Lenders/Title Insurance - Litigation to Protect $15 Million in First Priority Mortgages
Representation of lenders in a case in which the plaintiffs, including a prominent New Jersey real estate developer, are seeking to divest the owner of twenty-two investment properties located in Jersey City and North Bergen, New Jersey of title and, in so doing, avoid our clients' $15 million in first priority mortgages secured by those properties. The case involves complex legal and factual issues dating back to the mid-1990's, when the plaintiff developer filed a voluntary bankruptcy petition. To avoid losing substantial real estate holdings to foreclosure, the plaintiffs transferred ownership of the mortgaged properties in question to a firm originally hired to assist them in restructuring their debt through an arrangement that plaintiffs now claim gave them the right to reacquire the properties purportedly because the firm was acting as their "nominee." The firm and its principal later filed for bankruptcy and, in the process, sold the properties free and clear of all liens, claims and encumbrances under the Bankruptcy Code. Approximately two months later, our clients provided a purchase money mortgage loan in the principal amount of $15 million to fund the acquisition of the properties. Thereafter, the plaintiffs re-emerged to claim that the mortgages given to our clients were void. Herrick is working to help our clients protect and preserve their mortgages and other legal rights.
Lender/Title Insurance - New York Supreme Court Victory
Obtained reversal of a New York Supreme Court ruling finding that the deed transferring title to a property was void ab initio. Our client, a lender with a first priority mortgage lien on the property, had not been named as a party in the underlying action, but was sued in a subsequent action filed by plaintiffs seeking to use the ruling to extinguish our client's $2.5 million lien on the property. We successfully intervened in the underlying lawsuit on behalf of the lender and argued that the Judge's original ruling -- finding that the deed was void ab initio -- was incorrect as a matter of law.
Title Insurance Company/Property Owner - Restrictive Covenant Dispute
Representing the owner of a vacant parcel of land in Westchester County, New York in a dispute with neighboring property owners over our client's plans to construct an affordable housing complex on the property. Relying on a century-old restrictive covenant contained in a prior deed which prohibited development of a "tenement or flat-house" on the property, the neighboring property owners are attempting to block our client's planned development of the land.
Title Insurance Underwriter and Agent - Summary Judgment Dismissing All Claims
Obtained summary judgment dismissing all claims against a title insurance underwriter and its agent following a coverage dispute arising out of a tax sale certificate that was not properly redeemed and discharged at the time of closing in accordance with the statute that governs redemptions after tax foreclosure proceedings have been commenced. The plaintiff in the action alleged that the title insurance underwriter and agent failed to advise its closing counsel how to comply with a statute designed to prevent "heir hunters" from preying upon parties vulnerable to foreclosure in the tumultuous period following the death of a predecessor owner, as occurred here.
Title Insurance Company - Class Action Defense
Representation of a title insurance company in a class action alleging overcharges on premiums for policies sold to consumers in New Jersey. We settled—on terms favorable to our client—early enough in negotiations to minimize our client's legal fees.
Stewart Title Guaranty Co. - New Jersey Supreme Court Victory
Representation of Stewart Title Guaranty Co. in its New Jersey Supreme Court victory limiting the scope of a title insurance company's liability for attorney misconduct. The homebuyers' attorney stole their escrow funds in conjunction with a real estate transaction. The New Jersey Lawyers Fund For Client Protection paid the victims for the attorney's theft, and then sued Stewart Title for reimbursement, in keeping with NJLF's long-held belief that a title insurer's liability should blanket all aspects of the closing process. The attorney here, however, had stolen the money before he contacted Stewart Title's agent to request a title insurance commitment and policy on behalf of the homebuyers. The trial court dismissed NJLF's lawsuit, but the Appellate Division reversed, ruling that in order for Stewart Title to avoid liability, it would have had to provide the homebuyers with direct notice informing them that their title insurance policy did not cover attorney theft. The Supreme Court unanimously reversed, ruling that the lack of notice was irrelevant, since the attorney was not acting as an agent of the title company at the time that he committed his crime.
Title Insurance Agency - Frivolous Claim Defense
Representation of a title insurance agency in a suit brought by a property seller. We won summary judgment and a dismissal of all claims. The court also ruled that the plaintiff had committed fraud in connection with the transaction, and imposed sanctions against him and his counsel, including attorney's fees, for frivolous litigation.
