Opinion
117652/09.
Decided May 16, 2011.
GREENBLATT AGULNICK, P.C., GREAT NECK, NY, ATTORNEY FOR BANK OF NEW YORK, Frenkel, Lambert, Weiss, Weisman et al, Bay Shore, New York, ATTORNEY FOR THE PLAINTIFF.
HAMARI VENTURES — Prose, BELLE HARBOR NY, ATTORNEY FOR THE DEFENDANT.
N.Y.C. TRANSIT ADJUDICATION BUREAU, BROOKLYN NY, ATTORNEY FOR THE DEFENDANT.
WORLDWIDE PLAZA CONDOMINIUM, NEW YORK NY, ATTORNEY FOR THE DEFENDANT.
N.Y.C. PARKING VIOLATIONS BUREAU, NEW YORK NY, ATTORNEY FOR THE DEFENDANT.
N.Y.C. ENVIRONMENTAL CONTROL BOARD, NEW YORK NY, ATTORNEY FOR THE DEFENDANT.
COUNTRYWIDE HOME LOANS — Prose, PLANO TX, ATTORNEY FOR THE DEFENDANT
OFFER RESLES — Prose, NEW YORK NY, ATTORNEY FOR THE DEFENDANT.
Recitation, as required by CPLR § 2219 [a] of the papers considered in the review of this (these) motion(s):
PapersNumbered Motion Seq. No. 003 Motion Seq. No. 004
Zweig n/m (RR and 3212) w/EMA, SEA affirm, AZ affid, exhs 1 BONY opp w/BMW affirm, exhs 2 BONY n/m (3212) w/BMW affirm, exhs 3 Zweig opp w/EMA affirm, exhs 4 BONY reply w/BMW affirm, exh 5 Order, Gische J., 1/10/11 6 Upon the foregoing papers, the decision and order of the court is as follows:This is an action to have to court discharge plaintiff Ann Zweig's ("Zweig") responsibilities under the Memorandum of Sale and Terms of Sale dated September 12, 2007 ("terms of sale") or, in the alternative, an order directing defendant the Bank of New York ("BONY") to refund her deposit. Zweig now brings a motion to reargue and renew a prior motion that the court denied, which mistakenly was based upon a previously filed Note of Issue, notwithstanding that it had been stricken. (Order, Gische J, 1/3/11). The court, by order dated January 10, 2011, vacated its January 3rd order, denying Zweig's motion as untimely. Thus, to the extent this motion seeks reargument/renewal of the court's January 3, 2011 order, the motion is academic since that order was vacated. Consequently, this motion and BONY's motion for summary judgment will be addressed on the merits since issue has been joined and the motions are timely brought (CPLR § 3212 [a]; Myung Chun v. North American Mortgage Co., 285 AD2d 42 [1st Dept 2001]).
Background, Facts and Arguments Presented
The facts of this case are largely unrefuted and were set forth at great length in this court's prior decision and order dated March 10, 2010 in which the court denied plaintiff's motion for a preliminary injunction. Briefly, Zweig was the successful bidder of a condominium apartment sold at a judicial auction held pursuant to a Judgment of Foreclosure and Sale dated March 14, 2007 ("judgment"). Pursuant to the terms of sale, Zweig made a deposit of $60,000 on the $523,000 purchase price, and the closing was scheduled for October 12, 2007.
Just two days before the closing, defendant Hamari Ventures, LLC ("Hamari") brought a motion for a preliminary injunction. It was initially denied by (now retired) Hon. Walter B. Tolub who then reconsidered his decision and held a hearing. Hamari's claim was that it, not BONY, held the first mortgage on the property, and therefore any monies from the foreclosure action rightfully belonged to Hamari. At the hearing, Judge Tolub found that the Hamari mortgage was recorded before BONY's (i.e. July 1, 2005 versus August 5, 2005) and that Hamari's mortgage did, in fact, have priority over BONY's. BONY appealed Judge Tolub's decision. The decision was reversed on appeal, shortly after Zweig brought her original motion for summary judgment. In its decision dated November 16, 2010, the Appellate Division, First Department held that the BONY, not Hamari, mortgage had priority although Hamari's mortgage was recorded first. The court held that regardless when the mortgages were actually recorded, the BONY mortgage had been filed with the City Registrar and an instrument is considered recorded from the date of its delivery, regardless of when it is actually documented in the Registrar's books and records ( The Bank of New York v. Resles, 78 AD3d 469 [1st Dept 2010]).
Although initially Zweig sought relief from the terms of sale based upon the doctrine of impossibility, plaintiff still seeks to be relieved from her obligations for equitable reasons, notwithstanding the recent decision on appeal. Zweig argues she spent years waiting to close on the apartment and all the while it was vacant, unmanaged, uncared for and uninsured. Zweig describes the difficult events of the past years, including certain serious health problems she has suffered. Zweig argues that by bearing the risk of loss attendant to the property for the past three while the parties litigated the issue of lien priority, she conferred a significant benefit on BONY because it pursued years of litigation and an appeal to protect its interests as a primary lienholder. Thus, Zweig seeks a discharge of her obligations and return of her deposit.
