| American Home Mtge. Servicing, Inc. v Sharrocks |
| 2012 NY Slip Op 00918 [92 AD3d 620] |
| February 7, 2012 |
| Appellate Division, Second Department |
| American Home Mortgage Servicing, Inc.,Respondent, v William Sharrocks et al., Defendants. Margaret J. Orosz, NonpartyAppellant. |
—[*1] Zarin & Steinmetz, White Plains, N.Y. (Jody T. Cross and David S. Steinmetz of counsel),for respondent.
In an action to foreclose a mortgage, nonparty Margaret J. Orosz, appeals, as limited by herbrief, from so much of an order of the Supreme Court, Westchester County (O. Bellantoni, J.),entered August 23, 2010, as denied those branches of her motion which were pursuant to CPLR1012 (a) (3) or 1013 for leave to intervene, to consolidate the instant action with an actionentitled Orosz v Orosz, pending in the Supreme Court, Westchester County, under indexNo. 1127/09, and to stay the foreclosure sale of the mortgaged real property pending theresolution of that action.
Ordered that the order is reversed insofar as appealed from, on the facts and in the exercise ofdiscretion, with costs, those branches of the motion of the nonparty appellant which were forleave to intervene and to consolidate the instant action with the action entitled Orosz vOrosz, pending in the Supreme Court, Westchester County, under index No. 1127/09, aregranted, that branch of the motion of the nonparty appellant which was to stay the foreclosuresale of the mortgaged real property is denied as unnecessary, and the matter is remitted to theSupreme Court, Westchester County, for further proceedings consistent herewith, includingamendment of the caption to reflect the consolidation.
On February 8, 2008, the nonparty appellant, Margaret J. Orosz (hereinafter the appellant),was awarded judgment against her brother and her brother's wife in the principal sum of$1,993,003.01 in a breach of contract action. As a result of the judgment, a lien was placed onreal property apparently owned by the appellant's brother and located in Armonk. After a seriesof transfers, the subject property was transferred to William Sharrocks, who, in 2005 and 2006,obtained loans in exchange for three mortgages on the subject property, which were consolidatedin October 2006. After Sharrocks defaulted on the consolidated mortgage loans, the plaintiffmortgagee commenced the instant foreclosure action in December 2007. Subsequently, inJanuary 2009, the appellant commenced an action (hereinafter the fraudulent conveyance action)against, among others, her brother, Sharrocks, and the plaintiff in the instant action, alleging thatthe serial conveyances of and mortgages on the subject property were fraudulent. The appellantalso filed a notice of pendency [*2]against the subject property. InApril 2010 the appellant moved in the instant foreclosure action, inter alia, pursuant to CPLR1012 (a) (3) or 1013 for leave to intervene, to consolidate the instant action and the fraudulentconveyance action, and to stay the foreclosure sale of the subject property pending the resolutionof the fraudulent conveyance action.
CPLR 1013 provides that a court has discretion to permit a person to intervene, inter alia,when the person's claim or defense and the main action have a common question of law or fact(see CPLR 1013). In exercising its discretion under CPLR 1013, "the court shall considerwhether the intervention will unduly delay the determination of the action or prejudice thesubstantial rights of any party" (WellsFargo Bank, N.A. v McLean, 70 AD3d 676, 677 [2010]; see CPLR 1013).
