I was in Court this morning for a motion and as those of us who are in Court regularly know you can get a real education watching Judges and Attorney's argue Motions. You can learn about the issues of law involved in their Motions and you can get a feel for the particular Judge in terms of how they deal with various Motions etc.
This morning a strikingly good looking, young, female Attorney with a very thick accent and European name took to the counsel table to argue a Motion to Dismiss. In sitting and watching her get creamed by the very patient Judge it was clear that she was clueless. The Lawyer that sent her should have known better than to send this rookie into the shark tank. I thought, though, that this would present a good opportunity to talk for a minute about Motions to Dismiss.
A Motion to Dismiss is made when the Defendant believes that the evidence presented viewed in a light most favorable to the Plaintiff is not sufficient to state a cause of action. So, if the case is about fraud and the facts alleged in the complaint do not make out a prima facie case for fraud the defense can make a Motion to Dismiss saying as much.
Judge's are loath to grant Motions to Dismiss especially before any discovery has taken place. I have seen dozens of Motions denied outright because the Judge ruled that absent the discovery process, where information and evidence to back up a Plaintiff's claim is to be revealed, the Motion must be denied because the legitimacy of the claim can not be weighed. Invariably, in these pre-discovery Motions to Dismiss the Attorney for the defendant will stand there and say adamantly that there is no case, that the complaint is all conjecture and lies and nothing of the sort took place. These inexperienced advocates, like the one I saw this morning, don't realize that this argument plays right into the plaintiff's hands and leads directly to a denial of the Motion.
The reason is simple. If you say that the allegations are spurious you have actually agreed that there are factual inconsistencies to be looked at. If their are factual inconsistencies then you have triable issues of fact. If you have triable issues of fact then the Motion to Dismiss must be denied. It is only after discovery, where each party shows his case, that a Defendant can honestly say that looking at the facts that are undisputed and giving the benefit of the doubt to the Plaintiff on the facts that are disputed that there is no cause of action.
Let's look at an example. P sues D for breach of contract. D makes a Motion to Dismiss and says that D has not breached the contract. D's motion to dismiss must be denied because there clearly is an issue of fact between the parties as to whether D has breached the contract.
CPLR 3211(a) gives a laundry list of instances where even if there are factual inconsistencies a Motion to Dismiss can prevail. Such scenarios are the Plaintiff has no standing, the Court lacks Subject Matter Jurisdiction, Defendant is immune to liability, etc. These are all legal arguments and as such can form the proper basis for such a dismissal. So, if P sues D for breach of contract and D makes a Motion to Dismiss and says that P lacks standing to sue because P was not a party to the contract then the motion should be granted. Presumably D would show the contract being sued upon and P would be absent as a party to that contract.
As a rule of thumb, I wait until after discovery to make a Motion a Dismiss. This affords me the opportunity to ask for a bill of particulars, send out interrogatories and conduct EBTs. It is through the discovery process that I can gain an understanding of a Plaintiff's action and determine whether a Motion to Dismiss is appropriate and my chances of prevailing on the Motion. Doing the Motion pre-discovery is almost always a waste of my time, the clients money and leads to my not being able to deliver a result that the client expects, however unreasonably those expectations are. Why would I want to create those expectations when I know that prevailing on the Motion is an unrealistic expectation? I create those expectations only after I become certain that they are realistic.
To this morning's inexperienced rookie I strongly recommend that you advise your clients that just because we all agree that the facts in the complaint are incorrect doesn't mean that we can offhandedly dismiss the action. Obviously there is a dispute of facts otherwise we would not be in Court in the first place. The Court is there to ultimately determine who is right and who is wrong. Every lawsuit is a he said - she said scenario. The argument of liar liar pants on fire is not sufficient to support a dismissal. Moreover, you are not likely to curry favor with your adversaries and with judges if your response to every lawsuit is a motion to dismiss and your clients are not going to be happy with your inability to get the case dismissed despite the expectations that you have created (even if those expectations were created unwittingly). It is waste of your time and the clients money. Make the motion when you can get it through that it is after discovery.
