Chisolm v Williams

[*1] Chisolm v Williams 2012 NY Slip Op 51426(U) Decided on July 26, 2012 Supreme Court, Kings County Schmidt, 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 This opinion is uncorrected and will not be published in the printed Official Reports.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 July 26, 2012
Supreme Court, Kings County

Beverly Chisolm, Marian Williams, a/k/a, Marion Parker, Plaintiffs,

against

Georgia Williams, Linda F. Wheeler and Citi Mortgage, Inc., John and Jane Doe, Undertenants and Financial Freedom Acquisition, LLC, Defendants.



12073/2005



Plaintiffs' Attorney: Jayne M. Dennis, 230 West 135th Street, Ground Fl., New York, NY 10030

Defendant's Attorney: Helmut Borchert, 19-02 Whitestone Expressway, Suite 302, Whitestone, NY 11357

David Schmidt, J.

Defendant Financial Freedom Acquisition, LLC (FFA), the holder of a reverse mortgage encumbering the premises at 179 Halsey Street, moves for an order directing the entry of summary judgment to dismiss the complaint and for an order in its favor on its counterclaims and cross claims, pursuant to CPLR 3212. Plaintiffs cross-move for summary judgment, seeking, among other things, an order declaring the mortgage held by FFA to be invalid.

Plaintiffs commenced this action to quiet title to 179 Halsey Street after they discovered that defendants Georgia Williams and Linda Wheeler, plaintiffs' step-mother and step-sister, had fraudulently deeded the premises back and forth between themselves and encumbered it with several mortgages. The premises had been specifically devised to plaintiffs under the terms of their father's will. For the following reasons, FFA's motion and plaintiffs' cross motion are denied.

I.Relevant Testimony

A.The Subject Premises

James C. Williams and Wilhelmina Williams, plaintiffs' parents, purchased the subject premises as husband and wife on October 26, 1949. On May 5, 1964, Wilhelmina Williams died, leaving James C. Williams as the surviving tenant by the entirety. Plaintiffs are the only two children of James and Wilhelmina and lived at the premises until about 1971. On January 14, 1972, Mr. Williams married Georgia Williams, but Mr. Williams remained the sole owner of [*2]the premises until his death on November 10, 1989. There was no mortgage on the property at the time of Mr. Williams' death.

B.Plaintiffs' Efforts to Probate the Will

On February 22, 1984, Mr. Williams executed a will, which, among other things, devised the premises to his daughters, Marion Williams and Beverly Chisolm, the plaintiffs in this action. Mr. Williams discussed the terms of the will with his daughters and plaintiffs therefore knew they were being left the premises. Mr. Williams also left the original will and a copy with his oldest daughter, Ms. Chisolm.

After Mr. Williams' death, Georgia Williams continued to reside at the premises with her children from a prior relationship. Sometime in February 1991, plaintiffs arranged a formal reading of their father's will in the office of Regina Felton, Esq., Georgia Williams' attorney. At her deposition, Marion Williams testified that she and her sister waited to have the will read because they wanted to allow Georgia Williams a grieving period and because they knew that the contents of the will would upset her. As it turned out, their concern was not entirely unfounded. According to plaintiffs, when Georgia Williams heard that the premises had been devised to plaintiffs, she became very upset and almost hysterical. Because each of the plaintiffs had their own residence, and believing their interest in the premises was sufficiently protected by the terms of the will, an oral arrangement was made between plaintiffs and Georgia Williams under which Georgia Williams could continue to reside at the premises as long as she paid the taxes and utilities and maintained the premises. Because of Georgia Williams' emotional state, the reading was adjourned with plaintiffs' understanding that it would be continued at a later date. The original will was left with Ms. Felton for safekeeping.

Subsequently, plaintiffs contacted Ms. Felton to obtain the original will.[FN1] Ms. Felton informed plaintiffs that the will was in storage and that she would have to search her files to retrieve it. Shortly thereafter, Ms. Felton informed plaintiffs that the will could not be located.[FN2]

On June 10, 1993, plaintiffs commenced a probate proceeding in Surrogate's Court to probate the copy of the will that was still in their possession. On September 16, 1993, Georgia Williams was personally served with a Citation and she appeared by counsel. According to plaintiffs, they were unable to complete probate due to a lack of funds and the matter remained unresolved.

