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v Mathon 2010 NY Slip Op 52082(U) Decided on December 1, 2010 Supreme Court, Suffolk County Spinner, J.
This opinion is uncorrected and will not be published in the printed Official Reports.
Decided on December 1, 2010 Supreme Court, Suffolk County
U.S. Bank National Association, Plaintiff against Sheila Mathon, Hank Mathon, Mortgage Electronic Registration Systems Inc. as Nominee and Mortgagee of Record, WMC Mortgage Corp., the Law Offices of Joseph D'Elia, Key Bank of Long Island n/k/a Washington Mutual Bank, Commissioner of Taxation and Finance, United States of AmericaInternal Revenue Service and Shore Park Estates Homeowners Association Inc., Defendants
Adam M. Marshall Esq. Cullen &Dykman LLP Attorneys for Plaintiff 100 Quentin Roosevelt Boulevard Garden City, New York 11530 Rosicki, Rosicki& Associates P.C. Former Attorneys for Plaintiff 51 East Bethpage Road Plainview, New York 11803 Sheila Mathon Hank Mathon Defendants Pro Se 815 Anthony Drive Lindenhurst, New York 11757 Jeffrey Arlen Spinner, J. ORDER ON MOTION Mot. Seq. 004-MotD Original Return Date: September 15, 2010 Final Submit Date: November 17, 2010 Premises
815 Anthony Drive Lindenhurst, New York 11757 District0103 Section025.00 Block02.00 Lot049.008
This is an action wherein the Plaintiff claims foreclosure of a mortgage dated September 28, 2006 in the original principal amount of $486,400.00 recorded with the Clerk of Suffolk County, New York on October 16, 2006 in Liber 21401 of Mortgages at Page 349. The mortgage secures a note of the same amount and encumbers real property commonly known as 815 Anthony Drive, Lindenhurst, Town of Babylon, New York and described as District 0103 Section 025.00 Block 02.00 Lot 049.008 on the Tax Map of Suffolk County. Plaintiff commenced this action by filing a Summons, Verified Complaint and Notice of Pendency on September 26, 2007. Following the interposition of an Answer by Defendants then-counsel, summary judgment was granted by Order dated April 14, 2008 and a Referee was appointed to compute in accordance with RPAPL § 1321. Thereafter, by Order dated January 30, 2009, a Substitute Referee was appointed. On July 12, 2010, Plaintiff moved for a Judgment of Foreclosure & Sale and, following the interposition of opposition by Defendants together with the present Order To Show Cause, the application was voluntarily withdrawn. Defendants SHEILA MATHON and HANK MATHON ("The Mathons") have moved pro se, by Order To Show Cause dated August 12, 2010, for a stay of all proceedings under this index number. Their application recites a number of grounds for the relief demanded including the pendency of a lawsuit in the United States District Court for the Eastern District of New York brought by the Mathons as plaintiffs under docket no. 10-CV-3664, the failure of Plaintiff's counsel to serve notice of proceedings upon Defendants' counsel and finally, that Plaintiff's offer of a loan modification should have operated as a stay of this action. As to the claim involving the federal action, this cannot constitute a legally cognizant ground for relief in the instant matter. In order for such injunctive relief to lie, the competing actions must have full and complete identity of claims, parties and the relief demanded, Green Tree Fin. Servicing Corp. v. Lewis 280 AD2d 642, 720 NYS2d 843 [2nd Dept. 2001]. In the federal action, there is a lack of identity of the parties in that the Mathons have impleaded sixteen individuals and entities who are not parties to the instant action. Moreover, the federal action has been brought under the federal Racketeer Influenced and Corrupt Organizations Act ("RICO"), 18 USC § 1961 et. seq. which is not a subject of the instant action.
