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MONROE SAV. BANK, FSB v. CATALANO

April 2, 1990

MONROE SAVINGS BANK, FSB, PLAINTIFF,
v.
VINCENT CATALANO, LENA M. CATALANO, AND UNITED STATES OF AMERICA, DEFENDANTS.



The opinion of the court was delivered by: Telesca, Chief Judge.

DECISION AND ORDER

On July 5, 1984, Monroe financed the Catalanos' purchase of the property in exchange for a $65,000 mortgage. In the summer of 1988, the United States seized the property and subsequently brought an action in this Court to forfeit the property pursuant to 21 U.S.C. § 881(a)(7). Upon being served with a summons and complaint in the forfeiture action, Monroe filed a claim with the United States based upon its mortgage lien against the property. Thereafter, the United States and Monroe entered into a written stipulation which provides in pertinent part:

  2. United States of America recognizes [Monroe's
  mortgage] lien against the subject premises as
  superior to all and any claims of the United States
  of America.
  3. [Monroe] . . . elects to permit said forfeiture
  action to proceed to judgment with the understanding
  that should the United States of America prevail in
  this forfeiture, the [Catalanos'] property is to be
  disposed of by the United States Marshal's Service
  . . . To the extent that said sale does not result in
  a sum sufficient to pay any and all of . . .
  [Monroe's mortgage] lien, the lien shall continue to
  remain a first and superior lien in all respects to
  the claims of the United States of America . . .
  6. Upon full payment of said mortgage as provided in
  paragraph 3 above, . . . [Monroe] acknowledges that
  all their right, title and interest in . . . [the
  Catalanos'] property is thereby extinguished . . . It
  is further agreed that if an order of forfeiture is
  granted in this action, it will expressly provide for
  full payment of . . . [Monroe's mortgage] as set
  forth above.

Stipulation and Order of Nov. 4, 1988 (No. 89-203T).

Soon after the United States commenced this forfeiture proceeding, the Catalanos defaulted on their mortgage. Since no attempt was made to cure the default, and since the United States had asserted a claim against the property, Monroe commenced this foreclosure action pursuant to 28 U.S.C. § 2409a. Although the defendants do not contest the validity of Monroe's mortgage, they do dispute the bank's right to foreclose. The Government additionally claims that this Court lacks jurisdiction to entertain this motion with respect to the Government's interest. Given its threshold nature, I will consider the Government's jurisdictional objection first.

DISCUSSION

Jurisdiction

  Sections 1346(f) and 2409a of Title 28 grant the district
courts original jurisdiction over civil actions to quiet title to
real property in which the United States claims an interest.
Taken together, these provisions "cast[] a wide jurisdictional
net" and extend to a "variety of suits besides the typical quiet
title action," United States v. Bedford Associates,
657 F.2d 1300, 1316 (2nd Cir. 1981), cert. denied,
456 U.S. 914, 102 S.Ct. 1767, 72 L.Ed.2d 173 (1982), including those
involving simultaneous forfeiture and foreclosure proceedings,
United States v. Real Property in Sevier Cty., Tenn.,
703 F. Supp. 1306 (E.D.Tenn. 1988); United States v. Real
Property Titled in the Name of Shashin, Ltd., 680 F. Supp. 332
 (D.Haw. 1987) (hereinafter "Shashin"). Indeed, as
the Second Circuit held in Bedford Associates, §
2409a (and § 1346(f)) confer jurisdiction over property
interests asserted by the United States whenever, as is the case
here, that interest is "adverse" to that of the plaintiff. 657
F.2d at 1316. Accordingly, the Government's interest is properly
the subject of this court's jurisdiction.

Summary Judgment with Respect to the Catalanos

By its own terms, Monroe's mortgage provides that it may foreclose on the property in the event of default. While the Catalanos admit that they have failed to make any payments since August 1988, they claim that they were relieved of their mortgage obligation when the Government wrongfully seized the property.*fn1 I find such a defense to be without merit.

It is well settled in New York that a mortgagee cannot be denied relief provided for under a mortgage because of conditions or circumstances not attributable to the mortgagee. "[A] mortgagor is bound by the terms of his contract as made and cannot be relieved from his default, if one exists, in the absence of waiver by the mortgagee, or estoppel, or bad faith, broad, oppressive or unconscionable conduct on the latter's part." Nassau Trust Co. v. Montrose Concrete Products Corp., 56 N.Y.2d 175, 183, 451 N.Y.S.2d 663, 436 N.E.2d 1265 (1982) (emphasis added) (quoting Ferlazzo v. Riley, 278 N.Y. 289, 292, 16 N.E.2d 286 (1938)); see also Gratton v. Dido Realty Co., Inc., 89 Misc.2d 401, 403, 391 N.Y.S.2d 954 (1977), aff'd, 63 A.D.2d 959, 405 N YS.2d 1001 (1978) (in the absence of an estoppel or oppressive and unconscionable acts by plaintiff, the Court is duty bound to enforce the mortgage as written by the parties). Although these conditions will relieve the mortgagor from default, each requires some provisional language in the mortgage ...


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