Opinion
7714/2008
1-7-2010
WELLS FARGO BANK, N.A. TRUSTEE UNDER POOLING AND SERVICING AGREEMENT DATED AS OF SEPTEMBER 1, 2005 ABFC ASSET-BACKED CERTIFICATES, SERIES 2005-WMC1, Plaintiff, v. SERGEY AMBROSOV, MORTGAGE ELECTRONIC REGISTRATION SYSTEMS, INC., AS NOMINEE AND MORTGAGEE OF RECORD; WMC MORTGAGE CORP.; NATIONAL CITY BANK; BOARD OF MANAGERS OF OCEANA CONDOMINIUM NO. TEN; NEW YORK CITY TRANSIT ADJUDICATION BUREAU; NEW YORK CITY ENVIRONMENTAL CONTROL BOARD; NEW YORK CITY PARKING VIOLATIONS BUREAU; "JOHN DOES" AND "JANE DOES", SAID NAMES BEING FICTITIOUS, PARTIES INTENDED BEING POSSIBLE TENANTS OR OCCUPANTS OF PREMISES, AND CORPORATIONS OTHER ENTITIES OR PERSONS WHO CLAIM, OR MAY CLAIM A LIEN THE PREMISES, Defendants.
Rosicki, Rosicki & Associates, PC, Plainview, New York, Plaintiff's attorney. Borah, Goldstein, Altschuler, Nahins & Goidel, PC, New York, NY, BMOC's attorney.
By order to show cause filed on October 16, 2009, under motion sequence number two, defendant Board of Managers of Oceana Condominium No. Ten (hereinafter BMOC) moves pursuant to CPLR § 6401(a) for an order appointing a receiver for the condominium unit known as 2A in a building located at 65 Oceania Drive East, Brooklyn, New York (hereinafter the subject unit). BMOC also seeks an order pursuant to RPAPL § 1325(2) that empowers the temporary receiver to rent the subject unit and to give the collected rent to BMOC to pay down the accumulated arrears in common charges.Plaintiff opposes the motion.
BACKGROUND
On March 10, 2008, plaintiff commenced the instant action against BMOC, Sergey Ambrosov (Ambrosov), and others by filing a summons, verified complaint and a notice of pendency with the King's County clerk's office. Plaintiff is the holder of the first mortgage on the subject unit. Ambrosov is plaintiff's mortgagor and the owner of the subject unit. BMOC is the authorized board of managers for Oceana Condominium No. Ten, the condominium complex which includes the subject unit. Plaintiff's action is based on Ambrosov's alleged default in making mortgage payments. On October 28, 2008, BMOC filed a notice of appearance.
MOTION PAPERS
BMOC's motion papers contained an affirmation of its counsel, an affidavit of its president, a proposed order and eight annexed exhibits labeled A through H. Exhibit A is a copy of the instant summons and complaint. Exhibit B is a copy of the deed of the subject unit. Exhibit C is a copy of a portion of BMOC's by-laws. Exhibit D is a copy of BMOC's ledger . Exhibit E is a copy of BMOC's notice of lien for unpaid common charges for the subject unit. Exhibit F, G and H are copies of court decisions published in the New York Law Journal.
Plaintiff opposes the motion with an affirmation of counsel.
APPLICABLE STATUTES
CPLR § 6401(a) and (b) deals with the appointment and powers of temporary receiver and provides as follows:
(a) Appointment of temporary receiver; joinder of moving party. Upon motion of a person having an apparent interest in property which is the subject of an action in the supreme or a county court, a temporary receiver of the property may be appointed, before or after service of summons and at any time prior to judgment, or during the pendency of an appeal, where there is danger that the property will be removed from the state, or lost, materially injured or destroyed. A motion made by
a person not already a party to the action constitutes an appearance in the action and the person shall be joined as a party. (b) Powers of temporary receiver. The court appointing a receiver may authorize him to take and hold real and personal property, and sue for, collect and sell debts or claims, upon such conditions and for such purposes as the court shall direct. A receiver shall have no power to employ counsel unless expressly so authorized by order of the court. Upon motion of the receiver or a party, powers granted to a temporary receiver may be extended or limited or the receivership may be extended to another action involving the property.
RPAPL § 1325 (2) provides as follows:
Where a receiver has been appointed, upon the application of the plaintiff or of any holder of a certificate evidencing an undivided interest in the mortgage or mortgage debt and upon proof that no answer has been interposed affecting the validity of the mortgage or the amount due thereon, or asserting any prior lien, or asserting a plea of tender of payment of the amount due, or which if sustained would affect in any way the right of the plaintiff to a judgment in foreclosure and to the payment of the amount claimed by the plaintiff in his complaint to be due, the court may direct that the receiver of the rents appointed in such action apply, during the pendency of the action, the rents received by him towards the payment of accrued interest on the mortgage, provided due provision shall have been made for the payment of taxes, administration expenses, fees and charges and such reserve as the court may direct. Any monies so paid over by the receiver shall be deducted from the amount of the judgment in said action.
