Dorothy M. Faison,, Appellant,v.Tonya Lewis,, et al., Defendants, Bank of America, N.A., Respondent.BriefN.Y.February 18, 2015To be argued by David Gordon Time Requested: 15 minutes NEW YORK COURT OF APPEALS DOROTHY M. FAISON, as Administratrix of the Estate of Percy Lee Gogins, Jr., Deceased, APL-2014-00080 Plaintiff-Appellant, -against- TONY A LEWIS, a/k/a TONY A TAYLOR, a/k/a TONY A LEWIS TAYLOR, DOROTHY LEWIS, and MORTGAGE ELECTRONIC REGISTRATION SYSTEMS, INC., Defendants, and BANK OF AMERICA, N.A., Defendant-Respondent. APPELLANT'S BRIEF IN REPLY GORDON & HAFFNER, LLP Attorneys for Plaintiff-Appellant 480 Mamaroneck A venue Harrison, New York 10528 (914) 381-4848 Of counsel on the Brief: David Gordon, Esq. Steven R. Haffner, Esq. Date Erie/Completed: September 2, 2014 Kings County Index No. 21046/10 Second Department Docket No. 2011-10613 Table of Contents Table of Authorities ....................................................................... .ii Preliminary Statement ....................................................................... 1 Argument. ..................................................................................... 3 I. THE RULE THAT VOID INSTRUMENTS CANNOT ACQUIRE EFFECT BY OPERATION OF THE STATUTE OF LIMITATIONS IS NOT LIMITED TO ILLEGAL CONTRACTS; IT IS EQUALLY APPLICABLE TO VOID DEEDS ........................ ..4 II. RESPONDENT HAS FAILED TO ESTABLISH ANY JUSTIFICATION FOR DEPARTURE FROM THE RULE THAT STATUTES OF LIMITATION CANNOT BAR ACTIONS TO DECLARE THE NULLITY OF VOID DEEDS ............. 8 CONCLUSION ........................................................................... .12 Table of Authorities Riverside Syndicate, Inc. v. Munroe, 10 N.Y.3d 18, 882 N.E.2d 875 (2008) .......................................................................................... 4,5, 7, 8 Cameron Estates, Inc. v. Deering, 308 N.Y. 24 (1954) .................. 4,5,6,7, 8,9,10 Swandiak v. Boniface, 161 A.D.2d 995, 557 N.Y.S.2d 567 (3d Dept. 1990) ........ 6 Marden v. Dorothy, 160 N.Y. 39 (1899) .................................................. 6 Reed v. Reed, 195 A.D.2d 451, 591 N.Y.S.2d 847 (2d Dept. 1993) ................... 9 Matter of Finchum v. Co1aiacomo, 55 A.D.3d 1084, 869 N.Y.S.2d 619 (3d Dept. 2008) .......................................................................................... 9 Wahle-Phillips Co. v. Fitzgerald, 225 N.Y. 137 (1918) ................................ 11 Peoplev. Snyder, 41 N.Y. 397 (1869) .................................................... 11 55 Eckford Real tv LLC v. Industrial & Commerical Bank of China (U.S.A.), N.A., 39 Misc. 3d 1208(A), 971 N.Y.S.2d 70 (Sup. Ct. Kings Co. 2013) .................. 11 II Preliminary Statement Respondent's arguments for application of the statute of limitations to Appellant's action for a declaration of the nullity of the Forged Deed must be rejected for the following reasons. First, Respondent contends that the loose convention employed by some courts in referring to forgery as a species of fraud requires application of the fi·aud statute of limitations to actions. However, as already demonstrated by Appellant (Br. 7-11 ), in actions to declare the legal nullity of a void instrument, the matter is not controlled by the label attached to the claim, but instead by the long-settled incapacity of void instruments ever to acquire legal consequence. Respondent's insistence that it is the rubric of fraud which is determinative also ignores the fundamental differences noted by Appellant (Br. 11, fu. 3) between a cause of action for fraud, in which the target of the wrongdoing must demonstrate she relied to her detriment on the defendant's falsehood, and actions for declaratory or equitable relief from a forged deed, in which the plaintiff/true owner is a stranger to the deed and to the transaction in which it was created. Second, Respondent urges that the rule barring application of statutes of limitation must be limited to cases in which the void instrument is an illegal contract. Again, Respondent fails to recognize that the bar against temporal limitation is a consequence of the nullity of the subject instrument, and not of the 1 particular circumstances that made it so. In essence, Respondent would fragment void ab initio instruments into separate classes: (i) illegal contracts, which would pennanently lack any effect; and (ii) all others, which would enjoy consequence until deprived of it by affirmative