Olmeda v Correia

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Olmeda v Correia 2012 NY Slip Op 32035(U) August 1, 2012 Sup Ct, Suffolk County Docket Number: 12-6251 Judge: Thomas F. Whelan Republished from New York State Unified Court System's E-Courts Service. Search E-Courts (http://www.nycourts.gov/ecourts) for any additional information on this case. This opinion is uncorrected and not selected for official publication. [* 1] SIIURT FORM (jRJ)I;R INDEX No. cori 12-6251 SUPREME COURT - STATE OF NEW YORK IAS. COMMERCIAL PART 45 - SUFFOLK COUNTY PRESENT: Hon. THOMAS F. WHELAN Justice of the Supreme Court MOTION DATE AD!. DATES 7/6/!2 7120/!2 Mot. Seq. # 001 - Mot D CDISP Y_ N--.X.... ---------------------------------------------------------------X GREGLIN OLMEDA and CARMEN OLMEDA, Plaintiffs, RODNEY DRAKE, ESQ. Atty. For Plaintiffs 600 Johnson Ave. Bohemia, NY 11716 -againstCARLOS CORREIA, ALVARO GONCAL YES, VALD, LLC, LAGE INDUSTRIES CORP., ISLIP TOWN RECEIVER OF TAXES, ET ALS, MASTROPIETRO-FRADE, LLC Attys. For Defendant Lage Indus. 190 Willis Ave. Mineola, NY I 150 I Defendants. ---------------------------------------------------------------X Upon the following papers numbered 1 to --LL.... read on this motion for summarv judgment. substitute and drop parities and to appoint referee ; Notice of Motion/Order to Show Cause and supporting papers 1 - 5 Notice of Cross Motion and supporting papers : Answering Affidavits and supporting papers _6_-_7 _ _ : Replying Affidavits and supporting papers 8-10 ; Othel' 11-12 (memorandum); 13 (affirmation) (Hlld !tIle! licttliliJ eouli.~0;;1 illwppol't 11iicloppo~ed to the lilotioi"l) it is, ORDERED that this motion (#001) by plaintiffs for an order; (l) awarding them summary judgment against the answering defendant, Lage Industries, Corp., and others; (2) substituting certain occupants found at the premises for unknowns named in the caption and/or otherwise deleting as party defendants certain named defendants; and (3) appointing a referee to compute amounts due under the subject mortgage, is considered under CPLR 3215,3212 and RPAPL § 1321 and is granted only to the limited extent set forth below. The plaintitl's, Greglin Olmeda and Carmen Olmeda, commenced this action to foreclose a July 8,2004 purchase money mortgage given to them by defendants, Carlos Correia, Alvaro Gonclavcs, and Vald, LLC, in cOIU1ectionwith their purchase of commercial premises located in Bay Shore New York. The mortgage was recorded in the office of the Suffolk County Clerk on July 24, 2004. According to the complaint served and .filed herein, the 1ll0itgagors defaulted in payment on January 10,2010, in response to which, the plaintiffs accelerated the loan. The plaintiffs commenced this action in 2012 seeking lhe foreclosure of the mortgage lien, the public sale of the property and recovery of deficiencies, if any be remaining after the sale, from the obligor defendants. Defendant, Lage Industries Corp., was joined herein as one of the non+mortgagor [* 2] Olmeda v Correia et als Index No. 12-6251 Page 2 defendants whom the plaltltin"s characterize as having some interest in, or hen again:;t, the mortgaged premises that is subsequent and subordinate to the mortgage lien orthe plaintiffs. Defendant. Lage Industries Corp., appeared herein by an answer containing four aflinnative defenses. Lage's answer also contains one counterclaim '-vherein it seeks declaratory relief against the pluintills pursuant to RPAPL § 1501 Such relief includes ajudicial declaration of the validity. extent and priority of each and every lien. including one purportedly arising from Lage's filing of a notice of pendency in accordance with a consent order issued in an action to recover diverted Lien Lawtrust assets commenced by Lage against the mortgagor defendants and others in 2011 (see Matter of Lage IlIdus .. Index II 601884/2009, Nassau County. Supreme Ct.). Since Lage's filing of its notice of pendency agmnst the subject premises predates the plaintiffs' filing of such a notice in connection with the commencement of this action, Lage demands a judgment declaring it has a "valid and subsisting lien against the premises" (see answer of defendant I.age attached as Exhibit C to plaintiffs' moving papers). By