M&T Real Estate Trust,, Appellant,v.James J. Doyle, II et al., Respondents.BriefN.Y.February 14, 20130 To be Argued by: JOHN K. ROTTARIS, ESQ. Estimated Time for Argument: (30 Minutes) STATE OF NEW YORK Court of Appeals M&T REAL ESTATE TRUST, Successor by Merger to M&T REAL ESTATE, INC., Plaintiff-Appellant, vs. JAMES J. DOYLE, II and JIM DOYLE FORD, INC., Defendants-Respondents. Erie County Index No.: I 2009/3364. Appellate Division Docket Numbers: CA 11-01572 and CA 11-01573. BRIEF FOR DEFENDANTS-RESPONDENTS JAMES J. DOYLE, II and JIM DOYLE FORD, INC. GROSS, SHUMAN, BRIZDLE & GILFILLAN, P.C. Attorneys for Defendants-Respondents James J. Doyle, II and Jim Doyle Ford, Inc. 465 Main Street, Suite 600 Buffalo, New York 14203 Telephone: (716) 854-4300 Facsimile: (716) 854-2787 JOHN K. ROTTARIS, ESQ. KATHERINE M. LIEBNER, ESQ. Of Counsel Date of Completion: October 11, 2012. BATAVIA LEGAL PRINTING, INC.— Telephone (866) 768-2100 DISCLOSURE STATEMENT Pursuant to § 500.1 (f) of the Rules of Practice of the Court of Appeals, Jim Doyle Ford, Inc. is a domestic corporation and has no parent companies, subsidiaries or affiliates. -1- RELATED LITIGATION Pursuant to § 500.6 of the Rules of Practice of the Court of Appeals, the "related litigation" to this appeal is an action for money judgment brought by Plaintiff-Appellant's affiliate, Manufacturers & Traders Trust Company ("M&T Bank") in Supreme Court, Erie County, on September 28, 2011, under Index Number I2011-605311, against Defendants-Respondents, James J. Doyle, II and Jim Doyle Ford, Inc. and two other entities, Kane Doyle, Inc. and Kay-Dee Realty, LLC. In the related litigation, M&T Bank moved for summary judgment by notice of motion dated March 2, 2012. Oral arguments were heard before the Hon. John A. Michalek, J.S.C. in Supreme Court, Erie County on September 6, 2012. Special Term reserved decision. As of this date, October 11, 2012, Special Term has not issued a decision. -ii- TABLE OF CONTENTS DISCLOSURE STATEMENT ................................................................................... i RELATED LITIGATION ......................................................................................... ii TABLE OF AUTHORITIES .................................................................................... iv QUESTION PRESENTED ....................................................................................... 6 PRELIMINARY STATEMENT ............................................................................... 7 STATEMENT OF FACTS ........................................................................................ 8 ARGUMENT .......................................................................................................... 12 I. THE FOURTH DEPARTMENT CORRECTLY FOUND THAT THE REFEREE'S DEED WAS "DELIVERED" WITHIN THE MEANING OF RPAPL § 1371 UNDER THE NARROW CIRCUMSTANCES OF THIS CASE .......................................................... 12 CONCLUSION ....................................................................................................... 18 -111- TABLE OF AUTHORITIES Brackett v. Barney, 28 N.Y. 333 (1863) ................................................................................................... 16 Cicero v. Aspen Hills II, LLC, 85 A.D.3d 1411 (3d Dep't 2011) ..................................................................... 8,15,17 Doctors Council vs. New York City Employees' Retirement System, 71 N.Y.2d 669 (1988) ............................................................................................... 13 First Federal Savings and Loan Association of Syracuse v. Ivy Ridge, Inc., 76 Misc. 2d 208 (Sup. Ct. Cayuga Co. 1973) .......................................................... 16 Kimmel v. State of New York, 76 A.D.3d 188 (4th Dep't 2010) .............................................................................. 13 Lennar Northeast Partners Limited Partnership v. Gifaldi, 258 A.D.2d 240 (4th Dep't 1999) ....................................................... 7,8,13,14,15,17 National Bank of Sussex County v. Betar, 207 A.D.2d 610 (3rd Dep't 1994) ................................................................... 7,14,17 Powderly v. Aetna Casualty & Surety Co., 72 Misc. 2d 251 (Sup. Ct. Monroe Co. 1972) ......................................................... 