Upon the following papers read on this motion to amend a pleading: Notice of Motion/ Order to Show Cause and supporting papers by Financial Freedom Acquisition dated March 24, 2023; Answering Affidavits and supporting papers by plaintiff dated May 13, 2023; Replying Affidavits and supporting papers dated May 31, 2023; it is ORDERED that the motion of Financial Freedom Acquisition, LLC for an order granting leave to amend its answer, and for an order dismissing the complaint pursuant to CPLR 3212, is granted. In this action to quiet title to real property located at 540 Abrahams Path, Amagansett, New York, the plaintiff Richard Hamilton Jr. claims an ownership interest deriving from an unrecorded deed executed by his parents, Richard Hamilton Sr. and Clara Hamilton, in May 1993. Defendant Financial Freedom Acquisition LLC (hereinafter “FFA”) claims an adverse interest based on a January 2007 reverse mortgage encumbering the property that was given by Hamilton Sr. and Clara in favor of FFA’s predecessor-in-interest. The mortgage was subsequently recorded in the Office of the Suffolk County Clerk. Hamilton Sr. died in November 2007, and Hamilton Jr. commenced this action to quiet title against Clara and FFA on December 18, 2008. Hamilton Jr. alleges, in part, that FFA’s predecessor-ininterest was on notice, at the time the reverse mortgage was obtained, that he was the fee owner of the property; therefore, his interest in the property is superior. Clara died on January 18, 2017, and thereafter, FFA’s successor-in-interest (hereinafter “the mortgagee”) commenced a separate action to foreclose on the reverse mortgage (see CIT Bank N.A. v. Richard Hamilton Jr., as heir and distributee of the estate of Clara C. Hamilton; Carl W. Hamilton, as heir and distributee of the estate of Clara C. Hamilton, et. al., Index No. 608770/2017). By order of this court dated October 15, 2021, this action and the foreclosure action were consolidated for the purposes of trial and disposition. This matter has a long procedural history; thus, the court will summarize only that which is relevant to the instant motion. In 2015, FFA moved for an order for summary judgment declaring that it was the bonafide encumbrancer for value of the property, that its interest in the property was valid and enforceable, and that any interest of the plaintiff was subordinate to the lien of the mortgage. By order dated August 7, 2015, the court denied the motion, finding that FFA had failed to show that its predecessor-in-interest reasonably ascertained whether Hamilton Jr.’s deed existed before the reverse mortgage was obtained. Subsequently, in 2021, the mortgagee in the foreclosure action moved for summary judgment to foreclose the mortgage, and by order dated December 22, 2022, this court granted the motion. In the decision and order, this court stated that there was a material fact “that was never known in the years of litigation–that is, that [the] unrecorded deed was never actually delivered to [Hamilton Jr.], but was held in escrow by his parents’ attorney and never recorded.” This court found that the unrecorded deed held in escrow put no one on notice of Hamilton Jr.’s claim of ownership, that Hamilton Jr.’s ownership claim was made only after the closing of the mortgage loan, and that Hamilton Jr. did not produce a copy of the 1993 deed until a year after the closing. Ultimately, this court found that because the deed was retained by the attorney of Hamilton Jr.’s parents, there was no passage of title to Hamilton Jr. before the mortgage was obtained, and that the mortgagee’s interest was protected by Real Property Law §291. FFA now moves for an order granting leave to amend its answer to include collateral estoppel as an affirmative defense, and upon amendment, for an order dismissing this action on the ground that there is no issue of fact. Hamilton Jr. opposes the motion, arguing that collateral estoppel is not applicable under the circumstances and that the August 2015 order denying summary judgment to FFA is the law of the case and should not be disturbed. Leave to amend a pleading shall be freely given provided that the proposed amendment is not palpably insufficient or patently devoid of merit, and there is no evidence that it would prejudice or surprise the opposing party (Bank of Am., N.A. v. DeNardo, 151 AD3d 1008, 1010, 58 NYS3d 469 [2d Dept 2017]; Redd v. Village of Freeport, 150 AD3d 780, 781, 53 NYS3d 692 [2d Dept 2017]). ” The burden of proof in establishing prejudice or surprise, or that the proposed amendment lacks merit, falls to the party opposing the