Opinion
IAS PART 34 Index No.: 9349/08 Motion No.: 11 & 12 Motion Seq.: 5 & 6
01-30-2012
EASTERN SAVINGS BANK Plaintiff, v. REBECCA THOMAS, Defendant.
SHORT FORM ORDER
PRESENT: HON. ROBERT J. McDONALD
Justice
The following papers numbered 1 to 19 read on this motion by defendant Rebecca Thomas for an order setting aside the referee's sale and deed to Winged Foot Investments Inc., dated March 10, 2010, pursuant to CPLR 2003; vacating the judgment of foreclosure and sale dated March 18, 2008 and entered on January 19, 2010, pursuant to CPLR 5015(a)(3); and dismissing the complaint pursuant to CPLR 3211(a)(7). Defendant Rebecca Thomas separately moves for an order staying the eviction proceeding commenced in the Civil Court, Queens County, pending the determination of the companion motion.
+-----------------------------------------------------------------------------+ ¦ ¦Papers Numbered¦ +-------------------------------------------------------------+---------------¦ ¦Order to Show Cause-Affidavit-Exhibits(A-I) ¦1-3 ¦ +-------------------------------------------------------------+---------------¦ ¦Opposing Affirmation-Exhibits(A-L) ¦4-6 ¦ +-------------------------------------------------------------+---------------¦ ¦Defendant's Supplemental Affirmation-Affidavit- Exhibits(A-K)¦7-10 ¦ +-------------------------------------------------------------+---------------¦ ¦Opposing Affirmation-Exhibits(A-H, 1-12) ¦11-13 ¦ +-------------------------------------------------------------+---------------¦ ¦Reply Affidavit-Exhibits(A-C-2) ¦14-16 ¦ +-------------------------------------------------------------+---------------¦ ¦Order to Show Cause-Affidavit-Exhibits(A-C) ¦17-19 ¦ +-----------------------------------------------------------------------------+
Upon the foregoing papers these motions are consolidated for the purposes of a single decision and are determined as follows:
The instant foreclosure action is based upon defendant Rebecca Thomas' non-payment of a mortgage debt related to 105-34 171 Place, and 105-34 169th Street, Jamaica, New York. Said action was commenced on April 14, 2008, and defendants Rebecca Thomas and
Renee Wishart defaulted in answering the complaint. This court granted a judgment of foreclosure and sale on December 18, 2009, which was entered on January 13, 2009. The foreclosure sale was noticed for September 11, 2009. On the day of the sale Thomas filed a motion by way of an order to show cause, in which she sought to interpose an answer and vacate the judgment of foreclosure and sale. Thomas obtained a stay of the foreclosure sale pending a determination of said motion. This court, in an order dated November 19, 2009 and filed on November 30, 2009, denied Thomas' motion as she had failed to establish a reasonable excuse for her default and a meritorious defense to the foreclosure action.
On December 9, 2009, plaintiff sent a notice of sale to defendant's then counsel, and the foreclosure sale was held on January 22, 2010, at which time plaintiff was the successful bidder for both properties. On March 4, 2010, the Referee executed a Referee's Report of Sale and a Referee's deed, transferring title to the property to plaintiff's assignee, Winged Foot Investments, Inc. (Winged Foot). On April 19, 2010, Thomas was served with a ten-day notice to quit the property. On June 22, 2010, Winged Foot and Eastern Savings Bank FSB commenced summary proceedings in Civil Court, Queens County, and served Thomas with process in said proceedings on July 10, 2010.
On August 10, 2010, Thomas moved by way of an order to show cause to vacate the judgment of foreclosure of sale, pursuant to CPLR 317 and 5015, and obtained a stay of the Civil Court proceedings, pending a determination of the order to show cause. This court, in an order dated September 2, 2010 and entered on September 30, 2010, denied that motion, as Thomas had failed to establish a reasonable excuse for her default and a meritorious defense to the foreclosure action. The court also determined that Thomas had not established that the foreclosure purchase price was unconscionable; that any basis existed for setting aside the referee's sale of the properties; and that errors made regarding the service of the notice of sale was trivial.
Defendant Thomas, pursuant to an order to show cause filed in the Appellate Division, Second Department, sought to enjoin the Civil Court proceedings, pending the determination of her unperfected appeal of the order of September 2, 2010. The requests for a temporary restraining order, however, were stricken from the order to show cause dated October 27, 2010 and by signed by the Hon. Sandra L. Sgroi.