16 River Bank America v. Pan-American Mall, Inc., 221 A.D.2d 327 (2d Dep't 1995) ............................................................................. 15 State of New York v. Patricia II., 6 N.Y.3d 160 (2006) ................................................................................................. 13 Ten Eyck v. Whitbeck, 156 N.Y. 341 ( 1898) ................................................................................................. 16 Tompkins v Hunter, 149 N.Y. 117 (1896) ................................................................................................. 13 -iv- Other Authorities McKinney's Consolidated Laws of New York, Book 1, Statutes, Sections 76 ........ 13 -v- QUESTION PRESENTED Question: Was the Appellant Division, Fourth Department, correct in holding that Plaintiff-Appellant's motion for leave to enter a deficiency judgment against the Defendants- Respondents was untimely pursuant to RPAPL § 1371(2) as more than 90 days expired since the foreclosure sale was consummated on the basis that the Referee, acting as grantor on behalf of the Court, duly executed and delivered the deed to Plaintiff-Appellant's counsel with the intention of passing title? Answer: Defendants-Respondents assert that this question should be answered in the affirmative. - 6- PRELIMINARY STATEMENT This appeal arises out of an action brought by Plaintiff-Appellant, M&T Real Estate Trust, Successor by Merger to M&T Real Estate, Inc. (hereinafter "Appellant" or "M&T") against Defendants- Respondents, James J. Doyle, II and Jim Doyle Ford, Inc. (hereinafter, collectively, "Respondents"). The nature of the suit is one of foreclosure of mortgages owned by M&T. This appeal is taken by Appellant from the Appellate Division, Fourth Department Memorandum and Decision ("Fourth Department Decision"), which held that the Appellant's motion for deficiency judgment was untimely pursuant to RPAPL § 1371(2), as more than ninety (90) days had expired since the Referee had duly executed and delivered the deed to M&T's counsel. Specifically, the Fourth Department held as follows: We agree with Defendants that the foreclosure sale was consummated and the 90-day period commenced in May 2010 upon the delivery of the Referee's Deed. Such delivery occurred within the meaning of the statute at that time inasmuch as the Referee, acting as grantor on behalf of the court (see Letznar Northeast Partners, Ltd. Partnership v. Gifaldi, 258 A.D.2d 240, 243, lv denied 94 N.Y.2d 754), executed and parted with control of the deed prepared by plaintiff's counsel with the intention to pass title (see National Bank of Sussex County v. Betar, 207 A.D.2d 610, 611-612). "When the Referee []signed the deed [ ] presented by [plaintiff's] counsel, [he was] left with no title to convey to any other party," and thus the sale was consummated upon the delivery of that deed in May 2010, notwithstanding the refusal of plaintiff's counsel to accept and retain physical possession of the - 7- (R. 5a-6a). deed at that time (Lennar Northeast Partners, Ltd. Partnership, 258 A.D.2d at 243; see Cicero v. Aspen Hills II, LLC, 85 A.D.3d 1411, 1412). Thus, plaintiff's motion was untimely. It is respectfully submitted that the Fourth Department Decision should be affirmed in its entirety. STATEMENT OF FACTS This action was brought by M&T pursuant to Article 13 of the Real Property Actions & Proceedings Law to foreclose three mortgages (the "Mortgages") affecting real property located in the Town of Tonawanda, County of Erie and State of New York, commonly known as 3330 Delaware Avenue, Tonawanda, New York (the "Premises"). (R. 22). A Judgment of Foreclosure and Sale dated August 6, 2009 and filed in the Erie County Clerk's Office on August 18, 2009, granted M&T judgment for the sum of $1,101,942.97, plus the costs of the foreclosure sale and interest. (R. 103- 109). The Judgment of Foreclosure and Sale also appointed Peter A. Weinmann, Esq., as Referee and directed that the Premises be sold under his direction (the "Referee" or "Weinmann"). (R. 104-105). Accordingly, Mr. Weinmann conducted the public auction sale of the Premises on September 24, 2009 at which Respondent was the successful bidder. (R. 163). Shortly after the sale, Plaintiff's counsel informed the Referee that M&T intended to assign its bid to its affiliate - 8- MAT Properties, Inc. ("MAT Properties") prior to the closing and that the closing would be delayed for several months because MAT