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Chemical Bank v. Levine

91 N.Y.2d 738 Court N.Y. Decision date 1998-06-04 English

Delivered by Titone, J.

Contents

Majority

p. 738
[698 NE2d 419, 675 NYS2d 583]
Chemical Bank, Respondent, v Mark L. Levine et al., Defendants, and Board of Managers of Remsen Gardens Condominium, Appellant.
Argued April 28, 1998;
decided June 4, 1998
p. 739
POINTS OF COUNSEL
Martin M. Filler, Staten Island, for appellant.
I. The commencement of an action to foreclose a mortgage “tolls” the statutory period accorded to prior common charges liens. (Reliance Fed. Sav. & Loan Assn. v Venet Homes, 57 AD2d 830 .) II. A condominium common charge lien filed before a mortgage is executed or recorded is prior and superior to the mortgage. (Bankers Trust Co. v Board of Mgrs., 81 NY2d 1033 ; Foxwood Run Condominium v Goller Place Corp., 166 Misc 2d 216 ; Washington Fed. Sav. & Loan Assn. v Schneider, 95 Misc 2d 924 ; Dime Sav. Bank v Levy, 161 Misc 2d 480 .) III. A condominium lien for unpaid common charges filed before a mortgage is recorded is prior and superior to said mortgage. (City & County Sav. Bank v Oakwood Holding Corp., 88 Misc 2d 198 ; Washington Fed. Sav. & Loan Assn. v Schneider, 95 Misc 2d 924 ; Merritt v Dansmith Corp., 240 App Div 338 .) IV. The delay occasioned by a mortgage holder which adversely affects lien holders substantially can be cause for denying equitable relief to the mortgagee. (Dollar Fed. Sav. & Loan Assn. v Herbert Fallen, Inc., 91 AD2d 601 .) V. A mortgage holder, guilty of laches, should be denied equitable relief. VI. Given the facts in this case, appellant is entitled to recover from respondent on a quantum meruit or unjust enrichment basis.
Siller Wilk, L. L. P., New York City (Charles D. Heilman, Mark E. Housman and Robert P. Reichman of counsel), for respondent.
I. The Board has advanced no grounds whatsoever to disturb the Court below’s proper application of Real Property Law § 339-aa’s express limitation of six years on the life of the common charges lien, and that Court’s decision and order should be affirmed. II. The trial court’s decision should not be disturbed on the basis of the Board’s urging that the unambiguous language of Real Property Law § 339-z be wholly disregarded so that a common charges lien can improperly be given priority over a first mortgage of record. (Matter of Richmond Constructors v Tishelman, 61 NY2d 1 ; People v Tatta, 196 AD2d
p. 740
328 ; Matter of Branford House v Michetti, 81 NY2d 681 ; Matter of Report of Aug.-Sept. 1983 Grand Jury III, 103 AD2d 176 ; Bankers Trust Co. v Board of Mgrs., 81 NY2d 1033 ; Prudential Ins. Co. v Ward, 154 Misc 2d 968 ; Washington Fed. Sav. & Loan Assn. v Schneider, 95 Misc 2d 924 ; Long Is. Sav. Bank v Gomez, 150 Misc 2d 482 ; Matter of Podolsky v Narnoc Corp., 196 AD2d 593 ; People v Munoz, 207 AD2d 418 .) III. The trial court properly granted Alaska summary judgment on the basis that the Board had not raised any issue of material fact concerning any of the other matters raised by it. (Quain v Buzzetta Constr. Corp., 69 NY2d 376 ; Department of Hous. Preservation & Dev. v Greenpoint Sav. Bank, 169 Misc 2d 61 ; Dollar Fed. Sav. & Loan Assn. v Herbert Kallen, Inc., 91 AD2d 601 ; Studley v National Fuel Gas Supply Corp., 125 Misc 2d 956 , 107 AD2d 122 ; Mikulec v United States, 705 F2d 599 ; New York State Mtge. Loan Enforcement & Admin. Corp. v North Town Phase II Houses, 191 AD2d 151 .) IV. The Board has utterly failed even to make out an argument for the application of laches. (New York State Mtge. Loan Enforcement & Admin. Corp. v North Town Phase II Houses, 191 AD2d 151 ; Schmidt’s Wholesale v Miller & Lehman Constr., 173 AD2d 1004 .)

OPINION OF THE COURT

The Condominium Act provides for a lien against each condominium unit for unpaid common charges and further provides that the lien will expire six years from the date it is filed (Real Property Law §§ 339-aa, 339-z). The threshold issue in this appeal is whether the commencement of a mortgage foreclosure action against the unit owner by a third party tolls the running of that six-year period. We conclude that a third-party foreclosure proceeding under these circumstances has no tolling effect and that, thus, the lien asserted by defendant condominium board lapsed and was without legal effect.

