| Finn v Church for the Art of Living, Inc. |
| 2011 NY Slip Op 09266 [90 AD3d 826] |
| December 20, 2011 |
| Appellate Division, Second Department |
| Kevin Finn, Respondent, v Church for the Art of Living,Inc., et al., Defendants, and Jesus is the Way Ministries, Inc.,Appellant. |
—[*1] Zinker & Herzberg, LLP, Smithtown, N.Y. (Jeffrey Herzberg of counsel), forrespondent.
In a stakeholder's interpleader action pursuant to CPLR 1006, the defendant Jesus is the WayMinistries, Inc., appeals from (1) an order of the Supreme Court, Nassau County (Brandveen, J.),entered December 21, 2010, which granted the plaintiff's motion for summary judgment on thecomplaint and denied its cross motion pursuant to CPLR 3211 (a) (8) to dismiss the complaintinsofar as asserted against it based on lack of personal jurisdiction, and (2) a judgment of thesame court entered March 9, 2011, which, upon the order, is in favor of the defendant Church forthe Art of Living, Inc., and against it in the sum of $50,000, being held in the escrow account ofthe plaintiff, and directed that those funds be distributed in certain amounts to the plaintiff andthe plaintiff's attorney, with the balance payable to the defendant Church for the Art of Living,Inc.
Ordered that the appeal from the order is dismissed; and it is further,
Ordered that the judgment is reversed, on the law, with costs, the plaintiff's motion forsummary judgment is denied, the order is modified accordingly, and upon searching the record,summary judgment is awarded to the defendant Jesus is the Way Ministries, Inc., dismissing thecomplaint insofar as asserted against it, and the plaintiff is directed to disburse the funds in thesubject escrow account to the defendant Jesus is the Way Ministries, Inc.
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 judgment (see CPLR 5501 [a] [1]).
This interpleader action arises from a contract between two not-for-profit corporations for thesale of real property located on Clinton Avenue in Hempstead (hereinafter the property). Thedefendant Jesus is the Way Ministries, Inc. (hereinafter the purchaser), contracted to purchase theproperty from the defendant Church for the Art of Living, Inc. (hereinafter the seller). Thepurchaser [*2]was a tenant of the seller in the building to bepurchased. The plaintiff, Kevin Finn, was the attorney for the seller. He commenced thisinterpleader action, inter alia, to collect his fees for the work he performed in this failedtransaction.
Upon signing the contract in July 2008, the purchaser remitted a down payment of $50,000,which Finn held in his escrow account. The seller attempted to schedule a closing in December2008, declaring time of the essence. The purchaser did not attend the closing, contending that theseller had failed to make repairs to the building as required by the contract of sale.
In May 2009, the seller filed for chapter 11 bankruptcy protection in bankruptcy court, whereFinn sought to recover his fee from the $50,000 held in escrow. However, in January 2010, theseller withdrew that petition, and the bankruptcy court dismissed the proceeding. Within daysthereafter, the seller wrote to Finn, stating that it no longer wanted Finn to represent it, andinstructing him to return the down payment to the purchaser in that the seller and purchaser hadsettled their dispute between them. The seller's new attorney and the purchaser also wrote toFinn, instructing him to return the down payment to the purchaser. Instead, however, Finncommenced this interpleader action, seeking a declaration that the purchaser defaulted in the realestate transaction and forfeited the down payment to the seller, and further seeking to recover hisfee, plus his own attorney's fee and expenses in litigating this interpleader action, from theescrowed funds. Finn subsequently moved for summary judgment on the complaint, and thepurchaser cross-moved to dismiss for lack of personal jurisdiction. The Supreme Court grantedthe motion and denied the cross motion.
The Supreme Court properly determined that the purchaser waived any objection to personalservice by appearing and actively participating in the action (see USF&G v Maggiore,299 AD2d 341, 342 [2002]; Matter of Roslyn B. v Alfred G., 222 AD2d 581, 582[1995]). Further, the Supreme Court did not err in considering the plaintiff's motion for summaryjudgment, "which was made before issue was joined, since the parties charted a summaryjudgment course by treating the motion as if issue had been joined" (Rhodes v Liberty Mut. Ins. Co., 67AD3d 881, 882 [2009]).
An escrow account contains only client funds, which are held by the attorney in his fiduciarycapacity (see Matter of Niles, 207 AD2d 50, 53 [1994]). Here, the ownership of the fundsin the escrow account was, at one time, a matter of dispute. However, once the seller and thepurchaser resolved that dispute and instructed Finn, as escrowee, to disburse the funds to thepurchaser, he was under an obligation to do so. Accordingly, Finn did not satisfy his prima facieburden of establishing entitlement judgment as a matter of law, and upon searching the record(see CPLR 3212 [b]), the purchaser is entitled to summary judgment dismissing thecomplaint insofar as asserted against it, with a direction that the funds in the escrow account beturned over to the purchaser. Angiolillo, J.P., Hall, Austin and Miller, JJ., concur.