Opinion
62536/2019
11-06-2020
POINT 62 LLC, Plaintiff, v. Miguel V. APONTE, Jr., Maria Felix, TD Bank, N.A., United States of America, New York State Department of Taxation and Finance, City of Yonkers, et al., Defendants.
For Plaintiff: Glenn Finley, Glenn Finley & Associates, 2024 Williamsbridge Rd, Bronx, NY 10461, 718-828-4888 For Defendant Miguel Aponte: Tanya Dwyer, Esq., Legal Service of the Hudson Valley, 1 Park Place, Suite 202, Peekskill, NY 10566, 914-402-2192 ext. 179
For Plaintiff: Glenn Finley, Glenn Finley & Associates, 2024 Williamsbridge Rd, Bronx, NY 10461, 718-828-4888
For Defendant Miguel Aponte: Tanya Dwyer, Esq., Legal Service of the Hudson Valley, 1 Park Place, Suite 202, Peekskill, NY 10566, 914-402-2192 ext. 179
Terry Jane Ruderman, J.
The following papers were considered on the motion by defendant Miguel Aponte, Jr., for an order pursuant to CPLR 3211 dismissing plaintiff's tax lien foreclosure action, and the cross-motion by plaintiff Point 62 LLC for an order pursuant to CPLR 3212 granting it summary judgment:
The conference required by AO/157/20 was held in this matter on August 25, 2020.
Papers Numbered
Notice of Motion, Affidavit, Exhibit A 1
Notice of Cross-Motion, Affirmation, Affidavit, Exhibits A-K 2
Affirmation in Reply and Opposition, Exhibits 1-2 3
On May 8, 2019, the City of Yonkers auctioned certain tax liens at a tax sale auction, at which plaintiff Point 62 LLC purchased the tax lien designated Lien No. 210181 on the property described therein as Section 2, Block 2176, Lot 8, City of Yonkers, New York. The principal amount of the auctioned tax lien was $3,767.59. Defendant Miguel Aponte, Jr. was listed as the owner of the property, although the property is jointly owned by Aponte and defendant Maria Felix. The documentation of the sale of the lien to plaintiff reports that "The annual rate of interest which the purchaser has bid and will be entitled to receive semiannually on the first days of January and July in each year is 8 per cent," and that "The date when the amount of the tax lien will be due to said purchaser is May Eighth Two Thousand and Twenty Two."
Plaintiff's attorney has submitted evidence that notice of plaintiff's purchase of the lien was sent to defendants Aponte and Felix, by certified mail, on June 3, 2019 at 56 Moquette Row, Yonkers, New York 10703 as well as to 2790 Bainbridge Row, Yonkers, New York, 10703; proof of delivery to the 56 Moquette Row address on June 8, 2019 is also submitted.
Although this was the address listed in the tax rolls of the City of Yonkers, subsequent service of process on Maria Felix at a similar street address in Bronx County—2790 Bainbridge Avenue, #2, Bronx, NY 10458—clarifies Aponte's claim that the notice sent on June 3, 2019 to 2790 Bainbridge Row in Yonkers was sent to an incorrect address.
On August 15, 2019, plaintiff commenced the instant tax lien foreclosure action by the filing of a summons and complaint and notice of pendency, asserting that there is due and owing on the purchased tax lien the principal sum of $3,767.59, because defendants failed to tender the semi-annual payment of interest due on the lien on July 1, 2019, and failed to pay the aggregate amount of the lien. The complaint identifies the tax lot of the subject property, Section 2, Block 2176, Lot 8 in the City of Yonkers. The street address of the subject property, 56 Moquette Row, Yonkers, New York, 10703, is specified in the notice of pendency, in addition to the tax lot number. The filed affidavits of service reflect that defendant Aponte was personally served with the summons and complaint and related documents pursuant to CPLR 308 (2) on September 30, 2019 at 101 Morningside Avenue, Yonkers, NY 10703, by delivery of a true copy of the documents to co-tenant Elijah Aponte, and that the follow-up mailing was made on October 1, 2019. Defendant Maria Felix was served on September 11, 2019 at 2790 Bainbridge Avenue, No.2, Bronx, NY 10458, by service on a named relative who confirmed that Felix resided there; a follow-up mailing to the same address was made on September 12, 2019.
On October 11, 2019, defendant Aponte, pro se, filed an answer stating that he has never received a tax notice at the subject property, and that neither the tax lien, nor the foreclosure documents clearly state the address of the subject property. Rather, his answer complains, the address referenced in the documents is 101 Morningside Ave., Yonkers, New York, along with a second, incorrect address. He asserts that the requisite auction notices, sale notices and redemption notices were not sent to the subject property's street address. He also protests that this action is improper in that the lien was sold before the statutory redemption period elapsed.
