Opinion
Index No. 710772/2015 Seq. Nos. 004 005
12-19-2022
WELLS FARGO BANK, N.A., Plaintiff, v. WAI CHIU LEONG, NEW YORK CITY ENVIRONMENTAL CONTROL BOARD, NEW YORK CITY PARKING VIOLATIONS BUREAU, NEW YORK CITY TRANSIT ADJUDICATION BUREAU, "JOHN" PAKANENDA (REFUSED FIRST NAME), "JANE" PAKANENDA (REFUSED FIRST NAME), JOEY "DOE" (REFUSED LAST NAME), "JANE DOE" (REFUSED NAME), "JANE DOE" (REFUSED NAME), Defendants.
Unpublished Opinion
Present: HONORABLE DENIS J. BUTLER Justice.
DENIS J. BUTLER JUDGE.
The following numbered papers read on this motion (Mot. Seq. 4) by defendant Wai Chiu Leong to reject the referees report of sale, compelling plaintiff/successful bidder to deposit with the referee all disallowed disbursements, compelling the referee to thereafter deposit any funds received by the plaintiff/successful bidder with the court; and on the motion (Mot. Seq. 5) by defendant Wai Chiu Leong for an order pursuant to CPLR § 6301 enjoining the New York City Department of Finance from releasing post-foreclosure surplus funds to the New York State Office of the State Comptroller as abandoned funds.
Sequence No. 004
Papers Numbered
Notice of Motion, Affirmation, Exhibits.................EF 68-74
Affirmation in Opposition, Exhibits.....................EF 75-76
Sequence No. 005
Papers Numbered
Order to Show Cause, Affirmation, Exhibits..............EF 77-85
Affirmation in Opposition, Exhibits.....................EF 86-87
Affirmation in Reply, Exhibits..........................EF 88-90
Upon the foregoing papers it is ordered that these motions are determined as follows:
Pursuant to the Judgment of Foreclosure and Sale, the mortgaged premises was sold at auction on July 21, 2017. On September 26, 2017, the referee issued her report of sale, which was duly filed with the Clerk's office on October 3, 2017. After the sale, there remained a surplus in the amount of $266,705.14, and this amount was paid into the court to the credit of this action by the referee, and thereafter transferred to the New York City Department of Finance.
Two motions by defendant Wai Chiu Leong are currently before the Court. In the first motion (Mot. Seq. 4), defendant Wai Chiu Leong seeks an order rejecting the referee's report of sale, asserting that the referee disbursed $12,170 from the proceeds of the sale to pay the transfer tax in contravention of the foreclosure Terms of Sale. Defendant Wai Chiu Leong further seeks an order directing plaintiff and/or the successful bidder deposit with the referee all disallowed disbursements and deposit any funds received with the court. In the second motion (Mot. Seq. 5), defendant Wai Chiu Leong seeks an order enjoining the New York City Department of Finance from releasing the post-foreclosure surplus funds to the New York State Office of the State Comptroller as abandoned funds.
With respect to the first motion under Mot. Seq. 4, inter alia, to reject the Referee's Report of Sale, the Court notes that neither the purchasers, nor the referee, were given notice of this motion, though they are necessary and interested parties hereto.
The referee appointed to conduct a foreclosure sale may make a sale only upon terms in conformity with the judgment of foreclosure and sale and applicable statutes (see Zouppas v. Yannikidou, 16 A.D.2d 52 [1st Dept 1962]; Mullins v. Franz, 162 AD 316, 318 [2d Dept 1914]). The referee, who serves as an agent of the court and acts in a ministerial capacity (see Morgan v. Ellenville Sav. Bank, 55 A.D.2d 178, 180 [3d Dept 1976]), lacks the authority to vary the judgment by way of the terms of sale (see Ercolani v. Sam &Al Realty Co., 17 N.Y.2d 299 [1966]; Mullins v. Franz, 162 AD 316, 318), and "unauthorized variations between the terms of sale and judgment are void" (Cicorelli v. Hickey's Carting, Inc., 66 A.D.3d 626, 627 [2d Dept 2009]).
The branch of the motion by defendant Wai Chiu Leong seeking to reject the referee's report is denied as untimely (see CPLR § 4403). Additionally, the purchasers and the referee are necessary parties and were not given notice of this motion. Morever, a real estate transfer tax is an expense of the sale which must be paid to record a deed (see Tax Law § 1410[b]), and here the judgment of foreclosure and sale obligated the referee to pay from the proceeds of the sale the "expenses of the sale." In addition, under the New York City Administrative Code § 11-2104, and Tax Law § 1404(a), the grantor of real property is obligated to pay real estate transfer taxes, and in the context of a foreclosure sale, the grantor is the referee.
Defendant Wai Chiu Leong also moves, under Mot. Seq. 005, for an order enjoining the New York City Department of Finance from releasing the post-foreclosure surplus funds to the New York State Office of the State Comptroller as abandoned funds. Defendant Wai Chiu Leong asserts that it has been advised by the New York City Department of Finance that the surplus funds will be deemed abandoned and released to the New York State Office of the State Comptroller pursuant to the Abandoned Property Law.
On a motion for a preliminary injunction the movant must establish the likelihood of success on the merits, irreparable injury and the balancing of the equities in its favor (see Aetna Ins. Co. v. Capasso, 75 N.Y.2d 860 [1990]; Washington Deluxe Bus, Inc. v. Sharmash Bus Corp., 47 A.D.3d 806 [2d Dept 2008]). Defendant Wai Chiu Leong has established his right to a preliminary injunction as the surplus funds at issue are not yet abandoned. While defendant Wai Chiu Leong has not yet filed a claim for the funds, he is the prior owner of the funds. Furthermore, defendant Wai Chiu Leong, under Mot. Seq. 004, has sought to reject the referee's Report of Sale in order to avoid certain disbursements and increase the amount of surplus funds, thus demonstrating that the funds are not abandoned. Since the surplus funds were deposited with the New York City of Department of Finance, there have also been many stays imposed in foreclosure actions as a result of the COVID-19 pandemic that have delayed this action. As such, injunctive relief is necessary and appropriate to maintain the status quo (see CPLR § 6301; 538 Morgan Aven. Properties, LLC v. 538 Morgan Realty, LLC, 186 A.D.3d 657 [2d Dept 2020]).
Accordingly, it is hereby
ORDERED that the motion by defendant Wai Chiu Leong under Mot. Seq. 004 is DENIED in its entirety; and it is further
ORDERED that the motion by defendant Wai Chiu Leong under Mot. Seq. 005 is GRANTED SOLELY TO THE EXTENT THAT the New York City Department of Finance is enjoined from releasing the postforeclosure surplus funds deposited in this action to the New York State Office of the Comptroller as abandoned funds.
Any requests for relief not specifically addressed herein are DENIED.
This constitutes the decision and order of the Court.