Lastly, to the Attorney who supervised this morning's rookie on this motion and sent her to court on her own, it is very poor form to send such an unprepared Attorney to court. She had no idea that her motion was not appropriate and clearly thought that she could just say that her client didn't do what he is accused of doing and get the case dismissed. Very poor form.
Feel free to contact me with any questions regarding this blog and any other legal questions you may have. I can be reached via e-mail jgoldstein@jgoldsteinlaw.com.
Wednesday, June 29, 2011
Sunday, June 19, 2011
The other day I stumbled upon two law students having coffee and studying for the Bar Exam at my favorite Aspen, Colorado breakfast spot, Ink (couldn't resist the free plug). I chatted these two students up and found out that they were studying Real Property Law for the Multi-State Bar Exam (Colorado only requires prospective Attorneys to take the Multi-State Bar Exam, they have no local Colorado Exam like so many other jurisdictions New York included). Being a Real Estate Attorney myself, I asked if I could take a turn in answering a practice question and explaining the law behind it.
The question I randomly choose was a complicated question revolving around the issue of which of several parties has legal title to a parcel of land when there are multiple deeds. The Bar examiners were really testing the students' knowledge of differences between the doctrines of Race, Notice and Race-Notice. I immediately decided that this much overlooked and complicated jurisprudence is ripe for explanation here in my blog as issues such as this do come up in private practice and it is important to be aware of the law.
We start with some background. Every state has a law that directs each County within the State to keep accurate land records. This is called a Recording Statute. The goal of this record keeping is to have one central location in each County where a person, for whatever reason, can search for and determine who is in title to any particular parcel of land as well as what liens exist against that parcel. Records are kept in three variations: a Grantor-Grantee Index; a Grantee-Grantor Index and; a block and lot index. In today's technologically advanced world many jurisdictions throughout the US have computerized these indexes making them easy to search and in some jurisdictions, such as New York where I practice, available online.
While the US was in its infancy problems with these indexes arose. Sometimes it would take days, or even months for deed and liens to be recorded and the pace of trading properties was faster than the pace of recording documents. Hence, it grew difficult to fully keep track of the owners and lien holders as properties changed hands quicker than the county clerk's could accurately record transactions. In response three doctrines evolved.
The first doctrine takes a literal look at the problem. The document dated first is first. Two examples to illustrate this doctrine called Race:
A) Owner deeds Parcel X to ABC Corp. and then decides that he prefers to sell Parcel X to XYZ Corp. so he deeds Parcel X to XYZ Corp. assume that nothing gets recorded, who owns the property? Simple, in a Race jurisdiction ABC Corp. owns Parcel X because the deed to ABC Corp. predates the deed to XYZ Corp.
B) Owner borrows money from ABC Bank in exchange for a lien against Owner's property. Owner then goes to XYZ Bank and borrows money in exchange for a lien against the same property. Which bank holds the superior lien? In a Race jurisdiction ABC Bank has a first position lien and XYZ Bank has a second position lien because the Mortgage between Owner and ABC Bank predates the Mortgage between Owner and XYZ Bank.
Simple so far but there are some very sneaky people out there who would steal documents and alter dates and take part in other such nefarious acts that made Race not seem as attractive a method to be used in determining property ownership. Here is the second doctrine of Notice comes into play. The Notice doctrine says that we don't care about the date of the document what counts is the order in which the documents are recorded in the County Clerk's office. The theory is that anybody could falsify a date on a document and, under the Race doctrine, fool others into believing that someone other than a true Owner or true lien holder is the Owner or lien holder. The Notice doctrine requires that in order to be effective a document relating to real property must be recorded in the County Clerk's office to be effective and to put the world on "Notice" of such transaction. Moreover, if we merely use Race then there is no way for a subsequent potential purchaser or lien holder to truly be certain that he is getting what he has bargained for. Let's illustrate this through our examples.