In his present motion to dismiss the complaint, defendant Aponte, still pro se, contends that (1) he still has more than a year to redeem the property pursuant to RPTL 1123 (1), and therefore this action is not ripe and the court lacks subject matter jurisdiction; (2) he had a payment agreement with the City of Yonkers and had complied with the payment schedule and had not defaulted, or received any notice that he had defaulted on the payment agreement, at the time this action was commenced; and (3) he was not properly notified by the City of Yonkers about the claimed tax default or the lien sale, and the notices he received contain no indication of the subject property's street address. Additionally, he argues that this Court lacks jurisdiction based on the manner in which plaintiff served him with the required notices after the purchase of the lien.
Plaintiff opposes the motion and cross-moves for summary judgment against defendant Aponte, and for a default judgment against the remaining defendants, who have neither appeared, answered the complaint, nor made a motion raising any objection to the complaint, and whose time to do so has expired.
In response to Aponte's challenges to the propriety of Yonkers' lien sale and this action, plaintiff contends that the City properly exercised its right to sell tax liens, and that plaintiff is properly exercising its right to foreclose on the tax lien based on defendants' failure to make semi-annual interest payments due, pursuant to the Charter of the City of Yonkers ("Yonkers City Charter"), Article XIX, § Cl9-7; plaintiff also asserts that it has complied with all notice requirements of the Yonkers City Charter.
Aponte, now represented by counsel, submits a reply affirmation in which his attorney argues that the "property," meaning the tax lien on the property, was not properly auctioned. Counsel for Aponte now also challenges the manner in which plaintiff sent notice to Aponte of the lien sale, by mailing it to him at the subject premises, 56 Moquette Row N, when, according to counsel, Aponte does not reside there. One of the exhibits offered with the reply papers is a lease of the Moquette Row property dated March 1, 2019, to Yajaira Marcelino as tenant. The Court notes, however, that although the address Aponte provided with his October 10, 2019 answer to the complaint was 101 Morningside Avenue, the address he provided on his December 9, 2019 affidavit in support of his motion listed the address 56 Moquette Row N below his signature, as did the signed Request for Judicial Intervention filed with his motion.
Counsel for Aponte also disputes the affidavit of service in which it is claimed that Aponte was served by substitute service of the summons and complaint upon Elijah Aponte, a co-tenant at 101 Morningside; counsel — not Aponte — asserts that "No such person exists, and defendant did not receive the papers that were allegedly served." No mention is made of the follow-up mailing to the same address.
Discussion
Although defendant Aponte raises a number of challenges to this action, only one warrants extended discussion, that is, the question of whether plaintiff may properly commence a foreclosure action just three months after purchasing the tax lien, based solely on Aponte's failure to pay interest on the principal amount of the lien. The other arguments may be addressed briefly:
Initially, the Court rejects Aponte's contention that personal jurisdiction was not properly acquired over defendants. The filed affidavits of service establish that defendants were personally served with the summons, complaint and supporting papers, and defendant's submissions do not create an issue of fact with regard to the claims made in those affidavits. Indeed, Aponte's moving affidavit and his verified answer do not challenge service of process; they focus solely on service of the underlying notices. The assertion by Aponte's counsel challenging the truth of the process server's affidavit of substituted service on a co-tenant at Aponte's address, fails to raise an issue of fact as to proper service. Such a claim may not be made for the first time in reply, nor may it be validly made in an affirmation by counsel, which is not a proper means by which to assert facts. Nor does Aponte's challenge to the propriety of service of the underlying notices establish a lack of personal jurisdiction.
Plaintiff has demonstrated that the notices it was required to send following the tax lien transfer, pursuant to the Yonkers City Charter, were sent in the proper manner. Article XIX, § C19-2.1 of the Charter provides that
"A. Within thirty (30) days after the completion of the tax lien purchase and the transfer of the tax lien as shown in the Comptroller's record of sales of tax liens, the purchaser shall give notice of the tax lien purchase as required herein.
"B. The purchaser shall give notice to each and every owner and mortgagee of the property burdened by the tax lien. The notice shall be mailed by certified or registered mail, return receipt requested, to such owner(s) and mortgagee(s) as their names and addresses appear on the tax rolls of the City and, if different, as their names and addresses appear in the deed(s) and mortgage(s) recorded with the Westchester County Clerk (emphasis added).
