Citibank, N.A. v Feustel

[*1] Citibank, N.A. v Feustel 2019 NY Slip Op 51119(U) Decided on July 10, 2019 Supreme Court, Suffolk County Quinlan, 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 This opinion is uncorrected and will not be published in the printed Official Reports.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 July 10, 2019
Supreme Court, Suffolk County

Citibank, National Association as Trustee for GSAA Home Equity Trust 2007-9, Asset-Backed Certificates Series 2007-9, Plaintiff,

against

Noel Feustel; Victoria Peterson; Bruce A. Rich as Trustee of the Village of Saltaire, Suffolk County, Capital One Bank USA, Na, George Roy Hill III, Hillary Richard as Trustee of the Village of Saltaire, Suffolk County; Jennifer Friedberg; Midland Funding of Delaware LLC as Successor in Interest to a Chase Account, Patricia Lama; Robert Lynn Cox II as Trustee of the Village of Saltaire, Suffolk County; Scott S. Rosenblum as Mayor of the Village of Saltaire, Suffolk County Susan Okon, the Incorporated Village of Saltaire, Suffolk County, Wells Fargo Bank, N.A., Defendant(s).



35293-2012



GROSS POLOWY, LLC

Attorneys for Plaintiff

900 Merchants Concourse, Ste 412

Westbury, NY 11590

RONALD D. WEISS, ESQ.

Attorney for Defendant, Noel Feustel

734 Walt Whitman Road, Ste 203

Melville, NY 11747

PAMELA J. GREENE, ESQ.

Court Appointed Referee

110 Connetquot Road Bayport, NY 11705
Robert F. Quinlan, J.

Upon the following papers numbered 1 to 125 read on this motion by plaintiff to confirm the report of the referee and for judgment of foreclosure and sale and supporting papers: 1-69; stipulations by parties to adjourn motion and any cross-motion: 70-76; defendant's cross-motion to "contest the referee's report oath and computations," for a hearing upon the referee's report, to discharge and substitute the referee, and in opposition to the judgment of foreclosure and sale and supporting papers: 77-94; and plaintiff's notice of rejection of defendant's cross-motion; 95-125; it is

ORDERED that defendant Noel Feustel's cross-motion to "contest the referee's report oath and computations," for a hearing upon the referee's report, to discharge and substitute the referee, and for a reduction of interest chargeable to defendant (Mot. Seq. #007) is denied; and it is further

ORDERED that the plaintiff's motion to confirm the report of the referee and for a judgment of foreclosure and sale (Mot. Seq. #006) is granted; and it is further

ORDERED that plaintiff's proposed order for a judgment of foreclosure and sale, as modified by the court, is signed contemporaneously with this decision.

PROCEDURAL HISTORY

This is an action to foreclose a mortgage on residential real property known as 39 South Snedecor Avenue, Bayport, Suffolk County, New York ("the property") given by defendants Noel Feustel and Victoria Petersen ("defendant-mortgagors") to Wells Fargo Bank, N.A. ("Wells"), a predecessor in interest to plaintiff Citibank, National Association as Trustee for GSAA Home Equity Trust 2007-9, Asset-Backed Certificate Series 2007-9 ("plaintiff") on May 23, 2007 to secure a note given the same day to Wells by defendant Noel Feustel ("defendant"). The prior history of this action is set forth in the court's decision after trial dated May 9, 2018, which held that plaintiff had established the mailing of the RPAPL § 1304 notices, resulting in the dismissal of defendant's remaining affirmative defense and the granting of summary judgment to plaintiff dismissing and striking defendant's answer and the appointment of a referee to compute pursuant to RPAPL § 1321. The court's decision noted that as the court had previously marked the proposed order submitted by plaintiff as "Not Signed" in denying the original motion for summary judgment by its decision placed on the record after oral argument on August 11, 2016 (Mot. Seq. #001), plaintiff was to submit a new order of reference, which was to include additional terms set forth by the court in the decision of May 9, 2018, included among those terms were the following:

