Court finds issues of fact precluded a finding that any of the parties were entitled to a distribution from the amounts on deposit pursuant to Eminent Domain Procedure Law section 304. The major issue is the validity of a "correction deed." Disclosure was ordered.
|Claimant(s):||ZACHARY DOUFEKIAS and SHIRIN KERMANSHAHCHI, Petitioners|
|Claimant short name:||KERMANSHAHCHI|
|Footnote (claimant name) :|
|Defendant(s):||THOMAS P. DiNAPOLI, as Comptroller of the State of New York, et. al., Respondents|
|Footnote (defendant name) :|
|Claim number(s):||SP-124, SP-125|
|Cross-motion number(s):||CM-76025, CM-76026|
|Judge:||STEPHEN J. MIGNANO|
|Claimant's attorney:||see Appendix 1|
|Third-party defendant's attorney:|
|Signature date:||September 2, 2009|
|See also (multicaptioned case)|
The first of these two related proceedings (SP-124) seeking the distribution of funds deposited by the State of New York pursuant to Eminent Domain Procedure Law section 304(E) was brought by way of Petition and Order to Show Cause by Zachary Doufekias. Doufekias alleges that he is the fee owner of premises appropriated by the State of New York (1) pursuant to Section 30 of the Highway Law and the Eminent Domain Procedure Law consisting of approximately 1.188 acres as identified on acquisition Map No. 229, Parcel No. 252, filed in the office of the County Clerk of Orange County on September 19, 2002.
Doufekias further alleges that he has agreed to accept the sum of $84,600.00 as just compensation for the appropriated property and that the State of New York, maintaining that other parties may have had an interest in the property, has deposited said sum in Eminent Domain Account No. W057810 pending determination of who is entitled to the funds. (2)
Doufekias claims fee title as the grantee of a deed dated October 26, 1999 from Norman Kermanshahchi, recorded in the office of the Orange County Clerk on November 8, 1999.
Vida Kermanshahchi, opposing the Petition, claims that the deed from Norman Kermanshahchi was the final link in a "defective chain of title," that "Doufekias is not the rightful owner"of the property and that she in fact is "the rightful and lawful owner of a 25% interest" in the subject property (Verified Answer and Counterclaim of Vida Kermanshahchi dated December 16, 2008, ¶¶ 77, 73, 79), and she requests, by way of Cross-Motion, that the Comptroller be directed to pay her the sum of $21,150.00 (25% of the amount deposited) plus accrued interest.
Sharona Kermanshahchi also objects to the relief requested by Doufekias, also claims that she was the rightful owner of a portion of the property, and asserts that discovery proceedings are necessary before the court can make any determination of title to the property prior to the appropriation and entitlement to the deposited proceeds.
Shirin Kermanshahchi has filed an Answer in which she demands that the petition be dismissed and she also requests that the Cross-Motion of Vida Kermanshahchi be denied.
* * *
Shirin Kermanshahchi is also the Petitioner in the second proceeding (SP-125) as the reputed owner of two parcels adjacent to the Doufekias parcel (separated by Stone Castle Road). This proceeding arises out of two appropriations -Map No. 243, Parcel No. 266 (approximately 8.529 acres), and Map No. 231, Parcel No. 254 (0.256 acres) - which resulted in deposits in Eminent Domain Accounts of $280,000.00 and $8,600.00 respectively. In contrast to the Doufekias taking, Shirin Kermanshahchi did not agree to accept the State's offers and has filed a claim for damages that is currently pending before a different judge of this court. (3)
Shirin Kermanshahchi also requests that the court consolidate the two special proceedings on the grounds that they involve adjoining parcels and present common questions of law and fact and that consolidation will promote judicial economy and avoid the possibility of inconsistent results.
Vida Kermanshahchi requests that the court deny the Petition of Shirin Kermanshahchi, asserts that she had a 25% ownership interest in these two parcels and is thus entitled to 25% of the deposited funds, and requests that the court "allow discovery to clarify the facts as to the holding of title" (Affidavit of Robert P. Cusumano, Esq, dated April 13, 2009, ¶ 20).
Sharona Kermanshahchi's position in the second proceeding is the same as in the first: she asserts an ownership interest in the property, submits that discovery needs to be conducted and asks the court to deny the Petition pending a hearing on all contested issues.
The transactions underlying the claims of the parties to these proceedings are complex and vigorously contested. These transactions are described in the affidavits of Heshmatollah Kermanshahchi, dated December 15, 2008, and his brother Norman Kermanshahchi, dated April 13, 2009.
