Title: Morris I. Gletzer v. Amos Harris

State: new-york

Issuer: New York Appellate Court

Document:

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This opinion is uncorrected and subject to revision before
publication in the New York Reports.
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No. 66  
Morris I. Gletzer, &c.,
            Plaintiff, 
        v. 
Amos Harris,
            Defendant.
--------------------------------
Greenpoint Mortgage Funding, 
Inc., et al., 
            Respondents, 
        v. 
Morris I. Gletzer, &c.,
            Appellant, 
Amos Harris, et al., 
            Respondents.
Zalman Schochet, for appellant.
David L. Birch, for respondents Greenpoint Mortgage
Funding, Inc. and Copplestone Finance Company Limited.
David A. Pellegrino, for respondent Amos Harris.
New York Sate Land Title Association, amicus curiae.
CIPARICK, J.:
In this appeal, we are asked to determine whether a
renewal lien secured pursuant to CPLR 5014 for a second 10-year
period can take effect nunc pro tunc on the expiration date of
the original lien, cutting off the property interests of
intervening mortgagees.  Because CPLR 5014 does not provide for a
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renewal judgment to have retroactive effect to the original
lien’s expiration date and because nunc pro tunc treatment is
inappropriate where, as here, additional lenders relying on the
public record acquired rights in the property, we hold that the
renewal lien becomes effective when granted by Supreme Court.    
  I
In 1991, plaintiff Gletzer obtained a default judgment
in Supreme Court against defendant Harris for approximately     
$ 470,000 due on a note.  On October 23, 1991, the judgment was
docketed and acted as a lien on a Manhattan condominium owned by
Harris.  While a money judgment award is enforceable for twenty
years (see CPLR 211 [b]), a real property lien resulting from the
judgment is viable for just ten years (see CPLR 5203 [a]).  But a
renewal action may be brought between the same parties to the
original action during the tenth year to extend the lien for an
additional ten-year period (see CPLR 5014 [3]).  
Gletzer was unable to foreclose on the condominium and
collect on the judgment and his efforts to collect from defendant
through a court proceeding in Missouri failed.  So, on October
22, 2001 –- one day before the ten-year lien was to expire --
Gletzer initiated the underlying CPLR 5014 action to renew his
lien.  Harris moved to dismiss the action for lack of personal
jurisdiction, relying primarily on his status as a Missouri
resident during the decade preceding the action.  In July 2004, a
special referee concluded that Harris was a New York domiciliary
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No. 66
1  In the Missouri proceeding, Gletzer sought to have the
October 23, 1991 judgment enforced.  Harris raised the
jurisdictional issue of improper service of process in the
original action.  
2  In 2003, Harris’s condominium was valued at approximately
$ 1.15 million.
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and amenable to suit in New York.1  In February 2005, Supreme
Court confirmed the referee’s report and granted Gletzer’s motion
for summary judgment, granting him a judgment lien nunc pro tunc
to October 23, 2001, the day the original 10-year judgment lien
had expired.   
After Gletzer’s original lien had expired but before
Supreme Court granted the renewal judgment –- during the “lien
gap” period –- two mortgage companies loaned Harris money in
return for secured mortgages on the Manhattan condominium.2 
Greenpoint Mortgage Funding, Inc. loaned Harris $ 600,000, which
mortgage was recorded on February 2003, and Copplestone Finance
Company, Ltd. loaned him $ 545,000, which mortgage was recorded
in July 2003. 
Subsequently, Greenpoint and Copplestone brought a
separate action pursuant to CPLR 5239, seeking vacatur of the
nunc pro tunc effect of the renewal judgment or, in the
alternative, a determination of the superiority of their liens
over Gletzer’s lien.  The mortgagees asserted that they had no
knowledge of Gletzer’s lien because a search of the public record
revealed only the expired ten-year lien.  Supreme Court dismissed
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their action.  In holding that Gletzer’s lien retained its
superiority, the court reasoned that CPLR 5014 requires the
timely commencement of a renewal action before the original lien
expires to avoid a lien gap, as was done here (one day before the
lien’s expiration), and that any subsequent adjudication,
although creating a lien gap (here for 3½ years), should not be
counted against the original lien holder.  