Title Insurance Company - Agent’s Fraud Imputed to Lender
Representation of a title insurance company against a lender whose agent committed a fraud that caused the loss of the insured mortgage. Our client successfully argued that since the agent acted on behalf of the bank, the fraud could be attributed to the bank and therefore fell under the policy’s exclusion for “acts of the insured.” The court’s ruling will have ramifications in the title insurance and mortgage lending industry since many sub-prime lenders relied upon unscrupulous agents to close their loans, and to the extent any frauds committed by those agents lead to a title loss, the lenders cannot look to the title insurers for indemnification.
Real Estate Development Company - Land Purchase Dispute
Representation of real estate development company in an appeal arising from its $3 million purchase and development of 7.5 acres of land from Hebrew Huntington Congregation. A faction of the congregation challenged the court's order that permitted our client to purchase the land under the Religious Corporations Law. The Second Department upheld the order and dismissed the appeal as moot, recognizing that our client was a bona fide good faith purchaser.
Title Insurer - Victory in Litigation Against the U.S. Government
Representation of an insured real property owner in defending against a large and complicated lawsuit by the U.S. Government over the purchase of a piece of real estate from the government. The case dragged on for three years before the insurer brought us in, and we won it on a motion for summary judgment.
RM 14 FK Corp. v. Bank One Trust Company - K-Mart Mortgage Dispute Appeal
Representation of a title insurer in its appeal of a trial court’s decision permitting a litigant to proceed with its claim seeking to void $30 million in mortgages, held by Merrill Lynch, encumbering 14 K-Mart stores throughout the US. The Appellate Division unanimously reversed the lower court, granting summary judgment for our client. (RM 14 FK Corp. v. Bank One Trust Company, 831 N.Y.S.2d 120 (1st Dept. 2007))
Title Insurer - Frivolous Claim Defense
Defended a title insurer in an action by a property owner seeking title insurance coverage. The court found the owner's damages to be attributable to its own actions, and impressed sanctions against the owner and its counsel, which included attorneys' fees, for prosecuting frivolous litigation.
Title Insurer - Mortgage Fraud Litigation
Representation of an insured lender in litigating the validity and enforceability of a multi-million dollar mortgage lien that was alleged to have been forged. Herrick overcame the fraud allegation and succeeded in enforcing the mortgage.
Title Insurance Company - Fraud Action
Representation of a title insurance company in obtaining a $1.4 million judgment and attachment of the defendants' bank accounts in a fraud action.
Title Insurer/Secured Lender - Priority Dispute
Representation of a secured lender in its claim to the proceeds of the sale of a borrower's principal asset. The court granted our motion for summary judgment, ruling that our client's claim had priority over competing claims asserted by produce sellers under the Perishable Agricultural Commodities Act. D.M. Rothman Co., Inc. v. Cohen Marketing Int'l, Inc., 2005 U.S. Dist. Lexis 14449, 2005 WL 1690524 (S.D.N.Y. 2005).
Title Insurer/Secured Creditor - Lien Priority Dispute
Representation of a title insurance company which was a secured creditor in a lien priority dispute with another creditor. After the properties securing the debt were sold, the bankruptcy court authorized payment of our client's claim, dismissing the competing secured creditor's claim. In re Litas International, Inc., 2004 WL 1488114, 2004 U.S. Dist. LEXIS 12151 (S.D.N.Y. 2004).
Title Insurance Companies - Class Action Defense
Representation of two title insurance companies in two class actions alleging overcharges on premiums for policies sold to consumers in New York. After extensive litigation, we settled on terms favorable to our clients.
In Re 455 CPW Associates - Mortgage/Mechanic’s Lien Priority Dispute
Representation of a title insurance company in its defense of a mortgage lender from Section 22 claims made by a mechanic lienor, in Bankruptcy Court, asserting that its lien took priority over an earlier filed mortgage. The Bankruptcy Court ruled in our client’s favor and both the District Court and the Second Circuit affirmed. (In Re 455 CPW Associates; Herbert Construction v. The Greater New York Savings Bank, 192 B.R. 85 (Bank. S.D.N.Y. 1996), aff. 2000 U.S. App. Lexis 23470 (2d Cir. 2000))