Winged Foot and Rebecca Thomas and Renee Wishart entered into a stipulation of settlement in the Civil Court action dated on January 24, 2010 (2011), whereby the final judgment of possession and warrant to issue forthwith was stayed to and including March 22, 2011. Winged Foot agreed to enter into a contract of sale to sell the property known as 105-34 171St Place, Jamaica, New York to Thomas' designees, and Thomas agreed to withdraw her appeal of the order of September 2, 2010. Thomas' designees, however, failed to order a title report, obtain a mortgage commitment and close title, despite the seller having sent a letter to the purchasers stating that time was of the essence. Winged Foot, therefore, pursuant to the terms of the stipulation obtained a judgment of possession and warrant of eviction with respect to the property known as 105-34 171st Place, Jamaica, New York.
Defendant Thomas, in the within order to show cause and affidavit dated August 26, 2011, now seeks an order setting aside and vacating the Referee's sale conducted on January 22, 2010, and setting aside the referee's deed, pursuant to CPLR 2003; vacating the judgment of foreclosure and sale, pursuant to CPLR 5015(a)(3); and dismissing the complaint pursuant to CPLR 3211(a)(7).
Defendant Thomas was self represented when she served the within order to show cause, and has since retained counsel. Defendant's counsel in a supplemental affirmation, seeks to supplement the order to show cause and requests the following additional relief: an order vacating the judgment of foreclosure and sale based on lack of personal jurisdiction and fraud; vacating the referee's report and computation; permitting defendants to interpose an answer with counterclaims; and disqualifying Kriss & Feuerstein from representing plaintiff in this action. Plaintiff has responded in full to defendant's requests for additional relief.
That branch of defendant's motion which seeks to disqualify plaintiff's counsel is denied. A party's right to counsel of its choosing is a valued right that should not be abridged absent a clear showing that disqualification is warranted (S & S Hotel Ventures L.P. v 777 S.H. Corp., 69 NY2d 437, 443, 445 [1987]; Goldstein v Held, 52 AD3d 471, 472 [2008]). Defendant's counsel wholly conclusory allegations regarding the lender's counsel conduct at the closing are not based on personal knowledge, and therefore lack probative value. In addition, Ms. Thomas acknowledges in her affidavit that Fass & Feuerstein, LLP represented the lender at the closing and only provided her with information regarding the amount of the sum she would receive as a result of the loan. The court finds that no basis exists for disqualifying counsel from representing the plaintiff in this action.
That branch of defendant's motion which seeks an order setting aside the judicial sale of the foreclosed properties and vacating the referee's deed, pursuant to CPLR 2003, is denied. This claim was raised for the first time more than a year after the January 22, 2010 sale of the foreclosed properties, and therefore, is time barred. (see CPLR 2003; Henriques v DeSoto Realty Corp., 170 AD2d 577 [1991]; Todd Supply v Hodgkiss, 133 AD2d 1006 [1987]).
Defendant's counsel asserts, in a supplemental affirmation, that the within motion is a motion to renew Thomas' prior motion which resulted in the order of September 2, 2010. Defendant Thomas in her prior motion sought to set aside the foreclosure sale on the grounds that it violated RPAPL 231(5); to set aside the referee's deed dated March 4, 2010; to vacate the judgment of foreclosure and sale dated March 18, 2008 and entered January 19, 2009, pursuant to CPLR 317 and 5015(a)(1); to permit the defendants to interpose an answer; to restrain the plaintiff and successful bidder from continuing with holdover proceedings in the Civil Court, Queens County; and to enjoin the further transfer of the premises. Defendant Thomas now seeks to raise new defenses to the foreclosure action, and asserts that as her prior counsel failed to raise these defenses, the evidence presented should be deemed to have been "unavailable" at the time the prior motion was made.
"A motion for leave to renew is not a second chance freely given to parties who have not exercised due diligence in making their first factual presentation" (Elder v Elder, 21 AD3d 1055, 1055 [2005]; see Matter of Allstate Ins. Co. v Liberty Mut. Ins., 58 AD3d 727[2009]). A motion for leave to renew must be based upon new facts, not offered on the original application, "that would change the prior determination" (CPLR 2221[e][2]; see Matter of Korman v Bellmore Pub. Schools, 62 AD3d 882, 884 [2009]). The new or additional facts must have either not been known to the party seeking renewal (see Matter of Shapiro v State of New York, 259 AD2d 753 [1999] or may, in the Supreme Court's discretion, be based on facts known to the party seeking renewal at the time of the original motion ( see Cole-Hatchard v Grand Union, 270 AD2d 447 [2000]). However, in either instance, a "reasonable justification" for the failure to present such facts on the original motion must be presented (CPLR 2221[e][3]; see Dervisevic v Dervisevic, 2011 NY Slip Op 8111, AD3d , 932 NYS2d 347 [2011]; see Matter of Korman v Bellmore Pub. Schools, 62 AD3d at 884). What constitutes a "reasonable justification" is within the Supreme Court's discretion (Heaven v McGowan, 40 AD3d 583, 586 [2007]).