Consolidating appeals from the two related actions, the
Appellate Division reversed Supreme Court’s decision, as
requested by the mortgage companies.  The court concluded that
Gletzer’s renewal lien became effective the date that it was
granted by Supreme Court, not when the original lien expired. 
Thus, the Appellate Division declared that the mortgagees’ liens
maintained priority over Gletzer’s lien.  
In interpreting the amended language of CPLR 5014, the
Appellate Division concluded that the plain language of the
statute does not eliminate all lien gaps.  It was meant solely to
provide a diligent creditor one year to reapply for an extension
of the lien to avoid a gap (see 51 AD3d 196, 201-202 [1st Dept
2008]).  Additionally, the court held that setting the date of
the renewal judgment nunc pro tunc to the expiration date of the
original lien was an “improvident exercise of discretion” (id. at
205).  Finally, the court held that Greenpoint and Copplestone
were entitled to rely upon the absence of a recorded lien in the
docket book (see id. at 205).  We granted Gletzer leave to
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No. 66
3  Harris did not appeal from the portion of the Appellate
Division order affirming Supreme Court’s determination that it
had acquired personal jurisdiction over him (see 51 AD3d at 199-
200).  Significantly, not before us now is the question of
whether the basis of jurisdiction for the original lien would
have been sufficient to confer jurisdiction in the new action
(see Siegel, Supp Practice Commentaries, McKinney’s Cons Laws of
NY, Book 7B, CPLR C5014:2, 2008 Pocket Part, at 30-31). 
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appeal, and now affirm.3 
II
Article 9 of the Real Property Law provides that a
properly recorded mortgage is superior to subsequently recorded
mortgages (see §§ 290-291).  The statute was enacted to protect
purchasers with an interest in real property without record
notice of prior encumbrances and to create a public record to
meet this end (see Andy Assoc., Inc. v Bankers Trust Co., 49 NY2d
13, 20 [1979]).  Likewise, liens are similarly recorded (see CPLR
5203).  For this reason, a “lien does not attach until the
judgment is docketed in the county where the land lies,” where it
may be found “docketed in a book containing the names of the
judgment debtor and the judgment creditor,” known as the docket
book (see McLaughlin, Practice Commentaries, McKinney’s Cons Laws
of NY, Book 7B, CPLR 9702:1).  As Professor Siegel explains,
“[o]nly a docketing of the judgment in the office of the county
clerk will bring about the lien” (Siegel, Practice Commentaries,
McKinney’s Cons Laws of NY, Book 7B, CPLR 5203:2).  
       
Because a lien on real property is only effective for
ten years and a money judgment is viable for twenty years (see
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CPLR 211 [b], 5203 [a]), the Legislature enacted CPLR 5014 to
allow a judgment creditor to apply for a renewal of the judgment
lien (see Siegel, Main Volume Practice Commentaries, McKinney’s
Cons Laws of NY, Book 7B, CPLR C5014:2).  To avoid expiration of
the judgment lien at the end of 10 years, the Legislature amended
CPLR 5014, in 1986, to allow real property lien holders to seek
timely renewal of the judgment lien during the last year of the
pendency of the original lien (see id.).  The amended language of
the statute reads: 
“An action may be commenced under subdivision
one of this section during the year prior to
the expiration of ten years since the first
docketing of the judgment.  The judgment in
such action shall be designated a renewal
judgment and shall be so docketed by the
clerk.  The lien of the renewal judgment
shall take effect upon the expiration of ten
years from the first docketing of the
original judgment” (CPLR 5014 [3]).  
