In this summary proceeding for possession, use and occupancy, a trial was held on December 13, 2011 at which time the court reserved decision and afforded both parties the opportunity to submit post trial memoranda.

Petitioner commenced the instant summary proceeding seeking use, occupancy and judgment against his cousin and his cousin's wife ("Respondents") in the amount of $189,000.00, for use and occupancy, pursuant to an alleged unwritten license agreement to pay mortgage and taxes directly to petitioner's lender. The initial papers detailed an alleged oral agreement between the parties, whereby petitioner agreed to purchase the property from respondents and gave respondents 90 days (or an indeterminate period of time, depending on whose version of events is more credible), in which to re-finance and re-purchase the property from petitioner.

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 fully pay off respondents' prior mortgages in the approximate amount of $480,000.00. Of the remaining $120,000.00, it was alleged that $110,000.00 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 petitioner's mortgage costs, taxes and insurance as "use and occupancy" until they re-financed and re-purchased the property from petitioner . [*2]Approximately one year 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 $589,000.00 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 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, 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. This court then granted petitioner's Order to Show Cause, lifting the stay it imposed in its April 28, 2011 order, citing the fact that there was "no action pending" to justify continuance of the CPLR �2201 stay of its own proceedings. A pre-trial conference was scheduled for October 25, 2011.

At the non jury trial held on December 13, 2011, the following was received into evidence:

Petitioner's Exhibit 1Certified copy of Bargain and Sale Deed with Covenants from Louis and Maritza Cappozzoli to James Fizzinoglia, dated April 10, 2007

Petitioner's Exhibit 2Letter from Steven J. Baum, P.C., dated March 24,

2011 with payoff figure in amount of $601,936.01

Petitioner's Exhibit 2Notice of Petition, Holdover, dated November 15, 2010

Petitioner's Exhibit 3Holdover Petition, dated November 15, 2010

Respondent's Exhibit ALetter from Wells Fargo, dated October 11, 2010 to

James Fizzinoglia, denying mortgage loan modification due to failure to provide information to lender [*3]

Respondent's Exhibit BLetter from Wells Fargo, dated November 5, 2010 to James Fizzinoglia denying mortgage loan modification due to failure to provide information to lender

Respondent's Exhibit CLetter from Wells Fargo, dated February 14, 2011 to James Fizzinoglia canceling his request for a loan modification

Respondent's Exhibit DHUD RESPA Settlement Statement, dated April 10, 2007 between Louis and Marita Cappozoli as Sellers and James Fizzinoglia as Buyer pertaining to the premises located at 9 Meadow Lane, New Rochelle, NY

Respondent's Exhibit EProposed "Contract Agreement", dated October 27, 2010, signed only by Louis Capozzoli

The credible facts adduced at the non-jury trial, established the following:

The petitioner, JamesFizzinoglia ("petitioner") and Louis Capozzoli "respondent" are first cousins who were extremely close, like brothers" until the commencement of this summary holdover proceeding.

Both petitioner and respondent admitted that respondent and his wife, Maritza (also, "respondent") originally owned the premises, located at 9 Meadow Lane, New Rochelle, New York, having purchased it in 2004 in an arms-length transaction for the amount of $589,000.00, subject to a mortgage of $482,000.00. Respondent contacted his cousin, the petitioner for assistance around March, 2007, after falling behind in mortgage payments, due to a work slowdown. According to both parties, respondents were facing foreclosure and the loss of their home. At respondents' request, respondents agreed to "deed over" the property to petitioner and, in turn, petitioner agreed to take out a mortgage and home equity loan, totaling $600,000.00 and transfer the property back to respondents within 30 to 90 days, after respondents obtained a mortgage. Petitioner testified that he gave $120,000.00 of the mortgage proceeds to respondent, after paying off the respondent's prior mortgages in the approximate sum of $480,000.00.^[FN1] Respondent testified that he received approximately $40,000.00 from the loan proceeds after payoff of the prior mortgages, which appears to be more consistent with the HUD RESPA Statement submitted into evidence. Respondent further testified that from the same loan proceeds, he paid $10,000.00 to petitioner and the rest was reinvested in the house for "tile work, [*4]new roof, water burner, etc.^[FN2] Petitioner admitted that the verbal agreement consisted of respondents' promise to pay the monthly mortgage payments, (which also included real property taxes) directly to the lender, as well as direct payments of insurance, repairs, heat and electricity, which he characterized as rent. The parties diverge on when and under what circumstances the petitioner was required to "deed back" the property to respondents. According to petitioner, the respondents were required to refinance and repurchase the house within 30 to 90 days, although petitioner testified, under cross-examination, that he was aware at some point that respondents considered placing their daughter on the mortgage with them.

