Levine v. Trumbull (In re: Timothy Stallmer) ( 2019 )

18‐3633‐bk
Levine v. Trumbull (In re: Timothy Stallmer)
UNITED STATES COURT OF APPEALS
FOR THE SECOND CIRCUIT
SUMMARY ORDER
RULINGS BY SUMMARY ORDER DO NOT HAVE PRECEDENTIAL EFFECT.
CITATION TO A SUMMARY ORDER FILED ON OR AFTER JANUARY 1,
2007, IS PERMITTED AND IS GOVERNED BY FEDERAL RULE OF
APPELLATE PROCEDURE 32.1 AND THIS COURT=S LOCAL RULE 32.1.1.
WHEN CITING A SUMMARY ORDER IN A DOCUMENT FILED WITH THIS
COURT, A PARTY MUST CITE EITHER THE FEDERAL APPENDIX OR AN
ELECTRONIC DATABASE (WITH THE NOTATION “SUMMARY ORDER”).
A PARTY CITING TO A SUMMARY ORDER MUST SERVE A COPY OF IT
ON ANY PARTY NOT REPRESENTED BY COUNSEL.
At a stated term of the United States Court of Appeals for the Second Circuit,
held at the Thurgood Marshall United States Courthouse, 40 Foley Square, in the
City of New York, on the 30th day of October, two thousand nineteen.
PRESENT: AMALYA L. KEARSE,
BARRINGTON D. PARKER,
RICHARD J. SULLIVAN,
Circuit Judges.
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IN RE: TIMOTHY STALLMER,
Debtor.
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PAUL A. LEVINE, CHAPTER 7 TRUSTEE,
Plaintiff‐Appellant,
v. No. 18‐3633‐bk
CHRISTOPHER S. TRUMBULL, JENNIFER
A. TRUMBULL, FATIMA LOBO,
Defendants‐Appellees.
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FOR APPELLANT: JAVIER J. MENDEZ (Paul A. Levine,
on the brief), Lemery Greisler, LLC,
Albany, NY.
FOR APPELLEES: CHRISTOPHER A. PRIORE (Peter A.
Lauricella, on the brief), Wilson, Elser,
Moskowitz, Edelman & Dicker LLP,
Albany, NY.
Appeal from a judgment of the United States District Court for the Northern
District of New York (Mae A. D’Agostino, Judge).
UPON DUE CONSIDERATION, IT IS HEREBY ORDERED, ADJUDGED,
AND DECREED that the judgment of the district court is AFFIRMED.
Paul A. Levine, Chapter 7 trustee for debtor Timothy Stallmer (“Debtor”),
appeals from an order of the district court (D’Agostino, J.) affirming the bankruptcy
court’s grant of summary judgment in favor of Defendants‐Appellees Christopher
Trumbull, Jennifer Trumbull, and Fatima Lobo. In the underlying bankruptcy
proceeding, the Trustee filed a complaint seeking to quiet title to property located
at 170 Glass Lake Road in Averill Park, New York (“the Property”), claiming, inter
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alia, that the deed under which Debtor conveyed the Property (“the RFL deed”) to
Richard F. Lease – who subsequently conveyed the Property and assigned a
mortgage on the Property to Defendants – was executed under false pretenses and
thus void. Specifically, the Trustee alleged that Debtor’s wife, Marcia Doyle,
tricked Debtor into executing the RFL deed by asking him to sign documents for
the stated purpose of obtaining a loan, without telling him that one of the
documents would in fact convey title in the Property to Lease. The bankruptcy
court (Littlefield, J.) granted Defendants’ motion for summary judgment,
concluding that the RFL deed was not executed under the false pretense that it was
a different type of document and thus void, but instead was, at most, fraudulently
induced and thus voidable. The Trustee appealed under 28 U.S.C. § 158(a)(1) to
the district court, which affirmed. We assume the parties’ familiarity with the
underlying facts and the record of prior proceedings, to which we refer only as
necessary to explain our decision to affirm.
On appeal from the district court’s review of a bankruptcy court decision,
“[w]e look through the district court to the bankruptcy court’s decision, and review
its analysis of law de novo.” In re DBSD N. Am., Inc., 634 F.3d 79, 94 (2d Cir. 2011).
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“It is axiomatic, however, that we may affirm on any grounds for which there is a
record sufficient to permit conclusions of law, including grounds not relied upon
by the [bankruptcy] court.” Chesley v. Union Carbide Corp., 927 F.2d 60, 68 (2d Cir.
1991) (internal quotation marks and citation omitted). In reviewing the
bankruptcy court’s grant of summary of judgment, we must determine “whether,
viewing the record in the light most favorable to the non‐movant, . . . any genuine
and disputed issue of material fact underlies the bankruptcy court’s decision.” In
re Treco, 240 F.3d 148, 155 (2d Cir. 2001). “Summary judgment is appropriate if
‘there is no genuine dispute as to any material fact’ and ‘the movant is entitled to
judgment as a matter of law.’” Ennio Morricone Music Inc. v. Bixio Music Grp. Ltd.,
936 F.3d 69, 71 (2d Cir. 2019) (quoting Fed. R. Civ. P. 56(a)); see also Fed. R. Bankr.
P. 7056 (providing that Fed. R. Civ. P. 56 applies in adversary bankruptcy
proceedings).