"C. The notice shall include a copy of the transfer of tax lien issued to the purchaser by the city; shall include a statement of the total amount due under the tax lien; shall state the next date upon which interest is to be paid to the lien purchaser and the amount which is to be paid; and shall state that if semi-annual interest payments are not timely paid and the tax lien is not paid in full by not later than three (3) years from the date of the tax lien sale, then the holder of the tax lien may foreclose the tax lien."
Assuming that, as Aponte indicates, the Bainbridge Row address in Yonkers to which plaintiff sent one of its notices was not a valid or correct address, it was nevertheless one of the addresses to which plaintiff was required to send the notice (see Yonkers City Charter § C19-2.1 [B] ), since it was the address for the owners that appeared on the City's tax roll records. Moreover, plaintiff also sent notices using the owners' names and addresses as they appeared in the deed and mortgage records of the Westchester County Clerk, as is also required by section C19-2.1 (B), namely, to 56 Moquette Row, Yonkers, New York, 10701, the subject premises. Therefore, plaintiff fully complied with the statutory notice requirements. Moreover, the latter mailing was received and signed for at that address, as reflected by the USPS Tracking printout and the unidentified recipient's recorded signature. If Aponte did not receive actual notice of the lien transfer, despite the mailing of the notice to the address of property he owns, the fault cannot be attributed to plaintiff.
To the extent Aponte contends that the City of Yonkers failed to properly comply with the prerequisites for a tax lien sale and transfer, as provided for by Yonkers City Charter § C19-1, it is not plaintiff's burden to prove the City's compliance. Indeed, the Charter provides that transferred tax liens are presumed to be regular, valid and effectual so as to transfer to the purchaser a valid and enforceable tax lien (see Yonkers City Charter § C19-14). Although Aponte claims in his answer that his property was not included on Yonkers' filed delinquent tax list, and that the publication of the list of properties with unpaid liens was not properly performed in the manner required by Yonkers City Charter § C19-1 (C), and although he asserts that he made all required payments pursuant to an agreement he had with the City, he has not submitted any materials tending to demonstrate the validity of his claims, or anything other than his bare assertions. Therefore, the presumption of regularity has not been rebutted, and dismissal is not warranted on those grounds. Furthermore, in the face of plaintiff's summary judgment motion, Aponte's conclusory assertions are insufficient to create a question of fact that would preclude summary judgment.
The claimed lack of subject matter jurisdiction raised by Aponte is also meritless. New York State Supreme Court has subject matter jurisdiction over tax lien foreclosure proceedings. Aponte's reliance on Real Property Tax Law § 1123 (1) is misplaced, since the Yonkers City Charter, Article XIX, governs the sale of tax liens by the City of Yonkers. Importantly,
"under RPTL § 1104, a municipality is permitted to ‘opt-out’ of [Article 11's] comprehensive scheme. Many municipalities, including New York City, have, in fact, opted-out. In its place, a municipality may provide its own statutory scheme for the enforcement of collection of delinquent taxes"
(John Blyth, Commentary, "Practice Insights: Differences in Enforcement of Collection of Delinquent Taxes," New York Consolidated Laws Service, Real Property Tax Law § 1104 ). Yonkers, like New York City, has adopted its own statutory scheme for the enforcement of delinquent property taxes.
Finally, the Court turns to Aponte's argument disputing plaintiff's claimed right to foreclose on the tax lien based solely on a failure to pay interest on the lien principal. Aponte suggests that such a procedure is contrary to the three-year redemption period provided by Article 11 of the RPTL and the Yonkers City Charter as the period of time before a foreclosure on a tax lien can be brought. He argues, with some logic, that if a foreclosure cannot be commenced for the principle amount during the redemption period, then it cannot be commenced based on overdue interest on the principle debt amount.
However, research discloses that Aponte's premise is incorrect. Initially, it is instructive to consider the case law approving and construing the New York City antecedent of Yonkers' current Charter provisions authorizing such tax lien sales (see former Greater New York Charter, §§ 1032 and 1035 [L. 1901, c. 466, as amended by L. 1908, c. 490, and L. 1911, c. 65] ), as well as New York City's current iteration (see Administrative Code of City of NY § 11-332 [b] ). The original New York City Charter provision was approved in 1912 (see Gautier v. Ditmar , 204 NY 20 [1912] ), and an appellate decision from 1914 explained that a purchased tax lien may be accelerated, even where the statutory redemption period for the lien has not elapsed, based on a default in certain payments, such as the interest due on the principle amount of the purchased lien (see Altman v. Bungay Co. of New York (161 App Div 583 [1st Dept 1914] ). The Court in Altman v. Bungay quotes the two relevant sections of the Charter, which are similar to the equivalent provisions of the current New York City Charter as well as the Yonkers City Charter at issue here.
