Opinion
Index No. 4702/2009 Mot. Seq. No(s). 13 Calendar No(s). 21 NYSCEF Doc. No. 114
08-15-2024
U.S. Bank National Association, As Legal Title Trustee for Truman 2016 SC6 Title Trust, Plaintiff(s), v. Lorraine T. Cunningham, et al., Defendant(s).
Unpublished Opinion
DECISION & ORDER
Hon. Cenceria P. Edwards, JSC, CPA
The following papers read herein:
Order to Show Cause, Affidavits (Affirmations), and Exhibits ____ 94-104, 106, 108
Opposing Affidavits (Affirmations) and Exhibits ______________ __109-110
In this foreclosure action Defendant-mortgagor Lorraine T. Cunningham (“Defendant Cunningham”) moves the Court, by Order to Show Cause (OSC) presented by her attorneys, The Biolsi Law Group, on February 28, 2024, pursuant to CPLR § 6301 to continue “to stay the auction scheduled for February 29, 2024, pending the determination of Motion Sequence (“mot. seq.”) #12 and set the matter down for a bad faith hearing”, pursuant to CPLR 3408, mot. seq. #13.
Plaintiff, U.S. Bank National Association, as Legal Title Trustee for Truman 2016 SC6 Title Trust (“Plaintiff”), continues this foreclosure action as assignee of Downey Savings and Loan Association, F.A., who commenced the action on February 25, 2009. The Complaint alleges that Defendant Cunningham executed the relevant note and mortgage, secured against her residential home located at 822 Lafayette Avenue, Brooklyn, New York (“subject premises”), in the amount “of $502,000.00 up to an amount not to exceed $552,200.00” on or about December 14, 2005 (see NYSCEF doc. #1, p. 4 [Complaint, ¶3]). Defendant Cunningham last paid the mortgage on April 1, 2008, with a balance due and owing of "$496,333.53 (see id., p. 5 [Complaint, ¶9]).
The allegations regarding Defendant Cunningham's default in payment of the mortgage and note, along with the last date paid, remain undisputed. This is a heavily litigated case with active participation by both Plaintiff and Defendant Cunningham, who has failed to vacate her defaults. The Biolsi Law Group is Defendant's fourth attorney and first appeared in the action via its filing of the OSC papers for mot. seq. #12 on October 15, 2023 (see NYSCEF doc. #s 32-65).
Procedural History
Defendant Cunningham first appeared in this action as a pro se litigant by serving and filing disclosure demands in May of 2010, which Plaintiff rejected (see NYSCEF doc. #1, pp. 52-63). An ex parte Default Judgment and Order of Reference was granted and entered September 7, 2010, against Defendant Cunningham for failure to answer the summons and complaint (see id., pp. 64-67). In May of 2013, Defendant Cunningham moved, pro se, to dismiss the complaint and Plaintiff opposed Defendant's motion and cross-moved to confirm the Referee's report and for a Judgment of Foreclosure and Sale ("JFS") (see NYSCEF doc. #l,pp. 183-184). By Order entered (Dawn Jiminez, J) on July 23, 2013, both parties stipulated and withdrew their motions without prejudice (see NYSCEF doc. #1, p. 185).
Plaintiff moved for a JFS in June 2016 (see NYSCEF doc. #1, pp. 1266-1276). Michael Cheatham, Esq., submitted opposition papers on Defendant Cunningham's behalf (see NYSCEF doc. #67) but failed to appear for oral argument, June 29, 2017. Hence, by Order entered July 17, 2017, the Court (Mark I. Partnow, J.) granted Plaintiffs JFS motion on Defendant's default (see NYSCEF doc. #1, p. 1282). On January 30, 2018, Defendant, represented by Harvey Sorid, Esq., moved to vacate her default but it was denied by Order entered March 7, 2018 (see id, p. 1364).
Plaintiff scheduled a foreclosure auction and sale for March 7, 2019, but it was canceled on March 6, 2019, when Defendant's third attorney, Evelyn Abioloa, Esq., moved by OSC to stay the proceedings, asserting that Defendant "is looking for additional time to be able to sell the property," as she had received multiple offers from prospective buyers (see NYSCEF doc. #1, pp. 1841-1844). By Order entered September 9, 2019, the Court (Noach Dear, J.) denied the motion, finding Defendant's proffered grounds for relief to be insufficient (see NYSCEF doc. #1, p. 1834).
Defendant filed another OSC to stay proceedings, which cancelled the December 5, 2019 (No. 2) auction. Post pandemic stays, in June of 2022, the Court (Lawrence Knipel, J.) denied the motion, stating that while the "OSC seeks [a] stay for a little time to obtain alternate financing," Defendant "has been afforded more than sufficient time" (see NYSCEF doc. # 5).
