Pope v. Saget

• Decision Date: 23 May 2006
• Docket Number: 8151.,8150.
• Citation: 2006 NY Slip Op 03999,817 N.Y.S.2d 1,29 A.D.3d 437
• Parties: KENDALLE POPE, as Executrix of MAUD ATKINS, Deceased, et al., Respondents, v. ALIX SAGET et al., Defendants, and ALEW MANAGEMENT & DEVELOPMENT, LLC, et al., Appellants. KENDALLE POPE, as Executrix of MAUD ATKINS, Deceased, et al., Respondents, v. ALIX SAGET et al., Defendants, and EQUITY SETTLEMENT SERVICES, INC., Appellant.
• Court: New York Supreme Court — Appellate Division

29 A.D.3d 437

817 N.Y.S.2d 1

2006 NY Slip Op 03999

KENDALLE POPE, as Executrix of MAUD ATKINS, Deceased, et al., Respondents, v. ALIX SAGET et al., Defendants, and ALEW

MANAGEMENT & DEVELOPMENT, LLC, et al., Appellants.

KENDALLE POPE, as Executrix of MAUD ATKINS, Deceased, et al., Respondents, v. ALIX SAGET et al., Defendants, and EQUITY SETTLEMENT SERVICES, INC., Appellant.

8150.

8151.

Appellate Division of the Supreme Court of the State of New York, First Department.

May 23, 2006.

Order, Supreme Court, New York County (Sherry Klein Heitler, J.), entered January 24, 2005, and order, same court and Justice, entered September 23, 2005, denying defendants' motions to dismiss the complaints against them, unanimously modified, on the law, to the extent of granting the motions to dismiss the causes of action of fraud and misrepresentation as against appealing defendants, Alew Management & Development, LLC, Suntrust Mortgage, Inc., Eliezer Elias and Equity Settlement Services, Inc., and otherwise affirmed, without costs.

This case arises from a purported transfer of property at 145 West 132nd Street, Harlem, from an aged owner to multiple successive owners. The original owner, Maud Atkins, died on February 12, 1998. Plaintiff Kendalle Pope is Atkins's cousin and her executrix. Plaintiff Kevin Smith is Pope's brother and, under the Atkins will, a devisee to whom she bequeathed the subject premises.

A deed dated January 17, 1998 purportedly conveyed the premises from Atkins to defendant Alix Saget¹ less than one month before Atkins's death. The deed misspelled Atkins's first name. It appeared to be notarized in Florida, which 96-year-old Atkins, bedridden, unable to write and suffering from dementia, had not visited. It was not recorded until more than four years later on May 22, 2002.

In its decision and order entered January 24, 2005, the motion court declared the deed a forgery and, thus, void. In the meantime, however, by deed dated July 16, 2002 and recorded August 14, 2002, Saget purported to convey the premises to defendant Mercury Homes Rehab, LLC (Mercury).² Defendant-appellant Equity Settlement Services, Inc. (Equity) was the abstract company that conducted the title search for the purported Saget-Mercury sale.

Before the Saget-Mercury deed was recorded, a deed dated August 7, 2002, subsequently recorded October 10, 2002, conveyed the premises from Mercury to defendant-appellant Eliezer Elias. He then conveyed the property to a real estate corporation he owned in part, Alew Management & Development, LLC (Alew).

The Atkins will was admitted to probate in New York County Surrogate's Court on October 22, 2002, and the premises were subsequently devised to Smith. Plaintiff executrix's attorney apparently uncovered the fraudulent conveyances when he ordered a title search in connection with probate.

In January 2003, plaintiffs commenced this action alleging forgery, misrepresentation and fraud. They acknowledged, however, that they and their predecessors in interest "have been in actual possession and occupancy" of the subject property since 1979.

In the second cause of action alleging misrepresentation, plaintiffs claimed that defendants acted in concert, transferring title to the premises in quick succession, and that they filed the fraudulently created documents with the City Register knowing that the public would rely on the records, and "in furtherance of their intent to defraud plaintiffs."

In the third cause of action alleging fraud, plaintiffs claimed that they relied upon the recorded documents to their detriment. They claimed damages of $1 million.

In September 2004, defendants Suntrust, Alew and Elias opposed plaintiffs' motion for summary judgment, and cross-moved to dismiss the claims for damages against them. They conceded that there was no delivery of a deed between Atkins and Saget, and that title in the premises should be revested in the plaintiffs. However, they asserted that they were not the parties involved in the forgery, or in any fraud or misrepresentation. They further argued that plaintiffs had not sustained any recoverable monetary damages.

In a decision and order entered January 24, 2005, the court, in that part of the order not appealed here, granted summary judgment to plaintiffs to the extent of declaring the Atkins-Saget deed void. The court found that neither Elias nor Alew held valid title to the property and that Suntrust had lost its mortgage security.³ The court denied summary judgment to plaintiffs on the issue of damages. It found that plaintiffs were unable to show what rental loss was caused by the fraudulent transfer or transfers and what efforts were made to market the property during the relevant time frame.⁴

The court also denied defendants' motion to dismiss the claims of fraud and misrepresentation against them. The court found a triable issue of fact existed as to whether defendants knew or should have known that the Atkins-Saget deed was forged. The court found that factors like the incorrect name on the deed, the series of rapid transfers, and the unusually long time between the execution of the Atkins-Saget deed and its recording could have put defendants on notice that something was amiss with the Atkins-Saget deed.

In September 2005, the court denied a similar motion to dismiss the complaint against defendant Equity. The court observed that if Equity knew or had reason to know that the Atkins deed was forged, then plaintiffs had a viable fraud claim against it.⁵

Now, in this consolidated appeal, defendants-appellants Alew, Elias and Suntrust and defendant-appellant Equity Settlement Services, Inc. assert that the fraud claims against them were not pleaded with sufficient particularity. They further argue that even if the fraud claims were properly pleaded and proved, plaintiffs have failed to show they have any recoverable damages.

We agree, and for reasons set forth below we modify both orders of the motion court to the extent of dismissing the fraud and misrepresentation causes of action against all the appealing defendants.

The elements required to be set forth in a viable fraud action are well established. In order to recover for fraud, plaintiffs must show a representation of material fact, the falsity of that representation, knowledge by the party who made the representation that it was false when made, justifiable reliance by the plaintiff, and resulting injury (see Channel Master Corp. v Aluminium Ltd. Sales, 4 NY2d 403, 406-407 [1958]). CPLR 3016 (b) requires that these elements of fraud be pleaded in detail (see Salles v Chase Manhattan Bank, 300 AD2d 226, 235 [2002]; Monaco v New York Univ. Med. Ctr., 213 AD2d 167, 169 [1995], lv dismissed in part and denied in part 86 NY2d 882 [1995]). In...