Kurlander v Willie

[*1] Kurlander v Willie 2006 NY Slip Op 52615(U) [21 Misc 3d 1106(A)] Decided on October 23, 2006 Supreme Court, Sullivan County Sackett, 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 This opinion is uncorrected and will not be published in the printed Official Reports.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 October 23, 2006
Supreme Court, Sullivan County

Steven H. Kurlander & David Goldberg, Plaintiffs,

against

Devon Willie, Defendant.



1147-01



APPEARANCES:

Newberg Law Offices, P.C.

Attorneys for Plaintiffs

33 North Street

Monticello, New York 12701

Richard A. Newberg, Esq., of Counsel

Drew, Davidoff & Edwards, LLP

Attorneys for Defendant

13 Liberty Street - P.O. Drawer 1040

Monticello, New York 12701

Michael Davidoff, Esq., of Counsel

Kenneth C. Klein, Esq.

Attorney for James Carnell, Jr. and Laura Carnell

4880 State Route 52 - P.O. Box 600

Jeffersonville, New York 12748

Robert A. Sackett, J.

Defendant moves by order to show cause, dated July 13, 2006, and amended order to show cause,for an order of this Court vacating a judgment of foreclosure and sale against defendant and canceling a deed of record made by Bruce Perlmutter, Esq., as referee, to James Carnell, Jr. and Laura Carnell [the "Carnells"], as purchasers of the subject of the subject property. Defendant further requests that he be permitted to serve a proposed answer in the mortgage foreclosure action.

The Carnells cross-move in opposition to defendant's application on the grounds that they are [*2]bona fide good faith purchasers for value and their title may not be disturbed as a matter of law and that defendant has failed to make a prima facie showing of entitlement to relief from the judgment. Plaintiffs appear and oppose defendant's application on the grounds that, inter alia, they fully complied with the procedural requirements of CPLR 3215(c) and that defendant failed to pay the remaining interest balance due on the subject mortgage.

Defendant became the owner of the premises in question, located in Monticello, Sullivan County, New York, in June 1986. Sometime in 1994 or the early part of 1995, a judgment was rendered against him, stemming from a lawsuit that was commenced in Sullivan County by James Carnell, Sr., the father of the cross-movant, and his wife. Having no other resources to pay the judgment, defendant alleges that he executed a mortgage dated January 19, 1995 to plaintiffs herein for the sum of $4,500.00, which mortgage is the subject matter of the instant litigation. Defendant further alleges that he made payments on the subject mortgage since 1995 on a monthly basis. He also claims that he paid off the mortgage in 1999 and that Steven Kurlander, Esq., acknowledged that there was no amount due and owing on the mortgage.

In May 2001, a foreclosure action was commenced by plaintiffs against defendant for the sum of $3,739.11, plus $2,355.64 interest. An affidavit of service annexed to defendant's affidavit in support of his application and to plaintiffs' attorney's affidavit in opposition indicates that personal service of the summons and complaint was effected upon defendant on June 13, 2001, at 77 Hiram Jones Road, Monticello, New York, the situs of the subject real property. Plaintiffs' counsel alleges, and it is not disputed, that no answer was ever interposed by defendant in the underlying mortgage foreclosure action.

At the end of June 2001, defendant received a certified letter from Richard Newberg,

Esq., plaintiffs' attorney, stating that there was still owed upon the mortgage the sum of $3,739.11. On or about July 10, 2001, defendant alleges that he spoke with plaintiffs' counsel and advised him that he had paid Kurlander in full. Plaintiffs' counsel purportedly advised defendant to bring the receipt for said payment to his office. However, defendant claims that he could not find the receipt nor the letter from Kurlander and was advised that he should make payment again to plaintiffs' counsel. On July 24, 2001, it is undisputed that defendant went to plaintiffs' counsel's office and paid the amount of $3,739.11, which he characterizes as an "informal appearance". It is also undisputed that defendant requested and received from a secretary in counsel's office a receipt for the aforesaid amount bearing the notation "paid in full." Defendant claims that the receipt is a full satisfaction of balance due on the mortgage that plaintiffs are now attempting to foreclose in this action. Conversely, plaintiffs' counsel argues that when defendant visited him in his office, he was told that the $3,739.11 was only a partial payment and that he still owed interest from February 19, 1996 to May 14, 2001 in the sum of $2,355.64. Defendant allegedly advised plaintiffs' counsel that he would pay same within the next few days. It is plaintiffs' counsel's contention that after defendant left his office he went to the reception area and apparently spoke to the office's new receptionist[FN1] asking for a receipt for the $3,739.11 payment even though he had paid by check which bears no such notation that it constituted payment in full. Defendant claims that three days after his first visit, he returned to plaintiffs' counsel's office and was told by counsel that there was no balance due on the subject mortgage.