Allegations of Heshmatollah Kermanshahchi
Heshmatollah states he was the owner of an Iranian business that, by 1970, was the largest food production firm in Iran. He alleges that he provided for the education and support of his three brothers, Norman, Rouhi and Iraj, and that during the 1950's, he gave each brother a share of the family business. Norman Kermanshahchi married an Iranian-American woman and traveled to the State of New York where he stayed for lengthy periods with his brother-in-law, Sol Tour, a real estate broker. During the late 1960's and early 1970's, the family business made a number of real estate investments in Orange County with the assistance of Tour.
In 1974, Heshmatollah was asked by Tour and Norman to purchase additional real property from Tour. Although he states he was reluctant to do so, he eventually "relented" and expended approximately $2 million to purchase the acreage from Tour. He decided to place formal ownership of the property in the name of his wife Bahie Kashefi, believing that she would be a good trustee for other family members, (4) and such was accomplished via a deed from Sol Tour to Bahie Kashefi dated April 15, 1974, covering nine separate parcels totaling 210.832 acres, recorded in the office of the Orange County Clerk on May 2, 1974 at Liber 1976, Page 855 (Verified Answer and Counterclaim of Vida Kermanshahchi in SP-124, exhibit A).
Heshmatollah states that during 1975, he concluded that it would be advisable to transfer some of the acreage directly to the family's next generation, and he requested his wife to convey 200 acres to his daughter, Vida, and three of her cousins: Paul, the son of Heshmatollah's brother Rouhi, Shirin, the daughter of his brother Norman, and Sharona, the daughter of his brother Iraj (the "Four Cousins"). This was accomplished via a deed from Ms. Kashefi to Paul, Vida, Shirin and Sharona dated November 6, 1975 and recorded in the office of the Orange County Clerk on January 13, 1976 at Liber 2026, Page 1104 (Id., Exhibit B). (5)
Heshmatollah further states that both before and after the transfer of the property to the Four Cousins, it was managed by Norman Kermanshahchi and Tour, who would account to him from time to time concerning income, mortgage payments and taxes.
Anticipating the fall of the Iranian government, the Kermanshahchi family fled Iran in 1978, with Heshmatollah and his family settling in Los Angeles and Norman settling in New York.
In 1979, Norman informed Heshmatollah that he needed to sell a portion of the property to raise funds and allegedly "convinced" Heshmatollah that, in order to effectively manage the property for the benefit of the family, it would be best to transfer the property directly to Norman. Heshmatollah states that Norman told him that if he were given legal title, he would hold the property in trust for the benefit of the Four Cousins. In August 1979, an attorney representing Norman wrote to Heshmatollah advising that, since two of the owners of the property, Vida and Sharona, were minors, transfer of the property would "require the authorization of the Court in your area for you to execute a Deed on behalf of Vida and for your brother to execute a Deed on behalf of Sharona" (Id., Exhibit C). Such deeds were never executed. Instead, Norman's attorney devised an alternate plan for transfer of the property. In a November 16, 1979 letter to Norman, the attorney wrote: "I have discussed this matter with the title insurance company which is insuring the title for the purchaser, Messina. They suggested that we have this deed run to Paul who is no longer a minor and then we can have the whole property transferred to you or whomever you designate" (Id., Exhibit D). The attorney enclosed "a correction deed to be signed by Bahie Kashefi" (id.).
This "Correction Deed," in which the original property (6) is purportedly conveyed by Ms. Kashefi to Paul Kermanshahchi, is dated December 18, 1979 and was recorded in the office of the Orange County Clerk on December 31, 1979 at Liber 2153, Pages 945 - 951 (Id., Exhibit E). In a deed dated December 20, 1979, two days later, Paul Kermanshahchi transferred the property to Norman Kermanshahchi via a deed also recorded on December 31, 1979 at Liber 2153, Pages 952-958; i.e., simultaneously with the "Correction Deed" (Id., Exhibit F). Thus did Norman Kermanshahchi ostensibly acquire sole title to the original 200 acre parcel that was deeded to the Four Cousins in 1975?
Heshmatollah alleges that, around the time of these conveyances, his brother Norman gave him a letter stating "this is to certify to you that I only own 25% of the property and each of you own 25%. I am holding this property in trust for all of you" (Id., Exhibit G). It is unclear who wrote this letter or to whom or when it was written. It is addressed to "__________ Kermanshahchi, __________ Kermanshahchi, and __________ Kermanshahchi,"(the blanks are not filled in), and it bears an illegible signature with no name typed under it. It appears that the Kermanshahchi name was misspelled in this document as well as in the Correction Deed.
