George v Grand Bay Assoc. Enter. Inc.

[*1] George v Grand Bay Assoc. Enter. Inc. 2006 NY Slip Op 52633(U) [21 Misc 3d 1114(A)] Decided on May 4, 2006 Supreme Court, Bronx County Roman, J. Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431. This opinion is uncorrected and will not be published in the printed Official Reports.

Decided on May 4, 2006
Supreme Court, Bronx County

Fernella George and Ruel Turner, Plaintiff(s),

against

Grand Bay Associates Enterprise Incorporated, Alvin Merrifield, Janelle Peters, Defendant(s).



6320/04

Nelson Roman, J.

Non-parties MARCO MENDEZ and LUIS MENDEZ (hereinafter Mendez) move seeking an order pursuant to CPLR §1012(a)(3), allowing them to intervene in the instant action. Thereafter, Mendez seeks an order pursuant to CPLR §3211(a)(1), dismissing the part of the instant action based on documentary evidence which establishes that plaintiffs' title claim is barred by CPLR §5523. Lastly, Mendez seeks an order pursuant to CPLR§ §3211(a)(10) and 1003, dismissing the entire action inasmuch as plaintiffs have failed to join a necessary party. Plaintiffs oppose the instant motion and cross-move seeking an order allowing them to re-file and reserve their amended complaint. Defendant GRAND BAY ASSOCIATES ENTERPRISES (Grand Bay) cross-moves seeking an order compelling compliance with this court's prior so-ordered stipulation dated March 15, 2004 and seeking summary judgment in favor of Grand Bay thereby quieting title of the property at issue and removing plaintiffs from the property at issue. Plaintiffs oppose Grand Bay's cross-motion asserting that issues of fact preclude summary judgment. They do not directly oppose the portion of the motion seeking compliance with Grand Bay's motion seeking compliance with this Court's prior order.

The instant action is one for cancellation and reformation of a forged real property deed. The action was commenced on January 8, 2004. The verified complaint alleges that plaintiffs are the owners of real property located at 1420 Fteley Avenue, Bronx, NY (1420 Fteley). It is alleged that said property was conveyed to Grand Bay by someone other than plaintiffs and that as a result, the transfer was effectuated by means of a forged deed. Plaintiffs seek to have the deed transferring said property to Grand Bay vacated and reformed. Grand Bay interposed its answer wherein it asserted cross-claims against JANELLE PETERS (Peters), a non-party.

The documentary evidence provided by Mendez in support of the motion indicates the following. By deed dated March 10, 1996, plaintiffs owned 1420 Fteley. In February 2002, Peters obtained a durable power of attorney from plaintiffs. On August 24, 2002, 1420 Fteley [*2]was conveyed to Peters and on that same day, the property was conveyed to Grand Bay by Peters. On June 30, 2003, CitiBank, N.A. (CitiBank) held the mortgage to the property and began a foreclosure action against plaintiffs' property. On March 15, 2004, plaintiffs were ordered to add Peters, previously not a party, as an additional defendant to the instant action. Said order further mandated that plaintiffs deposit $2263 per month plus any rents collected by them from 1420 Fteley into their attorney's escrow account. On August 13, 2004, the court granted CitiBank's foreclosure action by issuing an Order of Foreclosure and Sale. In December 2004, the Court granted Grand Bay's motion seeking summary judgment on its counterclaims against plaintiffs. Said motion was granted on default thereby dismissing the instant action outright. The order quieted title in favor of Grand Bay and cancelled plaintiffs' notice of pendency. On January 14, 2005, Grand Bay conveyed 1424 Fteley to Mendez. Mendez recorded the deed on January 25, 2005 and obtained mortgages from GreenPoint Mortgage Funding, Inc. On June 20, 2005, the Court vacated its order dismissing plaintiffs' action at the same time denying Grand Bay's motion for summary judgment finding that issues of fact precluded summary judgment.

Mendez submits an affidavit from Marco Mendez, wherein he asserts that Mendez is the current title holder for 1424 Fteley. The property was acquired from Grand Bay on January 25, 2005 and the deed recorded on January 31, 2005. The property was purchased for $410,000 and two mortgages were given to GreenPoint Mortgage Funding, Inc. In purchasing the property Mendez relied on the clear chain of title as evidenced in the New York City Register's office and upon the order of this court dated December 20, 2004. At the closing, $209,665 was used to satisfy the sum due to CitBank by virtue of plaintiffs' default. Plaintiffs are currently in possession of the property and refuse to vacate. Mendez continues to pay the mortgage on the property, while plaintiffs live rent free and in fact collect rent from tenants within the property.

