Opinion
400171/10.
August 9, 2010.
Decision and Order
Co-defendant, Nissan Motor Acceptance Corporation ("NMAC" or "Lender") moves for summary judgment, and also relies on UCC 9-609 [c] and CPLR 7101, for an order declaring NMAC to have a possessory right to a 2008 Nissan Altima, a motor vehicle bearing Vehicle Identification Number 1N4AL21E78N404001 ("Nissan" or "vehicle") which is allegedly superior to the property interests of co-defendant, Iliana Hernandez ("Iliana"). Iliana opposes the motion, however, Plaintiff, Property Clerk, New York City Police Department ("Plaintiff", "NYPD" or "Property Clerk"), filed an attorney's affirmation advising that Plaintiff has "no opposition to NMAC's exercise of its contractual and legal rights . . ." (Russo Aff at ¶ 7).
Brief Background and Procecural History
Pursuant to NYC Adm Code § 14-140, Plaintiff in this action seeks the forfeiture of the Nissan as an instrumentality of a crime. It started with an extensive investigation which culminated on October 6, 2009, when NYPD police officers arrested co-defendant, Juan Leon ("Leon") and charged him with committing various felony crimes while using the vehicle. At the time of Leon's arrest, the vehicle was seized and vouchered. On October 7, 2009, Leon was indicted and is currently in prison awaiting trial (see Affidavit of Service as Exhibit 3 to Russo Opp Aff).
The Property Clerk, in its verified complaint, essentially seeks the forfeiture of the vehicle because, Leon, as the beneficial owner, allegedly exercised dominion and control over the Nissan and used this vehicle "on multiple occasions to conceal and transport multiple illegal firearms and a controlled substance and to facilitate the sale of illegal firearms and [a] controlled substance, as part of an interstate trafficking ring . . ." (Exhibit B to Motion at ¶ 5). As to Iliana, Property Clerk simply resorted to repeated use of a boilerplate pleading without any factual underpinnings, to wit: "Iliana Hernandez consented, suffered and/or permitted . . . Leon to use the Subject Vehicle, and knew or should have known of . . . Leon's likely or intended illicit activity." (Verified Complaint as Exhibit B to Motion at ¶¶ 12,17, 22, 27, 32, 37, 42, 47, 52, 57, 62, and 67).
Notably at the outset, Property Clerk makes absolutely no claim that co-defendant Iliana used the Nissan to facilitate the commission of any crime and/or operated this vehicle for any illegal purpose. And Property Clerk joined NMAC, a nominal co-defendant, as an interested party solely to afford this secured creditor the right to actively participate in this action and protect its interests in the vehicle. Ford Motor Credit Co. v NYC Police Dept., Property Clerk, City of New York, 503 F3d 186 (2nd Cir 2007) (see Verified Complaint as Exhibit B to Motion at ¶ 8).
NMAC interposed an unverified answer to Plaintiff's verified complaint pleading an innocent lienholder defense and a cross-claim against Iliana (Exhibit B to Motion). Iliana filed her own verified answer attesting to being an innocent owner, but filed a separate verified answer in July 2010 to Lender's cross-claim (see Exhibit A to Hernandez Opp Aff). Presumably because Leon has no property interest in the vehicle and nothing to lose, Leon has neither answered the verified complaint or retained counsel to represent his interests nor made any effort to appear in court either personally or by designee when this matter was/is calendared.
Court records disclose that on July 21, 2010, Property Clerk filed a motion for a default judgment solely against Leon which was returnable August 5, 2010. The motion is now returnable on August 12, 2010.
