New York State Court of Claims

New York State Court of Claims

LOBEL FINANCIAL v. THE STATE OF NEW YORK, #2000-015-052, Claim No. 099833, Motion Nos. M-61627, CM-61743


Synopsis


A claim to recover for negligent conduct of the Department of Motor Vehicles in issuing a certificate of title omitting a lien holder accrues at the time the lien is impaired by the transfer of the vehicle to a third party.

Case Information

UID:
2000-015-052
Claimant(s):
LOBEL FINANCIAL CORP.
Claimant short name:
LOBEL FINANCIAL
Footnote (claimant name) :

Defendant(s):
THE STATE OF NEW YORK
Footnote (defendant name) :

Third-party claimant(s):

Third-party defendant(s):

Claim number(s):
099833
Motion number(s):
M-61627
Cross-motion number(s):
CM-61743
Judge:
FRANCIS T. COLLINS
Claimant's attorney:
Murphy, Burns, Barber & Murphy, LLPBy: Peter G. Barber, Esquire
Defendant's attorney:
Honorable Eliot Spitzer, Attorney General
By: Glenn C. King, EsquireStaff Attorney
Third-party defendant's attorney:

Signature date:
August 2, 2000
City:
Saratoga Springs
Comments:

Official citation:

Appellate results:

See also (multicaptioned case)



Decision


The motion of the defendant for an order dismissing the claim as barred by the time limitation set forth in Court of Claims Act § 10 (3) is granted. The cross-motion of the claimant for an order pursuant to Court of Claims Act § 10 (6) permitting the service and filing of a late claim is granted upon the condition that a claim in the form set forth in Exhibit A to the affidavit of Peter G. Barber sworn to May 17, 2000 be served and filed within sixty days of the date of this decision and order.

On May 22, 1995, claimant was assigned a retail installment contract and security agreement in the amount of $15,794.54 relating to the purchase of a 1992 Acura Legend automobile by Awilda and Timothy McCoy. On July 10, 1995, the Department of Motor Vehicles (DMV) issued a certificate of title listing Lobel as the lienholder for the Acura owned by Timothy McCoy. Claimant complied with 15 NYCRR 20.15 and 20.16 by submitting the required forms and fees establishing its status as a lienholder and by obtaining form MV-901 which confirmed that status. On March 18, 1996, DMV issued a new certificate of title identifying Awilda McCoy as the owner of the Acura Legend and omitting claimant as a lienholder. On June 25, 1998, Awilda McCoy used the new certificate of title to transfer ownership of the Acura to a dealer who in turn sold it to a third party on July 8, 1998. The McCoys continued to make the monthly payments on the loan until October of 1998. On November 23, 1998, after two monthly payments had been missed, the claimant contacted DMV and first learned of the issuance of the new certificate of title which omitted claimant's lien. This claim was personally served upon the Attorney General on February 17, 1999 and filed with the Clerk of the Court on the same date. Claimant filed a trial term note of issue and certificate of readiness on April 13, 2000 and the claim is scheduled to be tried on November 6, 2000.

The defendant moves for dismissal of the claim upon the ground that it was not served and filed within 90 days of accrual as required by Court of Claims Act § 10 (3). Defense counsel asserts that the cause of action accrued on March 18, 1996, the date DMV issued the certificate of title to Awilda McCoy without listing claimant as a lienholder. The Attorney General relies upon an unreported decision of Judge Benza in the case of Chrysler Credit Corporation v State of New York, Claim No. 84573, Motion No. M-48288, Cross-Motion No. CM-48411, Benza, J., in which Judge Benza held upon similar facts that the claim did not accrue at the time the injured party first discovered the negligent act of DMV. Claimant argues that even if a discovery rule is not to be applied in ascertaining the accrual date of the claim, it should be determined that the claim accrued no later than June 25, 1998 when the automobile was transferred by Awilda McCoy to a dealer as that was the date when claimant's security interest became impaired.

