| Private Capital Group, LLC v Hosseinipour |
| 2011 NY Slip Op 05953 [86 AD3d 554] |
| July 12, 2011 |
| Appellate Division, Second Department |
| Private Capital Group, LLC, Respondent, v EssyHosseinipour et al., Defendants, and Wells Fargo Home Mortgage, Inc., et al.,Appellants. |
—[*1] Lamb & Barnosky, LLP, Melville, N.Y. (Michelle S. Feldman of counsel), forrespondent.
In an action to foreclose a mortgage, the defendants Wells Fargo Home Mortgage, Inc., andWells Fargo Bank, N.A., appeal, as limited by their brief, from so much of an order of theSupreme Court, Queens County (Weiss, J.), dated May 14, 2010, as granted those branches of theplaintiff's motion which were for summary judgment on the complaint insofar as asserted againstthem, to strike the affirmative defenses and counterclaims asserted by the defendant Wells FargoHome Mortgage, Inc., and for an order of reference, and denied those branches of their crossmotion which were to vacate the default of the defendant Wells Fargo Bank, N.A., in answeringthe complaint and to deem the second amended answer of the defendant Wells Fargo HomeMortgage, Inc., timely served on behalf of the defendant Wells Fargo Bank, N.A., as well as thedefendant Wells Fargo Home Mortgage, Inc., pursuant to CPLR 3012 (d).
Ordered that the order is reversed insofar as appealed from, on the law, on the facts, and inthe exercise of discretion, with costs, those branches of the plaintiff's motion which were forsummary judgment on the complaint insofar as asserted against the defendants Wells FargoHome Mortgage, Inc., and Wells Fargo Bank, N.A., to strike the affirmative defenses andcounterclaims asserted by the defendant Wells Fargo Home Mortgage, Inc., and for an order ofreference are denied, and those branches of the cross motion of the defendants Wells FargoHome Mortgage, Inc., and Wells Fargo Bank, N.A., which were to vacate the default of thedefendant Wells Fargo Bank, N.A., in answering the complaint and to deem the second amendedanswer of the defendant Wells Fargo Home Mortgage, Inc., timely served on behalf of thedefendant Wells Fargo Bank, N.A., as well as the defendant Wells Fargo Home Mortgage, Inc.,pursuant to CPLR 3012 (d) are granted.
" '[U]nder res judicata, or claim preclusion, a valid final judgment bars future actionsbetween the same parties on the same cause of action' " (Maurischat v County of Nassau, 81 AD3d 793, 793 [2011], quotingLandau, P.C. v LaRossa, Mitchell &Ross, 11 NY3d 8, 12 [2008]). Here, neither the plaintiff nor its predecessors in interestwere parties to the prior foreclosure action, in which the defendants Wells Fargo HomeMortgage, Inc. (hereinafter Wells Fargo Home), and Wells Fargo Bank, N.A. (hereinafter WellsFargo Bank) (hereinafter together the Wells Fargo defendants), were [*2]parties. Accordingly, contrary to the plaintiff's contention, the WellsFargo defendants are not precluded by the doctrine of res judicata from litigating the priority oftheir mortgages as against the plaintiff's mortgage in this action (see City of New York v Welsbach Elec.Corp., 9 NY3d 124, 127-128 [2007]).
Additionally, even if, as the plaintiff contends, its predecessor in interest, nonpartyGreenpoint Mortgage Funding, Inc., was a necessary party to the prior foreclosure action(see RPAPL 1311), "[t]he absence of a necessary party in a mortgage foreclosure actionsimply leaves that party's rights unaffected by the judgment of foreclosure and sale" (Glass v Estate of Gold, 48 AD3d746, 747 [2008]).
Furthermore, the judgment of foreclosure and sale in the previous action, which barred alldefendants therein from asserting, inter alia, any rights, claims, and interest in the subjectproperty, does not preclude the Wells Fargo defendants from advancing their claims here, as theforeclosure sale of the premises ultimately was not conducted (see Nutt v Cuming, 155NY 309, 313 [1898] ["A judgment entered in a foreclosure action is final for all purposes ofreview, but in other respects it is interlocutory . . . The provision barring others oftheir interest in, or of their rights of equity of redemption in the mortgaged premises, of necessityrelates to the final concluding act, that of a sale of the premises"]; cf. Forbes v Aaron, 81 AD3d 876,877 [2011]; Bethel United Pentecostal Church v Westbury 55 Realty Corp., 304 AD2d689, 692-693 [2003]).
Moreover, contrary to the plaintiff's contention, the doctrine of judicial estoppel is notapplicable here. "The doctrine of judicial estoppel precludes a party from taking a position in onelegal proceeding which is contrary to that which he or she took in a prior proceeding, simplybecause his or her interests have changed" (Matter of New Cr. Bluebelt, Phase 4, 79 AD3d 888, 890 [2010]).Contrary to the plaintiff's contention, no position advocated by the Wells Fargo defendants in theprior foreclosure action is contrary to their position here with regard to the priority of theirmortgages in relation to the plaintiff's mortgage. Accordingly, the Wells Fargo defendants are notprecluded by the doctrine of judicial estoppel from advancing their contentions here concerningthe priority of their mortgages in relation to the plaintiff's mortgage.
Therefore, based on the foregoing, the Supreme Court erred in granting that branch of theplaintiff's motion which was to strike the affirmative defenses and counterclaims asserted inWells Fargo Home's second amended answer.
The Supreme Court improvidently exercised its discretion in denying those branches of theWells Fargo defendants' cross motion which were to vacate Wells Fargo Bank's default inanswering the complaint and to deem Wells Fargo Home's second amended answer timely servedon behalf of Wells Fargo Bank as well as Wells Fargo Home pursuant to CPLR 3012 (d). "Adefendant seeking to vacate a default in appearing or answering must demonstrate a reasonableexcuse for the default and a potentially meritorious defense to the action" (Citimortgage, Inc. v Brown, 83 AD3d644, 644 [2011]; see CPLR 5015 [a] [1]). Contrary to the plaintiff's contention, theWells Fargo defendants established a reasonable excuse for Wells Fargo Bank's default inanswering the complaint. The Wells Fargo defendants also demonstrated a potentiallymeritorious defense, as they established that Wells Fargo Bank's mortgage was recorded prior tothe plaintiff's mortgage (see generally Real Property Law § 291; Lend-Mor Mtge. Bankers Corp. vNicholas, 69 AD3d 680, 680 [2010]). Accordingly, the Supreme Court improvidentlyexercised its discretion in denying those branches of the Wells Fargo defendants' motion whichwere to vacate Wells Fargo Bank's default and to deem Wells Fargo Home's second amendedanswer timely served on behalf of Wells Fargo Bank as well as Wells Fargo Home pursuant toCPLR 3012 (d), particularly in light of the strong public policy favoring the resolution of actionson their merits and the absence of prejudice to the plaintiff (see Westchester Med. Ctr. v Allstate Ins. Co., 80 AD3d 695, 697[2011]).
The plaintiff failed to establish its prima facie entitlement to judgment as a matter of law. Insupport of its motion for summary judgment, the plaintiff submitted the assignment of themortgage and note to it, as well as evidence that the borrowers were in default (see generally Rossrock Fund II, L.P. vOsborne, 82 AD3d 737, 737 [2011]). However, the plaintiff also submitted [*3]evidence that established that the Wells Fargo Bank mortgage mayhave priority over the plaintiff's mortgage. In addition, with respect to the applicability of thedoctrine of equitable subrogation, the plaintiff submitted evidence that raised a triable issue offact as to whether proceeds of the Wells Fargo Home mortgage were used to satisfy a priormortgage on the premises which was superior in priority to the plaintiff's mortgage (see Countrywide Home Loans Inc. vDombek, 68 AD3d 1041, 1042 [2009]). Given the existence of triable issues of fact asto whether at least a portion of the Wells Fargo Home mortgage had priority over the plaintiff'smortgage as a result of an equitable lien, and whether the Wells Fargo Bank mortgage is superiorin priority to the plaintiff's mortgage, the Supreme Court erred in granting those branches of theplaintiff's motion which were for summary judgment on the complaint insofar as asserted againstthe Wells Fargo defendants, and for an order of reference. Angiolillo, J.P., Dickerson, Hall andRoman, JJ., concur.