Bodden v Kean

[*1] Bodden v Kean 2010 NY Slip Op 52433(U) Decided on January 26, 2010 Supreme Court, Kings County Knipel, 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 This opinion is uncorrected and will not be published in the printed Official Reports.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 January 26, 2010
Supreme Court, Kings County

Patricia Bodden, Plaintiff,

against

David Kean, Defendant.



23250/2008



Attorney for Plaintiff

Law Offices of J.R. Hairston, P.C.

243-18 Merrick Blvd.

Rosedale, NY 11422

(718) 990-8780

Attorney for Defendant

Joseph Monaco

150 East 58th Street

New York, NY 10155

(212) 486-4244

Lawrence S. Knipel, J.

In this action to impose a constructive trust on certain real property and to recover [*2]damages, defendant, David Kean (defendant),[FN1] moves for an order, pursuant to CPLR 2221 (d), granting him leave to reargue so much of an order of this court, entered May 27, 2009 (the prior order), as denied that branch of his motion which was to dismiss the complaint, pursuant to CPLR 3211 (a) (5), as time-barred, and upon reconsideration, dismissing the complaint (sequence no. 3). For the reasons set forth below, leave to reargue is granted and, upon reargument, the court adheres to its original determination.

In the prior order, the court held that the applicable six-year statute of limitations began to run in June 2008 when defendant refused to convey a 50% interest in the subject property to plaintiff, Patricia Bodden (plaintiff), and sought to evict her from the premises; rather than in June 1997 when defendant, with plaintiff's consent, took title to the subject property in his name only and obtained a purchase money mortgage loan. Because this action was commenced in August 2008, the court held that it was timely.[FN2]

In challenging this determination, defendant contends that the court overlooked a so-called critical date — November 14, 2001 — when, without plaintiff's knowledge or consent, defendant took out a new mortgage loan on the subject property. Specifically, defendant asserts that: The very gravamen of the plaintiff's claim is that the defendant wrongfully and improperly re-mortgaged the subject property in 2001 without the permission or consent of the plaintiff. . . This second mortgage allegedly stripped the property of equity that rightfully belonged to the plaintiff. As such the six[-year] statute of limitations was triggered no later than 2001 — the period to commence a lawsuit has expired and this action must be dismissed (Monaco Aff., dated June 30, 2009, ¶ 4 [original bold-faced type omitted; italics supplied]).

In his reply affidavit, defendant points out that "Ms. Bodden cannot claim that Mr. Kean's actions in 2001 were wrong (and the basis for her lawsuit) and at the same time claim that those very acts did not start the time period to file a lawsuit" (Monaco Reply Aff., dated Sept. 21, 2009, ¶ 2). In opposition, plaintiff does not specifically address this point. [*3]

A court has the discretion to grant a motion to reargue upon a showing that "the court overlooked or misapprehended the facts or law or for some other reason mistakenly arrived at its earlier decision" (Long v Long, 251 AD2d 631, 631 [2d Dept 1998]; CPLR 2221 [d] [2]). Based upon a review of the record and after taking judicial notice of the relevant loan documents stored on the Automated City Register Information System website of the Office of the City Register, New York City Department of Finance,[FN3] the court exercises its discretion and grants defendant leave to reargue.

In the prior order, the court did not specifically address the November 14, 2001 loan, which was beyond the limitations period, because it was unnecessary to the decision rendered. The November 14, 2001 loan concerned only $9,902[FN4] in equity, or less than 6% of the $180,000 in total equity which defendant allegedly took out of the subject property and converted for his own use (Verified Complaint, ¶ 15), and, furthermore, this minor loan was repaid by a new loan on November 9, 2006, which was within the limitations period. Defendant's statement that the "second mortgage [i.e., the November 14, 2001 loan] allegedly stripped the property of equity that rightfully belonged to the plaintiff" mischaracterizes plaintiff's claim in order to forge a link between (i) a series of the unauthorized loans, totaling $170,098 in new equity, on May 15, 2003, June 3, 2003, March 18, 2005 and November 9, 2006, all within the limitations period, and (ii) the single, isolated $9,902 increase in the balance of the purchase money mortgage loan on November 14, 2001, beyond the limitations period. To summarize pertinent documentary evidence:

June 30, 1997: With plaintiff's knowledge and consent, the subject property was acquired and titled solely in defendant who obtained a purchase money mortgage loan in the original principal amount of $202,400. This mortgage was ultimately assigned to Chase Manhattan Bank (Chase) on October 23, 2001.

November 14, 2001: Defendant and Chase executed a Consolidation, Extension and Modification Agreement, which combined the purchase money mortgage loan with a new $9,902 loan contemporaneously borrowed by defendant from Chase. The total principal amount was $204,800, inclusive of the then-outstanding balance of the purchase money mortgage loan. This was not a refinancing or replacement of an existing mortgage loan; rather, by virtue of the Consolidation, Extension and Modification Agreement, it represented merely an increase in the then-outstanding balance of the purchase money [*4]mortgage loan.[FN5]

May 15, 2003: Defendant obtained a $92,800 credit line/home equity loan from Chase (now known as JP Morgan Chase Bank) secured by the subject property. This transaction was a new loan.

