New York State Court of Claims

New York State Court of Claims

FOUR M v. THE STATE OF NEW YORK, #2001-015-547, Claim No. 101273


After trial Court dismissed claim seeking to recover damages from State stemming from issuance of title to motor vehicle without proof of lien. Court held that DMV's decision to issue title upon presentation of lien release letter was exercise of governmental discretion for which State is immune

Case Information

Claimant short name:
Footnote (claimant name) :

Footnote (defendant name) :

Third-party claimant(s):

Third-party defendant(s):

Claim number(s):
Motion number(s):

Cross-motion number(s):

Claimant's attorney:
Anthony M. Miranda, Esquire
Defendant's attorney:
Honorable Eliot Spitzer, Attorney General
By: Kathleen M. Resnick, EsquireAssistant Attorney General
Third-party defendant's attorney:

Signature date:
December 20, 2001
Saratoga Springs

Official citation:

Appellate results:

See also (multicaptioned case)

A trial resulting in a judgment determining liability and awarding damages against claimant in the amount of $25,413.36 including attorney's fees and disbursements occurred in Supreme Court on October 15, 1997 in connection with claimant's sale of a motor vehicle to Richard G. Green, Sr. Claimant herein seeks to recoup that money.

The claim alleges negligence on the part of the Department of Motor Vehicles (DMV) in releasing a previously recorded lien and issuing a new certificate of title for a 1993 Jeep Cherokee, VIN # IJ4GZ58S4PC665557. Claimant alleges that a letter purporting to release the lien presented to DMV by the vehicle's then titled owner was facially defective and that the actions of DMV's employees in issuing the new certificate of title with the lien removed failed to conform to the Department's published vehicle titling requirements. Claimant seeks to recover the sum of $25,413.36 including attorneys fees and disbursements paid by claimant in satisfaction of a judgment obtained by a subsequent purchaser of the vehicle (Richard G. Green, Sr.) from whom it was repossessed by the lien holder (Arcadia Financial Ltd.) in a separate action in Supreme Court.

The following underlying facts were not disputed at trial: On January 4, 1997 Antwan Anderson purchased a 1993 Jeep Cherokee, VIN # IJ4GZ58S4PC665557, from Master Motors of Buffalo, New York (Master). Anderson made a down payment of $2,500.00 and financed the remainder of the purchase price ($18,119.20) through an installment payment contract with Arcadia Financial LTD (Arcadia). Arcadia perfected its security interest in the vehicle by filing a lien and notifying the New York State Department of Motor Vehicles which duly noted the lien on a Certificate of Title on February 20, 1997
. Anderson made payments on the vehicle in February and March 1997. On February 11, 1997 Anderson submitted to DMV a document purporting to be a letter dated February 11, 1997 on Arcadia's letterhead releasing the lien on the subject vehicle, indicating that the security contract was paid in full on February 11, 1997 and further stating that "[t]he original MV. 901 was either lost or never received". The letter appeared to be signed by Cheri S. McTernan on behalf of Arcadia's "Administrative Department". Below the signature line the name Cheri L. McTernan was printed. On March 4, 1997 DMV issued a new certificate of title without Arcadia's lien noted thereon.
Anderson then sold the vehicle to claimant Four M Sales on March 14, 1997. In doing so he presented the newly issued certificate of title which indicated that there were no liens of record. It is alleged that prior to purchasing the vehicle claimant Four M examined the newly issued title and contacted DMV by telephone, where an employee named Mike informed claimant's President that there were no liens of record against the vehicle. On April 21, 1997 claimant in turn sold the vehicle to Richard G. Green, Sr. (Green) who financed his purchase through Pentagon Federal Credit Union (Pentagon).

Since Anderson had defaulted on his payments after March 1997 Arcadia's (the initial lien holder) agent repossessed the vehicle on June 13, 1997 from Green who thereafter commenced an action in Supreme Court, Erie County, against Arcadia and the claimant. Arcadia in turn commenced a third party action against Anderson, Pentagon, Master and DMV. The action against DMV was dismissed by the Supreme Court for lack of jurisdiction.

