Real Property Law

Forgery Claim

Faison v. Lewis

NYLJ 5/13/15, p. 18, col. 1

Court of Appeals (4-3 decision; Majority opinion by Rivera, J., Dissenting opinion by Lippman, Ch., J.)

In an action to set aside a deed and mortgage on the basis of forgery, true owner appealed from the Appellate Division's determination that the claim against a mortgagee bank was time-barred. A divided Court of Appeals reversed, holding that the statute of limitations does not run against forgery claims, even when the claim is advanced against a lender who did not participate in the forgery and who relied on the recorded forged deed.

Percy Gogins and Dorothy Lewis inherited the subject property as tenants-in-common. In May 2000, Lewis conveyed her half-interest to her daughter Tonya. In February 2001, Tonya recorded a “corrected” deed, allegedly conveying both Gogins' and Dorothy's interest to Tonya. Gogins' daughter contends that this corrected deed was a forgery. In 2002, she brought an action on behalf of the estate of her father, who died in 2001, seeking to invalidate the corrected deed. That action was dismissed because the daughter was not the administrator of the estate; her mother had been appointed administrator. The mother's lawyer, now disbarred, took no action with respect to the deed. Meanwhile, in 2009, Tonya borrowed $269.332 from mortgagee, secured by a mortgage on the property. The mortgage was granted in favor of Mortgage Electronic Registration Systems (MERS). Then, in 2010, daughter, who had now been appointed as administrator of her father's estate, brought this action against Dorothy Lewis, Tonya Lewis, mortgagee bank, and MERS, seeking to set aside the deed and mortgage based on the forgery. Supreme Court dismissed the complaint in its entirety on statute of limitations grounds, and the Appellate Division modified to reinstate the complaint against the Lewises and MERS, but affirmed with respect to mortgagee bank. The daughter appealed the dismissal with respect to mortgagee bank.

In reversing, the Court of Appeals majority relied on the rule that a forged deed cannot convey good title and that it is impossible for a person whose claim relies on a forged deed to become a bona fide purchaser. The court held that forgery is a category distinct and apart from fraud, and that principles derived from fraud do not apply to forged deeds.

Chief Judge Lippman, dissenting for himself and Judges Abdus-Salaam and Stein, emphasized that the cases distinguishing forgery from fraud were not statute of limitations cases. The dissenters concluded that forgery claims should be subject to a statute of limitations because with the passage of time, forgery claims would become impossible to defend.

Partition and Sale

Lacorte v. Harley

NYLJ 5/27/15, p. 17, col. 2

Supreme Ct, Suffolk Cty.

(Hudson, J.)

In an action for partition of real property, the court awarded summary judgment ordering a partition and sale, and appointing a referee to determine and report the parties' respective rights in the sale proceeds.

Lacorte and Nolan began a romantic relationship in 2005, the same year they purchased the subject property as tenants-in-common. They jointly executed a mortgage, and leased the property to others. In 2012, Nolan died, and her daughter, Harley, succeeded to her interest. In this action, Lacorte sought partition and sale of the property, and alleged that he was entitled to 80% of the sale proceeds because he contributed a greater proportion of the money needed to close title, and because he had paid almost all costs and maintenance relative to ownership of the property. He sought summary judgment on his complaint seeking a declaration that he holds 80% of the property, and also sought to recover additional sums he paid for maintenance if the court were to determine that he owned only 50% of the property. Harley sought summary judgment establishing that sale proceeds should be distributed equally.

The court granted summary judgment ordering a partition and sale, noting that both parties agreed to that relief. The court also held that Lacorte would be entitled to a greater share in the proceeds based on the equities, but concluded that an accounting would be necessary in order to determine how much of the proceeds each cotenant should receive. The court noted that the presumption that each tenant in common is entitled to an equal share “may be rebutted,” and held that Harley was not entitled to summary judgment on her claim to 50% of the proceeds. The court referred the matter to a referee to determine and report on the equities between the parties.

Foreclosure Proceeding

Jamison v. Aquai

NYLJ 5/18/15, p. 25, col. 5

AppDiv, Second Dept.

(memorandum opinion)

In an action for a declaration that plaintiff is the owner of the subject real property, plaintiff appealed from Supreme Court's dismissal of its cause of action to stay a foreclosure proceeding. The Appellate Division reversed and denied mortgagee bank's motion to dismiss, holding that plaintiff was not collaterally estopped from asserting her interest in the property.