Heshmatollah states that the first time he had an indication that something might be amiss was when his daughter, Vida, was contacted by an investigator about a year ago. Heshmatollah further states he contacted his brother Rouhi and asked him to contact Norman and request a "statement of account" and Norman responded that he did not have to give a statement to anyone.
Vida Kermanshahchi states that she was unaware that she may have had an ownership interest in any property in Orange County, New York until she received a telephone call from an investigator in 2007 or 2008. She was unaware of the Correction Deed, which supposedly divested her of her 25% interest in the original property, which includes the property taken by the State, and maintains that the Correction Deed is a nullity and that she is entitled to 25% of the proceeds from the condemnations.
Allegations of Norman Kermanshahchi
Like his brother Heshmatollah, Norman Kermanshahchi is not a party to these proceedings, but was nevertheless a major participant in the transactions underlying the controversies currently before the court. He traces Doufekias's claim to the funds that are the subject of SP-124 as follows:
1. April 15, 1974 deed from Sol Tour to Bahie Kashefi.;
2. November 6, 1975 deed from Kashefi to the Four Cousins;
3. December 18, 1979 deed from Kashefi to Paul Kermanshahchi (the Correction Deed);
4. December 20, 1979 deed from Paul Kermanshahchi to Norman Kermanshahchi;
5. October 26, 1999 deed from Norman Kermanshahchi to Doufekias. (7)
Norman maintains that the reason for the Correction Deed was that Heshmatollah and his wife were told of the "proper procedure" for transferring the land (involving a court approved transfer by the three minor grantees on the 1975 deed), that they "ignored" that procedure, that Norman's attorney proposed the alternative procedure of executing a correction deed, that Norman relied on the advice of his attorney and title insurance company that such a procedure was proper and that Heshmatollah and his wife concealed the fact that the property had been transferred from their daughter. Referring to the letter that Heshmatollah alleges Norman gave him - stating that Norman agrees that he only owns 25% of the property and is holding it in trust - Norman alleges that the letter is not authentic, that he neither wrote it nor caused it to be written and that he neither signed it nor caused his signature to be placed on it.
With respect to Sharona's opposition to the requested relief, Norman maintains that Sharona signed a General Release running in favor of him and his daughter Shirin that precludes any claim against either of them. That document contains three pages. On the first, undated, page, four members of the Kermanshahchi family, three of whom are otherwise unidentified in any of the papers before the court (8) are named as releasors along with Sharona, whose name is typed in a different font than the others. Page two consists solely of five signatures dated February 28, 2003, including Sharona Kermanshahchi and Sharad Kermanshahchi. Page three is a California All-Purpose Acknowledgment in which notary Sharad Kerman states that Sharona Kermanshahchi appeared before him on April 17, 2007 and acknowledged that her signature on the 2003 release was genuine. The document appears to refer to a transfer from Norman to Sharona and the four others of a 13.7 acre parcel in exchange for a general release of any claim against him, with specific approval of all actions taken by Norman with respect to "the above and all other parcels on the same Stone Castle Road" (Exhibit L to Affidavit of Norman Kermanshahchi dated April 13, 2009).
In addition to arguing that Sharona's claims are foreclosed by the General Release, Norman maintains that Vida and Sharona should be barred from challenging the Correction Deed under the doctrines of equitable estoppel and unclean hands and that the statute of limitations has run on any such challenge. While Norman's positions on these issues are not directly germane, since he is not a party to any proceeding before this court, his contentions are echoed in the positions of some of the parties.
Summary of Parties' Positions
It bears restating at this point that the sole issue before the court, in each of these special proceedings, is the distribution of the funds on deposit in the three eminent domain accounts arising from the two subject takings. In both proceedings, the ostensible fee owner claims entitlement to the funds which in both cases is challenged by Vida and Sharona Kermanshahchi each claiming entitlement to 25% of all three accounts. In both cases, the alleged weak link in the chain of title is the 1979 Correction Deed.
Zachary Doufekias maintains that he acquired good title in 1999. He argues that the claims of Vida and Sharona are barred by equitable estoppel, estoppel by deed and laches. He questions the actions of both Heshmatollah and Norman Kermanshahchi and suggests Vida's and Sharona's claims should be asserted against them and argues that Vida should not now be allowed to dispute transactions in which her parents were key players, implicit in which is the position that the actions of the parents may be held against the minor child for the purpose of applying legal principles such as equitable estoppel, clean hands and laches.
Doufekias also contends that, in any event, any claim by Vida or Sharona to the subject funds has long been extinguished by operation of CPLR 208, providing for an extension of the statute of limitation for a cause of action accruing on behalf of an infant until three years after the infant attains majority.