Here, the "new evidence" offered by defendant consists of information that the defendant knew at the time of the prior 2010 motion, as it is based upon the loan transaction, loan documents, and the papers served by the plaintiff when it commenced this action. Although law office failure can be accepted as an excuse as to why the additional facts were not submitted on the original application, mere neglect is not an acceptable excuse (Morrison v Rosenberg, 278 AD2d 392 [2000]; Cole-Hatchard v Grand Union, 270 AD2d 447 [2000]). Defendant was represented by four different attorneys in this action and their alleged failure to present a meritorious defense, or to proffer additional defenses to the underlying foreclosure action, does not constitute a basis for renewal. Therefore, that branch of defendant Thomas' motion for leave to renew the prior 2010 motion, is denied.
That branch of defendant's motion which seeks an order vacating the judgment of foreclosure and sale on the grounds of lack of personal jurisdiction, is denied. This court, in its order of November 19, 2009, determined that defendants' bare denials of service were insufficient to raise any factual dispute as to service, and failed to establish a reasonable excuse for their default in answering the complaint. The court further determined that defendants had not alleged a meritorious defense to the foreclosure action. In the order of September 2, 2010, the court stated that the prior order dealt with the question of service, and that the denial of the prior order to show cause, precluded the court from accepting the proposed answer. Defendant Thomas, therefore, is now barred by the doctrine of law of the case from re-litigating the issue of personal jurisdiction (see People v Evans, 94 NY2d 499, 502 [2000]; Martin v City of Cohoes, 37 NY2d 162, 165 [1975]; Gilligan v Reers, 255 AD2d 486, 487 [1998]; Baldasano v Bank of N.Y., 199 AD2d 184, 185 [1993]).
That branch of defendant's motion which seeks to vacate the judgment of foreclosure and sale on the grounds of fraud, pursuant to CPLR 5015(a)(3), is denied. CPLR 5015(a)(3) provides that the court may vacate a judgment on the grounds of "fraud, misrepresentation, or other misconduct of an adverse party." (see Oppenheimer v Westcott, 47 NY2d 595, 603 [1979]). Although there is no express time limit for seeking relief from a judgment pursuant to CPLR 5015 (a) (3), a party is required to make the motion within a reasonable time (see Felix v Law Off. of Thomas F. Liotti, 2011 NY Slip Op 8899, AD3d , 933 NYS2d 874 [2011]; Matter of Rockland Bakery, Inc. v B.M. Baking Co., Inc., 83 AD3d 1080, 1082 [2011]; Bank of N.Y. v Stradford, 55 AD3d 765, 765 [2008]; Sieger v Sieger, 51 AD3d 1004, 1006 [2008]; Aames Capital Corp. v Davidsohn, 24 AD3d 474, 475 [2005]; Miller v Lanzisera, 273 AD2d 866, 868 [2000]). Here, defendant Thomas' delay of more than two years after entry of the judgment of foreclosure and sale in moving to vacate the judgment, despite her awareness of all relevant facts surrounding the issue, is unreasonable (see Rizzo v St. Lawrence Univ., 24 AD3d 983, 984 [2005]).
Furthermore, CPLR 5015(a)(3) requires the movant to articulate a fraud, not in the inducement of the agreement or the execution of the documents which form the basis for the complaint, but in the procurement of the judgment (see Fidelity New York, FSB v Hanover Companies, Inc., 162 AD2d 582, 583 [1990]; Marine Midland Bank v Hall, 74 AD2d 729 [1980]; see also In re Holden, 271 NY 212, 218 [1936]). It is only in those cases wherein the moving defendant advances specific and substantiated allegations that the plaintiff or its agents engaged in acts constituting extrinsic fraud, that is, wrongful acts of trickery or deceit which allegedly induced the moving defendant into defaulting or otherwise wrongfully deterred him or her from litigating the plaintiff's claims and demonstrates justifiable reliance thereon, will a vacatur of a default in answering be excused as reasonable (see CPLR 5015 [a][3]; Midfirst Bank v Al-Rahman, 81 AD3d 797 [2011]; Tribeca Lending Corp. v Crawford, 79 AD2d 1018 [2010]; Bank of New York v Stradford, supra; Wells Fargo v Linzenberg, 50 AD3d 674 [2008]; Citicorp Vendor Fin., Inc. v Island Garden Basketball, Inc., 27 AD3d 608, 609 [2006]; Aames Capital Corp. v Davidsohn, 24 AD3d 474 [2005]; American Shoring, Inc. v D.C.A. Constr., Ltd., 15 AD3d 431 [2005]; Hall Signs, Inc. v Aries Striping, Inc., 250 AD2d 811 [1998]; Cofresi v Cofresi, 198 AD2d 321, 321-322 [1993] ; Marine Midland Bank v Hall, 74 AD2d 729, 729-730 [1980]).