In turn, plaintiffs' counsel alleges that, having failed to receive the interest due payment from defendant and after unsuccessfully attempting to reach defendant by telephone, he wrote to defendant on July 30, 2001, informing him of the interest due and asking him to make arrangements for his payment. On September 14, 2001, purportedly receiving no response from defendant, plaintiffs' counsel sent defendant a second letter, with a copy of the July 30, 2001 letter enclosed, by certified mail, informing him that if he did not hear from him within three days the foreclosure action would be continued. While [*3]not actually denying that he received these two letters, defendant claims to have no knowledge of receipt of either of them.

Defendant contends that he frequently travels to Jamaica where his wife and two children live, visiting the island from between three to six times a year and staying between two to four weeks on each occasion. He further claims that, notwithstanding plaintiffs' counsel's allegations, he heard nothing further after July 27, 2001 and assumed the matter was completed and the mortgage was satisfied. He alleges that in mid-February 2006 he visited Jamaica for approximately two-and-one-half months, returning to the United States in early May 2006. Approximately two weeks prior to his return, defendant alleges that a friend of his, Kevin Mitchell, who takes care of defendant's property during his absence, called him to advise him that there had been a foreclosure involving defendant's property and that cross-movants had purchased the property at the foreclosure sale. James Carnell, Sr., owns the other property adjoining the premises in question.

Defendant now seeks to vacate the subject judgment and foreclosure and sale entered June 27, 2005 and cancel the deed of record between the referee and the cross movants, contending that he was never served with the summons and complaint in the foreclosure action. Defendant also argues that plaintiffs failed to comply with CPLR 3215(c) and CPLR (g) in that default was not entered within one year and defendant was not given appropriate notice nor was he provided with the required additional notice. He also seeks relief from the judgment of foreclosure and sale pursuant to CPLR 5015 based on the fact that there was no default and if there was a default, it is excusable and he has a meritorious defense. He also contends that plaintiffs failed to comply with CPLR 2003 in that he was allegedly not given notice of the sale or the manner of the sale itself.

Prefatorily, cross-movants argue that regardless of whether or not defendant may be entitled to any relief as against plaintiffs, as a matter of law, he cannot obtain relief as against the Carnells because they are bona fide purchasers for value and their title may not be disturbed. In order to establish as a matter of law that a party is a bona fide purchaser, that party has the burden of proving that he or she purchased the property for valuable consideration, and that he or she purchased it without "knowledge of facts that would lead a reasonably prudent purchaser to make inquiry" (Berger v Polizzotto, 148 AD2d 651 [1989], lv denied 74 NY2d 612 [1989]). Here, the Court is satisfied that cross movants have established that they were bona fide purchasers for the subject premises.

With regard to the issue of "fair consideration", it is undisputed that the Carnells were the successful bidders at the foreclosure sale conducted by the referee, Bruce Perlmutter, Esq., purchasing the subject property for $63,000. Although defendant claims that in his estimation, the property was worth in excess of $200,000, no evidence has been offered to substantiate this claim. Moreover, defendant's moving papers are devoid of any allegations that the Carnells had notice or knowledge of any alleged defects in the foreclosure proceeding until the defendant's motion was made which would preclude a finding that the Carnells acted in good faith. Unequivocally, there was no stay or notice of pendency in effect at either the time of the foresclosure sale or when the title was conveyed to the Carnells which would have served to protect defendant's interests. Indeed, defendant's attempts to characterize cross-movants' actions prior to purchasing the subject premises, as, among other things, criminally and racially motivated, are untenable and without support.

