Emigrant Bank, as successor-by-merger with Emigrant Savings Bank - Manhattan, Plaintiff-Respondent,
Luigi Rosabianca, et al., Defendants, Carmelo Rosabianca, et al., Defendants-Appellants.
Petroff Amshen LLP, Brooklyn (James Tierney of counsel), for
Leitman Bailey, P.C., New York (Jeffrey R. Metz of counsel),
Friedman, J.P., Gische, Kapnick, Kahn, Gesmer, JJ.
Supreme Court, New York County (Gerald Lebovits, J.), entered
June 17, 2016, which denied the motion of defendants Carmelo
and Vivian Rosabianca (the Rosabiancas), inter alia, to file
a late answer pursuant to CPLR 3012(d), affirmed, without
the Rosabiancas' sympathetic position, we conclude that
the denial of their motion for relief under CPLR 3012(d) was
warranted for the reasons that follow.
Factual and Procedural Background
1974, the Rosabiancas have owned and lived at the residential
property located at 2342 Benson Avenue in Brooklyn. Allegedly
without their knowledge, in 2008, the Rosabiancas' son,
defendant Luigi Rosabianca (Luigi),  used their home as
collateral for a $1.76 million mortgage loan he obtained from
Emigrant Mortgage Company (EMC) on a condominium unit located
at 55 Wall Street in Manhattan. EMC subsequently assigned the
collateral mortgage and related note to Emigrant Savings Bank
- Manhattan (ESBM), which was later merged into plaintiff,
April 30, 2008, shortly before Luigi's purchase of the
condominium, the Rosabiancas each granted Luigi a durable
general statutory short form power of attorney, appointing
Luigi to act as their attorney-in-fact for all matters listed
on the instruments, including "real estate
transactions" and "banking transactions" with
respect to their Brooklyn home. The Rosabiancas'
signatures on both powers of attorney were duly acknowledged
by a licensed notary public. Both powers of attorney have a
handwritten notation at the bottom stating, "2342 Benson
Ave., Brooklyn[, ] NY Block 6874[, ] Lot 50."
May 14, 2008 closing on the condominium unit, Luigi acted as
borrower, attorney-in-fact for the Rosabiancas, title closer,
and title agent for Fidelity Title Insurance Company. Also at
the closing that day, Luigi executed both the collateral
mortgage and an adjustable rate note referring to a
"Mortgage/Lien in the amount of $1, 760, 000" to be
placed on two properties, setting forth the addresses of the
Manhattan condominium unit and the Rosabiancas' Brooklyn
home. Luigi signed the collateral mortgage on the
Rosabiancas' behalf as their attorney-in-fact. Luigi also
provided an affidavit of effectiveness, sworn and subscribed
before a licensed notary public  with respect to each of
the powers of attorney, in which he swore that each power of
attorney was a "valid and subsisting [p]ower which has
not been revoked" and that he had "full and
unqualified authority to execute all documents." Luigi
alleges that, subsequent to the closing, he was unable to
locate the original powers of attorney and collateral
mortgage, and for that reason never recorded them.
allegedly made the collateral mortgage loan payments for more
than three years until defaulting on the loan by failing to
make the mortgage payment due August 1, 2011. One week later,
on August 8, 2011, he obtained a $500, 000 loan from a
Panamanian lender, Little Bay Investment Corp. (Little Bay),
which was secured by a mortgage on the Wall Street
condominium. On September 1, 2011, that mortgage was recorded
in the Office of the New York City Register.
April 18, 2012, the Rosabiancas were each served a copy of a
summons and complaint in an action brought by ESBM for an
order directing the Office of the New York City Register,
Kings County, to accept for recording copies of the powers of
attorney signed by the Rosabiancas and the collateral
mortgage, because the original documents were lost
(Emigrant Savings Bank - Manhattan v Rosabianca, Sup
Ct, Kings County 2012, Index No. 6591/12) (the Kings County
action). The first page of the complaint refers to the
"Collateral Mortgage in the original principal sum of
$1, 760, 000.00 dated May 14, 2008, " and states that
the powers of attorney were "given by Defendants Carmelo
Rosabianca and Vivian Rosabianca to Luigi Rosabianca to act
as their Attorney in Fact with respect to the granting of
a collateral mortgage in favor of [EMC] on
the premises known as 2342 Benson Avenue, Brooklyn, New York
11214" (emphasis added).
