Case Law Shorts

Case Law Shorts    12/30/13       New York Appellate Division, Second Dept.


State Not Liable for County Clerk’s Error in Docketing a Judgment/Semantics. Bank obtained a judgment against mortgage broker and its principal, a natural person, individually. However, the clerk, upon docketing the judgment, depicted the individual’s name as a debtor corporation. Thereafter, the principal sold property titled in his name and did so without satisfying the judgment. Bank brought an action in the Court of Claims for negligence against the State, maintaining that pursuant to statute, the clerk’s docketing of judgments is ministerial and therefore, the State cannot avail itself of sovereign immunity. The State countered that the act of docketing a judgment calls upon the clerk to review the abstract and make a determination as to whether the judgment debtor is a natural person or a corporation.  Therefore, the act of docketing a judgment is discretionary and sovereign immunity shields the act of docketing judgments from negligence. The Court of Claims granted summary judgment to the State and the Second Dept. sustained, however with different reasoning.  The Court stated that the act of docketing a judgment is ministerial.  However, liability hinges on whether the State violated a duty owed specifically to the plaintiff and not to the public in general and in the end, here, whether the ministerial duty of docketing judgments is solely for the benefit of judgment creditors. The Court stated that the docketing of judgments benefits another class – purchasers of real property – in that the docketing of judgments provides notice to purchasers of the fact that a lien exists against the property…“Here, while judgment creditors undoubtedly stand to benefit from CPLR 5018 and 5203, they do not constitute the sole class to benefit from the docketing of judgment liens. The recording of judgment liens is of particular benefit to prospective purchasers of real property belonging to judgment debtors. ‘The docketing of the judgment is especially for the purpose of giving notice of the lien to third parties dealing with the land of the judgment debtor’ (Bernstein v Schoenfeld, 37 Misc 610, 612, affd 81 App Div 171; see We Buy Now, LLC v Cadlerock Joint Venture, LP, 46 AD3d 549, 549-550).” Flagstar Bank, FSB v State of New York, 2013 NY Slip Op 08592, Appellate Division, Second Department, December 26, 2013.




1. That the statute was intended to benefit purchaser's of the property is a litle on the weak side – the property is not encumbered until the judgment is docketed.  The Court may have found another way to get to where it ultimately wanted to go, encapsuled in this ending one sentence quip…“‘[T]he government is not an insurer against harm suffered by its citizenry at the hands of third parties" (Valdez v City of New York, 18 NY3d at 75).’”

2. More importantly for insurers, who can purport to be a good faith purchaser where the judgment index depicts the name of an individual - but denotes a corporation…especially where the name cannot be found on the State’s corporation website?




Case Law Shorts    12/20/13       New York Appellate Division, Second Dept.


Barrel of Fish Hooks - Husband forges wife’s name, transfers property multiple times, and to his assumed name, obtains a mortgage and ultimately sells property (to avoid equitable distribution): Wife sued husband for divorce in 2008. Husband moved to dismiss based upon a 2000 divorce in Lebanon. The Supreme Court, Kings County, ruled that the prior divorce did not resolve marital property and the Court sought to divide real property in Brooklyn and Queens. A referee found that during the late 1990s and early 2000s, defendant transferred the Brooklyn property from himself and his wife as tenants by the entirety to his relatives and that he forged his wife’s signature for the transfer.  Thereafter, that defendant effectuated more transfers between relatives and an assumed name, that he obtained a mortgage from Emigrant Mortgage and ultimately sold the property in 2009 for $950,000 (bona fide purchaser put on a $675K Signature Bank mtg.) Defendant also transferred the Queens property to a third party and for no consideration. The wife discovered the transfers after the Court divided the property and the Second Dept., after a lengthy discussion regarding self-incrimination and civil vs. criminal contempt, sustained a civil contempt finding as the defendant failed to cooperate with discovery.   El-Dehdan v El-Dehdan, 2013 NY Slip Op 08404, Appellate Division, Second Department, December 18, 2013



Remarks: Cases like this emphasize the value of title insurance. 




Case Law Shorts    12/9/13       New York Appellate Division, Second Dept.


Title Insurer/Survey Reading/Trail/Specificity/Rights of Others: Purchaser bought property and purchased title insurance.  The survey depicted a trail traversing the property and the title policy contained an exception that recited the trail but did not specifically except rights of others to use the trail. Purchaser attempted to subdivide and sell the property but encountered objections because of the trail. Thereafter, the insured’s claim to title insurer was denied based upon the trail recital in the survey exception. Notwithstanding, insured claimed that, as the policy did not contain any exception specifically excepting rights of others over the trail, the policy was rendered ambiguous and therefor, should be construed against the insurer. Insurer moved for summary judgment and the Suffolk County Supreme Court (J. Molia) denied. The Second Dept reversed… “Here, First American established its prima facie entitlement to judgment as a matter of law by submitting, inter alia, the title insurance policy, which specifically excepted the trail from coverage. In opposition, the plaintiff failed to raise a triable issue of fact as to whether the language of the policy is ‘susceptible of two reasonable interpretations’ and, therefore, ambiguous (State of New York v Home Indem. Co., 66 NY2d 669, 671; see MDW Enters. v CNA Ins. Co., 4 AD3d 338, 340-341; see generally Alvarez v Prospect Hosp., 68 NY2d 320, 324). Contrary to the plaintiff's contention, while the relevant provisions of the policy could have theoretically been more precise by specifying the rights of third parties which may arise from the trail, such lack of specificity does not render the policy provisions ambiguous (see Greenfield v Philles Records, Inc., 98 NY2d 562, 573; Henrich v Phazar Antenna Corp., 33 AD3d 864, 867; see also Kasowitz, Benson, Torres & Friedman, LLP v Duane Reade, 98 AD3d 403, 406; RM Realty Holdings Corp. v Moore, 64 AD3d 434, 438). Moreover, 'extrinsic and parol evidence is not admissible to create an ambiguity in a written agreement which is complete and clear and unambiguous upon its face' (W.W.W. Assoc. v Giancontieri, 77 NY2d at 163 [internal quotation marks omitted]).”    A. Gugliotta Dev., Inc. v First Am. Tit. Ins. Co. of N.Y., 2013 NY Slip Op 08034, Appellate Division, Second Department, December 4, 2013



Editor’s Remark.  Raising separate exceptions (eg. "rights of parties" or "out of possession") for items that have already been excepted via the survey reading is commonplace and practitioners have come to rely upon the industry practice, to the insured's detriment as shown here.