Opinion
18408/08.
Decided April 2, 2010.
Plaintiff moves to punish defendants, agents and assigns for contempt for failing to comply with an order dated September 24, 2008. Defendants Jiqing Development Inc. (Jiqing Development), Yi Xia and Jiqing Yue cross-move to stay this foreclosure action pending the outcome of the foreclosure action entitled Up Associates, LLC v Xia, (Supreme Court, Queens County, Index No. 18406/2008) and to remove the temporary Receiver appointed pursuant to the ex parte order dated September 24, 2009.
The court notes that plaintiff has stipulated the order to show cause should not be construed to seek contempt as against counsel for defendants Jiqing Development, Yi Xia and Jiqing Yue ( see Stipulation dated July 31, 2009).
With respect to the branch of the cross motion by defendants Jiqing Development Inc., Yi Xia and Jiqing Yue to stay this action pending the outcome of the foreclosure action under Index No. 18406/2008, the corporate loan was secured by the subject mortgage on the property owned by defendant Jiqing Development, and in addition, defendants Yi Xia and Jiqing Yue gave personal guarantees which, in turn, were further secured by a mortgage on the guarantors' own property at 136-20 38th Avenue, Unit 10F, Flushing, New York (the 38th Street Property). When defendant Jiqing Development defaulted in its payments on the debt, plaintiff instituted the foreclosure action (Index No. 18406/2008) on the alleged guarantors' property, naming Yi Xia, Jiqing Yue and Jiqing Development as party defendants therein, and later on the same day, separately instituted this foreclosure action (Index No. 18408/2008) on the corporate property.
Defendants Jiqing Development, Yi Xia and Jiqing Yue assert that plaintiff was obligated to recite this procedural history in its complaint pursuant to RPAPL 1301(2), but instead, incorrectly alleged that "[n]o proceedings have been had at law or otherwise before any court or judge for the relief sought herein based on the stated default."
RPAPL 1301(2) requires that "[t]he complaint shall state whether any other action has been brought to recover any part of the mortgage debt, and, if so, whether any part has been collected." Both the prior action and this action are actions in equity and neither is one at law for the recovery of any part of the mortgage debt. Thus, the allegation by plaintiff in the complaint pursuant to RPAPL 1301(2) is neither false nor a sham ( cf. Ginsberg v Roberts, 19 AD2d 739). Furthermore, as of the time of the commencement of this action, no judgment had been issued in the prior action, and defendants Jiqing Development, Yi Xia and Jiqing Yue soon became aware of the prior action, having been joined therein as party defendants.
Defendants Jiqing Development, Yi Xia and Jiqing Yue contend they have incurred unnecessary costs and expenses in relation to their having to defend both actions, and if the instant action is stayed, potentially inconsistent results will be avoided. They also contend that plaintiff should have obtained leave of court in the action under Index No. 18406/2008 before bringing this action, citing RPAPL 1301(3).
"RPAPL 1301 (3), by its terms, is mortgagee specific and debt specific directing that [w]hile the action is pending or after final judgment for the plaintiff therein, no other action shall be commenced . . . to recover any part of the mortgage debt' (emphasis added). Significantly, the language specifies the' action on the', not just any, mortgage debt" ( Central Trust Co. v Dann, 85 NY2d 767, 771).
It is well established when there are several mortgages given to secure a single debt, a single foreclosure action should be brought in which the guarantor is a party defendant so long as the properties involved are all subject to the jurisdiction of one court ( see Sanders v Palmer, 68 NY2d 180, 186 [a single debt was secured by mortgage of property of the corporate debtor and by a mortgage of the separate property of an individual guarantor]); see generally 2 Bergman on New York Mortgage Foreclosures § 27.01[3][a]). In this way, the properties may be sold separately in such order as the court may fix, followed by an application for a deficiency judgment, or court may direct a single sale of all the parcels, and permit plaintiff to await the conclusion of the sale before seeking a deficiency judgment ( see Sanders v Palmer, 68 NY2d 180, 186; see also Parisi TTEE Parisi Enterprises, Inc. Profit Sharing Trust v Black Meadow Estates, Inc., 208 AD2d 597).
It is undisputed that 1) the subject mortgage and the alleged guarantors' mortgage secure a single debt, 2) plaintiff did not obtain leave of court in the action under Index No. 18406/2008 before bringing this suit, and 3) the properties are situated Queens County. Defendants Jiqing Development, Yi Xia and Jiqing Yue, nevertheless, did not move, pre-answer, to dismiss the complaint herein on the ground of violation of RPAPL 1301(3), or assert an affirmative defense based upon such violation in their answer. Nor did defendants Jiqing Development, Yi Xia and Jiqing Yue raise this argument regarding violation of RPAPL 1301(3) when opposing the prior motion by plaintiff for summary judgment in this action. They also made no motion to consolidate the actions. Rather, they now seek a stay of this action pending the outcome of the prior action.
"To impose a stay in one action pending the resolution of a related action, there must be a complete identity of parties, claims, and reliefs sought in the two actions ( see National Mgt. Corp. v Adolfi, 277 AD2d 553; Guilden v Baldwin Sec. Corp., 189 AD2d 716; Sears v Country Developers, 178 AD2d 708; Abrams v Xenon Indus., 145 AD2d 362)" ( Green Tree Financial Servicing Corp. v Lewis, 280 AD2d 642). In this case, although the foreclosure of the mortgage on the guarantors' parcel is dependent on the default in payment on the note, the relief sought in this action, i.e. foreclosure of the corporate mortgage, is distinct from the relief sought in the prior action, i.e. foreclosure of the guarantors' mortgage given on the 38th Street Property. Because the relief sought in the two actions is not identical, a stay is inappropriate.