When mortgagee bank brought a foreclosure action, plaintiff, who was not the record titleholder of the property, moved to intervene. Supreme Court denied the motion without explanation, indicating that it was not determining whether plaintiff was a necessary or indispensable party. Plaintiff then brought this declaratory judgment action, and moved to stay the foreclosure proceeding. Mortgagee bank moved to dismiss the claim for a stay of the foreclosure proceeding, arguing that plaintiff's participation in the foreclosure proceeding collaterally estopped her from challenging the foreclosure proceeding in the declaratory judgment action. Supreme Court agreed and plaintiff appealed.

In reversing, the Appellate Division emphasized that the bank had failed to establish that plaintiff's interest in the property had been determined in the foreclosure proceeding because plaintiff's motion to intervene was denied without explanation. The court also noted that so long as plaintiff was not named as a party in the foreclosure proceeding, the foreclosure sale would be void with respect to the plaintiff.

Restrictive Covenants

Fader v. Taconic Tract Development LLC

NYLJ 5/22/15, p. 22, col. 1

AppDiv, Second Dept.

(memorandum opinion)

In an action by neighbor for a judgment declaring that proposed construction of an access road would violate restrictive covenants, landowner appealed from a Supreme Court order granting summary judgment to neighbor. The Appellate Division affirmed, holding that neighbor had standing and that the proposed construction would violate the covenants.

Neighbor and landowner own adjacent parcels in the Countrywide subdivision. The developer of that subdivision imposed a covenant on landowner's parcel requiring that the parcel be maintained as open space in its natural state in perpetuity. Landowner and her husband and an LLC in which the husband is the principal own land outside the Countrywide subdivision, and sought to develop this land. The town planning board gave preliminary approval for a 16-unit subdivision that would build a roadway across landowner's Countrywide parcel as the principal means of access to the new subdivision. Neighbor then brought this action for a declaratory judgment, and Supreme Court determined that the proposed roadway would violate the restrictive covenants.

In affirming, the Appellate Division first held that because the covenants were part of a common development scheme created for the benefit of all homeowners in the Countrywide subdivision, neighbor had standing to enforce the covenants. The court then held that neighbor had established, prima facie, that the proposed road construction would violate the covenants, and also held that landowner had not raised a triable issue of fact in opposition to neighbors' motion for summary judgment.

Title Insurer

JBGR, LLC v. Chicago Title Insurance Co.

NYLJ 5/22/15, p. 22, col. 4

AppDiv, Second Dept.

(memorandum opinion)

In an action to recover damages for breach of a title insurance policy, title insurer appealed from Supreme Court's denial of its summary judgment motion. The Appellate Division affirmed, rejecting title insurer's contention that collateral estoppel barred the insured's claim.

In 1994, Elliott purchased 286 acres of land in order to develop a residential community. He signed a declaration limiting the total number of units to 140. That declaration was recorded in 1999, and he sold his interest in the project to Costello in that year. By 2005, all 140 units had been built, and Costello asked Elliott whether he would be interested in repurchasing the property. Elliott arranged for six LLCs, in one of which Elliott was the principal, to purchase the property with the intent of building 55 additional residences. The purchasers gave Costello a note for $2.97 million, secured by the property. The LLC purchasers (other than Elliott) were allegedly unaware of the declaration Elliott had signed and recorded. These LLCs obtained title insurance from Chicago Title. The policy excluded any defect in title “created, suffered, assumed or agreed to by the insured claimant.” The note to Costello had not been paid when, in 2009, the LLCs learned of the declaration.

In 2011, Costello brought an action against the LLCs on the note. The LLCs then brought this action against the title insurer. In 2012, Supreme Court awarded summary judgment to Costello, writing that the LLCs' “conclusory and unsubstantiated allegations that they were unaware of the declaration ' is unavailing in light of the fact that defendant Elliott conceded in his affidavit that he executed same.” In this action against the title insurer, the title insurer argued that the determination in the Costello action collaterally estopped the LLCs from contending that they were unaware of the declaration. Supreme Court nevertheless denied the title insurer's summary judgment motion.

In affirming, the Appellate Division emphasized that the only issue necessarily determined in the Costello action was that the LLCs were liable to Costello on the unpaid note. That determination did not collaterally estop the LLCs in this action. Moreover, the court held that the knowledge of Elliott as an agent could not be imputed to the other LLCs without clear proof that Elliott had the declaration in mind at the time of the subsequent purchaser of the property. Here, title insurer failed to provide such proof. As a result, the title insurer was not entitled to summary judgment.