By Notice of Sale e-filed September 19, 2023, Plaintiff scheduled the third auction for October 26, 2023 (see NYSCEF doc. #29) which was canceled on October 25, 2023, when Defendant, now represented by her fourth attorney, The Biolsi Law Group, moved by OSC in mot. seq. #12, inter alia, to stay the proceedings, dismiss the action, or, alternatively, toll several years of interest. On the date of the OSC hearing, The Biolsi Law Group uploaded its withdrawal letter (see NYSCEF doc. #76) and the Part Clerk marked the motion withdrawn.
On January 12, 2024, Plaintiff noticed a fourth auction for February 29, 2024 (.sec NYSCEF doc. #77), which was canceled (No. 4) on February 28, 2024, when the Biolsi Law Group moved by OSC, in mot. seq. #13, for another stay and a bad faith hearing pursuant to CPLR 3408.
CPLR § 6301- Request to Stay the Proceedings OSC Mot. Seq. #12
Defendant Cunningham's OSC mot. seq. #13 references mot. seq. #12 and in its relief, asks the Court to continue the stay the action until mot. seq. 12 is determined; however, the Court cannot oblige this request and determine mot. seq. #12, as Defendant-Cunningham's lawyers, The Biolsi Law Group, herein have rendered mot. seq. #12 moot. The stay of the proceedings caused by Defendant's OSC mot. seq. #12, filed on October 25, 2023, which stayed the October 26, 2023, foreclosure sale, was lifted due to The Biolsi Law Group's withdrawal of mot. seq. #12, effective per the Part Clerk's calendar markings, and confirmed per The Biolsi Law Group's letter of withdrawal, e-filed the morning of November 15, 2023, the date on which the motion was scheduled for appearance (see NYSCEF doc. #76; Defendant Affirmation Exhibit D -"ecourts web-civil supreme). In support of this OSC, Attorney Jacobson's affirms that his Exhibit D supports his position that mot. seq. #12 is still viable; however, the Court reviewed Exhibit D and noted that it does not state mot. seq. #12 was fully submitted or withdrawn. More importantly The Biolsi Law Group's withdrawal letter along with the Part Clerk's calendar markings control. Thus, Defendant's OSC mot. seq. #12 is not properly before this Court, leaving this Court without jurisdiction to determine mot. seq. #12 as a part of Defendant's OSC mot. seq. #13.
CPLR 3408(f) - Bad Faith Hearing
The sole question before this Court (OSC mot. seq. #13) is whether Plaintiff's attorney has deprived Defendant Cunningham of the opportunity to settle the mortgage via good faith settlement negotiations, thereby preventing her from redeeming the equity rights in her property. The Court answers this question in the negative; Defendant Cunningham is not entitled to a settlement conference or bad faith hearing, pursuant to CPLR 3408, for the reasons set forth below.
In response to the foreclosure mortgage crisis the New York State legislature enacted CPLR 3408 to minimize the loss of residential homesteads (1-4 families) and afford those homeowner defendants in foreclosure litigation sufficient due process protections with an opportunity to defend equitably against the foreclosure action while statutorily requiring that plaintiff/mortgage lenders provide viable options to settle the mortgage as early as possible, preferable pre-discovery, pre-dispositive motions, pre-trial, with the parties under the supervision of a court mandated settlement conference in the earlier phase of the action, CPLR § 3408(a). Amongst other remedies CPLR § 3408(f) provides for a "Bad Faith hearing" and requires both plaintiff and defendant to "negotiate in good faith" to "reach a mutually agreeable resolution".
The primary ground upon which Defendant seeks to stay the foreclosure proceedings herein, the latest of two OSC's filed by The Biolsi Law Group since October 2023, is her contention that Plaintiffs attorney frustrated her right to redeem the subject premises by not conceding to the payoff issued by Plaintiff s servicer. Specifically, Defendant's attorney's sole argument for a bad faith hearing is that Plaintiff s attorney, by letter dated December 18, 2023, provided him with a payoff statement in the amount of $1,381,394.59 calculated with the 9% statutory rate awarded pursuant to CPLR § 5004 (see NYSCEF doc. #100 [Exhibit C to moving papers]); in substantial difference to Plaintiff s servicing agent who submitted a payoff letter, dated January 23, 2024, in the amount of $965,784.19 calculated with the 7.67% contractual rate in the note (see NYSCEF doc. #99 [Exhibit B]).
