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.
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