Thereafter, the Honorable Joseph D. Mintz, J.S.C. determined that Arcadia's lien was a valid, perfected purchase money security interest entitling Arcadia to possession of the vehicle and directed Green, who had previously been awarded temporary possession of the vehicle, to return the vehicle to Arcadia. Justice Mintz held that claimant had purchased the vehicle subject to Arcadia's lien despite both Green's and Four M's lack of notice and ordered Four M to pay Green $1,699.68, the amount Green had paid Pentagon under Green's installment loan agreement. The Court further ordered claimant to pay Pentagon $14,641.96, the amount owed Pentagon by Green as of November 12, 1997. This figure included $1,805.80 in attorney's fees paid by Pentagon in defending the Supreme Court action plus interest of $2.81 per day from November 13, 1997 through entry of the order and judgment and at the rate of 9% per annum thereafter until the judgment amounts were paid in full.

Claimant appealed to the Appellate Division, Fourth Department, which affirmed the order and judgment of the trial court on May 7, 1999. A motion for leave to appeal to the Court of Appeals was denied by order of that Court dated August 31, 1999. The instant claim was filed on October 21, 1999.

At the start of the trial the parties stipulated to the receipt in evidence of claimant's Exhibits 1 - 10 and defendant's Exhibits A through C which are described in Appendix A to this decision.

Claimant then offered the testimony of Michael V. Miranda who identified himself as the President of Four M Sales which he described as a business engaged in the purchase and sale of used motor vehicles. The witness described his duties as administrative in nature including the review of all financing transactions for Four M. He also testified that he was personally familiar with DMV procedures for the titling, recording and releasing of motor vehicle liens. He alleged that he, along with a salesman identified as Randy Gezewski, purchased the subject vehicle from Antwan Anderson and that as part of that process Anderson produced a certificate of title which the witness examined noting that no lien against the vehicle was listed. The witness testified that as part of the purchase process he called the Department of Motor Vehicles and spoke to an employee identified only as Mike who allegedly told the witness there were no recorded liens against the vehicle[1]
. The witness then offered testimony, best described as speculation and legal argument, regarding DMV procedures with regard to the release of a previously recorded lien and what he perceived to be deficiencies and ambiguities in the letter presented to DMV which purportedly memorialized the release of Arcadia's lien. These will be discussed further below in connection with the testimony of DMV employee Rose Ann Harris.
On cross-examination the witness detailed his understanding of the chain of ownership of the vehicle and approximated the successive selling prices paid by each of the vehicle's buyers, namely, Anderson, Four M and Green. Miranda admitted that he did not know Anderson prior to Four M's purchase of the vehicle and that although he had heard of Arcadia Financial prior to March 1997 he was not familiar with any of its employees, including Cheri McTernan, whose signature was contained on the letter acknowledging the satisfaction of Arcadia's security interest in the vehicle. The witness testified that in the Fall of 1997 he was contacted by the Probation Department and was informed that Antwan Anderson had been convicted of [mail] fraud in connection with this matter[2]
but Miranda could not recall if he was asked to estimate Four M's loss resulting from this transaction. The witness acknowledged his awareness of a criminal judgment entered against Antwan Anderson in the United States District Court for the Western District of New York (Defendant's Exhibit B) and of its restitution paragraph ordering Anderson to repay Four M Sales, Inc. the sum of $9,000.00. Miranda could not recall having supplied that figure to the sentencing court but admitted that he never requested the Court to adjust the amount set forth in the judgment to approximate the amount sought by Four M in this claim. He testified that Four M has been receiving restitution checks from Anderson; that Four M has not otherwise received compensation for this loss and acknowledged that Four M never commenced a civil action against Anderson.
Claimant's second witness, Michael Williamson, testified that in 1997 he was Arcadia's buying center manager based in Minneapolis, MN. and described Arcadia as a business which buys retail sales agreements from car dealers. Williamson testified regarding his awareness of Richard Green's lawsuit and, without objection having been made, testified to a conversation with an unspecified FBI agent who told him that Antwan Anderson was involved in [mail] fraud[3]
. Williamson indicated that he had seen the letter (Exhibit A), purportedly from Arcadia, stating that the company's security interest had been paid in full on February 11, 1997 and was asked whether the letter was legitimate. Williamson testified that the letter was not an original and that Arcadia had never employed an individual named Cheri McTernan.
He testified further that the form of the letter was not the same or identical to the form used by Arcadia in 1997; that Arcadia did not have an "Administrative Department;" and that Arcadia Financial Ltd. did not use its "Ltd" designation in transacting business in New York State. He further alleged that an officer of the bank had to sign a release of collateral and that the letter issued would be computer generated, uniform in its typeface. The witness pointed out that the printed name on the form did not match the signature because the middle initials were not the same. He also testified that although the letter indicated on its face that "[t]he original MV.901 was either lost or never received" by Arcadia such statement was false since the original MV-901 was located at the home office in Minneapolis. The defendant did not cross-examine this witness.

