Opinion
25616/09.
Decided March 24, 2010.
Alexander Karasik, Esq., Plaintiff.
Tamara Savery, Esq., Defendant.
The motion, by Order to Show Cause, by plaintiff Maryann Furman seeks an order setting aside the non-judicial foreclosure sale of shares of stock in her cooperative apartment and for injunctive relief pursuant to CPLR 6301 and the motion by defendant Wells Fargo Home Mortgage Inc. (Wells Fargo) for an order, pursuant to CPLR 3211(a)(1) and 3211(a)(6), dismissing the complaint against it are consolidated for disposition herein and, upon consolidation: (1) that branch of the motion by Wells Fargo for an order dismissing plaintiff's Uniform Commercial Code claims (the "first" second cause of action) is granted and (2) Wells Fargo's remaining requests for relief and plaintiff's motion are held in abeyance pending a hearing before a Judicial Hearing Officer in the TAP Part pursuant to Article 22 of the Judicial Law in accordance with 12 NYCRR Part 122. Upon the filing of the requisite forms and the approval of the Administrative Judge, the date will be fixed by the Clerk of the Part.
In this action to annul a foreclosure sale of shares of stock in a cooperative apartment pursuant to Section 9-610 of the Uniform Commercial Code, Ms. Furman alleges, among other things, that she purchased the premises at 2546 East 13th Street in Brooklyn in 2002, that in March 2009 she fell behind in her mortgage payments to Wells Fargo, and that it subsequently commenced foreclosure proceedings against her. According to plaintiff, she applied for a "loan workout solution" with Wells Fargo and, in July 2009, by virtue of a written Stipulated Partial Reinstatement/Repayment Agreement (the Agreement), Wells Fargo agreed to a dismissal of the foreclosure action. Ms. Furman further alleges that she complied with the Agreement by making an initial payment to Wells Fargo of $482 by July 30, 2009, but Wells Fargo failed to communicate such information to its counsel and, on September 3, 2009, a foreclosure sale was held. Because Wells Fargo's agents allegedly admitted over the telephone that a mistake had been made, the plaintiff seeks to annul the sale and to prohibit the transfer of the premises, as well as money damages.
In her motion, Ms. Furman seeks an order nullifying the foreclosure sale and reinstating the proprietary lease between her and defendant Atlantic Towers Apt. Corp. Although such relief, if granted, would seem to obviate the need for injunctive relief, she also requests that the defendants be restrained from selling or transferring the premises. In an affidavit, Ms. Furman essentially repeats her allegations regarding her financial hardship, her agreement with Wells Fargo, her compliance with the terms of the Agreement and Wells Fargo's mistake in allowing the sale to proceed. She notes that the Agreement provided that she was to make a payment in the amount of $19,521.37 by October 1, 2009 and she is "prepared to make [the payment] once the subject sale is annulled and the foreclosure proceedings are dismissed."
In opposition to the Order to Show Cause, defendant Keith Wachtell (Wachtell), who successfully bid to purchase the subject shares, argues that, once the foreclosure sale took place, the plaintiff was precluded from exercising a right to redeem the property. Wachtell challenges Ms. Furman 's assertion that she still resides at the subject premises and her claim that she had an agreement with Wells Fargo. Wachtell points out that the letter agreement with Wells Fargo is dated August 6, 2009 and, therefore, he dismisses plaintiff's payment of $482 on July 29, 2009 as a "random payment" unrelated to an agreement allegedly reached with Wells Fargo. Wachtell also faults the plaintiff for failing to produce an affidavit from Wells Fargo's attorneys to corroborate her claim that a mistake was made by Wells Fargo when it allowed the sale to proceed.
In reply, Ms. Furman notes that, according to the Terms of Sale governing the non-judicial sale, the successful bid was subject to any prior arrangement between the plaintiff and Wells Fargo for the reinstatement, payoff or modification of the mortgage and, if any such arrangement had been made, the sale would be deemed null and void. Since Ms. Furman allegedly made a "valid reinstatement agreement" with Wells Fargo, she contends that she is entitled to cancellation of the sale. In a further affirmation in reply, she asserts that she received the Agreement, dated August 6, 2009, on August 17, 2009 and, on August 18, 2009 (within 48 hours thereafter), she returned it in the same manner (as evidenced by the "fax job log", Exhibit "A" of the further reply).
