Opinion
2016-09447, 2016-09451 Index No. 56393/14
08-13-2019
BANK OF NEW YORK MELLON, etc., Respondent, v. Derek SMITH, Appellant, et al., Defendants.
DECISION & ORDER ON MOTION
The appellant, Derek Smith, having appealed to this Court from two orders of the Supreme Court, Westchester County, both dated May 24, 2016, and having perfected the appeals on March 6, 2017, the respondent having filed a brief on April 6, 2017, and the appellant having filed a reply brief on April 27, 2017, the matter was placed on the calendar for February 11, 2019. On February 6, 2019, Day Pitney, LLP, appellate counsel for the respondent, submitted a stipulation to withdraw the appeals. By order to show cause dated February 8, 2019, the parties to this appeal and their respective counsel, including Gross Polowy, LLC, trial counsel for the respondent, Day Pitney, LLP, appellate counsel for the respondent, and Marcos & Sitaras, PLLC, counsel for the appellant, were directed to show cause before this Court why an order should or should not be made and entered imposing such sanctions and/or costs, if any, against them pursuant to 22 NYCRR 1250.2(c) as this Court may deem appropriate.
Now, upon the order to show cause and the papers filed in response thereto, it is
ORDERED that within 20 days of service upon it of a copy of this decision and order on motion, Gross Polowy, LLC, trial counsel for the respondent, is directed to pay a sanction in the sum of $1,000 to the Lawyers' Fund for Client Protection of the State of New York; and it is further,
ORDERED that within 10 days after payment of the sanction, Gross Polowy, LLC, shall file proof of payment with the Clerk of this Court; and it is further,
ORDERED that within 20 days of service upon it of a copy of this decision and order on motion, Day Pitney, LLP, appellate counsel for the respondent, is directed to pay a sanction in the sum of $250 to the Lawyers' Fund for Client Protection of the State of New York; and it is further,
ORDERED that within 10 days after payment of the sanction, Day Pitney, LLP, shall file proof of payment with the Clerk of this Court; and it is further,
ORDERED that Bank of New York Mellon is directed to pay a sanction in the sum of $500, and shall deposit the sum of $500 with the Clerk of this Court for transmittal to the Commissioner of Taxation and Finance (see 22 NYCRR 130–1.1 [b]; 130–1.3), within 20 days after service of a copy of this decision and order on motion upon Gross Polowy, LLC; and it is further,
ORDERED that the Clerk of this Court, or her designee, is directed to serve counsel for the parties with a copy of this decision and order on motion. With summons and complaint dated March 14, 2013, Bank of New York Mellon (hereinafter New York Mellon) commenced an action against, among others, Derek Smith to foreclose a mortgage securing certain real property (hereinafter the 2013 action). While the 2013 action was still pending, with summons and complaint dated April 14, 2014, New York Mellon commenced a separate successive action against Smith (hereinafter the 2014 action) to foreclose the same mortgage securing the same real property that was at issue in the 2013 action. At all times relevant to the issues determined herein, New York Mellon was represented in the trial court by Gross Polowy, LLC (hereinafter Gross Polowy), in both the 2013 action and the 2014 action.
While the 2013 action remained pending, New York Mellon moved in the 2014 action for, among other relief, summary judgment. In an order dated May 24, 2016, the Supreme Court, inter alia, granted that branch of the motion of New York Mellon which was for summary judgment on the complaint insofar as asserted against Smith. In a second order, also dated May 24, 2016, the same court, among other things, referred the matter to a referee to compute the amount due to the plaintiff.
Smith appealed to this Court from both of the orders dated May 24, 2016. Smith's appeals were perfected on March 6, 2017, and an affidavit of service states that the appellant's brief and record on appeal were served by mail upon Gross Polowy, as counsel for New York Mellon, on that same date. On March 21, 2017, a notice of appearance was filed in this Court by Day Pitney LLP (hereinafter Day Pitney), stating that it had been retained to represent New York Mellon in connection with these appeals. Day Pitney thereafter filed a respondents' brief in this Court on behalf of New York Mellon on April 6, 2017. Smith filed a reply brief on April 27, 2017.
The appeals were placed on this Court's calendar for February 11, 2019. On February 6, 2019, Day Pitney submitted a stipulation in which the parties to the appeals agreed to withdraw the appeals. By order to show cause dated February 8, 2019, the parties to this appeal and their respective counsel, including Gross Polowy, Day Pitney, and Marcos & Sitaras, PLLC (hereinafter Marcos & Sitaras), counsel for Smith, were directed to show cause before this Court why an order should or should not be made and entered imposing such sanctions and/or costs, if any, against them pursuant to 22 NYCRR 1250.2(c) as this Court deemed appropriate. In response to this Court's order to show cause, Gross Polowy, Day Pitney, and Marcos & Sitaras have all submitted affirmations in which they argue that sanctions should not be imposed. Oral argument on the motion was subsequently held before this Court on February 27, 2019. For the reasons that follow, we conclude that Gross Polowy, Day Pitney, and New York Mellon should all be sanctioned for their flagrant violations of 22 NYCRR 1250.2(c).