In opposition to Mendez' motion and in support of their cross-motion plaintiffs provide the following. Plaintiffs provide a lengthy affidavit from FRANELLA GEORGE (George), wherein she states that Peters was misled into executing two fraudulent powers of attorney by Grand Bay. George also states that Peters was already joined in the action by virtue of an amended summons and complaint. However, it is submitted that said document was rejected by the clerk as it did not bear an original signature.

Plaintiffs provide an amended summons and complaint dated April 14, 2004. The same alleges that Peters executed certain papers and a deed for 1424 Fteley. It alleges that Grand Bay should have known that Peters did not have the authority to transfer 1424 Fteley.

Grand Bay provides documentary evidence, much of it in inadmissible form, and most of it identical to the evidence submitted by Mendez.

Intervention

CPLR §§1012 and 1013 govern circumstances where non-parties to an action can intervene upon an existing action and be made parties thereto. CPLR §1012 (a) reads

[*3]Intervention as of right. Upon timely motion, any person shall be permitted to intervene in any action: 1. When a statute of the state confers an absolute right to intervene; or 2. When the representation of the person's interest by the parties is or may be inadequate and the person is or may be bound by the judgment; or 3. When the action involves the disposition or distribution of, or the title or a claim for damages for injury to, property and the person may be affected adversely by the judgment.

CPLR §1013 reads

Upon timely motion, any person may be permitted to intervene in any action when a statute of the state confers a right to intervene in the discretion of the court, or when the person's claim or defense and the main action have a common question of law or fact. In exercising its discretion, the court shall consider whether the intervention will unduly delay the determination of the action or prejudice the substantial rights of any party.

Case law prescribes that irrespective of what kind of intervention is sought, the relevant inquiry is whether the party seeking to intervene has a real and substantial interest in the outcome of the litigation. Agostino v. Soufer, 248 AD2d 147 (1st Dept. 2001); County of Westchester v. Department of Health of the State of New York, 229 AD2d 460 (2nd Dept. 1996); Vantage Petroleum v. Board of Assessment Review of the Town of Babylon, 91 AD2d 1037 (2nd Dept. 1983); Plantech Housing, Inc. v. Conlan, 74 AD2d 920 (2nd Dept. 1980). If the intervenor has a real and substantial interest in the outcome of the litigation, intervention should be allowed. Id.

Joinder of Necessary Parties

CPLR §1001 governs the circumstances under which people not made parties to an action, must be made parties to an action. CPLR§1001(a) readsParties who should be joined. Persons who ought to be parties if complete relief is to be accorded between the persons who are parties to the action or who might be inequitably affected by a judgment in the action shall be made plaintiffs or defendants. When a person who should join as a plaintiff refuses to do so he may be made a defendant.

CPLR §1003, authorizes dismissal for a party's failure to join a necessary party. CPLR §1003, reads

Nonjoinder of a party who should be joined under section 1001 is a ground for dismissal of an action without prejudice unless the court allows the action to proceed without that party under the provisions of that section. Misjoinder of parties is not a ground for dismissal of an action. Parties may be added at any stage of the action by leave of court or by stipulation of all parties who have appeared, or once without leave of court within twenty days after service of the original summons or at anytime before the period for responding to that summons expires or within twenty days after service of a pleading responding to it. Parties may be dropped by the court, on motion of any party or on its own initiative, at any stage of the action and upon such terms as may be just. The court may [*4]order any claim against a party severed and proceeded with separately.

A court has the discretion to consider whether there has been a failure to join a necessary party and in such a circumstance, can dismiss the action. City of New York v. Long Island Airports Limousine Service Corp., 48 NY2d 469 (1979); Ferrando v. New York City Board of Standards and Appeals, 12 AD3d 287 (1st Dept. 2004). The relevant inquiry as stated in the statute is whether the action, as is, can accord complete relief or whether non-parties might be inequitably affected by a judgment in the action. Id. Dismissal "serves judicial economy by preventing multiplicity of suits. It also insures fairness to third parties who ought not to be prejudiced or embarrassed by judgments purporting to bind their rights or interest where they have had no opportunity to be heard.'" Long Island Airports Limousine Service Corp., at 475, quoting, First Nat. Bank v. Shuler, 153 NY 170, 163 (1897).