"ORDERED that as the court had marked plaintiff's prior proposed order of reference "not signed" after denying its prior motions for summary judgment, plaintiff is directed to serve a new order of reference in conformity with this decision within 45 days of the date of the decision, which in addition to the usual language, shall include the following language:ORDERED that within 30 days of the date of this order, plaintiff is to serve a copy of the order of reference upon all parties who have appeared in this action, as well as upon the referee and thereafter file the affidavits of service with the Clerk of the Court; and it is furtherORDERED that within 60 days of the date of this order, plaintiff is to provide the referee, and defendants who have appeared, all papers and documents necessary for the referee to perform the determinations required by this order, "plaintiff's submissions"; defendant(s) may submit written objections and proof in support thereof, "defendant's objections," to the referee within 14 days of the mailing of plaintiff's submissions; and it is further

ORDERED that the referee's report is to be prepared and submitted to plaintiff within 30 days of receipt of plaintiff's submissions, and the referee's report is to be submitted by plaintiff with its application for a judgement of foreclosure and sale; and it is further ORDERED that the referee's duties are defined by this order of reference (CPLR 4311, RPAPL § 1321), and the referee has no power beyond that which is limited by this order of reference to the ministerial functions of computing amounts due and owing to plaintiff and determining whether the premises can be sold in parcels; the referee shall hold no hearing, take no testimony or evidence other than by written submission, and make no ruling on admissibility of evidence; the referee's report is merely advisory and the court is the ultimate arbiter of the issues, if defendant's objections raise issues as to the proof of amounts due and owing the referee is to provide advisory findings within his/her report; and it is furtherORDERED that if defendant's objections have been submitted to the referee, defendant(s) shall also submit them to the court if opposing plaintiff's application for a judgment of foreclosure and sale; failure to submit defendant's objections to the referee will be deemed a waiver of objections before the court on an application for a judgment of foreclosure and sale; failure to raise and submit defendant's objections made before the referee in opposition to plaintiff's application for a judgment of foreclosure and sale shall constitute a waiver of those objections on the motion;ORDERED that failure to comply with any term of this order will not form the basis for a motion to dismiss the action, but will be the subject of the status conference at which future compliance will be determined."

The court's records show that on June 14, 2018, plaintiff submitted the new order of reference, and that on July 20, 2018 defendant's present counsel was substituted for his former counsel. On August 16, 2018 the court signed plaintiff's order of reference, which included the above language, and adjourned a status conference originally scheduled for September 26, 2018 to December 19, 2018. Three status conferences were held on December 19, 2018, February 6, 2019 and March 27, 2019 as the parties were engaged in active loss mitigation attempts. When these attempts failed plaintiff filed Mot. Seq. # 006, originally returnable March 28, 2019.

Among plaintiff's submissions is a copy of a stipulation executed by counsel for the parties, to adjourn the original submission of Mot. Seq. #006 to May 9, 2019, and including therein a further agreement that defendant was to file any opposition or cross-motion seven days before the return date.

Defendant filed his cross-motion and opposition, which is stamped on defendant's counsel's "blue back" by the Supreme Court Clerk's office on June 13, 2019. Plaintiff's counsel filed a "Notice of Return and Rejection" dated June 6, 2019 arguing that defendant's time to [*2]oppose and cross-move had expired on May 9, 2019, with plaintiff's counsel stating in her affirmation "While Defendant requested an adjournment Plaintiff never received a fully executed stipulation of adjournment and pursuant to the Court Clerk the Stipulation to Adjourn had not been filed." It appears from this statement that plaintiff's counsel was aware of a second stipulation to adjourn, but believed that it was never duly executed by defendant's counsel, nor filed with the court.

Contrary to plaintiff's assertion, the court has in its file a faxed copy of the stipulation of adjournment executed by both counsel, dated May 2, 2019, adjourning the submission of the motion until June 13, 2019 and which states that defendant's opposition and any cross-motion were to be served "on of before June 3, 2019;..." It further states that a "copy, PDF or facsimile of this stipulation shall be considered as effective and valid as the original." The copy of the stipulation was faxed to chambers by defendant's counsel on May 7, 2019 consistent with Part 27's published rules. Therefore, as this is a non-"e-filed" action, plaintiff's counsels "notice of rejection" is inaccurate, and defendant's cross-motion and opposition were timely filed pursuant to the second stipulation, the court must consider defendant's cross-motion and opposition. In apparent reliance upon the notice of rejection, plaintiff filed neither opposition to the cross-motion or a reply.