Defendant Thomas does not claim that the plaintiff engaged in any fraud, misrepresentation, or other misconduct that prevented her from fully and fairly litigating this matter, in other words, extrinsic fraud (see In re Holden, 271 NY 212 [1936]; Heidari v First Advance Funding Corp., aff'd 55 AD3d 669 [2008]; Putnam County Nat. Bank of Carmel v Simpson, 204 AD2d 297 [1994]). What defendant alleges is that the underlying mortgage was obtained by fraud, in other words, intrinsic fraud. Where a claim is based on intrinsic fraud, a court may vacate a default judgment pursuant to CPLR 5015 (a)(3) provided that the movant demonstrates both a reasonable excuse for the default and the existence of a meritorious defense (see Bank of New York v Lagakos, 27 AD3d 678 [2006]). This court has previously determined that defendant Thomas has not demonstrated a reasonable excuse for her default in answering the complaint, and as stated above, she is barred from re-litigating this issue by the doctrine of the law of the case. That branch of defendant's motion which seeks to vacate the judgment of foreclosure and sale, therefore, is denied.
To the extent that defendant seeks to raise as a defense the plaintiff's alleged failure to comply with a condition precedent to suit, the court cannot consider this defense, as defendant has not established a basis to vacate the default judgment.
Defendant Thomas, in connection with the loan and mortgage, entered into a "cash collateral and interest reserve agreement" with the lender, Eastern Savings Bank, FSB, dated October 31, 2006, whereby $40,000.00 was placed into an interest bearing money market. Said agreement authorized certain named trustees, employees of the lender, to withdraw the sum of $3,333.33 from the reserve and apply said sum to "supplement monthly payments of interest, principal, taxes and insurance due and owing under the terms of the Note and Mortgage commencing January 1, 2007 and continuing until the Reserve is depleted."
Defendant's counsel claims that no portion of said $40,000.00 was ever applied to outstanding interest on the loan. Plaintiff's counsel, however, states in his affidavit that the $40,000.00 held in escrow was already depleted when the default occurred, and therefore the Referee did not include the entire amount in his calculations. Defendant Thomas' claims, in her reply papers, that said agreement is unenforceable. This claim is without merit as Ms. Thomas does not deny that she executed said agreement. Furthermore, this agreement inured to the benefit of the defendants', as the lender never claimed that it was owed interest for any period prior to the default.
The Referee, in his report and computation, clearly set forth the escrow balance of $1,463.90, and credited the defendants with this amount, which was subtracted from the advances made by the lender for the payment of insurance and taxes on the mortgaged properties following the default. The Referee, in making his computations, did not award interest for any period prior to the default. Defendant's counsel's assertion that the Referee's computations were incorrect, are rejected. Therefore, that branch of defendant's motion which seeks to vacate the Referee's report and computation on the grounds that it was based on an inaccurate calculation of the amount due, is denied.
That branch of defendant's motion which seeks to interpose an answer and counterclaims, is denied. Defendant may not re-litigate her default in answering the complaint, and in the absence of any basis for vacating the judgment of foreclosure and sale, defendant may not interpose an answer and counterclaims. The court, therefore, declines to make any determination with respect to the additional defenses defendant now seeks to interpose in this concluded foreclosure action.
Accordingly, defendant's motion for an order setting aside the referee's sale and deed to Winged Foot Investments Inc., dated March 10, 2010, pursuant to CPLR 2003; vacating the judgment of foreclosure and sale dated March 18, 2008 and entered on January 19, 2010, pursuant to CPLR 5015(a)(3); and dismissing the complaint pursuant to CPLR 3211(a)(7), is denied in its entirety. Defendant's request for leave to renew her prior motion which resulted in the order of September 2, 2010, is denied. The remainder of defendant's motion is denied in its entirety. Defendant's separate motion for a stay of the Civil Court proceedings is denied as moot. Dated: Long Island City, NY
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ROBERT J. McDONALD
J.S.C.