Since there exists such a dissimilarity of both parties and claims between the state and federal actions, this Court cannot grant injunctive relief under this theory. Turning next to the claim of a lack of notice to counsel, Plaintiff asserts that since the Mathons [*2]sought this relief by Order To Show Cause, it has withdrawn its motion for judgment, thus rendering the application to be academic. Defendants claim that Plaintiff failed to serve their counsel Adam Gomerman Esq. with notice of their intent to seek judgment. They rely upon this Court's Order of April 14, 2008 which directs, in pertinent part, that "ORDERED that the answer interposed by defendants SHEILA MATHON and HANK MATHON is hereby stricken and deemed converted to an appearance and demand in foreclosure, requiring service of all future papers, including but not limited to Notice of Sale, Notice of Proceedings for Surplus Monies and Notice of Discontinuance of Action upon said defendants..." It is clear from the language thereof that service is to be made upon Defendants and not necessarily their attorney. Moreover, Defendants had discharged their counsel prior to the date of the application, thus rendering this claim to be academic. It must be stated here, however, that this Court takes a very dim view of the tactic of withdrawal of an application as a way in which to deprive an adverse litigant of his or her day in court. That being said, the Court finds that this claim for relief is devoid of legal and factual efficacy and likewise must be denied. The issue of the claim of the forbearance/modification agreement, however, is an entirely different situation, one that is considerably troubling to this Court. Defendants assert (and Plaintiff does not in any way controvert) that on April 17, 2009, without the benefit of counsel, they executed a three page document entitled "Home Affordable Modification Trial Period Plan" which was propounded to them by Plaintiff. Indeed, a copy of the same is appended as Exhibit C to the Affidavit of Thomas E. Reardon. According to Defendants (and again, not controverted by Plaintiff), they timely remitted to Plaintiff the three payments of $ 1,736.00 required thereunder and in compliance therewith, followed with nine more monthly payments in the same amount. According to Defendants (and once again, not controverted by Plaintiff), they continued to send monthly payments of $ 1,736.00, doing so in compliance with a letter from Plaintiff's servicer Chase Home Finance LLC dated June 1, 2009 and appended to their Order To Show Cause. In relevant part, this letter states, in bold face type, as follows; "If you make all  trial period payments on time and comply with all applicable program guidelines, you will have qualified for a final modification. However, there may be a period of time between your last trial payment and your first modification payment as we finalize the documents and get them back from you. During that interval, you should make a continuation payment at the trial period amount, and an extra coupon has been provided for that purpose.That payment will be applied as a principal reduction payment on your loan after your final modification is effective."
It is undisputed that Defendants sent thirteen payments to Chase Home Finance LLC totalling $ 22,568.00 in reliance upon both the aforementioned April 17, 2009 Trial Modification and the subsequent June 1, 2009 letter and further, that the same were accepted by Plaintiff, presumably under the terms and conditions dictated by Plaintiff. According to Defendants, they regularly inquired as to the
status of the final modification and were variously informed that all documents had been received, the application was with underwriting and finally, underwriter had approved the final modification. Notwithstanding the continuing stream of payments from Defendants and the verbal representations made to them, Chase Home Finance LLC, by letter dated April 15, 2010 (two days shy of one year following execution of the Trial Modification) notified Defendants that a loan [*3]modification would not be offered to them due to their inability to meet the existing guidelines therefor. The reason stated for the denial was the inability to meet HAMP guidelines by modifying the payments to equal 31% of Defendants' gross monthly income. In opposition to the foregoing, the Affidavit of Thomas E. Reardon, Assistant Vice-President of Chase Home Finance LLC (Plaintiff's servicing agent), plainly acknowledges the foregoing assertions by Defendants but states, in Paragraph 7, that "...Due to a combination of factors, however, including missing documents, the submission of stale financial data and a significant influx of Trial Plan applications, the Mathons' Trial Plan was not reviewed by the underwriting department until on or about April 2, 2010." The Affidavit does state that on June 30, 2010 the Mathons applied for a new modification but that they failed to supply all necessary documents for consideration. However, nowhere in Plaintiff's submissions to this Court is there any substantiation of this claim nor is the issue of Defendants' payments addressed. Too, there is no proof of any computation or other calculation explaining the basis for denial herein. In further opposition to Defendants' motion, Plaintiff has submitted the Affidavit of Adam M. Marshall Esq., an associate in the firm of Cullen &Dykman LLP. Mr. Marshall states under oath, in Paragraph 9 thereof, that "Since the Mathons moved by Order to Show Cause to stay the foreclosure on August 12, 2010, further efforts have been made to provide the Mathons with a loan modification based on verifiable income. On October 12, 2010, Plaintiff withdrew its Motion for Judgment of Foreclosure and Sale. In addition, a new application for a loan modification was forwarded to the Mathons. However, the Mathons have abjectly refused to complete the application or supply the financial documents requested therein." This