Flagstar Bank v. State

114 A.D.3d 138, 978 N.Y.S.2d 266

This text of 114 A.D.3d 138 (Flagstar Bank v. State) is published on Counsel Stack Legal Research, covering Appellate Division of the Supreme Court of the State of New York primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Flagstar Bank v. State, 114 A.D.3d 138, 978 N.Y.S.2d 266 (N.Y. Ct. App. 2013).

Opinion

OPINION OF THE COURT

Angiolillo, J.E

This appeal raises the issue of whether a judgment creditor may recover damages from the State of New York when a county clerk’s error in docketing a judgment allowed the judgment debtor to convey real property free of the judgment lien, frustrating the judgment creditor’s ability to execute on the [140]*140judgment. We conclude that a private right of action by a judgment creditor against the State may not be fairly implied by the statutes governing the docketing of judgments. Accordingly, the Court of Claims properly granted the State’s motion for summary judgment dismissing the judgment creditor’s claim.

The instant claim arises from the efforts of the claimant, Flagstar Bank, FSB (hereinafter Flagstar), to enforce a judgment in its favor against Caribbean Mortgage Corp. and the president of Caribbean Mortgage Corp., Udit Meeto, pursuant to a settlement agreement in an action filed in Federal District Court (hereinafter the federal action). A final judgment dated June 26, 2006 (hereinafter the federal judgment) was entered on consent of the parties in favor of Flagstar and “against defendants Caribbean Mortgage Corp. and Udit Meeto, jointly and severally, in the principal sum of $2,150,925.47.” The consent portion of the federal judgment was signed by “Caribbean Mortgage Corp. By Udit Meeto, Its President” and by “Udit Meeto, Individually.”

Flagstar submitted a certified copy of the abstract of judgment, together with a copy of the federal judgment, to the Queens County Clerk’s Office (hereinafter the County Clerk) for docketing. The abstract of judgment listed the parties against whom the federal judgment had been entered as “Caribbean Mortgage Corp. and Udit Meetoo [sic].” It is undisputed that, on November 14, 2006, the County Clerk, in docketing the federal judgment, erroneously identified Udit Meeto as a “debtor/corporation” rather than a natural person. As a result of this error, in January and February 2008, Meeto was able to convey two parcels of his real property free and clear of Flag-star’s judgment lien. Shortly after conveying these properties, Meeto ceased making payments to Flagstar on the federal judgment, leaving an unpaid principal balance of $938,774. In June 2008, Flagstar learned of Meeto’s conveyances and notified the County Clerk. On June 16, 2008, the County Clerk corrected the docketing error to reflect that the federal judgment was entered against Udit Meeto, a natural person.

Shortly thereafter, Flagstar commenced actions in the Supreme Court, Queens County, to set aside the conveyances of the two parcels of real property. In one of the actions, Flagstar obtained a default judgment against Meeto and the purchaser, but in the other action, the purchaser of the property contested the action. On March 30, 2009, Flagstar filed the instant claim against the State of New York to recover damages for the al[141]*141leged negligence of the County Clerk in failing properly to docket the federal judgment, asserting that this alleged negligence resulted in Flagstar’s loss of its judgment liens against the two subject parcels of real property. In its answer, the State denied that it negligently breached a duty of care, and asserted affirmative defenses, including governmental function immunity.

The State moved for summary judgment dismissing the claim, and Flagstar cross-moved for summary judgment on the issue of liability. In support of its motion, the State submitted exhibits, including a transcript of the deposition testimony of the County Clerk’s data entry clerk who had docketed the federal judgment. The data entry clerk testified that, based on the description of the parties set forth on the abstract of the federal judgment, it was not clear whether Udit Meeto was a person or a corporation. She searched the database, and upon finding no previous entries of that name in the system, entered Udit Meeto as a corporation. Although she had no independent recollection, she assumed that she did not look at the last page of the federal judgment that was attached to the abstract, where Meeto was identified as a person.

The State contended that the claim must be dismissed because the County Clerk was under no statutory obligation to look beyond the face of the abstract of the federal judgment to determine Meeto’s status, citing CPLR 5018 (b), which requires a county clerk to docket a judgment of a federal court upon the filing of a “transcript” of such judgment. The State further contended that, in any event, the data entry clerk’s determination as to whether Meeto was a corporation or an individual was not a purely ministerial act, but required the exercise of discretion and was, therefore, protected by sovereign immunity. In opposition to the motion and in support of its cross motion, Flagstar contended that the County Clerk was negligent as a matter of law for failing to comply with CPLR 5018 (c) (1), which requires docketing of any judgment “under the surname of the judgment debtor,” and that the State was not shielded from liability by the doctrine of sovereign immunity, citing National Westminster Bank, USA v State of New York (155 AD2d 261 [1989], affd 76 NY2d 507 [1990]).

