Dorothy M. Faison,, Appellant,v.Tonya Lewis,, et al., Defendants, Bank of America, N.A., Respondent.BriefN.Y.February 18, 2015To be Argued by: LIEZL IRENE PANGILINAN (Time Requested: 15 Minutes) APL-2014-00080 Kings County Clerk’s Index No. 21046/10 Appellate Division, Second Department Docket No. 2011-10613 Court of Appeals of the State of New York DOROTHY M. FAISON, as Administratrix of the Estate of PERCY LEE GOGINS, JR., Deceased, Plaintiff-Appellant, – against – TONYA LEWIS, a/k/a TONYA TAYLOR, a/k/a TONYA LEWIS TAYLOR, DOROTHY LEWIS and MORTGAGE ELECTRONIC REGISTRATION SYSTEMS, INC., Defendants, – and – BANK OF AMERICA, N.A., Defendant-Respondent. BRIEF FOR DEFENDANT-RESPONDENT LIEZL IRENE PANGILINAN FIDELITY NATIONAL LAW GROUP Attorneys for Defendant-Respondent Bank of America, N.A. 350 Fifth Avenue, Suite 3000 New York, New York 10118 Tel.: (212) 594-8515 Fax: Date Completed: August 12, 2014 TABLE OF CONTENTS Page No. TABLE OF AUTHORITIES oooo······oo·······oo···· ................. oooo··········oo···········: ..... oo ... oooooooii PRELIMINARY ST ATEl\1ENT 00.00 00 ••• 00 ••••••••••••• 00 .•.•.••••• 00 •••••••••••• 00 00 ••••• 0000 •• 00 •• 00 oooo• .• 00.1 COUNTERSTATEMENT OF QUESTIONS PRESENTED FOR REVIEW oooooooooooo3 STATEl\1ENT OF FACTS oo ..... ooooooooooooooooooOOoooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooo.4 PROCEDURAL HISTORY OF THIS ACTION .... ooooooooooooooooooooooooooooooooOOOOOOoooooooooooo .. 5 I. THE SIX-YEAR STATUTE OF LIMITATIONS CONTAINED IN CPLR § 213(8) APPLIES TO ALL ACTIONS FOR FRAUD, INCLUDING ACTIONS FOR FORGED DEEDS oooooooooo .... oo .......... oooooooooooooooooooooooooooooooooooooo .. 8 II. THE HOLDING IN RIVERSIDE SYNDICATE WAS LIMITED TO AGREEMENTS THAT ARE ILLEGAL AND VOID AS AGAINST PUBLIC POLICY AND IS THEREFORE INAPPOSITE TO ACTIONS FORFRAUD .. oo.oooooooo···········oo············oo•oooo•oooooo••••oo•·············oo···oo·········oo ........ oo.12 III. A STATUTE OF LIMITATIONS BAR TO FORGED DEED CLAIMS IS NECESSARY TO PRESERVE THE SANCTITY OF TITLE AND PROTECT PROPERTY RIGHTS IN NEW YORK STATE 0000 .......... 00 ...... 00 .. .16 IV. A MORTGAGEE HAS STANDING TO ASSERT THE STATUTE OF LIMITATIONS AS A DEFENSE TO AN ACTION THAT WOULD AFFECT ITS INTEREST IN THE MORTGAGED PROPERTY 000000 ........ 00 ... 18 CONCLUSION .. oo.·oo••oooo···•oo•oooooo••························ .......... oo ............. oooo····oo···oo····ooooo ... oo.23 i TABLE OF AUTHORITIES Cases Page No. 3636 Greystone Owners, Inc. v. Greys tone Bldg. Co., 51 A.D.3d 461, 857 N.Y.S. 2d 121 (1 stDep't 2008) .................................. 17 527-9 Lenox Ave. Realty Corp. v. Ninth St. Assoc., 200 A.D.2d 531, 606 N.Y.S.2d 699 (1st Dep't 1994) .................................. 22 Certain Underwriters at Lloyd's v. Milberg LLP, 2009 WL 3241489 (S.D.N.Y. 2009) ............................................................. 14 Coombs v. Jervier, 74 A.D.3d 724, 906 N.Y.S.2d 267 (2d Dep't 2010) ............................. 7, 9, 10 County of Tioga v. Solid Waste Indus., 178 A.D.2d 873, 577 N.Y.S.2d 922 (3dDep't 1991) ................................... 22 Diocese of Buffalo v. McCarthy, 91 A.D.2d 213, 1983 WL 481357 (4th Dep't 1983) .................................... 16 Faison v. Lewis, 106 A.D.3d 1047, 966 N.Y.S.2d 198 (2d Dep't 2013) ................................... 7 Fitzgerald v. Fitzgerald, 301 A.D.2d 851, 753 N.Y.S.2d 570 (3d Dep't 2003) ..................................... 9 Flanagan v. Mt. Eden Gen. Hasp., 24 N.Y.2d 427, 248 N.E.2d 871, 301 N.Y.S.2d 23 (1969) .......................... 11 Georgiou v. Panayia of Mtns. Green Orthodox Monastary, Inc., 16 A.D.3d 998, 792 N.Y.S.2d 667 (3d Dep't 2005) ....................................... 9 ii -------------~~- In re McFarland, 7 Misc.3d 1003(A), 801 N.Y.S.2d 236 (Sur. Ct. Nassau Co. 2005) ........... 19 Incorporated Village of Island Park v. Island Park-Long Beach, Inc., 81 N.Y.S.2d 407 (Sup. Ct. Nassau Co. 1948) .............................................. 20 JP Morgan Chase Bank, N.A. v. Kalpakis, 91 A.D.3d 722, 937 N.Y.S.2d 105 (2d Dep't 2012) ................................... 7, 9 Matter of Lupoli, 237 A.D.2d 440, 655 N.Y.S.2d 551 (2dDep't 1997) ................................... 10 Matter ofRothko, 43 N.Y.2d 305, 372 N.E.2d 291, 401 N.Y.S.2d 449 (1977) ........................ 16 Nash v. Duroseau, 39 A.D.3d 719, 835 N.Y.S.2d 611 (2d Dep't 2007) ..................................... 21 ·Nixon v. Barrow, 239 A.D.2d 326, 657 N.Y.S.2d 980 (2dDep't 1997) ................................... 10 Parrish v. Unidisc Music, Inc., 68 AD.3d 566, 892 N.Y.S.2d 45 (1st Dep't 2009) ........................................ 9 Perry v. Fries, 90 A.D. 484, 85 N.Y.S. 1064 (3dDep't 1904) ....................................... 19, 21 Perry v. Williams, 40 Misc. 57 (Sup. Ct. Tompkins Co. 1903) .................................................. 21 Piedra v. Vanover, 174 A.D.2d 191, 579 N.Y.S.2d 675 (2d Dep't 1992) ................... 8, 10, 12, 16 Riverside Syndicate, Inc. v. Munroe, 10 N.Y.3d 18, 882 N.E.2d im, 853 N.Y.S.2d 263 (2008) ...................... 