Sklavos v. OKI–DO Ltd.

• Decision Date: 18 June 2018
• Docket Number: 020698/2009
• Parties: Alexander SKLAVOS, as Executor of the Estate of Edward Sklavos, Prime Real Estate Ventures, LLC, Lindsey Leigh, LLC, 401K Plan, Christina Swirni a/k/a Christini Smirni, Mark Styczen and Eve Styczen, Plaintiffs, v. OKI–DO LTD., and "John Doe No.1" through "Jane Doe #10, the last 10 names being fictitious and unknown to the Plaintiffs, the persons or parties intended being the occupants, tenants, persons or entities, if any, having or claiming an interest in or lien upon the mortgaged premises described in the verifies complaint, Defendants.
• Court: New York Supreme Court

60 Misc.3d 1203 (A)

109 N.Y.S.3d 833 (Table)

Alexander SKLAVOS, as Executor of the Estate of Edward Sklavos, Prime Real Estate Ventures, LLC, Lindsey Leigh, LLC, 401K Plan, Christina Swirni a/k/a Christini Smirni, Mark Styczen and Eve Styczen, Plaintiffs,

v.OKI–DO LTD., and "John Doe No.1" through "Jane Doe #10, the last 10 names being fictitious and unknown to the Plaintiffs, the persons or parties intended being the occupants, tenants, persons or entities, if any, having or claiming an interest in or lien upon the mortgaged premises described in the verifies complaint, Defendants.

020698/2009

Supreme Court, Suffolk County, New York.

Decided June 18, 2018

SIEGEL & REINER, LLP, Attorneys for Plaintiffs, By: Richard H. Del Valle, Esq., 900 Third Avenue, New York, NY 10022

SOLOMON & SIRIS, PC, Co–Counsel to Plaintiffs, By: Michael J. Siris, Esq., Garden City Center, 100 Quentin Roosevelt Boulevard, Suite 504, Garden City, NY 11530

ROSENBERG FELDMAN SMITH, LLP, Attorneys for Defendant, By: Michael H. Smith, Esq., Richard B. Feldman, Esq., 551 Fifth avenue, 24th Floor, New York, NY 10176

James Hudson, J.

As English society evolved, businesses grew beyond that of a sole proprietor such as the village smith or the itinerant weaver plying their trade in solitude. From the time some enterprising innkeeper employed the first ostler, the law was required to address the rights and responsibilities of the relationship between principal, employee and third parties. The Law of Agency was born. In contrast with Roman law, agency, as we understand it, was a product of the English Common law. It was a necessary component and support of a commercial system which, after a genesis of village to village trade, presumed to grow and fling itself across the seas (see Dalley, A Theory Of Agency Law , University of Pittsburgh Law Review, 2011, Vol.72 p.495). As the discussion below demonstrates, The Law of Agency has grown and adapted to changing conditions in the world of commerce. Its doctrines govern us to this day and decide the case at bar. Judge Learned Hand, of happy memory, best described the transition of this Law as society evolved:

"The responsibility of a master for his servant's act is not at bottom a matter of consent to the express act, or of an estoppel to deny that consent, but it is a survival from ideas of status, and the imputed responsibility congenial to earlier times, preserved now from motives of policy. While we have substituted for the archaic status a test based upon consent, i.e. , the general scope of the business, within that sphere the master is held by principles quite independent of his actual consent, and indeed in the face of his own instructions" ( Kidd v. Thomas A. Edison, Inc. , 239 F. 405, 407 [S.D.NY], aft, 242 F. 923 [2d Cir. 1917] ).

Initially the Court must thank Counsel, Mr. Siris and Mr. Del Valle for the Plaintiffs and Mr. Smith for the Defense for their eloquence on behalf of their respective clients. Such advocates honor the Court.