Section 1032 as it read at the time was as follows:
"The aggregate amount of each tax lien transferred pursuant to this title, shall be due three years from the date of the sale. Until such aggregate amount is fully paid and discharged, the holder of the transfer of tax lien shall be entitled to receive interest on such aggregate amount from the day of sale, semiannually on the first day of January and July, at the rate which the purchaser shall have bid. At the option of the holder of any transfer of tax lien the aggregate amount thereof shall become due and payable after default in the payment of interest for 30 days or after default for six months after the delivery of transfer of tax lien in the payment of any taxes, assessments or water rents, which become a lien on and after the day of the date mentioned in the advertisement of the sale as stated therein, on the tax lien transferred by such transfer of tax lien' (emphasis added).
Section 1035, authorizing a foreclosure action, read as follows:
"If the amount of any tax lien which shall have been transferred by a transfer of tax lien shall not be paid when under its terms and the provisions of this title such amount shall be due, the holder of such tax lien may maintain an action in the Supreme Court to foreclose such tax lien."
The decision in Altman v. Bungay Co. of New York explicitly acknowledged that the statute provided for circumstances in which the holder of the tax lien was entitled to accelerate the lien, rather than wait for the three year period to elapse. The Court explained that since "[t]hree years had not elapsed since the date of sale when this action was commenced, ... it was therefore necessary for plaintiff to allege, in order to maintain the action at all, that the due date had been accelerated for one of the reasons provided in the statute, and to specify in intelligible language which reason so accelerated" ( 161 App Div at 587 ). Although the foregoing cases did not explicitly concern the Yonkers City Charter provisions at issue here, their reasoning provides this Court with guidance, given the similarity of the two cities' laws in this respect.
In addition, a 1951 trial court decision denied a motion to dismiss a tax lien foreclosure action, where the property owner challenged the plaintiff's right to foreclose based on the owner's failure to pay interest on the lien (see Goldner v. Savenue Realty Corp. , 199 Misc 561 [Sup Ct Kings County 1951] ). The property owner's legal argument was based on the timing of the action; it suggested that the purchaser of the lien was not entitled to claim a default in payment of interest until six months had elapsed after the first January or July that followed the purchase of the tax lien. Although the argument there did not focus on the redemption period, or the propriety of foreclosing based solely on a failure to pay interest, it is notable that in rejecting the property owner's argument, the court allowed the foreclosure to proceed although it was commenced just a few months after the plaintiff's purchase of the tax lien, and the then-applicable Administrative Code (former section 415[1]-36.0) provided for a three-year redemption period (id. ).
The current New York City Administrative Code continues to authorize tax lien foreclosures based on failures to pay semi-annual interest on the principal amount of the lien, but has reduced the redemption period on the tax lien principal from three years to one year. It provides as follows:
"The aggregate amount of each tax lien transferred pursuant to this chapter shall be due and payable one year from the date of the sale. Until such aggregate amount is fully paid and discharged, the holder of the tax lien certificate shall be entitled to receive interest on such aggregate amount from the date of sale, and semi-annually at the rate of interest applicable in accordance with section 11-319 of this chapter. * * * At the option of the holder of any tax lien certificate the aggregate amount thereof shall become subject to foreclosure after default in the payment of interest for thirty days or after default for six months after the date of sale stated in the tax lien certificate in accordance with sections 11-320(d) and 11-328 of this chapter in the payment of any taxes, assessments, sewer rents, sewer surcharges, water rents, any other charges that are made a lien subject to the provisions of this chapter, or the interest or penalties thereon which become a lien on or after the date of sale of the tax lien transferred by such tax lien certificate."
(Administrative Code of City of NY § 11-332 [b] ). This Code provision has been relied on in recent years to support tax lien foreclosures based on the property owners' failure to pay the semi-annual interest due on the tax lien, before the one year redemption period had elapsed (see NYCTL 2014-A Trust v. Stillman , 2019 NY Misc LEXIS 6786, 2019 WL 6894860 [Sup Ct Kings County 2019] ; NYCTL 2016-A Trust v. 294 Eighth Ave. Realty Corp. (2017 NY Misc LEXIS 4599, 2017 WL 5903319 [Sup Ct NY County 2017] ; NYCTL 2015-A Trust v. Hau Yiu Cheng (2017 NY Misc LEXIS 1617, 2017 WL 1759156 [ Sup Ct Queens County 2017] ). Notably, New York City's information website plainly informs readers that
"[a] lien holder can begin formal foreclosure proceedings in court within one year of the lien sale date. Foreclosure can also begin if you don't pay the semi-annual interest on the lien sale amount within 30 days after it is due" (see NYC Lien Sale Information Notice, https://portal.311.nyc.gov/article/?kanumber=KA-01512).