2, 12 iii Riverside Syndicate, Inc. v. Munroe, 39 A.D.3d 256, 833 N.Y.S.2d 452 (1st Dep't 2007) ..................................... 14 Rosevele Frocks v. Sommers, 191 Misc. 614, 78 N.Y.S.2d 41 (App. Tetm 1st Dep't 1948) ................. 18, 19 Sargiss v. Magarelli, 12 N.Y.3d 527, 909 N.E.2d 573, 881 N.Y.S.2d 651 (2009) .......................... 7 Shalikv. Hewlett Assoc., L.P., 93 A.D.3d 777, 940 N.Y.S.2d 304 (2d Dep't 2012) ............................. 7, 9, 15 Shannon v. Gordon, 249 A.D.2d 291, 670 N.Y.S.2d 887 (2d Dep't 1998) ................................... 10 Vilsack v. Meyer, 96 A.D.3d 827, 946 N.Y.S.2d 595 (2d Dep't 2012) ................................... 7, 9 Statutes CPLR § 213(1) ........................................................................................................ 12 CPLR § 213(2) ........................................................................................................ 13 CPLR § 213(8) .......................................................................... 1, 2, 3, 7, 8, 9, 10, 15 Secondary Sources 77N.Y. Jur. 2dMortgages § 126 ............................................................................ 17 51 Am.Jur.2d Limitations ofActions § 56 ......................................... , .................... 19 Siegel, N.Y. Prac. § 33 (5th ed.) ............................................................................. 11 IV PRELIMINARY STATEMENT A statute of limitations exists to prevent the prosecution of stale claims, without regard for whether they may ultimately prove meritorious. Consequently, the primary question presented in any statute oflimitations analysis must be whether the cause of action has been timely commenced. Appellant asks this Court to simply abandon this well-settled approach for claims of forgery. There is no basis in law or reason for the radical change proposed by Appellant. Thus, the proper focus in this appeal is not whether an allegedly forged deed was void ab initio, but rather, whether the statute of limitations precludes Appellant from prosecuting her claim for forgery. Indeed, it does. Defendant-Respondent Banlc of America, N.A. ("BANA" or "Respondent") is the holder of a mortgage against certain property located in Brooldyn, New York. By this action, Plaintiff-Appellant, Dorothy M. Faison, as Adminsitratrix of the Estate of Percy Lee Gogins, Jr., Deceased ("Faison" or "Appellant") seeks to set aside a conveyance and a related mortgage, claiming that a deed dating back to December 2000 was forged. The Supreme Court, Kings County, properly dismissed the entire complaint as barred by the statute oflimitations. On appeal, the Appellate Division, Second Department, affirmed the dismissal of the complaint and correctly held that the six-year statute of limitations contained in CPLR § 213(8) applies to a cause of action alleging forgery. 1 Appellant suggests that no statute of limitations should apply to an action to void a forged instrument but fails to cite a single case - and none can be found- to support her position. Appellant's entire appeal rests on a misapplication of this Court's holding in Riverside Syndicate v. Munroe, 10 N.Y.3d 18, 882 N.E.2d 875, 853 N.Y.S.2d 263 (2008), which is inapposite as it did not involve either a deed or even a claim of forgery, but rather the wholly unrelated issue ofthe enforceability of a private contract which was illegal and void as against public policy. In contrast, the cases are legion which apply the six-year statute oflimitations contained in CPLR § 213(8) to actions involving forged deeds. Contrary to Appellant's contention, the application ofthe six-year statute of limitations to forgery claims does not conflict with the general proposition that a forged deed is void ab initio. A party claiming forgery must simply pursue those claims within the statutory time frame required. To find otherwise would be a radical departure from well-settled law, and would devastate New York property owners by putting them in perpetual risk of ownership contests. For these reasons, the Appellate Division, Second Department's decision and order affirming the trial court's dismissal of the complaint and the denial of Faison's cross-motion should be affirmed in all respects. 2 COUNTERSTATEMENT OF QUESTIONS PRESENTED FOR REVIEW 1. Did the Appellate Division, Second Department, correctly find that the six- year statute of limitations applicable to claims of fraud also applies to claims of forgery? Yes. CPLR § 213(8) applies claims offraud, of which forgery is but one subtype; and the distinction between deeds which may be voidable versus deeds which may be void ab initio is irrelevant in the statute oflimitations analysis. 2. Did the Appellate Division, Second Department, correctly affirm the lower court's denial of Appellant's cross-motion to dismiss Respondent's affirmative defense based on the statute oflimitations as academic once the statute of limitations acted as a bar to Appellant's claims? Yes. The statute of limitations defense is not personal to the parties to an instrument, and where a property owner would be able to raise the statute of limitations as a defense to an action, a lender that derives its interest in the property directly from the property owner, likewise has standing to assert the defense, which acts as a complete bar to Appellant's claims. 