C.Defendants' Fraudulent Transfer of the Premises

On April 26, 1991, without plaintiffs' knowledge or consent, Georgia Williams recorded a deed transferring title to the subject premises from herself to "Georgia Williams and Linda F. Wheeler as tenants in common." The deed was dated March 8, 1991. At the same time, a mortgage was given by Georgia Williams and Linda Wheeler to Integrity Mortgage Corp. in the [*3]initial principal amount of $65,000.00. There is no record of any transfer of title into Georgia Williams' possession prior to this conveyance.

Georgia Williams and Linda Wheeler were involved in numerous other transactions involving the Premises between 1991 and 2005, including at least three deed changes between the two parties and six other mortgages being placed on the Premises.

In early 2005, plaintiffs discovered Georgia Williams' transfer of title. Marion Williams testified that she was in the Kings County clerk's office reviewing tax records to make sure that Georgia Williams had continued to pay the property taxes, pursuant to their agreement. While reviewing the records, Marion Williams learned that title had been transferred into the names of Georgia Williams and Linda Wheeler. In March 2005, plaintiffs retained an attorney to file suit against Georgia Williams to quiet title in the premises and to complete probate of the will. On April 8, 2005, Georgia Williams mortgaged the premises to FFA to secure a debt in the principal amount of $469,342.50. By its motion, FFA seeks, among other things, a declaration that its mortgage is valid and that plaintiffs' rights, if any, are subject to the mortgage.

D.Relevant Procedural History

On April 19, 2005, plaintiffs filed the instant action. FFA was not named as a defendant. FFA moved to intervene by order to show cause dated January 28, 2010 which was granted by order of Justice Martin M. Solomon dated March 25, 2010. FFA served its verified answer with counterclaims and cross-claims on all parties on April 9, 2010, including a counterclaim for laches. Thereafter, plaintiffs served a reply to FFA's counterclaims.

FFA's motion for a default judgment against defendants Georgia Williams and Linda Wheeler on FFA's cross-claims was granted by order of this court dated July 15, 2010.

II.Discussion

To prevail on a motion for summary judgment, the proponent must make a prima facie showing of entitlement to judgment as a matter of law, tendering evidentiary proof in admissible form. See Zuckerman v City of New York, 49 NY2d 557, 560 (1980). Once this showing has been made, the burden shifts to the party opposing the motion to rebut the prima facie showing by producing evidentiary proof in admissible form sufficient to require a trial of material issues of fact. See Kaufman v Silver, 90 NY2d 204, 208 (1997). Additionally, in deciding the motion, the court must view the evidence in a light most favorable to the party opposing the motion and must give that party the benefit of every favorable inference. Negri v Stop & Shop, 65 NY2d 625, 626 (1985).

In moving for judgment in its favor, FFA argues that the doctrine of laches is applicable to the instant action and requires dismissal of the complaint. Specifically, FFA maintains that plaintiffs are guilty of "gross laches" because they waited fifteen and a half years from Mr. Williams' death to commence this action and assert their right to the Premises.

In opposition (and in support of their cross motion), plaintiffs contend that there is no laches because the evidence in the record establishes that they filed a petition in Surrogate's Court to probate a copy of the lost will twelve years earlier, in 1993. In addition, plaintiffs argue that the filing of the 1993 probate proceeding as well as the apparent break in the chain of title created by Georgia Williams' and Linda Wheeler's fraudulent deed are documented in publicly available records, and therefore, FFA had constructive notice of plaintiffs' interest in the property. [*4]

In reply, FFA argues, inter alia, that the harm to plaintiffs created by Georgia Williams' transfer of the premises in 1991 occurred long before plaintiffs filed for probate in 1993, and that fact, along with plaintiffs' abandonment of that proceeding until 2005, is sufficient to give rise to the equitable defense of laches.

