Loccisano v Ayers

[*1] Loccisano v Ayers 2009 NY Slip Op 52004(U) [25 Misc 3d 1208(A)] Decided on October 5, 2009 Supreme Court, Kings County Battaglia, 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 This opinion is uncorrected and will not be published in the printed Official Reports.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 October 5, 2009
Supreme Court, Kings County

Frank Loccisano, Plaintiff,

against

Robert Ayers, Susan Ayers and Conestoga Title Insurance Company, Defendants.



14794/08



Plaintiff Frank Loccisano was represented by Christopher J. Brunetti, Esq. of Eaton & Torrenzano, LLP. Defendant Conestoga Title Insurance Company was represented by Veronica A. McMillan, Esq. of Lewis & Greer, P.C.

Jack M. Battaglia, J.

The Verified Complaint of plaintiff Frank Loccisano alleges four causes of action. Three of the causes of action are asserted against defendant Robert Ayers, or against him and defendant Susan Ayers, and seek repayment of money allegedly loaned to those Defendants. For present purposes, the material allegations of those causes of action relate to a Mortgage Note and Mortgage, each dated October 5, 2006 and executed by defendant Robert Ayers. The principal amount of the Note is $95,620, and payment is secured by a mortgage on premises located at 1969 East 29th Street, Brooklyn. The Fourth Cause of Action is asserted against defendant Conestoga Title Insurance Company, and alleges negligence in connection with the purchase and sale of the premises at 1969 East 29th Street on May 1, 2007.

Defendant Robert Ayers has not appeared in the action, and, by order of the Hon. Sylvia Hinds-Radix dated February 5, 2009, the Verified Complaint has been dismissed as against defendant Susan Ayers. With this motion, defendant Conestoga seeks an order, pursuant to CPLR 3211 (a) (1) and (a) (7), and CPLR 3212, dismissing the only cause of action in the Verified Complaint asserted against it.

Specifically, Plaintiff alleges that defendant Conestoga "knew or should have known that Plaintiff had a Mortgage against the premises known as and by 1969 East 29th Street, Brooklyn, New York, securing the Mortgage Note in the amount of $95,620.00"; and "was negligent in disregarding the aforementioned Mortgage, and allowing the closing for the aforementioned premises to take place on May 1, 2007 without requiring Defendant Robert Ayers to pay Plaintiff [*2]the amounts due and owing to him out of the proceeds of sale." (Verified Complaint, ¶ ¶ 24-25.)

Defendant Conestoga's motion is based exclusively on the contention that Plaintiff's claim "sounding in negligence is insufficient as a matter of law"; Conestoga "never owed the Plaintiff any duty to ensure his purported mortgage against the Property was satisfied"; "[t]here was never any relationship between Plaintiff and Conestoga so as to create and foist a duty of care upon Conestoga to in any way protect the Plaintiff." (Affirmation in Response to Motion for Default Judgment and in Support of Cross-Motion [sic], ¶ ¶ 26-27.)

Factually, Conestoga's motion is supported by an affidavit of Victoria Shteisman, who describes herself as a member of Alvig Abstract, LLC, "an agent" of Conestoga, and a two-inch stack of documents, some in admissible form, some not. Although Conestoga purports to move in part pursuant to CPLR 3211 (a) (1), i.e., "a defense . . . founded upon documentary evidence," few of the writings attached constitute "documentary evidence" (see Lewis v Proctor & Gamble, Inc., 18 Misc 3d 1110 [A], 2007 NY Slip Op 52488 [U], * 2- * 3 [Sup Ct, NY County 2007]), and, in any event, they do not "resolve[ ] all factual issues as a matter of law, and conclusively dispose[ ] of the plaintiff's claim" (see Matovcik v Time Beacon Record Newspapers, 46 AD3d 636, 638 [2d Dept 2008]), at least not on the ground on which the motion is based.

More importantly, the facts asserted in Ms. Shteisman's affidavit and the documents selected by Conestoga for attachment to its papers give an incomplete, if not misleading, picture of the role played by Conestoga with respect to Plaintiff's mortgage on the premises located at 1969 East 29th Street.