The provisions of the current Yonkers City Charter concerning tax lien purchasers' authority to commence a tax lien foreclosure action, appear in Yonkers City Charter § C19-7 and § C19-10. Charter § C19-7 contains language similar to that in the equivalent New York City provisions:
"The aggregate amount of each tax lien transferred pursuant to this Article shall be due three years from the date of the sale. Until such aggregate amount is fully paid and discharged, the holder of the transfer of tax lien shall be entitled to receive interest on such aggregate amount from the day of sale, semi-annually on the first day of January and July, at the rate which the purchaser shall have bid.
* * * "If default shall be made in the payment of any installment of such interest and shall continue for a period of thirty days after such installment became due and payable , or if default shall be made in the payment of any tax or assessment upon lands and tenements affected by the transfer of tax lien, which became due and payable after the day of the date mentioned in the advertisement of the sale of the tax lien as stated therein, and such latter default shall continue for a period of six months after the delivery of the transfer of tax lien and after such tax or assessment became a lien, then and in either such case, at the option of the holder of the transfer of tax lien, the aggregate amount thereof shall become due and payable " (emphasis added).
The phrasing of this Yonkers City Charter provision, which provides that upon a default in the payment of semi-annual interest which continues for more than thirty days, "at the option of the holder of the transfer of tax lien the aggregate amount thereof shall become due and payable," cannot be mistaken. It echoes the language that has been successfully relied on in similar provisions for so long that its efficacy can no longer be doubted. Therefore, this Court concludes that plaintiff's complaint properly alleges, in accordance with the Yonkers City Charter, that the entire principal of the purchased tax lien, in the amount of $3,767.59 plus interest, has now been declared due. Plaintiff may therefore rely on section C19-10 of the Charter for its right to a judgment of foreclosure, based on plaintiff's exercise of its option to call due the aggregate amount of the tax lien following defendants' default in paying the interest due thereon.
Despite concluding that the Yonkers City Charter authorizes the present tax lien foreclosure action, despite the time remaining in the three-year redemption period, the Court observes that the notice provision of the Charter fails to ensure that property owners are fully warned of such a possibility (see Yonkers City Charter § C19-2.1). Notably, the wording of the required notice that a purchaser of a tax lien must send to the property owner lacks such information. Specifically, section C19-2.1 directs that
"The notice shall include a copy of the transfer of tax lien issued to the purchaser by the city; shall include a statement of the total amount due under the tax lien; shall state the next date upon which interest is to be paid to the lien purchaser and the amount which is to be paid; and shall state that if semi-annual interest payments are not timely paid and the tax lien is not paid in full by not later than three (3) years from the date of the tax lien sale, then the holder of the tax lien may foreclose the tax lien " (emphasis added).
The provision's use of the conjunctive, directing that the notice to the property owner state that the holder of the tax lien will be entitled to foreclose if the interest payments are not timely paid and the tax lien is not paid in full, tends to incorrectly indicate to the recipient that the mere failure to timely make semi-annual interest payments will not, in itself, give the holder of the tax lien the right to foreclose before the expiration of the three year period from the date of the tax lien purchase.
A plain notice of the possibility of a foreclosure action based solely on a failure to make a semi-annual interest payment on the tax lien principal can be found in New York City's website, which clearly warns of the possibility that "[f]oreclosure can also begin if you don't pay the semi-annual interest on the lien sale amount within 30 days after it is due" (see NYC Lien Sale Information Notice, https://portal.311.nyc.gov/article/?kanumber=KA-01512).
However, the failure of the Yonkers' Charter to ensure that the notice sent to by the lien's purchaser to property owners includes such a warning does not, in itself, warrant a different interpretation of the portions of Charter section C19-7 at issue here, which allow the acceleration of the entire lien based on non-payment of interest due and owing. Whatever the Charter's notice provision does or does not require, it does not directly impact the Court's construction of the pertinent language of section C19-7, "If default shall be made in the payment of any installment of such interest and shall continue for a period of thirty days after such installment became due and payable , * * * then * * * at the option of the holder of the transfer of tax lien, the aggregate amount thereof shall become due and payable ," and the provision of section C19-10 that gives the purchaser its right to foreclose when a tax lien is due.
Therefore, it is hereby
ORDERED that defendant's motion to dismiss the complaint is denied, and it is further
ORDERED that plaintiff's cross-motion for summary judgment is granted, and it is further
Order of Reference signed.
This constitutes the Decision and Order of the Court.