The court notes an anomaly in defendant's filing, as both counsel's affirmation and defendant's affidavit are dated June 3, 2019, but the affidavit of mailing by an employee of defendant's counsel states that she deposited the papers with the U.S.P.S. on June 1, 2019, the same day that defendant's counsel notarized the her affidavit of mailing. The court finds this to be an error that can be ignored pursuant to CPLR 2001.

DEFENDANT'S CROSS-MOTION IS DENIED

Although unopposed, defendant's cross-motion is denied, as defendant and his counsel make a number of claims that have no merit, are unsupported by evidentiary proof in admissible form and are based, at best, upon supposition.

REFEREE HAS NO CONFLICT OF INTEREST

Defendant's claim that the referee has a "conflict of interest," that her report must be disregarded as a result of this "conflict" and a new referee appointed lacks any substance or merit. The claim is based upon the assertion in defendant's affidavit that the referee "lives close to my home," that he and his wife attend social functions which she also attends, and "that on at least one occasion" she mentioned to defendant her involvement as referee in his foreclosure . Defendant makes no claim that the referee said or did anything wrong, that she discussed the facts of the case and her duties with him, that she attempted to influence him in any manner or that she claimed to do anything in regards to her position as referee that was influenced positively or negatively by the fact that they are "neighbors." Defendant's foreclosure action is a public record. All the papers, submissions, documents and financial information filed therein, other than items that are required to remain confidential such as bank account numbers, social security numbers, etc., are available for view by the public. The fact that a neighbor is aware of his foreclosure action is not a reason to discharge the referee, absent any other facts.

The referee, Pamela J. Greene, Esq., an attorney in good standing approved by the Office of Court Administration as eligible to serve as a referee in foreclosure actions, acts as a quasi-judicial officer in her capacity. Just as with a judge, she has to exercise her best discretion to [*3]determine if there is an actual conflict in her holding the office to which she was appointed. A judge, or referee, must exercise his/her own judgment to determine if there is a conflict; merely knowing a litigant is not enough to require a judge to recuse him or herself from a case. If a judge, or a quasi judicial officer such as a referee, believes that the relationship is not of such a nature that it would effect how the case is decided before her, she is not required to recuse herself.

CPLR 4312 sets forth qualifications for a referee, the Rules of the Chief Judge set forth the disqualifications from appointment by the court and the Rules of the Chief Administrator of the Courts set specific circumstances where a judicial officer must disqualify themselves (see 22 NYCRR §§ 36.2 [c], [d] [appointments by the court]; 100.3 [E] [judges]; 122.10 [judicial hearing officers]); those standards require more than just being a neighbor who knows about a case for recusal. Defendant makes no attempt to present facts that would rise to a level that would require the referee to disqualify herself. As set forth in the rules cited above, an officer must disqualify herself if she has a personal bias or prejudice, personal knowledge of the actual facts in controversy, that she had served as a lawyer in the controversy or a lawyer with which she is associated did so, that she has an economic interest in the controversy, that she or the her spouse is related to the sixth degree of consanguinity with a party who has an interest in the case, that she or her spouse has a fourth degree of relationship to a person who is acting as a lawyer in the case or their spouse. Defendant brings forward no such claims, let alone proof, that any of these disqualifying events have occurred in this case which would require the referee to be disqualified.

Here the referee executed her oath on February 8, 2019 and swore to faithfully and fairly determine the questions referred to her and make a just and true report. From defendant's statement, Ms. Greene was apparently aware that defendant was her neighbor when she so swore. She found no reason in her conscience to recuse herself from her assigned duties and defendant has provided no proof to contradict her undertaking of this obligation. Further, the court notes defendant's cross-motion, although seeking the removal of Ms. Greene, does not appear to have been served upon her, which would have allowed her to address the allegations. Defendant's application is denied.

FAILURE TO COMPLY WITH TERMS OF ORDER WAIVES OBJECTIONS

As to defendant's claim that the referee's report does not accurately reflect the amounts due plaintiff, defendant fails to provide any facts to support the allegations of which he was purportedly "advised." Defendant raises no direct challenges to the validity of the expenses claimed in plaintiff's submissions to the referee and the court, nor does he provide any proof that the amounts provided are inaccurate.