The Court notes that Defendant was in receipt of payoff statements from both the Plaintiff s attorney and Plaintiff s servicer. It is "inexplicable" to this Court why The Biolsi Law Group relied on Plaintiff's servicer's statement with no further consultation with Plaintiffs attorney as to its accuracy. Plaintiff's servicer's letter clearly gave deference to Plaintiff to ultimately determine the payoff funds due as it informed Defendant's attorney on page 2 in the letter that "Allpayoff figures are subject to final verification of the mortgage lender. We may adjust any portion of this payoff statement, at any time, for the following reasons, including, but not limited to, escrow disbursements made on behalf of the loan holder (s), fee advances, items returned by your financial institution, including previously made payments, additional fees or charges, and any good faith and/or inadvertent clerical errors. " (NYSCEF doc. #99, p. 2 [Exhibit B]). In support of a bad faith hearing attorney Jacobson affirms:
"Here, the matter should be set down for a conference as it is inexplicable that Defendant can receive two payoff amounts that contain a discrepancy of over $400,000. Plaintiff s counsel is acting in bad faith, which adversely affects Defendant's ability to exercise her equitable right of redemption. Plaintiffs action warrant [s/c] setting the matter down for a bad faith hearing." (NYSCEF doc. #96, ¶¶ 12-14).
This Court notes that most often, a plaintiffs payoff letter differs, especially when a Defendant makes the same request of the plaintiffs different representatives, at different times, while knowing that the plaintiffs attorney's information is most reliable.
Defendant's attorney, a skilled foreclosure litigation firm, is aware that in active foreclosure lawsuits, the Plaintiffs attorney's payoff letter controls. The Court notes that Defendant's attorney Jacobson never affirmed that he requested an additional payoff statement from Plaintiff or asked for any resolution, in writing or otherwise, to what he believed to be a discrepancy in the payoff amount prior to filing this bad faith hearing OSC. The Biolsi Law Group simply waited until the day before the auction to file another OSC and achieved its end goal - to further stay the sale and prolong payoff of the mortgage. During the OSC hearing Defendant was persistent at offering a short pay off approximately $800,000.00. However, Plaintiff s attorney and its client, who appeared in person, were unwilling to accept Defendant's short payoff, as they asserted the subject premises is worth significantly more than the approximately $1,400,000 owed.
The Biolsi Law Group failed to provide any case or statutory law to support its argument or consider that Plaintiff s servicer's interest rate of 7.67%, applied to the outstanding 16-year-old debt in its payoff letter, is less than the statutory JFS interest rate of 9% (see CPLR § 5004[a]) and accounts for the difference in Plaintiff s calculations. Defendant's lackluster argument that Plaintiffs attorney's submission of a payoff statement differing in $400,000.00, without more, is a frivolous argument presented by The Biolsi Law Group.
Not only is the The Biolsi Law Group's argument frivolous in theory but it fails in law, as well. Foremost, this litigation is far past the settlement conference phase of the foreclosure action, with a Judgment of Foreclosure of sale entered January 18, 2018, with notice of entry served upon Defendant/Movant on March 16, 2018 (see NYSCEF doc. #1, p. 1327-1340). It is widely established and included in the statute itself that the good-faith requirement is applicable only during the settlement conference phase and its purpose is to encourage that "both the plaintiff and the defendant are prepared to participate in a meaningful effort at the settlement conference to reach a resolution" (CPLR § 3408 [f][3]). The settlement phase of this action occurred more than a decade ago; it is inexplicable why The Biolsi Law Group premised its mot. seq. #13 OSC solely on an expired CPLR 3408 (f) argument. Defendant's relief sought herein post-JFS under CPLR 3408 (f) is, thus, unavailable (see Deutsche Bank Natl. Trust Co. v Singh, 216 A.D.3d 1080, 1081-1082 [2d Dept 2023]).
"A judgment of foreclosure and sale is final as to all questions at issue between the parties and concludes all matters of defense which were or might have been litigated in the foreclosure action" (Wells Fargo Bank, N.A. v Graziano, 192 A.D.3d 1192, 1192-1193 [2d Dept 2021], quoting Ciraldo v JP Morgan Chase Bank, N.A., 140 A.D.3d 912, 913 [2d Dept 2016]). Importantly, since Defendant's reliefs in mot. seq. #13 do not seek to vacate the judgment of foreclosure and sale, the duly entered JFS remains binding. Resultingly, Defendant's attorney's request to set the matter down for a settlement conference and bad faith hearing is "without merit in law" and is denied.
Sanctions - Frivolous Motions -22 NYCRR § 130-1.1 [a])
"[W]here an argument advanced by a party is, as is relevant here, 'completely without merit in law and cannot be supported by a reasonable argument for an extension, modification or reversal of existing law,' sanctions may be warranted" (U.S. Bank N.A. v Livingston, 199 A.D.3d 964, 966 [2d Dept 2021], quoting 22 NYCRR 130-1.1[c][1]). "Conduct is [also] frivolous if 'it is undertaken primarily to delay or prolong the resolution of the litigation, or to harass or maliciously injure another'" (M&T Bank v Friedmann, 217 A.D.3d 934, 936 [2d Dept 2023], quoting 22 NYCRR 130-1.1 [c] [2]). Considering Defendant's attorney's proficiency in foreclosure litigation before this Court, its unsupported CPLR 3408(f) arguments, void of fact and in law, it is incumbent upon this Court to examine Defendant's attorneys' actions under 22 NYCRR130-1.1.