Affidavit by counsel seems to be somewhat at odds with the averments of Mr. Reardon and is amply rebutted by Defendants' motion papers. Defendants have appended a plethora of documents dating from April 30, 2010 through July 28, 2010 evidencing their application for a new modification (which appears to be a HAMP modification identical to the one that Plaintiff had just rejected) as well as their cooperation with the demands of Plaintiff regarding the same. Even so, while Defendants were assiduously attempting to re-negotiate a modification, Plaintiff was instructing its counsel to continue prosecution of the foreclosure action. It is painfully obvious to this Court that Defendants relied upon representations made by Plaintiff and acted affirmatively based upon those representations, all to their serious detriment. There has been no disclosure by Plaintiff to this Court as to whether or not this loan in foreclosure is deemed to be "sub-prime" or "high cost" in nature. Moreover, no mandatory settlement conference has been held in this matter though same is plainly required pursuant to CPLR § 3408. Since an action claiming foreclosure of a mortgage is one sounding in equity, Jamaica Savings Bank v. M.S. Investing Co. 274 NY 215 (1937), the act by Plaintiff of commencing of this action inescapably
invokes the Court's equity jurisdiction. While it is to be noted that the formal distinctions between an action at law and a suit in equity have been abolished in New York (see CPLR 103, Field Code Of 1848 §§ 2, 3, 4, 69), the Supreme Court nevertheless is fully vested with equity jurisdiction and the distinct rules governing equity are still extant, Carroll v. Bullock 207 NY 567, 101 NE 438 (1913). Speaking generally and broadly, it is the settled law of this jurisdiction that [*4]"Stability of contract obligations must not be undermined by judicial sympathy..." Graf v. Hope Building Corporation 254 NY 1 (1930). However, it is true with equal force and effect that equity must not and cannot slavishly and blindly follow the law, Hedges v. Dixon County 150 US 182, 192 (1893). Finally, as decreed by our Court of Appeals in the matter of Noyes v. Anderson 124 NY 175 (1890) "A party having a legal right shall not be permitted to avail himself of it for the purposes of injustice or oppression..." 124 NY at 179. In the matter of Eastman Kodak Co. v. Schwartz 133 NYS2d 908 (Sup. Ct., New York County, 1954), Special Term stated that "The maxim of "clean hands" fundamentally was conceived in equity jurisprudence to refuse to lend its aid in any manner to one seeking its active interposition who has been guilty of unlawful, unconscionable or inequitable conduct in the matter with relation to which he seeks relief." 133 NYS2d at 925, citing First Trust & Savings Bank v. Iowa-Wisconsin Bridge Co. 98 F 2d 416 (8th Cir. 1938), cert. denied 305 US 650, 59 S. Ct. 243, 83 L. Ed. 240 (1938), reh. denied 305 US 676, 59 S Ct. 356 83 L. Ed. 437 (1939); General Excavator Co. v. Keystone Driller Co. 65 F 2d 39 (6th Cir. 1933), cert. granted 289 US 721, 53 S. Ct. 791, 77 L. Ed. 1472 (1933), aff'd 290 US 240, 54 S. Ct. 146, 78 L. Ed. 793 (1934). Here, the Court has serious and grave concerns regarding Plaintiff's conduct in this matter, which appears to be rife with bad faith. This can be amply seen by the acceptance of multiple payments following the three trial payments, the promise albeit unfulfilled of the permanent modification and the verbal assurances that the modification had been approved juxtaposed with the vague denial issued one year after the trial agreement, the spurious claims of non-cooperation by Defendants, the seeming offer of a "new" modification and the withdrawal of the motion for judgment in an apparent attempt to divest this Court of jurisdiction to deal with this Order To Show Cause. It is the province and indeed the obligation of the trial court to assess and to determine issues regarding credibility, Morgan v. McCaffrey 14 AD3d 670 (2nd Dept. 2005). In the matter before the Court, the pendulum of credibility seems to swing heavily in favor of Defendants. When the conduct of Plaintiff in this proceeding is viewed in its entirety, it compels the Court to invoke the ancient and venerable principle of "Falsus in uno, falsus in omni" (Latin; "false in one, false in all") upon Defendant which, after review, is wholly appropriate in the context presented, Deering v. Metcalf 74 NY 501 (1878). Regrettably, the Court has, thus far, been unable to find even a scintilla of good faith respecting Plaintiff's conduct. Plaintiff comes before this Court with seemingly unclean hands demanding equitable relief against Defendants. After careful consideration, it is the determination of this Court that this matter be set down for a hearing to explore whether Plaintiff has acted in good faith, whether or not sanctions should be imposed upon Plaintiff or whether the Court should consider the invocation of other remedial measures.
It is, therefore ORDERED that the application of Defendants SHEILA MATHON and HANK MATHON be and the same is hereby granted to the extent set forth herein; and it is further [*5] ORDERED that a hearing shall be convened in this matter, to be held on January 12, 2011 at 2:30 p.m., Courtroom 229A, Supreme Court, 1 Court Street, Riverhead, New York 11901; and it is further ORDERED that said hearing shall not be adjourned except upon order of the Court; and it is further ORDERED that any relief not expressly granted herein is hereby denied; and it is further ORDERED that within ten (10) days of the date of entry hereof, Plaintiff's counsel shall serve a copy of this Order upon the Calendar Clerk of the Supreme Court, upon Defendants and all parties entitled to notice. This shall constitute the Decision and Order of this Court.
Dated: December 1, 2010 Riverhead, New York E N T E R: ______________________________________ JEFFREY ARLEN SPINNER, J.S.C.
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