Bd. of Managers of the 442 St. Marks Ave. Condo. v. Milord

212 A.D.3d 760

183 N.Y.S.3d 131

BOARD OF MANAGERS OF the 442 ST. MARKS AVENUE CONDOMINIUM, respondent,

v.Marc C. MILORD, et al., defendants,442 Marks Ave 123, LLC, intervenor-appellant.

2019–13565

Index No. 505471/14

Supreme Court, Appellate Division, Second Department, New York.

Submitted—September 23, 2022

January 25, 2023

Altman Schochet LLP, New York, NY (Irena Shternfeld of counsel), for intervenor—appellant.

Baltzis Daigle LLP, New York, NY (Konstantinos G. Baltzis of counsel), for respondent.

BETSY BARROS, J.P., JOSEPH A. ZAYAS, WILLIAM G. FORD, JANICE A. TAYLOR, JJ.

DECISION & ORDER

In an action to foreclose a lien upon a condominium unit for nonpayment of common charges, the intervenor, 442 Marks Ave 123, LLC, appeals from an order of the Supreme Court, Kings County (Mark I. Partnow, J.), dated November 8, 2019. The order, insofar as appealed from, denied that branch of the intervenor's motion which was to direct a referee to return a down payment to the intervenor, and granted that branch of the plaintiff's cross motion which was, in effect, to direct the referee to release the down payment to the plaintiff.

ORDERED that the order is reversed insofar as appealed from, on the law and in the exercise of discretion, with costs, that branch of the intervenor's motion which was to direct a referee to return the down payment to the intervenor is granted, and that branch of the plaintiff's cross motion which was, in effect, to direct the referee to release the down payment to the plaintiff is denied.

On or about June 7, 2006, the defendant Marc C. Milord executed a note in the principal sum of $308,000, which was secured by a mortgage (hereinafter the senior mortgage) on a residential condominium unit located in Brooklyn (hereinafter the subject property). Thereafter, the plaintiff, the Board of Managers of the 442 St. Marks Avenue Condominium, recorded a lien on the subject property for unpaid common charges, late charges, assessments, and legal fees in the amount of $50,874.44. On June 16, 2014, the plaintiff commenced this action to foreclose the lien. Thereafter, the Supreme Court entered a judgment of foreclosure and sale, inter alia, awarding the plaintiff the principal sum of $88,225.09, and directing the sale of the subject property at auction.

A judicial auction was held on October 11, 2018, and the intervenor, 442 Marks Ave 123, LLC, placed the winning bid of $490,000 and tendered the sum of $49,000 as a down payment to the referee. Thereafter, the intervenor conducted a title search on the subject property, which revealed, among other things, the existence of the senior mortgage held by nonparty Deutsche Bank National Trust Company, as Trustee for Morgan Stanley ABS Capital I Inc. Trust 2006–HE7 Mortgage Pass–Through Certificates, Series 2006–HE7 (hereinafter Deutsche Bank).

On or about April 17, 2019, the intervenor moved, by order to show cause, inter alia, to vacate the October 11, 2018 sale of the subject property, and to direct the referee to return the $49,000 down payment to it. The intervenor argued, in substance, that the failure by the referee or the plaintiff's counsel to reveal the senior mortgage on the subject property prior to the sale violated principles of equity in addition to the Auction Rules of Kings County. The plaintiff opposed the motion and cross-moved, among other things, in effect, to direct the referee to release the down payment to it. By order dated November 8, 2019, the Supreme Court, inter alia, granted that branch of the intervenor's motion which was to set aside the sale of the subject property, denied that branch which was to direct the referee to return the down payment to the intervenor, and granted that branch of the plaintiff's cross motion which was, in effect, to direct the referee to release the down payment to the plaintiff. The intervenor appeals from so much of the order as denied that branch of its motion which was to direct the referee to return the down payment to it, and granted that branch of the plaintiff's cross motion which was, in effect, to direct the referee to release the down payment to the plaintiff.

"[A] court has the discretion to set aside a judicial sale where fraud, collusion, mistake, or misconduct casts suspicion on the fairness of the sale" ( SRP 2012–4, LLC v. Darkwah, 198 A.D.3d 938, 939, 156 N.Y.S.3d 343 [internal quotation marks omitted]; see Bank of N.Y. Trust Co. v. Gonzalez–Salinas, 89 A.D.3d 779, 779, 932 N.Y.S.2d 372 ; Dime Sav. Bank of N.Y. v. Zapala, 255...