"To establish laches, a party must show: (1) conduct by an offending party giving rise to the situation complained of, (2) delay by the complainant in asserting his or her claim for relief despite the opportunity to do so, (3) lack of knowledge or notice on the part of the offending party that the complainant would assert his or her claim for relief, and (4) injury or prejudice to the offending party in the event that relief is accorded the complainant. All four elements are necessary for the proper invocation of the doctrine." Meding v Receptopharm, Inc., 84 AD3d 896, 897 (2d Dept 2011) (internal quotation marks and citations omitted). In addition, in assessing whether a delay is fatal to the enforcement of a right, "regard must always be had to the peculiar circumstances of each case." Richardson v Vajiradhammapadip Temple, 24 AD3d 649, 650 (2nd Dept 2005) (internal quotation marks omitted).

Turning first to the third element of FFA's laches defense, i.e., its lack of knowledge or notice of plaintiffs' interest in the premises, plaintiffs strenuously argue that FFA was on constructive notice of plaintiffs' interests. Pointing to the title insurance policy and title report obtained by FFA, plaintiffs maintain that an accurate and complete title report should have included a Surrogate's Court search, which, evidently, FFA's title company did not undertake. Had such a search been conducted, FFA would have had notice of plaintiffs' claim. Plaintiffs further contend that, had FFA bothered to examine the chain of title to the premises as documented in the ACRIS records (annexed to FFA's motion as Exhibit "H"), it would have easily discovered that there was no deed recorded from James C. Williams to Georgia Williams.

For its part, FFA contends that the 1993 petition would not have revealed anything more than the fact that the will had been lost and plaintiffs were seeking to have a copy of the will admitted to probate. FFA also insists that it performed all the due diligence required of a mortgagee by conducting a title search which revealed that Georgia Williams and Linda Wheeler had been in the chain of title for fourteen years, since 1991. In this regard, FFA relies on the deposition testimony and affidavit of its First Vice President of Operations, Gail Balettie, attesting that FFA was entitled to rely on representations made by a borrower in a loan application as a result of the certification provision in the application. Ms. Balettie also attests that the title search company did not conduct a Surrogate's Court search because such a search is not customary on a residential mortgage transaction.

However, the conclusory testimony of FFA's First Vice President, "unencumbered by any trace of facts or data," is not sufficient to support summary judgment. Amatulli v Delhi Constr. Corp., 77 NY2d 525, 533-34, n 2 (1991). Indeed, neither movant has submitted expert witness affidavits to attest as to whether or not FFA's due diligence adhered to standards common among lenders. Thus, on the record before it, the court cannot make a determination on the parties' contentions as a matter of law.

Although the afore-mentioned issue of fact is a sufficient reason to deny both motions, it is still worth considering FFA's contention, on reply, that the subsequently abandoned 1993 probate proceeding, filed two years after Georgia Williams' first fraudulent transfer and four years after plaintiffs' father's death, itself constitutes inexcusable delay. See Kraker v Roll, 100 [*5]AD2d 424, 432-33 (2nd Dept 1984) ("[W]here laches is the equitable defense, it must be shown that plaintiff inexcusably failed to act when she knew, or should have known, that there was a problem with her title to the property. In other words, for there to be laches, there must be present elements to create an equitable estoppel.") (internal quotation marks and citations omitted).

However, on this issue as well, the court finds that there are questions of fact as to whether, given the "peculiar circumstances" of this case (Richardson, 24 AD3d at 650), plaintiffs' delay was inexcusable. For example, Marion Williams testified that it was Georgia Williams' attorney who suggested that they should adjourn the reading of the will to give Georgia Williams time to recover from her obvious distress and continue at another time. See FFA's motion, Exhibit "L," p. 18. This, according to Marion Williams, was the reason plaintiffs left the will with Ms. Felton, who ultimately misplaced it. Id. Thus, a trier of fact would have to assess whether plaintiffs' failure to immediately probate the original will and the subsequent delay and complications in probating a copy, was excused by Georgia Williams' attorney's loss of the original will.

