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Gletzer v. Harris

May 12, 2009

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.



The opinion of the court was delivered by: Ciparick, J.

Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431.

This opinion is uncorrected and subject to revision before publication in the Official Reports.

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 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 and amenable to suit in New York*fn1. 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*fn2. 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 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 31/2 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 appeal, and now affirm.*fn3

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 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 ...


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