The following papers were read on this motion:

Order to Show Cause and Affirmation in Support1-2, 1-3

Affidavit in Opposition1-2

In this summary proceeding for possession and use and occupancy, petitioner now moves by Order to Show Cause to lift the stay imposed by this court in its April 28, 2011 decision. Petitioner also prays for the issuance of a final judgment of possession and warrant of eviction. Respondent opposes petitioner's Order to Show Cause, citing no change in circumstance since the court issued its previous decision staying the instant summary proceeding pending resolution of the Supreme Court foreclosure action.

Background

Petitioner commenced the instant summary proceeding seeking use, occupancy and judgment against his cousin ("Respondent") in the amount of $189,000.00, pursuant to an alleged [*2]unwritten license agreement to pay mortgage and taxes. The initial papers described an alleged deal struck by the parties, whereby petitioner agreed to purchase the property from respondents and gave respondents 90 days (or an indeterminate period of time, depending on the version) in which to re-finance and re-purchase the property.

It was further alleged that in April, 2007, respondents deeded the property to petitioner and petitioner secured a $600,000.00 mortgage which was used to pay off respondents' prior mortgage in the approximate amount of $480,000. Of the remaining $120,000, $110.000 was paid to the respondents and $10,000.00 was paid to petitioner to cover his closing costs. Respondents continued to reside in the premises pursuant to an oral agreement whereby they agreed to pay the mortgage costs and taxes as "use and occupancy". Sixteen months later, respondents stopped making payments to the lender. The house is now the subject of a foreclosure proceeding in the Supreme Court Westchester County which was pending at the commencement of this proceeding.

Respondents aver that they purchased the house originally in 2004 for $500,000.00 from an unrelated third party in an arm's-length transaction. In 2007, respondents fell behind in their mortgage payments and asked petitioner, to assist them by "lending his credit" to respondents. Respondents claim that they deeded over their interest to petitioner in reliance upon an oral agreement that petitioner would reconvey the property back to the respondents and that

respondents would refinance the property when their financial situation improved. Other than this, the parties would pay nothing to each other going forward. Respondents would continue to pay the mortgage and taxes directly to the lender and municipality respectively and continue to reside in the premises.

In addition, respondents allege that they invested "tens of thousands of dollars" in substantial improvements to the real property. In 2009, respondents, admitted falling behind again in mortgage payments. The lender commenced a foreclosure proceeding naming both petitioner and respondents as defendants. Respondents filed an Order to Show Cause in the foreclosure proceeding in Supreme Court seeking to vacate its default in answering the complaint, granting leave to interpose an answer and counter-claim against respondent, seeking, inter alia, reformation of the deed and establishment of a constructive trust for the benefit of the respondents. By Decision and Order of the Hon. Orazio R. Bellantoni, dated March 16, 2011, said Order to Show Cause was denied in its entirety because (1) Respondents failed to offer any excuse for the delay in filing the answer and (2) a preliminary injunction was deemed inappropriate where the facts were sharply disputed. The time in which to file an appeal of this order had not yet expired when this court rendered its initial decision staying the instant summary proceeding on April 28, 2011. Subsequently, on June 7, 2011, the respondent filed a separate action in Supreme Court, seeking imposition of a constructive trust upon the premises and reformation of the deed to reflect respondents' equitable ownership.

Discussion

The Stay [*3]

Initially in its prior decision staying the foreclosure proceeding, this court held that the respondent had set forth the necessary elements constituting a constructive trust.. The court also examined the then-current procedural posture of the case vis * vis the foreclosure action that had been commenced earlier by the lender against the petitioner and respondents. While that case is technically still pending, the Supreme Court has denied respondents' motion to interpose an answer and counterclaim. That order has not been appealed and the time in which to file an appeal has long expired. In the interim, the respondent has filed an action in Supreme Court to impress a constructive trust on the property for his benefit. That latter-filed action is also now pending.

CPLR, *2201 provides that a court may stay its own action pending the disposition of a pending matter. In this case, even though the summary proceeding and foreclosure suits arise out of the same actions or events which would determine the dispositive issue of title, the equitable defense of lack of title will not be adjudicated to fruition in the previously commenced foreclosure proceeding. As there is no logical predicate to continue the stay in deference to the matter technically pending in Supreme Court, this court would be reluctant to continue the stay.

The action commenced by respondent eight months after commencement of the instant summary proceeding cannot serve as the basis for this court to broaden its discretion to issue a stay beyond the grounds clearly enunciated in CPLR 2201 and CPLR 3211(4). To do so, would open the door to potential "forum shopping" issues which could be utilized to evade the summary nature of a summary proceeding by commencement of a later action.

Subject Matter Jurisdiction

The lower courts have not developed a uniform approach to the treatment of title issues

when raised as an equitable defense in a summary proceeding. Some courts deny jurisdiction, citing lack of subject matter jurisdiction to try title issues, even when interposed as an equitable defense. Mahshie v. Dooley, 48 Misc 2d 1098, 266 N.Y.S.2d 661 (1965). Other courts have held that a summary proceeding cannot be res judicata as to the issue of title,because the lower courts (in the cited case, the District Court) lacked subject matter jurisdiction. O'Frias v. Melton, 32 AD2d 1046, 303 N.Y.S.2d 785 (1969). However, a later Second Department case held that where the issue of title is sufficiently developed in a summary proceeding, the respondent who raised the equitable defense in the summary proceeding would later be estopped from raising the same defense in a subsequent suit to determine title claims to the property. Nissequogue Boat Club, n/k/a Nissequogue Yacht Club, et al., v. State of New York, 14 AD3d 542, 789 N.Y.S. 2d 71 (2005).

Professor Siegel notes, "...[T]he very question of whether the petitioner is the respondent's landlord may turn on an issue of title, as where a complicated arrangement raises an issue of whether the petitioner is an owner and the respondent his tenant, or the petitioner a mortgagee and the respondent in fact his mortgagor. Siegel, NY Practice *576 (4th ed.) Siegel further explains that the solution appears at the post-judgment stage of the proceeding where the estoppel effect is limited, saving it for a plenary test in a court of plenary title jurisdiction at a later time. On the res judicata effect, Siegel opines that the title question is usually not binding in a higher court in a later plenary test of title. Statutorily, this and is directly addressed in RPAPL *742(2) which provides in pertinent part..."The judgment shall not bar an action, proceeding or [*4]counterclaim, commenced or interposed within sixty days of entry of the judgment, for affirmative equitable relief which was not sought by counterclaim in the proceeding because of the limited jurisdiction of the court." In the instant summary proceeding, this court is mindful that its ultimate determination may not be given res judicata effect by a court of plenary jurisdiction. At this juncture, it is just not possible to know how fully the issue of title will be litigated here and whether the parties will face a Nissequoge estoppel issue further up the judicial chain. This court finds that it possesses the requisite subject matter jurisdiction to determine the right of present possession

Conclusion

The court grants petitioner's Order to Show Cause to the limited extent of lifting the stay imposed in its April 28, 2011 order. The parties are directed to appear for a pre-trial conference on October 25, 2011.

The foregoing constitutes the Decision and Order of the Court.

Dated: October 12, 2011

New Rochelle, New York



Hon. Susan I. KettnerCity Court Judge