A) Recall that we said that we have two deeds the ABC Corp. and the XYZ Corp. deed. Let's say that the XYZ Corp. deed gets recorded prior to the recording of the ABC Corp. deed. Who owns Parcel X now? In a Notice jurisdiction XYZ Corp would be the owner because XYZ Corp. got to the County Clerk first. The theory is that XYZ Corp. is a bonafide purchaser because there was no way XYZ Corp. could have known about the ABC Corp. because that deed was never recorded.
B) Recall that we have two lien holders and we seek to know which lien holder is superior. The answer would be that the dates of the mortgages would have no bearing on the lien order rather the only question would be which Bank recorded first. So, if XYZ Bank recorded first their lien would be superior to that of ABC Bank regardless of the fact that ABC Bank has a mortgage predating that of XYZ Bank.
But doesn't all this seem a bit unfair? We have people dating papers, recording papers and all the best laid plans gone to waste for one reason or another. Now comes the third doctrine, Race-Notice. Race-Notice says that you must be recorded to be effective but that once recorded we go by date of the document. In this manner we have protected the subsequent bonafide purchaser from taking property that turns out not to have belonged to the seller due to an unrecorded deed and we have protected the purchaser who simply got to the clerk late.
If you have any questions please do not hesitate to contact the Law Office of Jeffrey M. Goldstein PLLC.
The question I randomly choose was a complicated question revolving around the issue of which of several parties has legal title to a parcel of land when there are multiple deeds. The Bar examiners were really testing the students' knowledge of differences between the doctrines of Race, Notice and Race-Notice. I immediately decided that this much overlooked and complicated jurisprudence is ripe for explanation here in my blog as issues such as this do come up in private practice and it is important to be aware of the law.
We start with some background. Every state has a law that directs each County within the State to keep accurate land records. This is called a Recording Statute. The goal of this record keeping is to have one central location in each County where a person, for whatever reason, can search for and determine who is in title to any particular parcel of land as well as what liens exist against that parcel. Records are kept in three variations: a Grantor-Grantee Index; a Grantee-Grantor Index and; a block and lot index. In today's technologically advanced world many jurisdictions throughout the US have computerized these indexes making them easy to search and in some jurisdictions, such as New York where I practice, available online.
While the US was in its infancy problems with these indexes arose. Sometimes it would take days, or even months for deed and liens to be recorded and the pace of trading properties was faster than the pace of recording documents. Hence, it grew difficult to fully keep track of the owners and lien holders as properties changed hands quicker than the county clerk's could accurately record transactions. In response three doctrines evolved.
The first doctrine takes a literal look at the problem. The document dated first is first. Two examples to illustrate this doctrine called Race:
A) Owner deeds Parcel X to ABC Corp. and then decides that he prefers to sell Parcel X to XYZ Corp. so he deeds Parcel X to XYZ Corp. assume that nothing gets recorded, who owns the property? Simple, in a Race jurisdiction ABC Corp. owns Parcel X because the deed to ABC Corp. predates the deed to XYZ Corp.
B) Owner borrows money from ABC Bank in exchange for a lien against Owner's property. Owner then goes to XYZ Bank and borrows money in exchange for a lien against the same property. Which bank holds the superior lien? In a Race jurisdiction ABC Bank has a first position lien and XYZ Bank has a second position lien because the Mortgage between Owner and ABC Bank predates the Mortgage between Owner and XYZ Bank.
Simple so far but there are some very sneaky people out there who would steal documents and alter dates and take part in other such nefarious acts that made Race not seem as attractive a method to be used in determining property ownership. Here is the second doctrine of Notice comes into play. The Notice doctrine says that we don't care about the date of the document what counts is the order in which the documents are recorded in the County Clerk's office. The theory is that anybody could falsify a date on a document and, under the Race doctrine, fool others into believing that someone other than a true Owner or true lien holder is the Owner or lien holder. The Notice doctrine requires that in order to be effective a document relating to real property must be recorded in the County Clerk's office to be effective and to put the world on "Notice" of such transaction. Moreover, if we merely use Race then there is no way for a subsequent potential purchaser or lien holder to truly be certain that he is getting what he has bargained for. Let's illustrate this through our examples.