The mortgaged premises had been owned, prior to the May 1, 2007 sale to nonparties, by Robert Ayers and Susan Ayers, who were married when the property was acquired, and nonparty William O. Arndt. In 2005, Ms. Ayers commenced a marital dissolution proceeding in this court (index no. 2477/05), which led to a Stipulation of Settlement dated February 16, 2006, which in turn was incorporated, but not merged, into a Judgment of Divorce issued March 29, 2006 by the Hon. Joseph S. Silverman. In an order dated March 20, 2007, the Hon. Eric I. Prus appointed Susan Ayers "as receiver w/o bond for the purpose of executing the contract of sale, deed and other closing documents which are necessary to transfer [Robert Ayers's] share of the premises at 1969 East 29th Street" to the prospective purchasers.

Ms. Shteisman asserts in her affidavit that the prospective purchasers "ordered an abstract of title prepatory to the issuance of title through Alvig Abstract, LLC . . . , one of Conestoga's agents in New York State" (Shteisman Affidavit, ¶ 6); that "[t]he abstract of title revealed a mortgage Plaintiff purported to have against the Property executed only by Defendant Robert Ayers, one of the three joint tenants" (id., ¶7); that Conestoga instructed that "the purported mortgage had certain infirmities and could be omitted as a Scheduled B exception to the Purchasers [sic] policy if . . . Susan Ayers agreed to undertake obtaining a court order to discharge Plaintiff's purported mortgage as against the Property" (id., ¶ 8), which she did in a [*3]Letter of Indemnity and Undertaking executed on May 1, 2007, the date of the closing of title on the sale to the prospective purchasers; that Conestoga issued a policy of title insurance to the purchasers at the closing; and that "[a]t no time did Alvig or Conestoga undertake to prepare any title abstract or issue any policies of insurance to the Plaintiff Frank Loccisano with respect to his discharged mortgage against the Property or otherwise" (id., ¶ 12.) Copies of the Letter of Indemnity and Undertaking and the Owner's Policy of Title Insurance, both dated May 1, 2007, are attached.

What is not attached, or even referred to in either the Shteisman affidavit or counsel's affirmation in support of the motion, is a copy of an Affidavit of Greg Amand, described as a "title underwriter" for Conestoga, that was submitted in support of Susan Ayers's motion before the matrimonial court for an order discharging Plaintiff's mortgage on the premises at 1969 East 29th Street. In the Affidavit, which is attached to Plaintiff's opposition to this motion, Mr. Amand purports to provide the reasons Conestoga omitted Plaintiff's mortgage as an exception to the title insurance policy issued to the purchasers of the property. On August 10, 2007, the Hon. Eric I. Prus ordered that "the mortgage . . . dated October 5, 2006 and recorded on November 24, 2006 . . . shall be immediately discharged; and the Kings County Registers Office is directed to cancel the aforementioned mortgage of record in that the same is not a valid lien on 1969 East 29th Street."

Plaintiff was not a party to the proceedings that resulted in the discharge of his mortgage. In an affidavit submitted by Susan Ayers in support of her motion to dismiss Plaintiff's Verified Complaint as against her, she asserts that on August 10, 2007, "Plaintiff appeared in Court and . . . Judge Prus afforded the Plaintiff an opportunity to be heard" on her motion that his mortgage be discharged. (Affidavit in Support of Motion to Dismiss dated June 13, 2008, ¶ 8.) But the transcript of the proceedings before Justice Prus on that day, attached to Plaintiff's opposition on this motion, do not reveal Plaintiff's presence. The transcript does reveal that Justice Prus cited the affidavit of Conestoga's underwriter in support of his decision to order the mortgage discharged.

"[A] title company hired by one party is not, absent evidence of fraud, collusion or other special circumstances, subject to suit for negligent performance by one other than the party who contracted for its services." (Calamari v Grace, 98 AD2d 74, 83 [2d Dept 1983]; see also Velazquez v Decaudin, 49 AD3d 712, 716 [2d Dept 2008].) Nevertheless, "privity is not required to assert a claim based on fraud or intentional misconduct." (Id.)

