Calendar Date: January 10, 2018
Getnick Livingston Atkinson & Priore, LLP, Utica (Patrick
G. Radel of counsel), for appellant.
Malz, Davenport Center, for Vincent D. Iocovozzi, respondent.
& Gordon, Esqs., New Hartford (Dean L. Gordon of
counsel), for Bonnette L. Iocovozzi, respondent.
Before: McCarthy, J.P., Devine, Aarons, Rumsey and Pritzker,
MEMORANDUM AND ORDER
from two orders of the Supreme Court (Coccoma, J.), entered
September 28, 2016 in Otsego County, which partially denied
plaintiff's motion for, among other things, a deficiency
judgment against defendant Bonnette L. Iocovozzi.
2008, defendants Vincent D. Iocovozzi and Bonnette L.
Iocovozzi (hereinafter collectively referred to as
defendants), then a married couple, signed a mortgage note
acknowledging indebtedness to plaintiff for $600, 000. The
debt was secured by a mortgage granting plaintiff a lien upon
two properties, one located in Otsego County (hereinafter the
camp property) and the other in Herkimer County (hereinafter
the funeral home property). The camp property was owned
jointly by defendants, while the funeral home property was
owned solely by Vincent Iocovozzi. Defendants thereafter
became involved in a divorce action. During the course of
said action, Vincent Iocovozzi commenced a bankruptcy
proceeding and, as part of the bankruptcy plan, entered into
an agreement with plaintiff whereby the fair market value of
the funeral home property (deemed to be $175, 000) was
applied to reduce the joint mortgage debt. Vincent Iocovozzi
then executed a new note and mortgage in favor of plaintiff
for $175, 000.
February 2015, plaintiff commenced a foreclosure action
solely with respect to the camp property. A judgment of
foreclosure and sale in relation to said property was granted
in November 2015, and the foreclosure sale was completed in
December 2015, with plaintiff - having bid $255, 000 - as the
successful bidder. In March 2016, plaintiff moved for leave
to enter a deficiency judgment against defendants as it
relates to the camp property. Supreme Court, in two orders,
denied plaintiff's motion, finding that Bonnette
Iocovozzi "was not a party to [Vincent Iocovozzi's
bankruptcy] plan and has/had every right to expect that
both properties secured the entire debt,
" further holding that although "[p]laintiff
clearly had the right to modify the terms of the original
note and mortgage with... Vincent Iocovozzi, it could/cannot
do so to the detriment of... Bonnette Iocovozzi."
Plaintiff now appeals, and we affirm.
general rule is that where a mortgage is secured by more than
a single parcel of property, the right to apply for a
deficiency judgment arises only when all the properties
subject to the mortgage lien are sold" (Wydra v
Chai, 50 A.D.3d 779, 781  [citations omitted],
lv denied 11 N.Y.3d 711');">11 N.Y.3d 711 ). Here, the language
contained in the mortgage conformed with this rule by
providing that plaintiff could seek a deficiency judgment
upon foreclosure and sale of the "Property, " which
was defined in the note as being located at both the
camp and funeral home addresses. Vincent Iocovozzi's
agreement with plaintiff during the course of the bankruptcy
proceeding did not alter Bonnette Iocovozzi's rights in
this respect, as she never agreed to be bound by the
bankruptcy settlement, and the bankruptcy order merely
limited plaintiff's rights against her to those
"pursuant to applicable non-bankruptcy law
" (emphasis added). Under general contract principles,
plaintiff may not unilaterally alter Bonnette Iocovozzi's
original obligation without her consent (cf. Bier Pension
Plan Trust v Estate of Schneierson, 74 N.Y.2d 312, 315
). Inasmuch as Bonnette Iocovozzi assumed only a
contractual obligation to pay any deficiency resulting from
the foreclosure and sale of both properties, we
agree with Supreme Court that it would be inequitable to hold
her liable for a deficiency relating solely to the camp
to plaintiff's assertion, Bonnette Iocovozzi is not bound
by the bankruptcy order under principles of res judicata, as
the matter on appeal does not involve the same cause of
action that was raised during the bankruptcy proceeding
(compare Celli v First Trust Nat'l Bank of Northern
New York [In re Layo], 460 F.3d 289, 292 [2d Cir 2006]).
Nor do principles of equitable estoppel foreclose her from
challenging the motion for a deficiency judgment, as she
never agreed to the settlement with respect to the funeral
home property (compare Adirondack Trust Co. v
Farone, 245 A.D.2d 840, 842 , lv
dismissed 91 N.Y.2d 1002');">91 N.Y.2d 1002 ) and did not induce
plaintiff through her conduct to change its position. Because
Bonnette Iocovozzi neither agreed to nor was bound by the
settlement, a deficiency judgment would need to be calculated
in the traditional manner, after a public auction, pursuant
to RPAPL 1371 (2).
remaining contentions, to the extent not explicitly addressed
herein, have been considered and found lacking in merit.
McCarthy, J.P., Devine, Aarons and Rumsey, JJ., concur.
that the orders are affirmed, ...