3 STATEMENT OF FACTS Defendant Dorothy Lewis and Percy Lee Go gins, Jr., deceased, (the "Decedent" or "Gogins"), were siblings and inherited property located at Bergen Street, Brooklyn, New York (the "Property") from their mother who died intestate in 1996. (RA-9.) Upon the death of their mother, Dorothy Lewis and Go gins each inherited a one-half interest in the Property as tenants in common. (RA-9.) On or about May 21, 2000, Dorothy Lewis conveyed her one-half interest in the Property to her daughter, Tanya Lewis, by quitclaim deed which was duly recorded on July 25, 2000. (RA-9, RA-13- RA16.) Appellant does not dispute the validity of the conveyance of this one-half interest to Tony a Lewis. On or about December 14, 2000, a conection deed was executed, adding Gogins as an additional grantor, such that the entire fee interest in the Property was transfened from Gogins and Dorothy Lewis, as tenants in common, to Tanya Lewis (the "Conection Deed"). (RA-9, RA-17- RA-20.) The Conection Deed was recorded on February 14, 2001. (RA-9, RA-17.) Gogins died on or about March 27, 2001. (RA-29.) On or about September 18, 2002, Faison commenced an action in Kings County Supreme Court captioned "Percy Lee Gogins, Jr., Deceased, By Dorothy M. Faison, Wilheminia Gogins, Percy Lavon Gogins and Priscilla A. Gogins v. 4 Rev. Dorothy Lewis and Tonya Lewis AIK/ A Tonya Taylor, Tonya Lewis- Taylor," Index Number 37529/2002, alleging that the defendants forged the Correction Deed. (RA-32- RA-43.) That action, much like the instant one, asked the court to void the Correction Deed along with a mortgage against the Property held by Wells Fargo Home Mortgage, Inc. (RA-36.) The action was ultimately dismissed in April2003 on the grounds that Faison lacked the capacity to maintain the action because she had not been appointed Administratrix of Go gins's Estate. (RA-44- RA-50.) Years later, on or about December 18, 2009, Tonya Lewis granted a mortgage in favor ofBANA, secured against the Property, in the original principal amount of $269,332.00, which was recorded on January 7, 2010. (RA-21 - RA- 28.) PROCEDURAL HISTORY OF THIS ACTION On or about July 29, 2010, over nine years after Gogins's death, Faison was finally appointed Administratrix of the Estate Gogins. (RA-30.) She then commenced the instant action with the filing of a summons and complaint in Supreme Court, Kings County, on or about August 24, 2010, nearly ten years after the execution and recording of the Conection Deed which Appellant challenges in this action. (RA-7- RA-12.) The complaint states two causes of action: first, for a ) declaration that the December 14, 2000 Correction Deed is null and void and for related damages; and second, for a declaration that the December 18, 2009 mortgage held by Respondent is null and void. 1 (RA-9- RA-11.) Respondent filed and served an Answer on or about December 1, 2010, asserting the statute oflimitations as an affinnative defense. (RA-64- RA-69.) Respondent thereafter moved to dismiss the complaint as barred by the statute of limitations on July 11, 2011. (RA-1- RA-50.) On or about August 4, 2011, Appellant cross-moved to dismiss Respondent's affirmative defense based on the statute oflimitations. (RA-51- RA-70.) On or about August 23,2011, Respondent filed a Reply and Opposition to Appellant's Cross-Motion. (RA-71 - RA-78.) These motions were heard by the trial court on September 13, 2011 and, after due deliberation, the court granted Respondent's motion to dismiss the complaint and denied Appellant's cross-motion as moot. (A5.) Appellant appealed to the Appellate Division, Second Department and, on May 29, 2013, the Appellate Division rendered a Decision and Order affirming the 1 Appellant appears to concede that BANA has a valid mortgage interest on at least one-half of the Property- that portion which was transferred from Dorothy Lewis to Tonya Lewis. (Appellant's Briefp. 4.) 6 lower court's granting of Respondent's motion to dismiss and denying Appellant's cross-motion as academic (the "Decision and Order"). (A3-A4.) In Faison v. Lewis, 106 A.D.3d 1047, 753 N.Y.S.2d 198 (2d Dep't 2013), leave to appeal granted in part, dismissed in part, 22 N.Y.3d 1193 (2014), the Court held: Contrary to the plaintiffs contention, the statute of limitations for a fraud cause of action applies to a cause of action alleging forgery (see Shalik v. Hewlett Assoc., L.P., 93 A.D.3d 777, 940 N.Y.S.2d 304; Vilsack v. Meyer, 96 A.D.3d 827, 946 N.Y.S.2d 595; JP Morgan Chase Bank, N.A. v. Kalpakis, 91 A.D.3d 722, 937 N.Y.S.2d 105; Coombs v. Jervier, 74 A.D.3d 724, 906 N.Y.S.2d 267). The statute of limitations for a fraud- based cause of action requires that the action be commenced within six years after the allegedly fraudulent act or within