The Court agrees with Judge Benza's determination that a cause of action against the State for negligence on the part of DMV in issuing a certificate of title does not accrue at the time the injured party discovers the wrongdoing. In Marine Midland Bank v State of New York, 195 AD2d 871, the Third Department declined to make a determination of a specific event giving rise to the accrual of a claim of this nature but did comment that the Court was "unpersuaded" that the claim should be determined to have accrued at the time the lien was extinguished. At paragraph six of his affirmation of May 31, 2000, defense counsel points to the concurring opinion of Mr. Justice Pissuto in the case of Flushing Natl. Bank v State of New York, 210 AD2d 294, as rejecting the discovery rule and supporting a determination that the claim accrued at the time the property was transferred to a third party free and clear of the claimant's security interest. The Court finds the reasoning of Mr. Justice Pissuto to be compelling upon the issue of the accrual date of a claim of this nature since under the Court of Claims Act a claim accrues when damages are reasonably ascertainable (Arbor Hill Partners v New York State Commr. of Housing & Community Renewal, 267 AD2d 675; Augat v State of New York, 244 AD2d 835). When DMV issued the title on March 18, 1996 omitting claimant as a lienholder the claimant had not sustained any damage as steps could have been taken at that juncture to correct the omission. It was not until Awilda McCoy transferred the vehicle to the dealer on June 25, 1998 that claimant sustained damage by the loss of its security interest in the automobile. The Court holds that the claim accrued on June 25, 1998. Since claimant failed to serve a notice of intention to file a claim, or serve and file a claim, within 90 days of accrual as required by Court of Claims Act § 10 (3) the claim must be dismissed.

Turning to the cross-motion, claimant seeks summary judgment or, in the alternative, late claim relief. In view of the dismissal of the claim as untimely summary judgment in claimant's favor clearly is not available. However, the late claim application requires consideration by the Court. The most appealing result upon the facts contained in this motion record would be to simply award late claim relief nunc pro tunc so as to preserve the present claim. However, this Court is without the authority to grant nunc pro tunc late claim relief (Byrne v State of New York, 104 AD2d 782, 783; White v State of New York, 161 Misc 2d 938, 943). Therefore, if late claim relief is appropriate the claimant will have to begin this litigation anew by the filing and service of a new claim.

Subdivision 6 of section 10 of the Court of Claims Act permits this Court, if the applicable Statute of Limitations set forth in article 2 of the CPLR has not expired, to allow the filing of a late claim upon consideration of the following factors: "whether the delay in filing the claim was excusable; whether the state had notice of the essential facts constituting the claim; whether the state had an opportunity to investigate the circumstances underlying the claim; whether the claim appears to be meritorious; whether the failure to file or serve upon the attorney general a timely claim or to serve upon the attorney general a notice of intention resulted in substantial prejudice to the state; and, whether the claimant has any other available remedy".

This Court has broad discretion in deciding a motion to permit the late filing of a claim (Ledet v State of New York, 207 AD2d 965), and the statutory factors are not exhaustive or one factor controlling (Matter of Gavigan v State of New York, 176 AD2d 1117). The most important factor is whether the potential claim has merit, as it would be a futile exercise to permit litigation of a clearly baseless lawsuit (Savino v State of New York, 199 AD2d 254).

As the claim proceeds upon a negligence theory, and the Court has determined that it accrued on June 25, 1998, the late claim application is timely as the three year Statute of Limitations set forth in CPLR § 214 has not expired.

The excuse advanced for the delay in filing is that claimant complied with all of the legal requirements to secure and confirm its status as a lienholder and had no reason to believe that DMV failed to record its lien until the monthly payments stopped in October of 1998. The Court finds this excuse to be reasonable and that factor weighs in favor of granting the motion.

The intertwined issues of notice, opportunity to investigate and lack of prejudice will be considered together. The State's alleged negligent act is memorialized in the documents of DMV and the defendant will not be prejudiced if late claim relief is granted (Remley v State of New York, 174 Misc 2d 523, 524). The factors of notice, opportunity to investigate and lack of prejudice are in favor of granting the motion.

With respect to the issue of merit, the Third Department has held that the State of New York may be held liable upon a negligence theory when a DMV employee issues an erroneous certificate of title in performing his or her ministerial function (Ford Motor Credit Co. v State of New York, 133 AD2d 980). The proposed claim alleges such conduct and potential merit has been established.

As to the last factor, it appears that litigation in this Court is claimant's only avenue of recovery as the vehicle is now beyond claimant's reach and it appears that the McCoys are judgment proof.

A consideration of all of the factors, especially the demonstration of potential merit, leads the Court to grant the motion.


August 2, 2000
Saratoga Springs, New York

HON. FRANCIS T. COLLINS
Judge of the Court of Claims


The Court considered the following papers:
  1. Notice of motion dated April 28, 2000;
  2. Affirmation of Glenn C. King dated April 28, 2000, with exhibit;
  3. Notice of cross-motion dated May 17, 2000;
  4. Affidavit of Gary Dean Lobel sworn to May 12, 2000, with exhibits;
  5. Affidavit of Peter G. Barber sworn to May 17, 2000, with exhibits;
  6. Affirmation in opposition to the cross-motion of Glenn C. King dated May 31, 2000;
  7. Reply affidavit of Peter G. Barber sworn to June 6, 2000.