The Biolsi Law group began representing Defendant Cunningham in October 2023 and to date, it is indeterminable whether, prior to submitting moving papers on her behalf, the firm filed a proper notice of appearance or, to the extent applicable, a consent to change attorney form. The Biolsi Law Group has filed three OSC's on Defendant's behalf within four months. On October 25, 2023, Defendant's attorney Jacobson filed the OSC in mot. seq. #12 (see NYSCEF doc. #s 32-65), and after Plaintiff had filed both a letter of intent to oppose it and a full set of opposing papers (see NYSCEF doc. #s 31, 66-67, and 72-75), Defendant's attorney abruptly withdrew the OSC (see NYSCEF doc. #76). Similarly, on February 8, 2024, Defendant's attorney Jacobson filed another OSC to stay the sale (see NYSCEF doc. #s 80-89), and after Plaintiff filed a letter of intent to oppose it (see NYSCEF doc. #s 79 and 90), the OSC was withdrawn on February 26, 2024 (see NYSCEF doc. # 91). Finally, the next day, on February 27, 2024, Defendant's attorney Jacobson filed the OSC comprising the instant mot. seq. #13 (see NYSCEF #s 94-107).
As Defendant-Cunningham was previously represented by counsel, new counsel may only act on her behalf if the procedures set forth under CPLR 321 are followed. It is noted that after Defendant's third attorney filed an OSC on her behalf in March 2019, Defendant filed a pro se OSC in December 2019, and there is no indication that the third attorney properly withdrew or was terminated before The Biolsi Law Group took over the defense in October 2023.
The Biolsi Law group, on Defendant Cunningham's behalf, has filed and withdrawn multiple 9th hour OSC's to stay foreclosure sales and has been successful at canceling the aution. The OSC herein contains frivolous arguments to conference and schedule a bad faith hearing pursuant to CPLR 3408, even though CPLR 3408 conferences occur during an action's early stages and, more importantly, this relief is unavailable post-JFS where a defendant has not vacated her default.
This Court has previously, at the OSC hearing, verbally cautioned The Biolsi Law Group for its delay tactics, including offering dubious impromptu representations in Court. Incorporated herein by reference is the Court's Order, dated February 29, 2024, enumerating the Court's concerns regarding The Biolsi Law Group's conduct (see NYSCEF doc. #108).
The Court is also disturbed by Defendant-Cunningham's non-compliance with its Orders and her willful failure to attend the OSC hearings on February 28, 2024, and July 24, 2024. On July 24, 2024, at the fourth and final continuance of the OSC mot. seq. #13 hearing, continued each time at the Defendant's request to determine solutions to resolve the mortgage, Defendant Cunningham failed to appear. Her attorney, Jacobson, informed the Court, in the ninth hour, that Defendant-Cunningham was out of town on an emergency, and he was not prepared with any additional information to settle the mortgage. The Court denied any further continuances.
This Court stayed the action with four continuances of the instant motion, assuming Defendant's attorney's CPLR 3408 arguments were relevant and presented in good faith in support of its OSC mot. seq. #13 to stay the sale, and that Defendant-Cunningham was working towards resolving the debt as claimed. While this Court prefers, where possible, the parties settle the action when Defendant's sole homestead is it risk, and respects zealous legal advocacy, frivolous arguments are not acceptable, especially from experienced foreclosure attorneys.
Defendant's attorney's frivolous motion filing lacks merit in fact and law, and has, once again, delayed Plaintiffs entitlement to proceed to foreclosure auction. Hence, The Biolsi Law Group is cautioned (see 22 NYCRR § 130-1.1[c][1] and [c] [2]).
Accordingly, the above-referenced motion by Defendant Lorraine Cunningham (mot. seq. #13) is DENIED and it is:
ORDERED that all Stays are lifted forthwith, and the Plaintiff may proceed to foreclosure sale; and it is further
ORDERED that Plaintiff shall be permitted to apply forthwith to the Foreclosure Department for a date on which to conduct the auction and sale of the foreclosed premises; and it is further
ORDERED, that Plaintiffs and Defendant's attorneys, to the extent they have not done so, shall file their notices of appearance (or consent to change attorney forms, if applicable) forthwith; and it is further
ORDERED that within 10 days of the date of entry of this Order, the moving Defendant shall serve a copy of the Order with Notice of Entry upon the Referee, and all other parties and persons entitled to notice of these proceedings, by overnight mail.
The foregoing constitutes the Decision and Order of this Court.