With respect to the branch of the cross motion by defendants Jiqing Development, Yi Xia and Jiqing Yue to remove the temporary Receiver, the court gave effect to the right reserved to plaintiff in the mortgage to the appointment of a receiver, without notice ( see Real Property Law § 254). The receivership order provides that the temporary Receiver "is hereby appointed with the usual powers and direction as Receiver for the benefit of the plaintiff of all the rents and profits now due and to become due during the pendency of this action and issuing out of the mortgaged premises," and that he "shall continue in [his] duties as such until the receivership is terminated by court order. . . ." Because such language contemplates that the receivership will survive beyond the date of the judgment of foreclosure and sale and up until the time of sale ( see CPLR 6401), defendants Jiqing Development, Yi Xia and Jiqing Yue argue that the temporary Receiver should be discharged because a receiver is not necessary for the security or protection of the property. Defendants Jiqing Development, Yi Xia and Jiqing Yue assert that the subject property is a development property, not a rental property, and no income or rents are being generated from the premises. They also assert that they have protected, maintained and improved the premises at all times, paid all real estate taxes, continued and maintained sufficient insurance, including naming plaintiff as an additional insured, completed the construction of the premises, obtained a certificate of occupancy for it, and procured a tax abatement for the premises. They further assert that the temporary Receiver has done little in relation to the property.
Plaintiff contends that defendants Jiqing Development, Yi Xia and Jiqing Yue caused construction to continue at the premises and permitted persons to occupy it in violation of the receivership order, and therefore, are guilty of contempt of court. Plaintiff also contends that those defendants have impeded its rights by engaging in inferior, substandard, construction, and creating hazardous conditions at the premises, thereby warranting continuation of the receivership. In addition, plaintiff contends that defendants Jiqing Development, Yi Xia and Jiqing Yue impeded the temporary Receiver in the performance of his duties, by barring his access to the inside of the premises, until August 27, 2009, when the court directed the turn over the keys. Plaintiff further contends that the temporary Receiver has made efforts to secure the property, and to obtain the requisite insurance for it.
"In order to prevail on a motion to punish a party for civil contempt, the movant must demonstrate that the party charged with the contempt violated a clear and unequivocal mandate of the court, thereby prejudicing a right of another party to the litigation ( see Judiciary Law § 753[A][3]; McCain v Dinkins, 84 NY2d 216, 226; Gloveman Realty Corp. v Jefferys , 29 AD3d 858 , 859; Goldsmith v Goldsmith, 261 AD2d 576, 577). The movant bears the burden of proving the contempt by clear and convincing evidence ( see Riverside Capital Advisors, Inc. v First Secured Capital Corp. , 28 AD3d 455 , 456; Vujovic v Vujovic , 16 AD3d 490 , 491)" ( Riverside Capital Advisers, Inc. v First Secured Capital Corp. , 43 AD3d 1023, 1024). "An application to adjudicate a party in contempt is treated in the same fashion as a motion, and a hearing need not be held if an issue of fact is not raised ( see Mulder v Mulder, 191 AD2d 541)" ( Riverside Capital Advisors, Inc. v First Secured Capital Corp. , 28 AD3d 455 ).
The receivership order, which was a lawful mandate ( see Real Property Law § 254), enjoined defendants Jiqing Development, Yi Xia and Jiqing Yue from "interfering in any manner with the Mortgaged Premises or its possession, or with the receiver's management thereof," and required them "to deliver and attorn to the receiver all . . . agreements, contracts . . . relating to space in the Mortgage Premises." Such order clearly prohibited defendants Jiqing Development, Yi Xia and Jiqing Yue from taking any steps in relation to the possession or management of the property.
Plaintiff has demonstrated that the order was served by mail upon their counsel on October 14, 2008. Plaintiff, by its submissions, has presented clear and convincing evidence that defendants Jiqing Development, Yi Xia and Jiqing Yue wilfully and knowingly violated the receivership order insofar as they, without the consent or permission of the temporary Receiver, continued with the construction and permitted at least one person to occupy the property. In addition, the excuses and explanations by defendants Jiqing Development, Yi Xia and Jiqing Yue for doing so are unsatisfactory. Furthermore, they have prejudiced plaintiff's rights by creating hazardous conditions as a result of the construction there.
Defendants Jiqing Development, Yi Xia and Jiqing Yue, therefore, are in civil contempt of court for their violation of the receivership order. They are fined $250.00 each, plus legal costs and expenses, and are directed to halt all construction at the premises and not to permit any tenants, residents or occupants at the property without the consent of the temporary Receiver (Judiciary Law § 773). Plaintiff is directed to submit an affidavit of its counsel setting forth the hourly rate, legal services rendered, and costs and expenses incurred, in relation to the motion by plaintiff to punish defendants Jiqing Development, Yi Xia and Jiqing Yue for contempt along with the order to be entered hereon.
Accordingly, the cross motion by defendants Jiqing Development, Yi Xia and Jiqing Yue to stay this action pending the outcome of the action under Index No. 18406/2008 and remove the temporary Receiver is denied. The motion by plaintiff to punish defendants Jiqing Development, Yi Xia and Jiqing Yue for contempt is granted to the extent of holding them in contempt of court and fining them $250.00 each, plus legal costs and expenses, and directing them to halt all construction at the premises and not to permit any tenants, residents or occupants at the property without the consent of the temporary Receiver.
Settle order.