| Cashel v Cashel |
| 2012 NY Slip Op 02446 [94 AD3d 684] |
| April 3, 2012 |
| Appellate Division, Second Department |
| Thomas P. Cashel, Respondent, v Francine Cashel,Defendant. (Action No. 1.) Thomas P. Cashel, Respondent, v Francine Cashel et al., Defendants,and Fremont Investment & Loan, Appellant. (Action No. 2.) Mortgage Electronic RegistrationSystems, Inc., Plaintiff, v Francine Parziane Cashel et al., Defendants. (Action No. 3.) |
—[*1] Saltzman Chetkof & Rosenberg, LLP, Garden City, N.Y. (Michael Chetkof and Andrea M.Brodie of counsel), for plaintiff-respondent.
In three related actions, inter alia, for a divorce and ancillary relief (action No. 1), to set asidea deed on the ground of fraud (action No. 2), and to foreclose a mortgage (action No. 3), whichwere joined for trial, Fremont Investment & Loan, a defendant in action No. 2, appeals, aslimited by its brief, from so much of an order of the Supreme Court, Suffolk County (Crecca, J.),dated March 4, 2011, as, (a) upon reargument and renewal, vacated the determination in an orderdated April 17, 2009, denying those branches of the motion of Thomas P. Cashel, the plaintiff inaction Nos. 1 and 2, which were for summary judgment on the fourth cause of action in actionNo. 1, declaring that a deed dated June 6, 2002, conveying title to certain real property fromThomas P. Cashel to Francine Cashel, a defendant in action Nos. 1, 2, and 3, is null and void,and on the first cause of action in action No. 2 insofar as asserted against it declaring that thedeed is null and void and that all mortgages encumbering the real property that were executed onor after June 6, 2002, are cancelled as a lien against the real property, and thereupon grantedthose branches of the motion, (b) granted those branches of the motion of Thomas P. Cashelwhich were for summary judgment dismissing its third counterclaim and striking its second andfourth affirmative defenses in action No. 2, and thereupon directed the Clerk of the County ofSuffolk to mark the deed dated June 6, 2002, void and of no further effect, and to accept a deedfrom Thomas P. Cashel to himself, confirming his ownership of the property as of June 6, 2002,and (c) denied that branch of its cross [*2]motion which was forsummary judgment on its third counterclaim in action No. 2.
Ordered that the order dated March 4, 2011, is modified, on the law, (1) by deleting theprovisions thereof, upon reargument and renewal, granting those branches of the motion ofThomas P. Cashel which were for summary judgment on the fourth cause of action in action No.1 and the first cause of action in action No. 2 insofar as asserted against Fremont Investment &Loan, declaring that the deed dated June 6, 2002, is null and void, and substituting therefor aprovision, upon reargument and renewal, adhering to the determination in the order dated April17, 2009, denying those branches of the motion, (2) by deleting the provisions thereof, uponreargument and renewal, granting that branch of the motion of Thomas P. Cashel which was forsummary judgment on the first cause of action in action No. 2 insofar as asserted against FremontInvestment & Loan declaring that all mortgages encumbering the real property that wereexecuted on or after June 6, 2002, are cancelled as a lien against the real property, andsubstituting therefor a provision adhering to the determination in the order dated April 17, 2009,denying that branch of the motion, (3) by deleting the provisions thereof granting those branchesof the motion of Thomas P. Cashel which were for summary judgment dismissing the thirdcounterclaim and striking the second and fourth affirmative defenses asserted by FremontInvestment & Loan in action No. 2, and substituting therefor a provision denying those branchesof the motion, and (4) by deleting the provisions thereof directing the Clerk of the County ofSuffolk to mark the deed dated June 6, 2002, void and of no further effect and to accept a deedfrom Thomas P. Cashel to himself confirming his ownership of the real property as of June 6,2002; as so modified, the order dated March 4, 2011, is affirmed insofar as appealed from, withcosts to the appellant.