the instant motion. the plaintiffs seck summary judgment on their complaint agal11st,among others, answering defendant Lage and dismissal of its affirmative defenses and counterclaim for declaratory relieL A review of the moving papers reveals a su/Ticient establishment of a prima facie entitlement to summary judgment on the plaintiffs' complaint to the extent it asserts claims against defendant Lage, in as much as, they included copies of the mortgage. the unpaid note and evidence of a default under the terms thereof by the mOI1gagor defendants (see CPLR 3212; RPAPL § 1321: Countrywide Home Loans v Delphonse, 64 AD3d 624, 883 NYS2d 135 [2d Dept 20090; Well!)'fargo Bank Millnesota v Perez, 41 AD3d 590, 837 NYS2d 877 [2d Depl2007]); Household Fill. Realty Corp. of New York}, Willl1, 19 AD3d 545, 796 NYS2d 533 [2d Oept2005J; Oewell Fed. Ballli FSB v.MilIer. 18 AD3d 527, 794 NYS2d 650 [2d Dcpt 2005]). Although the plaintilfs advance no other direct claims agamst defendant Lage. the prima facie establishment of the plaintiffs' claims for foreclosure and sale of the mortgaged premises concomitantly establishes the plaintiffs' implicit demands lor the extinguishment. upon the public salc of the premises, of defendant Lage's claimed interest in the subject premises. as the plaintiffs' complaint describes such interest as subsequent and subordinate 10 the plaintilfs'mortgage. It was thus incumbent upon answering defendant Lage Industries to submit proof sufficient to raise a genuine question or fact rebutting the plaintifT's prima facie showing of their cntitlement to judgment on lheir complaint or in support of one or more of the aftirmativc defenses asserted in Lagc's answer (see Grogg As!)'ocs. )/ South Rd. Anocs .. 74 A03d 1021. 907 NYS2d 22 [1d Dcpt 20101; Washingtoll Milt. Hault v O'Connor, 63 A03d 832, 880 NYS2d 696 [2d Ocpt 2009J: J.P. Morgan CIIl/!)"f! ank, NA v Agnel/o, 62 AD3d 662. 878 NYS2d 397 [2d Ocpt 20091; We/hi Fargo Balik B Minnesota Natl. AS.\"II. v Perez, 41 i\D3d 590, 837 NYS2d 877 [2d Dept 2007]; Household Fill. Realty Corp. of New York v Winl1. 19 AD3d 545. supra; Charter Olle BallI.., FSB v Houston, 300 AD2d 429. 751 NYS2d 573 f2d Dept 20021). /\ review of the opposing papers reveals. however. that no such question or I~lctwas raised. NOlleufthe plcaded <lllinnative defenses set forth in Lage's answer wen: asserted in opposition to the instant motion. Instead, three new deICnses are advanced by Lage as a basis for a denial of the plaintifE; motion for summary judgment. Defendant Lage first asscJ1s that due to its filing ora notice [* 3] Olmeda v Correia et als Index No. 12~6251 Page 3 of pendency against the subject premises in 2011, well prior to the commencement of this action, it has a valid and subsisting lien against the mortgaged premises that is entitled to some unldentified priority overthc mortgage lIen oethe plaintiffs. Lage's J"ilingof the notic!;:of pendency was the product ofa soordered stipulation that settled a contempt application served in the prior action it commenced to recover diverted trust funds under Article 3-a of the Lien Law from the mortgagor defendants and others (see Matter of Lage [mlu.'i_, Index if 601884/2009. Nassau County, Supreme Ct.). Defendant Lage contends thai, at that time of the contempt settlement, it was unaware that the plaintilTs' mortgage was in default and it asserts that the plaintiffs' acceptance of mortgage payments from the mortgagor defendants or their agents constituted a diversion oflrust funds for which the plaintiffs are liable to defendant Lage under Article 3-a of the Lien Law. Defendant Lage further asserts that it would not have accepted the contempt settlement, the cornerstone ol'which was the filing ofthe notice of pendency, ifit knew that the plaintiffs' mortgage was in delnult when said settlement was struck and said notice filed. 