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Condo Owner Seeks Return of Deed Conveyed in Alleged Foreclosure Rescue Scam

VMW LAW, New York, March 2010: The Bronx Supreme Court in New York views it as a case of an alleged “foreclosure rescue scam” or “deed theft”. Deed theft is the description given to the situation where property owners are solicited with offers of private, nonqualifying, short term financing to pay off a delinquent debt with the requirement that the property owner conveys title to the property as collateral in order to finalize the short-term financing. The property is then sold by the fraudster for its fair market value and ALL of the equity is retained by the fraudster.

FACTS

In Diallo v, Grand Bay Assoc, Enters., Inc., plaintiff Ibrahim Diallo ran into financial difficulties in 2001 and needed urgent financial assistance to rescue the condominium unit her purchased in 1994. In the process he met Alvin Merrifield. The Complaint alleges that Merrifield proclaimed he was in a position to help Diallo refinance and avoid foreclosure. Plaintiff alleges that Merrifield then placed him in contact with Kathleen Bradshaw, an attorney, who allegedly convinced Diallo to convey title to the property to defendant Grand Bay Associates Enterprises, Inc. (Grand Bay).

Diallo claims that his understanding of the agreement was that: (1) Merrifield to pay off his $22,000 mortgage; (2) plaintiff to pay the maintenance arrears; and (3) plaintiff to make $700 monthly payments to Merrifield, $350 of which was to be applied to the unit’s monthly maintenance fee. Diallo further alleges that the arrangement was to last four to six months, during which time Merrifield would obtain refinancing on plaintiff’s behalf. Plaintiff alleged that Merrifield paid off the mortgage, but failed to obtain refinancing for plaintiff as agreed. Nevertheless, plaintiff continued to pay Merrifield the agreed upon $700 monthly installments, which from 2001 to 2004 added up to $20,844.23.

Problems developed when in 2003, a condominium’s management started foreclosure proceedings against Grand Bay for failure to pay the unit’s monthly maintenance fees. Diallo claims that he stopped making the $700 monthly payments to Merrifield and as a result GBA Enterprises, Inc. instituted eviction proceedings against him. During the eviction proceedings Diallo alleges that he discovered that Kathleen Bradshaw, the attorney Merrifield referred him to, was representing GBA Enterprises, Inc. in the eviction action.

Diallo then commence proceedings in Bronx Supreme against Grand Bay seeking a declaratory judgment of ownership of the condominium unit in fee simple or, in the alternative, to void the deed conveyance based on fraudulent inducement.

Court Amended Plaintiff’s Complaint Sua Sponte

The case becomes even more interesting with the court’s sua sponte amendment of the complaint, a rear action taken by courts in New York. In amending the complaint the court interposed additional defendants noting that there were business entities involved: (1) Grand Bay Associates Enterprises, Inc., to which plaintiff conveyed ownership of the condominium, and (2) GBA Enterprises, Inc., which interposed an answer in response to the suit and commenced eviction proceedings against plaintiff. Mr. Merrifield was the President of both entities the court found. Further the court found that Bradshaw had served as the attorney for all of the parties at various points. The court therefore amended the complaint in the interest of justice.

The case is Diallo v. Grand Assoc. Enters., Inc. No. 15044/04, 2010 NY Slip Op 50214[U]

Voluntary Payment Doctrine Bars Recovery of Alleged Rent Overcharges

New York, New York, February 2, 2010: Citibank got a wake-up call from the New York State Appellate Division, First Department. The court affirmed an order of the supreme court dismissing Citibank’s complaint which sought to recover some half a million dollars in rent overcharge.
The court ruled that the complaint for alleged rent overcharges was barred under the voluntary payment doctrine. The Plaintiff was Citicorp North America, Inc. It alleged that Fifth Avenue 58/59 Acquisition Company, LLC overcharged the bank for a period of about 10 years. The court that it was undisputed that Citicopr was highly sophisticated and did not question for approximately nine years the amount of rent they were paying, and did not compare the rent provisions of their lease to the rent amounts billed by defendants.

Determining that the plaintiffs demonstrated a clear lack of diligence and paid the amounts without protest or inquiry and without being under a material mistake of fact, the court applied the voluntary payment doctrine.

The case was Citicorp North America, Inc. v. Fifth Avenue 58/59 Acquisition Company, LLC, No. 2084, 2010 NY Slip Op 00725, 2010 BL 23107 (1st Dep’t Feb. 2, 2010)

New York Landlord to Pay $1 Million for Tenant Harassment

VMW LAW, New York, New York, February 15, 2010: A New York City landlord has agreed to pay $1 million to compensate tenants who suffered harassment by the landlord. Vantage Properties LLC also agrees to set up reforms to stop “frivolous” eviction actions, according to Bloomberg Law which quoted New York Attorney General Andrew Cuomo.

The tenant harassment settlement came after Cuomo announced on Jan. 28 that he planned to sue Vantage for harassing tenants in rent-regulated units. Vantage purchased more than 125 buildings containing 9,500 units since 2006 with private-equity funding from Apollo Real Estate Advisors, according to Cuomo. About 1,500 of the units have been vacated.

According to details of the settlement $750,000 would towards paying damages to tenants who can prove they were subjected to unjustified rent demands or unwarranted Housing Court proceedings. Bloomberg Law is reporting that Vantage is promising better investigations before serving legal notices, and will pay $250,000 to fund nonprofit organizations that provide legal help to tenants. Vantage also agreed to compliance audits.