New York State Court of Claims

New York State Court of Claims

MORETRAN v. THE STATE OF NEW YORK, #2009-038-547, Claim No. 115706, Motion Nos. M-76259, CM-76329


Defendant’s motion for summary judgment on claim alleging damages due to DMV’s failure to record perfected New Jersey lien on New York title granted. Even though lien was noted on New Jersey title, claimant did not submit DMV form or required fee to have the lien noted on the New York title, and thus, claimant’s own conduct was the cause of its loss occasioned by the clear New York title

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:
PRICE, MEESE, SHULMAN & D’ARMINIO, P.C.By: John R. Edwards, Jr., Esq.
Defendant’s attorney:
ANDREW M. CUOMO, Attorney General of the State of New York
By: Michael T. Krenrich, Assistant Attorney General
Third-party defendant’s attorney:

Signature date:
June 5, 2009

Official citation:

Appellate results:

See also (multicaptioned case)


The facts of this claim are undisputed. As stated in the claim, claimant provided financing for a truck purchased in New Jersey by non-party Intratex Trucking, Inc. (“Intratex”). Claimant retained a security interest in the truck in the amount of $51,650.00. Claimant’s lien was noted on the back of the New Jersey title document and on a New York State Department of Motor Vehicles (“the DMV”) notice of lien form (a “Form MV-900"), both of which were transferred to Intratex at the time of the sale in August 2007. As alleged in the claim, the owner of Intratex, Wladyslaw Olszawski, drove the truck to Albany, New York, and on October 29, 2007, he was issued a clear certificate of title by the DMV. In November 2007, after making several payments to claimant, Intratex sold the truck to Best Used Trucks of PA, using the clear New York State certificate of title. Intratex then defaulted on its payments to claimant, and Olszawski is now residing in Poland. The claim asserts that claimant has suffered damages in the amount of $47,769.00 as a direct result of the DMV’s negligence in failing to note claimant’s lien on the New York State certificate of title.[1] Claimant moves for summary judgment against defendant, and defendant cross-moves for summary judgment dismissing the claim. Claimant argues that defendant is liable in negligence for disregarding the existence of claimant’s lien as shown on the back of the New Jersey title and issuing a clear certificate of title. Claimant relies on Vehicle and Traffic Law (V&TL) § 2108(a)(3), which, in pertinent part, states that “each certificate of title issued by the commissioner shall contain: ... [t]he names and addresses of any lienholders ... if the application is based on a certificate of title, as shown on the certificate.” While this argument appears initially to be compelling, close scrutiny of it within the broader context of the provisions of the Uniform Certificate of Title Act (V&TL Article 46) and DMV’s regulations concerning titling of vehicles (15 NYCRR Part 20) leads to a different result.

When an application for a certificate of title is made for a vehicle that was previously registered or licensed in another state, V&TL § 2105(c) requires the application to contain or be accompanied by:

(1) Any certificate of title issued by the other state or country;

(2) Any other information and documents the commissioner reasonably requires to establish the ownership of the vehicle and the existence or non-existence of security interests in it.

DMV regulations state that “[i]n order to perfect a security interest [in a vehicle which is not titled in New York], the lender must submit a notice of lien (Form MV-900) ... together with the appropriate recording fee which must be paid by the lender” (15 NYCRR § 20.15[b][2] [emphasis added]). V&TL § 2125(a)(2) and (c) require a party with a secured interest in a vehicle to pay a $5.00 fee for each security interest that is to be noted on the certificate of title. Claimant does not acknowledge these statutory and regulatory provisions, nor does it contend that the requirements of 15 NYCRR § 20.15(b)(2) are unreasonably required or otherwise outside the scope of V&TL §2105(c)(2).

Simply stated, claimant – the lender with a secured interest in the vehicle – did not comply with V&TL and DMV regulations requiring it to file the Form MV-900 and pay the accompanying fee in order to have its security interest noted on the certificate of title. As asserted in the claim and demonstrated by its exhibits, claimant “transferred” the New Jersey title and an executed Form MV-900 to its debtor, Intratex, on August 7, 2007 (see Claim, ¶ 3). Claimant did so even though it held a contractual security interest in the document of title (see Claim, Exhibit A, Security Agreement, p.1, ¶ 2.1), and despite New York law expressly requiring the creditor – not the debtor – to take action to have the out-of-State security interest noted on the New York certificate of title. Claimant’s execution of the Form MV-900 indicates its awareness (1) that Intratex intended to register and title the truck in New York, and (2) that claimant was required to file the certificate of title and Form MV-900 with the DMV.[2] “Had claimant taken the necessary steps to perfect its lien, the clean certificate of title would not have been issued; having failed to do so, claimant is responsible for its own loss” (Chrysler Credit Corp. v State of New York, 262 AD2d 768, 770 [3d Dept 1999]). Simply stated, unless and until claimant filed the Form MV-900 with the accompanying fee, DMV owed claimant no duty to note the lien on the certificate of title, and thus, there could be no breach of a duty.

Claimant’s effort to distinguish Chrysler Credit Corp. (id.) because the debtor in that case presented the DMV with a manufacturer’s certificate of origin (MCO) and not a title document reflecting a perfected security interest is unavailing. In processing a title application, “DMV clerks perform only the decidedly ministerial function of determining whether all of the necessary documents are tendered, and they do not review MCO forms for lienholder information in view of the discrete procedures for perfecting liens” (id. at 769-770 [emphasis added]). Claimant cites no authority that requires the DMV to note a security interest that was perfected in another state in the absence of the lienholder’s compliance with the required administrative procedures.