By order to show cause dated February 11, 2010, Plaintiff sought a preliminary injunction to stay Leon and Hernandez from "selling, leasing, gifting, assigning, pledging or otherwise disposing of . . ." the Nissan. Since the inception of this matter, to date, Lender has never made a court appearance. At the nascent stage, NMAC apparently chose not to take a position for or against Property Clerk's application for this provisional remedy. Iliana did not file any formal opposition but did submit documentation and other relevant information to persuade Plaintiff to allow her to sell the vehicle which would moot this action. In its unpublished June 10, 2010 Decision and Order, this court granted Plaintiff a preliminary injunction for the requested relief and at the same time directed Plaintiff to not only file a Note of Issue but also required all parties to "proceed to a jury trial [on July 19, 2010] to ultimately determine whether . . . [Iliana knew or should have known Leon, an alleged beneficial owner of the Nissan, was using this vehicle to commit various crimes and] is civilly liable under N.Y.C. Adm. Code § 14-140 warranting forfeiture of the Nissan. The outcome-determinative verdict . . . [would] moot the need for any further provisional remedy pending the criminal prosecution against Leon for the alleged crimes." (bracketed matter added).
Counsel for Plaintiff and Iliana stipulated to adjourn the jury selection date to July 26, 2010 and during that ensuing week, and without leave of court, signed a stipulation agreeing to postpone the filing of the Note of Issue until 30 days after the issuance of a decision disposing of NMAC's summary judgment motion.
NMAC'S Motion
While Iliana is the only registered and titled owner of the Nissan ( see Exhibit A to Hernandez Opp Aff at 5), nonetheless, she and Leon did co-sign a Simple Interest Retail Installment Contract — New York with NMAC (the "Contract") to finance the purchase of this vehicle (Exhibit A to Motion). Pursuant to the Contract, the vehicle was pledged to NMAC as collateral, requires Iliana and Leon to preserve the vehicle from harm and allows NMAC to take the vehicle from them if they breach the Contract.
As a procedural matter, NMAC initially notes that at the time it served and filed this motion, Iliana had not answered its cross-claim. As to the merits, NMAC contends that Leon's alleged illegal use of the vehicle to commit the varied crimes, the current criminal prosecution of Leon and the commencement of this concomitant forfeiture action triggered a default under the Contract entitling NMAC to possess the Nissan. Thus, NMAC seeks summary judgment declaring Lender to be an innocent lienholder who has a "superior right of possession to the vehicle . . . [and] is entitled to immediate possession . . ." thereof (Grimes Aff in Support of Motion at ¶ 2). Stated more starkly, NMAC seeks an order confirming its right to terminate Iliana's right to possess and use the Nissan, and pursuant to its "duly perfected, first priority purchase money security interest . . ." (Meola Aff in Support of Motion at ¶ 2), directing Plaintiff to immediately deliver the vehicle to NMAC to enable Lender to "liquidate the vehicle and apply the proceeds received to reduce the balance owed NMAC under the . . . [Contract]. . ." ( Id. at ¶ 5).
Because NMAC's cross-claim never demanded an answer, Iliana was otherwise relieved of any "obligation to serve an answer to the cross-claim, because . . . [without a demand], the allegations of the cross claim are deemed to be denied and avoided (CPLR 3011) . . ." Green Point Sav. Bank v Pagano, 103 AD2d 735, 736 (2nd Dept 1984); Fleet National Bank v Harley, 153 AD2d 1005 (3rd Dept 1989). Evidently in an abundance of caution, Iliana served and filed her verified answer to the cross-claim and categorically denies being in default under the Contract.
Pursuant to UCC § 9-609 et seq., based on a contract default, a secured creditor may seek to recover possession of collateral with or without judicial process.
Iliana's Opposition
Iliana also claims to be an innocent owner (Hernandez Opp Aff at ¶ 11; see also, Verified Answer at ¶ 70 [Exhibit A to Hernandez Opp Aff at ¶ 70]), categorically denies each and every pleaded claim that she "consented, suffered and/or permitted . . ." Leon to use the vehicle for criminal/illegal purposes and attests to first learning about Leon's criminal activities at the time of his arrest; categorically denies ever having any actual or constructive knowledge of Leon's alleged, historic and ongoing criminal/illegal activity (Verified Answer, in passim); and categorically denies breaching the "Use of Vehicle" (Clause C) and "Default" (Clause F) provisions of the Contract (Hernandez Opp Aff at ¶¶ 3-10). Morever, despite the pendency of this forfeiture action, Iliana currently possesses and uses the Nissan as well as continues to make timely car loan payments, to date (see Hernandez Opp Aff at ¶ 17; Exhibit A to Hernandez Opp Aff at 39). Finally, Iliana contends that NMAC has not demonstrated a good faith basis for believing that "its prospect of payment or performance [under the Contract] is impaired" (Hernandez Opp Aff at ¶ 19) and, therefore, the latter has no contractual right to any motion-requested relief.