A) Recall that we said that we have two deeds the ABC Corp. and the XYZ Corp. deed. Let's say that the XYZ Corp. deed gets recorded prior to the recording of the ABC Corp. deed. Who owns Parcel X now? In a Notice jurisdiction XYZ Corp would be the owner because XYZ Corp. got to the County Clerk first. The theory is that XYZ Corp. is a bonafide purchaser because there was no way XYZ Corp. could have known about the ABC Corp. because that deed was never recorded.
B) Recall that we have two lien holders and we seek to know which lien holder is superior. The answer would be that the dates of the mortgages would have no bearing on the lien order rather the only question would be which Bank recorded first. So, if XYZ Bank recorded first their lien would be superior to that of ABC Bank regardless of the fact that ABC Bank has a mortgage predating that of XYZ Bank.
But doesn't all this seem a bit unfair? We have people dating papers, recording papers and all the best laid plans gone to waste for one reason or another. Now comes the third doctrine, Race-Notice. Race-Notice says that you must be recorded to be effective but that once recorded we go by date of the document. In this manner we have protected the subsequent bonafide purchaser from taking property that turns out not to have belonged to the seller due to an unrecorded deed and we have protected the purchaser who simply got to the clerk late.
If you have any questions please do not hesitate to contact the Law Office of Jeffrey M. Goldstein PLLC.
Tuesday, May 10, 2011
Today's Day in Court
I just got back to the office from spending the morning in Court at The New York State Supreme Court, Kings County. The case posed an interesting set of facts. A signed a contract with B to sell a small building to B. A defaulted on the contract and then sold the building to C. C refurbished the building and sought to sell it D at a handsome profit. When B found out about the sale from C to D, seven months after A sold the building to C, B placed a Notice of Pendency against the building, in effect blocking the sale from C to D, and sued A for specific performance. However, B, did not name C in the suit and never served C with the notice of pendency. Hence, C found out about the Notice of Pendency only when the title company found it when they ran a continuation of title just prior to the closing.
C retained me to move the Court for an Order canceling the Notice of Pendency and insulate C from any connection to the pending lawsuit between A and B. I represented C on a companion case like this that was in Court in February. Armed with that experience, I personally went to B's Attorney's office to serve the Order to Show Cause and I personally went to A's home address to serve A. Having done so, and knowing that neither of those parties appeared previously on the companion case and seeing that neither party served me with opposition papers I went to Court ready for a fight but expecting a default. I got the latter. Motion granted on default. The Notice of Pendency is cancelled, my client is dismissed from the case, neither of the other parties can make claims relating to this case or this property against C. Success!
That's the story of the case but the real story here is the ridiculous bureaucracy that I encountered in getting this done this morning. Motion day in a Court room in Brooklyn is never easy. The Judge I was in front of had over 90 cases on the calendar. The process is managed chaos. When you get to the courtroom you seek out your adversary. At 9:45AM the clerk calls the calendar for lay people that means s/he takes attendance. If one of the parties is not present then the case moves to the second call at 10:45AM with a warning that the calendar may not be called until later depending on the Court's progress with conferencing and hearing cases. This morning the second call actually took place closer to 11:00AM. By that time, knowing that no one was showing up to oppose my motion I had already a "short form order." A short form order is the document that states the disposition of the Motion. I then had to wait for over an hour for the Judge to sign the order. There has got to be a better way.
