Catafago Law Firm, P.C., New York, N.Y. (Jacques Catafago of counsel), for appellant.
Thomas G. Sherwood, LLC, Garden City, N.Y., for respondent.
MARK C. DILLON, J.P., DANIEL D. ANGIOLILLO, JOHN M. LEVENTHAL, PLUMMER E. LOTT, JJ.
DECISION & ORDER
In an action to foreclose a mortgage, the defendant Alfred Rattenni appeals from (1) an order of the Supreme Court, Putnam County (Nicolai, J.), dated November 28, 2011, which denied his motion pursuant to CPLR 4404(b) to set aside a decision of the same court dated June 30, 2011, made after a nonjury trial, and for judgment as a matter of law on the ground that the subject mortgage loan was usurious, and (2) a judgment of foreclosure and sale of the same court entered March 22, 2012, upon the decision.
ORDERED that the appeal from the order is dismissed; and it is further,
ORDERED that the judgment of foreclosure and sale is reversed, on the law and the facts, the defendant's motion pursuant to CPLR 4404(b) to set aside the decision and for judgment as a matter of law on the ground that the subject mortgage loan was usurious is granted, the complaint is dismissed, and the order is modified accordingly; and it is further,
ORDERED that the matter is remitted to the Supreme Court, Putnam County, for the entry of a judgment in accordance with General Obligations Law § 5-511(2); and it is further,
ORDERED that one bill of costs is awarded to the defendant Alfred Rattenni.
The appeal from the intermediate order must be dismissed because the right of direct appeal therefrom terminated with the entry of judgment in the action (see Matter of Aho, 39 N.Y.2d 241, 248). The issues raised on the appeal from the order are brought up for review and have been considered on the appeal from the judgment of foreclosure and sale (see CPLR 5501[a]).
In September 2006, in return for a loan of $275, 000, Ronald Mangini, as attorney-in-fact for the defendant Alfred Rattenni, executed a six-month balloon promissory note (hereinafter the note) in favor of the plaintiff for the principal sum of $275, 000, with a stated interest rate of 12% per annum. As security for the note, Mangini executed and delivered to the plaintiff two mortgages on property owned by Rattenni, one on a single-family residence in Carmel, New York (hereinafter the Carmel house), and one on a condominium in Westchester County. At the closing, the plaintiff withheld a 5% "origination fee" of $13, 750 from the loan principal. Rattenni had the option to extend the terms of the note for an additional six-month period upon payment of a "non-refundable service charge" of 2% of the principal sum, or $5, 500.
Mangini made interest payments from Rattenni's accounts for the six-month term of the note and then exercised the option to extend the note for a second six-month term and paid the $5, 500 extension fee. In May 2007, Mangini handled the sale of Rattenni's condominium in Westchester County and used $125, 000 of the proceeds to pay down the loan principal and release the property from the mortgage. When the remaining principal sum of $150, 000 became due and was not paid, the plaintiff commenced this action to foreclose on the Carmel house. Rattenni raised defenses alleging that he did not authorize Mangini to execute the note and mortgage and that the interest charged on the loan exceeded the civil usury limit, rendering the loan transaction void. In a decision made after a nonjury trial, the Supreme Court determined that Mangini had authority to enter into the transaction on Rattenni's behalf pursuant to two powers of attorney, the civil usury limit did not apply to this loan, and even if the civil usury limit was applicable, the effective interest rate did not exceed the civil usury limit. On March 22, 2012, the court entered a judgment of foreclosure and sale upon the decision.
"On an appeal from a judgment after a nonjury trial, this Court's power to review the evidence is as broad as that of the trial court, and this Court may render the judgment it finds warranted by the facts, giving due regard to the trial court, which had the advantage of assessing the credibility of the witnesses" (Rock v Rock, 100 A.D.3d 614, 615-616; see Northern Westchester Professional Park Assoc. v Town of Bedford, 60 N.Y.2d 492, 499).
The Supreme Court correctly determined that the plaintiff was entitled to rely upon the statutory short form power of attorney granting Mangini authority with respect to, among other things, real estate transactions, which Rattenni executed two days before the closing (see General Obligations Law § 5-1502A). The power of attorney was facially valid and unrevoked at the time of the closing, and the "circumstances surrounding its presentation would not have put a reasonable person on notice that something was amiss" (Neildan Constr. Corp. v Angona, 209 A.D.2d 389, 390; see Hudson Enters. v Wasserman, 256 A.D.2d 550, 550-551; Grasso v Fiumara, 167 A.D.2d 510; see also Yabkow v Yabkow, 89 A.D.3d 932, 933; Crandall v Personal Mtge. Corp., 210 A.D.2d 981, 982; cf. Collision Plan Unlimited. v Bankers Trust Co., 63 N.Y.2d 827, 831).
Under the civil usury statute, the maximum interest rate on a loan is 16% per annum (see General Obligations Law § 5-501; Banking Law § 14-a). General Obligations Law § 5-501(6)(a) provides that the 16% maximum interest rate is not applicable "to any loan or forbearance in the amount of [$250, 000] or more, other than a loan or a forbearance secured primarily by an interest in real property improved by a one or two family residence." Contrary to the plaintiff's contention, the plain language of section 5-501(6)(a) does not require that a one- or two-family residence securing a loan be occupied by the owner for the civil usury limit to apply. Despite using the narrowing term "occupied by the owner" or "owner-occupied" in other usury statutes (see General Obligations Law §§ 5-501, 5-527), and despite being aware of preexisting usury regulations that applied differently to one- and two-family residences occupied by the owner (see 3 NYCRR 4.2-4.4), the Legislature specifically chose not to include the term "occupied by the owner" in the statute (see Commonwealth of the N. Mariana Is. v Canadian ...