Bank of N.Y. Mellon v CampagnaAnnotate this Case
Decided on December 3, 2018
Supreme Court, Westchester County
The Bank of New York Mellon FKA THE BANK OF NEW YORK, AS TRUSTEE FOR THE CERTIFICATE HOLDERS OF THE CWABS, INC., ASSET-BACKED CERTIFICATES, SERIES 2006-18, Plaintiffs,
Laura Campagna, UNIFUND CCR PARTNERS, Defendant.
The Law Office of William Yurus
Attorneys for Acqua Capital
Pleasantville, New York 10570
Frank Malara, Referee
245 Main Street, Suite 450
White Plains, New York 10601
William J. Giacomo, J.
In an action to foreclose a mortgage, Acqua Capital LLC moves to designate a successor referee pursuant to CPLR 4314 (motion sequence No.4); and to reject in whole or in part the findings in the referee's report filed on July 24, 2018 (motion sequence #5):
1. Notice of Motion/Affirmation of William Yurus, Esq./Exhibits A-C;
2. Referee's Report dated July 23, 2018;
3. Notice of Motion/Affirmation of William Yurus, Esq./Exhibits A-H;
Factual and Procedural Background
This action was commenced to foreclose a mortgage on real property located at 459 S Lexington Avenue, White Plains, New York. The property was owned by the defendant Laura Campagna. The defendant Unifund CCR Partners is a lienholder. The foreclosure sale took place on June 22, 2016, and the property was sold to Acqua Capital, LLC, for $350,000. The sale resulted in surplus monies in the amount of $187,771.74.
Acqua Capital and Campagna entered into a lease agreement, dated August 1, 2016, whereby Acqua agreed to lease the premises to Campagna for $6,000 per month for two years. Under Campagna's signature is handwritten "funds from court pays monthly rent".
On May 3, 2017, Campagna filed a notice of claim to surplus monies. On May 8, 2017, Campagna executed an assignment of rights to surplus monies to Acqua Capital to fund the lease in the amount of $156,000.00. Pursuant to the terms of the assignment, Campagna was to be paid in full the security deposit of $12,000.00 upon vacancy and Acqua Capital would be paid the remainder of $144,000 in consideration for the rental of the premises under the lease agreement. The assignment states that Campagna chose to proceed without an attorney.
In an order of this Court dated October 5, 2017, a referee was appointed to[A]scertain and report the amount due to ACQUA CAPITAL LLC, LAURA CAMPAGNA or any other person who has a lien on the said surplus monies and to ascertain the priority of the several liens thereon to the end that on the coming in and confirmation of the report on such reference, such further order may be made for the distribution of said surplus monies as may be just.
Acqua Capital prepared a proposed report of priority of liens and amount due to the referee providing that the surplus monies be paid to Campagna in the amount of $31,851.76 and to Acqua Capital in the amount of $156,000.00.
Acqua thereafter moved to designate a successor referee on the grounds that the referee failed to submit a report.
The referee issued a report, dated July 23, 2018, with respect to the surplus monies. The report notes the referee's concern that Campagna, who was not represented by counsel, was a victim of overreaching by Acqua Capital. The referee states that the lease agreement, which guaranteed $6,000 per month in rent, was way above market value. The referee determined that the fair market rental value of the premises was between $3,000 and $4,000 per month. The referee found that should the Court find that the lease is enforceable, the rent should be reasonable and recommends a fair and reasonable rental value of $3,500 per month for a total of $84,000 for two years. The referee consulted with a real estate broker for the fair market rental [*2]value of the premises and attached comparable rental listings in White Plains for monthly rent payments of $3,000, $3,700, and $3,400.
The referee also conducted a lien search which disclosed a lien held by Unified CCR Partners LLC in the amount of $8,638.44. The referee's report recommends the following distribution and priority of surplus monies:
Unified CCR Partners as first priority lien holder$8,638.44
Acqua Capital, LLC for rent$84,000.00
Total: $187,771.74Acqua Capital moves to reject in whole or in part the referee's report on the grounds that the referee exceeded his authority. Acqua Capital argues that without the benefit of a hearing or contacting the parties, the referee rewrote the terms of the lease and substituted his own judgment and opinion instead of that bargained for by the parties. Acqua Capital further argues that the lienholder Unified CCR Partners has never appeared in this action and that the amount of legal fees requested by the referee is excessive and devoid of merit.
Initially, Acqua Capital's motion to designate a successor referee on the grounds that the referee has failed to file a report is dismissed as academic inasmuch as the referee filed his report on July 24, 2018.
"RPAPL 1361 (2) provides that the court, by reference or otherwise, shall ascertain the amount due to any claimants and the priority of any liens for purposes of the distribution of surplus moneys. Furthermore, a referee may inquire into and determine all questions of law and fact, usury, fraud or the like, and every question tending to show the equities of the claimants, to the end that it may be decided in such proceedings finally and on the merits to whom such surplus moneys belong" (Citibank, N.A. v Schroeder, 266 AD2d 332, 333 [2d Dept 1999] [internal citations omitted]).
A referee derives his or her authority from an order of reference by the court (see Matter of Martinborough v Martinborough, 98 AD3d 511, 512 [2d Dept 2012]). The scope of a referee's duties is defined by the order of reference (see CPLR 4311; First Data Merchant Servs. Corp. v One Solution Corp., 14 AD3d 534, 535 [2d Dept 2005]. A referee "who attempts to determine matters not referred to him [or her] by the order of reference acts beyond and in excess of his [or her] jurisdiction" (McCormack v McCormack, 174 AD2d 612, 613 [2d Dept 1991]; Furman v Wells Fargo Home Mtge., Inc., 105 AD3d 807, 810 [2d Dept 2013]).
The court, as the ultimate arbiter, has the power to confirm or reject the report of a referee and make new findings (see CPLR 4403; Stein v American Mtge. Banking, 216 AD2d 458 [2d Dept 1995]). However, the report and recommendations of a referee should be confirmed if the findings are supported by the record (see Sichel v Polak, 36 AD3d 416 [1st Dept [*3]2007]).
Here, the referee did not exceed his authority. The scope of the order of reference was to "ascertain and report the amount due to ACQUA CAPITAL LLC, LAURA CAMPAGNA or any other person who has a lien on the said surplus monies and to ascertain the priority of the several liens". Thus, it was necessary for the referee to address the issue of the legitimacy of the assignment and the lease between Campagna and Acqua Capital, including the monthly rental payments, in order to ascertain the amount due from the surplus monies to Acqua Capital, Campagna, and any other lienholders (see e.g. Goldstein v Sokel, 194 AD2d 518 [2d Dept 1993]).
The Court finds that the referee's report distributing the surplus monies is fully supported by the record (see Mondello v Mondello, 253 AD2d 861 [2d Dept 1998]). In support of the recommendation that the fair market rental value of the premises was $3,500 per month, the referee submitted real estate comparable listings. The Court notes that in support of its motion to reject the referee's report, Acqua Capital has failed to submit any evidence at all with respect to the fair market rental value of the property.
In evaluating what constitutes reasonable attorney's fee, the factors to be considered include the time and labor expended, the difficulty of the questions involved and the required skill to handle the problems presented, the attorney's experience, ability, and reputation, the amount involved, the customary fee charged for such services, and the results obtained (see Matter of Talbot, 84 AD3d 967, 967-968 [2d Dept 2011] quoting Matter of Szkambara, 53 AD3d 502, 502-503 [2d Dept 2008]).
The referee submits detailed billing invoices in support of his claim for legal fees incurred in connection with this foreclosure action based upon the order of reference dated August 15, 2015, in the amount of $1,875 (7.5 hours at $250/hr) and based upon the order of reference dated October 5, 2017, in the amount of $3,100 (12.4 hours at $250/hr). Compensation which is deemed reasonable for the services provided is approved in the amount of $4,975.00 in attorneys' fees and $406.41 in expenses.
In accordance with the foregoing, the Court finds the distribution and priority of surplus monies as follows: (1) fees to the Westchester County Commissioner of Finance; (2) Unified CCR Partners $8,638.44; (3) Acqua Capital, LLC, pursuant to assignment $84,000.00; (4) Referee $4,975; (5) Referee expenses $406.41; and (6) remainder to Laura Campagna.
Accordingly, it is
ORDERED that Acqua Capital LLC's motion to designate a successor referee pursuant to CPLR 4314 is DENIED as academic (motion sequence #4); and it is further
ORDERED that Acqua Capital LLC's motion to reject in whole or in part the findings in the referee's report filed on July 24, 2018 is DENIED (motion sequence #5); and it is further
ORDERED that the referee's report is confirmed to the extent indicated herein; and it is further
ORDERED that the Commissioner of Finance shall immediately release the surplus [*4]funds and any accrued interest less fees to the Referee; and it is further
ORDERED that upon release of the surplus funds the Referee shall distribute the funds in accordance herewith.
Dated: December 3, 2018
White Plains, New York
HON. WILLIAM J. GIACOMO, J.S.C.