Booth v Ameriquest Mtge. Co.
Annotate this CaseDecided on February 15, 2011
Supreme Court, Suffolk County
Richard P. Booth, as Administrator of the Estate of Donald W. Booth, a/k/a Donald W. Booth, Sr., Plaintiff,
against
Ameriquest Mortgage Company, Defendant.
21539-2006
Attorney for Plaintiff
Domenick A. Pelle, Esq.
Pelle & Pelle
5240 Merrick Road
Massapequa, New York 11758
Attorney for Defendant
Jaret S. Weber, Esq.
Weber Law Group, LLP
290 Broadhollow Road, Suite 200E
Melville, New York 11747-4818
Emily Pines, J.
DECISION UPON STIPULATED FACTS
In this action, the plaintiff, Richard P. Booth, as Administrator of the Estate of Donald W. Booth a/k/a Donald W. Booth, Sr., seeks a judgment (1) setting aside and declaring to be null and void a leasehold mortgage given by defendant, Ameriquest Mortgage Company, on property located [*2]at 4164 Broadway, Gilgo Beach, Suffolk County, New York, (2) cancelling and discharging said mortgage, and (3) directing the Clerk of the County of Suffolk to cancel and discharge the record of said mortgage. Pursuant to a Stipulation and Order dated December 13, 2010, the parties have agreed to submit the claims asserted by the plaintiff, Richard P. Booth, as Administrator of the Estate of Donald W. Booth a/k/a Donald W. Booth, Sr., to the Court for a decision upon the following stipulated facts:
Donald W. Booth, Sr. (hereinafter "Donald, Sr.") died intestate on October 6, 2000 leaving a lease on a piece of property known as 4164 Broadway, Gilgo Beach, Suffolk County, New York ("Property") and other assets including, but not limited to, Merrill Lynch accounts, a Chase Manhattan Bank account, and a life insurance policy on his life. He was survived by three adult children, Donald W. Booth Jr. ("Donald Jr."), Gail Booth ("Gail") and Richard Booth ("Richard").
On October 20, 2000 Gail died intestate leaving her surviving two brothers, Donald Jr. and Richard. On March 23, 2003 Donald Jr. and Michelle entered into a mortgage with Ameriquest. An action was brought in the Supreme Court against Donald Jr. and Michelle, which was transferred to the Surrogate's Court by Richard, to set aside an assignment of a lease to the Property and for an accounting of assets allegedly taken by Donald Jr. and Michelle from the estate of Donald Sr. before and after the death of Donald Sr. Donald Jr. died on January 12, 2005 and killed Michelle that same day. Representatives of the estate of Donald Jr. and Michelle were appointed in the State of Idaho.
The action against Donald Jr. and Michelle was settled by a stipulation entered into by Richard Booth and the representatives of the estates of Donald Jr. and Michelle to settle the claims of Richard as Administrator of the Estate of Donald Sr. against Donald Jr. and Michelle. The Surrogate entered an order dated March 31, 2006, which speaks for itself.
Both parties have submitted memoranda of law in support of their positions. Plaintiff argues that Ameriquest (1) was on "inquiry notice" of the plaintiff's claims to an interest and/or equity in the subject property, (2) was not a bona fide mortgagee, and (3) is chargeable with knowledge of all of the facts diligent inquiry would have revealed. Specifically, the plaintiff contends that Ameriquest is charged with notice that Richard, in the 2001 probate proceeding in Surrogate's Court commenced by Donald Jr., filed objections claiming, among other things, that a 1998 assignment of the lease from Donald Sr. to Donald Sr. and Donald Jr. as joint tenants was the product of fraud, duress and undue influence exerted by Donald Jr. Additionally, plaintiff contends that Ameriquest is bound by the order of the Surrogate's court dated March 30, 2006, issued in a related proceeding commenced by plaintiff. In that order, the Surrogate, in accordance with a Stipulation of Settlement between the parties to that proceeding, declared (1) that Donald Sr. had absolute title to the lease of the property, (2) that the 1998 assignment of the lease is invalid and in all respects null and void, (3) that an assignment of the lease in 2000 from Donald Jr. to Donald Jr. and Michelle is invalid and in all respects null and void, and (4) that Richard is the sole beneficiary of the Estate of Donald Sr. Therefore, plaintiff contends that the mortgage is invalid because Donald Jr. and Michelle had no interest in the lease at the time the mortgage was issued.