On appeal, the Trustee argues that there are material issues of fact concerning
whether the RFL deed is void, rather than merely voidable. As the parties do not
dispute, New York law governs this question. See, e.g., Lockheed Martin Corp. v.
Retail Holdings, N.V., 639 F.3d 63, 69 (2d Cir. 2011). Under New York law, “[t]he
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difference . . . between a void deed and a voidable deed is important” because it
affects a party’s ability to quiet title against a subsequent bona fide purchaser.
Weiss v. Phillips, 65 N.Y.S.3d 147, 155 (App. Div. 2017). If a deed is void, “the law
deems that no transfer actually occurred” and thus the deed “does not pass title
and cannot be enforced even if title is later acquired by a bona fide purchaser.” Id.
As relevant here, a deed is void if it was executed under false pretenses – that is, if
the signer of the deed was “unaware of the nature of the instrument he or she was
signing, such as where the signer is illiterate, or blind, or ignorant of the alien
language of the writing, and the contents thereof are misread or misrepresented to
him by the other party, or even by a stranger.”1 Cash v. Titan Fin. Servs., Inc., 873
N.Y.S.2d 642, 645 (App. Div. 2009) (internal quotation marks and citation omitted).
In contrast, if the signer was aware that he was signing a deed, but was misled as
to the deed’s purpose, then the deed is deemed to be procured by fraudulent
inducement and is merely voidable. See Weiss, 65 N.Y.S.3d at 156. In that event,
a subsequent bona fide purchaser is protected under New York Real Property Law
1 Under New York law, a signature procured under false pretenses is tantamount to a
forged signature. See Weiss, 65 N.Y.S.3d at 155–56 (“Forged deeds and/or encumbrances
are those executed under false pretenses, and are void ab initio.”). Thus, we construe the
forgery and false‐pretenses arguments to raise the same issue on appeal.
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§ 266. See id.
Here, the bankruptcy court concluded that there was no triable dispute that
the RFL deed “was the result of fraudulent inducement because the debtor stated
that he knew he was signing a deed but was unaware that the property would be
transferred to the Lease.” Special App’x at 7. The court based that conclusion in
part on the following sworn statement, which Debtor gave to the Albany County
District Attorney’s Office during a criminal investigation of Doyle in October 2014:
One day Marcia called me to meet her in front of the Capitol and I met
her. She wanted me to sign the deed to 170 Glass Lake Road Averill Park.
The name of the person was Richard Lease and he was going to loan
Marcia $10,000.00 and would hold the lease; [sic] deed. I found out
later it was actually for the sale of the house.
App’x at 181 (emphasis added). On appeal, the Trustee contends that this
statement does not unambiguously establish that Debtor knew he was signing a
deed at the time he signed it, particularly in light of his subsequent deposition
testimony that he “didn’t know [he] was signing a deed,” but instead “thought [he]
was signing a note of some sort and [] later learned that it was the deed.” App’x
at 461. However, the Trustee’s attorney submitted an affirmation to the
bankruptcy court stating that “[Debtor]’s testimony is that he thought he was signing a
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deed because his wife needed a loan . . . .” App’x at 530 (emphasis added).
But even if there were a genuine dispute over whether Debtor actually knew
he was signing a deed, any such dispute would not be “material,” since Doyle’s
false representations did not relieve Debtor of his obligation to read the three‐page
document. Under New York law, “[i]t is well settled that ‘a party is under an
obligation to read a document before he or she signs it, and a party cannot generally
avoid the effect of a document on the ground that he or she did not read it or know
its contents.’” Dasz, Inc. v. Meritocracy Ventures, Ltd., 969 N.Y.S.2d 653, 655 (App.
Div. 2013) (brackets omitted) (quoting Cash, 873 N.Y.S.2d at 645). As noted above,
this rule applies even where a party is misled as to the contents of the document,
unless that party has a valid excuse for not reading it, “such as where the signer is
illiterate, or blind, or ignorant of the alien language of the writing.” Cash, 873
N.Y.2d at 645 (rejecting, on summary judgment, plaintiffs’ claim that defendants
fraudulently procured a deed that one plaintiff signed without reading). Here, the
Trustee offers no valid excuse for Debtor’s failure to read the RFL deed, which: (1)
was titled “Bargain and Sale Deed, with Covenants against Grantor’s Acts;” (2)
stated that Debtor “does hereby grant and release unto [Richard Lease]” the
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Property; (3) further stated that Debtor “has duly executed this deed;” and (4)
included Debtor’s undisputed signature under the word “Grantor.” App’x at 37–
38. Further, the deed he signed was accompanied by an affidavit that he was
asked to sign – and did sign – titled “AFFIDAVIT FOR DEED IN LIEU OF
FORECLOSURE.” App’x at 172. On this record, we conclude that the RFL deed
is not void under New York law, and thus the bankruptcy court did not err in
granting Defendants’ motion for summary judgment.
We find that the Trustee’s remaining arguments are without merit.
Accordingly, we AFFIRM the judgment of the district court.
FOR THE COURT:
Catherine O’Hagan Wolfe, Clerk of Court
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