More significantly, the court's order of May 9, 2018, and the order of reference signed August 16, 2018, contain specific language and direction as to how the order of reference is to proceed, as well as setting the authority and duties of the referee. The orders set up a schedule for the submission of the order of reference, and the submission of objections by defendant to plaintiff's submissions to the referee; it also limited the authority of the referee to report, and required that defendant submit his objections to the referee and upon the motion for a judgement of foreclosure and sale he was to submit those same objections to the court to allow the court to make a determination as to their validity. The order provided that failure of defendant to submit [*4]objections to the referee would be deemed a waiver of objections before the court on an application for a judgment of foreclosure and sale and that failure to raise and submit defendant's objections made before the referee in opposition to plaintiff's application for a judgment of foreclosure and sale would also constitute a waiver of those objections before the court on the motion.

Defendant's counsel makes no claim of not having received a copy of the order of reference, or the submissions made by plaintiff to the referee. There is no proof that defendant complied with the directive of the order to submit objections to the referee. Defendant had ample opportunity to raise any insufficiencies or errors in the submissions by plaintiff to the referee in compliance with the procedures set out in the orders, instead defendant raises his non-specific objections for the first time in his cross-motion and opposition. Pursuant to the terms of the order of reference, he has waived his claims, if he had any valid specific claims. Under the circumstances of this case the referee was not required to hold a hearing before issuing her report (see Deutsche Bank National Trust Co. v Jackson, 68 AD3d 805 [2d Dept 2009]; Deutsche Bank National Trust Co. v Zlotoff, 77 AD3d 702 [2d Dept 2010]; Deutsche Bank National Trust Co. v Williams, 134 AD3d 981 [2d Dept 2015]; Bank of NY Mellon v Hoshmand, 158 AD3d 600 [2d Dept 2018]). Where the computation consists solely of determining the amount of interest due, a hearing before the referee is not required (see Blueberry Invs. Co. v Ilana Realty, 184 AD2d 906 [3rd Dept 1992] cited with approval in LBV Props. v Greenport Dev. Co., 188 AD2d 588 [2d Dept 1992]; Capital One, N.A. v Knollwood Properties II, LLC, 98 AD3d 707 [2d Dept 2012]; Wachovia Mtg. Corp. v Lopa, 129 AD3d 830 [2d Dept 2015]).

As indicated above, by failing to follow the order and direction of the court that defendant submit his objections to the referee, defendant violated those orders and by their terms effectively waived any objections to plaintiff's submissions that he may have had, including the nature of the evidentiary proof submitted in support thereof. As with other matters in litigation, once a party fails to object to hearsay statements or submissions, that party has waived the hearsay objection. The court recognizes that if defendant had followed the procedure set forth in its orders and made even the non-specific, general objections he now submits in opposition to the motion for a judgment of foreclosure and sale to the referee, the court could have found plaintiff's submissions insufficient to establish the property- related expenses claimed (see Bank of New York Mellon v Graffi, 172 AD3d 1148 [2d Dept 2019]), but not the simple computation of the interest due on the note (see Blueberry Invs. Co. v Ilana Realty, supra, cited with approval in LBV Props. v Greenport Dev. Co., supra; Capital One, N.A. v Knollwood Properties II, LLC, supra; Wachovia Mtg. Corp. v Lopa, supra). Even in situations where no order had been issued as here, a defendant mortgagor is not entitled to a hearing before a referee on the principal sum due, where he submitted his contentions to the Supreme Court, the ultimate arbiter, as the court found the contentions to be without merit (see Stein v American Mtg. Banking, Ltd, 216 AD2d 458 [2d Dept 1995]; NYCTL 1996-1 Trust v Westmoreland Assoc., 33 AD3d 900 [2d Dept 2006]; Aurora Loan Services v Taylor, 114 AD3d 627 [2d Dept 2014]; affd 25 NY3d 355[2015]).

The court notes that defendant's claims that plaintiff's presentation as to property related expenses are without any support or direct reference to "errors," they are merely speculative. An example of this speculative approach is that defendant merely claims that the taxes claimed paid are incorrect, but fails to provide any proof of that claim which could be easily obtained from the [*5]Town of Islip's Receiver of Taxes, a public record.