Contrary to defendant's assertions, the Court finds cross-movants' reliance on DaSilva v Musso (76 NY2d 436 [1990] and Marcus Dairy, Inc. v Jacene Realty Corp. (298 AD2d 366 [2002]) to support their position that they are good faith purchasers for value and, as such, are protected in this litigation, well placed. But perhaps even more significant is the holding in Marlee, Inc. v Bittar (257 NY 240 [1931]), a case also cited by cross-movants wherein the Court of Appeals held, in pertinent part:

"The Appellate Division has the power to compel the restitution of property or a right lost by an erroneous judgment; "but no so as to affect the title of a purchaser in good faith and for value" [citation [*4]omitted]. If title to the property had been taken by the plaintiff as the highest bidder upon the sale under the erroneous judgment of foreclosure, the defendant could still have enforced her lien upon the property. The right to enforce that lien has been lost because the property was transferred by the plaintiff to an assignee who has been held to be a purchaser for value and in good faith; but in place of the property which was subject to a lien, the plaintiff received the purchase price...Those proceeds take the place of the property which has been sold, and, as an adjunct of its power to compel restitution, the court may compel the value or the purchase price to be restored'" (id. at 242-243).

The holding reached by the Marlee court is echoed in DaSilva v Musso, supra, and other, more recent cases, such as Aubrey Equities, Inc. v Goldberg (247 AD2d 253 [1998]), and in U.S. Bank Nat'l Assn. v VanVliet, (24 AD3d 906 [2005]). Thus, as a matter of law, cross-movants' title to the subject real property, acquired by them as good faith purchasers for value, is protected.

Assuming, this is a case which, as defendant so vigorously argues, is one which "cries for fairness", the appropriate remedy herein is not to set aside the judicial sale, but to seek restitution from the plaintiffs in the form of the restoration of the value or the purchase price of the premises in question.

Likewise, the Court finds no support in the record for defendant's argument that the judgment of sale must be vacated based on non-service of the summons and complaint. The defendant failed to rebut the presumption of proper service raised by the process server's affidavit of service with his conclusory assertion that he has no recollection of being served with a copy of the summons and complaint on June 13, 2001 (see DeLaFrange v DeLaFrange, 24 AD3d 1044 [2005]).The fact that defendant frequently travels to Jamaica is insufficient to sustain a conclusion that he was in Jamaica on the date process of service was effected upon him in June 2001.

Nor does the Court find merit to defendant's allegation that plaintiffs failed to comply with the requirements of CPLR §3215(c) and (g). Both plaintiffs' counsel and cross-movants argue, and properly so, that pursuant to CPLR 3215(c), plaintiffs were not obligated to obtain a judgment based upon his default within one year. CPLR 3215(c)requires only that the plaintiff "take proceedings" within a year after the defendant's default. Here, plaintiffs did "take proceedings" by moving for an order of reference by notice of motion dated May 17, 2002, which was within one year of defendant's default, which occurred on July 3, 2001 (see CPLR 3215[b]).

As to defendant's argument with respect to CPLR 3215(g)(1),"the lack of notice of the application [for a default judgment] by itself does not warrant vacatur of the judgment [citations omitted]" (Leader Fed. Bank for Savings v Van Tienhoven, 262 AD2d 1078 [1999]).

In any event, the Court finds unpersuasive defendant's argument that he purportedly was not given notice of the judicial sale. Annexed to plaintiffs' counsel's opposing affidavit is a copy of a letter dated February 27, 2006 and sent certified mail, return receipt requested, addressed to defendant at his Hiram Jones Road address, providing him with a copy of the notice of sale. As it is undisputed that the Hiram Jones Road address is defendant's correct address and defendant concedes that that is his primary address, his assertion that he was in Jamaica at that time is irrelevant. Thus, assuming arguendo, the Court were to accept defendant's argument that his visit to plaintiffs' counsel's office on July 24, 2001 constituted an "informal appearance", then the notice of sale was properly provided to him at his primary address. Under the facts herein, the Court concurs with cross movants that defendant has failed to demonstrate any prejudice to a substantial right by some defect contemplated by CPLR §2003. Furthermore, with respect to defendant's assertion that he was not provided with additional notice pursuant to CPLR 3215(g)(3)(i), the additional notice requirements thereunder are inapplicable to "actions affecting title to real property" (CPLR 3215[g][3][iii]).

