Opinion
24341/06.
Decided January 5, 2009.
Gena Goldberger, Esq, Berkman, Henoch, Peterson Peddy, PC, Plaintiff Attorney.
Jay Markowitz, Esq, David L Stern, Esq., Stern Stern, Esq., Defendant Attorney.
Calixte Valentin, one of the named defendants herein, has moved this court by Order to Show Cause, dated the 2nd day of October, 2008 to vacate the judgment of foreclosure auction and sale of his home, located at 3510 Avenue L, Brooklyn, NY, and to void and reverse the transfer of title to said premises from Rafael Badalov, the successful bidder at the mentioned sale, to him and his wife, Marie Valentin. Mr. Valentin represents that he and his wife executed a Greenpoint mortgage on the subject property for $93,750.00 on December 16, 1992 on which a foreclosure action was commenced in 2006. In October of said year, a reinstatement letter was received by him calling for payment of $11,045.49 ($9,806.75 in loan defaults plus $1,238.74 in legal fees) to restore the mortgage, which sum he withdrew from his checking account and sent to plaintiff's attorneys on November 18, 2006. Approximately six weeks later the check was returned to him, whereupon he and his wife consulted with an attorney who advised them that he was in contact with Greenpoint's lawyer. Thereafter, he ceased receiving monthly mortgage statements, and thereafter received court documents which were turned over to the lawyer that he had retained whom he assumed was negotiating a payment plan with the bank until receiving notice that a foreclosure sale had taken place and the property deeded over to Rafael Badalov on or about June 13, 2008.
Greenpoint Mortgage Funding, Inc., in its affirmation in opposition, argues against Mr. Valentin's application on the grounds that he, 1. failed to make service of the order to show cause pursuant to CPLR 403(a), (d); 2. has no meritorious defense evidenced by the fact that he defaulted on the loan and failed to provide the full amount necessary to reinstate the same; and 3. failed to deposit monies into court in compliance with the requirements of RPAPL 1341. More particularly, Greenpoint asserts that the defendant's failure to have personally served the supporting papers on or before October 8, 2008 as required by the order to show cause rendered the matter jurisdictionally defective (citing, Scharmann's Inc. v. 388 West Broadway, LLC, 258 AD2d 262, 685 NYS2d 33 [1st Dept., 1999], quoting Zambelli v. Dillon, 242 AD2d 353, 661 NYS2d 268 [2d Dept., 1997]). In addition, a vacatur of the judgment requires a showing of likelihood of success on the merits which is countermanded by the defendant's default and repeated attempts to make partial payments. Furthermore, to have avoided the auction sale, the defendant was required by the provisions of RPAPL 1341 to have deposited monies into court which he did not do. Finally, Greenpoint notes that the defendant was noticed at all stages throughout the foreclosure action; that disputes as to amounts owed was the province of the Referee; that any acts or omissions of defendant's attorney would only be a basis for malpractice and not a defense to foreclosure; and that the defendant's right of redemption expired at the time of the actual sale, regardless of whether the referee's deed has actually been delivered (citing, GMAC Mortgage Corp., v. Tuck, 299 AD2d 315 [2d Dept., 2002]; EMC Mortgage Corporation v. Bobb, 296 AD2d 476 [2d Dept., 2002]; and, Citibank, N.A. v. Press Realty Corp., Inc., 139 Misc 2d 558).
Greenpoint argues, most emphatically, that it was not required to accept partial tender (citing, Marine Midland Bank v. Malmstrom, 186 AD2d 722, 588 NYS2d 655 [2d Dept., 1992]), and that Mr. Valentin has engaged in a pattern of disingenuous practices designed not to make full restitution on his defaulted mortgage as evidenced by the following chronology. On September 20, 2006, a reinstatement letter was sent to the defendants which explicitly required payment of $9,564.49 no later than 3:00pm on September 28, 2006. On October 2, 2006, Greenpoint received a partial payment of $7,033.98 which was returned on even date. On October 18, 2006, Greenpoint was sent payment for $9,564.49, which was again returned on receipt with a letter containing updated reinstatement figures and instructions on how and when payment was to be received. On October 31, 2006, the defendants sent payment for $7,317.10, which was again returned with a letter advising them that said amount was insufficient for reinstatement. On November 3, 2006 and November 6, 2006, defendants' counsel respectively sent a fax and letter requesting a payment plan. Thereafter, on November 14, 2006, Greenpoint's counsel advised the defendant via fax to contact Greenpoint's mitigation department (the same instruction had been given to plaintiff's counsel on November 6, 2006). Despite that directive, on November 21, 2006, Mr. Valentin again sent a partial payment which Greenpoint rejected with an accompanying letter, dated December 4, 2006, apprising him of updated reinstatement figures. Upon plaintiff's default on the foreclosure complaint, this court appointed a referee to compute on August 1, 2007. A duly entered copy of said order was sent to Mr. Valentin on October 18, 2006. On October 24, 2006, Mr. Valentin sent a partial payment of $3,317.10. On November 8, 2007, Greenpoint furnished updated reinstatement figures to Mr. Valentin. On January 14, 208, this court issued a judgment of foreclosure and sale, duly entered on February 6, 2008. A notice of sale scheduled for March 20, 2008 was thereafter published, pursuant to RPAPL § 231, on which date the property was sold for $320,000.00. The referee's report of sale, dated June 5, 2008, determined a surplus in the amount of $213,569.91.