Respondents were not able to obtain a mortgage during that time period and requested additional time. Petitioner initially agreed because of their family relationship and because at that point, respondent was still making timely payments to the lender.

At the April 10, 2007 closing, where respondents conveyed the premises by Bargain and Sale Deed, with Covenants Against Grantors' Acts to petitioner, petitioner testified that the parties used the same attorney and that the petitioner incurred no costs with respect to the closing. Petitioner further testified that he never made any payments toward the mortgage and that he never had any intention of moving into the premises. Both parties testified that respondents paid petitioner $10,000.00 for use of his credit. Petitioner testified that the $10,000.00 represented funds for unforseen expenses. However, on cross-examination, he testified that he used the money for other purposes. His testimony was at variance with a previous affidavit that he submitted to the court, wherein he stated that the $10,000.00 was paid to cover his expenses. There is no dispute that the petitioner is the sole obligor on the note and mortgage covering the premises.

All went well until approximately one year later, when petitioner received a notice from his lender that the mortgage was in arrears. He contacted the respondents, who indicated that they were again experiencing financial difficulties but indicated that notwithstanding that, they would continue to make the monthly payments. In fact, the respondents continued to make some payments on the home equity loan. According to the petitioner, as of the date of trial, the respondents had not made any mortgage payments for a period of thirty-seven months.^[FN3] In July, 2010, over three years after the "sale" to petitioner and nearly two years of substantially not paying the mortgage payments, petitioner demanded that the respondents vacate the property. In September, 2010, respondents sought legal assistance to terminate the license agreement and evict respondents from the premises. Petitioner further testified that he received a notice from the lender, dated March 24, 2011, that the total amount to pay off the mortgage amounts was $601,936.01. Petitioner's Exhibit 2.

Petitioner reviewed and read the contents of the petition on the stand. When queried by his own attorney as to how he arrived at the $189,000.00 figure demanded in the petition for use in occupancy, inexplicably, he stated that he did not know. When asked if he were to rent the property, how much he would be able to receive, again, he indicated that he did not know. However, he characterized the property as a well-maintained four bedroom/ three bath home on one quarter acre. [*5]

Respondent Louis Capozzoli's version of events differed most sharply on the circumstances under which he and his wife were required to repurchase the premises from petitioner. Most notably, he testified that the plan was to place respondents' daughter on the deed and mortgage. At the time that respondents stopped paying, his daughter was still in college, with one and a half years to graduation and decent employment prospects. Respondent offered three letters from the lender, dated October 11, 2010, November 5, 2010 and February 14, 2011, (Respondents' Exhibits A, B and C, respectively), received by both parties, which tended to corroborate his testimony that the respondent attempted to modify the two mortgages and worked with petitioner toward that end for some time.

Respondent's daughter testified that the lender agreed to modify the second mortgage, thereby reducing the monthly payments, which enabled them to make payments on the modified second mortgage, (but not the first), for approximately one year. Respondent, Louis Cappozoli testified that all three parties (petitioner, respondent and respondent's daughter) attended the mandatory foreclosure conferences in Supreme Court. According to respondent, this changed when the lender's representative informed them that the equity in the house was $50,000.00. According to respondents, the petitioner then demanded that they pay him $50,000.00 for his continued cooperation in refinancing the first mortgage and assuring respondents continued participation in the ongoing foreclosure conferences. Respondents refused to pay the $50,000.00 and were asked to leave. After this, respondents ceased making any payments to the lender. In addition, at no time whatsoever, did respondents make any payments for "use and occupancy" directly to petitioner. At no time did respondents try to obtain independent financing to buy back the premises from petitioner.

Maritza Cappozoli testified that in addition to the mortgage modification, they needed their daughter's income to qualify for the "modified" mortgage. She testified that their monthly income was approximately $4,415.00 monthly, not including their daughter's income.^[FN4] According to Mrs. Cappozoli, the only reason they were not able to refinance, was the petitioner's demand for $50,000.00 and his unwillingness to cooperate in the loan modification process. The court found this testimony incredible. There was no testimony that tended to support respondents' position that even with their daughter's contributions, that they could qualify for a modified mortgage or any financing which would enable them to carry the monthly carrying cost of the premises.

