JPMorgan Chase Bank, N.A. v Katz
Attorneys and Parties
Brief Summary
Quiet title under RPAPL article 15 [to determine claims to real property and for declaratory relief], effect of a deed naming a nonexistent limited liability company (LLC), and mortgage lien validity; application of CPLR 213(6) [six-year statute of limitations for reformation of an instrument running from the date the mistake was made].
Upon reargument, the Supreme Court, Kings County, held the fourth cause of action time-barred, vacated its prior grant declaring Isaac Gross, LLC’s interest null and void, and denied summary judgment declaring Aharon Katz sole owner and the mortgage a valid lien on the entire property.
The Appellate Division modified by reinstating summary judgment declaring any purported interest of Isaac Gross, LLC in the property null and void, rejecting the statute of limitations defense.
A deed purporting to convey to a nonexistent entity is void at inception; a statute of limitations cannot validate what is void (citing Matter of Hausman and Faison v Lewis). Thus, the RPAPL article 15 claim to nullify the LLC’s interest is not time-barred. However, voiding the LLC’s portion does not establish Katz as sole owner or validate his mortgage as to the entire property because that interest remains with the grantor, Yosef Gold.
Background
JPMorgan Chase Bank, N.A. sued in 2016 under RPAPL article 15 to determine title and for declaratory relief regarding a Brooklyn property. A deed dated June 26, 2008 from Yosef Gold purported to convey the property to Aharon Katz (typed) and Isaac Gross, LLC (handwritten). The deed was recorded January 29, 2009. The LLC’s articles of organization were not filed until July 24, 2008, after the deed’s execution. On September 5, 2008, Katz gave JPMorgan a $650,000 mortgage. JPMorgan sought declarations that Katz was sole owner, that any interest of Isaac Gross, LLC was null and void, and that Katz’s mortgage was a valid lien on the entire property. Defendants argued the claims were time-barred.
Lower Court Decision
By order dated June 30, 2021, the court granted summary judgment declaring any interest of Isaac Gross, LLC null and void, but denied summary judgment declaring Katz sole owner and the mortgage valid against the entire property. On September 13, 2022, upon reargument, the court held the fourth cause of action time-barred, vacated its prior grant regarding the LLC’s interest, and adhered to denying declarations of sole ownership and full-lot mortgage validity.
Appellate Division Reversal
The Appellate Division modified: upon reargument, it adhered to the original June 30, 2021 determination granting summary judgment declaring any purported interest of Isaac Gross, LLC null and void, and otherwise affirmed the denial of summary judgment declaring Katz sole owner and the mortgage valid against the entire property. The court held the claim was not time-barred because the deed to the nonexistent LLC was void ab initio (Matter of Hausman), and a statute of limitations cannot validate a void instrument (Faison v Lewis; OneWest Bank v Schiffman). As to sole ownership and mortgage validity, the portion purportedly conveyed to the LLC remained with the grantor, Gold, precluding summary judgment for JPMorgan on those declarations.
Legal Significance
Reaffirms that a conveyance to a nonexistent grantee (e.g., an unformed LLC) is void ab initio and not subject to statute of limitations defenses to defeat a quiet title/declaratory claim. Also clarifies that invalidating the void conveyance does not automatically vest full title in the remaining named grantee or validate a mortgage over the entire property; the voided share remains with the original grantor.
A deed naming a nonexistent LLC is void from inception and can be nullified notwithstanding limitations defenses, but that ruling alone does not establish sole ownership in another grantee or the validity of a mortgage on the entire property—the grantor retains the voided interest.