Ameriquest states that the only remaining legal issues are (1) whether it acquired a valid [*3]mortgage on the subject Property through Donald Jr.'s intestate share in the property through distribution as one of two remaining distributees of the estates of Donald Sr. and Gail, and (2) whether the Court is bound by the March Order of the Surrogate's Court. Specifically, Ameriquest contends that upon Donald Sr.'s death, a one-third right, title and interest in Donald Sr.'s estate automatically passed and vested, pursuant to EPTL 4-1.1, to each of Gail, Richard and Donald Jr., including Donald Sr.'s leasehold interest in the subject property. Ameriquest claims that upon the death of Donald Sr., Gail, Richard and Donald Jr. each held a one-third interest in the leasehold as tenants in common. Additionally, Ameriquest contends that when Gail died intestate and with no issue on October 20, 2000, Richard and Donald Jr., as the sole distributees of Gail's estate, were automatically and equally vested with Gail's interest in Donald Jr.'s estate, including her one-third interest in the lease in the subject property. Therefore, Ameriquest argues that as of October 20, 2000, Richard and Donald Jr. each held a 50% interest in the estate of Donald Sr., including the lease. Thus, it is Ameriquest's position that the mortgage issued on March 23, 2003, was secured by Donald Jr.'s 50% interest in the lease and that Ameriquest can seek to foreclose on this 50% interest. Accordingly, Ameriquest requests that the plaintiff's complaint be dismissed.
The Court notes that on a prior appeal in this case, the Appellate Division, Second Department determined that Ameriquest "possessed facts of such nature that would have excite[d] the suspicion of an ordinarily prudent person'" (quoting Miner v. Edwards, 221 AD2d 934 [4th Dept 1995]) and that "it was not a bona fide encumbrancer for value" (Booth v. Ameriquest Mortgage Co., 63 AD3d 769 [2d Dept 2009]). The Appellate Division's prior determination is law of the case (Cinelli Builders Inc. v. Ferris, 78 AD3d 881, 882 [2d Dept 2010]).
In any event, Ameriquest's contention that Donald Jr. had a 50% interest in the lease by operation of law as of October 20, 2000, which interest was conveyed as security to Ameriquest on March 23, 2003, is without merit. Rather, where, as here, a lessee dies intestate, a lease for years is an asset of his estate which, for the purpose of administration of the estate, is personal property and passes to the personal representative of the estate (EPTL § 13-1.1[a][1]; Christoforo v. Shore Ridge Assoc., 116 AD2d 123, 126 [2d Dept 1986]; Schnee v. Jonas Equities, Inc., 109 Misc 2d 221, 222 [App Term 2d Dept 1981]; Joint Props. Owners, Inc. v. Deri, 113 AD2d 691, 693 [1st Dept 1986]). Therefore, upon the death of Donald Sr. in 2000, his leasehold interest passed as personal property to the personal representative to the estate. It did not automatically vest in his distributees as Ameriquest contends. Richard was appointed the Administrator of the Estate of Donald W. Booth Sr. by an Order of the Surrogate's Court of Suffolk County dated April 22, 2005. Accordingly, the Court finds that Ameriquest did not acquire a valid mortgage on March 23, 2003, as Donald Jr. had not acquired any interest in the lease on the subject property through distribution at the time the mortgage was issued.
Ameriquest's reliance on Kraker v. Roll (100 AD2d 424 [2d Dept 1984]) is misplaced. Kraker involved claims regarding title to two parcels purchased by the decedent before he died intestate in 1963. Unlike Kraker, this case involves claims to Donald Sr.'s leasehold interest in the subject property, not title. As noted above, unlike title to real property, a lease for years is an asset of his estate which is personal property and passes to the personal representative of the estate (EPTL [*4]§ 13-1.1). Thus, contrary to Ameriquest's contention, the facts of this case are not "on all fours" with Kraker and Kraker is not controlling.
Based upon the foregoing, the Court need not determine whether the parties are bound by the March 31, 2006, Order of the Surrogate's Court.
The relief requested in the plaintiff's complaint is hereby granted.Submit judgment on notice.
Dated: February 15, 2011
Riverhead, New York
EMILY PINES
J. S. C.
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