I confirm the referee's report to the extent set forth. The plaintiff's motion for judgment of foreclosure and sale is granted as modified by the Judgment of Foreclosure and Sale issued with this memorandum order, including denial of the plaintiff's request to extinguish any water easement benefitting the adjacent Argyros property. Kamhi's cross-motion is granted to the extent set forth below.
John Argyros and Maria Argyros (the "Argyroses") are the owners of commercial property adjacent to Waterside on which the Argyroses constructed the diner which they continue to operate as their sole source of income. At a time subsequent to the recording of the bank mortgages sought to be foreclosed here but after the Declarations of Condominium pursuant to state law were recorded, the Argyroses claim to have obtained an easement for consideration and in writing, allegedly signed by a Waterside agent, which was also duly recorded. The Declarations of Condominium for Waterside provided that easements to adjacent landowners under certain circumstances were contemplated and the easement itself was a matter of record when the FDIC acquired the assets of the bank. The Argyroses also claim that they were given oral approval of the easement by an officer of the original bank prior to the acquisition of the bank's assets by the FDIC.
The Argyroses assert that the waterline installed underground provides water service not otherwise available at the time of construction of the diner, that they maintain and repair the waterline at their sole cost, that they pay by separate meter for all water used, that they have been and now are in compliance with all municipal regulations, and that the easement does not prevent the condominium units from being used as dwellings. The easement, according to the Argyroses and not disputed by the plaintiff, runs across a steep slope at the back of the property which cannot be built upon or used. Consequently the underground water easement neither adds to nor detracts from the value of the property being foreclosed.
In defense of their claim, the Argyroses assert various legal as well as equitable arguments, including the question of whether the mortgagee of only a portion of the property has standing by itself to extinguish an otherwise valid easement.
The plaintiff challenges the propriety of permitting the easement to survive the foreclosure, relying on among other things the nature of the dealings leading to the alleged agreement, the prior recording of the bank mortgage and loan agreements, and the ineffectiveness of oral agreements with respect to the rights of the FDIC under 12 U.S.C. §§ 1832(e), 1821(d)(9).
The basic reality of the foreclosure and sale of the condominium units at this juncture is that all easements or other rights of any other persons not mortgagors are not prejudiced or otherwise affected. The foreclosure will give the mortgagee or purchaser of the property the same rights with respect to the easement, and in all others ways, that the mortgagor had. No evidence has been presented that marketability of title to the property is measurably, if at all, impaired by permitting the easement to survive at the present time.
Under Federal Rule of Civil Procedure 1, sentence 2, as amended, effective December 1, 1993, the rules "shall be construed and administered to secure the just, speedy, and inexpensive determination of every action" (amendment emphasized). The court is to exercise its discretion to promote these goals, which include in this instance providing the mortgagee with important property interests but should not permit potential disputes with third parties that have not been shown to be economically significant and would probably have remained dormant if not for the foreclosure, to disrupt or delay these proceedings.
The foreclosure sale shall be conducted subject to the rights of the Argyroses according to the document recorded with the County Clerk, Westchester County, on May 4, 1990 at Liber 9796, page 54.
The Board of Managers of the Villa Condominium opposes the plaintiff's motion only insofar as the Referee, in his report dated June 9, 1993, recommended that the property be sold as one parcel.
It is in the interest of all parties that the method of sale promote the highest possible sale price. To achieve that goal while recognizing the plaintiff's concern about possible manipulation of the bidding process where the units are sold individually, I direct that the auction be a dual offering, with the property put up first as a single parcel and then as individual units in such order as the referee shall consider most advantageous. After notice and hearing, the court will confirm the sale with the highest results.
Defendant Carl Kamhi, alleging among other things a lien against the property of $ 195,000 for principal due
on his mortgage, resists foreclosure prior to adjudication of his claims, and also suggests the action be remanded to the state court.
The Judgment of Foreclosure and Sale directs that the parties including Kamhi provide the court within 20 (twenty) days of the date of that order calculations of such amounts as they believe should be deposited with the court and how those amounts are arrived at.
Kamhi's crossclaims against the individual defendants as alleged guarantors survive without prejudice and are in any case independent of the property to be sold. Since all of Kamhi's claims are preserved for future adjudication and any net proceeds yielded by the sale will be reserved in an interest-bearing escrow account to an appropriate extent, he will not be adversely affected.
The adjudication of outstanding claims will proceed concurrently with the foreclosure and sale of the property at issue. A pretrial conference to schedule discovery and other matters will be held in the chambers of Judge Broderick on January 14, 1994 at 10:30 a.m.
Dated: White Plains, N.Y.
December 13, 1993
CHARLES L. BRIEANT, U.S.D.J.