two years after discovery, whichever is later (CPLR 213[8], 203[g]; Sargiss v. Magarelli, 12 N.Y.3d 527, 881 N.Y.S.2d 651, 909 N.E.2d 573; Vilsack v. Meyer, 96 A.D.3d at 828, 946 N.Y.S.2d 595). Here, the forgery allegedly occurred in 2000, and the plaintiffs own filing in an earlier action showed that she knew of the alleged fraud by 2003. Thus, she was required to commence an action by 2006 at the latest, whereas this action was commenced in 2010. Accordingly, the Supreme Court properly granted that branch of the motion of the defendant Bank of America, N.A. (hereinafter the Banlc), which was to dismiss the complaint insofar as asserted against it (see CPLR 213[8], 203[g]; Sargiss v. Magarelli, 12 N.Y.3d 527, 881 N.Y.S.2d 651, 909 N.E.2d 573; Vilsack v. Meyer, 96 A.D.3d at 829, 946 N.Y.S.2d 595). 106 A.D.3d at 1048. Appellant now appeals to this Court from parts of the Decision and Order. 7 I. THE SIX-YEAR STATUTE OF LIMITATIONS CONTAINED IN CPLR § 213(8) APPLIES TO ALL ACTIONS FOR FRAUD, INCLUDING ACTIONS FOR FORGED DEEDS New York courts have consistently held that the six-year statute of limitations applies to actions involving forged instruments. The precise issue in this appeal was first addressed by the Second Department in 1992 in Piedra v. Vanover, 174 A.D.2d 191, 579 N.Y.S.2d 675 (2d Dep't 1992). There, the plaintiff sued to void a deed claiming that her signature had been forged and that the conveyance was therefore void. The court dismissed the action as time-barred, holding that the six-year statute of limitations contained in CPLR § 213(8i which applied to claims of fraud, applied equally to claims of forgery since "the concepts of 'forgery' and 'fraud' are so closely related, that 'forgery' is but one species of 'fraud."' Id. at 194. Since then, courts of this State have adhered to this rule -that the statute of limitations for fraud governs causes of action specifically alleging forgery, 2 CPLR § 213(8) provides the statute oflimitations for an action based upon fraud and states, "the time within which the action must be commenced shall be the greater of six years from the date the cause of action accrued or two years from the time the plaintiff or the person under whom the plaintiff claims discovered the fraud, or could with reasonable diligence have discovered it. CPLR § 213(8). It is undisputed that the two-year "discovery rule" is inapplicable to the facts of this case. Appellant was aware of the forgery as of 2002 when she commenced an earlier action in Kings County Supreme Court based on the same allegations asserted in this action. The Decision and Order also found that the Appellant lmew of the forgery as of 2003 and thus could not avail herself of the discovery rule. (A.4.) 8 including actions involving forged deeds. See, e.g., JP Morgan Chase Bank, Nat. Ass 'n v. Kalpakis, 91 A.D.3d 722, 937 N.Y.S.2d 105 (2d Dep't 2012)(claim to invalidate deed governed by statute oflimitations in CPLR § 213(8)); Shalik v. Hewlett Associates, L.P., 93 A.D.3d 777, 940 N.Y.S.2d 304 (2d Dep't 2012)(in an action where plaintiffs sought a judgment declaring, inter alia, that the decedent's signature on a partnership agreement was forged and void ab initio, the court held that the limitations period for a fraud cause of action applies to a cause of action alleging forgery); Vilsack v. Meyer, 96 A.D.3d 827, 946 N.Y.S.2d 595 (2d Dep't 20 12)(in action based on a forged deed, the court reiterated that a fraud-based action must be commenced within six years of the fraud or within two years from the time the plaintiff discovered the fraud or could with reasonable diligence have discovered it); Coombs v. Jervier, 74 A.D.3d 724, 906 N.Y.S.2d 267 (2d Dep't 2010)(action alleging forged deed barred by six-year statute oflimitations under CPLR § 213(8)); Parrish v. Unidisc Music, Inc., 68 A.D.3d 566, 892 N.Y.S.2d 45 (1st Dep't 2009)(suit seeking declaration that signature on an agreement was a forgery barred by six-year statute oflimitations ); Georgiou v. Panayia of Mtns. Green Orthodox Monastary, Inc., 16 A.D.3d 998, 792 N.Y.S.2d 667 (3d Dep't 2005)(action alleging that deed was forged was barred by six-year statute of limitations for fraud causes of action); Fitzgerald v. Fitzgerald, 301 A.D.2d 851, 753 N.Y.S.2d 570 (3d Dep't 2003)(suit alleging that a power of attorney was 9 forged was barred by six-year statute oflimitations); Shannon v. Gordon, 249 A.D.2d 291, 670 N.Y.S.2d 887 (2d Dep't 1998)(action seeking damages for forgery barred by six-year statute oflimitations in CPLR§ 213(8)); Matter of Lupoli, 237 A.D.2d 440, 655 N.Y.S.2d 551 (2d Dep't 1997)("to the extent that the appellant claims that certain signatures on the deeds transferring the property were forged, any cause of action based on that claim is also time-barred"); Nixon v. Barrow, 239 A.D.2d 326, 657 N.Y.S.2d 980 (2d Dep't 1997)(rejecting claim to set aside deed as time-barred, citing Piedra v. Vanover). Significantly, Appellant fails to address, let alone distinguish, any of this well-settled authority. In this action, Appellant alleges