Properties planned to conduct a sealed bid sale of the foreclosure bid. (Id.). Nearly eight (8) months after the sale, on May 10, 2010, Mr. Weinmann received a letter from Appellant's counsel, Vincent 0. Hanley, Esq. ("Mr. Hanley") dated May 10, 2010, which enclosed a proposed Referee's Deed naming MAT Properties as grantee, a proposed Referee's Report of Sale, and other closing documents. (R. 163, 167). In this letter, Mr. Hanley stated the following: (R. 167). If the papers meet with your approval, please sign the papers and return them to our office in the enclosed self addressed stamped envelope. (Please note that the report requires your signature in three places and that the deed must be signed before a notary public). Accordingly, Mr. Weinmann executed the deed and Referee's Report of Sale dated May 11, 2010. (R. 163). The Referee's Report of Sale states, in pertinent part, as follows: EIGHTH: That I have made, executed and delivered to such purchaser a good and sufficient deed of conveyance for the said mortgaged premises. (R. 120) (emphasis added). Pursuant to Mr. Hanley's instructions, Mr. Weinmann delivered and returned the duly executed documents by cover letter dated May 12, 2010. (R. 163). - 9- On or about May 13, 2010, Mr. Hanley contacted the Referee by telephone and informed him that MAT Properties had changed plans and was not prepared to accept the deed at that time. (R. 164). Mr. Weinmann apparently advised Mr. Hanley during their phone conversation that he had already executed the deed, Referee's Report of Sale and other closing documents and had returned them to him as requested. (Id.). While Appellant's counsel had initiated the process by sending Mr. Weinmann the proposed closing documents, Mr. Hanley indicated to Mr. Weinmann that he had not yet received the executed documents and did not intend to accept them when they arrived in the mail. (Id.). Accordingly, by cover letter dated May 17, 2010, Appellant's counsel returned to Mr. Weinmann the executed Referee's Deed, Referee's Report of Sale and other closing documents. (Id., R. 168). Over one month later, on July 26, 2010, the Referee received another letter from Mr. Hanley dated July 26, 2010 requesting that here-send him the executed Referee's Deed and other closing documents because his client was now prepared to accept and record the deed at that time. (R. 164-165, 169). Thereafter, Mr. Weinmann had the executed Referee's Deed, Referee's Report of Sale and other papers hand-delivered to Appellant's counsel office on July 27, 2010. (R. 164- 165). - 10- Although the Referee's Deed had in fact been delivered twice already to Appellant's counsel by the Referee, on August 6, 2010 Mr. Hanley sent Mr. Weinmann an e-mail message requesting that Mr. Weinmann re-execute the Referee's Deed over again so that the deed would be dated concurrently with its most recent delivery. (R. 165, 170). Mr. Weinmann then re-dated the Referee's Deed on August 9, 2010 and it was picked up by someone from Mr. Hanley's office on that same day. (R. 165). The Referee's Deed was recorded in the Erie County Clerk's Office on August 17, 2011. (R. 115). Thereafter, on September 2, 2010 (more than ninety (90) days after the original Referee's Deed was executed and delivered by the Referee to Appellant's counsel on May 12, 2010) Appellant moved for an Order, inter alia, (a) confirming the Referee's Report of Sale; (b) determining that the fair and reasonable market value of the mortgaged premises as of the date such premises were bid on at the foreclosure auction sale; and (c) granting leave to the Appellant to enter a deficiency judgment against Respondents. Special Term granted Appellant's motion on June 24,2011 (the June 2011 Order). (R. 14-17). Thereafter, Special Term entered judgment against Respondents pursuant to the July 2011 Order. (R. 19-21). As noted above, the Appellate Division, Fourth Department's Decision reversed the June 2011 Order and July 2011 Order on the grounds that Appellant's - 11 - motion for leave to enter a deficiency judgment was untimely pursuant to RP APL § 1371(2) in that it was not made within ninety (90) days after the execution and delivery of the Referee's Deed to Appellant's counsel on May 12, 2010. The Fourth Department noted that the Referee, acting on behalf of the court, executed and parted control of the deed prepared by Appellant's counsel on May 12, 2010 with