| New York Community Bank v Vermonty |
| 2009 NY Slip Op 09629 [68 AD3d 1074] |
| December 22, 2009 |
| Appellate Division, Second Department |
| New York Community Bank, Respondent, v JayVermonty, Fomerly Known as Jesus Vermonty, et al., Defendants, and Dave Sheldon, AlsoKnown as David Sheldon, et al., Appellants. |
—[*1] Forchelli, Curto, Crowe, Deegan, Schwartz, Mineo & Cohn, LLP, Mineola, N.Y. (James C.Ricca of counsel; Kathryn Sammon Burns on the brief ), for respondent.
In an action to foreclose a mortgage and to cancel a purported satisfaction of mortgage filedwith the Office of the City Register of the City of New York for Queens County, the defendantsDave Sheldon, also known as David Sheldon, and Darren K. Kearns appeal, (1) as limited bytheir brief, from so much of an order and judgment (one paper) of the Supreme Court, QueensCounty (Grays, J.), dated September 23, 2008, as denied those branches of their motion whichwere to renew their motion to dismiss the complaint and to vacate their default in answering thecomplaint, and granted those branches of the plaintiff's motion which were for leave to enter adefault judgment against them, and to direct the Office of the City Register of the City of NewYork for Queens County to cancel and discharge the purported satisfaction of the plaintiff'smortgage and to reinstate the plaintiff's mortgage, and (2) from an order of the same court datedDecember 15, 2008, which denied their motion to set aside their default in answering thecomplaint.
Ordered that the order and judgment dated September 23, 2008 is affirmed insofar asappealed from; and it is further,
Ordered that the order dated December 15, 2008 is affirmed; and it is further,
Ordered that one bill of costs is awarded to the respondent.
The appellant Dave Sheldon, also known as David Sheldon, brought a prior proceeding toexecute a judgment he had obtained against Carmen Vermonty, regarding her property in QueensCounty. Vermonty's property was encumbered by a first mortgage held by the plaintiff herein,New York Community Bank (hereinafter the Bank). The judgment rendered in the proceedingbrought by Sheldon directed that Vermonty's homestead property be sold by the sheriff at apublic sale, with the first $10,000 of the proceeds to be paid to Vermonty, and the remainder ofthe proceeds to be paid first to the Bank for "the balance of its outstanding mortgage, if any," andthen the sum of[*2]$20,148 to a judgment creditor whosejudgment was recorded before Sheldon's, and third, to Sheldon, in the amount of his judgmentagainst Vermonty.
The Bank sent the sheriff a payoff letter, stating that the total amount due to satisfy themortgage loan on Vermonty's property was $105,751.29. That letter stated that the principalbalance on the mortgage was $95,054.47, and then itemized other charges and fees due forinterest, escrow advances, corporate advances, recording fees, late fees, and a prepaid subsidy.Despite the Bank's advisement to the sheriff of its payoff figure of $105,751.29, the sheriff onlypaid the Bank the principal balance on the mortgage of $95,054.47. Thereafter, the Office of theCity Register for the City of New York for Queens County (hereinafter the Register) recorded aletter from the sheriff, stating that the sum of $95,054.47 had been paid to the Bank, as asatisfaction of the Bank's mortgage.
In 2006 the Bank brought this action to foreclose its mortgage on Vermonty's property,seeking to recover the difference between what it was owed and the $95,054.47 that it receivedfrom the proceeds of the sheriff's sale, and further seeking to cancel the purported satisfaction ofits mortgage. The Bank named the appellants, Dave Sheldon, also known as David Sheldon, andDarren K. Kearns, as defendants in the foreclosure action, because they were the successfulbidders at the sheriff's sale.
In the order denying the appellants' first pre-answer motion pursuant to CPLR 3211 todismiss this action, they were directed to interpose an answer within 30 days of being servedwith a copy of the order plus notice of entry. Although served with a copy of the order and noticeof entry, the appellants never served an answer to the complaint. The appellants' motion tovacate their default was properly denied because they failed to proffer a reasonable excuse fortheir failure to timely answer the complaint, or a meritorious defense to the foreclosure action(see CPLR 5015 [a] [1]; HSBC Bank, USA v Dammond, 59 AD3d 679, 680[2009]; Matter of Macias v Motor Veh. Acc. Indem. Corp., 10 AD3d 396 [2004]).
The Bank's motion for leave to enter a default judgment against the appellants was properlygranted, as the Bank established entitlement to judgment foreclosing its mortgage and cancelingthe purported satisfaction of its mortgage, recorded by the Register. "Mortgagees. . . whose liens are senior to that of the judgment being levied do not lose theirliens . . . [A]s long as their liens are senior, [they] keep the liens, [and] the buyer atthe execution sale tak[es] subject to them" (Siegel, Practice Commentaries, McKinney's ConsLaws of NY, Book 7B, CPLR C5236:8). The sheriff's payment of $95,054.47 to the Bank fromthe proceeds of the judicial sale failed to satisfy the mortgage debt, and since the mortgage wasnot extinguished by the payment and the purchasers at the judicial sale took title subject to themortgage, the Bank is entitled to foreclose on the entirety of the mortgage, and to seek thebalance due.
The Supreme Court properly directed that the purported satisfaction of the Bank's mortgagebe cancelled and that the Bank's mortgage be reinstated. A mortgagee may have an erroneousdischarge of mortgage, without concomitant satisfaction of the underlying mortgage debt, setaside, and have the mortgage reinstated where there has not been detrimental reliance on theerroneous recording (see Citibank, N.A. v Kenney, 17 AD3d 305, 308 [2005]). Here, theBank established that the Register erroneously recorded the sheriff's letter stating that it had paid$95,054.47 from the proceeds of the sale to the Bank, as a satisfaction piece, and that no one haddetrimentally relied upon that recorded discharge.
The appellants' remaining contentions are without merit. Fisher, J.P., Santucci, Balkin andAustin, JJ., concur.