Claimant’s reliance on In re Males (999 F2d 607 [2d Cir 1993]) for the proposition that a security interest perfected in another jurisdiction continues in New York is misplaced. In re Males, supra, interpreted V&TL § 2118(c)(2)(A), which provides that a lien noted on an out-of-state title is perfected in this State. That statutory provision addresses the validity of the perfected lien as against other creditors or subsequent lienholders, even when the perfected security interest is not noted on the New York certificate of title (see e.g. Chrysler Financial Co., L.L.C. v Schlant, 243 BR 613 [WDNY 2000]). V&TL § 2118(c)(2)(A) does not address the notation of the lien on the New York certificate of title, it does not require the DMV to record the out-of-state lien on a New York title, and it does not expressly relieve the secured creditor from acting in compliance with New York statutes and regulations to ensure that its secured interest is reflected on the New York title. In other words, that provision provides claimant with authority to enforce an out-of-state perfected security interest against subsequent purchasers or creditors, but it does not provide a remedy against the DMV for not proactively recording an out-of-state lien on the New York title.

Claimant’s reliance on Lobel Financial Corp. v State of New York (8 Misc 3d 662 [Ct Cl 2005]) and Exchange National Bank of Tampa v State of New York (88 Misc 2d 444 [Ct Cl 1976]) for the proposition that the State should be held liable when the DMV issues a clear title despite knowledge of the existence of a lien is unpersuasive because those cases are distinguishable in material respects. In Exchange Nat’l Bank, the State was found liable for issuing a clean certificate of title without including a Florida bank as a lienholder when it negligently failed to follow its own regulations that require the applicant for a New York title to surrender the out-of-State title (see 15 NYCRR § 20.7[a]). Here, Olszawski surrendered the original New Jersey title document. In Lobel Financial Corp., the DMV issued a certificate of title in July 1995 that showed claimant’s lien, but in March 1996, DMV issued a replacement title that did not list any lienholder. Claimant Lobel’s motion for summary judgment was granted because no issue of fact was raised as to defendant’s negligent failure to continue to include the claimant’s lien on the replacement title. In Lobel, the claimant’s compliance with administrative procedural requirements was not an issue discussed by the Court. Here, claimant’s failure to do so is the crux of the defense to the claim. Indeed, claimant’s apparent reliance upon Olszawski to perfect its security interest in New York rather than doing so itself enabled claimant’s own loss because Olszawski did not file the executed Form MV-900, and he could not have obtained a New York certificate of title without surrendering the original New Jersey title document (see 15 NYCRR § 20.7[a]).

Claimant’s public policy argument that defendant’s negligence caused it to lose its secured interest in the truck for want of a $5.00 fee is far too simplistic. Having provided Olszawski with possession of documents that facilitated his ability to obtain a certificate of title without further involvement by claimant, and having failed to protect its own security interest by filing the Form MV-900 and paying the associated fee, claimant seeks recovery from the State of New York. However, the Appellate Division has stated that despite the DMV’s failure to proactively record a lienholder’s security interest, where the claimant has not complied with administrative requirements, “claimant is responsible for its own loss” (Chrysler Credit Corp. v State of New York, supra at 770).

Finally, claimant’s conclusory argument that a decision in favor of defendant would violate the Full Faith and Credit clause of the United States Constitution is both undeveloped and misplaced. This claim is not about defendant’s unwillingness to give full faith and credit to the laws of New Jersey; it is about claimant’s failure to comply with required administrative processes in New York.

Accordingly, it is

ORDERED, that claimant’s motion for summary judgment, M-76259 is DENIED, and it is further

ORDERED, that defendant’s cross motion for summary judgment, CM-76329 is GRANTED, and claim No. 115706 is DISMISSED.

June 5, 2009
Albany, New York

Judge of the Court of Claims

Papers considered

(1) Notice of Motion, dated February 11, 2009;

(2) Affidavit of Gary Streifer in Support of Motion for Summary Judgment, sworn to

February 11, 2009, with Exhibits A-E;

(3) Letter Brief of Claimant, dated February 11, 2009;

(4) Notice of Cross-Motion, dated February 27, 2009;

(5) Affirmation in Opposition to Claimant’s Motion for Summary Judgment and in Support of

Defendant’s Cross-Motion for Summary Judgment of Michael T. Krenrich, AAG, dated

February 27, 2009, with Exhibits 1–5;

(6) Letter Brief of John R. Edwards, Jr., Esq., dated March 10, 2009;

(7) Correspondence of John R. Edwards, Jr., Esq., dated March 13, 2009;

(8) Reply of Michael T. Krenrich, AAG, dated March 16, 2009.

[1]. Claimant implicitly acknowledges that while recovery of damages might be pursued against others, it has determined that defendant State is its most likely source for recovery: “Wladyslaw Olszawski has fled the country and is now residing in Poland. A claim against the Pennsylvania purchaser of the truck alleging actual or constructive notice of the Lien which was not on the title appears too speculative to anticipate a recovery from that source” (Streifer Affidavit, ¶ 11 [emphasis in original]).
[2]. The Form MV-900 executed by claimant clearly states at the bottom of the form: “LIENHOLDER: Mail this form, the $5 fee paid by the lienholder, and the owner’s title (if issued) to:” the DMV Title Bureau (Krenrich Affirmation in Opposition, Exhibit 3 [emphasis in original]).