Action No. 1 is an action for a divorce and ancillary relief, commenced by Thomas P. Cashel(hereinafter Thomas) against Francine Cashel (hereinafter Francine). Action No. 2 involves aparcel of real property located in Ronkonkoma (hereinafter the property). On June 6, 2002, adeed was executed conveying title to the property from Thomas to Francine (hereinafter thedeed). The same day, Francine executed a mortgage on the property in order to secure a loan inthe principal sum of $206,250 from Flagstar Bank (hereinafter the Flagstar mortgage loan).Francine then remitted a portion of the proceeds from the Flagstar mortgage loan to Thomas.Thomas alleged that, in June 2004, while preparing to file for divorce, he discovered thatFrancine fraudulently transferred the property and placed it in her name by forging his signatureon the deed. In August 2004 Thomas filed a notice of pendency in connection with the property.Shortly thereafter, Francine executed a mortgage on the property in favor of Fremont Investment& Loan (hereinafter Fremont), a defendant in action No. 2, in the amount of $345,875(hereinafter the Fremont mortgage loan). It is undisputed that, from the proceeds of the Fremontmortgage loan, the sum of $196,028 was allocated to satisfy the Flagstar mortgage loan.
In the fourth cause of action in action No. 1, Thomas sought a judgment declaring that thedeed is null and void on the ground that Francine forged his signature thereon. In the first causeof action in action No. 2, Thomas similarly sought a judgment declaring that the deed is null andvoid as a forgery and that all mortgages encumbering the property that were executed on or afterJune 6, 2002—which included the mortgage given to Fremont to secure the Fremontmortgage loan—are cancelled as liens against the property.
Upon renewal and reargument, the Supreme Court erred in granting those branches ofThomas's motion which were for summary judgment on the fourth cause of action in action No. 1declaring that the deed is null and void, and on the first cause of action in action No. 2 insofar asasserted against Fremont declaring that the deed is null and void and that all mortgagesencumbering the property that were executed on or after June 6, 2002, are cancelled as liensagainst the property. In support of his motion, Thomas submitted a transcript of Francine'sdeposition testimony, in which she testified that, with Thomas's authorization, she signedThomas's name on the deed. Thus, Thomas made a prima facie showing of entitlement tojudgment as a matter of law by establishing that the signature on the deed purporting to be hissignature was inscribed by Francine (see Alvarez v Prospect Hosp., 68 NY2d 320, 324[1986]; Cruz v Cruz, 37 AD3d754, 754 [2007]). However, in opposition, Fremont raised a triable issue of fact as towhether Thomas ratified the deed, since there is evidence in the record indicating that Thomasmay have had knowledge of the material facts concerning the [*3]forgery, and that he benefitted from the transaction (seeStandard Funding Corp. v Lewitt, 89 NY2d 546, 552 [1997]; Matter of New York StateMed. Transporters Assn. v Perales, 77 NY2d 126, 131 [1990]). We note that on a priorappeal in this case, the Court of Appeals reversed a decision and order of this Court andthereupon denied Fremont's motion for summary judgment, concluding that there were triableissues of fact "with respect to whether plaintiff Thomas P. Cashel possessed the requisite'knowledge of material facts' concerning the allegedly binding deed," and explaining that it couldnot "conclude, as a matter of law, that [Thomas] ratified the deed" (Cashel v Cashel, 15 NY3d 794,796 [2010] [citation omitted]). Similarly, on this appeal, there are triable issues of fact as towhether the deed was subject to ratification, and whether Thomas ratified the deed. Thus, theSupreme Court erred in concluding, as a matter of law, that the deed was not subject toratification in the first instance. For the same reasons, the Supreme Court should have deniedthose branches of Thomas's motion which were for summary judgment striking Fremont's secondaffirmative defense in action No. 2, which alleged that Thomas consented to the conveyance andtransfer of the property, and Fremont's fourth affirmative defense in action No. 2, which allegedthat Thomas ratified the forgery and concomitant transfer of the property by accepting thebenefits flowing therefrom.