Nevertheless, FFA insists that White v Priester, 78 AD3d 1169 (2d Dept 2010) requires a finding by this court that plaintiffs be precluded from asserting their claim under the doctrine of laches. In White, the defendant was appointed the guardian for her mother. Id. at 1170. In 2002, the defendant requested and the court approved a transfer of the mother's residence to the defendant on the ground that the transfer would be beneficial for Medicaid and estate planning. Id. The mother died soon thereafter. Id. The plaintiff, the great-granddaughter of the deceased ward and a beneficiary under a will, brought suit six years later against defendant, seeking, among other things, the imposition of a constructive trust on the residence. The court, on appeal, held that the plaintiff's action was barred by laches. In reaching this determination, the Court reasoned that the great granddaughter was aware that the guardian/defendant continued to reside in the ward's former residence after her death; she and other family members made a conscious decision to take no legal steps to secure an interest in the ward's estate; and, critically, "in reliance upon her unchallenged ownership of the premises, the defendant maintained the property solely at her own expense and changed her position to her financial detriment by incurring a mortgage debt in excess of $700,000." Id. at 1171. As a result, the Court concluded that defendant had sufficiently demonstrated prejudicial delay.

White is not this case. Here, Georgia Williams was well aware, through the will reading as well as through the probate proceeding in which she appeared by counsel, that plaintiffs had an interest in the premises and, what is more, intended to pursue that interest by legal means. As such, it cannot be said that Georgia Williams mortgaged the premises in reliance on her "unchallenged" ownership. In addition, the defendant in White transferred the property to herself with court approval. Thus, unlike the instant case where there is an unexplained and evident break in the chain of title created by defendants' fraud, the mortgagee in White relied upon a legal conveyance supported by court order.

For the same reason, FFA's reliance on Wilds v Heckenstall, 93 AD3d 661 (2nd Dept 2012), is misplaced. There, plaintiff, who had brought an action to quiet title, waited almost 11 years after the decedent's death, before commencing a proceeding to have the will probated. Id. at 664. In the intervening time, a mortgage had been taken out on the property by the nephew [*6]and niece of the decedent's husband, who had been given a life estate and who had deeded the premises to them. The Surrogate's Court entered a decree declaring that the plaintiff was the owner of the property, but also determined that the plaintiff's ownership interest was subject to the rights of the mortgagee. In affirming the Surrogate's Court's decree, the Court stressed that the mortgagee would otherwise have been prejudiced by plaintiff's delay because it "did not know and could not have known at the time that it took the mortgage on the property that the plaintiff would challenge [defendants'] ownership interest." Id. (emphasis added). Here, however, a proceeding had been commenced prior to FFA's mortgage. Therefore, it cannot be said that FFA "could not have known" that plaintiffs would challenge Georgia Williams' and Linda Wheeler's purported ownership interest.

In sum, the evidence submitted by defendants, including, inter alia, plaintiffs' deposition testimony and the ACRIS records for the premises, is insufficient to establish FFA's entitlement to judgment as a matter of law on its defense of laches. The same issues of fact that preclude granting FFA summary judgment on its motion, likewise compels the court to deny plaintiffs' cross motion. Accordingly, it is

ORDERED that defendant Financial Freedom Acquisition, LLC's motion for summary judgment, is denied; and it is further

ORDERED that plaintiffs Beverly Chisolm's and Marion Williams' cross motion for summary judgment is denied.

Dated:July 26, 2012

ENTER:

_______________________

J.S.C. Footnotes

Footnote 1: There is a discrepancy in the record as to when this call took place. Plaintiffs, in an affidavit they submitted in support of their cross motion, attest that the call was made sometime in 1991. Plaintiffs' petition in the 1993 proceeding, annexed as Exhibit "C" to their affidavit, alleges that the call was made at the end of January 1993.

Footnote 2: At a deposition in 2005, Ms. Felton denied ever meeting the plaintiffs or knowing anything about the will.