that the forgery occurred on or about December 14, 2000; she was therefore required to commence an action to void the forged instrument within six (6) years ofthat date- on or before December 14, 2006. See Coombs, 74 A.D.3d at 725 (statute oflimitations began to run on the date ofthe alleged forgery). Appellant suggests that, unlike situations where a fraud would render a deed merely "voidable," no statute of limitations should apply to a claim to nullify a forged deed because a finding offorgery would render the deed void ab initio. However, asking the courts to look first at the potential legal outcome of a case, rather than at the timeliness of the claim in the first instance, would tum the statute oflimitations analysis on its head and render it meaningless. Appellant's proposed 10 rule presupposes that the plaintiffto an action will ultimately prevail in her case, and therefore allows a stale case to proceed. Such a rule, however, ignores the intent of a statute of limitations- to prevent the litigation of stale claims entirely, without regard for the ultimate merits ofthe case. "The Statute of Limitations was enacted to afford protection to defendants against defending stale claims after a reasonable period of time had elapsed during which a person of ordinary diligence would bring an action." Siegel, N. Y Prac. § 33 (5th ed.)(citing Flanagan v. Mount Eden Gen. Hasp., 24 N.Y.2d 427, 248 N.E.2d 871, 301 N.Y.S.2d 23 (1969)). It allows a defendant to completely defeat a plaintiff's claim without addressing the actual merits. Id. As this Court explained in Flanagan v. Mt. Eden Gen. Hasp.: The primary consideration . . . is undoubtedly one of fairness to the defendant. There comes a time when he . . . ought not be called on to resist a claim where the evidence has been lost, memories have faded, and witnesses have disappeared ... The lapse of years without any attempt to enforce a demand creates, therefore, a presumption against its original validity . . . protecting parties from the prosecution of stale claims, when, by loss of evidence from death of some witnesses, and the imperfect recollection of others, or the destruction of documents, it might be impossible to establish the truth. 11 24 N.Y.2d 427,429-430 (citations omitted). This point is particularly salient here where the signatory of the allegedly forged deed is deceased. Respondent should not have to defend against a now nearly 14 year old forgery claim. The existence of a statute of limitations aclmowledges and reinforces the idea that rights and claims may not be preserved indefinitely, and that it is necessary to bring finality to the prosecution of claims. 3 Appellant's proposed rule simply ignores this significant policy and Appellant has provided no sound reason to depart from long-standing precedent. II. THE HOLDING IN RIVERSIDE SYNDICATE WAS LIMITED TO AGREEMENTS THAT ARE ILLEGAL AND VOID AS AGAINST PUBLIC POLICY AND IS THEREFORE INAPPOSITE TO ACTIONS FOR FRAUD Unable to point to a single New York case to support her position that an action to void a forged deed is completely exempt from any statute oflimitations, Appellant relies on a distorted interpretation of a single sentence in the case of Riverside Syndicate, Inc. v. Munroe, 10 N.Y.3d 18, 882 N.E.2d 875, 853 N.Y.S.2d 263 (2008), wherein this Court opined that a statute of limitations cannot make a void instrument valid with the passage of time. Appellant's attempt to extend this 3 It should be noted that CPLR § 213(1) provides for a six-year statute of limitations for actions for which no limitation is specifically prescribed by law. The existence of this catch-all provision further evidences the preference in the law for bringing finality to claims. The court in Piedra v. Vanover commented that even if forgery were to be considered a distinct cause of action from fraud, it would still be subject to the six-year statute oflimitations contained in CPLR § 213(1). See Piedra, 174 A.D.2d at 195. 12 one sentence to all cases involving potentially void instruments is a gross oversimplification of the holding in that case. The discussion contained within Riverside Syndicate is inapposite since it did not involve a forgery or a deed, but rather an illegal private contract which could never be enforced or become valid because of its illegal nature. In Riverside Syndicate, an illegal contract between a landlord and his tenants violated the Rent Stabilization Law. I d. The landlord brought an action for a declaratory judgment that the agreement violated public policy and was therefore void, and the defendant-tenants responded by claiming that the landlord's claims were barred by the statute oflimitations in CPLR § 213(2). Id. The Court of Appeals held that since no contract was ever validly formed due to its illegal nature, no statute oflimitations applied to an action to have the illegal contract declared void. Id. The subject matter of the agreement rendered it illegal and void from inception. This was the issue at the heart of the Riverside Syndicate case and the basis for the