Discussion
"[T]he proponent of a summary judgment motion must make a prima facie showing of entitlement to judgment as a matter of law, tendering sufficient evidence to eliminate any material issues of fact from the case [internal quotation marks and citation omitted]." Santiago v Filstein, 35 AD3d 184, 185-186 (1st Dept 2006). The burden then shifts to a motion's opponent to "present facts in admissible form sufficient to raise a genuine, triable issue of fact." Mazurek v Metropolitan Museum of Art, 27 AD3d 227, 228 (1st Dept 2006); see Zuckerman v City of New York, 49 NY2d 557, 562 (1980). If a motion's opponent does not competently controvert any evidentiary supportive fact, that fact may be deemed admitted. Kuehne Nagel, Inc. v Baiden, 36 NY2d 539, 544 (1975); see also, Monroe Dewey Partners v MDR Dev., Inc., 159 AD2d 948 (4th Dept 1990). If there is any doubt as to the existence of a triable fact, the motion for summary judgment must be denied. See Rotuba Extruders, Inc. v Ceppos, 46 NY2d 223, 231 (1978).
Before addressing the merits of NMAC's summary judgment motion, a brief review of the import of Krimstock v Kelly, 306 F3d 40 (2nd Cir 2002), cert denied 539 US 969 (2003)(" Krimstock") is necessary. Krimstock has made prompt post-seizure retention hearings legally de rigueur when motor vehicles are seized at the time any criminal defendant is arrested. As has been oft-stated, the purpose of a prompt post-seizure retention hearing is "to afford any defendant whose motor vehicle was seized at the time of arrest with the opportunity for a prompt, post-seizure hearing to determine the probable validity and justification for the pre-judgment retention of the vehicle, pendente lite.' ( Property Clerk v Burnett, N.Y.L.J., August 6, 2004, p. 18, col.1 [Sup. Ct., N.Y. Co.]) . . ." Property Clerk of Police Dept of City of New York v Harris, 7 Misc3d 1032[A] [*1](Sup Ct, NY Co, 2005), revd 34 AD3d 215 (1st Dept 2006), affd 9 NY3d 237 (2007)(" Harris").
Prior to commencing this forfeiture action, Plaintiff provided both Leon, the vehicle operator at the time of his arrest and Iliana with notice to appear at a Krimstock hearing and justify its seizure and then retention of the vehicle. As indicated earlier, a grand jury has indicted Leon inter alia with committing various felonies and the vehicle served as the instrumentality of these crimes, namely, Leon was indicted for using the Nissan to store and transport cocaine and firearms for criminal sale. Thus, if the scheduled Krimstock hearing had been held, one would not need to be prescient to discern that Plaintiff could easily have demonstrated probable cause for Leon's arrest, a likelihood of success in this forfeiture action and the need for continued impoundment of the Nissan if Leon was the owner of the vehicle and sole defendant in this action.
Generally at such hearings, Property Clerk would have to establish probable cause for a defendant's arrest, a likelihood of success in obtaining civil forfeiture and the need for continued retention of a motor vehicle to ensure its availability for a forfeiture judgment.
But, that is not the case here. Property Clerk also joined Iliana, the only registered and titled owner of the Nissan. As such, Iliana would have to have been afforded a full and fair opportunity to present an innocent owner defense and contest any continued impoundment of the Nissan, pendente lite. And as shown on this slim record thus far, that burden would have been one Iliana could have easily met ( Harris, 9 NY3d at 248).
