21 Park Place LLC v. Granado Serv., Inc.
| Citation | 2015 NY Slip Op 32467 (U) |
| Decision Date | 19 November 2015 |
| Docket Number | INDEX No.: 15003/13 |
| Parties | 21 PARK PLACE LLC, Plaintiff, v. GRANADO SERVICE, INC., 800 W. MERRICK RD. CORP., "JOHN DOE #1" THROUGH "JOHN DOE #20", the last twenty names being fictitious and unknown to plaintiff, the persons or parties intended being the tenants, occupants, persons or corporations, if any, having or claiming an interest in or lien upon the premises, described in the complaint, Defendants. |
| Court | New York Supreme Court |
TRIAL/IAS PART 18
Submission Date: 09/25/15
Motion Sequence: 002
DECISION & ORDER
XXX
Papers Numbered Sequence #002 Notice of Motion, Affirmation & Exhibits 1 Affirmation in Opposition & Exhibits 2 Reply Affirmation & Exhibits 3
Upon the foregoing papers, motion by defendant 800 W. Merrick Rd. Corp. ("Merrick") for summary judgment on its first counterclaim extinguishing plaintiff's interest in the property located at 800 W. Merrick Road, Valley Stream, New York (the subject property) is granted. This Court declares that the Treasurer's Deed dated May 15, 2013, and also the subsequent deed dated July 15, 2013 to plaintiff, for the subject property are void and the record owner of the subject property is Merrick.
Submit judgment on notice.
By Order dated February 23, 2015 ("the prior Order"), this Court denied plaintiff's motion for summary judgment as premature, and granted plaintiff the opportunity to amend its complaint to allege a claim against Merrick based upon plaintiff's grantor's payment of a lien for unpaid taxes owed for the subject premises by the former owner, defendant Granado Service, Inc. ("Granado"). Plaintiff declined to amend, and at this time defendant Merrick moves for summary judgment.
The facts underlying the plaintiff's claims and Merrick's counterclaims are set forth in the prior Order, which is incorporated herein. Plaintiff claims ownership of the subject property, which consists of three physical lots: Lots 224, 225 and 236. These three lots are taxed as one parcel.
Non-party 611 MNR Corp. ("MNR") is plaintiff's grantor. MNR and plaintiff are related entities.1 Back in 2010, MNR purchased tax lien certificate #2009-03-0000662, covering "Section 37, Block 407, Lot 224" (Exhibit G to the moving papers), for $3,766.01, representing unpaid Village taxes. Approximately three years later, MNR obtained a Treasurer's Deed (Exhibit F to the moving papers) for the subject property dated May 15, 2013, wherein the property again was identified as "Section 37, Block 407, Lot 224." The Treasurer's Deed contained no metes and bounds description. Although the Treasurer's Deed provides "Schedule A attached," no Schedule A was attached. The Treasurer's Deed was recorded on June 14, 2013 ( Exhibit F).
Meanwhile, defendant Granado transferred its interest in the subject property to defendant Merrick by deed dated May 24, 2013 (Exhibit J). The purchase price was $351,500. Granado's deed to Merrick was recorded on May 31, 2013 (see Exhibit J). At the closing, Merrick attempted to pay off all tax liens on the subject property.
Merrick's title report (Exhibit EE to the Reply papers) used at the closing identified two tax lien certificates held by MNR. The first tax lien certificate, #662-09 for unpaid Village taxes for 2009/2010, is the one that is the subject of this action. The second tax lien certificate is #969/2011 for unpaid Village taxes for 2011/2012. The second tax lien held by MNR was paid off by Merrick but not directly; plaintiff states that MNR was repaid by the Village Treasurer. The first tax lien was not paid off and is the subject of this action.
MNR conveyed its interest in the subject property to plaintiff by Bargain and Sale Deed acknowledged July 15, 2013 (Exhibit O to the moving papers; "the MNR deed"). This MNR deed was recorded on July 23, 2013 (Exhibit C to plaintiff's moving papers on the prior motion, annexed as Exhibit B to the opposition papers herein). The consideration for plaintiff's deed was $6,644.05. On the MNR Deed the words "Schedule A attached" were crossed out.
Plaintiff commenced this action seeking to extinguish all right, title and interest of the defendants to the premises. Defendant Merrick counterclaims for judgment extinguishing plaintiff's interest in the subject property, or alternatively, finding it equitably subrogated to the interests of all the tax lien holders for the liens on the subject property paid by it at the closing in the aggregate amount of $349,618.10. Defendant Granado, the former owner, has defaulted in answering.