The Defendant OKI–DO Ltd. (hereinafter referred to as "OKI") is possessed in fee simple of a parcel of realty located at 2835 Shipyard Lane, East Marion, New York (hereinafter referred to as "The Property"). In 2007 the Plaintiffs loaned the Defendant a total of one million dollars which was secured by two mortgages for $500,000.00 each. The mortgages were originally executed on October 8th, 2007 and October 15th, 2007. They were consolidated into a single note and mortgage on the latter date via a Consolidation, Extension and Modification Agreement "CEMA" (Plaintiffs' Exhibit "6"). OKI's sole shareholder, officer and director, Dr. Kazuko Hillyer, did not appear at either of the closing dates. Instead the documents encumbering the property were executed by a Mr. Edward Stein acting as Attorney-in-fact pursuant to a Power of Attorney, purportedly given to him by Dr. Hillyer on behalf of OKI. The CEMA was not paid as per its terms and Plaintiffs commenced this action to foreclose upon the mortgage. In its defense, OKI contends that Mr. Stein did not have authority to mortgage the property on OKI's behalf and that the Power of Attorney dated October 4th, 2007 was forged. The Parties made successive motions for summary judgment which were denied by the Court on April 8th, 2010, April 23rd, 2010 (Whelan J) and April 26th, 2014 (Gazzillo J).

In support of their contention that the mortgage was properly executed and that Mr. Stein was authorized to act as OKI's agent, Plaintiffs cite to the authority found in: 212 Inv. Corp. v. Kaplan , 16 Misc 3d 1125 (a), *4, 847 NYS2d 905 [Sup Ct.NY Co.2007] ; ABN AMRO Mortgage Group, Inc. v. Stephens, et al. , 91 AD3d 801 [2nd Dept.2012] ; DeTata v. Tress , 4 AD2d 748 [2nd Dept.1957, app. dismissed 3 NY2d 920 [1957] ; George H.G. Heine v. Colton, Hartnick, Yamin & Sheresky, et al. , 786 F. Supp.360,[SDNY 1992]; Greenpoint Bank v. Nazzal , 287 AD2d 485 [2nd Dept.2001] affirming 2000 WL 36722476 [Sup.Ct Westchester Co.2000] ; In Re Mendelsohn , 2013 WL 3555690 [Surr. Ct. NY Co.2013] aft 116 AD3d 477 [1st Dept.2014], leave to appeal denied 24 NY3d 907 [2014] ; Leslie, Semple & Garrison, Inc. v. Gavit & Co., Inc. , 81 AD2d 950 [3rd Dept.1981] ; Matter of Estate of Charles White , 11 Misc 3d 1054 [A], 815 NYS2d 496 [Supt. Ct. Broome Co.2006] ; Matter of Simon , 44 AD2d 570 [2nd Dept.1974] ; Moffett v. Gerardi , 75 AD3d 496 [2nd Dept.2010] ; Morales v. Yaghoobian , 13 AD3d 424 [2nd Dept.2004] ; News Syndicate Co. v. Gatti Paper Stock Corporation , 256 NY 211 [1931] ; Pimpinello v. Swift & Co. , 253 NY 159 [1930] ; Pink, et al. v. Rome Youth Hockey Association, Inc., et al. , 41 NY3d 994 [2016]; Provident Bay Road, LLC v. NYSARC, Inc. 117 AD3d 1356 [3rd Dept. 2014] ; Rosen v. Rosen , 243 AD2d 618 [2nd Dept.1997] ; Rothschild v. Title Guarantee & Trust Co. 204 NY 458 [1912] ; Sack v. Drew Mortgage Associates, Inc. 1999 WL 1327906 [Mass Superior Court 1999] ; Sofio v. Hughs , 162 AD2d 518 [2nd Dept.1990] leave to appeal denied, 76 NY2d 712 [1990] ; Sorenson v. Bridge Capital Corp., et al. , 52 AD3d 265 [1st Dept.2008] ; Thomson v. Rubenstein , 31 AD3d 434 [2nd Dept.2006] ; Torres v. Ashmawy, MD, et al. , 24 Misc 3d 506 [Sup. Ct. Orange Co.2009] ; Woody's Lumber Co., Inc., v. Jayram , 2005 WL 6052930 [Sup. Ct. Nassau Co.2005], reargument denied, 2005 WL 6052928, aff'd 30 AD3d 590 [2nd Dept.2006] ; WWW Associates, Inc. v. Giancontieri , 77 NY2d 157 [1990] ; Young v. Lacy , 120 AD3d 1561 [4th Dept.2014].