"In considering a motion to dismiss pursuant to CPLR 3211 (a) (7), the court should accept the facts alleged in the complaint as true, affording the plaintiff the benefit of every possible favorable inference and determining only whether the facts as alleged fit within into any cognizable legal theory." (Id. at 714.) "In assessing a motion under CPLR 3211 (a) (7), . . . a court may freely consider affidavits submitted by the plaintiff to remedy any defects in the complaint . . . and the criteria is whether the proponent of the pleading has a cause of action, not whether he has stated one'." (Leon v Martinez, 84 NY2d 83, 88 [1994] [quoting Guggenheimer v Ginzburg, 43 NY2d 268, 275 (1977)].) [*4]

Plaintiff's Verified Complaint contains "no allegation that [he] had any relationship or contact with" Conestoga. (See Velazquez v Decaudin, 49 AD3d at 716.) It alleges only that Conestoga "knew or should have known" of his mortgage, which is not disputed, and that Conestoga "was negligent in disregarding" the mortgage, and "allowing the closing . . . to take place . . . without requiring [the mortgagor] to pay plaintiff the amounts due and owing to him out of the proceeds of sale." (Verified Complaint, ¶ ¶ 24, 25.) But Conestoga could not owe Plaintiff any duty greater than it owed the prospective purchasers of the property and their lender, and assuming that the latter were owed a tort duty in addition to the contract duty (see Hamelin v ETNA Abstract Corp., 174 Misc 2d 712, 715 [Sup Ct, Franklin County 1997]), the duty required due care in determining the status of title to the property, and not to clearing title. There is no allegation that Conestoga did not tell the prospective buyers or their lender about Plaintiff's recorded mortgage.

In his affidavit, however, submitted in opposition to this motion, Plaintiff alleges that, in the affidavit submitted by Conestoga's title underwriter, Greg Amand, in support of Susan Ayers's motion to discharge Plaintiff's mortgage, the underwriter "falsely asserts that [the] Mortgage is invalid because it was signed by one of the three owners of the subject property, and because it was executed after the Judgment of Divorce"; that Conestoga was "grossly negligent" in submitting the Amand affidavit in support of the motion; and that, "in addition to being grossly negligent," Conestoga's conduct was "fraudulent and indicates the possible existence of a conspiracy with . . . Susan Ayers to discharge [Plaintiff's] mortgage in deprivation of [his] due process rights." (Affidavit of Frank Loccisano, ¶ 10, 11.)

As previously noted, Conestoga makes no reference to the Amand affidavit in its initial moving papers, and, quite surprisingly, makes no reference to it in its reply to Plaintiff's opposition. Rather, it contends generally that it "did not participate in any conspiracy' with . . . Susan Ayers to discharge Plaintiff's purported mortgage against the Property." (Reply Affirmation, ¶ 9.) That, of course, is a matter of fact, and since Conestoga presents no sworn testimony of its own on this motion, by affidavit or deposition testimony, the contention cannot resolve the motion on either its CPLR 3211 (a) (7) or CPLR 3212 grounds.

Conestoga also contends in reply that any question about the enforceability of Plaintiff's mortgage has been resolved against him by the August 10, 2007 order of Justice Prus, discharging the mortgage and directing that it be cancelled of record, and the February 5, 2009 order of Justice Hinds-Radix, dismissing this action as against Susan Ayers. Doctrines of law of the case, res judicata, and collateral estoppel are cited in support. These contentions do not appear in Conestoga's initial moving papers, and Conestoga does not articulate their relevance to the duty question on which the motion is based. Indeed, the validity and enforceability of Plaintiff's mortgage appear to be relevant only to questions of breach of duty and causation. Nonetheless, Plaintiff alleges in opposition that the Amand affidavit was "false" in stating that the mortgage was invalid, and Conestoga's contentions are responsive. [*5]

The contention based upon the February 2009 order of Justice Hinds-Radix is easily disposed of. The "short form order" states that Ms. Ayers's motion is granted, and the action dismissed as against her, without stating any reason. Moreover, in the affidavit submitted by Ms. Ayers in support of her motion to dismiss, which is attached as part of Conestoga's moving papers, she did not contend that Plaintiff's mortgage is invalid or unenforceable, but, rather, that it was enforceable only against her former husband, Robert Ayers. The February 2009 order, therefore, has no "law of the case" significance on this issue.