Based on certain procedural infirmities, no Krimstock hearing was actually held to afford Iliana the "opportunity to prove that . . . [she] did not 'permit' or 'suffer' the criminal use of . . . [her] vehicle (see Krimstock, 306 F3d at 48,56-58, 63)." ( Id. 9 NY3d at 243). Property Clerk, perhaps mindful of Iliana's posture as an innocent owner and her significant property interest in the Nissan, agreed to release this vehicle, pendente lite, which, as noted earlier, Iliana continues to exclusively possess and use, to date. See generally, Property Clerk of Police Dept of City of New York v Plaskett, 40 AD3d 231 (1st Dept 2007).
Against this backdrop, it must be emphasized that unlike Iliana, NMAC, the innocent lienholder, does not have a present possessory right to the Nissan ( Property Clerk of NYC Police Dept v. Molomo, 81 NY2d 936). Rather, it has a "contingent possessory interest in a seized vehicle. "( Harris, 9 NY3d at 246), a considerable "interest in . . . [its] present value . . ." and the same right as a vehicle claimant-owner to expect that a civil forfeiture action be promptly instituted and then be afforded due process and an opportunity to be heard as an active participant in such action. See Ford Motor Credit Co., supra, 503 F3d at 193-195.
There is no question that this action was promptly commenced and the defendants accorded due process protection. And while this action was commenced in early February 2010, four months elapsed before NMAC decided to make this dispositive motion in its attempt to gain possession of the Nissan based on its co-defendants' alleged default of their Contract with Lender.
That being said, NMAC's premature summary judgment motion must be denied for following reasons.
At the outset, NMAC cannot justifiably rely on County of Nassau v Patel, 10 Misc3d 1052(A) (Sup Ct, Nassau Co, 2005) as being controlling in this matter. In Patel, supra, there were two critical factors to justify the court awarding possession of a seized vehicle to American Honda Finance Corp. ("Honda"), a lienholder like NMAC: (1) the sole defendant-owner of the motor vehicle subject to civil forfeiture was convicted for violating VTL § 1192.2, a misdemeanor crime; and (2) at the time Honda made its motion to recover possession of Patel's vehicle, the plaintiff-claiming authority was entitled to summary judgment as a matter of law in that action for civil forfeiture of defendant-owner's motor vehicle which was used as an instrumentality of this crime (Nassau County Adm Code § 8-7.0[g][3]). Therefore, the plaintiff-claiming authority's actual consent to allow Honda to recover the "collateral vehicle" from the defendant-owner served the same purpose as obtaining a judgment of forfeiture.
One distinguishing factor is that in the parallel criminal prosecution here, Leon has yet to be convicted of any of the crimes for which he has been indicted. Another significant factor in this action is Iliana, the titled owner of the vehicle, who is aggressively defending against the civil forfeiture of the Nissan Leon used in the alleged commission of various crimes and who has a right to, and does, advance an innocent owner defense to defeat Plaintiff's forfeiture claim ( see County of Nassau v Rojas, 49 AD3d 487, 488 [2nd Dept 2008]) (Nassau County Adm Code §§ 8-7.0[g] et seq. requires an "adjudication of guilt against the driver and [must] afford an 'innocent owner' the opportunity to assert a[] . . . defense . . .").
Nassau County Administrative Code § 8-7.0(g)[4][f] expressly allows an owner of a motor vehicle to establish he or she is an innocent owner as an affirmative defense (see also, County of Nassau v Rojas, supra). And for guidance as to the competing burdens and evidentiary criteria, this court turns to case law in the Second Department where the defense of innocent ownership has been raised with greater frequency than in the First Department.
To reiterate, Patel, supra, involved an owner-operator of a motor vehicle used in the commission of crime. But on a record developed during this round of summary judgment motion practice, neither Lender nor Plaintiff has competently shown that Iliana ever used the vehicle in furtherance of any crime and/or that she "knew or should have known that . . . [Leon would use the Nissan] as an instrumentality of or in furtherance of a crime . . ." ( Property Clerk, New York City Police Dept. v Pagano, 170 AD2d 30, 35 (1st Dept 1991).
