Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

United States v. Simpson Borough Place Corp.

September 5, 2007

UNITED STATES OF AMERICA, PLAINTIFF,
v.
SIMPSON BOROUGH PLACE CORP., BRACH B. SIMPSON, CLUB CASINO CORP., NEW YORK CITY DEPARTMENT OF FINANCE, AND THE STATE OF NEW YORK DEPARTMENT OF TAXATION AND FINANCE, DEFENDANTS.



The opinion of the court was delivered by: Dora L. Irizarry, U.S. District Judge

MEMORANDUM AND ORDER

Currently before the court is a motion by defendants Simpson Borough Place Corp. ("SBPC") and Branch Simpson ("Simpson")(collectively, "defendants") for an order pursuant to New York's Real Property Actions and Proceedings Law ("R.P.A.P.L") § 1355(2) to confirm the Report of Sale of Eugene J. Corcoran, United States Marshal for the Eastern District of New York, and for an order pursuant to R.P.A.P.L. §§ 1361 and 1362 to direct that surplus monies from the sale be distributed to SBPC. Also before the court is a motion by Angelo Holding Corp. ("Angelo") to reopen the foreclosure action to allow Angelo to assert a claim, or, alternatively, to allow Angelo to intervene as of right or permissively pursuant to Fed. R. Civ. P. 24(a) and 24(b). For the reasons set forth below, Angelo's motion is denied and that of defendants SBPC and Simpson is granted.

Statement of Facts

In 1985, P&F Associates ("P&F"), a company in which Simpson was a general partner, took out a $635,000 note from Citibank, N.A. See Affidavit of Branch Simpson in Support of Defendant's Motion ("Branch Affidavit") ¶2. The note was secured by a mortgage on property located at 26-44 Borough Place in Queens, New York ("the Property"). The $635,000 note, owed to Citibank is the "First Mortgage" on the Property. Id. In 1988, Simpson sold his interest in P&F to the other partners for a $570,000 note, also secured by a mortgage on the Property. Simpson's $570,000 note is the "Second Mortgage" on the Property. Id. at ¶3. The First Mortgage was assigned to the Small Business Administration ("SBA") in 1991. Id. at ¶6. Eventually, the property was deeded to SBPC, still subject to the First and Second Mortgages.*fn1 Id. at ¶7. P&F defaulted on both the First Mortgage and the Second Mortgage. Id. at ¶4-5.

In 2001, the plaintiff, on behalf of the SBA, brought an action seeking foreclosure of the Property because P&F had defaulted on the First Mortgage. On June 27, 2002, the Honorable Reena Raggi, then U.S. District Judge for the Eastern District of New York, issued a Judgment of Foreclosure and Sale of the Property. Simpson Aff. Exhibit A. Pursuant to the Judgment, on April 11, 2003, an auction was held. Affidavit of Stephen D. Hans in support of Angelo's Motion to Intervene ("Hans Aff.") ¶ 3; Declaration of Branch Simpson in Opposition to Angelo's Motion to Intervene ("Simpson Decl.") ¶ 3. The successful bidder at the auction was 27-16 41st Ave., LLC ("27-16"), a company headed by Angelo Gerasimou.*fn2 Id. On April 11, 2003, Gerasimou, on behalf of 27-16, signed a "Memorandum of Sale" in which 27-16 agreed to pay $1,100,000 for the Property and agreed to comply with the "Terms of Sale." The Terms of Sale are annexed to the Hans Aff. as Exhibit B and the Simpson Decl. as Exhibit B.

Pursuant to the Terms of Sale, 27-16 put down a $110,000 deposit on the Property. See Hans Aff. Exhibit F; Simpson Decl. Exhibit B. The Terms of Sale required 27-16 to close and pay the balance of the sale price on May 15, 2003. Id. In the event that 27-16 failed to close on May 15, 2003, and no extension was given, the Terms of Sale allowed the seller (the government) to hold 27-16 liable for "the whole amount" of the purchase with interest. Id. Moreover, in the event that 27-16 failed to close, the Terms of Sale allowed the seller to reauction the property. Id. If, at a reauction, the Property sold for a lesser amount than 27-16 agreed to pay, the Terms of Sale allowed the seller to collect the deficiency from 27-16. Id.

