| IndyMac Bank, F.S.B. v Yano-Horoski |
| 2010 NY Slip Op 08532 [78 AD3d 895] |
| November 16, 2010 |
| Appellate Division, Second Department |
| IndyMac Bank, F.S.B., Appellant, v Diana J. Yano-Horoskiet al., Respondents. |
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In an action to foreclose a mortgage, the plaintiff appeals from a judgment of the SupremeCourt, Suffolk County (Spinner, J.), dated December 1, 2009, which, inter alia, vacated ajudgment of foreclosure and sale of the same court (McNulty, J.), dated January 12, 2009,cancelled the note and mortgage, and directed the Suffolk County Clerk to cancel the notice ofpendency. By decision and order on motion of this Court dated January 14, 2010, enforcement ofthe judgment dated December 1, 2009, was stayed pending the hearing and determination of theappeal.
Ordered that the judgment dated December 1, 2009, is reversed, on the law, without costs ordisbursements, the judgment of foreclosure and sale is reinstated, the note and mortgage arereinstated, and the Suffolk County Clerk is directed to reinstate the notice of pendency.
In July 2005, after the defendant Diana J. Yano-Horoski defaulted on her mortgage, theplaintiff, IndyMac Bank, F.S.B., commenced the instant foreclosure action. On January 12, 2009,the Supreme Court (McNulty, J.) issued a judgment of foreclosure and sale. Notwithstanding theentry of a judgment of foreclosure and sale, the Supreme Court scheduled various postjudgmentsettlement conferences between March and August of 2009, which the plaintiff agreed to attendand participate in. Based upon the plaintiff's conduct during these conferences, the SupremeCourt (Spinner, J.), sua sponte, directed a hearing to determine whether sanctions should beimposed against the plaintiff. Following the hearing, based on a determination that the plaintiffhad conducted the settlement negotiations in bad faith, the Supreme Court issued a judgmentwhich, inter alia, vacated the judgment of foreclosure and sale, cancelled the note and mortgagein its entirety, and directed the Suffolk County Clerk to cancel the notice of pendency.
Here, the severe sanction imposed by the Supreme Court of cancelling the mortgage and notewas not authorized by any statute or rule (see Tewari v Tsoutsouras, 75 NY2d 1, 5-7[1989]), nor was the plaintiff given fair warning that such a sanction was even underconsideration (see Matter of Harner vCounty of Tioga, 5 NY3d 136, 140 [2005]; Barasch v Barasch, 166 AD2d 399,400 [1990]). The reasoning of the Supreme Court that its equitable powers included the authorityto cancel the mortgage and note was erroneous, since there was no acceptable basis for relievingthe homeowner [*2]of her contractual obligations to the bank(see First Natl. Stores v Yellowstone Shopping Ctr., 21 NY2d 630, 637 [1968];Levine v Infidelity, Inc., 285 AD2d 629, 630 [2001]), particularly after a judgment hadalready been rendered in the plaintiff's favor.
In light of our determination, we need not address the plaintiff's remaining contentions.Dillon, J.P., Florio, Balkin and Roman, JJ., concur. [Prior Case History: 26 Misc 3d717.]