| Sabbatini v Galati |
| 2007 NY Slip Op 06973 [43 AD3d 1136] |
| September 25, 2007 |
| Appellate Division, Second Department |
| Nicholas Sabbatini, Appellant, v Elizabeth Galati, asExecutrix of Benito Galati, Deceased, et al., Defendants, and Elizabeth Galati,Respondent. |
—[*1] Nunzio Pecoraro, Douglaston, N.Y., for respondent.
In an action, inter alia, to foreclose a mortgage, the plaintiff appeals from an order of theSupreme Court, Queens County (Nelson, J.), entered September 30, 2005, which granted themotion of the defendant Elizabeth Galati for summary judgment dismissing the complaint insofaras asserted against her in her individual capacity.
Ordered that the order is affirmed, with costs.
In January 1994, to secure payment of a debt, the defendants Benito Galati and Maria Galatiexecuted a second mortgage in favor of the plaintiff on real property they owned in Long IslandCity. The plaintiff did not record the mortgage. Several months later, on July 11, 1994, theplaintiff obtained a confession of judgment from Benito Galati based on the same mortgage debt.The plaintiff filed the confession of judgment on November 2, 1994 but did not attempt toexecute on his judgment. Although he testified at his deposition that Benito Galati was "havingfinancial difficulties and that the [real property] as well as other business entities the Galatis hadwere being foreclosed," the plaintiff further testified that he decided not to pursue enforcement ofthe judgment because he felt that retaining an attorney would be expensive and because he hadhis own business problems. Meanwhile, on July 19, 1994 Benito Galati and Maria Galatiexecuted another mortgage on the real property, this one in favor of Joseph Gallo, securing a debtthey allegedly owed to Gallo [*2]in the sum of $300,000.
In August 1994 the bank that held the first mortgage on the real property, Astoria FederalSavings and Loan Association (hereinafter Astoria), commenced an action to foreclose itsmortgage. The plaintiff was not made a party to that action, and he does not claim that he madeany effort to bring his unrecorded liens to the attention of the parties to that action. A judgmentof foreclosure and sale ultimately was entered, and the real property was sold to Gallo at aforeclosure sale held on September 21, 1995. Approximately five years later, on August 31,2000, Gallo conveyed the property to Elizabeth Galati, the daughter of Benito Galati and MariaGalati.
On April 4, 2003 the plaintiff commenced an action (hereinafter the original action) againstthe Galatis and Gallo, among others, inter alia, to set aside the conveyance from Gallo toElizabeth Galati, to restore title to Benito Galati and Maria Galati, and to foreclose his mortgage,alleging that the Galatis and Gallo engaged in a fraudulent scheme to render Benito Galati andMaria Galati judgment proof. The Supreme Court granted the motion of the defendant ElizabethGalati for summary judgment dismissing the complaint in the original action insofar as assertedagainst her finding, inter alia, that the original action was time-barred under the statute oflimitations applicable to actions based on fraud (see CPLR 213 [8]). On appeal, thisCourt affirmed on the alternative ground that the plaintiff had failed to establish, as a conditionprecedent to the commencement of the action, that he had caused an execution of judgment to beissued and that it was returned unsatisfied. We thus held that the action was barred by theplaintiff's failure to comply with RPAPL 1301 (1). In light of our determination, we found noreason to address the remaining contentions of the parties (see Sabbatini v Galati, 14 AD3d 547, 548 [2005]).
The plaintiff thereafter caused an execution of judgment to be issued, which was returnedunsatisfied by the sheriff. The plaintiff then commenced this action for the same relief as wasdemanded in the original action, seeking the benefit of CPLR 205 (a), which permits a plaintiff tocommence a new action upon the same transaction or occurrence or series of transactions oroccurrences within six months after termination of a prior action, provided that the prior actionwas timely commenced and was not terminated, inter alia, by a final judgment upon the merits.
Elizabeth Galati moved for summary judgment dismissing the complaint insofar as assertedagainst her in her individual capacity, arguing, inter alia, that res judicata and collateral estoppelbarred the instant action, and that, in any event, the original action was untimely commenced.The Supreme Court granted the motion, reasoning that its prior finding of untimeliness was notdisturbed by our decision and order on appeal in the original action, and implicitly holding thatthe action was barred by res judicata and collateral estoppel. The plaintiff appeals. During thependency of the appeal, Benito Galati died and Elizabeth Galati, as administratrix of his estate,was substituted for him.