13yreason of such filing, the plaintiJls' purported receipt and application of diverted Lien Law trust funds to the payment of the subject mortgagc and the plaintiffs' delay in commencing this action, defendant Lage claims that its is entitled to an outright denial of the plainti ITs' motion and dismissal of the complaint or a conditional denial pending a detcrmination of Luge's counterclaim for a declaration regarding the priority of tts claim of interest in the subject premises. For the reasons stated below. ho,.vever, these contentions are rejected as unmeritorious. Traditionally. mortgage lien priorities were governed by the priority of time as it was considcred the priority of right. These rules were derived from corrunon law principles that provided that the first transfer or property or an interest therein left the transferor with nothing left to convey so that a second transferee urthe same property acquired no title or other interest therein (see I Mortgages and Mortgage Foreclosure in New York, 8:9). * These concepts were altered with the adoption of New York's recording acts which date back to the \8111 century and are currently coditied in Al1iclc 9 of the Rcal Property Law (see Fort v Burch, 6 Barb. 60. 661.NY Gen. Term., 1849"];RPL 290 el. seq.). Thereunder, a transferee, contract vendee or encumbrancer of property who qualifies as a good faith purchaser for value and who first records his or her conveyance. contract of sale or encumbrance will defeat prior unrecorded interests and most subsequently recorded mterests whenevcrcreated. Sinceamortgage is considered a ·'convcyancc'·under Ihe recording acts. a mortgagee and its assignees may qualify as purchasers for value (see RPL §§ 290: 291). However. neither a judgment creditor nor a mechaniC's lienor qualify as purchasers for value under the recording acts. although by statute. they generally enjoy priorities upon docketings or filings made under different statutes (see CPLR Al1icle 52; Lien Law § 13[1); 1 Mortgages and Mortgage Foreclosure in New York § 8: 12). A mortgage lirst recorded thus enjoys presumptive priority over later recorded contracts. conveyances and encumbrances ..judgments and mechanic· S liens (see ABN AMRO Mtgt!. Group, [m;. II Pantoja, 91 AD3d 440, 936 NYS2d 163 I: Ist Dl.:pt2012]). * The provisional remedy a1forded by the liling ora notice or pendency IS governed by Article 65 of the CPLR and such remedy differs markedly f"i·OIl1 the protections aflorded by Ihe current provisions of New Yark's recording act. The purpose of a notice of pendency is to atlord constructive notice from the lime of its tiling of a claim of interest in the subject premises so that any person who records a [* 4] Olmeda v Correia et als Index No. 12-625] Page 4 conveyance. encumbrance or contract for sale alter that timc becomes bound by all oJ"the proceedings taken 111 the action to which thc notice relates (see 2386 Crestoll Ave. Realty, LLC v M-P-M Mgt.. 58 i\D3d 158, 867 NYS2d 41611 sl Dept., 20081. quoting CorpoNlthm Bishop ofCllllrch of Jesus Christ of Latter-[)ay Saints v Solow Bldg. Corp., 52 AD2d 533, 534, 381 NYS2d 887 l1976]). Its effect is to bmd, as if they were parties to the action, all persons whosc conveyance, contract or encumbrance, whencvcr created, is recorded subsequent to the filing ofthc notice of pendency (see DLJ Mtge. Capilal Inc." Wille/sor. 78 AD3d 645. 910 NYS2d 160 [2d Dept2010]). However. it is only those claimants having enforceable, superior intcrcsts in property that may bind others not joined as parties to the suit of such a claimant by the proper filing of a notice of pendency (see 2386 Crestoll Ave. Relllly, LLC v M-P-M Mgt., 58 AD3d 158, supra; Varoll vAnniflo, 170 AD2d 445, 565 NYS2d 540 [19911). The filing or a notice of pendency does not create rights thm do not already exist (see 11 Warren's Weed, New York Real Property § 115.04 [5th ed.J). The filing ofa notice of pendency is thus no substitute for the recording of a contract of sale, conveyance or encumbrance (see Avila vArmdll Corp, 34 AD3J G09, 826 NYS2d 322 [2d Dept2006l; VllfOlIl,AlIlliIlO, 170 AD2d 445, supra). A party's failure to avail itselfofthe protections oJ"RPL 9§ 291 or 294 may not be cured by the filing of a notice of pendency since such notice has no effect upon the merits of a claimed property interest (see DLJ Mtge. Capital fnc. v Windsor, 78 AD3d 645. supra; TCJS Corp. v Ko.fj, 74 AD3d 1188.904 NYS2d 159[2d Dept 2010]: 2386 Cresloll Ave. Realty, LLC v M-P-M Mgl .. 