The Supreme Court also erred in granting that branch of Thomas's motion which was forsummary judgment dismissing Fremont's third counterclaim in action No. 2, in which Fremontalleged that, in the event that Thomas secured a judgment declaring that the deed is null and voidand that the Fremont mortgage is cancelled, Fremont, pursuant to the doctrine of equitablesubrogation, is entitled to a lien against the property to the extent that any proceeds from theFremont mortgage loan were used to satisfy the Flagstar mortgage loan.
The doctrine of equitable subrogation provides that "[w]here property of one person is usedin discharging an obligation owed by another or a lien upon the property of another, under suchcircumstances that the other would be unjustly enriched by the retention of the benefit thusconferred, the former is entitled to be subrogated to the position of the obligee or lien-holder"(King v Pelkofski, 20 NY2d 326, 333 [1967] [internal quotation marks omitted]). Aclaim for equitable subrogation "is one of the mechanisms by which the law of restitution andunjust enrichment will reallocate the burden of a given liability from one who has originallydischarged it to another whom the law considers more appropriate to bear it" (Restatement[Third] of Restitution and Unjust Enrichment § 24, Comment a).
Thomas failed to establish his entitlement to judgment as a matter of law dismissingFremont's third counterclaim in action No. 2. In his motion, Thomas argued, and the SupremeCourt agreed, that the doctrine of equitable subrogation is inapplicable since Fremont did notdischarge an obligation owed by Thomas in satisfying the Flagstar mortgage loan but, rather,discharged an obligation owed only by Francine. However, it is undisputed that Thomasauthorized Francine, as his agent, to encumber the property by obtaining the Flagstar mortgageloan, and that Thomas received a portion of the proceeds from the loan. If Thomas ultimatelyprevails in voiding the deed and cancelling the Fremont mortgage, he would be the record ownerof the property free and clear of the Flagstar mortgage loan, which he authorized and from whichhe received some of the proceeds. Therefore, under such circumstances, in order to preventThomas from becoming unjustly enriched, Fremont would be entitled to a lien in the sum of$196,028, representing the portion of the proceeds of the Fremont mortgage loan which wereused to satisfy the Flagstar mortgage loan.
We note that the Supreme Court granted that branch of Thomas's motion which was forsummary judgment dismissing Fremont's third counterclaim in action No. 2 on the additionalground that the doctrine of equitable subrogation was inapplicable since there were no lienssenior to the Flagstar mortgage loan. However, the existence of a senior lien is not relevant to therelief sought by Fremont in its third counterclaim in action No. 2, since it is not thereby seekingto apply the doctrine for the purpose of obtaining priority over another lien (see Great E.Bank v Chang, 227 AD2d 589, 589 [1996]).
Additionally, Thomas contends that Fremont cannot invoke the doctrine of equitablesubrogation since Fremont has "unclean hands." However, Thomas failed to meet his burden of[*4]showing that Fremont " 'is guilty of immoral, unconscionableconduct' " (Jara v Strong Steel Door,Inc., 58 AD3d 600, 602 [2009], quoting Columbo v Columbo, 50 AD3d 617, 619 [2008] [internal quotationmarks omitted]; see Fade vPugliani/Fade, 8 AD3d 612, 614 [2004]).
Thus, regardless of the sufficiency of Fremont's opposition papers, the Supreme Court shouldhave denied that branch of Thomas's motion which was for summary judgment dismissingFremont's third counterclaim in action No. 2 (see generally Winegrad v New York Univ.Med. Ctr., 64 NY2d 851, 853 [1985]).
Finally, while Fremont asks this Court to grant that branch of its cross motion which was forsummary judgment on its third counterclaim in action No. 2, it would be premature to grant thatbranch of the cross motion before the resolution of the causes of action seeking to declare that thedeed is null and void and that the Fremont mortgage is cancelled (see Scott v Doyle, 12 Misc 3d1163[A], 2006 NY Slip Op 51012[U] [2006]). Rivera, J.P., Chambers, Austin and Roman,JJ., concur.