In her proposed verified answer in the instant action, the appellant interposed affirmativedefenses asserting, inter alia, that "Sharrocks took the subject property as a party to a fraudulentconveyance, and lacked right, title, interest and authority to encumber the subject real property,"that "[t]he subject mortgages to Defendant Sharrocks were fraudulently made and void ab initio,"and that she "has a superior lien on the subject property and is entitled to the proceeds of any saleof the subject property." As such, there are common questions of law and fact pertaining to thevalidity of Sharrocks's mortgages in the instant foreclosure action and the fraudulent conveyanceaction. In addition, the appellant demonstrated a real and substantial interest in the outcome ofthe foreclosure proceedings (see WellsFargo Bank, N.A. v McLean, 70 AD3d 676 [2010]; Berkoski v Board of Trustees of Inc. Vil. of Southampton, 67 AD3d840, 843-844 [2009]; Matter ofBernstein v Feiner, 43 AD3d 1161, 1162 [2007]; County of Westchester vDepartment of Health of State of N.Y., 229 AD2d 460, 461 [1996]). Accordingly, theSupreme Court should have granted that branch of the appellant's motion which was for leave tointervene pursuant to CPLR 1013.
"Whether intervention is sought as a matter of right under CPLR 1012 (a), or as a matter ofdiscretion under CPLR 1013, is of little practical significance since a timely motion for leave tointervene should be granted, in either event, where the intervenor has a real and substantialinterest in the outcome of the proceedings" (Wells Fargo Bank, N.A. v McLean, 70AD3d at 676- 677; see Berkoski v Boardof Trustees of Inc. Vil. of Southampton, 67 AD3d 840, 843 [2009]; Sieger vSieger, 297 AD2d 33, 35-36 [2002]; Perl v Aspromonte Realty Corp., 143 AD2d 824[1988]). In light of our determination that intervention was warranted pursuant to CPLR 1013,we need not determine whether intervention should have been permitted as of right under CPLR1012 (a).
A motion to consolidate two or more actions rests within the sound discretion of the trialcourt (see CPLR 602; Matter ofLong Is. Indus. Group v Board of Assessors, 72 AD3d 1090, 1091 [2010]; NorthSide Sav. Bank v Nyack Waterfront Assoc., 203 AD2d 439 [1994]). Where commonquestions of law or fact exist, consolidation is warranted unless the opposing party demonstratesprejudice to a substantial right (seeAlizio v Perpignano, 78 AD3d 1087, 1088 [2010]; Pierre-Louis v DeLonghi Am., Inc., 66 AD3d 855, 856 [2009];Glussi v Fortune Brands, 276 AD2d 586 [2000]).
In the fraudulent conveyance action, the appellant alleged that the conveyances andmortgages that underlie the instant foreclosure action were fraudulent. Consequently, the subjectmatter of the instant foreclosure action and the fraudulent conveyance action share commonquestions of law and fact, warranting consolidation of the two actions (see Lorber v Morovati, 83 AD3d799 [2011]; Alizio v Perpignano, 78 AD3d at 1088; Ryckman vSchlessinger-Levi-Polatsch-Tydings, 225 AD2d 603 [1996]). Moreover, the plaintiff has notshown how it would be prejudiced by consolidation of the two actions. The plaintiff is a party toboth actions, and the validity of any foreclosure sale it enters into will ultimately be contingenton the outcome of the fraudulent conveyance action. Thus, the Supreme Court should havegranted that branch of the appellant's motion which was to consolidate this foreclosure action andthe fraudulent conveyance action (see Matter of Long Is. Indus. Group v Board ofAssessors, 72 AD3d at 1091; ViafaxCorp. v Citicorp Leasing, Inc., 54 AD3d 846, 850 [2008]; Ryckman vSchlessinger-Levi-Polatsch-Tydings, 225 AD2d 603 [1996]; North Side Sav. Bank vNyack Waterfront Assoc., 203 AD2d 439 [1994]).
In light of our determination consolidating the mortgage foreclosure action and the fraudulentconveyance action, the Supreme Court is now obligated to determine the allegations of [*3]fraudulent conveyance before entering any judgment in theconsolidated action, including any judgment of foreclosure and sale, if warranted. Hence, there isno need to stay the foreclosure and sale pending resolution of the fraudulent conveyance action,and that branch of the appellant's motion which was for such a stay must be denied asunnecessary. Angiolillo, J.P., Dickerson, Belen and Austin, JJ., concur.