Appellate Division Second Department Awards Lender $1.4 Million And Secures Foreclosure and Sale
A lender retained Adam Leitman Bailey, P.C. to handle an appeal in the Second Department in a foreclosure action. The lender’s action was dismissed at an inquest when the lower Court determined that the limited power of attorney entered into between the lender and its servicer was “void and ineffectual.”
In that action, the Court had granted summary judgment in favor of the lender. Normally, in a foreclosure action, the Court would then send the matter to a referee to compute the amounts due and owing on the loan. However, here, the Court instead order that damages be established at an inquest.
During the inquest, the lender produced a representative from its servicer to testify regarding the damages. In an extraordinary ruling, the lower Court found the limited power of attorney void because (1) it did not include a schedule of loans, and (2) other agreements reference in the limited power of attorney were not produced. The Court then held that since the limited power of attorney was void, the representative did not have the authority to testify. Despite, the hearing only being related to damages as summary judgment had already been granted in favor of the lender, the Court dismissed the entire action.
Adam Leitman Bailey, P.C. argued that it was inappropriate for the Court to dismiss the action and by doing so it sua sponte vitiated an agreement freely entered into between the lender and servicer that is customarily used in the mortgage loan business. Here, the limited power of attorney was entered into before the lender acquired the loan. Additionally, the other documents referenced in the limited power of attorney are separate and apart, and the limited power of attorney does not require the servicer to produce those agreements in order to establish its authority to act on behalf of lender.
The Second Department ruled in favor of the lender determining that the lender met its burden in producing the representative from the servicer who established that $1.4 million was due on the loan.
As such, the Second Department overturned the lower Court’s decision dismissing the action, reinstated the complaint, and remanded the matter back to the lower Court to enter the appropriate judgment in favor of lender in the amount of $1.4 million.
Jeffrey R. Metz, Esq., and Danny Ramrattan, Esq. at Adam Leitman Bailey, P.C. secured this result for its client.