Court's statement upon which Appellant so heavily, but erroneously, relies. Nothing in Riverside Syndicate suggests that the statement was in any way intended to apply to claims of forgery. Moreover, because Riverside Syndicate did not involve a fraud, there was no discussion of the difference between instruments that may be voidable versus void ab initio. Thus it is clear 13 that the holding was limited to only those situations where an instrument is void at inception for illegality - not for fraud. It bears noting that when the Riverside Syndicate case was before the First Department, that court specifically stated, "[b ]ecause the consent judgment is void as a matter of public policy (not due to fraud, mistake or unconscionability), the statute oflimitations (which was not raised on the motion or cross motion) does not bar the instant action on the ground that it was commenced more than six years after the consent judgment was entered." Riverside Syndicate, Inc., 39 A.D.3d 256, 257, 833 N.Y.S.2d 452 (1st Dep't 2007). This comment is especially instructive since the Appellate Division clearly took this crucial distinction- between contracts void for fraud versus contracts void for illegality- into consideration in its decision, which was later affirmed by this Court. Appellant's argument here was also explicitly discredited in the case of Certain Underwriters at Lloyd's v. Milberg LLP, 2009 WL 3241489 (S.D.N.Y. 2009), which discussed the Riverside Syndicate case at length. In Certain Underwriters, a plaintiff brought an action seeking rescission of a contract on the basis of fraud. In response to a motion to dismiss on statute of limitations grounds, the plaintiff argued that no statute of limitations barred the action since the contract was void, relying on the Riverside Syndicate case. The Southern District ofNew York explained that Riverside Syndicate was inapplicable, stating: "in [Riverside 14 Syndicate], the subject matter of the contract was illegal. Because statutory law expressly rendered such contracts void, the contract at issue could never have been enforced, regardless of whether the statute of limitations had run ... By contrast, a contract [to buy insurance], such as the one in this case does not involve an illegal agreement but rather an illegal act by one of the parties during contract formation ... " Id. at 5-6. Ultimately, the court in Certain Underwriters determined that because the gravamen of the complaint was to have a contract declared void on the basis of fraud, the parties could not escape the statute of limitations bar. 4 Again, Appellant fails to cite a single case in which Riverside Syndicate was applied to an alleged forgery, let alone a forged deed. Thus it is clear that the case has no bearing on the proper statute oflimitations to be applied to claims of forgery and thus has no application to the instant action. 4 Indeed, in Shafik v. Hewlett Assoc., L.P., 93 A.D.3d 777, which applied the six- year statute oflimitations bar to an action for forgery, the appellant made the identical argument in its brief to the Second Department, relying on Riverside Syndicate for the proposition that no statute of limitations applied to agreements that are void ab initio due to forgery. Shalikv. Hewlett Assoc., L.P., Joint Brief for Plaintiff-Appellants, 2011 WL 11747579 (N.Y.A.D. 2 Dept.)(Appellate Brief.) Although not specifically addressed in its decision, the argument was implicitly rejected by the Second Department when it held that the statute oflimitations in CPLR § 213(8) applied to bar the claim. 15 III. A STATUTE OF LIMITATIONS BAR TO FORGED DEED CLAIMS IS NECESSARY TO PRESERVE THE SANCTITY OF TITLE AND PROTECT PROPERTY RIGHTS IN NEW YORK STATE Appellant's proposed rule oflaw must also fail because it does not take into consideration the difference between deeds and other instruments, specifically private contracts. The crux of Appellant's argument is that "[s]ince a deed void for forgery is entirely without legal consequence from inception, the true owner of property is not required to take legal action to avoid the rights, duties and interests it purports to create." (Appellant's Briefp.9.) This proposition is simply incorrect. Surely, if no action were required then the instant lawsuit would be unnecessary. Instead, a plaintiff is required to bring an action to obtain a declaration that a deed is forged in order to protect her interests, and must do so within the time provided by statute- here, within six years of the alleged forgery. See Piedra, 174 A.D.2d at 196 (a person claiming title but not in possession must act affirmatively and within the time provided by statute). Moreover, each of the cases cited by Appellant for the proposition that "no judicial action is required to divest a void instrument oflegal effect" involves contracts, not deeds. See Matter of Rothko, 43 N.Y.2d 305, 372 N.E.2d 291, 401 N.Y.S.2d 449 (1977)(an agreement for the sale of paintings was voidable because of self-dealing); Diocese of Buffalo v. McCarthy, 91 A.D.2d 213 (4th Dep't 1983 )(lease agreement which failed to comply with requirements of statute was 16 void ab initio as in violation of statute); 3636 Greystone Owners, Inc. v. Greys tone Bldg. Co., 51 A.D.3d 461, 857 N.Y.S.2d 121 (1st Dep't 2008)(lease was not void ab initio and court did not err in applying statute oflimitations and dismissing action as time-barred). These cases are inapposite because they fail to address how deeds are unique from other contracts. Deeds, unlike other private agreements, affect the rights and interests of more than the actual parties to the agreement, and are relied upon by individuals who may have no part in the conveyance whatsoever - property owners and lenders who rely on a recorded deed in a chain of title- and they are relied upon by all subsequent interest holders, ad infinitum. The recordation of instruments affecting real property is intended to protect the rights of innocent purchasers and to establish a public record to furnish potential purchasers with notice of previous conveyances and encumbrances that might affect their interest. 77 NY Jur. 2d Mortgages§ 126 (citing Witter v. Taggart, 78 N.Y.2d 234, 577 N.E.2d 338 (1991)). This leads to the most significant problem presented by Appellant's proposed rule of law. If Appellant were to prevail, and this Court determined that no statute of limitations applies to actions seeking to void forged deeds, the resulting state of the law would spell nothing short of mass disaster for property ownership in New York State. Property owners would have no security in their 17 chain of title. There would be a constant and infmite threat that some unknown person, at any future time, could claim that a forged deed lies in the chain of title- perhaps dating back 10, 20 or 100 years- which could divest a property owner of their home. Appellant's proposition would so undermine the security of property transfers that it would effectively prevent homeowners from using their property as collateral to borrow money from banks and lending institutions, or would otherwise have the effect of making home loans subject to prohibitive terms and interest rates in order to protect a lender's mortgage interest. There would be no security in any title under Appellant's rule oflaw. The foregoing reasons underscore why the long-standing rule applicable to forgery claims- that a six-year statute oflimitations applies to claims seeking to void forged deeds - is correct and must be preserved. IV. A MORTGAGEE HAS STANDING TO ASSERT THE STATUTE OF LIMITATIONS AS A DEFENSE TO AN ACTION THAT WOULD AFFECT ITS INTEREST IN THE MORTGAGED PROPERTY Appellant's suggestion that only the parties to a deed may raise the statute of limitations as a defense to a claim of forgery is equally meritless. While generally the statute oflimitations is considered a personal defense, there are well- recognized exceptions, such as a judgment creditor having a lien upon its debtor's property, whose interest would be affected in an action involving the property. See Matter ofRosevele Frocks, Inc. v. Sommers, 191 Misc. 614, 78 N.Y.S.2d 41 (App. 18 Term 1st Dep 't 1948)( a judgment creditor having the lien of a judgment against the property had standing to assert the statute of limitations as a ground of opposition to the trustee's claims). As the court in Rosevele Frocks, Inc. v. Sommers explained: "[ a]lthough it is generally true that the Statute of Limitations is a plea personal to the debtor, which he may invoke or waive as he chooses, there are various recognized exceptions .... As respects a judgment creditor having a lien upon the property of the debtor, it is held he may plead the Statute of Limitations as a bar to an asserted claim against the property affected by the lien." I d. at 616 (citations omitted); see also In re McFarland, 7 Misc.3d 1003(A), 801 N.Y.S.2d 236 (Sur. Ct. Nassau Co. 2005)(While the statute oflimitations may not be asserted on behalf ofthe debtor's liability by an ordinary creditor ofthat debtor ... [t]here is, however, an exception for a judgment creditor who has a lien on the defendant's property"); Perry v. Fries, 90 A.D. 484, 85 N.Y.S. 1064 (3d Dep't 1904 )(subsequent assignee of a junior mortgage was entitled to plead the 1 0-years statute of limitations as a defense to an action by plaintiff to set aside a mortgage discharge for mistake); 51 Am.Jur.2d Limitations of Actions§ 56 (citing Gurske v. Strate, 165 Neb. 882, 87 N.W.2d 703 (1958)("Since the statute oflimitations is a personal defense, the statute of limitations generally may not be used by one who has no relation of privity with the party who has the defense. On the other hand, when there is privity between a person who could, if sued, plead the statute and the 19 party offering to plead it, the latter may plead it to save his or her property. Such is the case with heirs, mortgagees, and transferees of mortgaged property.")). Moreover, "the proposition seems to be undisputed that, where the bar of the statute is complete against the person from whom right or title was derived, it is operative and