Although the Supreme Court erred in granting Elizabeth Galati's motion for summaryjudgment dismissing the complaint insofar as asserted against her in her individual capacity tothe extent its determination was premised on the doctrines of res judicata and collateral estoppel,we nevertheless affirm the order on the ground that the action is barred by the statute oflimitations.
Compliance with RPAPL 1301 (1) is a condition precedent to an action to foreclose amortgage. Dismissal of a complaint for the failure to satisfy a condition precedent to suit is not a"final judgment upon the merits" for the purposes of CPLR 205 (a) (see Carrick v CentralGen. Hosp., [*3]51 NY2d 242, 251-252 [1980]; Wilson v New York City Hous. Auth.,15 AD3d 572, 573 [2005]; Knotts v City of New York, 6 AD3d 664, 665 [2004]). Therefore,the plaintiff was entitled to the benefit of CPLR 205 (a) if the original action were timelycommenced, and the dismissal of the original action would not give rise to res judicata orcollateral estoppel in the second action. Contrary to the determination of the Supreme Court,collateral estoppel does not bar relitigation of the issue of the timeliness of the original action, anissue not finally determined against the plaintiff on the prior appeal (see generally Ryan vNew York Tel. Co., 62 NY2d 494, 500 [1984]). Elizabeth Galati's characterization of thisCourt's decision and order as articulating an "additional" ground for dismissal, while notupsetting the Supreme Court's findings as to the statute of limitations, misapprehends thedecision and order of this Court, which based its affirmance only on RPAPL 1301 (1) andexpressly stated it was not addressing any remaining issues (see Sabbatini v Galati, 14 AD3d 547 [2005], supra).
The original action, filed on April 4, 2003, however, was untimely commenced since thegravamen of the plaintiff's two causes of action was actual fraud (see CPLR 213 [8];Brick v Cohn-Hall-Marx Co., 276 NY 259, 264 [1937]; Doe v Jacobs, 19 AD3d 641, 642[2005]; Gold Sun Shipping v Ionian Transp., 245 AD2d 420, 421 [1997]). Thus, theplaintiff had the later of six years from the date his cause of action accrued or two years from thetime he discovered, or with reasonable diligence could have discovered, the fraud in order tocommence the original action (see CPLR 213 [8]; Liberty Co. v Boyle, 272AD2d 380, 381 [2000]; Leone v Sabbatino, 235 AD2d 460, 461 [1997]; Bernstein vLa Rue, 120 AD2d 476, 478 [1986]). The causes of action accrued no later than November13, 1995, when Gallo acquired a referee's deed to the real property as a result of Astoria'sforeclosure of the first mortgage. The original action was commenced more than six years later.Nothing Elizabeth Galati allegedly did in acquiring title on August 31, 2000 added to theplaintiff's alleged losses, and thus her conduct may not be deemed to give rise to a new orseparate cause of action, nor did her conduct delay or extend the accrual of the causes of actionalleging fraud.
The plaintiff bears the burden of establishing that he could not have, with reasonablediligence, discovered the fraud earlier than two years before commencing the original action(see Julian v Carroll, 270 AD2d 457, 457-458 [2000]; Hillman v City of New York,263 AD2d 529, 529-530 [1999]; Lefkowitz v Appelbaum, 258 AD2d 563 [1999]).He failed to satisfy this burden. Indeed, the record reveals that he knew enough by the time herecorded Benito Galati's confession of judgment on November 2, 1994 to put him on notice ofthe alleged fraud. By then, no reasonably diligent creditor in the plaintiff's circumstances wouldhave failed to uncover the objective facts on which the plaintiff now bases hiscomplaint—the execution, tender, and recording of an allegedly fraudulent deed in favor ofGallo.
Accordingly, the action is time-barred, and the Supreme Court properly granted the motionof Elizabeth Galati for summary judgment dismissing the complaint insofar as asserted againsther in her individual capacity.
In view of this disposition, it is unnecessary to address the parties' remaining contentions.
Finally, we decline the request of Elizabeth Galati, in her individual capacity, to awardsanctions against the plaintiff on this appeal. Crane, J.P., Goldstein, Skelos and Carni, JJ.,concur.