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Wells Fargo Bank Minnesota, N.A. v. Ray

February 20, 2009

WELLS FARGO BANK MINNESOTA, N.A., AS TRUSTEE FOR DELTA FUNDING HOME EQUITY LOAN TRUST 1998-3, PLAINTIFFS,
v.
SHELDA RAY AND CHAMPION MORTGAGE CO., INC., DEFENDANTS.



The opinion of the court was delivered by: Sylvia O. Hinds-Radix, J.

Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431.

This opinion is uncorrected and subject to revision before publication in the printed Official Reports.

This action was commenced by the filing of a summons and complaint on July 18 2003 to foreclose a mortgage encumbering the premises at 569 Maple Street, Brooklyn, New York. An order of reference was issued by this court on or about October 15, 2003 and thereafter a judgment of foreclosure and sale was entered by the court. Pursuant to a judgment of foreclosure entered by this court on June 7, 2005, the subject property was scheduled for a foreclosure sale at a public auction held on April 17, 2008. At the auction, Third Equities ("Third Equities") was declared the successful bidder and purchased the property for $155,000.00, and tendered to the referee Trevor Headley, Esq. a down payment of $16,000.00.

Thereafter, on April 22, 2008, defendant Shelda Ray ("Ms. Ray") moved, pro se by order to show cause with a temporary restraining order, for an order, canceling the foreclosure sale held on April 17, 2008, staying the transfer of the deed to the property and directing that the "funds be returned to the auctioneer." Said order to show cause was signed by this court on April 22, 2008 and was made returnable on April 24, 2008. The order provided for personal service on the referee and on all parties entitled to notice by April 23, 2008. On the return date of Ms. Ray's order to show cause, an attorney for Third Equities appeared and informed the court that Third Equities was never served with notice of the order to show cause and had just been made aware of the matter by the plaintiff. The court granted Third Equities request for an adjournment to respond to the order to show cause.

On April 29, 2008, Third Equities cross-moved for an order (1) permitting it to intervene in this action, and (2) upon such grant of intervention, denying Ms. Ray's order to show cause.

The court heard oral argument on Ms. Ray's order to show cause and on Third Equities cross-motion on June 12, 2008. Thereafter, the court heard further argument on November 11, 2008, after this matter was fully briefed.

In support of her order to show cause to vacate the foreclosure sale and to stay the transfer of the deed, Ms. Ray submitted her own affidavit in which she avers that on April 16, 2008, she paid to Ocwen Loan Servicing Company ("Ocwen"), plaintiff's agent, "the total sum of $4,000.00, with $3,500.00 made to Owen before the Auction Sale and $500.00 following the Auction Sale." She avers that she was told by a representative of Ocwen that the foreclosure sale would be cancelled before the auction took place and that a forbearance agreement would be entered into and would be sent to her. She also avers that she was told that a forbearance agreement would be prepared whereby she would be given the opportunity to pay the arrears owing under her mortgage. Ms. Ray contends that she relied on the representation made by Ocwen. In further support of her order to show cause, Ms. Ray submits a printout indicating that a payment in the amount of $4000.00 was made through Money Gram to Ocwen on April 16, 2008. Additionally, Ms. Ray submits a stipulation of agreement dated June 11, 2008, entered into between Peter Roach and Associates, P.C., attorneys for the plaintiff, and John McDonald, attorney for Ms. Ray. The stipulation agreement provides in relevant part that:

"Plaintiff consents to the cancellation of the auction sale and to the return of the bid deposit [held] by the Referee to the successful bidder with the defendant movant to be given the opportunity to perform the terms and provisions of a proposed forbearance agreement between plaintiff and defendant and to be reduced to a written agreement."

"If the forbearance agreement is satisfactorily performed by defendant with plaintiff, this mortgage loan between plaintiff and defendant is to be reinstated and the foreclosure action to be discontinued with prejudice and the notice of pendent canceled of record."

The attorney for the lender was also present in court at the hearing and was in agreement with Ms. Ray's Position with reference to her being told that she could make the payments and retain her home.

In addition to her agreement with the lender, Ms. Ray also contends that she was not notified of the date, time and place of the foreclosure sale. The court notes that it is well settled that the failure to give proper notice of a sale, as required by RPAPL 231 is a mere irregularity and not a jurisdictional defect (see Key Corporate Capital v Lindo, 304 AD2d 620 [2003]; Marine Midland Bank v Landsdowne Mgt. Assoc., 193 AD2d 1091 [1993], lv denied 82 NY2d 656 [1993]; Norstar Bank v LNP Realty Corp., 216 AD2d 279 [1995]; Amresco New England II v Denino, 283 AD2d 599 [2001]). Absent a showing that a substantial right of a party to participate in the sale was prejudiced, the failure to give proper notice will not require that a sale be set aside (RPAPL 231 [6]; see Key Corporate Capital, 304 AD2d at 620; Amresco New England II, 283 AD2d at 599). Service of the notice of sale is not required on a defendant who is in default for failure to appear (see Bank of New York v Agenor, 305 AD2d 438 [2003]. Further, the purpose of the RPAPL 231 publication requirement is to give notice to all who might become bidders so that fair value can be realized at the sale (see Wayman v Zmyewski, 218 AD2d 843, 844 [1995]).

Further, Third Equities, the claimed successful bidder, moves to intervene in the action, In support of its cross motion to intervene, Third Equities asserts that as the successful bidder for the premises, it has a real and palpable interest in the premises, and will be adversely affected by any judgment allowing the defendant to redeem the premises. It is well settled in the law that a party is permitted to intervene in an action as of right when, inter alia, "the action involves the disposition or distribution of, or the title ... to, property and the person may be affected adversely by the judgment" (CPLR 1012 [a] [3]). The court, in its discretion, may permit a person to intervene, inter alia, "when the person's claim or defense and the main action have a common question of law or fact" (CPLR 1013). "However, it has been held under liberal rules of construction that whether intervention is sought as a matter of right under CPLR 1012 (a), or as a matter of discretion under CPLR 1013 is of little practical significance," and that "intervention should be permitted where the intervenor has a real and substantial interest in the outcome of the proceedings" (Sieger v Sieger, 297 AD2d 33, 36 [2002] quoting Perl v Aspromonte Rlty. Corp., 143 AD2d 824, 825 [1988]). In the instant matter, since Third Equities as the claimed successful bidder at the foreclosure auction sale, it clearly has an interest in the outcome of the case (see, (CPLR 1012 [a][3]). Accordingly, that portion of Third Equities cross-motion seeking intervention only, is granted.

Third Equities further argue that Ms. Ray's order to show cause is defective and should be denied because it was not served upon it as the proposed intervenor. The court finds that argument to be unconvincing in light of the fact on the return date of Ms. Ray's order to show cause, the court after being informed that Third Equities was not served with the order to show cause, adjourned the matter to allow Third Equities the opportunity to respond to the order to show cause, thus granting it the opportunity to intervene and to be heard. In that respect, there can be no claim of prejudice and accordingly, that part of Third Equities cross-motion is denied.

Third Equities further oppose Ms. Rays order to show cause on the ground that Ms. Ray's right to redeem the property was extinguished upon the sale of the subject premises at the auction pursuant to the judgment of foreclosure. Additionally, Third Equities argue that Ms. Ray has not ...


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