Vida Kermanshahchi maintains that the Correction Deed, a necessary link in the respective chains of title running to the petitioners, was a nullity because it did not correct any mistake but rather purported to take property from her, without her knowledge or consent, while she was a minor. She thus disputes the claims of Doufekias and Shirin to ownership as of the takings dates and claims entitlement to 25% of the proceeds based on her 25% ownership under the 1975 deed. Her position is that she was simply the owner of a 25% interest in property at the time of the takings and that no statute of limitations on any cause of action ever began to run, other than that measured from service on her of a notice of taking.
Shirin Kermanshahchi, in addition to agreeing with Doufekias's arguments, contends that the Correction Deed was "not a correction deed at all, but a substantive transfer of title," (Memorandum of Law dated April 15, 2009) intended not to correct a mistake but to divest Vida and Sharona of title, with Vida's mother and father being among the primary participants. She contends that the plain language of the deed was to transfer title from Vida and Sharona and that the court should hold, notwithstanding any law that may be applicable to correction deeds, that the document was simply a valid deed.
Sharona Kermanshahchi maintains that she never executed a deed transferring her 25% interest in the subject property, she is entitled to 25% of the proceeds, notes that the deeds under discussion refer to several parcels of land and states that the parcel conveyed to Doufekias was part of parcel IV and that "[d]iscovery needs to occur in order to depose Norman Kermanshahchi and determine how Parcel IV was broken up and title conveyed (Affidavit in Opposition of Sharona Kermanshahchi [SP-124], ¶ 6).
"The Eminent Domain Procedure Law confers upon the Court of Claims jurisdiction to determine not only the value of the appropriated property, but also to resolve conflicts of title and order the distribution of an award or fund resulting from the acquisition of property by the State of New York (EDPL 501, subd [A]; 505). The EDPL provisions were intended to avoid prolonged and duplicative litigation in the Court of Claims and Supreme Court over title interests in the property, and conflicting claims to the proceeds of an appropriation (Cf. L-C Security Serv. Corp. v State of New York, 107 Misc 2d 433)."
City of Syracuse v State of New York (121 Misc 2d 8, 10). Title interests or liens existing on the date of an eminent domain taking are extinguished as of the date of the taking and preserved as claims against the proceeds. It is the burden of each of the parties making a claim in these two proceedings to establish their entitlement to the funds.
The claims of the petitioners in both cases are based upon the deed executed by Bahie Kashefi in 1979, purportedly transferring to Paul Kermanshahchi title to the same property she had transferred to Paul and his three cousins four years earlier, utilizing a "correction deed" to correct a purported "mistake made in the names" of the grantees. Typically, a correction deed is utilized to correct a mutual mistake as to a parcel's description, and in such cases the description of the property conveyed by the correction deed will prevail (Builder's Mortg. Co. v Berkowitz, 134 App Div 136 [2d Dept 1909]). However a correction deed that purports to reduce a grantee's interest is not valid, "without any indicia that the grantee accepted the deed diminishing the property rights obtained by reason of the first deed" (Knapp v Hughes, 25 AD3d 886, 889 [3d dept 2006]; see also Cruz v Cruz, 37 AD3d 754 [2d Dept 2007]). "Ordinarily a deed is wholly inoperative as a conveyance where the grantor has previously conveyed away his entire title. 'Where the grantor has divested himself of title, although by mistake he has not conveyed the title in the way in which he intended, he cannot by a subsequent conveyance correct his mistake, there being no title remaining in him to convey, unless in a case where the conveyance has been rescinded or canceled by a mutual consent of the parties.' 18 C. J. 218." (Reid v Reid, 230 Ky 835 ; see also Kirkpatrick v Ault, 177 Kan 552 ; C.J.S. Deeds § 43).
There is no indication that all of the parties to the deeds were in agreement that a mistake had been made in 1975 and that the 1979 deed (with Paul as sole owner) accurately reflected the parties' intent and the 1975 deed (with Vida, Sharona and Shirin each owning 25%) did not. A subsequent decision by a grantor that she did the wrong thing and wants to rectify her mistake is not the type of mutual mistake upon which a correction deed may be based.
Whether application of the principles of equitable estoppel, estoppel by deed, laches or unclean hands could be applicable herein is a determination that cannot be made on the limited record currently before the court. Of particular concern in this regard is the application of such principles against a person based on the conduct of other persons (parents).
There are suggestions in some of the documentation (i.e., the General Release executed by Sharona) that perhaps there was a division of the original 200-acre property among the various family members, but no proof that such occurred.
