| US Bank N.A. v Gestetner |
| 2013 NY Slip Op 00972 [103 AD3d 962] |
| February 14, 2013 |
| Appellate Division, Third Department |
| US Bank National Association, as Trustee for Credit SuisseFirst Boston MBS 2004-4, Respondent, v Sandor Gestetner et al., Defendants, andSteven D. Sklar et al., Appellants. |
—[*1] Maynard, O'Connor, Smith & Catalinotto, LLP, Albany (Justin W. Gray of counsel)and Hogan & Lovelles U.S., LLP, New York City (Renee Garcia of counsel), forrespondent.
Garry, J. Appeal from an order of the Supreme Court (Cahill, J.), entered February23, 2012 in Sullivan County, which, among other things, denied a motion by defendantsSteven D. Sklar and Erminia Sklar to dismiss the amended complaint against them.
In 2007, plaintiff commenced this action to foreclose a mortgage on real property inthe Town of Tusten, Sullivan County executed by defendant Sandor Gestetner inFebruary 2004 and later assigned to plaintiff. Defendant Steven D. Sklar (hereinafterdefendant) was named as the record owner of the mortgaged premises. Defendantinterposed a pro se answer, and Gestetner defaulted. In 2008, defendant Erminia Sklar(hereinafter Sklar), who is defendant's wife, sought to intervene in the action, assertingthat she and defendant (hereinafter collectively referred to as defendants) were co-ownersof the property, that a forged power of attorney was used to transfer Sklar's interest toGestetner in February 2004 and that this conveyance and plaintiff's mortgage [*2]were executed without Sklar's knowledge orconsent.[FN1]Plaintiff opposed Sklar's intervention. Supreme Court (Sackett, J.) denied Sklar'sapplication, she appealed and this Court granted her leave to intervene (74 AD3d 1538[2010]). Thereafter, Sklar served an answer that, among other things, asserted acounterclaim for a judgment pursuant to RPAPL article 15 declaring that the conveyanceto Gestetner and plaintiff's mortgage are void.
In June 2011, plaintiff filed an amended complaint that, among other things, assertednew causes of action against defendants and Gestetner for fraud and conspiracy,restitution and/or unjust enrichment and subrogation and/or an equitable mortgage.Defendants moved to dismiss the amended complaint upon the ground, as relevant here,that the claims were time-barred (see CPLR 3211 [a] [5]). Supreme Court deniedthe motion, and defendants appeal.
Defendants assert that Supreme Court erred in finding that plaintiff's new claimsagainst them were timely. The limitations period for a fraud claim is the greater of sixyears after the cause of action accrued or two years after it could have been discoveredwith reasonable diligence (see CPLR 213 [8]).[FN2]We agree with Supreme Court that the fraud cause of action accrued no later thanFebruary 2004, and that plaintiff could not reasonably have discovered it before May2008, when Sklar first sought to enter the foreclosure action. The limitations period forunjust enrichment is six years from the occurrence of the wrongful acts (see Elliott v QwestCommunications Corp., 25 AD3d 897, 898 [2006]) and, as a claim in equity, thesame period applies to plaintiff's cause of action seeking an equitable mortgage(see CPLR 213 [1]; Roslyn Union Free School Dist. v Barkan, 16 NY3d 643,650 [2011]). Plaintiff's amended complaint was filed in June 2011, roughly 16 monthsafter expiration of the six-year limitations periods and 13 months after expiration of thetwo-year fraud discovery period.
Supreme Court found that the claims were nonetheless timely because the statutes oflimitations were tolled by two excludable periods of time. The shorter of these periodswas an automatic stay of three to seven months resulting from defendant's chapter 7bankruptcy filing in October 2010. Standing alone, this stay was not long enough to saveany of plaintiff's claims and, in any event, applied only to proceedings against defendant,with no effect upon the claims against Sklar (see United States of Am. v Lyons,292 AD2d 683, 684 n [2002], lv denied 98 NY2d 606 [2002]). As to the longerperiod, Supreme Court found that the running of the limitations period was tolled duringthe pendency of Sklar's motion to intervene, initially filed in November 2008 andultimately decided by this Court in June 2010. We disagree. There is "no [*3]authority in the law for such a toll" (State of New Yorkv General Elec. Co., 199 AD2d 595, 598 [1993]). Unlike a timely motion for leaveto amend a complaint to add a defendant, which tolls the running of the statute oflimitations as the proposed amendment must await judicial determination (see Perez vParamount Communications, 92 NY2d 749, 754 [1999]), Sklar's application tointervene did not prevent plaintiff from amending its complaint. Plaintiff could havesought leave to add claims against defendant and Gestetner at any time, without regard tothe outcome of Sklar's motion. As to Sklar, plaintiff was not required to elect betweenopposing her intervention and raising timely claims against her, but could have moved inthe alternative for leave to amend the complaint in the event that its opposition failed.The rule enunciated in Perez, that the statute is tolled when the proposedpleadings are attached to a motion for leave to amend (see id. at 755-756), is notimplicated here since plaintiff neither sought to amend its complaint nor supplied noticeof the proposed amendments until after the limitations periods had expired.