judicial action. This stratification finds no warrant in the case law, and would scrap the settled distinction between a "void" instrument - i.e., one forever without legal effect, regardless of whether passed upon by a court -- and a "voidable" instrument - i.e, one with legal effect until there has been a contrary adjudication. Respondent's radical departure would thus imbue all void instruments, other than illegal contracts, with a power they have never had to alter legal relations. Third, Respondent insists that continued application of the bar against temporal limitations would undermine the statutory objectives of repose and avoidance of "stale" claims. It must be presumed, however, that when this Court held limitations inapplicable to the narrow class of actions which seek declarations of nullity, it fully considered the competing interests at play, and found their balance militated against temporal limitation. Further, to the extent a defendant in such an action might be prejudiced by delay which has resulted in the loss of evidence, Respondent has failed to explain why the doctrine of laches would fail to provide a fully sufficient defense. 2 Finally, invoking the shibboleth of land record "sanctity", Respondent predicts nothing short of catastrophe for New York's real estate markets from continuation of the bar against temporal limitations on actions to declare the nullity of void deeds. However, the mere fact of recording has never immunized real property instruments from legal attack and, even where a statute of limitations is applicable, recorded instruments remain vulnerable to impeachment until the applicable limitation has run. This reality has not, however, had any discernible chilling effect on real estate markets, in which titles regularly change hands, and mortgage loans are regularly made, without regard to how much time has passed since the seller or owner acquired title and whether potential title contests have become time barred. Respondent has not condescended to offer any reason why continuation of the bar against application of statutes of limitation in the limited class of actions which seek relief from void deeds would have any appreciable dampening effect on the vitality of real estate markets. 1 ' Without prejudice to any other part of this appeal, Appellant withdraws its argument (App. Br. Point II) that Respondent lacked standing to raise the statute of limitations defense with respect to Appellant's claims for relief from the Forged Deed. 3 Argument I. THE RULE THAT VOID INSTRUMENTS CANNOT ACQUIRE EFFECT BY OPERATION OF THE STATUTE OF LIMITATIONS IS NOT LIMITED TO ILLEGAL CONTRACTS; IT IS EQUALLY APPLICABLE TO VOID DEEDS Respondent urges this Court to confine to illegal contracts the rule applied in Riverside Syndicate, Inc. v. Munroe, 10 N.Y.3d 18, 882 N.E.2d 875 (2008), that a statute of limitations cannot breathe life into a void instrument by barring actions to declare its nullity (Resp. Br. 13). Respondent's myopic reading of Riverside is erroneous, as it fails to recognize the bar to operation of the statute of limitations turned not on the specific circumstance that the instrument in issue was an illegal contract, but on its resulting nullity, a status that may adhere to other instruments and arise on other grounds. If there is any justification for the restriction pressed by Respondent, it neither appears in the decision nor arises from reasoned analysis. Respondent's misconception is made apparent by this Court's holding in Cameron Estates, Inc. v. Deering, 308 N.Y. 24 (1954), which barred application of a statute oflimitation to an action to declare the nullity of a tax sale deed. In Cameron Estates, a tax sale deed had been erroneously issued to defendant Suffolk County, although the underlying tax bill had been paid. As tax delinquency was a condition to foreclosure, the tax deed was void from inception for want of statutory authmization. More than six years after the deed was recorded, the plaintiff sued to declare its nullity and to remove it as a cloud on title. 