Opinion
12463/02.
Decided September 12, 2005.
The pro-se defendant, Dennis Reid, a seventy-one (71) year old dialysis patient, initially moved this court by Order to Show Cause, dated August 26, 2004, to vacate the judgment of foreclosure and referee deed given to French Open Realty, LLC herein, to allow him to exercise his equity of redemption, and to pay off the mortgage in full with regards to his residence, located at 250A Kingston Avenue, Brooklyn, NY 11213 (Block 1257, Lot 71). Mr. Reid predicated this request on the fact that the plaintiff and its agents were rude, non-responsive, and thereby intentionally prevented him from paying off his arrears. In addition, he claims to not have been served with any Notice of Foreclosure Sale.
Lido Realty, LLC, (hereinafter, Lido) the foreclosure purchaser's lender [of $350,000.00 principal], interposed opposition papers to Mr. Reid's motion on the principal ground that ". . . he failed to comply with the unconditional requirements of RPAPL 1341 that he make payment into court and obtain a stay prior to the sale." (Citing NYCTL 1996-1, et al. v. LFJ Realty corp., 307 AD2d 957, 763 NYS2d 836 [2nd Dept., 2003]; NYCTL 1996-1, et al. v. Thompson, Supreme Court, Kings County, J. Lewis, 4/7/04 NYLJ p. 22; col. 1; EMC Mortgage Corp. v. Bobb, 296 AD2d 476, 745 NYS2d 204 [2nd Dept. 2002]; Green point Savings Bank v. Oppenheim, 237 AD2d 409, 655 NYS2d 560 [2nd Dept.]). Lido also points to the fact that ". . . granting [Mr.] Dennis Reid's motion will unjustly enrich him. Substantial liens, including another mortgage as well as open taxes, etc., were paid off as a result of this action." In addition to the foregoing, Lido filed a cross-motion requesting leave ". . . to intervene in this action as a party defendant, pursuant to CPLR § 1012 and 1013, and to amend the caption accordingly." Lido argues that it is entitled to intervention as of right because its interests have not been adequately protected by plaintiff, Abley [CPLR § 1012 (a) (2)]; and, it has an interest in the disposition and distribution of the Premises and in the proceeds of the sale that may be set aside [CPLR § 1012 (a) (3)]. Lido also asserts that it is entitled to permissive intervention inasmuch as its claims and the main action have common questions of law and fact [CPLR § 1013].
Plaintiff, Abley Properties, Inc., also opposes Mr. Reid's application on the basis that its
". . . prosecution of the foreclosure action was proper and complied with all of the directions of this Court, as well as applicable provisions of the laws of the State of New York [In addition], . . . the issue of the Defendant Reid's equity of redemption becomes moot since the foreclosure auction held on April 29, 2004 operated to forever extinguish the Defendant Reid's equity of redemption." The plaintiff points out that ". . . the entire mortgage indebtedness was declared immediately due as a result of the Defendant Reid's failure to make required monthly payments on the mortgage commencing with payment due January 5, 2002. Pursuant to paragraph 41 of the Rider to the Mortgage, once the entire indebtedness was accelerated, there was no longer the ability to reinstate the Mortgage upon payment of arrears only. (citing, Katz v. Sardone Realty Corp., 212 NYS2d 447 [1961]). The only way that the Defendant Reid could have avoided the sale of the premises would have been to comply with the provisions of RPAPL § 1341 . . . (citing, Gabriel v. 351 St. Nicholas Equities, Inc., 68 AD2d 338, 562 NYS2d 660 [1st Dept., 1960], Federal Nat'l Mortgage Assoc. v. Miller, 123 Misc2d 431, 473 NYS2d 743 (Sup. Ct. Nassau Co., 1984), and Nat'l Bank of No. America v. Cohen, 89 AD2d 725, 453 NYS2d 849 [3rd Dept. 1982]).
Furthermore, in response to Mr. Reid's contention of improper service, the plaintiff notes that "[a] review of the "Description" provision of the Affidavit of Service reveals that it provides a specific description of the Defendant Reid, including his age of 67 at the time, and also makes note that the Defendant Reid acknowledged his receipt of the Summons and Complaint by signing copies thereof." Affidavits of service were filed with the County clerk evidencing that the commercial and residential tenants were duly served as well. Upon the parties' default save for Fleet Bank, which appeared by its attorneys and waived notice an order of reference [dated, February 20, 2003] was issued by this court, which was served on Mr. Reid at four separate addresses, including his daughter's house where he had been personally served with process. Thereafter, the Defendant Reid, as owner of equity of redemption, and the tenants of the premises were served with this court's February 23, 2004 judgment of foreclosure and sale, with notice of entry. They were also served with the Notice of sale, which was set for April 29, 2004, and published on March 29, April 5, April 12, and April 19, 2004. The sale was conducted [at a price of $465,000.00] and a closing held on July 8, 2004, at which time a referee's deed was issued to French Open Realty, LLC, the assignee of the successful bidder, Rahim Siony, as evidenced by the referee's Report of Sale, dated August 23, 2004. The plaintiff acknowledges that it had received a letter from an attorney, Marc E. Cohen, who had requested a pay-off letter on behalf of Mr. Reid, which had been furnished on November 11, 2003, with no follow up.
