Opinion
21077/08.
Decided October 7, 2009.
This is an action to foreclose a mortgage.
On June 2, 1987, defendants Peter Epps and Teresa Epps (the Epps defendants) purchased the real property located at 7107 Park Drive East, Kew Gardens, New York (the premises), and their deed to the premises was recorded on June 16, 1987, with the proper tax map designation of Block 6548, Lot 1231. The Epps defendants made this purchase using a $96,000 loan from Ensign Bank, F.S.B. (Ensign), giving in return a mortgage on the premises for the same amount (Mortgage One). Mortgage One was subsequently assigned to State Street Bank and Trust Company (State Street), and that assignment was properly recorded on September 9, 1999.
On December 11, 2003, defendant Peter Epps, as borrower, executed a note with Accredited Home Lenders, Inc. (Accredited), as lender, for $152,000 (the Accredited Note). To secure this loan, the Epps defendants executed a $152,000 mortgage on the premises in favor of Mortgage Electronic Registration System, Inc. as nominee for Accredited (Mortgage Two). Mortgage Two was recorded on March 1, 2004, but with the incorrect lot designation of 1234 instead of 1231.
On June 10, 2004, defendant Musa Ali (Ali) purchased the premises from the Epps defendants for $225,000, taking out a loan from defendant Wells Fargo Bank, N.A. (Wells Fargo) for $202,000 (the Wells Fargo Note), and giving in exchange a mortgage on the premises for that amount (Mortgage Three).
On August 21, 2008, plaintiff commenced this action to foreclose on Mortgage Two. Issue was joined by service of an answer for Ali and Wells Fargo, asserting improper indexing of Mortgage Two as an affirmative defense, and counterclaiming for Mortgage Two's vacatur and removal from record, and for money damages caused by Mortgage Two's cloud on title. Plaintiff served a reply to the counterclaims, asserting a general denial. Plaintiff then, with new counsel, served an amended reply, asserting a number of affirmative defenses, including that the conveyance of the premises from the Epps defendants to Ali is void, being a fraudulent conveyance for the purpose of avoiding claims and liens of creditors, including those of plaintiff and its predecessors in interest, and that plaintiff is entitled to equitable subrogation. The Epps defendants, who reside in Florida, appeared pro se via service of an answer, filed January 13, 2009, containing a general denial.
On March 10, 2009, plaintiff served upon Ali and Wells Fargo deposition notices, a notice for discovery and inspection, a first set of interrogatories, a demand for statements, a demand for experts, and a demand for witnesses. By letter dated April 13, 2009, plaintiff demanded compliance with its discovery demands. No discovery was forthcoming. Ali and Wells Fargo now move for summary judgment dismissing plaintiff's complaint as to them pursuant to CPLR 3212, and to vacate and remove plaintiff's mortgage from the public records. Plaintiff cross-moves for leave to serve and file an amended reply to defendants' counterclaims pursuant to CPLR 3025 (b), striking the pleadings of Ali and Wells Fargo pursuant to CPLR 3126, precluding Ali and Wells Fargo from offering any evidence in support of their positions pursuant to CPLR 3126, compelling Ali and Wells Fargo to comply with plaintiff's discovery demands and notices by a date certain and to appear at an examination before trial at a subsequent date, time, and location certain pursuant to CPLR 3126, and awarding to plaintiff the costs of the cross motion.
In support of their motion, Ali and Wells Fargo submitted their affidavits, the latter's by one Kelly Ball, Process Specialist for Wells Fargo. Ali states in his affidavit that the Epps defendants never informed him of the existence of Mortgage Two, and that he lacked actual notice of Mortgage Two. Ms. Ball, on behalf of Wells Fargo, states in her affidavit that Wells Fargo had no actual notice of Mortgage Two at the time it loaned the funds to Ali to purchase the premises from the Epps defendants.
The affidavits of Ali and Wells Fargo are proof that they were not on actual notice of Mortgage Two, and the undisputed error in indexing proves they were not on constructive notice, either ( see V D Realty USA Corp. v Mitso Group, Inc., 240 AD2d 562, 563). Ali and Wells Fargo have, thus, established prima facie entitlement to judgment as a matter of law ( see Real Property Law § 291; Alvarez v Prospect Hosp., 68 NY2d 320, 324).
Plaintiff asserts, in opposition, that it is entitled to equitable subrogation. "The doctrine of equitable subrogation applies where the funds of a mortgagee are used to satisfy the lien of an existing, known incumbrance when, unbeknown to the mortgagee, another lien on the property exists which is senior to his but junior to the one satisfied with his funds. In order to avoid the unjust enrichment of the intervening, unknown lienor, the mortgagee is entitled to be subrogated to the rights of the senior incumbrance'" ( Pawling Sav. Bank v Jeff Hunt Props., 225 AD2d 678, 680, quoting King v Pelkofski, 20 NY2d 326, 333-334).
Plaintiff states that its predecessor in interest, Accredited, paid off and satisfied at least $78,274.50 of prior liens on the premises on December 11, 2003, consisting of $70,230.17 to satisfy Mortgage One, and $8,044.33 to satisfy a tax judgment encumbering the premises. At the time these payments were made, Mortgage Three did not yet exist. Equitable subrogation, thus, does not apply in this case ( see Bank One v Mon Leang Mui , 38 AD3d 809 , 812). Moreover, plaintiff did not become the assignee of Mortgage Two until August 18, 2008, the date of the assignment from Accredited, and, thus, was on notice of Mortgage Three, which had been recorded in 2004, and which should have led plaintiff to conduct further inquiry ( see Roth v Porush, 281 AD2d 612, 615).
In reply, plaintiff states that "[i]f Ali and Wells Fargo disagree with the assertions in the proposed amendment, then there are issues of fact to be litigated . . ." This is not a correct statement of the law. Rather, the well-settled law is that once the movant for summary judgment has made "a prima facie showing of entitlement to judgment as a matter of law, tendering sufficient evidence to demonstrate the absence of any material issues of fact," as Ali and Wells Fargo have done here, "the burden shifts to the party opposing the motion for summary judgment to produce evidentiary proof in admissible form sufficient to establish the existence of material issues of fact which require a trial of the action" ( Alvarez, 68 NY2d at 325). Plaintiff has failed to submit any such evidence, either in opposition to the motion, or in support of its cross motion, based upon personal knowledge ( see Zuckerman v City of New York, 49 NY2d 557, 562), making only allegations of fraud unsupported by evidence from someone with personal knowledge. Plaintiff has, thus, failed to create a triable issue of fact, and has failed to show a meritorious defense, rendering its cross motion moot, and plaintiff's mere hope that depositions or other discovery will reveal helpful evidence is not a proper basis to postpone determination of the motion ( see CPLR 3212[f]; Conte v Frelen Assoc., LLC , 51 AD3d 620 , 621; Salon v Millinery Syndicate , 47 AD3d 914 , 915; Public Adm'r of Kings County v Tomassetti, 271 AD2d 515). Plaintiff's assertion that Ali declared bankruptcy in 2005 is not only irrelevant, but not true, as Ali and Wells Fargo proved in opposition to the cross motion.
As Mortgage Two has ceased to be a valid lien on the premises, it may be canceled as a cloud on title ( see Seip v Pfeil, 205 Misc 1024, 1026). An award of damages, however, is not warranted, as there has been no showing of entitlement to such damages.
Accordingly, the motion of Ali and Wells Fargo is granted to the extent of dismissing plaintiff's complaint as to them, and canceling and Mortgage Two as a cloud on title. Plaintiff's cross motion is denied in all respects.
Settle order.