Opinion
No. 5980/2011.
08-08-2014
T10 FUNDING, Plaintiff, v. Laura CHAVEZ, Virginia Nava, Wells Fargo Financial Credit Services New York, Inc., and City of Yonkers, Defendants.
William Yurus, Esq. Pleasantville, Movant. Louis Spizzirro, Esq., Yonkers, Plaintiff. Kenneth Bunting, Esq., White Plains, Referee.
William Yurus, Esq. Pleasantville, Movant.
Louis Spizzirro, Esq., Yonkers, Plaintiff.
Kenneth Bunting, Esq., White Plains, Referee.
Opinion
WILLIAM J. GIACOMO, J.
In this tax foreclosure action non-party, Daniel Amicucci, moves to set aside the foreclosure sale held in this action on June 24, 2013 in which certain real property located at 900 Midland Avenue, No.3B, Yonkers, New York was auctioned to the plaintiff. Mr. Amicucci attended the foreclosure auction but was not the successful bidder.
Mr. Amicucci filed a motion to set aside the sale and the Court (Connolly, J.) by decision and order dated December 4, 2013 referred the matter for a hearing with regard to three issues:
1. Did Mr. Amicucci receive an opportunity to obtain the proper funds to submit a bid at the foreclosure sale? According to Mr. Amicucci, he arrived at the time and place of sale with bank checks payable to his order which he attempted to endorse over to the referee. The referee rejected the tender of double-endorsed checks and Mr. Amicucci was not allowed to bid.
2. Whether the restriction on double-endorsed checks was inserted into the terms of sale by the plaintiff in a manner designed to discourage bidding? and
3. Whether the price paid by plaintiff was so drastically low as to shock the conscience?
The Hearing Testimony
A hearing was conducted by the Court on March 19, 2014. Post hearing briefs were requested and have been submitted by both parties.
After a review of the trial testimony as well as the arguments made by counsel in their post trial submissions, the Court makes the following ruling.
At the hearing, movant Daniel Amicucci, testified that he saw the notice of sale in the newspaper and arrived at the time and place for sale, the Westchester County Courthouse lobby, with two bank checks totaling $70,000 payable to his order which he intended to endorse over to the referee in connection with his bid. The auctioneer was Kenneth L. Bunting, Esq. the referee appointed by the Court (Tolbert, J.) to conduct the auction. Mr. Amicucci testified that prior to the auction he read the notice of sale which did not indicate that the bank checks tendered by the successful bidder had to be made payable directly to the referee. Notably, the notice of sale indicated that the property would be “[s]old pursuant to the terms of the sale and filed judgment of foreclosure.”
At auction, Mr. Amicucci was the highest bidder. When he attempted to endorse his bank checks over to the referee, the referee rejected the tender asserting that he would not accept double endorsed checks. The referee informed Mr. Amicucci that he had to obtain bank checks payable to his order if he wanted his bid to be considered. At trial, Mr. Amicucci testified that, contrary to the applicable law, the referee did not give him adequate time to leave the Courthouse to obtain the appropriate bank checks.
It was also at trial that Amicucci raised for the first time a claim that Midland Manor Condominium where the unit is located was a necessary party to the foreclosure because it was owed common charges at the time of sale. Therefore, Amicucci's claim was that plaintiff's failure to name the condominium association renders the sale void.
Kenneth Bunting, the court appointed referee in this matter, also testified at the hearing. Mr. Bunting testified that he has been a practicing attorney for over 26 years and during that time has received over 100 referee appointments.
Mr. Bunting testified that it is customary for a plaintiff to send him the terms of sale prior to the sale date and that, if anyone wanted to know the specific terms of sale prior to the auction, they simply needed to telephone him and he would tell them what the terms were. Further, if anyone wanted to know what type of checks he required at the closing, he would advise them of that in the event they called him before the sale date.
Mr. Bunting also testified that when Mr. Amicucci offered to double endorse his checks, he advised Mr. Amicucci that his bank would not accept those checks; therefore, he would not accept them. Mr. Bunting claims that he informed Mr. Amicucci, if he so desired, he could leave the auction to obtain checks in the correct form. According to Mr. Bunting, rather than taking advantage of the offer Mr. Amicucci argued with him before eventually leaving the Courthouse without telling him whether he intended to take advantage of the offer and return with appropriate checks.
Plaintiff's principle, Louis Zazzarino, also testified at the hearing. Mr. Zazzarino testified that on the morning of the sale he added language to the terms of sale requiring that checks be made payable directly to the referee. He also amended the terms of sale to indicate that the sale would also be subject to the interest of three prior lien holders. He did not specifically list the condominium as a prior lien holder. The plaintiff was the low bidder at the sale obtaining the property for the sum of $10,000. However, the evidence established that title was taken by plaintiff subject to the prior liens listed in the terms of sale which liens total approximately $200,000.