As to the claim that plaintiff is seeking counsel fees well in excess of the agreed upon flat rate set between plaintiff and its counsel, there is no issue. When plaintiff's submissions advise of such a flat rate fee, but counsel seeks a larger fee based upon claimed "extra work," this court has always applied the flat fee and not authorized a larger fee based upon counsel's claims. Here the agreed upon counsel fee is controlling and that is all that will appear in the judgment signed by the court. Therefore, there is no prejudice to defendant by plaintiff failing to provide evidence of the work performed to entitle it to "enhanced counsel fees." Defendant's counsel erroneously refers to CPLR § 4321 as controlling as to counsel fees, but that statute is used to determine fees that may be claimed by a referee, not plaintiff's counsel.

As to defendant's claim of "error" in the interest calculation because he cannot determine how the referee reached the interest calculation, defendant again relies upon speculation with no proof. Defendant does not dispute the balance claimed owed pursuant to the term of the mortgage of $724,001.06, nor the interest rate set in the mortgage of 6.875% per year. The court performed its own calculations by figuring the number of years defendant was in default at the interest rate given (six years from July 1, 2010 through June 30, 2016) and then applying a "per diem" amount to the remaining days in default to January 26, 2017. The court's calculations of the interest came to a figure slightly more than that calculated by the referee; in deference to defendant the court will use the lower figure set by the referee.

NO PROOF OF LACK OF GOOD FAITH NEGOTIATIONS TO REDUCE INTEREST

Finally, defendant makes a belated argument concerning "bad faith" negotiations and the "good faith" required by CPLR 3408. Defendant and plaintiff may undertake further negotiations at any time in an attempt to avoid a foreclosure sale, but this action has long left the Foreclosure Settlement Conference Part. CPLR 3408 requires that parties at mandatory foreclosure settlement conferences negotiate in good faith to reach a mutually agreeable resolution (see U.S. Bank v Smith, 123 AD3d 914 [2d Dept 2014]; Wells Fargo Bank v Meyers 108 AD3d 9 [2d Dept 2013]; Wells Fargo Bank v Miller, 138 AD3d 1024 [2d Dept 2016]). Even if the court was to determine that defendant's cross-motion was a belated attempt at seeking a hearing on plaintiff's lack of good faith in negotiating pursuant to CPLR 3408, defendant has failed to submit admissible evidence to establish such a claim. To determine if plaintiff failed to negotiate in good faith the totality of circumstances must show plaintiff did not conduct a meaningful effort to reach a resolution (see U.S. Bank, N.A. v Sarmiento, 121 AD3d 187 [2d Dept 2014]; Citimortgage , Inc. v. Pugliese, 143 AD3d 659 [2d Dept 2016]; PNC Bank, N.A. v Campbell, 142 AD3d 1147 [2d Dept 2016]; Citimortgage v Rockefeller, 155 AD3d 998 [2d Dept 2017]). In order to be entitled to a hearing on the issue of failing to negotiate in good faith, defendant must sufficiently show that the totality of circumstances demonstrated that plaintiff's conduct did not constitute a meaningful effort at reaching a resolution (see US Bank, N. A. v Cohen, 156 AD3d 844 [2d Dept 2017]). Here defendant's submissions provide no evidentiary basis to support a conclusion which would require a hearing to determine if some penalty should be measured against plaintiff for failing to negotiate in good faith (see IndyMac Bank, FSB v. Yano-Horoski, 78 AD3d 895 [2d Dept 2010]; Citimortgage, Inc. v Nimkoff, 159 AD3d 869 [2d Dept 2018]). Therefore, the court can find no basis for a reduction in the amount of interest that plaintiff is entitled to collect, as sought by defendant.

Further, the history of the action indicates that much of the delay in its resolution can be chargeable to defendant. Defendant's unopposed cross-motion is therefore denied.

JUDGMENT OF FORECLOSURE AND SALE GRANTED

The court has reviewed plaintiff's submissions, the submissions by the referee appointed pursuant to RPAPL § 1321 and defendant's opposition to plaintiff's motion. The court finds that these submissions entitle plaintiff to a judgment of foreclosure and sale in line with the court's decision set forth above. The court signs plaintiff's proposed judgment of foreclosure and sale submitted with the motion, as modified by the court, contemporaneously with the signing of this decision and order.

Finally, the court asks the parties to review the amendment to the caption granted earlier by the court, and if any future submissions in this action are made, that the amended caption, as indicated in the caption used herein, be used.

This constitutes the Order and decision of the Court.

Dated: July 10, 2019

Hon. Robert F. Quinlan, J.S.C.