58 AD3d 158: .I"upra; vila II Arsada Corp. 34 AD3d 609. supra: Varou v AUllblO. ]70 AD3d 445. supra). A Here, the plaintiff's mortgage \vas given and recorded in July of2004, some seven years prior to the accrual of defendant Lage's claim of some interest in the subject premises and the filing of its notice of pcndcncy. The plaintiffs' mortgage lien thus has priority over all unrecorded prior interests about which plaintilT<; had no notice and all subsequently recorded interests. Defendant Lage's subsequent Jiling ofa notice of pendency upon its acceptance of the 2011 settlement of its conlempt claim in the trust diversion action, which did not involve a claim against the mortgaged premises, did not affect the pnority of the plaintifE-;' previously recorded mortgage. Indeed, it is defendant Lage who is chargeable with constructive notice of the existence of such mortgage, by virtue of the recordation of piaintill's' mortgage prior to Luge's receipt of the so-ordered settlemcnt stipulation \vhcrein the defendants consented to Lage's filing of a notice oj"pendency against the subjcct premises 111 exchange for the posting of security previously directed by the court in the Nassau County trust fund diversion action. Assuming, without so finding, that the notice of pendency filed by Lage was a proper use orthe provisional remedy afforded by a notice of pendency (see CPLR 6512: Security Pac, ftftge. amI Real t.state Serv., Inc. v Republic of Philippines. 962 F2d 204 r.C.A.2 NY 1992]), the recent award of judgment in favor of Lage in the trust diversion action clearly provides an independent ground for the rejection of the claims advanced by Luge in opposition to this summary judgment motion by the plainti ft's (see CPLR 6514ra]). Lage's contentions that the plainti ITs' motion should be denied because the plainlilTs purporlcdly rcceived diverted trust funds belonging to Lage and applied them the payment or the mOrlgagt: in violation oJ"various provisions of Lien Luw Article 3-a are rejected as unmeritoriolls. These claims are not asserted in the answer of defendant and their assertion here in opposition to the plaintiffs' motion are unavailing. as they do not preclude the plaintiffs' prosecution of their claims for foreclosure and sale [* 5] Olmeda v Correia ct als Index No. 12-6251 Page 5 (see Neighbor/rood Hous. Servo of New fork City, 67 AD3d 872, 889 NYS2d 62712d Dept 20091). I\lso unavailing are Lage's claims that the doctrine of laches should be applied to bar the plaintiffs' recovery of the relief demanded on this motion for an accelerated judgment against defendant Lage in this loreclosure action. The doctrine of laches is not available to defeat a lorcclosure action brought within the statutory period of limitations (see New York State Mtge. Loan Enforcement and Admi". Corp. v North TowlI Phase II Houses, Inc., 191 J\D2d 151,594 NYS2d 183 1"1l Dcpt !993]; Schmidt's . s Wholesale, Inc. v Nliller & LelmulIl COIH·t.,173 J\02d 1004, 569 NYS2c1 836 [3d Dept 19911). . Under these circumstances, those portIons of this motion by the plaintiffs for summary judgment dismissing the affirmative defenses and counterclaim of defendant Lage Industries and forjudgment on its complaint against Lage lor foreclosure and sale are granted. Pursuant to RPAPL 1501, the court declares that defendant Lage has no valid and subsisting lien or interest in the mOl1gagepremises arising from its filing ofthe 20 11 notice of pendency that is prior or of equal priority to the plaintifls' mortgage lien. However, the plaintiffs' demands for an order cancelling the notice of pendency are denied without prejudice to the interposition of an application therefor to the court presiding over the Nassau County trust diversion action, out of which, the authority to rile such notice emanated (see CPLR 6514). Also granted are those portions of this motion wherein the plaintiffs seek to substitute Juan Pedrie in place of "John Doc #1 "; Edwin Echenique in plaee of "John Doe #2"; Marlon Campos Henriquez in place of -'John Doe # 3"; Esperanza Villatoro in place of «Jane Doc #. J ": Ruth Ponce m place of "Janc Doc # 2"; Meradre Poncc in place of "Jane Doe # 3"; and Debra Lopez Ponce in place of ''"Jane Doc # 4". Likewise granted is the plaintiffs' request to delete as parry dcfendants the remaining unknown defendants set forth in the caption. The caption of this action is thus amended 10 reflect lhe substitution of these defendants and the deletion of the unknown defendants and all future proceedings shall be captioned accordingly. Those portions oj" the instant motion wherein the plainti tTsseek summary judgment against the mortgagor defendants is denied. The remedy of summary judgment is available only in cases in which issue has been joined by service oran answer by the targeted defendant and where copies of the plead1l1g served accompanied the motion (see CPLR 32121.aJ;rb]; Shaibani v Somya, 7] A03d 1121,898 NYS2d 72l2d Oept 2010]; Enriquez v Home LawlI Care allli Lflllllscaping, Inc .. 