Straw buyer and fake seller. Not unheard of terms in real estate transactions. They are bad enough, but then the escrow monies on their way to pay off the earlier mortgage go missing. Who’s to blame?
In Khadidiatou Bah v Stuart 2013 NY Slip Op 30171(U) January 17, 2013 Supreme Court, New York County Docket Number: 113354/06 Judge: Joan M. Kenney we see that "Briefly, on August 22,2005, plaintiff Bah purchased real property located at 721 Commonwealth Ave., Bronx, NY (the property), from Karamoko Diabi (seller). The price of the property was $360,000.00 and in connection with the purchase, Bah obtained a mortgage from WaMu in the amount of $328,000.00.
The seller had a prior mortgage on the property in the amount of $305,733.54, to be satisfied with the proceeds of the sale of the property. Plaintiffs allege that at the closing, on August 22,2005, CILMI & Associates (CILMI), on behalf of WaMu, issued a check to satisfy the prior mortgage to Beneficial. Allegedly, those funds were stolen and converted by co-defendants Stuart, Beneficial, and Dalley, and not used to satisfy the prior mortgage; all of this after Stuart told CILMI, and plaintiffs that the money was needed in escrow to secure the title insurance from Commonwealth. The escrow account was created by Union National Abstract, LLC (Union), Commonwealth’s policy-issuing agent. CILMI believes that because Union is an agent of Commonwealth then Cal Stuart is an agent of commonwealth, because he pushed for the money to be placed into the escrow account. Commonwealth issued the title insurance policy to WaMu for the closing of the property. Third-party-plaintiff alleges that not only is Commonwealth responsible for insuring this loss, but that Cal Stuart was an agent working for Commonwealth, making Commonwealth culpable for some of the loss. (see also, The third-party summons and complaint, annexed as Exhibit B to the moving papers). The third-party summons and complaint filed against Commonwealth by CILMI alleges that Commonwealth should be responsible for contribution should WaMu prevail against CILMI."
"“Contribution is generally available as a remedy ‘when two or more tort-feasors share in responsibility for an injury, in violation of duties they respectively owe to the injured person,’ (Garrett v Holiday Inns, 58 NY2d 253 …, quoting Smith v Sapienza, 52 NY2d 82 …). ‘A contribution claim can be made even when the contributor has no duty to the injured plaintiff..’(Raquet v Braun, 90 NY2d at 182). In such situations, a claim of contribution may be asserted if there has been a breach of duty that runs from the contributor to the defendant who has been held liable. The ‘critical requirement’ for apportionment by contribution under CPLR Article 14 is that ‘the breach of duty by the contributing party must have had a part in causing or augmenting the injury for which contribution is sought.’(Trump Vill. Section 3, Inc. v New York State Hous. Fin. Agency, 307 AD2d 891 [ 1 st Dept. 2003). CPLR 1401 states that “two or more persons who are subject to liability for damages for the same personal injury, injury to property or wrongful death, may claim contribution among them whether or not an action has been brought or a judgment has been rendered against the person from whom contribution is sought.” A right to indemnity, as distinguished from contribution, is not dependent upon legislative will, but springs from contract, express or implied, and full, not partial reimbursement is sought. (McDerrnott v City of New York, 50 NY2d 211[1980). Pursuant to CPLR 1007, “After the service of his answer, a defendant may proceed against a person not a party who is or may be liable to that defendant for all or part of the plaintiffs claim against that defendant …” Further, 1007 also states that “suits against a third party can only be maintained for contribution or indemnification claims.” (Phoenix Erectors, LLC v Fogarty, 90 AD3d 468 [1st Dept. 2011]). Commonwealth’s self-serving statement that they had no privity with CILMI is unsupported by admissible evidence and is insufficient, at this juncture, to grant the application to dismiss the third-party complaint. It is noted that Commonwealth may still be liable for all or part of the claims asserted by p1aintiff Whether it be contributory or full indemnification, Commonwealth may be liable as the principal to Cal Stuart, the principal to Union, or as the insurer of WaMu. However, the exact nature of the relationships between Commonwealth and the parties to this action during the course of the transaction and sale of the property has not been conclusively established by admissible documentary evidence, no doubt due to the fact that discovery on this 2006 matter is not complete. In fact, it is asserted that discovery on this matter has yet to begin."