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Foreclosure Orders; Default Judgement of Foreclosure and Sale; Water Charge Calculations: This Week In Scott Mollen’s Realty Law Digest

Scott Mollen discusses “Universal Construction, Inc. v. Ramza,” “Axos Bank v. Ottomanelli,” and “Omega Mkt. v. NYC Dep’t of Environmental Protection.

Foreclosures—Although There Was a Failure To Comply With the Notice Provisions of Foreclosure Order, Evidence Indicated That Defendant Prior Owner Had Actual Notice of the Auction—Defendant Claimed To Have Gone to the Judge’s Courtroom In Error, Instead of Foreclosure Auction Part—However, eCourt Notification That Counsel Received and E-Mail Correspondence Indicated That Appearance Was To Be Made In the Foreclosure Auction Part

A trial court order had granted nonparty “A’s” cross-motion to confirm a special referee’s report and had denied a motion by defendant “B” to vacate the subject foreclosure and sale and enjoin “A’s” “ability to transfer the property.” The Appellate Division (court) affirmed.

The court held that the trial court had “properly confirmed the special referee’s report, as the report’s findings were supported by the record….”

“B” argued that “A” had failed to provide notice of the foreclosure sale, as required by the trial court’s foreclosure order. “B” claimed that it had gone to the courthouse at the time of the foreclosure auction, but had gone to the “wrong part of the building,” i. e. they mistakenly went to the trial judge’s courtroom and found that the courtroom was locked.

The special referee found that “B” and its counsel had appeared at the courthouse at the time of the foreclosure and that this evinced the “B”’s “actual knowledge that the auction was scheduled to take place.”

The court noted that “evidence further shows that counsel was aware that an appearance was to be made in the foreclosure auction part of the courthouse, which is exhibited in the eCourt notification counsel received and e-mail correspondence between the parties prior to the auction date.”

The court observed that at the hearing before the special referee, “B” had “failed to present any evidence or arguments showing that it did not have actual knowledge of the auction, and it fails to show on appeal that the relevant rulings by the referee lack adequate support from the hearing record.”

The special referee had found that “B”’s principal “lacked credibility” and “B” failed to “provide any adequate alternative explanations for appearing in court at the time of the auction.”

Thus, the court held that “B” “failed to sustain its burden of showing prejudice to a substantial right on account of any failure to strictly comply with the notice provisions of RPAPL 231(6).” The referee and the court had concluded that “the direct and circumstantial evidence shows that (“B”) had actual notice of the auction.”

Comment: Jeffrey R. Metz and Colin E. Kaufman of Adam Leitman Bailey, PC, counsel for the purchaser at the auction explained that the prior owner had “failed to satisfy a mechanics lien and never sought to redeem.” They noted that although the prior owner claimed that he lacked notice of the sale “as had been directed by prior court order,” the “court notification system indicated that the matter would appear in the foreclosure part on a date certain and the prior owner’s then attorneys sought to adjourn the date and…the prior owner and new counsel were at the courthouse on the auction day but rather than appear in the foreclosure auction part, they stayed in the hallway of the courtroom of the judge and went to the foreclosure part after the sale had taken place.”

They also observed that if the prior owner had not received notice, “why else would its principal and his new counsel appear in the courthouse on the date of the auction?” Moreover, there was no scheduled motion or conference at the judge’s regular part and the eCourt notice “clearly spelled out where one had to appear.”

Universal Construction, Inc. v. Ramza LLC, Good Friends Realty Corp and Mazal Ubracha 101 LLC, Appellate Division, First Department, Case No. 2022-03680. Decided Dec. 14, 2023. Kapnick, J.P., Kern, Friedman, González, JJ.

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