September 7, 2012, after the Rosabiancas failed to appear in
the Kings County action, ESBM moved for a default judgment
directing that the copies of the powers of attorney and
collateral mortgage be recorded and to quiet title in its
favor. On November 19, 2012, Supreme Court, Kings County,
granted the motion and issued an order of default. On January
29, 2013, the Rosabiancas were each served with a notice of
entry of the order of default.
21, 2013, Supreme Court, Kings County, entered a judgment
directing that the copies of the powers of attorney and
collateral mortgage be recorded in the Office of the City
Register, Kings County. On August 13, 2013, a notice of entry
of judgment was served on each of the Rosabiancas with a copy
of the judgment attached. The judgment describes the
"Collateral Mortgage" as a "mortgage in the
original principal sum of $1, 760, 000.00 dated May 14, 2008,
" and as "given by Defendants Carmelo Rosabianca
and Vivian Rosabianca to Luigi Rosabianca in favor of [EMC],
on the Property." The address of the
"Property" appearing on the judgment is "2342
Benson Avenue, Brooklyn, New York 11214."
September 6, 2013, the copies of the powers of attorney and
collateral mortgage were recorded at the Office of the City
Register, Kings County, by EMC.
November 19, 2013, EMC served a 90-day notice of default on
the Rosabiancas pursuant to RPAPL 1304. The notice of default
stated that the Rosabiancas were 841 days in default on the
collateral mortgage and were at risk of losing their home.
February 2014, Little Bay assigned its mortgage on the Wall
Street condominium to Secured Lending Corp.
March 26, 2014, plaintiff filed a summons and complaint in
the instant action to foreclose on both the Rosabiancas'
home and Luigi's condominium unit, naming the
Rosabiancas, Luigi and Secured Lending as defendants. The
Rosabiancas were served with copies of the summons and
complaint by delivery to a person of suitable age and
discretion at their place of residence on April 11, 2014,
followed by delivery of copies of the summons and complaint
to the Rosabiancas at their home address via first class mail
on April 17, 2014 (see CPLR 308). The affidavits
of service as to both of the Rosabiancas were e-filed in the
Office of the New York County Clerk on April 28, 2014.
Rosabiancas now allege that it was only upon their receipt of
the copies of the summons and complaint in this action that
they became aware of the existence of the collateral
mortgage. They also aver that, after they were served with
the summons and complaint, Luigi assured them that he would
"do everything in his power" to prevent foreclosure
on their home.
28, 2014, the Rosabiancas' time to answer the summons and
complaint expired, without the Rosabiancas having appeared in
9, 2014, plaintiff served the Rosabiancas with notices of
default pursuant to CPLR 3215(g)(3)(i) by first class mail.
August 20, 2014, Luigi appeared at a mandatory foreclosure
settlement conference, where he admitted the default and
indicated that he intended to reinstate the loan from
plaintiff and to settle with Secured Lending on its mortgage
against the condominium unit, which, although obtained
subsequently, had been recorded prior to the recording of
plaintiff's mortgage. The settlement conference was
adjourned to October 20, 2014, to afford Luigi time to
prepare and submit a settlement proposal. However, Luigi
failed to appear for the adjourned settlement conference. On
December 12, 2014, plaintiff moved for a default judgment of
the Rosabiancas retained counsel. Rather than opposing
plaintiff's motion for a default judgment, however, they
moved, on April 23, 2015, as relevant on appeal, for leave to
file a late answer. On June 16, 2016, following oral
argument, Supreme Court denied the motion.
appeal, the Rosabiancas argue that Supreme Court should have
granted their motion to file a late answer because Luigi used
their home as collateral for the mortgage without their
knowledge or consent. They also claim that their lack of
awareness of the collateral mortgage and their reliance on
their son to protect their home from foreclosure once they
became aware of the mortgage constitute an excusable default
and a meritorious defense. In addition, they argue that the
powers of attorney used by Luigi to obtain the collateral
mortgage on their home were deficient because their
signatures were obtained on those documents without their
knowledge of the documents' true nature and contents.
response, plaintiff maintains that the Rosabiancas'
default was not excusable because the Rosabiancas could have
hired counsel other than Luigi when they first became aware
of the collateral mortgage. Plaintiff further contends that
the Rosabiancas have no meritorious defense because they each
executed a valid power of attorney authorizing Luigi to act
as their attorney-in-fact.
