Federal Natl. Mtge. Assn. v Clinton

[*1] Federal Natl. Mtge. Assn. v Clinton 2004 NY Slip Op 51221(U) Decided on August 5, 2004 Supreme Court, Nassau County 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 This opinion is uncorrected and will not be published in the printed Official Reports.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 August 5, 2004
Supreme Court, Nassau County

FEDERAL NATIONAL MORTGAGE ASSOCIATION, Plaintiff(s),

against

ETHEL CLINTON, Individually and as Administrator of The Estate of Cleveland Clinton, Jr.; State of New York, and "JOHN DOE No.1" through "JOHN DOE #10", the last ten names being fictitious and unknown to the Plaintiff, the person or parties intended being the persons or parties, if any, having or claiming an interest in or lien upon the mortgage premises described in the complaint, Defendant(s).



35727/97

Thomas P. Phelan, J.

Motion by defendant Ethel Clinton, Individually and as Administrator of The Estate of Cleveland Clinton, Jr., brought by Order to Show Cause dated July 1, 2004 [Mahon, J.] to vacate and set aside the judgment of foreclosure dated June 24, 2003 [Phelan, J.] and foreclosure sale held on December 1, 2003 nunc pro tunc is granted.

On Wednesday, November 26, 2003, the day before Thanksgiving, defendant Clinton attended a closing at her attorney's office during which title to the subject premises was allegedly transferred to contract vendee Willie Robinson. Argent Mortgage Company provided the new mortgage loan to Robinson in furtherance of his purchase. As alleged by counsel for defendant Clinton, despite his personal efforts to contact counsel for plaintiff to obtain the payoff amount due, he was forced to leave a message on counsel for plaintiff's answering machine. Another message was allegedly left by counsel for Robinson on Friday, November 28, 2003, and a third message was allegedly left by counsel for Clinton on December 1, 2003. None of these messages were [*2]ever returned.

No attempt, however, was made to contact the referee and on Monday, December 1, 2004 the scheduled foreclosure sale went forward with non-party, Property Development (Property), as the successful bidder.

That same day, counsel for Clinton forwarded to counsel for plaintiff a certified check in the sum of $131,772.32 which sum was estimated to exceed the sum due to reinstate Clinton's mortgage with plaintiff. Said sum was rejected by correspondence from plaintiff's counsel dated December 2, 2003 since "[r]einstatement funds were due ... by November 30, 2003 ... [and] [t]his property went to foreclosure sale on December 1, 2003 at 9:00 A.M.".

In order to cure the title defect caused by the December 1, 2003 foreclosure sale after the November 26, 2003 private sale, counsel for Clinton negotiated an assignment of bid from Property to Clinton for the sum of $60,000 (said sum representing reimbursement of Property's $30,000 downpayment to the referee and a $30,000 profit to Property).

As Clinton now has the funds to re-pay plaintiff and has obtained Property's interest in the premises, she moves to vacate the judgment of foreclosure and subsequent foreclosure sale nunc pro tunc.

Plaintiff opposes vacatur contending that the foreclosure sale once held extinguished defendant's right to redeem (see NYCTL 1996-1 Trust v. LFJ Realty Corp., 307 AD2d 957) and that, while plaintiff was willing to accept reinstatement prior to the foreclosure sale Clinton failed to even make timely payment to secure reinstatement. In addition, counsel for plaintiff affirms that their office was open on Wednesday, November 26, 2003, and states that to his knowledge there were no communications of any kind.

No information, however, is provided about the automated message taking facilities at counsel for plaintiff's office and counsel for plaintiff's statement fails to controvert counsel for defendant Clinton's allegation that he left a message on Wednesday, November 26, 2003, and that counsel for plaintiff's office was closed on Friday, November 28, 2003, when a second attempt was allegedly made.

"It is well settled that a court, in the exercise of its equitable powers has the discretion to set aside a judicial sale where fraud, collusion, mistake or misconduct casts suspicion on the fairness of the sale (citations omitted)" (Bankers Federal Sav. & Loan Ass'n. v. House, 182 AD2d 602).

Clinton's reliance on the representation by plaintiff that it would accept reinstatement of the mortgage at any time prior to the December 1, 2003 foreclosure sale, coupled with counsel for Clinton's attempt to accomplish same as part of the closing held on November 26, 2003*, satisfies the court that there were sufficient "mistakes" made by both parties to justify exercise of the court's equitable powers (compare NYCTL 1996-1 Trust v. LFJ Realty Corp., supra).

Since there appears little, if any, consequence to plaintiff in allowing vacatur to permit the chain of title from Clinton to Robinson to remain intact, vacatur of the June 24, 2003 judgment and December 1, 2003 sale is granted nunc pro tunc.

All costs and expenses associated with the foreclosure sale, including the advertising and referee's fee, shall however remain the responsibility of defendant Clinton to re-pay.

Satisfaction of plaintiff's mortgage shall take place within 30 days of date of entry of this order. The referee may turn over to counsel for Clinton any sums in the referee's possession (excluding his fee) to be held in escrow by counsel for Clinton pending satisfaction of plaintiff's mortgage or for use in doing so.

This decision constitutes the order of the court.

Dated: August 5, 2004 THOMAS P. PHELAN

J.S.C.

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*While counsel for plaintiff notes that the loan for the November 26, 2003 closing was not funded until November 28, 2003, the loan was funded prior to the December 1, 2003 foreclosure sale.