In December 1988, September 1990 and February 1991, the Remsen Gardens Condominium Board of Managers filed liens for unpaid common charges against condominium unit 604-c, located at 1272 East 91st Street in Brooklyn. No steps were ever taken to foreclose these liens. In December of 1989, the owner of the unit, Mark Levine, gave a first mortgage to Chemical Bank, plaintiff Alaska Seaboard Partners Ltd.’s predecessor in interest. That mortgage was not recorded until June of 1991. Levine failed to meet his obligations under the mortgage, and, consequently, the present foreclosure action was commenced on November 12, 1993.

p. 741
Because of its asserted Real Property Law § 339-z lien, Rem-sen Gardens Condominium Board was named as an additional defendant. Defendant Board responded with an answer in which it took the position that its statutory lien for unpaid common charges had priority over Chemical’s first mortgage. In February of 1996, Alaska Seaboard, which had acquired Chemical’s mortgage by assignment, moved for an order substituting itself as plaintiff, striking Remsen’s answer, granting it summary judgment and directing the appointment of a Referee. One of the arguments made in support of that motion was that to the extent that they were then more than six years old, defendant Board’s filed liens had expired by operation of law.

Supreme Court granted the motion in its entirety, holding that plaintiffs mortgage was superior to defendant’s liens. On defendant’s appeal, the Appellate Division affirmed, but it did so on the separate theory that plaintiffs liens had lapsed. This Court subsequently granted defendant Board leave to appeal from the Appellate Division order, which finally disposed of all of the issues against that party (see, Cohen and Karger, Powers of the New York Court of Appeals § 20, at 82-83 [rev ed]). We now affirm.

Real Property Law § 339-aa provides that a properly filed common charge lien “shall continue in effect until all sums secured thereby, with the interest thereon, shall have been fully paid or until expiration six years from the date of filing, whichever occurs sooner.” Arguing that the six-year period referred to in this statute is analogous to a statute of limitations, defendant Board contends that the running of this period is capable of being “tolled” and, more specifically, that the commencement of plaintiffs mortgage foreclosure action on November 12, 1993 had that effect. Thus, in defendant’s view, the passage of time since that date has not impaired the validity of its liens. Defendant’s argument is unpersuasive.

There is nothing in the language of Real Property Law § 339-aa that supports the analysis defendant advocates. The statute does not refer to the time for commencing an action on the lien, but rather to the duration of the lien itself. Thus, its formula differs from that used in typical statutes of repose, which are aimed at suspending the judicial remedy (see generally, Sharrow v Inland Lines, 214 NY 101 ; Hulbert v Clark, 128 NY 295 ; compare, CPLR 213-215), and fits more aptly within the class of durational rules that operate as “qualifications” to the right itself (see, e.g., Romano v Romano, 19 NY2d 444 , 447; see generally, Siegel, NY Prac § 34 [2d ed]).

p. 742
Furthermore, even assuming that section 339-aa could fairly be characterized as a statute of limitations, there would be no basis for finding the existence of a toll arising from the commencement of a third-party foreclosure action, since there is no such provision in either the Condominium Act or the CPLR and there is no suggestion anywhere in the statutory scheme that the Legislature intended such a result. We are unpersuaded by defendant’s suggestion that the toll in question may be inferred by analogy to Lien Law § 17, which provides that a mechanic’s lien expires one year after it has been filed unless the lienholder commences a foreclosure action. All that may reasonably be inferred from Lien Law § 17 is that the Legislature knows how to make specific provision for the result defendant seeks when that result is, in fact, intended. We note that even if this were a case arising under Lien Law § 17 rather than Real Property Law § 339-aa, the commencement of an action by a party other than the lienholder would not suffice to satisfy the clear statutory requirements.

Accordingly, we conclude that the commencement of the present foreclosure action by the first mortgagee did not in any way prevent the statutory liens defendant held on the condominium unit from lapsing by operation of law six years after the date those liens were filed. Similarly, the fact that defendant interposed the claimed priority of its liens in its answer to plaintiffs complaint does not serve to advance defendant’s position, since the assertion of a lienholder’s interest in the proceeds of a first mortgage foreclosure is not the legal or conceptual equivalent of foreclosure on the lien.

Inasmuch as defendant Board has taken no independent steps to enforce its liens by bringing a foreclosure action within their six-year lives, those liens have lapsed and, consequently, can no longer be cited as a basis for claiming a share of the proceeds of plaintiffs foreclosure action. In view of this conclusion, we do not reach defendant’s argument that Real Property Law § 339-z (ii), which gives priority to “all sums unpaid on a first mortgage of record,” does not apply where, as here, the first mortgage was not recorded until after the liens were filed. Since defendant’s liens have been extinguished by the passage of time, their relative priority is now moot.

Accordingly, the order of the Appellate Division should be affirmed, with costs.

p. 743
Chief Judge Kaye and Judges Bellacosa, Smith, Levine, Ciparick and Wesley concur.

Order affirmed, with costs.

Cases cited

Statutes and regulations cited