Opinion
11920/04.
Decided November 30, 2006.
On April 14, 2004, plaintiff Mariel Thomson (hereinafter Thomson) commenced the instant action by filing a summons and verified complaint with the Kings County Clerk's office. Defendant 395 Van Brunt (hereinafter Brunt) joined issue by verified answer and counterclaim dated October 20, 2004. Defendants Daisy's Luncheonette Corp.(hereinafter Daisy) and Nicholas Faselis (Faselis) are represented by the same counsel and filed their verified answer and counterclaims on October 24, 2004.
Plaintiff's complaint alleges the following. Plaintiff and Norman Gluck own real property located at 395 Brunt Street, Brooklyn, New York. On February 4, 2003, she asked Faselis, an officer of Daisy, for a loan of forty seven thousand dollars ($47,000.00) secured by the aforementioned real property. The loan was memorialized by the simultaneous execution of a bargain and sale deed and a contract of sale. Daisy allegedly recorded the deed and transferred title to the real property to Brunt by improperly treating the loan as a sale of the property. Plaintiff seeks consequential and punitive damages, legal fees and the cost of the action.
Defendants Daisy and Faselis' answer assert six affirmative defenses and two counterclaims. The first affirmative defense is that the complaint fails to state a cause of action. The second is that plaintiff's claim is barred by estoppel. The third is that her claim is barred by documentary evidence. The fourth is that the matter should not proceed without Norman Gluck. The fifth is that plaintiff's claim is barred due to her receipt of payment for the subject real property. The sixth is that plaintiff's claim is barred by the statute of frauds. The first and second counterclaim seeks reimbursement of the satisfaction of liens and encumbrances docketed against the subject property in the event plaintiff prevails.
Brunt's answer asserts six affirmative defenses and two counterclaims. The first affirmative defense is that the complaint fails to state a cause of action. The second, third, fourth and fifth assert that plaintiff's claim is barred by laches, promissory estoppel, documentary evidence and the statute of frauds, respectively. The sixth is that Brunt is a bona fide purchaser for value. The first and second counterclaim seek damages for plaintiff's encumbrance of the subject property.
The issues in this action were tried before Part 52 of this Court without a jury on July 25 and August 14, 2006. Mariel Thomson, Sylvester Sichenzie, Joseph Mannino, Nicholas Faselis, Santo Searlto and Salvatore Inzvillo testified at trial. Only two documents were admitted into evidence, a contract of sale and a bargain and sale deed by the plaintiff. Pursuant to CPLR § 4213, the parties were afforded an opportunity to submit requests for findings of fact. Daisy and Plaintiff did so. Brunt adopted Daisy's proposed findings of fact. The court makes the following findings of fact.
Findings of Fact
In February of 2003, plaintiff and Norman Gluck owned real property (hereinafter the subject property) located at 395 Van Brunt Street, Brooklyn, New York. At the time the property was encumbered by two mortgages held by Joseph Mannino and a tax lien. Plaintiff was faced with notice of a tax lien foreclosure sale scheduled for February 5, 2003 and believed that she was in imminent danger of losing all her interest in the subject property. She contacted Joe Mannino seeking financial help to satisfy the tax lien and imminent tax lien sale.
Mannino had given plaintiff loans in the past secured by her real properties. He also had previously brought two prior mortgage foreclosure proceedings against the plaintiff for non-payment of her mortgage obligations. One pertained to the subject property and the other was to a property she owned located at 397 Van Brunt Street in Brooklyn, New York. Mannino obtained judgments of foreclosure and sale in both proceedings. Plaintiff lost the 397 Van Brunt property at an auction. She was able to retain the subject property by a stipulation settling the proceeding and agreeing to a new payment plan.