At this juncture, except for relying on Iliana's responses to certain interrogatories ( see Exhibit 3 to Russo Aff)(e.g., Iliana permitted Leon to use the Nissan for work, whereas she used the vehicle on weekends for personal use), Plaintiff has not offered any competent proof to "rebut the showing of innocent ownership [i.e., Iliana's sworn affidavit in opposition to NMAC's motion, her verified answers, etc.] by demonstrating that the person charged with using the vehicle as an instrumentality of the crime is the beneficial owner of the vehicle . . ." (bracketed matter added) Price v Property Clerk of New York City Police Dept., 74 AD3d 1078 (2nd Dept 2010). Stated differently, while Plaintiff relies on the fact that Leon co-signed the Contract presumably as an accommodation co-buyer, this fact alone does not constitute "sufficient evidence of . . . [Leon's] possessory interest in the car, with its attendant characteristics of dominion and control, to sustain a finding that . . . [Leon] was the owner of the car . . ." (bracketed matter added) Vegari v. Kraisky, 120 AD2d 739, 740 (2nd Dept 1986).
Parenthetically, Plaintiff blithely acquiesces to NMAC's motion to recover possession of the Nissan ostensibly to avoid the time or expense of a jury trial and without any claim that it is capable of rebutting Iliana's innocent ownership defense (and for that matter proving she was merely the nominal owner). In this vein, Plaintiff does not even advance the notion that it needs further discovery "into the issue of whether the owner could establish innocent ownership . . . by exploring, inter alia, whether . . . [Iliana] knew of . . . [Leon's] intended whereabouts . . . [at the time he was arrested] and any other issues related to the question of innocent ownership . . ." (bracketed matter added)( County of Nassau v Valesquez, 44 AD3d 987 (2nd Dept 2007]) (see CPLR § 3212[f]).
On this record, it is evident that Iliana, the titled owner and Contract buyer assumed, and continues to assume, her Contract obligations, to wit, she has not used the vehicle illegally or subjected the vehicle to lawful seizure. On that score, the court files show that Iliana had lawfully retrieved the Nissan from Property Clerk's custody by the time Plaintiff completed service of process in this action in or about February 2010. Further, despite the pendency of this action, even Lender has not offered a scintilla of evidence that Iliana, the Contract buyer, impaired "her prospect of payment or performance . . ." (Exhibit A to Grimes Aff in Support of Motion at Clause F) and/or impaired Lender's security interest in the vehicle. Contrarily, Iliana is current with her loan payment schedule under the Contract and has made certain "to keep the vehicle in good condition, obey all laws, . . . [and] keep the vehicle free from the claims of others . . ." ( County of Nassau v Gazzola, 2005 NY Misc LEXIS 3561 [*8][Nassau Co, Sup Ct, 2005]).
While it may be said that Iliana's unchallenged affidavit (and verified answer to the cross-claim) in opposition to Lender's summary judgment motion might be insufficient to award Iliana summary judgment dismissing this action ( see Velasquez, supra, 44 AD3d at 988), still at the very least, Iliana has raised triable issues to counter Lender's conclusory claim that this Contract Buyer has breached her Contract. Right now, NMAC has simply not shown it is entitled to summary judgment on its cross-claim pursuant to CPLR Article 71, particularly without a factual basis to claim a superior possessory right than that of Iliana requiring the latter to turn over possession of the Nissan to Lender. Accordingly, NMAC's motion for summary judgment is denied in its entirety.
Plaintiff shall be directed to file a Note of Issue no later than September 6, 2010. This court further directs all parties to appear on September 13, 2010 at 9:30 a.m. at the 4th Floor Jury Assembly Room at 60 Centre Street, New York, New York for jury selection and the ensuing trial forthwith. This is a final marking against all parties for all purposes.
This constitutes this court's Decision and Order. Courtesy copies of same have been provided to counsel for the parties.