CPLR 3012(d), a trial court has the discretionary power to
extend the time to plead, or to compel acceptance of an
untimely pleading "upon such terms as may be just,
" provided that there is a showing of a reasonable
excuse for the delay. In reviewing a discretionary
determination, the proper inquiry is whether the court
providently exercised its discretion.
Artcorp Inc. v Citirich Realty Corp. (140 A.D.3d 417');">140 A.D.3d 417');">140 A.D.3d 417');">140 A.D.3d 417
[1st Dept 2016]), we adopted the factors set forth in
Guzetti v City of New York (32 A.D.3d 234, 238
(id.) [1st Dept 2006] [McGuire, J., concurring]) as
those that "must . . . be considered and balanced"
in determining whether a CPLR 3012(d) ruling constitutes an
abuse of discretion. Those factors include the length of the
delay, the excuse offered, the extent to which the delay was
willful, the possibility of prejudice to adverse parties, and
the potential merits of any defense (32 A.D.3d at 238).
case, with respect to the first
Artcorp/Guzetti factor, the length of the
delay, the Rosabiancas were served with copies of the summons
and complaint in this action showing that plaintiff sought
foreclosure on both Luigi's Manhattan condominium unit
and the Rosabiancas' Brooklyn home, in April 2014. The
Rosabiancas made their motion on April 16, 2015. Thus, the
length of the delay in their response to the summons and
complaint was approximately one year. This factor tends to
support denial of their motion, especially when viewed in
light of their prior notices of the mortgage at least by
April 2012 and of the default by November 2013.
the second Artcorp/Guzetti factor, the
excuse offered for the delay, the Rosabiancas aver that they
reasonably relied on their son's representation that he
would "do everything in his power" to prevent
foreclosure on their home, which they understood to mean that
he would appear in court on their behalf and defend them.
Although the circumstances afford a sympathetic view of the
Rosabiancas, the merit of their position is questionable,
given that they can point to no action taken by Luigi on
their behalf following service of the summons and complaint
upon them. We treat this factor as neutral, tending neither
to favor nor to disfavor denial of the Rosabiancas'
respect to the third Artcorp/Guzetti
factor, the absence or presence of willfulness, the
Rosabiancas maintain that they first learned that the
collateral mortgage had been placed on their home in April
2014, when they were served with the summons and complaint in
this action. As the record shows, however, the Rosabiancas
were served with the complaint in the Kings County action on
April 18, 2012. That complaint showed that ESBM sought to
record both powers of attorney signed by the Rosabiancas and
contemporaneously record the original collateral mortgage on
their Brooklyn home. By no later than August 13, 2013, when
they were served with the notice of entry of the default
judgment in the Kings County action, the Rosabiancas had been
informed that the copies of the powers of attorney and the
collateral mortgage on their home would be recorded. Thus, at
the time that Carmelo Rosabianca stated, in his April 14,
2015 affidavit in support of the Rosabiancas' motion,
that he had no knowledge that a mortgage had been placed on
his home before the commencement of this action, the
Rosabiancas were almost certainly knowing participants in the
transaction, as they were aware of both the mortgage and its
function of enabling Luigi to finance the purchase of the
condominium unit using the equity in their home. This factor
tends to support denial of the motion.
the fourth Artcorp/Guzetti factor, the
possibility of prejudice to an adverse party, plaintiff's
argument as to the prejudice it would suffer due to the delay
in recouping its interest in the property is substantially
neutralized by its delay in pursuing its legal ...