binding against the successor." Incorporated Village of Island Park v. Island Park-Long Beach, Inc., 81 N.Y.S.2d 407, 410 (Sup. Ct. Nassau Co. 1948)( a property owner of adjoining land who would be affected by reformation of the deed, was not a stranger to the plaintiffs claim and was in a position to plead the statute oflimitations as a defense). Surely if a judgment creditor is permitted to assert the statute of limitations as a defense, a fortiori, a mortgagee should be permitted to raise the defense where the mortgagee is given its interest in the property directly by the owner, not merely as a result of a judgment. Permitting a mortgagee to raise the statute of limitations as a defense in an action seeking to void a deed comports with logic and reason. As explained above, deeds are routinely relied upon by both property owners and lenders. Equity and fairness require that a lender, in reliance upon a deed, be permitted to raise the same defenses as the owner who gave the lender its interest in the property in the first instance. 20 Here, Respondent is the current holder of the mortgage against the Property at issue in this action, having been granted a mortgage by Tonya Lewis, the current owner of the Property, and a party to the very deed which Appellant disputes. Clearly, Respondent, being in direct privity with Tonya Lewis, is no "stranger" to Appellant's claims and must be entitled to assert the statute of limitations to defend its own interest in the Property. By contrast, Appellant has provided no reason for denying a mortgagee in privity with the property owner the right to raise this defense. Appellant's citation to Perry v. Williams, 40 Misc. 57 (Sup. Ct. Tompkins Co. 1903), is puzzling since it does not, as Appellant suggests, stand for the proposition that the statute of limitations is a personal defense that may not be raised by anyone other than the parties to a transaction, but rather, permits the assertion of the defense by those who are in privity with the parties to the disputed transaction. More significantly, the trial court in Perry, which originally held that the defense could not be raised by the defendant, was subsequently reversed by the Third Department. See Perry v. Fries, 90 A.D. 484,85 N.Y.S. 1064 (3dDep't 1904). The remaining cases cited by Appellant are distinguishable insofar as they involve defenses that are personal to the individuals who participated in a particular transaction. Nash v. Duroseau, 39 A.D.3d 719, 835 N.Y.S.2d 611 (2d Dep't 2007)(lack of consideration is defense personal to the original mortgagor in 21 a foreclosure action); 527-9 Lenox Ave. Realty Corp. v. Ninth St. Assoc., 200 A.D.2d 531, 606 N.Y.S.2d 267 (1st Dep't 1994)(defendants who were not parties to underlying conveyance did not have standing to raise issue of lack of consideration); County of Tioga v. Solid Waste Indus., 178 A.D.2d 873, 577 N.Y.S.2d 922 (3d Dep't 1991 )(lack of consideration and unconscionability are defenses personal to the parties to the contract ). These types of defenses -lack of consideration and unconscionability - involve situations which would require the party asserting the defense to have knowledge ofthe facts and circumstances specific to the transaction that could form the basis of the defense. A statute of limitations defense is different, however, since it relies not on the information held by the individuals who participated in a particular transaction, but rather on the plaintiffs delay in prosecuting a claim which may be established without reliance upon the specific parties to a transaction.5 5 Appellant makes the curious argument that Respondent may not raise the statute of limitations defense as it pertains to the second cause of action in the complaint seeking to void BANA's mortgage. (Appellant's Brief, p.l4, footnote 5.) This issue was not addressed below and therefore is irrelevant to the instant appeal. In any event, such an assertion is patently incorrect. Respondent has demonstrated that Appellant's claim seeking nullification of a forged deed is barred by the statute of limitations. It therefore follows that any interest flowing from that deed- including Respondent's mortgage- must be permitted to stand since Appellant may no longer contest the deed's validity. Furthermore, the motion to dismiss which precipitated the instant appeals was one to dismiss the complaint, in its entirety, as barred by the statute oflimitations. The entire action was dismissed as against Respondent and neither the first nor the second cause of action survives. 22 CONCLUSION For the reasons stated herein, Respondent submits that the Decision and Order affirming the lower court's order granting Respondent's Motion to Dismiss the Complaint and denying Appellant's Cross-Motion should be affirmed in its entirety. Dated: New York, New York August 12, 2014 23 Respectfully Submitted, Liezl Irene Pangilinan, Esq. Fidelity National Law Group Attorneys for Respondent Bank of America, N.A. 350 Fifth Avenue, Suite 3000 New York, New York 10118 (646) 708-8089 (212) 594-8378 (fax)