LENNAR NORTHEAST PARTNERS LIMITED PARTNERSHIP v. GIFALDI

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Supreme Court, Appellate Division, Fourth Department, New York.

LENNAR NORTHEAST PARTNERS LIMITED PARTNERSHIP, Plaintiff-Appellant, v. Carl A. GIFALDI, Eva Gifaldi, Defendants-Respondents, et al., Defendants.  (Appeal No. 1.)

Decided: July 09, 1999

PRESENT:  PINE, J.P., HAYES, PIGOTT, JR., SCUDDER and BALIO, JJ. Francis E. Kenny, Rochester, for plaintiff-appellant. Robert J. Feldman, Buffalo, for defendants-respondents.

The issue presented in these appeals is when a foreclosure sale is consummated within the meaning of RPAPL 1371.   Chase Manhattan Bank commenced foreclosure actions against two pieces of property, one in Rochester and the other in Buffalo, owned by Carl A. Gifaldi and Eva Gifaldi (defendants).   Plaintiff, Lennar Northeast Partners Limited Partnership (Lennar), subsequently acquired the loans.   Lennar obtained stay relief in defendants' bankruptcy proceedings, then sold the Rochester property on November 13, 1996, and the Buffalo property on December 6, 1996, both by public auction.   Lennar was the successful bidder at each auction.   At the close of each auction, the respective Referees each executed a deed that had previously been prepared by Lennar's counsel and the Referees' signatures were acknowledged by Lennar's counsel on the date of each auction.   However, the name of the grantee and the bid amount at the foreclosure sale were not completed at the time the Referees executed the deeds.   After execution, Lennar's counsel took possession of each deed, but stated that he did not accept delivery of either deed because he expressly told each Referee that he was taking possession of the deeds in escrow.   Neither Referee was in possession of the deed he signed at any time thereafter;  both deeds remained in the possession of Lennar's counsel.   Lennar apparently hoped to eliminate some tax liens before recording the deeds and to avoid transfer taxes on two transactions if a third-party purchaser were found.

Lennar did not find third-party purchasers for either property.   After obtaining some property tax relief, Lennar allegedly authorized its counsel to accept delivery of the deeds on its behalf and complete and record them, vesting title in Lennar.   The deed to the Rochester property was recorded on November 17, 1997 and the deed to the Buffalo property on December 9, 1997, approximately one year after the respective auctions.   At that time, Lennar's counsel also prepared a report of sale for each Referee's signature.

On February 13, 1998, Lennar moved to confirm the sale and for a deficiency judgment against the mortgagors of the Rochester property pursuant to RPAPL 1371(2);  Lennar made a similar motion with respect to the Buffalo property on March 5, 1998.   Defendants cross-moved for orders dismissing that part of each motion seeking a deficiency judgment, arguing that the 90-day period of limitations for such a motion had already run, having commenced on the dates of the respective auctions.   Lennar argued that the 90-day period of limitations did not start running until it accepted delivery of the deeds approximately one year later, on November 17, 1997 and December 9, 1997, the dates of recordation.   Lennar's motions were denied and defendants' cross motions to dismiss were granted in each case, one in Supreme Court, Monroe County (appeal No. 1), and the other in Supreme Court, Erie County (appeal No. 2).   We affirm both orders.

RPAPL 1371(2) requires that a motion for a deficiency judgment be made “within ninety days after the date of the consummation of the [foreclosure] sale by the delivery of the proper deed of conveyance to the purchaser”.   RPAPL 1371(3) provides that “[i]f no motion for a deficiency judgment shall be made as herein prescribed the proceeds of the sale regardless of amount shall be deemed to be in full satisfaction of the mortgage debt and no right to recover any deficiency in any action or proceeding shall exist.”

