Dominion Fin. Corp. v Saw Mill Done Deal Dev., LLC
Annotate this CaseDecided on November 24, 2014
Supreme Court, Westchester County
Dominion Financial Corporation, Plaintiffs,
against
Saw Mill Done Deal Development, LLC, MARK PASTERNACK and ANITA COHEN, AS EXECUTORS OF THE ESTATE OF JEFFREY H. PASTERNACK and H. ELIOT SUBIN, Defendants.
1422/2008
STANLEY ZWILLINGER, ESQ.
54 Radcliff Drive
New City, New York 10956
PAUL MEYER, ESQ.
35 East Grassy Sprain Road
Suite 508
Yonkers, New York 10710
William J. Giacomo, J.
[*2]Factual & Procedural Background
On May 16, 2006, defendant Saw Mill Done Deal, Inc. ("Saw Mill") executed and delivered to plaintiff a note and mortgage encumbering property located at 258 Saw Mill River Road, Hawthorne, New York. The loan amount was $450,000 and the loan payments were personally guaranteed by defendants Jeffrey H. Pasternack, now deceased, and defendant H. Eliot Subin. The note provided that Saw Mill make monthly payments of $5,277.87 commencing on July 1, 2006 through May 31, 2007 at which time the unpaid principal together with any unpaid interest was to be due and payable.
On October 20, 2006, plaintiff entered into a Line of Credit and Security Agreement with Israel Discount Bank of New York ("IDB"). To secure the line of credit, plaintiff agreed to give IDB a collateral mortgage on its interest in the Saw Mill property. Pursuant to the terms of the Credit Agreement, plaintiff retained the right to enforce its right, title and interest in the collateral, the Saw Mill property. On August 1, 2007, plaintiff executed an assignment of the Saw Mill mortgage to IDB. The Assignment was recorded on June 16, 2008.
Defendants defaulted under the terms of its mortgage loan and on January 18, 2008, plaintiff commenced this mortgage foreclosure action. On March 28, 2008 defendants interposed an answer which did not raise the affirmative defense of standing.On April 6, 2009, after the assignment/collateral mortgage was recorded, this Court granted plaintiff's motion for summary judgment in the foreclosure action. The April 6, 2009 order indicates that defendants Pasternack and Subin consented to the relief sought by plaintiff. The April 6, 2009 order also strikes defendants' answer.
On February 24, 2010, defendants consented to the referee's computation of amount due in the foreclosure action.
On September 13, 2010, the Judgment of Foreclosure and Sale was signed by the Court. A foreclosure sale was held on November 16, 2010 at which time plaintiff was the successful bidder in the amount of $125,000. Plaintiff then assigned its bid to 200 Madison Ave. Holdings LLC to whom the referee's deed was delivered.
On April 11, 2012, a deficiency judgment in the amount of $590,907.14 was entered against defendant Subin. In July 2012, plaintiff commenced an action, Dominion Financial v. Subin, under index No. 61170/2012 [FN1] , against Subin and his children seeking to enforce the deficiency judgment.
Defendants now move in this foreclosure action to vacate the judgment of foreclosure and sale on the grounds of fraud, newly discovered evidence, misrepresentation and misconduct by plaintiff and, upon vacatur, to direct conveyance of the property back to Saw Mill. Defendants claim that although the amount of the mortgage was $400,000, $50,000 was withheld until the site plan was approved. Defendants claim that since the site plan was never approved, the $50,000 was never [*3]disbursed and the amount due in foreclosure should not have included that $50,000.
Defendants also argue that plaintiff did not have standing to bring this action since its interest in the mortgage was assigned to IDB prior to the commencement of the foreclosure action although the assignment was recorded after the commencement of the action.
In opposition, plaintiff states that the judgement of foreclosure in this action did not include the $50,000 withheld. Plaintiff also argues that defendants waived the affirmative defense of standing. Notably, plaintiff points out that defendants did not raise an affirmative defense of lack of standing in the answer filed in this case. Further, when plaintiff moved for summary judgment in 2009, defendants again did not raise plaintiff's lack of standing as a defense. Rather, defendants consented to the relief sought by plaintiff and their answer was stricken.
Plaintiff also argues that the assignment did not act as a bar to commencing this action. Plaintiff argues that the assignment was part of a collateral mortgage and that IDB's interest in the Saw Mill property was only triggered if it defaulted under the terms of the Line of Credit agreement. Thus, since plaintiff did not default, IDB never had standing to bring an action against defendants.
Discussion
CPLR § 5015. Relief from judgment or order provides in relevant part:
(a) On motion. The court which rendered a judgment or order may relieve a party from it upon such terms as may be just, on motion of any interested person with such notice as the court may direct, upon the ground of:
1. excusable default, if such motion is made within one year after service of a copy of the judgment or order with written notice of its entry upon the moving party, or, if the moving party has entered the judgment or order, within one year after such entry; or
2. newly-discovered evidence which, if introduced at the trial, would probably have produced a different result and which could not have been discovered in time to move for a new trial under section 4404; or
3. fraud, misrepresentation, or other misconduct of an adverse party; * * *
Here, defendants claim the Judgment of Foreclosure and Sale must be vacated on the ground of newly discovered evidence and fraud, misrepresentation, and misconduct of the plaintiff.
The Court notes however, that in their answer defendants did not raise the affirmative defense of standing. Further, in 2009 when plaintiff moved for summary judgment and when the assignment in question was recorded and a matter of public record, defendants again failed to raise the issue of standing.
The Court of Appeals and all of the Appellate Divisions have squarely held that an argument that a plaintiff lacks standing is waived pursuant to CPLR 3211(e), if not [*4]asserted in the defendant's answer or in a pre-answer motion to dismiss the complaint,(see Wells Fargo Bank Minn., N.A. v Mastropaolo, 42 AD3d 239, 242 [2nd Dept 2007]; see also Deutsche Bank Nat. Trust Co. v. Islar, 2014 WL 5638883, 2014 NY Slip Op. 07468, 07468 [2nd Dept 2014]). Here, not only did defendants fail to raise lack of standing as an affirmative defense in their 2008 answer, they could have, but did not, raise that objection in opposition to plaintiff's motion for summary judgment. Notably, the assignment in question was a matter of public record as of June 16, 2008, thus it was available to defendants at the time plaintiff moved for summary judgment. Nevertheless defendants did not oppose the motion and, in fact, consented to the relief sought. Accordingly, defendants have waived the right to assert the affirmative defense of lack of standing for the first time 6 years after the commencement of this action and 4 years after the Judgment of Foreclosure and Sale was signed.(see Fargo Bank Minn., N.A. v Mastropaolo, 42 AD3d at 242).
With respect to defendants' claim that the amount sought in foreclosure improperly included $50,000 which was never released, on February 24, 2010 defendants consented to the Referee's computation of the amount due.
In light of the above, defendants' motion to vacate the Judgment of Foreclosure and Sale and to convey the property back to Saw Mill is DENIED.
Dated: White Plains, New York
November 24, 2014
HON. WILLIAM J. GIACOMO, J.S.C.
FootnotesFootnote 1:In Dominion Financial v. Subin, by decision and order dated July 3, 2014 the Court (Walker, J.) granted plaintiff summary judgment on its complaint. Defendants therein filed a Notice of Appeal.
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