| Wargo v Jean |
| 2010 NY Slip Op 07745 [77 AD3d 919] |
| October 26, 2010 |
| Appellate Division, Second Department |
| Hendra Wargo, Appellant, v Paul Henri Jean et al.,Defendants, and Wilmington Finance, a Division of AIG Federal Savings Bank, Respondent.(Action No. 1.) Wilmington Finance, a Division of AIG Federal Savings Bank, Respondent, vPaul Jean, Defendant, and Hendra Wargo, Appellant. (Action No. 2.) |
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In related actions, inter alia, to set aside a conveyance of real property on the ground of fraudand to foreclose a mortgage, Hendra Wargo, the plaintiff in action No. 1 and a defendant inaction No. 2, appeals (1) from an order of the Supreme Court, Orange County (Giacomo, J.),dated January 2, 2008, which denied her motion to stay all proceedings in action No. 2 pendingthe resolution of action No. 1, and (2), as limited by her brief, from so much of an order of thesame court (Slobod, J.), dated June 3, 2009, as granted the motion of Wilmington Finance, adivision of AIG Federal Savings Bank, a defendant in action No. 1 and the plaintiff in action No.2, to dismiss the complaint insofar as asserted against it in action No. 1 pursuant to CPLR 3211(a) (5) as barred by the doctrine of res judicata.
Ordered that the order dated January 2, 2008, is reversed, on the law, the motion of HendraWargo in action No. 2 to stay all proceedings in that action pending the resolution of action No. 1is granted, and the sale and transfer of the subject real property are stayed pending the resolutionof action No. 1; and it is further,
Ordered that the order dated June 3, 2009, is reversed insofar as appealed from, on the law,the motion of Wilmington Finance, a division of AIG Federal Savings Bank, to dismiss thecomplaint insofar as asserted against it in action No.1 pursuant to CPLR 3211 (a) (5) as barred bythe [*2]doctrine of res judicata is denied; and it is further,
Ordered that the appellant is awarded one bill of costs.
Hendra Wargo, the plaintiff in action No. 1 (hereinafter the fraud action) and a defendant inaction No. 2 (hereinafter the foreclosure action), was the owner of real property located on ShinHollow Road in Port Jervis. Paul Jean, a defendant in both actions, allegedly forged Wargo'ssignature on a contract of sale and a deed, and fraudulently obtained her property. He obtained amortgage loan from Wilmington Finance, a division of AIG Federal Savings Bank (hereinafterWilmington), a defendant in the fraud action and the plaintiff in the foreclosure action. Wargocommenced the fraud action, alleging that Jean, and others involved in the sale of her property,had defrauded her. She later amended her complaint to add Wilmington as a party defendant inthe fraud action, alleging that Wilmington was negligent in giving Jean a mortgage loan, and thatWilmington acted in concert with Jean to defraud her.
Jean defaulted on the mortgage and, approximately five months after the commencement ofthe fraud action, Wilmington commenced the foreclosure action against Jean and Wargo. Wargocounterclaimed, alleging essentially the same claims as she had asserted against Wilmington inthe fraud action. Wilmington moved for summary judgment on the complaint in the foreclosureaction, arguing that Wargo's counterclaims alleging negligence and fraud were irrelevant to theforeclosure action. Wargo separately moved to stay all proceedings in the foreclosure action,pending resolution of the fraud action. Wilmington's motion was granted in an order datedDecember 7, 2007. In an order dated January 2, 2008, the Supreme Court denied Wargo's motionto stay all proceedings in the foreclosure action, pending the resolution of the fraud action.Wilmington then moved pursuant to CPLR 3211 (a) (5) to dismiss the complaint insofar asasserted against it in the fraud action, arguing that Wargo's claims against it were barred by resjudicata because they had been litigated in the foreclosure action. In an order dated June 3, 2009,the Supreme Court, inter alia, granted Wilmington's motion to dismiss the complaint in the fraudaction insofar as asserted against it. Wargo appeals from both the order denying her motion tostay the foreclosure action, and so much of the order dated June 3, 2009, as dismissed thecomplaint in the fraud action insofar as asserted against Wilmington.
Since, at the time Wilmington moved for summary judgment on the complaint in theforeclosure action, the issues of forgery and fraud were also being litigated in the fraud action,the Supreme Court should have granted Wargo's motion to stay all proceedings in the foreclosureaction, pending resolution of the fraud action. If Wargo succeeds in proving that the documentstransferring the property to Jean were fraudulent, or that the signatures thereon were forged, thenWilmington's mortgage is not valid and Wilmington cannot succeed in the foreclosure action (see Johnson v Melnikoff, 65 AD3d519, 520 [2009]; GMAC Mtge.Corp. v Chan, 56 AD3d 521, 522 [2008]). Moreover, since the Supreme Court did notdetermine in the foreclosure action that there was no forgery or fraud, but only that the issues offorgery and fraud were irrelevant to the disposition of that action, those issues have not beennecessarily decided against Wargo. Accordingly, the doctrine of res judicata is inapplicable, andthe Supreme Court should not have granted Wilmington's motion to dismiss the complaint in thefraud action on that ground (see Ryan v New York Tel. Co., 62 NY2d 494, 500 [1984]).Mastro, J.P., Covello, Dickerson and Roman, JJ., concur.