| Greenpoint Mtge. Funding, Inc. v Stewart Tit. Ins. Co. |
| 2008 NY Slip Op 02552 [49 AD3d 687] |
| March 18, 2008 |
| Appellate Division, Second Department |
| Greenpoint Mortgage Funding, Inc., Respondent, v StewartTitle Insurance Company, Appellant. |
—[*1] Cullen and Dykman LLP, Garden City, N.Y. (Douglas J. Bohn and Marianne McCarthy ofcounsel), for respondent.
In an action to recover damages for breach of a title insurance policy, the defendant appealsfrom (1) an order of the Supreme Court, Nassau County (Austin, J.), entered August 15, 2006,which granted the plaintiff's motion for summary judgment on the complaint and dismissing thecounterclaim, and denied its cross motion for summary judgment dismissing the complaint andon its counterclaim, and (2) an amended judgment of the same court dated November 1, 2006,which, upon the order, is in favor of the plaintiff and against it in the principal sum of $402,500.
Ordered that the appeal from the order is dismissed; and it is further,
Ordered that the amended judgment is reversed, on the law, the plaintiff's motion forsummary judgment on the complaint and dismissing the counterclaim is denied, the order ismodified accordingly, and the matter is remitted to the Supreme Court, Nassau County, forfurther proceedings on the complaint and the counterclaim; and it is further,[*2]
Ordered that one bill of costs is awarded to the defendant.
The appeal from the intermediate order must be dismissed because the right of direct appealtherefrom terminated with the entry of judgment in the action (see Matter of Aho, 39NY2d 241, 248 [1976]). The issues raised on the appeal from the order are brought up for reviewand have been considered on the appeal from the amended judgment (see CPLR 5501 [a][1]).
Jack Beige, an attorney, and Louis V. Crispino (hereinafter Louis) were principals in RoyalMortgage Bankers, Inc. (hereinafter Royal), a licensed mortgage banking company. Royalentered into an agreement with the plaintiff Greenpoint Mortgage Funding, Inc. (hereinafterGreenpoint) pursuant to which Royal agreed to originate and take applications for mortgageloans. Greenpoint agreed to evaluate, among other things, the applicant's credit and the value ofthe real property in question. If the applicant met Greenpoint's underwriting requirements,Greenpoint would "table fund" the mortgage loan, which was made by Royal to the applicant, bywiring the funds necessary for the loan to a designated account. Royal would then simultaneouslyassign the mortgage and the promissory note to Greenpoint.
In March 1999 Louis submitted an application to Royal for a mortgage loan secured by hishome in Suffolk County, in order to refinance the existing indebtedness encumbering his home.The home was owned by Louis and his wife Linda Crispino (hereinafter Linda) as tenants by theentirety. It is undisputed that the mortgage loan was to be issued to Louis only. It is alsoundisputed that the transaction required Linda to execute a deed conveying her interest in thehome to Louis. After evaluating the application, Greenpoint agreed to "table fund" a mortgageloan in the amount of $402,500. Greenpoint also approved Beige to supervise the closing of theloan. The defendant Stewart Title Insurance Company (hereinafter Stewart) issued a policyinsuring the mortgage in the amount of $402,500. The policy indicated that title in the propertywas vested solely in Louis's name, and that "Royal Mortgage Brokers Inc., its successors and/orassigns" was the insured party.
At the closing of the loan on June 23, 1999 a deed purportedly conveying Linda's interest inthe home to Louis (hereinafter the deed) was presented. The following facts are undisputed.Linda was not present at the closing, and, other than the title closer's inquiry to Louis as towhether his wife were alive, there was no attempt made to verify what purported to be Linda'ssignature on the deed. Moreover, Beige was not present at the closing. Instead, he designated anemployee of Royal, who was a notary public but not an attorney, to supervise the closing of theloan. The employee notarized Linda's signature on the deed. All of the loan and closingdocuments were prepared by Greenpoint, and Greenpoint provided Beige with specific closinginstructions. Greenpoint "table funded" the mortgage loan by wiring the funds directly intoBeige's escrow account, Royal assigned the mortgage and note to Greenpoint, and Beigesubsequently disbursed those funds to, among others, Louis and the parties already holdingmortgages on the property. Louis died in January 2001 and, shortly before his death, he admittedto Linda that he participated in an illegal conveyance of her interest in the home in 1999.
In March 2001 Linda commenced an action (hereinafter the Linda Crispino action), inter alia,to set aside the deed because her signature on the deed was forged, and for a judgment declaringthat the mortgage and note that had been assigned to Greenpoint by Royal are nullities. Stewartagreed to defend Greenpoint in the Linda Crispino action under the policy, but it reserved itsrights to assert any defenses and to seek recovery of the attorney's fees and costs in defendingGreenpoint if it subsequently determined that Greenpoint was not covered by the policy. After anonjury trial, [*3]the Supreme Court, Suffolk County, found thatLouis forged Linda's signature on the deed. The court issued a "partial judgment" declaring thatthe deed is null and void, and declaring that the mortgage is null and void because Greenpoint'sinterest in the property had been extinguished upon Louis's death. Greenpoint appealed to thisCourt from stated portions of the partial judgment. By decision and order dated April 14, 2003,this Court affirmed the partial judgment insofar as appealed from (see Crispino v GreenpointMtge. Corp., 304 AD2d 608 [2003]), holding that the Supreme Court correctly set aside thedeed and the mortgage, that Greenpoint was the assignee of the mortgage, and that Royal was theassignor of the mortgage (id. at 609).
Greenpoint subsequently requested that Stewart indemnify its loss under the policy. Stewartdenied the claim, asserting that Greenpoint was not entitled to coverage. Greenpoint thencommenced this action to recover the amount of the mortgage loan pursuant to the policy.Stewart, inter alia, interposed a counterclaim to recover the attorney's fees and costs it incurred indefending Greenpoint in the Linda Crispino action, contending that Greenpoint was not entitledto a defense or indemnification under the policy. Greenpoint moved for summary judgment onthe complaint and dismissing the couterclaim, and Stewart cross-moved for summary judgmentdismissing the complaint and on its counterclaim.
In a subsequent action commenced by Greenpoint against Beige to recover damages for hisnegligence in the performance of his duties, Greenpoint alleged in its complaint that Beige "wasretained by GreenPoint and undertook to act as GreenPoint's closing agent in connection with theclosing on June 23, 1999 of a certain mortgage loan in the amount of $402,500.00 made in favorof one Louis V. Crispino." Greenpoint also alleged that Beige "was negligent in the performanceof his duties on behalf of GreenPoint [by] delegating his responsibilities at the closing. . . and in failing to properly review the closing documents prior to authorizing therelease of the loan proceeds which had been wired to him by GreenPoint."
In the instant action, the Supreme Court determined that Greenpoint was the assignee of themortgage, and that it was an "insured" under the policy because it had purchased the mortgage"for value without knowledge of the asserted defect, lien, encumbrance, adverse claim or othermatter." The Supreme Court also determined, inter alia, that Royal was not the alter ego or theagent of Greenpoint and did not enable the fraud—the forgery of Linda's signature on thedeed—to be committed. Thus, it held that the provision of the policy excluding fromcoverage "[d]efects, liens, encumbrances, adverse claims or other matters . . .created, suffered, assumed or agreed to by the insured claimant" did not apply to Greenpoint.Furthermore, the court determined that the provision of the policy excluding from coverage anydefects, liens, encumbrances, adverse claims, or other matters "attaching or created" subsequentto the date of the policy did not apply. The court granted Greenpoint's motion for summaryjudgment on the complaint and dismissing the counterclaim and denied Stewart's cross motionfor summary judgment dismissing the complaint and on the counterclaim. An amended judgmentwas entered in favor of Greenpoint in the principal sum of $402,500. We reverse.
We agree with the Supreme Court that Royal was not the alter ego or agent of Greenpoint (see Almonte v Western Beef, Inc., 21AD3d 514, 515-516 [2005]; Longshore v Davis Sys. of Capital Dist., 304 AD2d964, 965 [2003]; Maurillo v Park Slope U-Haul, 194 AD2d 142, 146 [1993]; L.Smirlock Realty Corp. v Title Guar. Co., 70 AD2d 455, 464 [1979], mod on othergrounds 52 NY2d 179 [1981]). Moreover, we agree that Greenpoint was an "insured" underthe policy because it purchased the mortgage for value and it did not have actual notice of theforged deed.[*4]
However, the Supreme Court incorrectly grantedGreenpoint's motion for summary judgment on the complaint and dismissing the counterclaim.Greenpoint made a prima facie showing of its entitlement to judgment as a matter of law bytendering evidence that Beige was Royal's agent, that Greenpoint merely designated Beige as theattorney to supervise the closing of the loan, and that Beige had no power to bind Greenpoint toany agreement or contract (see Winegrad v New York Univ. Med. Ctr., 64 NY2d 851,854 [1985]).
In opposition, Stewart submitted sufficient evidence to raise a triable issue of fact as towhether Greenpoint enabled the forgery to be committed (see Zuckerman v City of NewYork, 49 NY2d 557 [1980]; Fidelity Natl. Tit. Ins. Co. of N.Y. v Consumer Home Mtge.,272 AD2d 512, 514 [2000]). Specifically, Stewart tendered evidence that Greenpointassigned certain responsibilities regarding the closing of the loan to Beige, with knowledge thatboth Beige and Louis were principals of Royal, and that Royal was the entity making the loan toLouis. Moreover, Stewart established that Beige did not appear at the closing, instead delegatinghis responsibilities to an employee of Royal who was not an attorney, but merely a notary publicwho notarized Linda's forged signature on the deed notwithstanding Linda's absence from theclosing. Furthermore, Stewart presented evidence that, in the action commenced by Greenpointagainst Beige, Greenpoint alleged that Beige was its closing agent with respect to the mortgageloan and that Beige was negligent in its responsibilities to Greenpoint. Since there are triableissues of fact as to whether Beige participated in the fraud perpetrated by Louis and Royal, andwhether Greenpoint in fact designated Beige as its closing agent for the loan and assigned himcertain responsibilities, there are thus triable issues of fact as to whether Beige's conduct may beimputed to Greenpoint. Accordingly, it is for the finder of fact to determine whether the policy'sexclusion from coverage of "[d]efects, liens, encumbrances, adverse claims or other matters. . . created, suffered, assumed or agreed to by the insured claimant" is applicable, inlight of the fact that Greenpoint admittedly wired the funds for the loan to Beige's escrowaccount. "Where a loss is caused by the fraud of a third party, in determining the liability asbetween two innocent parties, the loss should fall on the one who enabled the fraud to becommitted" (Fidelity Natl. Tit. Ins. Co. of N.Y. v Consumer Home Mtge., 272 AD2d at514). Thus, the Supreme Court erred in granting Greenpoint's motion for summary judgment onthe complaint and dismissing the counterclaim.
The parties' remaining contentions are without merit. Rivera, J.P., Skelos, Santucci andLeventhal, JJ., concur. [See 12 Misc 3d 1194(A), 2006 NY Slip Op 51568(U).]