Gletzer urges us to read the last sentence of this
paragraph so as to automatically give retroactive effect to a
renewal judgment –- even when it was sought the day before the
original lien expired and was not secured until more than three
years later.  Gletzer posits that the amended language in the
statute was meant to guarantee an original lien holder’s superior
interest in the property over any intervening creditor by
eliminating all lien gaps, no matter how long –- even though the
docket book does not reflect any viable lien during such gap.   
We first turn to the express language of CPLR 5014.  In
clear terms, the statute provides a means for a lien holder,
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whose 10-year real property lien is within its final year, to
bring a renewal action during the last year of the lien.  Nowhere
does the statute expressly mandate nunc pro tunc treatment of a
renewal lien where the order is granted after the original lien
has expired.  
Gletzer contends that CPLR 5014’s language “shall take
effect upon the expiration of ten years from the first docketing
of the original judgment” requires Supreme Court to expunge all
lien gaps when a lien holder has filed a renewal application
anytime within the last year of the lien –- albeit one day before
the expiration of the original lien.  The language of the
statute, however, speaks otherwise.  It is prospective in tone
(“shall take effect upon”), not retrospective.  The Legislature
could have used the words “shall take effect as of,” but did not. 
It allows a renewal lien, obtained before the original lien
terminates, to become effective once the original lien expires,
so as not to shorten the original lien period.  As Professor
Siegel so aptly states: 
“It allows the renewal suit during the last
year of the 10-year lien period.  And it
provides for yet an additional security for
the judgment creditor.  As long as the new
judgment is rendered within the 10-year lien
period, the lien that the new judgment
carries takes effect not immediately, but
only upon the expiration of the first 10-year
lien period . . .” (Siegel, Practice
Commentaries, McKinney’s Cons Laws of NY,
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No. 66
4  This commentator’s understanding of the amendment is
particularly influential in this context because he is credited
as having suggested the 1986 amendment to the statute (Comm. On
Civil Practice Law and Rules, Legislation Report, Bill Jacket, L.
1986 ch 123 at 15). 
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Book 7B, CPLR C5014:2 [emphasis added]) .4 
Similarly, other commentators have noted: 
“This provision enables the judgment creditor
to sue on the old judgment and thereby
acquire a new judgment and a fresh 10 year
lien. . . As long as the new judgment is
rendered within the 10 year lien period, the
lien that the new judgment carries takes
effect not immediately, but only upon
expiration of the first 10 year lien period,
avoiding a lien gap and at the same time
giving the judgment creditor a full 10 years
of new lien” (10 Carmody-Wait NY Prac 2d §
67:4 2009 [emphasis added]; see also 10-50
Weinstein-Korn-Miller, NY Prac § 5014.04 [2d
ed]). 
Finally, had the Legislature intended retroactivity as
a means to avoid all lien gaps, then allowing for a one-year
application period would have been superfluous.  Any lien gap
created after the expiration of the original lien would be
nullified as long as the renewal action was commenced before the
expiration of the original lien.  That the Legislature expressly
provided for a one year period is telling that it did not intend
the relief that Gletzer now seeks.  
As to legislative intent, we note that a statute should
be construed in light of the problem to be cured and the event
that prompted its enactment (see McKinney’s Cons Laws of NY, Book
1, Statutes § 95).  The 1986 amendment to the statute was meant
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No. 66
5  It is interesting to note that Gletzer may not have been
without a remedy after the expiration of the original ten-year
lien.  He could have filed an execution on his judgment pursuant
to CPLR 5203(b) or a Notice of Levy pursuant to CPLR 5235, as
such measures would have provided notice to the world of his
interest in the property.   
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to remedy the “Brookhaven problem” (see Brookhaven Mem. Hosp. v
Hoppe, 65 Misc 2d 1000, 1001-1002 [Suffolk Dist Ct 1971] [attempt
by judgment creditor to revive a lien failed because it was
brought before the ten years had elapsed since the docketing of
the judgment]), not to eradicate all lien gaps.  As the Sponsor’s
Memorandum to the 1986 amendment makes plain:  
“This bill would allow for the holder of the
lien to make application for a renewal lien
prior to the expiration date of the lien,
which is now ruled out by the decisions
handed down by the courts. (Brookhaven
Memorial Hospital, Inc. v Hoppe, 65 Misc 2d
1000” (Bill Jacket, L 1986 ch 123, at 8).
