Independence Community Bank v Omicron Indus., Inc.

[*1] Independence Community Bank v Omicron Indus., Inc. 2005 NY Slip Op 51674(U) [9 Misc 3d 1119(A)] Decided on July 21, 2005 Supreme Court, Suffolk County Pitts, J. Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431. This opinion is uncorrected and will not be published in the printed Official Reports.

Decided on July 21, 2005
Supreme Court, Suffolk County

Independence Community Bank, Plaintiff,

against

Omicron Industries, Inc. and VINCENT R. PASSAVIA, as Guarantor, Defendants.



03-2310

Arthur G. Pitts, J.

ORDERED that this motion by plaintiff for an order pursuant to CPLR 3212 granting summary judgment on its complaint in this foreclosure action and striking the defendants' answer, and for an order of reference appointing a referee to compute the amount due under the note and the mortgage, is granted; and it is further

ORDERED that JOHN L. JULIANO, ESQ. with an office at 39 Doyle Court, E. Northport, NY, 11731-6490 is hereby appointed referee to ascertain and compute the amount due upon the note and the mortgage, and to examine and report whether the mortgaged premises [*2]can be sold in one parcel; and it is further

ORDERED that pursuant to CPLR 8003(a) the referee be paid the statutory fee for the computation of the amount due the plaintiff.

This is an action to foreclose a mortgage on property located at 205 Wheeler Road, in Hauppauge, New York. On December 4, 2001, defendant Omicron Industries Inc. (hereinafter "Omicron") executed a mortgage on said premises in favor of plaintiff Independence Community Bank (hereinafter "Independence") to secure a note in the principal sum of $330,000.00. Also on December 4, 2001, defendant Vincent R. Passavia[FN1] (hereinafter Passavia") who is the president of Omicron, executed a personal guaranty wherein he unconditionally guaranteed "payment of claims of every nature" that Independence has against Omicron. Omicron allegedly failed to make the payments due on October 1, 2002, November 1, 2002, and December1, 2002[FN2]. By letter delivered December 14, 2002, Independence notified Omicron that it was in default and demanded Omicron pay all amounts due under the note. When Omicron failed to make such payment, Independence commenced this foreclosure on or about January 24, 2003, and filed a notice of pendency. Thereafter, Omicron and Passavia served an answer raising several affirmative defenses.

Independence then made a summary judgment motion which came before the Hon. James M. Catterson on April 14, 2004, wherein Justice Catterson heard testimony concerning this case and a related case, Independence v Passavia and Dunbas, LLC (Index No. 2308-03). By oral decision placed on the record, Justice Catterson granted Independence's summary judgment motion to the extent of granting its request for the appointment of a referee, and directing Independence to submit an appropriate order. Prior to Independence submitting such order, Justice Catterson was elevated to the Appellate Division, and Independence's order was then submitted to the undersigned. On August 3, 2004, this court signed an order adopting Justice Catterson's decision and granted Independence's motion for summary judgment. However, based upon the court's computerized records wherein it appeared that Independence's summary judgment motion was previously denied by the Hon. Edward D. Burke, this court sua sponte vacated its order of August 3, 2004. On February 7, 2005, Justice Burke issued an order, explaining that the court's computerized records regarding a denial of the summary judgment motion were based upon an erroneous entry, and that he never issued a decision or order in this action. Justice Burke also referred Independence's motion for summary judgment to the Clerk for reassignment, and it is once again before this court.

In support of its motion for summary judgment, Independence submits, inter alia: the [*3]note; the mortgage; the personal guaranty; the acceleration letter; the pleadings; the notice of pendency; the affidavits of service; its attorney's affirmation; the affidavit of Jack Reilly, Jr., who is employed by Independence and is responsible for supervising this mortgage; as proof of the failure of Omicron to make payment in accordance with the terms of the note and mortgage documents, thereby establishing its prima facie entitlement to a judgment as a matter of law (see, Federal Home Loan Mortg. Corp. v Karastathis, 237 AD2d 558, 655 NYS2d 631 [1997]). It is therefore incumbent upon defendants Omicron and Passavia to assert any defense which could properly raise an issue of fact as to the default on the mortgage (see, Green Point Savings Bank v Tornheim, 261 AD2d 360, 689 NYS2d 193 [1999]). "The law is clear that when a mortgagor defaults on loan payments, even if only for a day, a mortgagee may accelerate the loan, require that the balance be tendered or commence foreclosure proceedings, and equity will not intervene" (Home Savings of America, FSB v Isaacson, 240 AD2d 633, 659 NYS2d 94, 95 [1997]; quoting New York Guardian Mortgagee Corp. v Olexa, 176 AD2d 399, 401; 574 NYS2d 107, 108 [1991]). A valid tender requires an actual proffer of all mortgage arrears, and the tender of arrears will cure a default only prior to the notice of acceleration (Home Savings of America, FSB v Isaacson, supra ). Once a default has been declared and a loan's maturity accelerated, a mortgagee is not required to accept a tender of less than full repayment as demanded (id.).

In opposition, defendants Omicron and Passavia argue that Independence has not established that it has complied with a condition precedent to commencement of this foreclosure action. Specifically, they argue that Independence did not serve notice of default pursuant to the terms and conditions of the note.

There is no requirement in this state that a defaulting borrower be given an opportunity in writing to purge the default (1 Bergman on New York Mortgage Foreclosures, §4.04A, at 4-14). Where the mortgage documents do not require written notice of default prior to commencement of foreclosure, no notice of default is necessary (see, Small Business Administration v Mills, 203 AD2d 654, 610 NYS2d 371 [1994], 1 Bergman on New York Mortgage Foreclosures, §4.05 at 4-19). In the case at hand, there is no provision in the mortgage which requires Independence to send a notice of default as a prerequisite to a mortgage foreclosure action. Moreover, contrary to the assertion of Omicron and Passavia, there is no provision in the note which requires such notice of default. Rather, the note provides, "The undersigned waive(s) presentment, notice of dishonor, protest and any other notice or formality with respect to this ... Note" (see, Independence's Exhibit A, p.3)[FN3]. Lastly, Independence properly effectuated acceleration by its letters to Omicron and Passavia, and further by its filing of the summons, complaint and lis pendens (see, Albertina Realty Company v Rosbro Realty Corp., 258 NY 472, 180 NE 176 [1932]; see also, A.C. & H.M. Hall Realty Co. v Bel-De-Blue Inc., 72 NYS2d 659 [1947]).

Accordingly, this court adopts the oral decision of Justice Catterson of April 14, 2004, and the motion by Independence for summary judgment is granted.

Dated: July 21, 2005 _______________________________________

J.S.C.

FINAL DISPOSITION X NON-FINAL DISPOSITION Footnotes

Footnote 1:On the same day, Passavia and non-party Dunbas, LLC apparently executed two other notes, one for $386,250.00 and another for $365,946.92, which were not secured by a mortgage. These notes became the subject of another action (Independence v Passavia and Dunbas, Index No. 2308-03).

Footnote 2:Independence received a belated payment on December 11, 2002, which was applied against the unpaid October payment.

Footnote 3: In addition, the court notes that in the personal guaranty, notice of default is waived (see, Independence's Exhibit D, p.2).