The claimant's third and final witness was Rose Ann Harris, a 17 year DMV employee who works as Head Clerk of the Title Bureau, the unit of DMV responsible for issuing certificates of title and coordinating the release of security liens on motor vehicles. She testified that she had been employed in the Title Bureau for 3 ½ years. As Head Clerk in the Title Bureau she oversees a unit that perfects and satisfies liens, registers vehicle titles and issues certificates of title. She described the application for a new or different certificate of title which involves form MV-82. The application must be completed and accompanied by the most current certificate of title. That process entails the use of form MV-900 which is submitted by a dealer or a lending institution and must contain the name and address of the lending institution and a proper description of the vehicle. Harris testified that the Title Bureau has written guidelines which provide that certain documentation is required to prove release of an existing lien of record and that the application may be rejected if the examiner determines that the submitted documents are inadequate. Such documents often include a letter of lien satisfaction. She alleged that if such a letter were found to be questionable the application for a title would usually be rejected. She testified that no DMV rule or guideline requires an examiner to contact a lender regarding a questionable document. The witness equivocated in response to a question as to whether DMV could call up a prior lien satisfaction letter from a particular lender for comparison purposes. At one point she indicated that DMV did not have that capacity but later testified that while it was possible it was not required. She stated that the purpose of examining letters of lien satisfaction was to insure that all necessary information was provided and that the document was not fraudulent. She described in detail DMV's lien satisfaction procedure guidelines (Claimant's Exhibit 8) and then applied those guidelines[4]
to Exhibit A. The witness testified that the letter in question set forth the borrower's names (although it was misspelled); provided the vehicle's VIN, year and make; indicated a date of release (February 11, 1997); contained what appeared to be an original signature of an individual in the corporate administrative department. Harris stated that facsimile and photocopies of forms are often submitted to and accepted by DMV and that typographical errors such as the misspelling of the borrower's name and a different middle initial of the purported signer are not uncommon and in this instance did not mandate rejection of the request for a new certificate of title. Nor was the Minnesota address on the letterhead alarming since, according to the witness, corporations often have multi-state offices handling different aspects of the company's business. The witness testified that DMV processes over 500,000 lien releases each year with one-half of those being in the form of lien release letters. She indicated that DMV does not investigate possible fraudulent lien releases and averred she was unaware of any alleged rule preventing the processing of a lien release letter request containing more than a single error.
At the conclusion of the witness' testimony the claimant rested. The defense then asked the Court to take judicial notice of 18 USC § § 3663A and 3664 and 18 USC § § 3612 and 3613. The Court agreed to do so with relevancy, if any, to be determined. The defendant moved on the record to dismiss the claim for claimant's failure to prove a prima facie case. The Court reserved decision and now grants the motion.

The law is well established that the State is immune from liability for consequences attendant to the actions of its employees which are discretionary or quasi-judicial in nature (
Abruzzo v State of New York, 84 AD2d 876). "[W]hen official action involves the exercise of discretion, the officer is not liable for the injurious consequences of that action even if resulting from negligence or malice. Conversely, when the action is exclusively ministerial, the officer will be liable if it is otherwise tortious" (Tango v Tulevech, 61 NY2d 34, 40). The primary distinction to be made is whether the public employee's actions involve the exercise of reasoned judgment or adherence to a governing rule which requires a compulsory result (Lauer v City of New York, 95 NY2d 95). The determination as to whether immunity will attach is dependent upon "an analysis of the functions and duties of the actor's particular position and whether they inherently entail the exercise of some discretion and judgment" (Davis v State of New York, 257 AD2d 112, 115; quoting Mon v City of New York, 78 NY2d 309, 313).
Ford Motor Credit Co. v State of New York, 133 AD2d 980, the Third Department considered governmental immunity within the context of actions by State employees in issuing and processing certificates of title. While the Court recognized the discretionary nature of determinations concerning whether a certificate of title should be issued, it found that the failure in that case to issue the certificate to the vehicle owner as required by statute and departmental regulations was ministerial and, therefore, actionable. In this case the claimant does not argue that the letter of lien satisfaction was incomplete or failed to include the information required under applicable office procedure guidelines. Instead, the claim asserts that in reviewing the proffered letter the defendant's employees failed to discover what claimant asserts constitutes indicia of inauthenticity. On these facts the determination as to whether the letter of lien satisfaction was authentic is clearly not ministerial in nature but, rather, is dependent upon the exercise of reasoned judgment. The authenticity of a document offered for filing will be judged differently depending upon the individual performing the function and his or her weighing of the nature and extent of any errors or inconsistencies. The decision to accept the letter of lien satisfaction and issue a new certificate of title is, therefore, the sort of action to which governmental immunity attaches and may not form the basis for a finding of liability against the State.
Nor did
the State assume a special duty to Four M when one of its employees allegedly verified by telephone that no lien of record existed on the vehicle (see, White v Guarente, 43 NY2d 356; International Products Co. v Erie R.R. Co., 244 NY 331). The information supplied was accurate since the lien had been removed based on the fraudulent action of a third party. Absent such a duty, no cause of action will lie against a public entity for the performance of a governmental function (Lauer v City of New York, supra; Southworth v State of New York, 47 NY2d 874). To paraphrase Judge Weisberg's observation in Chung v State of New York, 122 Misc 2d 676, 678-679, "[t]he [titling] requirements of the Vehicle and Traffic Law are designed for the protection of the general public and do not give rise to a special duty to specific individuals. Even if negligent, the State cannot be held liable for the administration and enforcement of its [titling] obligations." Judge Weisberg also determined in Chung, supra that the claimant's injury was proximately caused not by the State's action but rather by the misstatements of the registrant of the vehicle. Here the claimant's injury was proximately caused by the criminal fraud of Antwan Anderson in submitting the fraudulent letter of lien release and not any actionable negligence by the defendant's employees. Claimant may not recover against the State and the defendant's motion to dismiss the claim is, therefore, granted.
The Clerk shall enter a judgment in conformity with this decision.

December 20, 2001
Saratoga Springs, New York

Judge of the Court of Claims

Claimant's Exhibits
  1. Certificate of Title issued 3/4/97
  2. Notice of Recorded Lien
  3. Certificate of Title issued 2/20/97
  4. Memorandum Decision dated 10/15/97
  5. Order and Judgment filed 12/5/97
  6. Retail Certificate of Sale dated 4/21/97
  7. Registration Application
  8. Vehicle Titling Requirements
  9. Satisfaction of Judgment to Green
  10. Satisfaction of Judgment dated 12/1/99

Defendant's Exhibits

  1. Lien Release Letter dated 2/11/97
  2. Judgment and Commitment Order
  3. Restitution Accounting/Antwan Anderson

[1]Much of this witness' testimony consisted of hearsay evidence to which no objections were made at trial.
[2]See footnote 1.
[3]See footnote 1.
[4]It appears to the Court that the examining procedure guidelines allow for the alternative use of a MV-901 or a letter of lien satisfaction (see Exhibit 8's concluding paragraph).