Counsel for Rafael Badalov, the successful bidder at the subject auction sale, interposed an affirmation in opposition to the defendant's order to show cause which asserts that no basis has been furnished to vacate the judgment of foreclosure herein, particularly in light of the defendant's failure to have complied with the specific terms of the reinstatement letter that was sent to him following his default. In addition, counsel stresses the injustice of the current situation in that although his client acquired title to the subject premises on June 13, 2008, is making monthly payments of $2,620.00, the defendant and his family continue to occupy the premises without paying rent or use and occupancy despite the fact that surplus funds of $213,569.91 are due him from the auction sale
In his reply, Mr. Valentin notes that while he had inadvertently omitted to serve the affirmation in support his order to show cause, the court had adjourned the matter to afford the defendants sufficient time to respond. In addition, Mr. Valentin asserts, while conceding that the reinstatement deadlines were missed, that the foreclosure sale should not have proceeded given the defendant's good faith efforts to reinstate the subject loan, even to the point of including what he deemed exaggerated legal fees that he had initially omitted.
The law in this area is unequivocal. "The owner of the equity redemption or any person with an interest in the mortgaged premises has a right to redeem the property at any time prior to the actual sale under a judgment of foreclosure (see NYCTL 1996-1 Trust v. LFJ Realty Corp., supra; United Capital Corp. v. 183 Lorraine St. Assoc., 251 AD2d 400, 675 NYS2d 543; First Federal Savings Loan assn. of Port Washington v. Smith, 83 AD2d 601, 441 NYS2d 309; Belsid Holding Corp. v. Dahm, 12 AD2d 499, 207 NYS2d 91). RPAPL § 1341 explicitly provides that "where an action is brought to foreclose a mortgage upon real property upon which any part of the principal or interest is due and another portion of either is to become due, and the defendant pays into court the amount due for principal and interest and the costs of the action, together with the expenses of the proceedings to sell, if any, the court shall: 1. dismiss the complaint without costs against the plaintiff, if the payment is made before judgment directing sale; or 2. stay all proceedings upon judgment, if the payment is made after judgment directing sale and before sale; but, upon a subsequent default in the payment of principal or interest, the court may make an order directing the enforcement of the judgment for the purpose of collecting the sum then due." The Appellate Division has made it abundantly clear that "[i]n the absence of fraud, collusion, mistake, or misconduct, a court is without discretion to set aside a sale of foreclosure unless the requirements of RPAPL § 1341 are met." Hence, where a defendant ". . . failed to make a payment into court and to make a motion to stay the sale of the property as required by RPAPL § 1341(2), [the] right to redemption expired" (see NYCTL 1996-1 Trust v. LFJ Realty Corp., supra, citing, Bankers Fed. Sav. Loan Assn. v. House, 182 AD2d 602, 581 NYS2d 858; EMC Mtge. Corp. v. Bobb, 296 AD2d 476, 745 NYS2d 204; Green Point Sav. Bank v. Oppenheim, 237 AD2d 409, 655 NYS2d 560). Insofar as any allegation of improper service is concerned, the Appellate Division made it clear, in American Business Credit, Inc. v. Sanabria, 2005 WL 1532405 (NYAD 2d Dept.), 2005 NY Slip Op. 05542, that a". . .conclusory denial of receipt [of process] was insufficient to raise an issue of fact in opposition to the plaintiff's prima facie evidence of proper service (citing, Dolec Consultants v. Lancer Litho Packaging Corp., 245 AD2d 415, 666 NYS2d 458; Manhattan Sav. Bank v. Kohen, 231 AD2d 499, 647 NYS2d 256; Sando Realty Corp. v. Aris, 209 AD2d 682, 619 NYS2d 140).
In the matter sub judice the plaintiff has convincingly demonstrated that Mr. Valentin and interested parties were in fact properly served. In addition, there is no indication of any fraud, collusion, mistake, or misconduct. It is also clear that Mr. Valentin was given due notice of the proceedings herein; that he deliberately failed to avail himself of the numerous opportunities that he had to reinstate the subject mortgage by either ignoring or not making the required payment; and, that his assertions of having retained an attorney that he thought was negotiating a repayment schedule on his behalf is belied by the correspondence of the parties and does not give rise to a meritorious defense.
On the basis of all of the foregoing, Mr. Valentin's order to show cause seeking vacatur of the judgment of foreclosure and referee deed given to Rafael Badalov, and to allow him to exercise his equity of redemption by paying off the mortgage in full with regards to his residenceis denied. Accordingly, the issue of improper service of the instant order to show cause is rendered moot. This constitutes the decision and order of this Court.