intention to pass title and, therefore, could not reconvey title at a later date despite Appellant's counsel's purported refusal to accept the deed. Respondents respectfully submit that the Fourth Department Decision should be affirmed in all respects. ARGUMENT I. THE FOURTH DEPARTMENT CORRECTLY FOUND THAT THE REFEREE'S DEED WAS "DELIVERED" WITHIN THE MEANING OF RPAPL § 1371 UNDER THE NARROW CIRCUMSTANCES OF THIS CASE. Appellant's principle argument in seeking reversal of the Fourth Department Decision is that it is inconsistent with "over 100 years" of New York real property common law regarding the requirement of the acceptance of a deed in arms-length transactions. The real issue of this case, however, is limited to whether the statutory requirements of "delivery" were satisfied under RPAPL § 1371 in the context of deficiency judgments in mortgage foreclosure actions. - 12- RPAPL § 1371 authorizes entry of a deficiency judgment in a mortgage foreclosure action. RP APL § 13 71 (2) states, in pertinent part: [S]imultaneously with making of a motion for an order confirming the sale, provided such motion is made within ninety days after the date of consummation of the sale by the delivery of a proper deed of conveyance to the purchaser, the party to whom such residue shall be owing may make a motion in the action for leave to enter a deficiency judgment .... RPAPL § 1371(2) (emphasis added). It is well settled that the 90 day period is akin to a statute of limitations. Lermar Northeast Partners Limited Partnership v. Gifaldi, 258 A.D.2d 240 (4th Dep't 1999). Where words of a statute are clear and unambiguous, resort may not be had to other means of interpretation and "the court should construe it so as to give effect to the plain meaning of the words used." Doctors Council vs. New York City Employees' Retirement System, 71 N.Y.2d 669, 674-75 (1988); see also State of New York v. Patricia II., 6 N.Y.3d 160, 162 (2006); McKinney's Consolidated Laws of New York, Book 1, Statutes, Sections 76. Thus, "[i]f the language employed has a 'definite meaning, which involves no absurdity or contradiction, there is no room for construction and courts have no right to add to or take away from that meaning.'" Kimmel v. State of New York, 76 A.D. 3d 188, 193-94 (4th Dep't 2010) (citing Tompkins v Hunter, 149 N.Y. 117, 123 (1896)). - 13- The language of the statute clearly indicates that a motion for deficiency judgment must be made within ninety (90) days after the delivery of the proper deed of conveyance to the purchaser. RPAPL §1371(2). There is no mention in the statute of acceptance of the deed by the successful bidder. Case law indicates that delivery can be effectuated in a variety of ways: So long as the grantor parts with his control over the deed with the intention to pass title, a deed may be delivered by words without acts or by acts without words or both words and acts. Thus, delivery to the grantee need not be effected by manual transfer but can also be shown by circumstances amounting to a constructive transfer. National Bank of Sussex County v. Batar, 207 A.D.2d 610 (3rd Dep't 1994). The Fourth Department has described the process as follows: When the Referees signed the deeds presented by Lennar' s counsel, they were left with no title to convey to any other party. In our view each transaction was "consummated" on the dates of the auction for each property by delivery of a proper deed of conveyance to Lennar' s counsel. Lennar, 258 A.D.2d at 243 (citation omitted). As is clear from the Decision, the Fourth Department examined the entire circumstances of the case in determining whether the statutory requirements of "delivery" were satisfied under RPAPL § 1371(2). In particular, the Fourth Department took into account the fact that ( 1) Appellant was the successful bidder in a foreclosure action; (2) the Referee was an officer of the court and acting on the - 14- court's behalf; (3) Appellant's counsel prepared the deed and other closing documents and requested the Referee to execute them; and ( 4) pursuant to Appellant's counsel's instructions, the Referee executed and parted with control of the deed with the intention of passing title by mailing it on May 12, 2010. (R. 5a- 6a). Under these limited circumstances, the Fourth Department held that the statutory requirements of "delivery" under RPAPL § 1371(2) had been satisfied as the Referee had