Nunc pro tunc treatment or retroactive effect of the
renewal judgment was not contemplated by the legislature. 
Instead, both the plain text of the statute and the bill jacket
materials make clear that the purpose of the amendment was to
give a creditor seeking to eliminate the prospect of a lien gap
one year to apply for a renewal lien -- not the uncertain
prospect of possibly obtaining one at some unspecified future
time and having it relate back to the date of the expiring lien.5
We further note that nunc pro tunc treatment, in
general, is reserved for “correct[ing] irregularities in the
entry of judicial mandates or like procedural errors” (Cornell v
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Cornell, 7 NY2d 164, 167 [1959] [internal quotation omitted]). 
This inherent court power to correct clerical errors may not be
wielded when third parties have substantive rights in play that
may be altered by “record[ing] a fact as of a prior date, when it
did not exist then” (Cornell, 7 NY2d at 167-168, citing Merrick v
Merrick, 266 NY 122-123 [1934]).  
In Mansfield v Cohn (58 NY2d 179 [1983]), under
somewhat different circumstances, we restated the limits of nunc
pro tunc treatment.  There, a court retroactively set the date
for the docketing of a lien where a foreign judgment from Texas
was filed in New York, but later vacated on appeal in Texas, only
to be reinstated by the Texas Supreme Court (see id. at 181-182). 
During the ensuing lien gap, a title company docketed a judgment
on the property (see id. at 182).  We said:
“The denial of nunc pro tunc relief was
mandatory.  The relief sought by the bank was
not to correct any irregularity, mistake,
omission or other error; the bank sought the
creation of a new lien retroactive to the
date of its prior lien which, on its own
motion, had been effectively nullified.  The
would-be invocation of a court’s inherent
power to correct error in a prior judgment is
unavailing as a predicate for the creation of
new substantive rights.  The rights of the
third party title insurance company had
effectively intervened” (58 NY2d at 182-183).
The Legislature, in enacting its amendment to CPLR
5014, is presumed to be aware of the common law (see 1 McKinney’s
Consolidated of New York, Statutes § 301 [a]).  Without having
expressly stated otherwise, we cannot presume that the
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Legislature intended to abrogate the traditionally limited
function of nunc pro tunc treatment, especially where the rights
of third parties are at stake.
We thus conclude that those seeking to secure any 
interest in real property must be able to rely upon a public
record to furnish full and complete information of any
conveyances, liens or encumbrances affecting such property.  They
should not be penalized for failing to unearth an expired lien or
investigating the prospect that it might be subject to a pending
renewal request.  Additionally, nunc pro tunc treatment under
these circumstances would be inimical to our State’s commitment
to record notice based upon the certainty of a docketing system
that alerts potential purchasers and lien holders to encumbrances
upon real property.  
Finally, we emphasize that CPLR 5014 affords a judgment
creditor a full year to renew his or her lien without suffering a
lien gap.  Where a judgment creditor diligently files at the
beginning of this period and alerts the court to the applicable
time constraint, a lien renewal application should be resolvable
before the original lien expires.  Thus, the Appellate Division
was correct in vacating the nunc pro tunc entry of the renewal
judgment and declaring that Greenpoint’s and Copplestone’s liens
have priority over Gletzer’s lien.  
Accordingly, the order of the Appellate Division,
insofar as appealed from, should be affirmed, with costs. 
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*   *   *   *   *   *   *   *   *   *   *   *   *   *   *   *   * 
Order, insofar as appealed from, affirmed, with costs.  Opinion
by Judge Ciparick.  Judges Graffeo, Read, Smith, Pigott and Jones
concur.  Chief Judge Lippman took no part.
Decided May 12, 2009