On June 29, 2018, the Presiding Justices of the Appellate Division promulgated statewide Practice Rules of the Appellate Division (see 22 NYCRR part 1250). These rules became effective on September 17, 2018, and apply, with limited exceptions not relevant here, "to each matter pending in the Appellate Division" on that date (Joint Order of Depts of N.Y. St Sup Ct, App.Div., dated June 29, 2018). Section 1250.2(c) of the Rules of the Appellate Division, All Departments (22 NYCRR), provides, in pertinent part, that "[t]he parties or their attorneys shall immediately notify the court when there is a settlement of a matter or any issue therein or when a matter or any issue therein has been rendered moot ... Any such notification shall be followed by an application for appropriate relief. Any party or attorney who, without good cause shown, fails to comply with the requirements of this subdivision may be subject to the imposition of sanctions."
This subdivision, by its plain language, is applicable to both "the parties" and "their attorneys" and it imposes a continuing obligation to monitor the status of the case and to apprise the Appellate Division of certain developments that might affect a pending appeal ( 22 NYCRR 1250.2 [c] ). Although, pursuant to this subdivision, only one party or attorney needs to notify the Court of the relevant developments, all of the parties and their attorneys are independently responsible for ensuring that timely notification occurs (see id. ). Where, as here, timely notification is not given by any of the parties or their attorneys, they may each be held independently responsible and, absent a showing of good cause for the failure to ensure a timely notification, sanctioned for their respective conduct (see id. ). Here, the record demonstrates that on July 12, 2018, Gross Polowy "received confirmation" that the 2013 action had been settled as a result of a modification of the underlying mortgage. Since that same mortgage formed the basis for the 2014 action, the modification of the mortgage triggered Gross Polowy's duty to "immediately notify the court" ( 22 NYCRR 1250.2 [c] ). Indeed, by continuing to actively participate in these actions in its capacity as trial counsel during the pendency of these appeals, Gross Polowy had a continuing obligation to advise its client's appellate counsel, Day Pitney, of the settlement of the 2013 action and the modification of the mortgage. However, it is undisputed that, over the course of the next six months, Gross Polowy did not take any steps to ensure or confirm that this Court or New York Mellon's appellate counsel was notified of the settlement. Under the circumstances, Gross Polowy's excessive delay, coupled with the absence of any viable explanation for its failure to comply with 22 NYCRR 1250.2(c), warrants the imposition of sanctions in the sum of $1,000.
As indicated, New York Mellon had an independent duty to take steps to ensure that this Court was notified of the settlement that it had reached with Smith (see 22 NYCRR 1250.2 [c] ). There is no allegation that New York Mellon took any steps to ensure or confirm that this Court was timely notified of the settlement. The only explanation for this failure was provided by Gross Polowy during oral argument of this motion to impose sanctions, where it was argued that the attorneys it had assigned to handle the 2013 action had not communicated with the attorneys it had assigned to handle the 2014 action. Contrary to Gross Polowy's contention, the confusion stemming from New York Mellon's dubious practice of maintaining two simultaneous actions against the same party for the same relief does not constitute good cause for its failure to comply with 22 NYCRR 1250.2(c). Under the circumstances, New York Mellon's excessive delay, coupled with the absence of any viable explanation for its failure to comply with 22 NYCRR 1250.2(c), warrants the imposition of sanctions in the sum of $500.
The record establishes that Marcos & Sitaras was aware of the settlement and modification in July 2018. However, unlike Gross Polowy and New York Mellon, an attorney for Marcos & Sitaras outlines the affirmative steps he took to secure dismissal of the 2014 action after the underlying mortgage had been modified and provides an explanation as to why he was reluctant to withdraw the appeals after the settlement was reached. In this regard, he contends that New York Mellon and Gross Polowy refused to voluntarily discontinue the 2014 action and, since that action remained pending, the orders that had been appealed remained valid and enforceable. Under these circumstances, we decline to impose sanctions, in the exercise of discretion, against Smith or Marcos & Sitaras pursuant to 22 NYCRR 1250.2(c).
Finally, New York Mellon's appellate counsel, Day Pitney, represents that it first learned of the settlement from Gross Polowy on January 15, 2019. Day Pitney sets forth the steps it took to obtain the stipulation withdrawing the appeals once it was apprised of the settlement. However, notwithstanding these actions, Day Pitney did not contact this Court until February 6, 2018, approximately three weeks after it first learned of the settlement and modification of the underlying mortgage. It cannot be said that this conduct complied with Day Pitney's obligation to "immediately notify the court" when there is a relevant development ( 22 NYCRR 1250.2 [c] [emphasis added] ). As the rule itself suggests, once this Court was notified of the settlement and modification of the underlying mortgage, "an application for appropriate relief" could have been submitted on a later date (id. ).
Day Pitney further contends that, although there was a "delay" in notifying this Court of the modification of the underlying mortgage, that "delay has not prejudiced appellant or respondent." This argument fails to account for one of the primary purposes of section 1250.2(c) of the Rules of the Appellate Division, All Departments (22 NYCRR), which is to protect the Appellate Courts from spending time analyzing matters that have been rendered academic. Indeed, if this Court had been timely advised of the settlement and modification in this case, it would have been able to devote additional resources to one of the many actual controversies that fill our docket. Under the circumstances, the failure of Day Pitney to comply with 22 NYCRR 1250.2(c) warrants the imposition of sanctions in the sum of $250.
SCHEINKMAN, P.J., BALKIN, MILLER and HINDS–RADIX, JJ., concur.