In support of its motion for summary judgment, BONY argues that now that litigation among the parties to the foreclosure action has ended, the closing can occur and Zweig had no excuse to not close. BONY points out that the terms of sale are very clear, warning the successful bidder that it is taking subject to the rights of any defendant to seek vacatur of the judgment.
Discussion
On a motion for summary judgment, the movant must make a prima facie showing of entitlement to judgment as a matter of law, tendering sufficient evidence to eliminate any material issues of fact from the case" [ Winegrad v. New York Univ. Med. Ctr., 64 NY2d 851, 853). Once met, this burden shifts to the opposing party who must submit evidentiary facts to controvert the allegations set forth in the movant's papers to demonstrate the existence of a triable issue of fact ( Alvarez v. Prospect Hosp., 68 NY2d 320, 324; Zuckerman v. City of New York, 49 NY2d 557).
"When a bid has been accepted and the purchaser signs the terms of sale, he or she is bound by contract under the general principles of contract law" ( Lane v. Chantilly Corp., 251 NY 435, 437 [1929]). However, the right to compel specific performance by a purchaser of realty at a judicial sale, as distinguished from a private sale between vendor and purchaser, will be determined solely on equitable principles ( Morrow v. Renniere Process, Inc., 222 A.D. 100 [1st Dept 1927]). Generally the court will exercise its equitable powers setting aside a judicial sale where fraud, collusion, mistake or misconduct casts suspicion on the fairness of the transaction ( Harbert Offset Corp. v. Bowery Sav. Bank, 174 AD2d 650 [2nd Dept 1991]). Moreover, the rule of caveat emptor applicable to private sales,"is not applied with as much strictness in judicial sales where a purchaser may have greater reliance that there are no hidden pitfalls . . ." ( Scala v. Levensen, 95 N.Y.S.2d 850 [Sup Ct Kings 1950]).
Although the terms of sale set a closing date it also specified that " TIME IS OF THE ESSENCE " but only as to the purchaser. The terms of sale also provide that the successful bidder is purchasing the property subject to, among other things, "the [r]ights of any defendants, pursuant to CPLR § 317 § 2003 and § 5015 . . ." as well as "Any notice of appeal(s) of the judgment of foreclosure and sale filed by any of the defendants." By agreeing to the terms of sale, Zweig, as purchaser, also "assume[d] all risk of loss or damage to the premises from the date of auction until the date of closing and thereafter." The terms of sale explicitly state that the only circumstance the successful bidder is entitled to a return of his or her deposit is if any party with an interest in the property files bankruptcy.
Although Zweig herself never expected a three year delay in closing, this was not unanticipated given the references to "CPLR § 5015" and "appeal(s) of the judgment of foreclosure . . .". Thus, the terms of sale expressly addresses situations that might arise where a defaulting defendant would try to vacate his/her/its default in the foreclosure action or an appeal of the judgment of foreclosure. In those instances, the closing would most likely be stayed by the court while the dispute is litigated and pending a decision — which is precisely what happened in the underlying foreclosure action.
Zweig's argument, that she conveyed a benefit upon BONY by shouldering the risk attendant to owning the apartment for the past three years, does not present any reason for the court to relieve her from her obligations under the terms of sale. It was a risk she took on as the successful bidder of foreclosed property in which one of the mortgage holders had defaulted. When Zweig purchased the apartment, she knew the judgment of foreclosure could be attacked and she agreed that if it was attacked, it would not be a reason to vacate her agreement to purchase the unit.
Zweig has not presented any reason why now that the dispute between the defendants in the foreclosure action is resolved and the sale can be completed, she should be excused from her obligations under the sales contract. While the court can in certain circumstances apply equity to excuse a purchaser from his/her/its performance under the terms of sale of foreclosed property for any number of reasons ranging from "mere mistakes, accidents or hardships . . ." to "oppressive or unfair conduct of others" ( Fisher v. Hersey, 40 Sickels 633 [1881]), the circumstances of this case do not justify such an order. The intervening litigation and appeal that ensured were foreseeable events well within the risks Zweig undertook when she bought the property. Therefore, Zweig's motion is denied in its entirety and the motion by BONY for summary judgment dismissing the complaint is granted.
Conclusion
In accordance with the foregoing,
It is hereby Ordered that plaintiff Anne Zweig's motion to reargue its motion for summary judgment is granted only insofar as her motion for summary judgment is considered on the merits but summary judgment is denied; and it is further
Ordered that the motion by defendant The Bank of New York, etc., for summary judgment is granted in its entirety; the Clerk shall enter judgment in favor of defendant The Bank of New York, as trustee on behalf of the Certificate holders of CWMBS, Inc. CHL Mortgage Pass-through Trust 200-29, Mortgage Pass Through Certificates, Series 200-29, dismissing the complaint; and it is further
Ordered that any relief not expressly addressed is hereby denied; and it is further
Ordered that this constitutes the decision and order of the court.
So Ordered: