M & T Bank v Goldthwait

[*1] M & T Bank v Goldthwait 2016 NY Slip Op 51879(U) Decided on December 19, 2016 Supreme Court, Onondaga County Murphy, 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 This opinion is uncorrected and will not be published in the printed Official Reports.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 December 19, 2016
Supreme Court, Onondaga County

M & T Bank, Plaintiff,

against

Paul R. Goldthwait a/k/a Paul R. Goldthwait, Sr. a/k/a Paul Goldthwait; Roberta M. Goldthwait, a/k/a Roberta Goldthwait; Paul R. Goldthwait, Jr. a/k/a P.R. Goldthwait, Jr.; et al., Defendants.



2016-672



Schiller, Knapp, Lefkowitz & Hertzel, LLP

By: Gregory J. Sanda, Esq.

Attorneys for Plaintiff

950 New Loudon Road, Suite 109

Latham, NY 12110-2100

Hiscock Legal Aid Society

By: Joseph G. Murray, Esq.

Attorneys for Goldthwait Defendants

351 South Warren Street

Syracuse, NY 13202
James P. Murphy, J.

In this action commenced by Plaintiff M & T Bank (the "Bank"), by the filing of a Summons and Complaint dated May 31, 2016, seeking to foreclose a Note and Mortgage dated January 25, 1990, made between Defendants Paul R. Goldthwait, Roberta Goldthwait and Paul R. Goldthwait, Jr. (the"Goldthwaits") and the Dale Mortgage Bankers Corp., the Goldthwaits, by Notice of Motion dated August 2, 2016, seeks to dismiss the Bank's Complaint pursuant to C.P.L.R. § 3211 (a) (1). The Goldthwaits further seek an Order compelling the Bank to comply with a certain Loan Modification Agreement ("loan modification") entered into between the [*2]parties on September 23, 2015, and further compelling the Bank to place the Goldthwaits' mortgage account to the same position as if the Bank had not declined accepting their payments. Finally, the Goldthwaits seek an Order barring the Bank from charging any fees or costs, including attorneys' fees for any events or actions taken since the permanent loan modification. See, Affidavit of Roberta M. Goldthwait, sworn to on August 8, 2016, Exhibit D, Loan Modification Agreement.

The undisputed facts show that the Goldthwaits executed a Note and Mortgage dated January 25, 1990, in favor of Dale Mortgage Bankers Corp. in the sum of $37,350.00 relating to the premises located at 7929 Owasco Road, Clay, NY 13041. Dale Mortgage Bankers Corp. gave an Assignment dated April 14, 1997, of the Note and Mortgage to M & T Mortgage Corporation. See, Affirmation of Joseph G. Murray, Esq., dated August 2, 2016, Exhibit L, Foreclosure Complaint filed in Index No. 2013-5512, Schedule E, Assignment of Mortgage.

Subsequently, pursuant to an alleged default of the Goldthwaits on the Note and Mortgage, the Bank commenced a prior foreclosure action against the Goldthwaits by the filing of a Summons and Complaint in the Onondaga County Clerk's Office on October 22, 2013 (Index No. 2013-5512). During the pendency of the 2013 foreclosure, the Bank by letter dated May 29, 2015, advised the Goldthwaits that they would be considered by the Bank to participate in a HUD pre-foreclosure sale program. The Bank stated that the Goldthwaits were "approved to enter into a trial period plan under the FHA's Home Affordable Modification Program ("FHA-HAMP). See, Goldthwait Aff., Exhibit A.

By letter dated September 17, 2015, the Bank informed the Goldthwaits that their application for a loan modification has been granted . . . subject to various terms. The parties executed a permanent modification on September 23, 2015, providing that "as of the first day of November, 2015, the amount payable under the Note and Security Instrument . . . is U.S. $50,015.50 consisting of the unpaid amount(s) loaned to Borrower by Lender, plus any interest and other amounts capitalized." A payment schedule for the loan modification set forth a term of 30 years, or 360 payments, with the principal and interest due and owing per month amounted to $253.42, together with escrow of $280.64 for a total payment of $534.06 commencing on November 1, 2015. In consideration of the above, the Bank discontinued the 2013 mortgage foreclosure action against the Goldthwaits, and the Goldthwaits executed a Release dated November 19, 2015, releasing the Bank on the Goldthwaits' counterclaims. A Stipulation to discontinue the above action was filed in the Onondaga County Clerk's Office on April 15, 2016.

The Goldthwaits commenced making payments in the sum of $534.06 for November 1, 2015; December 1, 2015; January 1, 2016; and on February 1, 2016. See, Goldthwait Aff., Exhibit B. The Goldthwaits then received a letter from the Bank dated February 3, 2016, notifying them that their request for a workout assistance "has been removed because there are liens or judgments that must be satisfied. Final review of your qualifications will be made upon receipt of the satisfaction of the liens and/or judgments." Id., Exhibit F. The Bank followed up with correspondence to the Goldthwaits dated February 8, 2016, returning a check in the amount of $207.74, stating that the payment did not represent the total amount due on the loan. Id., Exhibit G. Also, on February 8, 2016, the Bank sent correspondence to the Goldthwaits stating that as of February 8, 2016, their home loan was 1,378 days in default. Id., Exhibit H. The Bank commenced the above action (Index No. 2016-672) on May 31, 2016, seeking to foreclose on the [*3]Note and Mortgage dated January 25, 1990, relating to the subject premises at 7929 Owasco Road, Clay, NY.

The Court now considers the Goldthwaits' motion to dismiss pursuant to C.P.L.R. § 3211 (a)(1). The law is well established that under C.P.L.R. § 3211 (a)(1), a dismissal is warranted if the documentary evidence submitted conclusively establishes a defense to the asserted claims as a matter of law. See, Leon v. Martinez, 84 NY2d 83 (1994); see also, Maurice W. Pomfrey & Associates, Ltd. v. Hancock & Estabrook, LLP, 50 AD3d 1531 (4th Dept. 2008). It is further well settled that the terms of a written agreement define the rights and obligations of the parties. See, Abiele Contractors v. New York City School Construction Authority, 91 NY2d 1 (1997).

In support, the Goldthwaits argue that they were duly authorized and encouraged by the Bank to participate in a HUD pre-foreclosure program offered through the FHA HAMP. The Goldthwaits argue that they completed the participation, and were approved for a loan modification by the Bank, which was entered into by binding agreement dated September 23, 2015. The Goldthwaits argue that the Bank has unilaterally breached the loan modification by failing to accept further payments, and based upon the Bank's actions in declaring the underlying Note and Mortgage in default. The Bank, in opposition, contends that the Goldthwaits failed to comply with the terms offered by the Bank in the initial trial plan as set forth in the correspondence between the Bank and the Goldthwaits dated May 29, 2015.

With regard to the Bank's defense that the Goldthwaits failed to comply with the terms of a letter dated May 29, 2015, the law is well settled that where parties have reduced their agreement to writing, the parol evidence rule operates to exclude evidence of prior or contemporaneous agreements when offered to contradict, vary or subtract from the terms of the writing. See, Thomas v. Scutt, 127 NY 133 (1891); see also, Aratari v. Chrysler Corporation, 35 AD2d 1077 (4th Dept. 1970).

Here, it is undisputed that the parties entered into a written binding contract in the form of a loan modification dated September 23, 2015, where the proof shows that the Goldthwaits made payments in the amount of $534.06 from November 1, 2015 to February 1, 2016. The Bank's unilateral action in declaring a default of the underlying Note and Mortgage based upon the failure of the Goldthwaits to comply with an earlier FHA-HAMP trial period plan, some four months prior to the parties entering into a loan modification, clearly violates the parol evidence rule, and such correspondence dated May 29, 2015, cannot be used to contradict and/or vary the terms of the permanent loan modification dated September 23, 2015. Accordingly, based upon the clear terms of the permanent loan modification agreement, the Court finds that there exists a binding agreement between the parties which remains in full force and effect. Consequently, the Court grants the Goldthwaits' motion pursuant to C.P.L.R. § 3211 (a)(1), dismissing the Bank's Summons and Complaint dated May 31, 2016.

It is well established that a foreclosure action is equitable in nature and triggers the equitable powers of the Court. See, Notey v. Darien Construction Corp., 41 NY2d 1055 (1977). Once equity is invoked, the Court's power is as broad as equity and justice require. See, Norstar Bank v. Morabito, 201 AD2d 545 (2d Dept. 1994); see also, Wells Fargo Bank v. Meyers, 108 AD3d 9 (2d Dept. 2013). Moreover, under the court's equity powers, a court may compel specific performance of a modification agreement which is accepted by the parties. See, EMC Mortgage Corp. v. Gross, 289 AD2d 438 (2d Dept. 2001).

Here, the Goldthwaits correctly contend that because the Loan Modification Agreement remains in full force and effect, the Bank must take all necessary actions to place them and their mortgage account in the same position as if the Bank had not declined payments and had not commenced the foreclosure action. Equity demands nothing less.

Accordingly, based upon the unilateral actions taken by the Bank, the Court hereby grants the Goldthwaits' motion to dismiss the Bank's Complaint in its entirety. The Court finds that the Note and Mortgage dated January 25, 1990, as modified by the parties' loan modification dated September 23, 2015, are valid and remain in full force and effect. The Court further directs the Bank to accept all allegedly past due monthly mortgage payments, without any penalties or interest bringing the Goldthwaits current. The Court directs the Goldthwaits to make all past due payments to the Bank within thirty (30) days of notice of entry of a copy of this Court's Order. The above constitutes the Decision of the Court. The Bank shall submit a proposed Order to the Court, on notice to opposing counsel, within fifteen (15) days of the date of this Decision.

Dated: December 19, 2016

James P. Murphy

Justice of the Supreme Court