27-16did not close on May 15, 2003, but obtained extensions of the closing date. On March 30, 2005, 27-16 assigned its right to purchase the property to Universal Property Management Corp. ("Universal"). See Simpson Decl. Exhibit D, Hans Aff. Exhibit C. Gerasimou is also the principal and an officer of Universal. Affidavit of Gerasimou in Support of Angelo's Motion to Intervene ("Gerasomou Aff.") ¶ 4. On April 12, 2005, Universal told plaintiff that it would not close on the property.*fn3 See Simpson Decl. Exhibit C; Hans Aff. Exhibit E. Pursuant to the Terms of Sale, a reauction was held on October 21, 2005.*fn4 See Simpson Decl. Exhibit C, Hans Aff. Exhibit E. At reauction, the Property was purchased for $1,700,000. Id. The closing occurred on February 6, 2006. Id.

Pursuant to R.P.A.P.L. § 1355(1),on September 7, 2006, the United States Marshal for the Eastern District of New York, as the officer making the sale, issued a "Report of Sale."*fn5 According to the Report of Sale, the buyer paid $1,700,000. Id. The government credited 27-16's $110,000 deposit from the April 2003 auction toward the sale price. Id. The government then deducted from the gross amount of $1,810,00 its $984,622.23 judgment against SBPC, plus interest from the date of the judgment (June 6, 2002) in the amount of $84,843.66 and fees for advertising the sale. After all the deductions, the sale generated a surplus of $561,285.02. Id.

R.P.A.P.L. § 1355(2) requires that a motion to confirm the Report of Sale be made between three and four months after the Report of Sale is issued. Accordingly, on December 11, 2006, SBPC and Simpson made a motion to confirm the Report of Sale and for distribution of the surplus monies. These motions are currently before the court. In the meantime, Universal assigned any right it had to 27-16's deposit to Angelo. See Hans Aff. Exhibit G. Angelo now makes this motion to intervene so that it may make a claim to the $110,000 deposit.

Discussion

Angelo's Motion to Intervene as of Right Fed. R. Civ. P. 24 permits a party to intervene as of right upon a showing that (1) the motion is timely, (2) the party has an interest in the action, (3) the interest may be impaired by the disposition of the action, and (4) the interest is not protected adequately by the parties to the action. See Brennan v. N.Y.C. Bd. of Educ., 260 F.3d 123, 130 (2d Cir. 2001).

Courts evaluate the following factors to determine whether a motion to intervene is timely:

(1) the length of time the applicant knew or should have known of his interest before making the motion; (2) prejudice to existing parties resulting from the applicant's delay; (3) prejudice to the applicant if the motion is denied; and (4) the presence of unusual circumstances mitigating for or against a finding of timeliness. Farmland Dairies v. Comm'r of N.Y. State Dep't of Agric. & Mkts., 847 F.2d 1038, 1044 (2d Cir. 1988). Of all the factors, the first factor -- the length of time that Angelo knew or should have known of his interest -- is the most important and the most damaging to Angelo. See Catanzano v. Wing, 103 F.3d 223, 232 (2d Cir. 1996) ("[a]mong the most important factors in a timeliness decision is the length of time the applicant knew or should have known of his interest before making the motion."). The court denies Angelo's motion to intervene as of right for the following reasons.

First, Angelo waited too long to make the motion. In October 2005, the Property was reauctioned for an amount greater than 27-16 agreed to pay. The government, however, did not return the deposit. Thus, since at least October 2005, 27-16's successor corporation, Angelo, knew that the government was not returning 27-16's deposit. The court finds that Angelo knew or should have known of its interest in the action in October 2005, more than fifteen months prior to the date in which Angelo filed its motion to intervene. A delay of fifteen months is untimely. See Butler, Fitzgerald & Potter v. Sequa Corp., 250 F.3d 171, 182 (2d Cir. 2001) (twelve-month delay was untimely); In re Holocaust Victim Assets Litigation, 225 F.3d 191. 198-199 (2d Cir. 2000) (eight-month delay before motion to intervene was untimely); Catanzano, 103 F.3d at 232-33 (denying intervention after motion was filed eighteen months ...


Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.