The Defendant, however, argues that controlling authority serves to bar the Plaintiffs' claim and cites to the holdings ( ABN Amro Mortgage Group, Inc. v. Stephens , 91 AD3d 801 [2nd Dept.2012] ; American Motorists Insurance Co. v. Keep Services, Inc. , 63 AD3d 865 [2nd Dept.2009] ; Bayview Loan Servicing, LLC v. Sulyman , 130 AD3d 1197 [3d Dept.2015] ; CitiMortgage, Inc. v. Finocchiaro , 2013 WL 138541 [Sup. Ct. Richmond Co.2013] ; Collision Plan Unlimited v. Bankers Trust Co. , 63 NY2d 827 [1984] ; Craighead v. Peterson , 72 NY 279 [1878] ; Davis v. Dunnet , 239 NY 338 [1925, Pound J.]; Farmer v. National Life Ass'ns of Hartford, Conn. , 50 F. 829 [EDNY 1892] ; First National Bank of Nevada v. Williams , 74 AD3d 740 [2nd Dept.2010] ; Ford v. Unity Hospital , 32 NY2d 464 [1973] ; Goldstein v. Block , 288 AD2d 182 [2nd Dept. 2001] ; Grasso v. Fiumara , 167 AD2d 510 [2nd Dept.1990] ; Greenpoint Bank v. Nazzal , 2000 WL 36722476 [Sup Ct. Westchester Co. 2000] aff'd 287 AD2d 485 [2nd Dept.2001] ; Greenpoint v. Parissi , 256 AD2d 548 [2nd Dept.1998] ; Hudson Enterprises, Ltd v. Wasserman , 56 AD2d 550 [2nd Dept.1998] ; Hoffman v. Kraus , 260 AD2d 435 [2nd Dept.1999] ; In the Matter of Batlas , 144 AD3d 791 [2nd Dept.2016] ; In Re Conklin , 48 Misc 3d 291 [Surr. Ct. Nass. Co.2015] ; In the Matter of Goetz , 8 Misc 3d 200 [Surr. Ct Westchester Co. 2005] ; In Re Kislak , 7 Misc 3d 889 [Surr. Ct NY Co.2004] ; In Re McArthur , 173 AD 517 [3rd Dept.1916] ; In Re Mendelsohn , supra ; Kluge v. Fugazy 145 AD2d 537 [2nd Dept.1988] ; Morgold, Inc. v. ACA Galleries, Inc. , 283 AD2d 407 [2nd Dept.2001] ; Neildan Construction Corp. v. Angona , 209 AD2d 389 [2nd Dept.1994] ; Pebble Realty v. Estate of Darren Bryant , 11/20/2014 NYLJ 14, Col 5 [Surr. Ct. Queens Co.]; Porges v. United States Mortgage & Trust Co. , 203 NY 181 [1911] ; Renzi v. Aleszczyk , 44 AD2d 648 [4th Dept.1974] ; Taylor v. Commercial Bank , 174 NY 181 [1903] ; US v. Campola , 554 F. Supp. 20 [NDNY 1982] ; WWW Associates, Inc. v. Giancontieri , supra ] ). All of the above mentioned case law were of guidance to the Court as it made its determination. It was not necessary, however, to discuss all of these cases in this decision.

This Court conducted a non-jury trial to resolve the issues of fact.

Initially, Plaintiffs offered the testimony of Ms. Anna Maria Curella, the Deputy County Clerk of Suffolk County. Ms. Curella is the Supervisor of the Recording Department and described the methods used in recording Powers of Attorney. She also indicated that the regular course of business was for the Suffolk County Clerk to mail a copy of a filed Power of Attorney to the Principal. There was nothing asked in cross-examination to dispute that the October 4th, 2007 Power of Attorney (Plaintiffs' Exhibit "2") was mailed to Dr. Hillyer at her home address.

Plaintiffs called Dr. Hillyer to the stand. She stated, inter alia , that she had been OKI's sole shareholder and officer for many years, including the time period in which OKI purchased 2835 Shipyard Lane, Greenport, New York. OKI purchased the property on March 15th,1999 (Plaintiffs' Exhibit "1"). Dr. Hillyer described her various properties and business interests which demonstrated that she is a sophisticated businessperson. During the course of running her businesses, Dr. Hillyer employed a financial advisor, Mr. Ed Stein. Dr. Hillyer admitted that she had given Mr. Stein a Power of Attorney in July of 2007 (Plaintiffs' Exhibit "15").

There was some confusion...