DISCUSSION
“It is well settled that a court, in the exercise of its equitable powers, has the discretion to set aside a judicial sale where fraud, collusion, mistake, or misconduct casts suspicion on the fairness of the sale” (Provident Sav. Bank v. Bordes, 244 A.D.2d 470, 664 N.Y.S.2d 103 [2nd Dept 1997] ; seel also Guardian Loan Co. v. Early, 47 N.Y.2d 515, 521 [1979];Bankers Fed. Sav. & Loan Assn. v. House, 182 A.D.2d 602 [2nd Dept 1992] ).
POINT I–FAILURE TO NAME THE CONDOMINIUM–A NECESSARY PARTY
RPAPL § 1311 Necessary Parties, provides in relevant part:
Each of the following persons, whose interest is claimed to be subject and subordinate to the plaintiff's lien, shall be made a party defendant to the action:
1. Every person having an estate or interest in possession, or otherwise, in the property as tenant in fee, for life, by the curtesy, or for years, and every person entitled to the reversion, remainder, or inheritance of the real property, or of any interest therein or undivided share thereof, after the determination of a particular estate therein.
2. Every person having a right of dower or an inchoate right of dower in the real property or any part or share thereof.
3. Every person having any lien or incumbrance upon the real property which is claimed to be subject and subordinate to the lien of the plaintiff
* * *
Thus, to the extent Midland Manor Condominium has a common charge lien against the property, it was a necessary party to this action.
However, the fact that the Midland Manor Condominium was a necessary party to this foreclosure action does not make them indispensable parties whose absence mandates dismissal of the action (see CPLR 1001[b] ). Rather, the absence of a necessary party in a mortgage foreclosure action simply leaves that party's rights unaffected by the judgment of foreclosure and sale (see 6820 Ridge Realty LLC v. Goldman, 263 A.D.2d 22, 26 [2nd Dept 1999] ; Polish Natl. Alliance of Brooklyn v. White Eagle Hall Co., 98 A.D.2d 400, 470 N.Y.S.2d 642 [2nd Dept 1983] ).
Accordingly, plaintiff's failure to name Midland Manor Condominium does not warrant setting aside the sale.
POINT 2 APPROPRIATENESS OF THE SALE
RPAPL § 231[6] permits a Court to set aside a foreclosure sale any time within one year after the sale upon such terms as may be just. However, based upon the evidence presented at trial, the Court finds that there is no ground upon which to set aside the sale.
RPAPL § 231 provides the requirements for conducting a foreclosure sale. The only requirements set forth in connection with the publication of notice of sale is “the time and place of sale” and “description of the property to be sold” (see RPAPL § 231[2][a] ). Contrary to Mr. Amicucci's arguments, the statute does not require that the notice contain details regarding the manner in which the referee will accept down payment checks.
Moreover, referees appointed to conduct judicial sales are vested with discretion to address unforeseen circumstances that may arise in the context of the sale (see Glenvale v. 110 Corp. v. Tortora, 137 A.D.2d 654, 655 [2nd Dept 1988] ). In a proper case Courts have held that denying a bidder a brief recess to obtain the proper form of payment constitutes an improvident exercise of the referee's discretion. Here, the evidence establishes that the referee afforded an opportunity to Mr. Amicucci to obtain proper checks but he did not take advantage of that offer. In fact, in response to a question posed by the Court at the hearing, Mr. Amicucci testified that he has asked in the past about time to get sufficient funds from his bank at other foreclosure sales but did not do so this time.
Accordingly, the Court finds that Mr. Amicucci's opportunity to bid on this property was not prejudiced in any way and there is no basis to set aside the sale..
POINT 3–SALE PRICE WAS NOT REASONABLE
Mr. Amicucci also argues that the purchase by the plaintiff of the condominium unit for the price of $10,000 is so low as to shock the conscience and must be upset. However, the “mere inadequacy of price”, is insufficient to vacate a sale, unless there are additional circumstances that warrant invocation of equity powers (see Polish Natl. Alliance of Brooklyn v. White Eagle Hall Co., 98 A.D.2d 400, 470 N.Y.S.2d 642 [2nd Dept 1983] ; Guardian Loan Co. v.. Early, 47 N.Y.2d 515, 521) or unless the price is so inadequate as to shock the court's conscience (Matter of Superintendent of Banks of State of NY, 207 N.Y. 11;Southold Sav. Bank v. Gilligan, 76 Misc.2d 30;Monthar v. Haralambides, 56 Misc.2d 29).
Here, the evidence clearly establishes that in addition to the payment of $10,000 the plaintiff also took the unit subject to liens totaling approximately $200,000 which will have to be satisfied in order for clear title to be obtained. Notably, at trial Mr Amicucci testified that he believed the value of the property was in the $225,000–$249,000 range. Thus, the price paid by plaintiff at the time of auction does not mandate the sale be set aside.
SUMMARY
In this case, the Court holds that the absence of a necessary party is not fatal to the sale, that the referee did not prejudice Mr. Amicucci's right to bid at the sale and the price paid for the unit is not so disparaged as to shock the conscience of the Court.
Accordingly, Mr. Amicucci's application to set aside the foreclosure sale is DENIED AND THE CASE DISMISSED AT THE TIME OF TRIAL.