motion for leave to amend” (Lennon v. 56th & Park(NY) Owner, LLC, 199 AD3d 64, 153 NYS3d 535 [2d Dept 2021]). Hamilton Jr. has failed to demonstrate surprise or prejudice or that the collateral estoppel defense lacks merit under the circumstances. Therefore, the branch of FFA’s motion for leave to amend the answer to include the affirmative defense of collateral estoppel is granted (see Redd v. Village of Freeport, 150 AD3d 780, 781, 53 NYS3d 692) Hamilton Jr. contends that the law of the case doctrine precludes the court from dismissing this action on the ground that his claims are barred by collateral estoppel. “The doctrine of the law of the case is a rule of practice, an articulation of sound policy that, when an issue is once judicially determined, that should be the end of the matter as far as Judges and courts of co-ordinate jurisdiction are concerned . . . The law of the case operates to foreclose re-examination of [the] question absent a showing of subsequent evidence or change of law” (Strujan v. Glencord Bldg. Corp., 137 AD3d 1252, 1253, 29 NYS3d 398 [2d Dept 2016]; Brownrigg v. New York City Hous. Auth., 29 AD3d 721, 722, 815 NYS2d 681 [2d Dept 2006]). The doctrine of collateral estoppel “precludes a party from relitigating in a subsequent action or proceeding an issue clearly raised in a prior action or proceeding and decided against that party or those in privity” (Lennon v. 56th & Park (NY) Owner, LLC, 199 AD3d 64, 153 NYS3d 535 [2d Dept 2021]). “In order for collateral estoppel to apply, two elements must be established: (1) that the identical issue was necessarily decided in the prior action and is decisive in the present action; and (2) that the precluded party “must have had a full and fair opportunity to contest the prior determination” (Montoya v. JL Astoria Sound, Inc., 92 AD3d 736, 738, 939 NYS2d 92 [2d Dept 2012]). The party seeking to avoid application of the doctrine has the ultimate burden of establishing the absence of a full and fair opportunity to have litigated the earlier matter (Lennon v. 56th & Park (NY) Owner, LLC, 199 AD3d 64, 153 NYS3d 535). “While collateral estoppel is a “rigid rule[] of limitation [law of the case] has been described as amorphous and involving an element of discretion” (Matter of Part 60 RMBS Put — Back Litig., 195 AD3d 40, 48, 146 NYS3d 109 [1st Dept 2021][internal quotation marks omitted]). Thus, the law of the case doctrine “is not an absolute mandate on the court, since it may be ignored in extraordinary circumstances vitiating its effectiveness as a rule fostering orderly convenience” (Foley v. Roche, 86 AD2d 887, 447 NYS2d 528 [2d Dept 1982]). In the December 2022 foreclosure action decision and order, this court found that there was a material fact revealed that was never known in the years of litigation. Evidence showed that the 1993 deed was held by the attorney of Hamilton Jr.’s parents and that the deed was not delivered to Hamilton Jr. before his parents obtained the mortgage (see Matter of Humann, 136 AD3d 1036, 1036, 26NYS3d 304 [2d Dept 2016] ["(i)n order to transfer title, an executed deed must be delivered to and accepted by the grantee…or to a third party on the grantee's behalf"]). In light of this evidence, the court determined that title did not pass to Hamilton Jr. Based on the evidence proffered in the foreclosure action, the law of the case doctrine does not preclude re-examining the issue in this matter (see Matter of Seltzer v. New York State Democratic Comm., 293 AD2d 172, 174, 743 NYS2d 565 [2d Dept 2002]; Foley v. Roche, 86 AD2d 887, 447 NYS2d 528; see also Liberty Mut. Ins. Co. v. Aetna Cas. & Sur. Co., 235 AD2d 523, 525, 652 NYS2d 764 [2d Dept 1997]; Auerbach v. Klein, 2008 WL 680730 *12 [Sup Ct Suffolk County 2008]). Upon re-examination, the court finds that issues presented in this action were raised, actually litigated, and submitted for determination in the foreclosure action; therefore, Hamilton Jr.is collaterally estopped from litigating the same issues in this proceeding (Montoya v. JL Astoria Sound, Inc., 92 AD3d 736, 738, 939 NYS2d 92; see Lennon v. 56th & Park (NY) Owner, LLC, 199 AD3d 64, 153 NYS3d 535). Specifically, this court determined that FFA is the bonafide encumbrancer for value of the property and that its interest in the property is valid and enforceable. Accordingly, upon the amendment of FFA’s answer, the court finds that FFA’s collateral estoppel defense operates to bar this action, and the branch of the motion for an order dismissing the complaint is granted. X FINAL DISPOSITION NON-FINAL DISPOSITION Dated: October 4, 2023