June 3, 2003: Defendant obtained a $50,000 open-end revolving credit loan from Fleet National Bank secured by the subject property. This transaction was another new loan.

March 18, 2005: Defendant and Chase (JP Morgan Chase Bank) executed another Consolidation, Extension and Modification Agreement which further increased the then-outstanding balance of the purchase money mortgage loan by a $6,334.29 loan contemporaneously borrowed by defendant from Chase. The total principal amount was $183,000, inclusive of the November 14, 2001 loan. Again, this was not a refinancing or replacement of an existing mortgage loan; rather, it was another increase in the then-outstanding balance of the purchase money mortgage loan.

November 9, 2006: Defendant refinanced all of the mortgage loans on the subject property. Specifically, he took out a new mortgage loan from Ohio Savings Bank in the original principal amount of $386,000, which he used, in part, to satisfy all outstanding mortgage loans on the property. The remainder of the new loan proceeds, estimated by plaintiff at $180,000, was the equity which he took out of the subject property.

Thus, the only transaction beyond the limitations period was a $9,902 increase in the then-outstanding balance of the purchase money mortgage loan on November 14, 2001. Given its nature as merely a loan increase and its objectively insignificant amount of $9,902, this transaction was not an identifiable, wrongful act demonstrating defendant's refusal to convey an interest in the subject property to plaintiff (see Sitkowski v Petzing, 175 AD2d 801, 802 [2d Dept 1991]). It was a far cry from a stand-alone, $20,000 (in 1974 dollars) unauthorized mortgage loan which the Appellate Division, Second Department held in De Laurentis v De Laurentis (47 AD3d 750 [2008], lv denied 11 NY3d 706 [2008]) could trigger the running of the limitations period. Moreover, unlike the De Laurentis case, the loan here was fully repaid by a subsequent mortgage loan within the limitations period. Under the circumstances of this case, therefore, De Laurentis is inapposite. To measure the limitations period from November 14, 2001 — the date of the $9,902 loan increase — would be a clear case of the tail wagging the dog. [*5]

"On a motion to dismiss a cause of action pursuant to CPLR 3211 (a) (5) upon the ground that it is time-barred, the defendant bears the initial burden of establishing, prima facie, that the time in which to sue has expired" (Cottone v Selective Surfaces, Inc., __ AD3d __, 2009 WL 4986530, 2009 NY Slip Op 09605 [2d Dept 2009]). To sustain this burden, the defendant must establish, inter alia, when the plaintiff's cause of action accrued (id.). Here, plaintiff alleges that defendant first repudiated his promise to transfer 50% of the subject real property in June 2008 (Verified Complaint, ¶¶ 14, 16). That being so, defendant's retention of full title to the premises did not become adverse until that time (see Dingeo v Santiago, 87 AD2d 859 [2d Dept 1982]). In addition, plaintiff alleges that "the Defendant took over one hundred eighty thousand ($180,000.00) dollars in equity [from the subject property] and converted the same for Defendant's own use" (Verified Complaint, ¶ 15). As indicated above, all of the major borrowings — $92,800 on May 15, 2003, $50,000 on June 3, 2003, and $386,000 on November 9, 2006 — were within the limitations period. Construing the facts as alleged in the verified complaint in the light most favorable to plaintiff, defendant has failed to establish, prima facie, that the constructive trust claim governed by the six-year limitations period accrued more than six years before the commencement of this action in August 2008. Accordingly, the court adheres to its prior determination on the original motion (see CPLR 2221 [f]).

The foregoing constitutes the decision and order of this court.

E N T E R,

J. S. C. Footnotes

Footnote 1: Defendant is also referred to as David D. Kean in several loan documents.

Footnote 2: See e.g. Augustine v Szwed, 77 AD2d 298, 301 (4th Dept 1980) ("when parties agree that property will be acquired or held in one of their names with the understanding that it will be later transferred, the possession at the time of acquisition is not adverse and it does not become so until the promise to transfer is broken or repudiated"); Schwartz v Houss, 6 Misc 3d 1035 (A), 2005 WL 579152, *2, 2005 NY Slip Op 50308 (U) (Sup Ct, Kings County 2005) ("[t]he six-year Statute of Limitations for a constructive trust did not accrue until defendant announced . . . that he was treating the property as his own").

Footnote 3: Although a list of these documents is attached to the instant motion, defendant has submitted some, but not all, of the copies of the actual documents to the court.

Footnote 4: The actual loan amount was $9,902.21, which is rounded off, for convenience, to $9,902.

Footnote 5: Because the original purchase money mortgage did not permit new advances, defendant simultaneously executed a separate $9,902 mortgage, which was immediately merged with the original purchase money mortgage pursuant to the Consolidation, Extension and Modification Agreement. These circumstances, rather than the name given to the arrangement, are dispositive in determining its nature (see e.g. International Trade Assoc. v Rensselear Polytechnic Inst., 936 F2d 744, 748 [2d Cir1991]; 801 South Fulton Ave. Corp. v Radin, 138 AD2d 561, 562 [2d Dept 1988]).