4 The county argued the action was time barred under section 53 of the Suffolk County Tax Act, a statute of limitation which accorded conclusive effect to tax deeds six years after recording. This Court rejected the county's defense, noting the "vast difference between a tax deed voidable for irregularity in the proceedings and a tax deed void because the proceedings were a nullity due to prior payment of the tax," I d. at 30 (italics in original). The Court grounded this result in the principle that a statute of limitations can never operate to deprive a landowner of the right to remove the cloud on title created by a void tax deed. The Court's reasoning, fully consistent with its later ruling in Riverside Svndicate, applies with equal force to the declaration of the nullity of the Forged Deed sought here: The logic of such a view [i.e., that an action to declare the nullity of a void tax deed can never be barred under the statute of limitations] is inescapably correct, for otherwise the recording of the deed resulting from such a [tax sale] proceeding would transform the owner's absolute title in fee simple into a right of action only, the exercise of which is subject to time limitation. The tax deeds constituted a cloud on plaintiff's title which should be removed. When void tax deeds are attempted to be made prima facie evidence of the regularity of the proceedings, equity will interfere to permit removal as a cloud on title which right may be invoked by the owner in possession at any time as such a right is never barred by the Statute of Limitations. It is a continuing right which exists as long as there is an occasion for its exercise. 5 Id. at 30-31 (internal citations and quotation marks omitted). See also Swandiak v. Boniface, 161 A.D.2d 995, 996, 557 N.Y.S.2d 567, 568 (3d Dept. 1990) (statute of limitations could not bar action to quiet title clouded by void tax deed). Significantly, the tax deed in Cameron Estates was neither illegal in purpose nor illegal in its subject matter, but was void for a different essential infirmity. Thus, contrary to Respondent's contention, the bar against application of statutes oflimitation in actions to declare the nullity of void instruments is not at all limited to illegal contracts, but encompasses instruments void on any ground. The rationale of Cameron Estates also reveals the fundamental misconception behind Respondent's repeated and misleading characterization of this action as one "to void a forged instrument" (Resp. Br. 2), "to nullify a forged deed" (Resp. Br. 10) and "to void a forged deed" (Resp. Br. 12). Each of these formulations wrongly implies a power in the Forged Deed to affect rights in the subject property unless and until taken away by judicial act. The suggested power is iiTeconcilable with the rule that the Forged Deed has always been a legal nullity, Marden v. Dorothy, 160 N.Y. 39, 50-51 (1899), and thus incapable of doing anything more than clouding the true owner's title. Contrary to Respondent's mischaracterizations, this action does not seek to do anything to the Forged Deed; 6 instead, it seeks only a judicial declaration of the existing legal reality that the deed was and is without effect? Respondent has not disputed that the forgery alleged by Appellant would render the Deed here void from inception, just as the improperly issued tax deed in Cameron Estates and the illegal lease in Riverside Syndicate were void from creation. Like the instruments in these cases, with or without judicial intercession, the void Forged Deed could not possibly "transform [Appellant's] absolute title in fee simple into a right of action only, the exercise of which is subject to time limitation." Cameron Estates, 308 N.Y. at 30. Appellant likewise enjoys the same continuing right as the Cameron plaintiff to enlist equity to remove the cloud on title created by the Forged Deed, "at any time ... as long as there is an occasion for its exercise," unconstrained by the statute oflimitations. Finally, Appellant again misses the point in its attempt to elevate the shibboleth, that forgery is a species of fraud, into a rule requiring application of the fraud statute of limitations to actions seeking declaratory or equitable relief from a forged deed (Resp. Br. 8). Even assuming arguendo Appellants' claim may fall within the rubric of "fraud", the bar against application of the statute of limitations does not turn on the classification of Appellant's claim, but on the void character 'Equally misconceived is Respondent's assertion that "a plaintiff is required to bring an action to obtain a declaration that a deed is forged in order to protect her interests" (Resp. Br. 16). A forged deed lacks any capacity to diminish the true owner's interest in the subject prope11y, whether or not she takes legal action. 7 of the Forged Deed and on the declaratory nature of the relief sought. As demonstrated above, regardless oflabel, Appellant's claim to declare the nullity of the Forged Deed cannot be barred by application of any limitation period.3 II. RESPONDENT HAS FAILED TO ESTABLISH ANY mSTIFICATION FOR DEPARTURE FROM THE RULE THAT STATUTES OF LIMITATION CANNOT BAR ACTIONS TO DECLARE THE NULLITY OF VOID DEEDS Respondent offers two policy arguments for abandoning the rule that statutes of limitation cannot bar actions to declare the nullity of void deeds, to wit: (1) defendants might be forced to defend "stale" claims, after loss of potentially necessary evidence (Resp. Br. 10-11 ); and (2) the "sanctity" of land records would be destroyed, with catastrophic consequences for real estate markets. Neither argument can withstand scrutiny (Resp. Br. 16-18). First, statutes of limitation were nothing new when this Court decided Cameron Estates and Riverside Svndicate. It can only be assumed that, in ruling statutes of limitation inoperative in these cases, the Court carefully weighed the policy interests they serve - repose and avoidance of "stale" litigation -- against 'Respondent is also mistaken in contending that Appellant "fail[ ed] to address, let alone distinguish," the Appellate Division cases it has string-cited in support of its contention that forgery is fraud and, therefore, actions for declaratory relief from forged instruments are governed by the fraud statute oflimitations (Resp. Br. 1 0). This is the very proposition underlying the order from which this appeal is taken. Appellant has explicitly argued the proposition is wrong (App. Br. l 0-11 ). 8 those militating against giving effect to void instmments, and found the balance tipped in favor of the latter. Second, there is no merit to Respondent's assertion that, but for application of the statute of limitations, defendants in actions to declare the nullity of void instmments would be without remedy for loss of material evidence over time. Since these actions are equitable in nature (Cameron Estates, supra), the defense of laches is available to a defendant who can demonstrate she has been prejudiced by delay which led to the loss of necessary evidence. Cf Reed v. Reed, 195 A.D.2d 451, 591 N.Y.S.2d 847, 848 (2d Dept. 1993) ("The doctrine [oflaches] is available when there has been a considerable delay resulting in ... loss of evidence"). See, e.g., Matter of Finchum v. Colaiacomo, 55 A.D.3d 1084, 1086, 869 N.Y.S.2d 619, 623 (3d Dept. 2008) (laches barred workers compensation claim, asserted after two year delay against contractor and its carrier, where evidence was lost due to intervening death of a material witness). Respondent has failed to advance any reason why laches would not provide a fully sufficient defense to a party whose defense to an action for declaratory or other equitable relief from a void deed has been impaired by loss of evidence resulting from delay. Moreover, contrary to Respondent's premise, the fraud statute oflimitations, by its own terms, cannot be relied upon for repose or avoidance of potentially "stale" litigation. Where the tme owner is unaware of the forgery or of facts which 9 would reasonably permit its discovery, the statute extends her time to sue until two years after discovery of such facts, however long that might take. CPLR 213(8). For this reason, even were the statute of limitations applicable, the time in which an owner might seek declaratory or equitable relief could well be indefinite, just as it is under the present bar to temporal limitations. Finally, Respondent's appeal to the "sanctity" of recorded deeds and prediction of catastrophic consequences for the State's real estate markets (Resp. Br. 16-18) are as misconceived as they are grotesquely exaggerated. To begin with, the argument is again implicitly premised on the improbable proposition that, in Cameron Estates, this Court failed to consider the policy behind the recording statutes when it held that the running of the statute of limitations could not lend effect to a recorded, void deed. The purposes of recording were, of course, already long settled. Indeed, as the Court noted, it was the act of recording which would have triggered the running of the statute in issue, had the deed not been void. Further, contrary to Appellant's view, the recording of an instrument does not render it sacrosanct. If it did, statutes of limitation would be irrelevant, since challenge to a recorded land instrument would be impossible, at any time and on any ground. Respondent does not dispute that, even where a statute of limitation is 10 applicable, a deed may always be challenged before the statute has run out, notwithstanding the deed having been recorded. Yet, the Court may take judicial notice4 that, despite the vulnerability of all recorded deeds to attack before the expiration of statutory limitations, purchasers of New York real estate regularly accept deeds from sellers who have owned the subject property for short periods of time, even though all manner of challenge might yet be timely. Similarly, lenders rarely concern themselves with how much time has passed since a borrower's acquisition of title, as is evident from their willingness to finance real estate purchases and to extend mortgage financing on recently acquired properties.5 In short, the possibility that title to land will be assailed in court before limitations periods have run must be small, as it has not chilled New York's real estate markets to any perceptible degree. If there is reason to believe that any greater dampening effect will result from continuation of the existing rule that that statutes of limitation are inapplicable to the small subset of actions which seek ' The Court may take judicial notice of these generally known realities of New York's real estate markets. See, e.g., Wahle-Phillips Co. v. Fitzgerald, 225 N.Y. 137, 139 (1918) Gudicial notice that electrical fixtures generally pass with the conveyance of title to office buildings); People v. Snyder, 41 N.Y. 397, 398 (1869) Gudicial notice of widely known history of title to large tract in western part of State); 55 Eckford Realty LLC v. Industrial & Commerical Bank of China (U.S.A.), N.A., 39 Misc. 3d l208(A), 971 N.Y.S.2d 70 (Sup. Ct. Kings Co. 2013) Qudicial notice of sharp downturn of real property values in 2008). ' Moreover, purchasers and mortgagees almost universally protect themselves against these risks through the purchase of title insurance. 11 relief from void deeds, Respondent has failed to identify it. The realities of New York's real property markets belie Respondent's hyperbolic prediction that "mass disaster for property ownership in New York State" will follow if this Court declines to depart from the current rule. CONCLUSION For the foregoing reasons, it is respectfully submitted that this action to declare the nullity of a forged deed cannot be barred by the statute of limitations and that the order on appeal should accordingly be reversed. Dated: September 2, 2014 GORDON & HAFFNER, LLP Attorneys for Appellant ~· 48: ~n::enue 12 Harrison, New York 10528 (914) 381-4848 CERTIFICATE OF COMPLIANCE PURSUANT TO 22 NYCRR § 670.10.3(f) The foregoing brief was prepared on a computer. A proportionately spaced type face was used, as follows: Name of typeface: Point size: Line spacing: Times New Roman 14 Double The total number of words in the brief, inclusive of point headings and footnotes and exclusive of pages containing the table of contents, table of authorities, proof of service, certificate of compliance, or any authorized addendum containing states, rules, regulations, etc. is 2877. GORDON & HAFFNER, LLP Attorneys for Plaintiff-Appellant 480 Mamaroneck A venue Harrison, New York 10528 (914) 381-4848 AFFIRMATION OF SERVICE DAVID GORDON, an attorney admitted to practice in the courts of the State of New York, affirms under penalty of peljury, pursuant to CPR 2106: On September 2, 2014, I served each of the addressees listed below with three true and complete copies of the within Appellant's Brief in Reply by placing the same in sealed wrappers, with first class postage prepaid thereon, and placing them in the custody of the United States Postal Service at an official depository thereof within the State of New York, addressed to the last known address of each of the following addressees: L. Irene Pangilinan, Esq. Fidelity National Law Group Attorneys for Defendant Bank of America, N.A. 350 Fifth Avenue, Suite 3000 New York, New York 10118 Akennan Senterfitt LLP Attorneys for Defendant Mortgage Electronic Registration System, Inc. 666 Fifth Avenue, 20th Floor New York, New York 10103 Tonya Lewis a/k:Ja Tonya Taylor a/k:Ja Tonya Lewis Taylor ProSe 1900 Bergen Street Brooklyn, NY 11233 -and- 1120 Lenox Road Brooklyn, New York 11212 Dorothy Lewis ProSe 1120 Lenox Road Brooklyn, New York 11212 Dated: September 2, 2014