Based on their history, Mannino was not willing to lend her additional funds but was willing to talk to an associate to see if he would be interested in helping the plaintiff. He contacted Nicholas Faselis, the principal of Daisy, and explained to him plaintiff's plight and his own prior experience with her. Faselis told Mannino he was not interested in lending her money. After Mannino advised plaintiff of this fact, she then asked him if he knew anyone who might be interested in purchasing the property. Mannino went back to Faselis, told him of the liens and encumbrances on the property and of plaintiff's desire to sell the property for a price that would leaving her some cash after paying off the encumbrances. Faselis was interested. He told his attorney, Sylvetser Sichenzie, about his interest and arranged a meeting with plaintiff at his lawyer's office. Sichenzie ordered and obtained a judgment and lien search. He also prepared a deed and associated transfer documents transferring the subject property from the plaintiff and Norman Gluck to Daisy; and a contract of sale allowing the plaintiff to repurchase the subject property at a later date from Daisy.
On February 4, 2003 at 4:00 pm, Faselis met with the plaintiff at Sylvetser Sichenzie's law office. Sichenzie arrived later with the contract of sale and bargain and sale deed. Schenzie waited a while for plaintiff's counsel. After realizing that no attorney was going to come for the plaintiff, sichenzie asked the parties to leave his office. He gave Faselis the contract of sale and bargain and sale deed and expressed his unwillingness to participate in any transactions with the plaintiff while she was unrepresented by counsel.
Plaintiff and Faselis left Sichenzie's office and arranged to meet later that day in Mannino's apartment with Angelo Gallo, a notary public. Plaintiff, Gluck, Faselis and Gallo gathered at Mannino's apartment. While there, plaintiff and Gluck signed and notarized the deed conveying their property at 395 Van Brunt to Daisy. Plaintiff also signed a contract of sale in which Daisy was the seller and plaintiff was the buyer of the subject property. These two documents were the only items admitted into evidence. The contract of sale was signed by Faselis on behalf of Dasiy. Although the contract had a space for Gluck's signature, he did not sign the contract. The contract called for a purchase price of ($50,000.00) fifty thousand dollars, a down payment of five thousand dollars ($5,000.00) and a closing date of May 15, 2003.
Faselis gave the contract of sale and bargain and sale deed, funds to cover the transactions and instructions to record the deed and issue checks. Sichenzie recorded the deed within three days of receiving it. Plaintiff did not provide a down payment to Faselis and did not take any action to close on the repurchase of the subject property. About eight months later, on September 5, 2003, Daisy transferred the subject property to Brunt.
DISCUSSION
The plaintiff seeks monetary damages, punitive damage, the cost of the action and attorney's fees as damages based on the defendant's conveyance of the subject property while she remained the owner of same. She contends that her participation in the execution of a contract of sale and bargain and sale deed was meant to evidence a mortgage secured by the subject property and not a conveyance of the property.
In essence, plaintiff is asking the court to treat the deed of the subject property as a mortgage. Section 320 of the Real Property Law provides as follows: "Certain deeds deemed mortgages. A deed conveying real property, which, by any other written instrument, appears to be intended only as a security in the nature of a mortgage, although an absolute conveyance in terms, must be considered a mortgage; and the person for whose benefit such deed is made, derives no advantage from the recording thereof, unless every writing, operating as a defeasance of the same, or explanatory of its being desired to have the effect only of a mortgage, or conditional deed, is also recorded therewith, and at the same time" (see, Leonia Bank v. Kouri, 3 AD3d 213, 217 [1st Dept 2004]).
The burden of establishing that a deed absolute on its face was intended as a mortgage is onerous and rests entirely on the party seeking to recharacterize the transaction ( Bielawski v. Bazar, 47 AD2d 435 [3rd Dept 1975]. There is a strong presumption that a deed absolute on its face is what it purports to be, and a party can only overcome that presumption by a showing of clear and convincing evidence proving the precise terms of the alleged mortgage ( Bielawski v. Bazar, 47 AD2d 435 [3rd Dept 1975], citing Ensign v. Ensign, 120 NY 65). To establish that the deed was meant only as security, examination may be made not only of the deed and a written agreement executed at the same time, but also to oral testimony bearing on the intent of the parties and to a consideration of the surrounding circumstances and acts of the parties ( Corcillo v. Martut, Inc., 58 AD2d 617 [2nd Dept 1977]).