Speaking of there having to be a better way, during the first break that I had I filed a motion on another matter. There has got to be a better way to file motions. The current process is that you must take your RJI (Request for Judicial Intervention), if one has not been filed in the case already, to the clerk on the first floor, stand in line for them mark up and stamp the RJI (taking three copies and a copy of the Summons and Complaint in the case), the clerk then hands the RJI to the cashier. You have to wait on line at the cashier and pay the filing fee ($95 for an RJI). The cashier then stamps the RJI and receipts it. Next you take the Motion and the RJI to the Motion Support office on the second floor of the building but on the opposite side of the building where the clerk makes sure that the RJI has been properly paid for and checks the Motion for form. Once the clerk stamps that the Motion thereby approving it, you have to back downstairs to the first floor and submit the Motion to another clerk who checks to see if the Motion has been accepted by the clerk upstairs and then passes it along to the cashier. You then wait on line at the cashier to pay the fee ($45 for a Motion). Once the Motion is stamped paid and the funds receipted you then take the documents (the Motion and the RJI) back upstairs to Motion Support where you have a choice, A) you can simply drop the documents in a basket or B) if you want a copy stamped "filed" you have to wait in line to get the stamp before you drop the documents in the basket. Of course everyone wants their file copy stamped because you want to go back to the client and be able to show them the document.
This is a ridiculous process. There has got to be a better way.
In any event, the morning was a success in that I won my motion and I filed the documents necessary to move another case along!
C retained me to move the Court for an Order canceling the Notice of Pendency and insulate C from any connection to the pending lawsuit between A and B. I represented C on a companion case like this that was in Court in February. Armed with that experience, I personally went to B's Attorney's office to serve the Order to Show Cause and I personally went to A's home address to serve A. Having done so, and knowing that neither of those parties appeared previously on the companion case and seeing that neither party served me with opposition papers I went to Court ready for a fight but expecting a default. I got the latter. Motion granted on default. The Notice of Pendency is cancelled, my client is dismissed from the case, neither of the other parties can make claims relating to this case or this property against C. Success!
That's the story of the case but the real story here is the ridiculous bureaucracy that I encountered in getting this done this morning. Motion day in a Court room in Brooklyn is never easy. The Judge I was in front of had over 90 cases on the calendar. The process is managed chaos. When you get to the courtroom you seek out your adversary. At 9:45AM the clerk calls the calendar for lay people that means s/he takes attendance. If one of the parties is not present then the case moves to the second call at 10:45AM with a warning that the calendar may not be called until later depending on the Court's progress with conferencing and hearing cases. This morning the second call actually took place closer to 11:00AM. By that time, knowing that no one was showing up to oppose my motion I had already a "short form order." A short form order is the document that states the disposition of the Motion. I then had to wait for over an hour for the Judge to sign the order. There has got to be a better way.
Speaking of there having to be a better way, during the first break that I had I filed a motion on another matter. There has got to be a better way to file motions. The current process is that you must take your RJI (Request for Judicial Intervention), if one has not been filed in the case already, to the clerk on the first floor, stand in line for them mark up and stamp the RJI (taking three copies and a copy of the Summons and Complaint in the case), the clerk then hands the RJI to the cashier. You have to wait on line at the cashier and pay the filing fee ($95 for an RJI). The cashier then stamps the RJI and receipts it. Next you take the Motion and the RJI to the Motion Support office on the second floor of the building but on the opposite side of the building where the clerk makes sure that the RJI has been properly paid for and checks the Motion for form. Once the clerk stamps that the Motion thereby approving it, you have to back downstairs to the first floor and submit the Motion to another clerk who checks to see if the Motion has been accepted by the clerk upstairs and then passes it along to the cashier. You then wait on line at the cashier to pay the fee ($45 for a Motion). Once the Motion is stamped paid and the funds receipted you then take the documents (the Motion and the RJI) back upstairs to Motion Support where you have a choice, A) you can simply drop the documents in a basket or B) if you want a copy stamped "filed" you have to wait in line to get the stamp before you drop the documents in the basket. Of course everyone wants their file copy stamped because you want to go back to the client and be able to show them the document.
This is a ridiculous process. There has got to be a better way.
In any event, the morning was a success in that I won my motion and I filed the documents necessary to move another case along!
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