 We have previously held that the 90-day period of RPAPL 1371(2) is a Statute of Limitations (see, Procco v. Kennedy, 88 A.D.2d 761, 451 N.Y.S.2d 487, affd. 58 N.Y.2d 804, 459 N.Y.S.2d 267, 445 N.E.2d 650;  see also, Mortgagee Affiliates, Inc. v. Jerder Realty Corp., 62 A.D.2d 591, 406 N.Y.S.2d 326, affd. 47 N.Y.2d 796, 417 N.Y.S.2d 930, 391 N.E.2d 1011).  There is a presumption that a deed is delivered and accepted as of its date of execution (see, Ten Eyck v. Whitbeck, 156 N.Y. 341, 352, 50 N.E. 963;  see also, Manhattan Life Ins. Co. v. Continental Ins. Cos., 33 N.Y.2d 370, 372, 353 N.Y.S.2d 161, 308 N.E.2d 682;  Whalen v. Harvey, 235 A.D.2d 792, 793, 653 N.Y.S.2d 159, lv. denied 89 N.Y.2d 816, 659 N.Y.S.2d 857, 681 N.E.2d 1304;  D'Urso v. Scuotto, 111 A.D.2d 305, 306-307, 489 N.Y.S.2d 294;  4 Warren's Weed, New York Real Property, Delivery, § 4.02 [4th ed.] ).  The presumption is rebuttable, however, and “must yield to opposing evidence” (Manhattan Life Ins. Cos. v. Continental Ins. Cos., supra, at 372, 353 N.Y.S.2d 161, 308 N.E.2d 682).

 Here, typed on the face of each deed is the date on which it was executed, i.e., November 13, 1996 and December 6, 1996, respectively, and each Referee's signature was acknowledged on those respective dates.   Thus, the presumption arises that the deeds were validly delivered and accepted on those dates.   In addition, Lennar signed a memorandum of sale for each transaction;  the terms of each memorandum indicate that each property was purchased by Lennar on the respective auction date.   In an attempt to rebut the presumption, Lennar argues that its counsel did not accept each deed at the time of each auction, but kept the deeds “in escrow” until recordation.   That argument is unsupported by the record;  there is no proof that an escrow existed.

 For an instrument to be held in escrow, there must be (a) an agreement regarding the subject matter and delivery of the instrument, (b) a third-party depositary, (c) delivery of the instrument to a third party conditioned upon the performance of some act or the occurrence of some event, and (d) relinquishment by the grantor (see generally, 55 N.Y. Jur. 2d, Escrows, § 3;  4 Warren's Weed, op. cit., § 7.01).   Merely “[c]alling an act an escrow does not necessarily make it such.  * * * The word is often used for a holding which has none of the effects which the law attributes to it” (Farago v. Burke, 262 N.Y. 229, 233, 186 N.E. 683;  see, 4 Warren's Weed, op. cit., § 7.01).

Here, the Referees, who were the grantors on behalf of the court, imposed no conditions on delivery, nor is there any mention of escrow in either the terms of sale or any correspondence between Lennar's counsel and the Referees.   Indeed, Lennar's counsel acknowledged that Lennar was free to record the deeds at any time after the dates of the sales and that Lennar was not required to obtain permission of the Referees or anyone else to complete or record the deeds.   When the Referees signed the deeds presented by Lennar's counsel, they were left with no title to convey to any other party (see, Geddes Fed. Sav. & Loan Assn. v. Ferrante, 226 A.D.2d 1099, 642 N.Y.S.2d 109).   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 (see, RPAPL 1371[2];  Savings Bank of Utica v. 561-575 Delaware Ave., 201 A.D.2d 946, 607 N.Y.S.2d 528).   Because Lennar failed to raise an issue of fact to overcome the presumption of delivery and acceptance on the respective auction dates (cf., Birch v. McNall, 19 A.D.2d 850, 244 N.Y.S.2d 60), we conclude that delivery to Lennar's attorney was “ absolute”.

 We are not persuaded by the argument of Lennar that equity demands that its deficiency judgment claims not be forfeited and that defendants not receive a windfall.   This result is required by the statute (see, RPAPL 1371[3] ).   We have examined Lennar's remaining arguments and conclude that they are lacking in merit.

Accordingly, the orders on appeal should be affirmed.

Order unanimously affirmed with costs.

PINE, J.P.: