Summary
dismissing defendants' fraud argument on the ground that the mortgage loan at issue "was advanced in reliance upon a power of attorney that was lawful on its face and properly acknowledged"
Summary of this case from Antoine v. Am. Sec. Ins. Co.Opinion
No. 702867/2013.
11-03-2016
WELLS FARGO BANK, N.A., Plaintiff, v. Harry O'BERRY a/k/a Harry E. O'Berry, Michael J. Sancho a/k/a Michael Sancho, Marilyn Sancho, and Terri Ann Sancho, Defendants.
The following electronically filed documents read on this motion by plaintiff for a Judgment of Foreclosure and Sale; and on this cross-motion by defendants MICHAEL J. SANCHO A/K/A MICHAEL SANCHO and MARILYN SANCHO (collectively hereinafter defendants) for an Order denying plaintiff's motion, granting defendants' motion to dismiss the complaint, or in the alternative, granting defendants leave to file a late answer: Papers/Numbered
| Notice of Motion–Affidavits–Exhibits | EF 64–69 |
| Notice of Cross–Motion–Affidavits–Exhibits | EF 72–78 |
| Reply Affirmation and Opp. to Cross–Motion–Exhibits | EF 79–83 |
| Memo. of Law in Opposition to Cross–Motion and in Further Support | EF 84–97 |
| Affirmation in Reply | EF 98 |
This is a foreclosure action concerning real property located at 14–90 Point Breeze Place, Far Rockaway, N.Y. 11691.
Based on the record before the Court, on February 20, 2008, defendants executed and delivered to AmTrust Bank a note in the principal amount of $472,000, secured by a mortgage encumbering the subject property. Thereafter, the note and mortgage were assigned to plaintiff. Plaintiff alleges that defendants failed to make monthly payments commencing on April 1, 2009 and continuing to present.
Plaintiff commenced this action by filing a lis pendens, summons and complaint on July 22, 2013. All defendants were duly served and defaulted in appearing except for defendant Michael J. Sancho who filed an answer. The answer was stricken by this Court's Order dated September 15, 2015, granting plaintiff summary judgment and an Order of Reference. Gerald Chiariello, II was appointed as Referee. The referee took the referee's oath and submitted a report dated May 9, 2016. The report, based upon documentary evidence, found that plaintiff was due the sum of $767,138.34 as of April 5, 2016, and the mortgaged premises should be sold in one parcel. Based upon the report of the referee, plaintiff now moves for an order granting a final judgment of foreclosure and sale.
Defendants, who defaulted in opposing the prior summary judgment motion, cross-move to dismiss the action on the grounds that an Order in another related action precludes plaintiff from foreclosing upon defendants, plaintiff failed to respond to certain discovery demands, plaintiff lacks standing, and plaintiff failed to demonstrate that it complied with RPAPL 1304. In the alternative, defendants seek to serve a late answer.
The doctrine of the law of the case seeks to prevent relitigation of issues of law that have already been determined at an earlier stage of the proceeding and applies to determinations which were necessarily resolved on the merits in the prior order (see Gilligan v. Reers, 255 A.D.2d 486, 487 (1998) ; Lehman v. North Greenwich Landscaping, LLC, 65 AD3d 1293[ 2d Dept.2009] ; Hampton Val. Farms, Inc. v. Flower & Medalie, 40 AD3d 699 [2d Dept.2007] ). This Court's prior Order already granted plaintiff summary judgment. As defendants failed to reargue, renew, or appeal the earlier decision, finding that plaintiff established its prima facie case for judgment of foreclosure and sale, defendants are barred from relitigating the same issues set forth in the answer which was already struck by this Court (see People v. Evans, 94 N.Y.2d 499 [2000] ).
To the extent defendants seek to vacate the prior Order, pursuant to CPLR 5015(a)(1), to vacate a default in opposing a prior motion a defendant must establish a reasonable excuse for the default and a potentially meritorious defense (see Wells Fargo, N.A. v. Cervini, 84 AD3d 789 [2011] ; Midfirst Bank v. Al–Rahman, 81 AD3d 797 [2011] ; HSBC Bank, USA v. Dammond, 59 AD3d 679 [2009] ). Similarly a defendant seeking to file a late answer "must provide a reasonable excuse for the default and demonstrate a meritorious defense to the action" (Moriano v. Provident New York Bancorp, 71 A3d 747, 899 [2d Dept.2010] quoting Lipp v. Port Auth. of N.Y. and NJ, 34 AD3d 649 [2d Dept.2006]. The determination of what constitutes a reasonable excuse is left to the sound discretion of the court (see Abrams v. City of New York, 13 AD3d 566 [2004] ; Scarlett v. McCarthy, 2 AD3d 623 [2003] ; Westchester Med. Ctr. v. Clarendon Ins. Co., 304 A.D.2d 753 [2003] ).
Here, defendants contend that the clerks at the Centralized Motion Part failed to accept a fully executed Stipulation to Adjourn the prior motion. As such, the motion was deemed fully submitted without opposition. This Court notes that the motion was already adjourned once from July 15, 2015 to September 2, 2015. Additionally, defendants did not seek to vacate the prior Order granting plaintiff summary judgment until plaintiff filed this motion for a final judgment of foreclosure and sale. As such, this Court finds that defendants have failed to provide a reasonable excuse for their failure to oppose the prior motion.
In any event, this Court finds that defendants failed to provide a meritorious defense to this action.
By way of relevant background, Ms. Sancho and Harry O'Berry, Ms. Sancho's then boyfriend, acquired title to the subject property by deed dated 29, 1998. Ms. Sancho and Mr. O–Berry subsequently conveyed title to Ms. Sancho, alone, by deed dated September 10, 2003. In 2008, Ms. Sancho sought mortgage financing from AmTrust Bank. AmTrust required a more favorable borrower than Ms. Sancho. As such, Ms. Sancho conveyed the property to Mr. O'Berry and her nephew, Michael J. Sancho, by deed dated February 20, 2008. AmTrust advanced a $472,000 purchase money mortgage loan to Mr. O'Berry and Mr. Sanchez. The note was executed by Mr. Sancho on his own behalf, and on behalf of Mr. O'Berry pursuant to a power of attorney that appointed Mr. Sancho to serve as his attorney-in-fact. The Power of Attorney specifically endowed Mr. Sancho with the power to act as Mr. O'Berry's attorney-in-fact for "the purchase and mortgaging of the real property located at 14–90 Point Breeze Place, F.R. NY", was signed by Mr. O'Berry, and the signature was notarized. On June 14, 2012, Mr. O'Berry commenced an action against Mr. Sancho and Ms. Sancho in Queens County Supreme Court, under Index No. 12554/2012, alleging that Ms. Sancho had defrauded him into relinquishing his 50% interest in the property that he held in 1998 by presenting him with documents to sign that he did not read. Plaintiff was not a party to the related action. On February 2, 2016, Court Attorney–Referee Tracy Catapano–Fox issued a Decision after Trial finding that O'Berry had demonstrated that Mr. and Ms. Sancho engaged in fraud when they persuaded Mr. O'Berry to sign certain documents in 2003 and the Power of Attorney presented in connection with this subject loan in 2007. Specifically the Order states "the power of attorney signed by defendant MICHAEL SANCHO dated December 15, 2007, is hereby deemed null and void." The decision also restored title to Mr. O'Berry and Ms. Sancho as it existed in 2003, with each holding an equal 50% interest. Mr. O'Berry's demand for partition and sale was denied in deference to the pendency of this foreclosure action.
Defendants contend that the Decision and Order in the related action precluded plaintiff from foreclosing herein as the power of attorney was deemed null and void. However, the Decision and Order do not assert that the power of attorney was void ab initio. Thus, this Court finds that the decision in the related action does not preclude plaintiff from foreclosing upon the mortgage herein. Moreover, [e]vidence of a gratuitous transfer in the chain of title does not, without knowledge of fraud, render a conveyance fraudulent and voidable as against the purchaser or mortgagee for value" (Miner v. Edwards, 221 A.D.2d 934 [4th Dept.1995] ; see Lebovits v. Bassman, 120 AD3d 1198 [2d Dept.2014] ). Here, it is undisputed that the original lender was a bona vide mortgagee. The mortgage loan was advanced in reliance upon a power of attorney that was lawful on its face and properly acknowledged. Defendants failed to provide any evidence that the original lender had any notice of a fraud in connection with the transaction.
As to defendants' contention that plaintiff failed to respond to certain discovery demands, defendants failed to offer any evidentiary basis to suggest that discovery may lead to relevant evidence. The mere hope and speculation that evidence sufficient to defeat the motion might be uncovered during discovery is an insufficient basis upon which to deny the motion (see CPLR 3212[f] ; Medina v. Rodriguez, 92 AD3d 850[2d Dept.2012] ; Hanover Ins. Co. v. Prakin, 81 AD3d 778 [2d Dept.2011] ; Essex Ins. Co. v. Michael Cunningham Carpentry, 74 AD3d 733 [2d Dept.2010] ; Peerless Ins. Co. v. Micro Fibertek, Inc., 67 AD3d 978 [2d Dept.2009] ; Gross v. Marc, 2 AD3d 681 [2d Dept.2003] ).
Defendants' also contest plaintiff's standing. However, defendants failed to assert lack of standing as an affirmative defense in the answer and failed to provide a reasonable excuse sufficient for leave to submit a late answer. Therefore, defendants waived the affirmative defense of standing pursuant to CPLR 3211(e) (see Deutsche Bank Natl. Trust Co. v. Hussain, 78 AD3d 989 [2d Dept.2010] ; U.S. Bank Natl. Assn. v. Eaddy, 79 AD3d 1022 [2d Dept.2010] ; Wells Fargo Bank Minn. v. Mastropaolo, 42 AD3d 239 [2d Dept.2007] ).
Lastly, defendants' argue that plaintiff failed to demonstrate that it complied with RPAPL 1304. "[P]roper service of the RPAPL § 1304 notice on the borrower or borrowers is a condition precedent to the commencement of the foreclosure action, and the plaintiff has the burden of establishing satisfaction of this condition" (Aurora Loan Services, LLC v. Weisblum, 85 AD3d 95, 107 [2d Dept.2011] ). The presumption of receipt by the addressee "may be created by either proof of actual mailing or proof of a standard office practice or procedure designed to ensure that items are properly addressed and mailed" (see Residential Holding Corp. v. Scottsdale Ins. Co., 286 A.D.2d 679 [2d Dept.2001] ). The affidavit of merit from Alisha Mulder, a Vice President Loan Documentation for plaintiff, states that the 90–day notice was mailed to defendants at the subject property by both certified and first-class mail on February 11, 2013. The affidavit further describes plaintiff's regular practice for mailing the 90–day notices. Accordingly, defendants mere assertions that they did not receive the 90–day notices are insufficient to rebut the presumption that the notices were properly mailed.
Accordingly, and for the reasons set forth above, plaintiff's motion for a final Judgment of Foreclosure and Sale is granted in its entirety and defendants' cross-motion is denied in its entirety.
Settle Order.