Finally, the Court addresses defendant's assertions that his default, if any, is excusable and that he has a meritorious defense. Prefatorily, the Court does not share defendant's view that his July 24, [*5]2001 to plaintiffs' counsel's office and plaintiffs' counsel's acceptance of his partial payment of the principal sum rises to the level of an "informal appearance" in the action pursuant to CPLR 320. In support of his position, defendant refers this Court to Citimortgage v Klausenberg, [ Sup Ct, Sullivan County, Meddaugh, J., Index No.: 765, January 9, 2006]. In that case, defendant moved to vacate the sale of the mortgaged premises to the purported purchaser and to set aside the final judgment of foreclosure and sale. In granting defendant's motion, the court found that defendant had advised plaintiff's counsel that he was in possession of the summons and complaint and requested that the mortgage foreclosure proceedings be held in abeyance for approximately one and half months. Subsequently, plaintiffs's and defendant's counsel exchanged correspondence with respect to, inter alia, payout figures. Thereafter, plaintiff's counsel filed an application for a judgment of foreclosure and sale, asserting that there was no change in the status of the action nor were any parties entitled to notice of the application, and defendant's property was subsequently sold at a referee's sale.The papers were not served on defendant's counsel nor on defendant. Under these circumstances, the court found that the letters from defendant constituted an appearance by defendant and defendant was entitled to have the foreclosure sale vacated and a new sale held upon notice to defendant.

The facts therein are distinguishable with those in the instant case in that, in the first instance, defendant at no point advised plaintiffs' counsel that he had received the summons and complaint. Rather, he alleges that he does not remember being served. In any event, even if the Court were to consider his visit to plaintiffs' counsel's office in July 2001 as an "informal appearance", it agrees that such does not serve to extend defendant's time to interpose an answer. Secondly, unlike the facts in Citimortgage, supra, defendant was provided with notice of the foreclosure sale. Defendant alleges that in 2001 he obtained a post office box in the Monticello Post Office and filed a forwarding notice so that all mail addressed to "77 Hiram Jones Road, Monticello, New York 12701" would be forwarded to his post office box. After the forwarding notice had expired after one year, he extended it for a second year. Thus, defendant should have received any mail addressed to the Hiram Jones address in that two-year time period, expressly the letters dated July 30, 2001 and September 14, 2001, after his purported "informal appearance". As cross movants observe, defendant does not deny receiving these letters, he simply does not recall ever having received them. Significantly, there is no indication that at any point in the litigation did defendant advise plaintiffs' counsel that he had changed his mailing address.

In light of the above, the Court finds that defendant's default is not excusable as he so vigorously argues. Nor does it find that he has a meritorious defense. In support of his argument that he has fully satisfied his obligation to the plaintiffs, defendant proffers the receipt marked "paid in full". Defendant's argument is flawed in several respects. In the first instance, plaintiffs' counsel alleges that at the July 24, 2001 meeting with defendant, he advised the latter that the payment was only a partial payment and that defendant still owed interest from February 1996 to May 2001 in sum in excess of $2,000. Any confusion or misconception defendant may have had in respect to the interest still owed based upon the receipt he received would certainly have been clarified the letters plaintiffs' counsel sent to defendant immediately following receipt of the payment of the principal. Secondly, there is no indication on the check paid by defendant to plaintiffs' counsel for the principal that it constitutes full satisfaction of the obligation. Thus, defendant's payment of $3,739.11, which was the exact amount of the principal due and owing, does not constitute payment in full of the entire obligation.

Accordingly, defendant's motion is denied in its entirety and the cross motion is granted in its entirety.

This constitutes the Decision and Order of this Court. All papers, including the original copy of this Decision and Order, are being filed with the Sullivan County Clerk's Office. Counsel is not relieved from the provisions of CPLR 2220 with respect to entry and notice of entry.

Dated: Monticello, New York [*6]

October 23, 2006

ENTER

_____________________________________

Hon. Robert A. Sackett, JSC Footnotes

Footnote 1:The receptionist was employed by Marvin Newberg, Esq., not plaintiffs' counsel.