49 AD3d 496, 854 NYS2d 410 [2d Dept2008J). Since it appears from the record lhat issue has not be joined by service oran answer on the part of the mortgagor defendants. the plaintiffs arc precluded ii'om seeking summary judg.ment against said defendants (see 115-41 St. Alblllu Holding Corp. v Harris.wm, 7 J AD3d 653, 894 NYS2d 896 [ld Dcpt 20101: Enriquez v Home LawlI Care allff Landscaping, IlIc .. 49 AD3d 496, supra). The plaintiffs' demands for summary judgment against all other defendants is likewise denied, as the court is ,"vithoutproof of their appearances by answer and withoul copies of any answers tiled by such defendants. The plaintifTs' application for the appointment of a referee to compute is also denied. It is well established that the appointment ora referee to compute as contemplated by RPI\PL § 1321 is not appropriate unless the claims of the plamtiffhave been adjudicated in its favor by the court and the only issues left for detcnnination arc those concerning the long account (see Vermont Fed. Balik v Cltase. 126 AD2d 1034,641 NYS2d 440 [2d Ocpt 19961). favorable adjudications orthe claims of the [* 6] Olmeda \' Correia et als Index No, 12-6251 Page 6 plaIntiffs may be made by the fixation of defaults in answering or by an award of summalY judgment on its complaint against the defendants (see Blink of East Asia Ltd. v Smith,:20 1 !\[)2d 522, 607 NYS2d 431 [2d Dcpt 1994J; Vermont Fed. Blink v Chase, 226 AD2d 1034, slIpra;Perllllllleal Prop. Holding.\·, LLC, 23 Mics2d 697, 874 NYS2d 873 [Sup C1. Kings County 2009J; HSBC Mtge. Serv., fllc. v Alphonso, 16 Misc3d[AJ, 2007 WL 2429711 [Kings County Supreme Court, 2007]). Until the plaintiffs' claims against all orthe defendants joined in the foreclosure action have been so adjudicated, an application for the appointment of a referee to compute is premature (see RPAPI. § 1321; Slwragll vSchwlIrtzherg, 149 AD2d 578, 540 NYS2d 45] [2d Ocpt 19891). Here, the plaintiffs' motion papers did not include a demand for a default judgment against the non-answering defendants with the requisite elements of proof required by CPLR 3215 (0, including proof of service of the summons and complaint upon some of those defendants, including the Town of Islip_ The moving papers also failed to establish whether appearances by service of answers or otherwise were interposed by the municipal defendants or by the newly identitied occupants served at the mortgage premises. Under these circumstances, the court denies the plaintiffs' motion for lhc appointment ofa referee pursuant to RJ>APL ~ 1321 as the samc is premature. Said denial is without prejudice to the interposition of a new npplication for the fixation of the defaults of all non-answering defendants pursuant to CPLR 3215 (1) and (g) and the appointment of a referee to compute as contemplated by RPAPL § 1321. Any such application shall include a copy of this order, as the award of summary judgment in favor of the plaintiffs against answering defendant, Lage Industries. Corp., set forth herein is a necessary component of any future application for the issuance of an order of reference. In view of the foregoing, the instant motion is granted only 10 the extent set forth above. A copy of this order must accompany any flltllre applicalion for an order fixing the defaults of the defendants who have not answered and lor an order of reference by virtue of all accelerated judgments granted to the plaintiffs pursuant to CPLR 3212 and 3215. Proposc.:cl rder granting summaryjudgc111cnt and appointing referee to compute bas been marked o "not signed" without prejudice. DATED: ~J!) r+""

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