On the current record, the court is unable to resolve the many disputed issues of fact necessary to a determination of the distribution of the funds. No party has established, on this record, entitlement to a distribution from the subject accounts. It is apparent that disclosure proceedings, and quite possibly a trial, are necessary to uncover the relevant facts.
Accordingly, the parties are directed to appear before the court on October 13, 2009 at 11:00 a.m., at which time a disclosure schedule shall be set. No later than 10 days prior to such date, each party shall serve on all opposing parties, and file with chambers, appropriate demands for disclosure, including document disclosure and depositions. Any party objecting to any disclosure request shall do so in writing, to be received by opposing counsel and the court, no later than October 9, 2009. The application for consolidation of these two special proceedings is granted only to the limited extent that disclosure shall proceed jointly, with the issue to be revisited at the conclusion of disclosure.
September 2, 2009
White Plains, New York
STEPHEN J. MIGNANO
Judge of the Court of Claims
For Zachary Doufekias: Montalbano, Condon & Frank, P.C. by Brian J. Quinn, Esq.
For the State of New York: Andrew M. Cuomo, Attorney General by Martin Rowley, AAG
For Vida Kermanshahchi: Reavis Parent Lehrer, P.C. by Mark H. Moore, Esq., and Levine & Levine, P.C. by Robert P. Cusumano, Esq.
For Sharona Kermanshahchi: Marcia E. Fokas, Esq.
For Shirin Kermanshahchi: Marc E. Elliott, P.C.
2. Papers considered:
Order to Show Cause, Petition of Zachary Doufekias (by counsel) and Exhibits
Verified Answer of the State of New York
Verified Answer and Counterclaim of Vida Kermanshahchi with Exhibits
Notice of Cross-Motion (CM-76025) of Vida Kermanshahchi, Affidavits and Exhibits
Memorandum of Law of Vida Kermanshahchi
Affidavit in Opposition of Sharona Kermanshahchi and Exhibits
Affidavit in Opposition of Norman Kermanshahchi
Verified Answer of Shirin Kermanshahchi
Memorandum of Law of Shirin Kermanshahchi in Opposition to Cross-Motion
Affidavit in Opposition of Shirin Kermanshahchi and Exhibits
Petitioner's Verified Reply to Counterclaim
Petitioner's Reply Affidavit and Affirmation and Exhibits
Petitioner's Memorandum of Law
Letter from Marc E. Elliott, Esq. dated April 28, 2009
Reply Affidavit of Robert Cusumano, Esq., counsel for Vida Kermanshahchi
Order to Show Cause, Petition of Shirin Kermanshahchi and Exhibits
Verified Answer of the State of New York
Notice of Cross-Motion (CM-76547) of Vida Kermanshahchi, Affidavits and Exhibits
Affidavit in Opposition of Sharona Kermanshahchi
Petitioner's Reply Affirmation and Exhibits
Reply Affidavit of Robert Cusumano, Esq., counsel for Vida Kermanshahchi
1. Cochecton Turnpike, Part 2, S.H. No 43 (a/k/a Route 17K).
2. Doufekias's Petition alleges that the deposit was made on October 8, 2002.
3. Vida has also filed a claim for damages arising out of the underlying appropriation.
4. Heshmatollah explains as follows: "Neither I nor my other family members were particularly precise about drawing up legal documents delineating the ownership of our assets and properties. . . In Iran, it was considered impolite and disruptive of family relations to enter into formal contracts among family members. The head of a family, like me, had absolute control over family property, and would dispose of it for the family's benefit without regard to formal legal documentation" (Affidavit of Heshmatollah Kermanshahchi, ¶ 8).
5. This deed states that it covers a portion of the property conveyed in the 1974 deed, and appears to include eight of the nine parcels described in the 1974 deed.
6. The Correction Deed recites that it covers the same premises conveyed by Kashefi to the Four Cousins in 1975, "this being a correction deed because of a mistake made in the names of the parties of the second part in the November 5, 1975 deed." However, it appears to convey all nine parcels from the 1974 deed while the 1975 deed appears to convey only eight of the nine parcels.
7. Shirin Kermanshahchi's claims to the accounts that are the subject of SP-125 is based on the same chain of title through the December 1979 conveyance from Paul Kermanshahchi to Norman Kermanshahchi, and a subsequent deed from Norman to Shirin conveying one of the eight parcels dated December 31, 1991.
8. Edna, Shawn and Sharad Kermanshahchi, in addition to Iraj Kermanshahchi, previously identified as Sharona's father.