intended to pass title and was "left with no title to convey to any other party." Lennar, supra; Cicero v. Aspen Hills II, LLC, 85 A.D.3d 1411, 1412 (3d Dep 't 2011 ). Appellant could not cause title to revert back to the Referee by simply trying to reject physical possession of the deed. (Id.); see River Bank America v. Pan-American Mall, Inc., 221 A.D.2d 327 (2d Dep't 1995). Accordingly, the subsequent acts of Appellant's counsel and the Referee following the mailing of the deed on May 12, 2010 have no bearing on when the 90 day limitation under RPAPL § 1371(2) began to run for purposes of the deficiency judgment. Additionally, it is important to note that RPAPL § 1371(2) requires the application for a deficiency judgment to be made simultaneously with the making of a motion to confirm the Referee's report of sale. The only report of sale before the court in this case clearly and unequivocally states that the Referee executed and - 15- delivered a good and proper deed of conveyance to the purchaser as of the May 11, 2010 date of the report. (R. 163). Therefore, the record reflects confirmation of the Referee's report, setting forth the deli very date of the deed. Contrary to M&T' s papers, the Fourth Department Decision does not make any determination whatsoever on the passing of title to real estate in arms-length transactions. Therefore, the "over 100 years" of New York case law, as M&T put it, will not be upset and is inapplicable to deficiency judgments in the narrow and limited circumstances addressed in the Fourth Department Decision. See, e.g., Ten Eyck v. Whitbeck, 156 N.Y. 341 (1898); Brackett v. Barney, 28 N.Y. 333 (1863); First Federal Savings and Loan Association of Syracuse v. Ivy Ridge, Inc., 76 Misc. 2d 208 (Sup. Ct. Cayuga Co. 1973); Powderly v. Aetna Casualty & Surety Co., 72 Misc. 2d 251 (Sup. Ct. Monroe Co. 1972). To the contrary, the Fourth Department Decision will add clarity to the foreclosure process under RP APL § 1371(2) and to deficiency judgments. M&T' s further argument that the Fourth Department's Decision will create confusion as counsel will not know when the RPAPL §1371(2) 90 days limitation begins to run is without merit. As is evident from the Fourth Department Decision, such a circumstance was not present here as it is undisputed that M&T' s counsel not only prepared the deed for the Referee's signature, but also received the deed following the Referee's execution and delivery of the deed through mail. - 16- Accordingly, Appellant's counsel was not "surprised" by the delivery of the deed. Regardless, service by first class mail or hand delivery is common practice in the legal world. If, in fact, a Referee's deed were to become "lost" in the mail, as M&T speculates, such a circumstance could undoubtedly be rectified by a court. Finally, M&T incorrectly argues that those RPAPL § 1371(2) deficiency judgment cases cited by the Fourth Department Decision have required that there be "acceptance" of a deed is misleading. See, e.g., National Bank of Sussex County, supra; Lennar, supra; Cicero, supra. In each of these cases, acceptance of the deed was not the issue of the case since it was never, as here, disputed. The courts only refer to it in dicta, but never address it substantively or stated that "acceptance" was necessary to complete delivery under RPAPL § 1371(2). Moreover, none of these cases address the factual circumstances presented herein- namely, where a Referee, as an officer of the court, executes and delivers a deed pursuant to Appellant's counsel's own instructions with the intention of passing title. In sum, Respondents respectfully submit that the Fourth Department Decision properly and narrowly applies to deficiency judgments in foreclosure proceedings under RPAPL § 1371(2) in the circumstances presented herein and M&T has offered no meritorious reasons why this Court should reverse the Fourth Department Decision. - 17- CONCLUSION Based on the foregoing, Respondents respectfully submit that the Fourth Department Decision be affirmed in its entirety. Dated: Buffalo, New York October 11, 2012 Doc #373246.1 - 18- Respectfully submitted, GROSS, SHUMAN, BRIZDLE & GILFILLAN, P.C. By ____________________ __ John K. Rottaris, Esq. Katherine M. Liebner, Esq. Attorneys for Defendants- Respondents Janzes J. Doyle, II and Jim Doyle Ford, Inc. 465 Main Street, Suite 600 Buffalo, New York 14203 Tel: (716) 854-4300