Nonetheless, we find some of plaintiff's new claims timely based upon the relationback doctrine (see CPLR 203 [f]). Contrary to the parties' arguments, thethree-step inquiry applied in determining whether a complaint may be amended to add anew defendant does not apply to Sklar (see e.g. Buran v Coupal, 87 NY2d 173,178 [1995]; De Sanna vRockefeller Ctr., Inc., 9 AD3d 596, 597-598 [2004]). Having sought to makeherself a defendant and assert a counterclaim, Sklar was already a party to the actionwhen plaintiff filed its amended complaint. As she had full knowledge of plaintiff'soriginal claims, the difficult issues to be considered before belatedly adding a stranger topending litigation are not posed (see Duffy v Horton Mem. Hosp., 66 NY2d 473,477 [1985]). Plaintiff's claims against Sklar—as with defendant—aredeemed to have been interposed at the time of its original complaint, to the extent that it"[gave] notice of the transactions, occurrences, or series of transactions or occurrences,to be proved pursuant to the amended pleading" (CPLR 203 [f]).
Plaintiff's cause of action seeking an equitable mortgage requires proof of "theexistence of a clear intent between the parties that certain property be held, given ortransferred as security for an obligation" (New York TRW Tit. Ins. v Wade's Can. Inn& Cocktail Lounge, 199 AD2d 661, 664 [1993] [internal quotation marks, bracketsand citation omitted]; see Moonv Moon, 6 AD3d 796, 797-798 [2004]). Such proof arises directly from thetransactions and events alleged in plaintiff's original foreclosure claim. As this claim"simply adds a new theory of recovery arising from the same occurrence upon which theoriginal claims are grounded," it relates back to the original complaint (Leclaire v Fort Hudson NursingHome, Inc., 52 AD3d 1101, 1102 [2008]). The unjust enrichment claim requiresa showing that defendants were enriched at plaintiff's expense and that "it is againstequity and good conscience to permit [them] to retain what is sought to be recovered" (Mandarin Trading Ltd. vWildenstein, 16 NY3d 173, 182 [2011] [internal quotation marks and citationsomitted]; accord Augur vAugur, 90 AD3d 1111, 1112 [2011]). Plaintiff's assertion that defendants wouldbe unjustly enriched if permitted to retain the benefits of its unpaid mortgage loan isbased upon the same transactions described in the original foreclosure complaint and isthus timely under the relation back doctrine.
We reach a different conclusion as to the cause of action for fraud. "The sine qua nonof the relation back doctrine is notice, and the requisite notice must be contained in theoriginal pleading" (Lawyers'Fund for Client Protection of the State of N.Y. v JP Morgan Chase Bank, N.A., 80AD3d 1129, 1130 [2011] [internal quotation marks, brackets and citations omitted];see August Bohl Contr. Co.,Inc. v L.A. Swyer Co., Inc., 74 AD3d 1649, 1650-1651 [2010]). Here, nothingin the original complaint gave notice of the conduct that plaintiff now alleges constituted[*4]a fraudulent scheme involving Gestetner, defendantand Sklar. Further, after Sklar made claims and submitted evidence—such as theallegedly forged power of attorney—that should, with reasonable diligence, haveapprised plaintiff of the alleged fraud, it waited more than two years to amend itscomplaint. Accordingly, the relation back doctrine does not save this claim (seeLindsey v Robins Co., 60 NY2d 417, 429 [1983]). It is unnecessary to addressdefendants' further contention that the fraud claim was defectively pleaded.
Mercure, J.P., Rose and Lahtinen, JJ., concur. Ordered that the order is modified, onthe law, without costs, by reversing so much thereof as denied the motion of defendantsSteven D. Sklar and Erminia Sklar to dismiss the cause of action against them for fraudand conspiracy; motion granted to that extent and said cause of action dismissed; and, asso modified, affirmed.
Footnote 1: Following the February2004 transactions, Gestetner executed a series of deeds that conveyed portions of hisinterest in the property back to defendant until, by June 2006, all of Gestetner's interesthad been so conveyed and defendant was the sole record owner of the property.
Footnote 2: Plaintiff denominatedthis cause of action "fraud and conspiracy." As no independent cause of action isrecognized for civil conspiracy to commit a fraud (see Snyder v Puente De BrooklynRealty Corp., 297 AD2d 432, 435 [2002], lv denied 99 NY2d 506 [2003]),the timeliness of plaintiff's claim that defendants joined in a fraudulent scheme is fullygoverned by the statute of limitations applicable to fraud.