In its motion, Wells Fargo points out that, in an effort to assist Ms. Furman after her default in payment, it offered her a Stipulated Partial Reinstatement/Repayment Agreement in late July or early August 2009, which agreement provided that, in order to achieve full reinstatement, the plaintiff and her loan co-signer Galina Zhigun (her mother-in-law) were required to remit $482 to Wells Fargo by July 30, 2009, sign and return the Agreement within 48 hours and remit $19,523.37 by October 1, 2009. According to the affidavit of Tamara Savery, a Litigation Specialist for Wells Fargo, the plaintiff did not sign the Agreement until August 18, 2009 and did not return it until after the September 3, 2009 sale and Galina Zhigun never signed it or returned it. Wells Fargo points out that Ms. Furman asserts three cause of action against it — a first cause of action for breach of contract, a second cause of action which alleges that Wells Fargo did not conduct the sale in a commercially reasonable manner and that it did not validly serve the Notice of Sale upon her, and a cause of action for specific performance of the Agreement (likewise designated as a "second" cause of action). In addition to arguing that it did not breach any agreement with plaintiff, Wells Fargo contends that the notice of sale was served pursuant to Uniform Commercial Code (UCC) § 9-611 (b) and that the sale was properly conducted. Therefore, Wells Fargo asserts that all claims against it should be dismissed.
"Every aspect of a disposition of collateral, including the method, manner, time, place, and other terms, must be commercially reasonably" (UCC 9-610 [b]). "A disposition of collateral is made in a commercially reasonable manner if the disposition is made: (1) in the usual manner on any recognized market; (2) at the price current in any recognized market at the at the time of the disposition; or (3) otherwise in conformity with reasonable commercial practices among dealers in the type of property that was the subject of the disposition" (UCC 9-627 [b] [1-3]). In her complaint, Ms. Furman fails to allege any facts to support her conclusory allegation that Wells Fargo did not conduct the sale in a commercially reasonable manner. She merely alleges that it had no legal basis for the sale because she was not in breach of any agreement with Wells Fargo. Moreover, with respect to the notice of sale, Ms. Furman has not offered any evidence to rebut Wells Fargo's affidavit of service of the notice of sale by certified mail and regular first class mail pursuant to UCC 9-611 [b] (see DeRosa v Chase Manhattan Mortg. Corp. , 10 AD3d 317 ). Under the circumstances, therefore, plaintiff's Uniform Commercial Code claims are dismissed.
The Terms of Sale specifically apprised potential bidders that the successful bid would be subject to any arrangement made prior to the sale between the plaintiff in the foreclosure action (Wells Fargo) and the borrowers (MaryAnn Furman and Galina Zhigun) for the reinstatement, payoff, modification or workout of the delinquent note and mortgage which was "at this time unknown" to the referee and that, in such event, the sale would be deemed null and void (see Ameriquest Mortg. Co. v Bellon , 29 AD3d 612; Artgage Co. v Papa, 12 Misc 3d 1177[A] [2006]). The sale occurred on September 3, 2009; however, Ms. Furman alleges that she and Wells Fargo reached a written agreement for the reinstatement of the mortgage, that the referee was not advised of the agreement by Wells Fargo's counsel prior to the sale and that she complied with her obligations under the agreement. Although Ms. Furman asserts that she signed the agreement and faxed a copy thereof to Wells Fargo's office, as directed, Wells Fargo claims otherwise. Under the circumstances, it is not possible to summarily resolve the issue of Ms. Furman s compliance with the terms of the Agreement. Accordingly, a hearing is necessary to determine the issue (see Reda v Voges, 192 AD2d 611; Unger v Joy, 78 AD2d 680). Since the sale occurred before Ms. Furman was required to pay an additional $19,523.37 to Wells Fargo, she did not do so. However, she should be prepared to demonstrate at the hearing that she is now ready, willing and able to remit such sum.
Pending the outcome of the hearing, the stay upon the transfer of the subject shares of stock shall continue in effect.
The foregoing constitutes the decision and order of this court.