Summary Judgment Standard
Summary judgment may only be granted "when it has been clearly ascertained that there is no triable issue of fact outstanding;" it is "a highly useful device for expediting the just disposition of a legal dispute for all parties and conserving already overburdened judicial resources (Matter of Suffolk County Dept of Social Servs. v. James M, 83 N.Y.2d 178, 182 [1994]. The movant must establish its defense or cause of action sufficiently to warrant a court's directing judgment in its favor as a matter of law (Gilbert Frank Corp. v. Federal Ins. Co., 70 N.Y.2d 966, 967 [1988]; Zuckerman v. City of New York, 49 N.Y.2d 557, 562 [1980]). Once this showing has been made, the burden shifts to the opponent to produce evidentiary proof in admissible form sufficient to establish the existence of material issues of fact that require a trial (Giuffrida v. Citibank Corp., 100 N.Y.2d 72, 81 [2003]; Alvarez v. Prospect Hosp., 68 N.Y.2d 320, 324 [1986]).
Good Faith Purchaser Status
A good faith purchaser for value is entitled to be protected unless such purchaser had previous notice of some fraud involved in the transaction (Real Property Law §266; see Fleming-Jackson v. Fleming, 41 A.D.3d 175, 176 [1st Dept. 2007]). "If the facts within the knowledge of the purchaser are of such a nature, as, in reason, to put him upon inquiry, and to excite the suspicion of an ordinarily prudent person and he fails to make some investigation, he will be chargeable with that knowledge which a reasonable inquiry, as suggested by the facts, would have revealed"(Anderson v. Blood, 152 N.Y. 285, 293 [1897]; Booth v. Ameriquest Mortg. Co., 63 A.D.3d 769 [2d Dept. 2009]).
"The New York Recording Act (Real Property Law §290 et. seq.), protects a good faith purchaser for value from a prior unrecorded interest in real property provided, inter alia, that the subsequent purchaser's interest is the first to be duly recorded"(Jenkins-Watson v. Golabi Holdings, LLC, 26 A.D.3d 467, 468 [2d Dept. 2006] quoting Rivas v. McDonnell, 308 A.D.2d 572, 572-573 [2d Dept. 2003]). Further, the interest of a good faith purchaser for value from the record owner trumps the interest of a party claiming under an unrecorded tax deed, where the subsequent purchaser records its deed first (Doyle v. Lazarro, 33 A.D.2d 142 [3d Dept. 1970], affd 33 N.Y.2d 981 [1974]; see Aiello v. Wood, 76 A.D.2d 1019 [3rd Dept. 1980]).
Discussion
The facts herein are not in dispute. It is the legal consequence of the facts about which the parties disagree.
Merrick moves for summary judgment on two alternative grounds: (1) that it is a good faith purchaser for value, and because its deed is recorded before the recording of the Treasurer's Deed its interest in the premises is superior to plaintiff's; (2) that the Treasurer's Deed is void for failing to properly describe the property conveyed by the Village pursuant to that deed.
Here, MNR did obtain the Treasurer's Deed prior to the purchase of the premises by Merrick, However, MNR did not record the Treasurer's Deed until after the date of Granado's conveyance to Merrick, and after the recording of the Granado deed. The recording acts charge the purchaser with notice only of matters in the record and matters outside the chain of title do not constitute notice (Doyle, supra at 144; Aiello supra). Under these circumstances, Merrick won the race to record.
The Court must now consider the other requirements for good faith purchaser status. Merrick submits the affidavit of Avedis Nakashian, the sole shareholder of Merrick, who testifies that nearly the entire purchase price of $351,500.00 paid by it was used to satisfy tax liens encumbering the subject property, and that Merrick has further made a significant investment in the property with the installation of a new roof, a new storefront, new windows and doors. Nakashian states that Merrick had no knowledge of the unrecorded Treasurer's Deed, and it would never have satisfied all the other tax liens and yet knowingly allowed plaintiff's tax lien in the amount of $3,766.01 to remain.
Merrick also submits an affidavit of Charles Peknic, Merrick's closing attorney for the purchase of the subject property. Mr, Peknic insists that neither he, nor anyone on behalf of Merrick was aware of the unrecorded Treasurer's Deed. The last deeds of record showed that Granado was the sole owner, and because Granado had failed to pay real estate taxes for several years, there were many tax liens against the property which were paid off at the closing.
On this record, Merrick has made out a prima facie case that it is a subsequent good faith purchaser for value, protected by the recording statutes. The burden now shifts to plaintiff to raise a triable issue of fact.
In opposition, plaintiff makes various arguments. First, it argues that Merrick is charged with the knowledge that real estate taxes are regularly levied. Merrick was well aware of the many tax liens against the property, but simply had no notice of the Treasurer's Deed.
Plaintiff's claim that the Treasurer's Deed divested Granado of all interest in the premises fails to take into account the recording statutes.
Plaintiff's contention that it did not sit back and watch Merrick make improvements is not supported by evidence of...
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