Arnav Indus., Inc. v.

• Decision Date: 23 July 2014
• Docket Number: Index No. 13965/1990
• Citation: Arnav Indus., Inc. v. M.H.B. Holdings, Inc., 2014 NY Slip Op 32005(U), Index No. 13965/1990 (N.Y. Sup. Ct. Jul 23, 2014)
• Parties: ARNAV INDUSTRIES, INC., Plaintiff v. M.H.B. HOLDINGS, INC., 20-32-25 WEST CORP., MARTIN BRODY, RACHEL BRODY, PHILIP BRODY, HADASSAH BRODY, MORGREN CONSTRUCTION CORP., CITY OF NEW YORK, and PEOPLE OF THE STATE OF NEW YORK, Defendants
• Court: New York Supreme Court

2014 NY Slip Op 32005(U)

ARNAV INDUSTRIES, INC., Plaintiff v. M.H.B. HOLDINGS, INC., 20-32-25 WEST CORP., MARTIN BRODY, RACHEL BRODY,PHILIP BRODY, HADASSAH BRODY, MORGREN CONSTRUCTION CORP.,CITY OF NEW YORK, and PEOPLE OF THE STATE OF NEW YORK, Defendants

Index No. 13965/1990

SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF NEW YORK: IAS PART 46

FILED: AUGUST 1, 2014

JULY 23, 2014

APPEARANCES:

For Plaintiff

Moshe Katlowitz Esq. and Elan Weinreb Esq.

Katlowitz & Associates

270 Madison Avenue, New York, NY 10016

For Defendants

Charles Mester Esq.

Turk Roth Mester, LLP

377 5th Avenue, New York, NY 10016

DECISION AND ORDER

LUCY BILLINGS, J.:

Plaintiff moves under C.P.L.R. § 5015(a)(3) to vacate a satisfaction of judgment executed December 30, 2006, and recorded January 5, 2007, by the Clerk of New York County, on the grounds that the satisfaction of judgment was forged and thus fraudulently executed. The decision of this motion requires the court to determine the permissible procedure for vacating a satisfaction claimed to be fraudulent, the timeliness standards that apply, and the standard of proof that the moving party must meet, as well as the application of C.P.L.R. §§ 4519, 4536, and4538 in this context. The court concludes that plaintiff's motion under C.P.L.R. § 5015(a)(3) is a permissible vehicle for the relief sought and is timely, but that plaintiff has not met its heavy burden to succeed via this motion.

I. BACKGROUND FACTS

Plaintiff commenced this action against the Brody defendants in 1990 for $2,109,110.64, plus interest. On December 9, 1994, defendants M.H.B. Holdings, Inc., 20-35-25 West Corp., Martin Brody, Rachel Brody, Philip Brody, and Hadassah Brody (Brody defendants) entered a stipulation of settlement in which plaintiff agreed to accept a total of $240,000.00 in payments of $2,000.00 per month from the Brody defendants in full settlement of plaintiff's action against them. The December 1994 stipulation provided that, in the event the Brody defendants defaulted in their stipulated payments, plaintiff was entitled to a judgment against the Brody defendants in the full amount claimed, reduced by any payments made, plus interest. Upon the Brody defendants' subsequent default, plaintiff obtained a deficiency judgment entered March 20, 1997.

The parties then entered another stipulation dated April 12, 1997, to vacate the March 1997 judgment and modify the December 1994 stipulation. The April 1997 stipulation provided that, upon the Brody defendants' failure to make any payment by the date when due, plaintiff was entitled, without further notice, to enter a deficiency judgment against the Brody defendants. Upon their default under this stipulation, plaintiff obtained adefault judgment entered February 28, 2006, against the Brody defendants for $4,408,406.64, including interest from December 10, 1992. The satisfaction of judgment executed December 30, 2006, and recorded January 5, 2007, now challenged, acknowledged that the Brody defendants had satisfied the February 2006 default judgment; bore the signature of Moshe Katlowitz, attorney for plaintiff; and was notarized by Naftali Ausch December 30, 2006.

II. PLAINTIFF'S CURRENT CLAIM

Plaintiff claims that the Brody defendants failed to remit any funds in satisfaction of the February 2006 judgment; denies Katlowitz's execution of the satisfaction of judgment December 30, 2006; and, on those grounds, moves to vacate the satisfaction pursuant to C.P.L.R. § 5015(a)(3). Plaintiff maintains that it delayed enforcement of the February 2006 judgment because it believed the Brody defendants lacked assets. Only when it investigated the Brody defendants' assets in contemplation of enforcing the judgment, did plaintiff discover the satisfaction March 11, 2013.

Katlowitz denies ever receiving authority from plaintiff to execute a satisfaction of judgment and meeting the notary public, as well as signing the satisfaction. He maintains that his signature was forged, pointing out that the final stroke of the signature on the satisfaction curves to the left, unlike his exemplars of his authentic signature. Besides the exemplars of Katlowitz's signature, which include copies of letters bearing his signature shortly before or after December 30, 2006,plaintiff presents affirmations by his colleagues who attest that they are familiar with his signature and that the signature on the satisfaction is not his. Although Katlowitz, a Sabbath observer, admits he was in New York City Saturday, December 30, 2006, so as to have executed the satisfaction after nightfall on that date before the Notary Public in New York County, he insists that such a possibility is inconsistent with his regular observance of the Sabbath at his residence in Kings County. Finally, Katlowitz recounts that his law firm records show no time recorded for services on behalf of or related to plaintiff on that date, but absent plaintiff's presentation of these records in support of its motion, Katlowitz's recitation of their contents is sheer hearsay. People v. Joseph, 86 N.Y.2d 565, 570 (1995); Fiallos v. New York Univ. Hosp., 85 A.D.3d 678, 678 (1st Dep't 2011); Lapin v. Atlantic Realty Apts. Co., LLC, 48 A.D.3d 337, 338 (1st Dep't 2008).