In opposition to Lido's cross-motion, the plaintiff submits that "[p]ursuant to paragraph 11 of the Terms of Sale, which was specifically accepted by Mr. Siony as the successful bidder, it was confirmed that Abley made no representations or warranties as to the condition of title or with respect to the marketability or insurability of title to the premises being sold. [Therefore,] Lido cannot attempt to make Abley responsible for recovery of purported amounts claimed to have been disbursed on the mortgage since Abley clearly did not receive all the funds disbursed. As set forth in the Report of Sale . . . the sale resulted in surplus monies in excess of $187,000.00 and there were close to $200,000.00 collected by the title company at closing to pay purported liens against the premises . . ." In addition, the plaintiff notes that "[t]he records of the New York State Department of State further reveal that an entity known as French Open Realty, LLC was not established until September 3, 2004, some two (2) months after the July 8, 2004 closing." The only entity in existence as of July 8, 2004 was a French Open, LLC, located at the same address as Rahim Siony, the successful bidder at the auction sale. The plaintiff highlights the fact that the
". . . closing statement issued by Kensington Title Agency . . . makes absolutely no reference to any mortgage whatsoever being placed against the property." In addition, the plaintiff points out that the copies of the checks submitted by Lido supposedly evidencing its $350,000.00 loan are dated 9/29/04, "which date is substantially after the purported July 8, 2004 date appearing on the mortgage. Consequently, they could not have served as consideration for the purported loan."
Attorney Scott Klein submitted an affirmation in reply to Lido's cross-motion and in further support of Mr. Reid's pro-se order to show cause, wherein he asserts the following, 1. that Mr. Reid ". . . firmly believed [that] a prior attorney, Ruth Fermin, intended to either pay off the mortgage in full, along with the foreclosure fees and costs, with monies he had put at her disposal, or file a bankruptcy petition on his behalf;" 2. that ". . . there has yet to be a transfer of the deed to the successful bidder and therefore, this Court may grant him relief;" 3. Mr. Rahim Siony was the successful bidder at auction and allegedly assigned his rights to French Open Realty, LLC on July 8, 2004. Upon information and belief, Mr. Siony was the sole stockholder of said company, which [however] was formed on September 3, 2004 by a William T. Lancaster, "an individual with no relationship to Siony;" 4. "Mr. Lancaster is a friend of Dennis Reid and he holds a Power of Attorney for Mr. Reid.;" 5. Mr. Reid is able to pay off the mortgage in full, along with the foreclosure fees and costs with $100,000.00 that he is presently holding in his IOLA account; and, 6. Mr. Reid has no opposition to Lido's intervention in this matter.
In opposition to the foregoing, Abley asserts that attorney Klein is merely expounding hearsay statements of which he has no personal knowledge. In addition, the imputation of frail health on Mr. Reid's part neither precluded him from contacting the Referee in an attempt to stop the foreclosure sale allegedly on the basis of lack of service, nor hampered him in bringing on the initial order to show cause. Also, the reference to attorney Fermin is misleading. Although she had attempted to negotiate a reinstatement, Mr. Reid's check for a fifteen month default [commencing September 5, 2000] was returned for insufficient funds. In addition, despite a subsequent lump sum payment which rendered the account current through to December 2001, Mr. Reid again fell into arrears as of January 5, 2002. Lastly, even if redemption were legally available; i.e., not extinguished by the foreclosure sale, the fact is that the sum of $100,000.00 would be insufficient to accomplish that goal since $88,107.50 was paid to Abley for its foreclosed mortgage and the purchase of the first mortgage that had been held by Neighborhood Housing Services of New York City, Inc., $15,969.00 was paid for real estate taxes, $31,570.25 was collected for unpaid water charges, $25,000.00 for emergency repair charges, and $108,000.00 for HPD charges, totaling $268,646.75.