The Court of Claims granted the State’s motion and denied Flagstar’s cross motion, rejecting Flagstar’s contention that National Westminster Bank controlled, and holding that the State did not owe Flagstar a special duty of care.

[142]*142In National Westminster Bank, the State conceded that the Bronx County Clerk negligently failed to timely docket the claimant’s Nassau County judgment, thus allowing the judgment debtor to convey his parcel of land in Bronx County free of the claimant’s encumbrance, and frustrating the claimant’s ability to execute on the judgment. The Court of Claims granted the claimant’s motion for summary judgment on the claim. On appeal to the Appellate Division, First Department, the State contended that, because the Bronx County Clerk was a local official, the State should not be held liable for the Clerk’s negligence and, alternatively, that sovereign immunity protected the State from liability for the County Clerk’s negligence even if he were a state official. The First Department affirmed the order awarding summary judgment in favor of the claimant on the issue of liability, rejecting both of the State’s arguments:

“The docketing of a judgment is fundamentally a court act and arises from the County Clerk’s role as Clerk of the Supreme Court. When the Clerk acts in his [or her] role as Clerk of the Supreme Court, he [or she] acts as a State officer. The Clerk has a duty to properly and timely docket judgments, and the act[ ] of recording the judgment on the record is not discretionary. Therefore, the doctrine of sovereign immunity does not obtain to insulate the State from liability for the Clerk’s negligent failure with respect to recording judgments” (National Westminster Bank, USA v State of New York, 155 AD2d at 261-262 [citations omitted and emphasis added]).

The State appealed to the Court of Appeals, raising only its primary argument that the County Clerk was not a state officer. The Court of Appeals rejected that argument and affirmed the decision and order of the First Department holding the State liable (see National Westminster Bank, USA v State of New York, 76 NY2d at 508-509).

Free access — add to your briefcase to read the full text and ask questions with AI

Related

Dinardo v. City of New York
921 N.E.2d 585 (New York Court of Appeals, 2009)
Pelaez v. Seide
810 N.E.2d 393 (New York Court of Appeals, 2004)
Mark G. v. Sabol
717 N.E.2d 1067 (New York Court of Appeals, 1999)
Uhr v. East Greenbush Central School District
720 N.E.2d 886 (New York Court of Appeals, 1999)
McLean v. City of New York
905 N.E.2d 1167 (New York Court of Appeals, 2009)
Brian Hoxie's Painting Co. v. Cato-Meridian Central School District
556 N.E.2d 1087 (New York Court of Appeals, 1990)
National Westminster Bank, USA v. State
562 N.E.2d 866 (New York Court of Appeals, 1990)
Bernstein v. Schoenfeld
81 A.D. 171 (Appellate Division of the Supreme Court of New York, 1903)
Bernstein v. Schoenfeld
37 Misc. 610 (New York Supreme Court, 1902)
Grygorewicz v. Domestic & Foreign Discount Corp.
179 Misc. 1017 (New York Supreme Court, 1943)
Gletzer v. Harris
909 N.E.2d 1224 (New York Court of Appeals, 2009)
Valdez v. City of New York
960 N.E.2d 356 (New York Court of Appeals, 2011)
Metz v. State
982 N.E.2d 76 (New York Court of Appeals, 2012)
Cruz v. TD Bank, N.A.
2 N.E.3d 221 (New York Court of Appeals, 2013)
Aspen Industries, Inc. v. Marine Midland Bank
421 N.E.2d 808 (New York Court of Appeals, 1981)
Sheehy v. Big Flats Community Day, Inc.
541 N.E.2d 18 (New York Court of Appeals, 1989)
Varela v. Investors Insurance Holding Corp.
615 N.E.2d 218 (New York Court of Appeals, 1993)
We Buy Now, LLC v. Cadlerock Joint Venture, LP
46 A.D.3d 549 (Appellate Division of the Supreme Court of New York, 2007)
Lapidus v. State
57 A.D.3d 83 (Appellate Division of the Supreme Court of New York, 2008)
Accounts Retrievable System, LLC v. Conway
83 A.D.3d 1052 (Appellate Division of the Supreme Court of New York, 2011)

Cite This Page — Counsel Stack

Bluebook (online)
114 A.D.3d 138, 978 N.Y.S.2d 266, Counsel Stack Legal Research, https://law.counselstack.com/opinion/flagstar-bank-v-state-nyappdiv-2013.