| Bank of Am., N.A. v Lucido |
| 2014 NY Slip Op 00956 [114 AD3d 714] |
| February 13, 2014 |
| Appellate Division, Second Department |
| Bank of America, National Association,Appellant, v Galina Lucido, Defendants, and John A. Lucido,Respondent. |
—[*1] Peter C. Kaiteris, Patchogue, N.Y., for respondent.
In an action to foreclose a mortgage, the plaintiff appeals from a judgment of theSupreme Court, Suffolk County (Spinner, J.), dated April 16, 2012, which, aftersettlement conferences pursuant to CPLR 3408, forever barred the plaintiff from"demanding, collecting or attempting to collect, directly or indirectly, any and all of thesums secured by the [instant] mortgage . . . designated or denominated asinterest, attorney's fees, legal fees, costs, disbursements or any sums other than theprincipal balance as well as advances for property taxes and property insurance if any,that may have accrued from the date of default up to the date of this [judgment]," fixedthe amount of the debt due under the subject note and mortgage at the sum of$493,219.75, and awarded the defendant John A. Lucido exemplary damages against theplaintiff in the sum of $200,000, which sum was to be applied as a credit against theprincipal balance of the mortgage, reducing the said principal balance to the sum of$293,219.75.
Ordered that the judgment is reversed, on the law, with costs, and the matter isremitted to the Supreme Court, Suffolk County, for further proceedings consistentherewith.
Although the Supreme Court had authority to impose a sanction or remedy in theevent it determined, after a hearing, that the plaintiff had failed to negotiate in good faithin the mandatory foreclosure settlement conferences (see CPLR 3408; Wells Fargo Bank, N.A. vMeyers, 108 AD3d 9, 11 [2013]), it lacked authority to include such a provisionin the judgment in the absence of any application for that relief (see Emigrant Mtge. Co., Inc. vFisher, 90 AD3d 823, 824 [2011]; Putnam County Temple & Jewish Ctr., Inc. v Rhinebeck Sav.Bank, 87 AD3d 1118, 1121 [2011]; Hunter Sports Shooting Grounds, Inc. v Foley, 73 AD3d702, 705 [2010]; Ambrosino v Village of Bronxville, 58 AD3d 649, 652[2009]; cf. Kay Found. v S & FTowing Serv. of Staten Is., Inc., 31 AD3d 499, 501-502 [2006]). Moreover, thecourt's imposition of sanctions, specifically, of exemplary damages, and the utilization ofthose exemplary damages to, in effect, award a reduction of the principal balance of thesubject mortgage, was done without notice to the plaintiff that the court wascontemplating such sanctions, and thereby deprived the plaintiff of its right to dueprocess (see Wells Fargo Bank, N.A. [*2]vMeyers, 108 AD3d at 22-23; IndyMac Bank, F.S.B. v Yano-Horoski, 78 AD3d 895, 896[2010]; Miller v CruiseFantasies, Ltd., 74 AD3d 919, 920 [2010]). In any event, although we are awareof the unfortunate situation of the defendant John A. Lucido (hereinafter the respondent)here, the record reveals that the conduct of the plaintiff in this case was not so egregiousas to merit the imposition of sanctions against it. Neither the plaintiff's refusal to considera reduction in principal, nor the plaintiff's delay in producing the pooling and servicingagreement (hereinafter PSA) for the subject mortgage, establish that the plaintiff failed tonegotiate in good faith. To the contrary, over the course of the settlement negotiations,counsel for the plaintiff consistently represented the unlikelihood of the plaintiff'sacceptance of the respondent's proposed reduction in principal, and any misstatement bythe plaintiff's counsel regarding the import of the provisions of the PSA did nothing tochange the plaintiff's stance with respect to the respondent's proposal. "Nothing in CPLR3408 requires plaintiff to make the exact offer desired by [the] defendant[ ], and [the]plaintiff's failure to make that offer cannot be interpreted as a lack of good faith" (Wells Fargo Bank, N.A. v VanDyke, 101 AD3d 638, 638 [2012]; see Citibank, N.A. v Van Brunt Props., LLC, 95 AD3d1158, 1159 [2012]). Rivera, J.P., Balkin, Hall and Sgroi, JJ., concur. [Prior CaseHistory: 35 Misc 3d 1211(A), 2012 NY Slip Op 50655(U).]