Finally, Lido, in its reply affirmation, asserts in pertinent part that contrary to plaintiff's contention, "[a]n examination of the [closing] checks . . . demonstrates that Lido's mortgage checks are drawn on the escrow account of Lido's transactional attorney and that the check memos show variously the Premises address or the same title number as the mortgage. Lido adds that there is nothing unusual about disbursing mortgage proceeds through an attorney's escrow account and [that] the suggestion to the contrary is disingenuous." Lido also notes that the correct name of the purchaser is French Open, LLC [formed on July 29, 2003] inadvertently listed as French Open Realty, LLC. Lido further asserts that upon learning of this typographical error, Mr. Reid "quickly formed French Open Realty, LLC on September 3, 2004 using his friend, William T. Lancaster, as the nominal principal of this new entity" in an attempt to confuse, masquerade, and stall these proceedings. Such conduct, Lido suggests is not only undeserving of sympathy which in any event is not a factor decisive of any issues herein presented but criminal.
The law in this area is unequivocal. "The owner of the equity redemption or any person with an interest in the mortgaged premises has a right to redeem the property at any time prior to the actual sale under a judgment of foreclosure (see NYCTL 1996-1 Trust v. LFJ Realty Corp., supra; United Capital Corp. v. 183 Lorraine St. Assoc., 251 AD2d 400, 675 NYS2d 543; First Federal Savings Loan assn. of Port Washington v. Smith, 83 AD2d 601, 441 NYS2d 309; Belsid Holding Corp. v. Dahm, 12 AD2d 499, 207 NYS2d 91). RPAPL § 1341 explicitly provides that "where an action is brought to foreclose a mortgage upon real property upon which any part of the principal or interest is due and another portion of either is to become due, and the defendant pays into court the amount due for principal and interest and the costs of the action, together with the expenses of the proceedings to sell, if any, the court shall: 1. Dismiss the complaint without costs against the plaintiff, if the payment is made before judgment directing sale; or 2. Stay all proceedings upon judgment, if the payment is made after judgment directing sale and before sale; but, upon a subsequent default in the payment of principal or interest, the court may make an order directing the enforcement of the judgment for the purpose of collecting the sum then due." The Appellate Division has made it abundantly clear that "[i]n the absence of fraud, collusion, mistake, or misconduct, a court is without discretion to set aside a sale of foreclosure unless the requirements of RPAPL § 1341 are met." Hence, where a defendant ". . . failed to make a payment into court and to make a motion to stay the sale of the property as required by RPAPL § 1341(2), [the] right to redemption expired" (see NYCTL 1996-1 Trust v. LFJ Realty Corp., supra, citing, Bankers Fed. Sav. Loan Assn. v. House, 182 AD2d 602, 581 NYS2d 858; EMC Mtge. Corp. v. Bobb, 296 AD2d 476, 745 NYS2d 204; Green Point Sav. Bank v. Oppenheim, 237 AD2d 409, 655 NYS2d 560). Insofar as any allegation of improper service is concerned, the Appellate Division made it clear, in American Business Credit, Inc. v. Sanabria, 2005 WL 1532405 (NYAD 2nd Dept.), 2005 NY Slip Op. 05542, that a ". . . conclusory denial of receipt [of process] was insufficient to raise an issue of fact in opposition to the plaintiff's prima facie evidence of proper service (citing, Dolec Consultants v. Lancer Litho Packaging Corp., 245 AD2d 415, 666 NYS2d 458; Manhattan Sqv. Bank v. Kohen, 231 AD2d 499, 647 NYS2d 256; Sando Realty Corp. v. Aris, 209 AD2d 682, 619 NYS2d 140). In the matter sub judice the plaintiff has convincingly demonstrated that Mr. Reid, the tenants, and interested parties were in fact properly served. In addition, there is no indication of any fraud, collusion, mistake, or misconduct. The error in grantee name is obviously just that since French Open Realty, LLC was admittedly not in existence at the time of the conveyance, and Mr. Reid was and is the sole principal owner of French Open, LLC, located at his same address. Accordingly, the parties can remedy that error by correction deed. (See In Re Baffa's Estate, 139 Misc. 298, 248 NYS 332 [1931], cited by Lido; and, compare Levitt v. 1317 Wilkins Corporation, 58 NYS2d 507 [1945]).
On the basis of all of the foregoing, Mr. Reid's order to show cause seeking vacatur of the judgment of foreclosure and referee deed given to "French Open Realty, LLC" herein, and to allow him to exercise his equity of redemption by paying off the mortgage in full with regards to his residence is denied. In turn, Lido's cross-motion requesting leave to intervene in this action as a party defendant, pursuant to CPLR § 1012 and 1013, and to amend the caption accordingly is denied as moot. This constitutes the decision and order of this Court.