As to Justice Prus's August 2007 order, as previously noted, the transcript of the August 10 appearance shows no appearance by Plaintiff, and the Order to Show Cause that was the vehicle for Susan Ayers's application, attached as part of Plaintiff's opposition papers, shows that service was to be made only on Robert Ayers. Plaintiff states in his affidavit that he appeared with counsel on August 10 to oppose the application, but "neither [his] attorney, nor [he] was given an opportunity to appear on the record and be heard in connection with the Order to Show Cause." (Affidavit of Frank Loccisano, ¶ 9.)

"Due process, of course, would not permit a litigant to be bound by an adverse determination made in a prior proceeding to which he was not a party or in privity with a party." (Gilberg v Barbieri, 53 NY2d 285, 291 [1981]; see also Tamily v General Contracting Corp., 210 AD2d 564, 566 [3d Dept 1994].) Conestoga contends, without any citation to authority, that "Plaintiff is in privity with . . . Robert Ayers who was a party to the [matrimonial] litigation and failed to take any action in response to Susan Ayers [sic] motion to discharge Plaintiff's mortgage from the Property." (Reply Affirmation, ¶ 15.) Particularly in light of the complexities involved with the treatment of marital property in matrimonial actions where there are third-party claims (see, for example, Darling v Darling, 22 Misc 3d 343 [Sup Ct, Kings County 2008]), Conestoga's showing is insufficient on this motion.

The continued viability of the privity requirement on claims of pecuniary loss caused by professional negligence, including claims against title companies, is based upon the public policy concern that "liability for injuries sustained by member of the general public who might be potentially affected by negligence in the promised performance" would be "unduly onerous." (See Calamari v Grace, 98 AD2d at 78-79.) "In reaching the policy judgment called duty', courts have . . . invoked a concept of privity of contract as a means of fixing fair, manageable bounds of liability in such cases" (Ossining Union Free School Dist. v Anderson La Rocca Anderson, 73 NY2d 417, 421 [1989]), and to avoid "liability in an indeterminate amount for an indeterminate time to an indeterminate class" (see id. at 423 [quoting Ultramares Corp. v Touche, 255 NY 170, 179 (1931)].)

These dangers are minimized when those affected by negligence in the rendition of professional services are not a "faceless or unresolved class of persons, but rather . . . a known group possessed of vested rights, marked by a definable limit and made up of certain components." (See White v Guarente, 43 NY2d 356, 361 [1977].) Here, a title company acted affirmatively, outside the scope of contracted for services, to affect the enforceability of an [*6]identified encumbrance upon the property. Having determined not to except the encumbrance from the coverage of its title insurance policy, Conestoga interjected itself into the relationship between and among the parties to the mortgage and the owners of the property, at least in part in furtherance of its own interests. Self-interest, of course, does not render conduct wrongful, and that conduct, and Justice Prus's determination that the mortgage is invalid, may ultimately prove unassailable. But an assessment of the reasonableness of Conestoga's conduct should not be foreclosed by a constrained construction of "duty" designed for other purposes.

As to CPLR 3211 (a) (7), the Court concludes that the Verified Complaint, supplemented by Plaintiff's affidavit, sufficiently "state[s] a cause of action." There are undoubtedly many issues yet to be resolved, including any question of privilege to which Conestoga may be entitled (see Ingber v Mallilo, 52 AD3d 569, 570 [2d Dept 2008]), but they are not raised by this motion.

As to CPLR 3212, as previously noted, Conestoga submits no sworn testimony of its own, either by affidavit or on deposition, in support of the motion. The affidavit of Victoria Shteisman of Alvig Abstract, LLC is incompetent and inadmissible to the extent that it asserts that "[a]t no time did . . . Conestoga undertake to prepare any title abstract or issue any policies of insurance to Plaintiff . . . with respect to his discharged mortgage against the property or otherwise" (¶ 12.) She is not shown to have personal knowledge, and the statement, therefore, must be deemed based on hearsay. The affidavit does not, in any event, address Conestoga's conduct in connection with the Ayers's matrimonial proceeding and the resulting order discharging the mortgage

Particularly at this stage of the action, in the absence of any disclosure, there are at least triable issues precluding summary judgment. (See Binyan Shel Chessed, Inc. v Goldberger Ins. Brokerage, Inc., 18 AD3d 590, 592 [2d Dept 2005].)

Defendant's motion is denied, with leave to renew after appropriate disclosure.

October 5, 2009____________________

Jack M. Battaglia

Justice, Supreme Court