Plaintiff's evidence consisted of her testimony describing the circumstances by which she executed the aforementioned bargain and sale deed and contract of sale. The plaintiff testified that she and Faselis had agreed that the deed would not be recorded and that the purpose of the deal was to pay the tax lien and halt the tax lien foreclosure auction scheduled for February 5, 2003. They also agreed that the deed and contract of sale were meant to evidence a secured loan and not a conveyance of the subject property. They also agreed that the deed would not be recorded unless plaintiff defaulted in the repayment of the loan. Plaintiff offered no documentary evidence pertaining to the number or monetary value of any encumbrances existing on the subject property; the exact amount of the money she borrowed, any actual payments she made or any offers she made to repay the alleged mortgage.
Faselis' testimony contrasted sharply with the plaintiff. On its face, the deed unequivocally demonstrated a transfer of the subject property by plaintiff and Norman Gluck to Daisy on February 4, 2003. The contract of sale demonstrates an agreement by Daisy to sell the subject property to plaintiff under certain terms on May 15, 2003. The court notes that plaintiff did not offer any explanation for not calling Norman Gluck as a witness. Nor did she explain the absence of his signature on the contract of sale. As the father of plaintiff's child, joint owner of the property in question, and a participant in the signing of the deed, he would be expected to have knowledge of the nature of the transaction in controversy. He also would be expected to be able to offer non-cumulative and favorable testimony in support of the plaintiff version of the events in question. In resolving the factual discrepancies between the plaintiff and Faselis, the court would be permitted to draw an adverse inference against the plaintiff for not calling this witness. A trier of fact may draw the strongest inference that the opposing evidence permits against a witness who fails to testify in a civil proceeding ( Crowder v. Wells Wells Equipment, Inc., 11 AD3d 360 [1st Dept 2004], citing, ( Matter of Nassau County Dept. Social Servs. v. Denise J., 87 NY2d 73, 79). The court would be permitted to conclude that his testimony would not have support the plaintiff's position and would not have contradict Faselis' position that the transaction was a conveyance.
However, the plaintiff failed to offer any evidence of the precise terms of the alleged mortgage between plaintiff and Daisy, through Faselis. Particularly, there was no evidence of the rate of interest, or any of the conditions or terms of repayment of the loan. In the absence of clear and convincing evidence proving the precise terms of the alleged mortgage, the plaintiff necessarily fails to overcome the presumption that the deed is precisely what it purports to be ( Bielawski v. Bazar, 47 Ad2d 435 [3rd Dept 1975], citing Ensign v. Ensign, 120 NY 65).
Therefore, plaintiff's claim is dismissed and her request for consequential and punitive damages, legal fees and the cost of the action is denied. It is well settled in New York that a prevailing party may not recover attorney's fees from a losing party except where authorized by statute, agreement, or court rule (U.S. Underwriters Ins. Co v. City Club Hotel, LLC, 3 NY3d 592 at 597. Here the plaintiff has not prevailed and has offers no basis for an awarding of attorney's fees or costs.
Defendants Daisy and Faselis brought two counterclaims seeking satisfaction of liens and encumbrances docketed against the subject property in the event plaintiff prevailed in the action. Plaintiff has not prevailed, therefore, both are dismissed as moot. "A matter is moot when a determination is sought on a matter which, if rendered, could not have any practical effect on the existing controversy" ( SOS Oil Corp. v. Norstar Bank of Long Island, 152 AD2d 223, 228 [2nd Dept 1989].
Defendant Brunt brought two counterclaims seeking damages for plaintiff's encumbrance of the subject property. The defendants offered no evidence to explain or support this claim and it is therefore dismissed.
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J.S.C.