As previously noted by this court, the lower courts have not developed a uniform approach in dealing with title issues, when raised as an equitable defense in summary proceedings. Some courts deny subject matter jurisdiction outright, even when title is 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.785 (1969). A much more recent Second [*6]Department case held that where the issue of title is sufficiently developed in a summary proceeding, the respondent who raised the equitable defense of title 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).

This court follows Professor Siegel's reasoning that..." [T]he very question of whether 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 is his tenant, or the petitioner a mortgagee and the respondent in fact his mortgagor" Siegel, NY Practice �576 (4th ed.). Siegel further notes 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. This is codified in RPAPL �742(2) which provides in pertinent part... that [T]he judgment shall not bar an action, proceeding or 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". A higher court will determine whether the issue of title was sufficiently developed in this court so as to give a Nissequoge estoppel effect..

Substantive Legal Analysis

Here, the respondents' posit that petitioner cannot maintain this proceeding because the respondents, not the petitioner, are the equitable owners of the property and, as such, between these parties, pursuant to RPAPL �721, the petitioner, as a non-owner, cannot maintain this proceeding.

Respondent premises their claim of equitable ownership on the assertion that petitioner is only a straw buyer, holding title as a mere nominee of respondents and that the only remedy is for the Supreme Court to impress a constructive trust, declaring respondents the true owners of the property and permit them to refinance the in accordance with the original agreement.

The four necessary elements which would require a court to impose a constructive trust are: (1) a confidential relationship, (2) a promise, express or implied, (3) a transfer in reliance on that promise, and (4) unjust enrichment". Sharp v. Kosmalski, 40 NY2d 119, 386 N.Y.S.2d 72.The sole purpose for imposition of a constructive trust is to prevent unjust enrichment, where a party holds property "under such circumstances that in equity and good conscience he ought not to retain it". Sharp v. Kosmalski, supra.

There is no question that a confidential relationship existed between the parties here. They agreed that they were "very close, like brothers" and respondent transferred the house to petitioner based, in part, on petitioner's promise to reconvey. The facts in this case are replete with evidence that satisfy the first three elements, which would necessitate imposition of a constructive trust: confidential relationship, promise to convey, and transfer in reliance on the promise.

However, the court finds that the element of unjust enrichment is lacking. The respondents transferred their property to the petitioner and received consideration from petitioner, whereby petitioner totally satisfied their initial mortgages in the amount of $523,294.80 and paid $46,123.71 directly to respondents from the proceeds of petitioner's mortgage proceeds. Petitioner, obligated himself on a note and mortgage, in the approximate amount of $600,000.00 to finance the transaction, such as occurs in the normal course of third party, arm's-length transactions. The transfer to petitioner was for consideration-the satisfaction [*7]of the respondents' prior mortgages, in addition to payment to petitioner of $45,123.71. Respondent testified that he used the remaining mortgage proceeds of $45,123.71, (for which petitioner is responsible is solely liable to repay), to invest in improvements to the property. This court cannot say, given the evidence presented, that petitioner "has received a benefit, the retention of which would be unjust". Miller v. Schloss, 218 NY 400, 113 N.E. 337, Sharp v. Kosmalski, supra.

Respondent cites several cases, including Tordai v. Tordai, 109 AD2d 996, 486 N.Y.S.2d 802, where a daughter conveyed her one-half interest in property, jointly owned with her father to him, in reliance upon her father's promise to transfer the interest back at a later date. That case is distinguishable from the present case, insofar as in Tordai, the court specifically cited the fact that the daughter received no consideration for initially transferring her interest to her father, unlike the case before us. Likewise, respondents' reliance on Matter of Wieczorek, 196 AD2d 204, 587 N.Y.S.2d 755 is totally misplaced. The Wieczorek case involved parties who had been previously married and the court's imposition of a constructive trust on a residence, in favor of the husband, where the residence which was originally owned by the husband, had been previously conveyed by him to the wife for no consideration, solely to protect the property from the husband's business creditors. In the present case, the respondents transferred the premises and received approximately $600,000.00 consideration for the transfer. The court finds no unjust enrichment and therefore, no constructive trust.

The court award awards petitioner a judgment of possession, warrant of eviction with no stay. The issue of the amount of use and occupancy to be awarded to petitioner, covering the period from April 1, 2007 to the present are severed for a separate plenary hearing on the value of the monthly occupation . The parties are directed to appear for a pre-trial conference on.

February 16, 2012.

The foregoing constitutes the Decision and Order of the Court.

Dated: February 2, 2012

New Rochelle, New York