Notices of Pendency and Restitution in Real Property Actions

Article 65 of the CPLR prescribes the procedure for filing and cancellation of a notice of pendency. A notice of pendency once filed, puts the world on notice, that with regard to a particular piece of real property, plaintiff has potential rights and any subsequent buyers purchase the property subject to any rights granted to plaintiff by the underlying action. Matter of Sakow, 97 NY2d 436 (2002). A notice of pendency has a life span of three years from the date of filing. Id. The notice of pendency automatically expires once the three years has elapsed and if not extended prior to expiration, once canceled or expired, cannot be revived. Id.

CPLR §5523, governs restitution in real property actions. That section reads

A court reversing or modifying a final judgment or order or affirming such a reversal or modification may order restitution of property or rights lost by the judgment or order, except that where the title of a purchaser in good faith and for value would be affected, the court may order the value or the purchase price restored or deposited in court.

CPLR §5523, furnishes a remedy to an individual who initiates an action regarding real property resulting in an adverse judgment. Da Silva v. Musso, 76 NY2d 436 (1990). As the statute states, the court has the inherent power to order restitution of a party's property rights. However, if the court reverses a final order affecting real property, thereby ordering restitution of a party's previously revoked property rights, restitution is not available if said property was conveyed to a good faith purchaser for value. Id. Revelone v. Arlind Realty Corporation, 299 NY 667 (1949). Instead, the court can order money damages equal to the value or the purchase price restored. Da Silva v. Musso, 76 NY2d 436 (1990). Thus, assuming that there has been a final order or judgment, adverse to plaintiff, after which the property at issue is conveyed, in the absence of a valid notice of pendency, plaintiff cannot have restitution of property rights, even if the court's order is reversed or modified. Id. This is because a final order or judgment is valid and conclusive adjudication of a party's substantive rights until overturned on appeal and fully enforceable in the absence of a judicial stay pursuant to CPLR §5519. Id. At that point plaintiff's remedy is an action for money damages equal to the value of the property or price paid. Id.; Meier v. Meier, 153 Misc 2d 72 (Supreme Court, Orange County 1992). (Court held that remedy where title of purchaser in good faith was affected by a subsequent court order, the remedy was damages equal to the value or the purchase price.). No cause of action lies against the good faith buyer, whose title for the property is insulated from an [*5]appellate reversal restoring property rights to the plaintiff. Da Silva v. Musso, 76 NY2d 436 (1990). This is because

Since the ability to transfer clear title is a natural incident of ownership, it follows that when a complaint involving title to or the right to possess and enjoy real property has been dismissed on the merits and there is no outstanding notice of pendency or stay, the property owner has a right to transfer or otherwise dispose of the property unrestricted by the dismissed claim.

Id. at 440. That the purchaser buying the property in good faith has knowledge that plaintiff has appealed an order adversely affecting his property rights is insufficient to vitiate the subsequent buyer's good faith. Id.; Aubrey Equities, Inc. v. Goldberg, 247 AD2d 253 (1st Dept. 1998). (Court held that good faith purchaser was entitled to retain title of property purchased prior to court's reversal of the judgment of foreclosure and sale notwithstanding purchaser's knowledge of pending appeal.).

CPLR §3211(a)(1)

The proponent of a motion to dismiss plaintiff's complaint pursuant to CPLR §3211(a)(1), that a defense is founded upon documentary evidence, bears the burden of coming forward with documentary evidence, conclusively establishing a defense to the asserted claims as a matter of law. IMO Industries, Inc., v. Anderson Kill & Olick, P.C., 267 AD2d 10 (1st Dept. 43).

Discussion

Mendez' motion pursuant to CPLR §1012, is hereby granted. Mendez is hereby granted intervention and made a party to this action for purposes of the instant motion and cross-motions. The evidence demonstrates that plaintiffs' action seeks to reform title to property duly purchased by Mendez. As a result, Mendez has a real and substantial interest in the outcome of the litigation and intervention should be allowed.