'

Forgery Claim

Faison v. Lewis

NYLJ 5/13/15, p. 18, col. 1

Court of Appeals (4-3 decision; Majority opinion by Rivera, J., Dissenting opinion by Lippman, Ch., J.)

In an action to set aside a deed and mortgage on the basis of forgery, true owner appealed from the Appellate Division's determination that the claim against a mortgagee bank was time-barred. A divided Court of Appeals reversed, holding that the statute of limitations does not run against forgery claims, even when the claim is advanced against a lender who did not participate in the forgery and who relied on the recorded forged deed.

Percy Gogins and Dorothy Lewis inherited the subject property as tenants-in-common. In May 2000, Lewis conveyed her half-interest to her daughter Tonya. In February 2001, Tonya recorded a “corrected” deed, allegedly conveying both Gogins' and Dorothy's interest to Tonya. Gogins' daughter contends that this corrected deed was a forgery. In 2002, she brought an action on behalf of the estate of her father, who died in 2001, seeking to invalidate the corrected deed. That action was dismissed because the daughter was not the administrator of the estate; her mother had been appointed administrator. The mother's lawyer, now disbarred, took no action with respect to the deed. Meanwhile, in 2009, Tonya borrowed $269.332 from mortgagee, secured by a mortgage on the property. The mortgage was granted in favor of Mortgage Electronic Registration Systems (MERS). Then, in 2010, daughter, who had now been appointed as administrator of her father's estate, brought this action against Dorothy Lewis, Tonya Lewis, mortgagee bank, and MERS, seeking to set aside the deed and mortgage based on the forgery. Supreme Court dismissed the complaint in its entirety on statute of limitations grounds, and the Appellate Division modified to reinstate the complaint against the Lewises and MERS, but affirmed with respect to mortgagee bank. The daughter appealed the dismissal with respect to mortgagee bank.

In reversing, the Court of Appeals majority relied on the rule that a forged deed cannot convey good title and that it is impossible for a person whose claim relies on a forged deed to become a bona fide purchaser. The court held that forgery is a category distinct and apart from fraud, and that principles derived from fraud do not apply to forged deeds.

Chief Judge Lippman, dissenting for himself and Judges Abdus-Salaam and Stein, emphasized that the cases distinguishing forgery from fraud were not statute of limitations cases. The dissenters concluded that forgery claims should be subject to a statute of limitations because with the passage of time, forgery claims would become impossible to defend.

Partition and Sale

Lacorte v. Harley

NYLJ 5/27/15, p. 17, col. 2

Supreme Ct, Suffolk Cty.

(Hudson, J.)

In an action for partition of real property, the court awarded summary judgment ordering a partition and sale, and appointing a referee to determine and report the parties' respective rights in the sale proceeds.

Lacorte and Nolan began a romantic relationship in 2005, the same year they purchased the subject property as tenants-in-common. They jointly executed a mortgage, and leased the property to others. In 2012, Nolan died, and her daughter, Harley, succeeded to her interest. In this action, Lacorte sought partition and sale of the property, and alleged that he was entitled to 80% of the sale proceeds because he contributed a greater proportion of the money needed to close title, and because he had paid almost all costs and maintenance relative to ownership of the property. He sought summary judgment on his complaint seeking a declaration that he holds 80% of the property, and also sought to recover additional sums he paid for maintenance if the court were to determine that he owned only 50% of the property. Harley sought summary judgment establishing that sale proceeds should be distributed equally.

The court granted summary judgment ordering a partition and sale, noting that both parties agreed to that relief. The court also held that Lacorte would be entitled to a greater share in the proceeds based on the equities, but concluded that an accounting would be necessary in order to determine how much of the proceeds each cotenant should receive. The court noted that the presumption that each tenant in common is entitled to an equal share “may be rebutted,” and held that Harley was not entitled to summary judgment on her claim to 50% of the proceeds. The court referred the matter to a referee to determine and report on the equities between the parties.

Foreclosure Proceeding

Jamison v. Aquai

NYLJ 5/18/15, p. 25, col. 5

AppDiv, Second Dept.

(memorandum opinion)

In an action for a declaration that plaintiff is the owner of the subject real property, plaintiff appealed from Supreme Court's dismissal of its cause of action to stay a foreclosure proceeding. The Appellate Division reversed and denied mortgagee bank's motion to dismiss, holding that plaintiff was not collaterally estopped from asserting her interest in the property.