III. VACATUR OF A SATISFACTION OF JUDGMENT

A. The Permissible Procedure

C.P.L.R. § 5015(a) (3) provides that the court may relieve a party from a judgment upon a motion on the ground of fraud, misrepresentation, or other misconduct of an adverse party. Although C.P.L.R. § 5015(a)(3) does not expressly apply to a satisfaction of judgment, it does not prohibit the vacatur of a post-judgment satisfaction, discharge, or enforcement proceeding upon a motion for that relief. E.g., Bank Leumi Trust Co. of New York v. Toms, 117 A.D.3d 555, 556 (1st Dep't 2014); NYCTL 1998-2Trust v. Ackerman, 82 A.D.3d 447, 447 (1st Dep't 2011); Friedman v. Janceski, 255 A.D.2d 227, 228 (1st Dep't 1998). See Matter of Hayes, 1 A. D. 3d. 789, 790 (3d Dep't 2003). The court also is empowered to vacate prior proceedings in the interest of substantial justice. Woodson v. Mendon Leasing Corp., 100 N.Y.2d 62, 68 (2003); Goldman v. Cotter, 10 A.D.3d 289, 293 (1st Dep't 2004); Appalachian Ins. Co. v. General Elec. Co., 8 A.D.3d 109, 109 (1st Dep't 2004); Bay Crest Assn., Inc. v. Paar, 99 A.D.3d 744, 746 (2d Dep't 2012),

A new action for fraud would be required to vacate a satisfaction of judgment only where the grounds for the vacatur occurred outside the original litigation and are wholly unrelated to the basis for the prior judgment in the original action. Wolfert v. Buttolph, 206 A.D.2d 359, 359 (2d Dep't 1994). Plaintiff's claim of fraud in the execution of the satisfaction, based on the Brody defendants' nonpayment pursuant to the stipulated settlement, and their defense, that plaintiff's deceased owner Joseph Wassner accepted their payments in full satisfaction of the settlement, arise from the original litigation. Since the allegedly fraudulent satisfaction of judgment was procured in the course of the original litigation where the judgment was entered, a vacatur by a motion pursuant to C.P.L.R. § 5015(a)(3), instead of a separate action, is permissible. See Matter of New York Diet Drug Litig., 47 A.D.3d 586, 586 (1st Dep't 2008); Parker & Waichman v. Napoli, 29 A.D.3d 396, 399 (1st Dep't 2006); Friedman v. Janceski, 255 A.D,2d at288.

B. Plaintiff's Timeliness

A motion for a vacatur based on fraud under C.P.L.R. § 5015(a)(3) must be brought within a reasonable time. Mark v. Lenfest, 80 A.D.3d 426, 426 (1st Dep't 2011); Indymac Bank, F.S.B. v. Yano-Horoski, 107 A.D.3d 672, 672 (2d Dep't 2013). When a fraud ought to have been discovered with reasonable diligence depends on when the circumstances suggest the probability of fraud to a person of ordinary intelligence. Sargiss v. Magarelli, 12 N.Y.3d 527, 532 (2009); Apt v. Morgan Stanley DW, Inc., 115 A.D.3d 466, 467 (1st Dep't 2014); Gutkin v. Siegal, 85 A.D.3d 687, 688 (1st Dep't 2011). The satisfaction was filed more than six years before plaintiff served this motion to vacate the satisfaction. Plaintiff, the moving party that bears the burden to establish the motion's timeliness, Taveras v. Philibert, 107 A.D.3d 492, 492 (1st Dep't 2013); Mark v. Lenfest, 80 A.D.3d at 426, provides no explanation for suddenly deciding to search for the Brody defendants' assets to enforce the February 2006 judgment in 2013, upon Joseph Wassner's death, or why such research in 2013 necessarily would lead plaintiff to discover the satisfaction of judgment.

Yet no circumstances in the record indicate that plaintiff knew facts from which to infer that a fraudulently executed satisfaction had been filed. See Trepuk v. Frank, 44 N.Y.2d 723, 724-25 (1978); Uni-Rty Corp. v. N. Y. Guangdong Fin., Inc., 117 A.D.3d 427, 427 (1st Dep't 2014); CSAM Capital, Inc. V. Lauder,67 A.D.3d 149, 157 (1st Dep't 2009); Brady v. Murray, 30 A.D.3d 186, 186 (1st Dep't 2006). Nor was it unreasonable for plaintiff not to investigate for any satisfaction of the judgment or not to inspect the public record for any purpose before March 2 013 and to inspect the record only when plaintiff sought to enforce the judgment. Guedi v. Dana, 11 A.D.3d 368, 368 (1st Dep't 2004); McGuiness v. Standard Drywall Corp., 193 A.D.2d 518, 518 (1st Dep't 1993). See Jaliman v D.H. Blair & Co. Inc., 105 A.D.3d 646, 647 (1st Dep't 2013). Then, upon discovering the satisfaction March 11, 2013, plaintiff promptly moved to vacate the satisfaction less than a month later. See Mark v. Lenfest, 80 A.D.3d at 426; Guedj v. Dana, 11 A.D.3d at 368; McGuiness v. Standard Drywall Corp., 193 A.D.2d at 518.

IV. LACK OF A CLEAR AND CONVINCING SHOWING

A. Plaintiff's Lack of a Prima Facie Showing

Although an expert's opinion is not essential, more than a bare allegation of forgery is required to contest a signature's authenticity. Banco Popular N. Am. v. Victory Taxi Mgt., Inc., 1 N.Y.3d 381, 384 (2004) ; CIT Tech. Fin. Servs. I LLC v....