DISCUSSION
"Article 64 of the CPLR supplies the provisional remedy of receivership. The Article 64 receiver is a person appointed by the court to take control of designated property and see to its care and preservation during litigation. *** The powers of a temporary receiver, which are more circumscribed than those of a permanent one, are set forth in CPLR 6401(b)." (see generally, Siegel, New York Practice 4th § 322 Temporary Receivership).
BMOC seeks an order appointing a temporary receiver pursuant to CPLR § 6401(a). BMOC also wants the temporary receiver to be given authority pursuant to RPAPL § 1325 (2) to rent the subject unit and to pay the rent to BMOC until all the accumulated unpaid common charges are paid in full or until the sale of the unit, whichever comes first. RPAPL § 1325 (2), however, pertains to the appointment of a receiver in mortgage foreclosure actions. BMOC does not have a mortgage on the subject unit and has certainly not commenced a mortgage foreclosure action. BMOC is applying the wrong statute pertaining to the powers of the temporary receiver. The power of a temporary receiver appointed pursuant to CPLR § 6401(a) is found in CPLR §6401(b) and does not include the power to rent a vacant property.
BMOC avers that the subject unit is vacant and that the owner has not paid common charges for sometime. BMOC's documentary evidence establishes that on April 30, 2007, it recorded a lien on the subject unit for unpaid common charges. BMOC, however, has not commenced an action against Ambrosov to collect the amounts due. Nor has BMOC answered plaintiff's complaint in the instant action. BMOC did file a notice of appearance seven months after the instant action was commenced. BMOC is therefore a defendant seeking a provisional remedy without having filed a pleading.
CPLR § 6401(a) provides that a receiver may be appointed "upon motion of a person having an apparent interest in the property which is the subject of an action in the Supreme Court ... where there is danger that the property will be removed from the state, or lost, materially injured or destroyed." It is well established that "courts ... exercise extreme caution in appointing receivers ... because such appointment [generally] results in the taking and withholding of possession of property from a party without an adjudication on the merits" (Jacobowitz v. Jacobowitz, 5 Misc 3d 1012(A) [NY Sup. 2004] citing Hahn v. Garay, 54 AD2d 629 [1st Dept. 1996]). Accordingly, "the provisional remedy of receivership may be invoked only in cases where the moving party has made a clear evidentiary showing of the necessity of conserving the property and protecting the party's interests" (Id., citing, Kristensen v. Charleston Square, Inc., 273 AD2d 312 [2nd Dept. 2000]). "The drastic remedy of the appointment of a receiver is to be invoked only where necessary for the protection of the parties ... [t]here must be danger of irreparable loss, and courts of equity will exercise extreme caution in the appointment of receivers, which should never be made until a proper case has been clearly established" (id. citing, In Re Armienti, 309 AD2d 659 [1st Dept., 2003]).
Furthermore, a receiver may only be appointed in an action which has property as its subject matter, therefore, it is the general rule that a receiver cannot be appointed in an action for a sum of money. If, however, the action effects specific money, e.g., the proceeds of the sale of specific securities, a receiver over the proceeds may be appointed ( see generally Joseph M. McLaughlin, Practice Commentaries, McKinney's CPLR C6401:1 at 406 citing Meurer v. Meurer, 21 AD2d 778 [1st Dept. 1964]).
BMOC has submitted several published decisions demonstrating that other judges have appointed temporary receivers on other matters involving other parties. BMOC, however, has not made any showing demonstrating that the subject unit will be removed from the state, lost, materially injured or destroyed. Nor has BMOC demonstrated that absent the provisional remedy it will have no adequate remedy at all.
According to the affidavit of BMOC's president, Ambrosev owes BMOC about $22,000.00 in common charges as of August 17, 2009. BMOC contends that without the relief requested, by the time plaintiff's foreclosure action is resolved, there will be no funds left from which to recover the accumulated unpaid common charges. In order to accept this conclusion, the court would need to know the amount of equity available after subtracting the mortgage debt from the units' market value. BMOC did not submit any evidence to support its contention. Of course, if the available equity were sufficient to cover the value of BMOC's financial interest they would have no basis for the appointment of a temporary receiver (see generally Societe Generale v. Charles, 157 Misc 2d 643[NY Sup. 1993]).
The plaintiff contends that the motion should be denied because BMOC was not vigilant and slept on its rights against the unit owner. Plaintiff's contention has merit. A party seeking an equitable provisional remedy should be pursuing all legal remedies readily available. BMOC has not yet brought an action against Ambrosev and has failed to explain its failure to do so.
The court finds that BMOC did not make the requisite showing to support the appointment of a temporary receiver.
BMOC's application for the appointment of a temporary receiver is denied.
The foregoing constitutes the decision and order of this court.