When mortgagee bank brought a foreclosure action, plaintiff, who was not the record titleholder of the property, moved to intervene. Supreme Court denied the motion without explanation, indicating that it was not determining whether plaintiff was a necessary or indispensable party. Plaintiff then brought this declaratory judgment action, and moved to stay the foreclosure proceeding. Mortgagee bank moved to dismiss the claim for a stay of the foreclosure proceeding, arguing that plaintiff's participation in the foreclosure proceeding collaterally estopped her from challenging the foreclosure proceeding in the declaratory judgment action. Supreme Court agreed and plaintiff appealed.

In reversing, the Appellate Division emphasized that the bank had failed to establish that plaintiff's interest in the property had been determined in the foreclosure proceeding because plaintiff's motion to intervene was denied without explanation. The court also noted that so long as plaintiff was not named as a party in the foreclosure proceeding, the foreclosure sale would be void with respect to the plaintiff.

Restrictive Covenants

Fader v. Taconic Tract Development LLC

NYLJ 5/22/15, p. 22, col. 1

AppDiv, Second Dept.

(memorandum opinion)

In an action by neighbor for a judgment declaring that proposed construction of an access road would violate restrictive covenants, landowner appealed from a Supreme Court order granting summary judgment to neighbor. The Appellate Division affirmed, holding that neighbor had standing and that the proposed construction would violate the covenants.

Neighbor and landowner own adjacent parcels in the Countrywide subdivision. The developer of that subdivision imposed a covenant on landowner's parcel requiring that the parcel be maintained as open space in its natural state in perpetuity. Landowner and her husband and an LLC in which the husband is the principal own land outside the Countrywide subdivision, and sought to develop this land. The town planning board gave preliminary approval for a 16-unit subdivision that would build a roadway across landowner's Countrywide parcel as the principal means of access to the new subdivision. Neighbor then brought this action for a declaratory judgment, and Supreme Court determined that the proposed roadway would violate the restrictive covenants.

In affirming, the Appellate Division first held that because the covenants were part of a common development scheme created for the benefit of all homeowners in the Countrywide subdivision, neighbor had standing to enforce the covenants. The court then held that neighbor had established, prima facie, that the proposed road construction would violate the covenants, and also held that landowner had not raised a triable issue of fact in opposition to neighbors' motion for summary judgment.

Title Insurer

JBGR, LLC v. Chicago Title Insurance Co.

NYLJ 5/22/15, p. 22, col. 4

AppDiv, Second Dept.

(memorandum opinion)

In an action to recover damages for breach of a title insurance policy, title insurer appealed from Supreme Court's denial of its summary judgment motion. The Appellate Division affirmed, rejecting title insurer's contention that collateral estoppel barred the insured's claim.

In 1994, Elliott purchased 286 acres of land in order to develop a residential community. He signed a declaration limiting the total number of units to 140. That declaration was recorded in 1999, and he sold his interest in the project to Costello in that year. By 2005, all 140 units had been built, and Costello asked Elliott whether he would be interested in repurchasing the property. Elliott arranged for six LLCs, in one of which Elliott was the principal, to purchase the property with the intent of building 55 additional residences. The purchasers gave Costello a note for $2.97 million, secured by the property. The LLC purchasers (other than Elliott) were allegedly unaware of the declaration Elliott had signed and recorded. These LLCs obtained title insurance from Chicago Title. The policy excluded any defect in title “created, suffered, assumed or agreed to by the insured claimant.” The note to Costello had not been paid when, in 2009, the LLCs learned of the declaration.

In 2011, Costello brought an action against the LLCs on the note. The LLCs then brought this action against the title insurer. In 2012, Supreme Court awarded summary judgment to Costello, writing that the LLCs' “conclusory and unsubstantiated allegations that they were unaware of the declaration ' is unavailing in light of the fact that defendant Elliott conceded in his affidavit that he executed same.” In this action against the title insurer, the title insurer argued that the determination in the Costello action collaterally estopped the LLCs from contending that they were unaware of the declaration. Supreme Court nevertheless denied the title insurer's summary judgment motion.

In affirming, the Appellate Division emphasized that the only issue necessarily determined in the Costello action was that the LLCs were liable to Costello on the unpaid note. That determination did not collaterally estop the LLCs in this action. Moreover, the court held that the knowledge of Elliott as an agent could not be imputed to the other LLCs without clear proof that Elliott had the declaration in mind at the time of the subsequent purchaser of the property. Here, title insurer failed to provide such proof. As a result, the title insurer was not entitled to summary judgment.

'