Mendez' motion seeking dismissal of the title claim portion of plaintiffs' action is hereby granted pursuant to CPLR §§3211(a)(1) and 5523. Contrary to plaintiffs' assertion, restitution and reformation of the deed is not a remedy available to plaintiffs' because Mendez was a good faith purchaser of the property herein. Mendez purchased the property herein after the court had dismissed plaintiffs' action and cancelled plaintiffs' notice of pendency. As such the only remedy available to plaintiffs is money damages from the other defendants in this action. On December 20, 2004, this court granted Grand Bay's motion quieting title in favor of Grand Bay, dismissing plaintiffs' action and cancelling the notice of pendency filed by plaintiffs. While said order was granted on default, this by no means diminishes the applicability of CPLR §5523, since when Mendez purchased the property he did so for value, $410,000, when there existed no notice of pendency and when title had been quieted in favor of Grand Bay. Horvath v. Grid Realty Corp., 64 AD2d 691 (2nd Dept. 1978). (Court held that even when title to property was obtained as a result of a default judgment, restitution would be unavailable, if prior to vacatur of the default, property was purchased in good faith and for value). Mendez purchased the property herein prior to the court's vacatur of its prior order restoring the action to the calendar. As a consequence, title must be quieted in favor of Mendez and plaintiffs' only remedy is to seek money damages from all other defendants.

Mendez' motion to dismiss the action pursuant to CPLR §§3211(a)(10) and CPLR §1003 is denied as moot. By virtue of plaintiffs' oversight, Peters has never been joined to the instant action. [*6]However, to the extent that the instant action is one for reformation of a deed and such a cause of action is barred by CPLR §5523 and case law, the Court must dismiss the complaint, in that it fails to state a cause of action. As discussed above, the only cause of action plaintiff has, is one for money damages against the instant defendants. The original complaint, fails to state that cause of action and similarly the amended complaint fails to state that cause of action. As a result, the reformation action is barred and the complaint, which states a cause of action for the same, must be dismissed, without prejudice to recommence an appropriate action for money damages against the instant defendants only and not Mendez.

Grand Bay's motion seeking to compel plaintiffs to comply with this Court's prior so-ordered stipulation is granted. The Court ordered that plaintiffs deposit $2,263 into their attorney's account. This amount was to cover mortgage payments paid initially by Grand Bay and more recently Mendez. The evidence demonstrates, that plaintiffs never deposited the required sum into their attorney's account or did so and the attorney never paid the same to the respective parties. Consequently, plaintiffs are hereby ordered to pay $2,263 per month beginning April 2004 through such time as plaintiffs remain in possession of 1420 Fteley. Said amount is to be divided among Grand Bay and Mendez in a pro rata manner to cover the portions of the mortgage paid by the respective parties.

For the foregoing reasons, plaintiffs' cross-motion and Grand-Bay's cross-motion are denied as moot. It bears mention that not only was Grand Bay's motion previously denied upon a finding that questions of fact precluded such relief, but this time around, the wholesale absence of admissible evidence would not have entitled the same to prima facie entitlement to summary judgment. It is hereby

ORDERED that the complaint herein be dismissed. It is further

ORDERED that title to the premises known as 1420 Fteley Avenue, Bronx, NY, Block No.3982, Lot #15, be quieted in favor of Marco and Luis Mendez, and that the same are adjudged to be the fee owners of the aforementioned premises. It is further

ORDERED that any claims by plaintiffs to the title held by Marco and Luis are hereby barred. It is further

ORDERED that upon a hearing, or upon agreement by Mendez and Grand Bay, plaintiffs pay Grand Bay and Mendez $2,263 per month for the period of time beginning April 2004 through such time as plaintiffs remain in possession of the herein premises. It is further

ORDERED that a writ of assistance be signed allowing for the removal by the Marshal or Sheriff of plaintiffs and their possessions from the 1420 Fteley Avenue, Bronx, NY. It is further

ORDERED that the stay of the action pending in landlord tenant court titled Associated Enterprises, Inc. v. Janelle Peters, John Doe and Jane Doe, Index #49880/03, be hereby vacated. It is further

ORDERED that Mendez serve a copy of this Order with Notice of Entry upon all parties within thirty (30) days hereof.

This constitutes this Court's decision and Order.

Dated :May 4, 2006

Bronx, New York

________________________________Nelson S. Roman, J.S.C.