HSBC Bank U.S. v. Cherestal

Unpublished Opinion

DECISION

CENCERIA P. EDWARDS, CPA, JUSTICE

The following e-filed papers read herein:

NYSCEF Doc. Nos.:
Notice of Motion/Order to Show Cause/Petition/Cross-Motion and Affidavits (Affirmations) and Exhibits	214-228
Opposing Affidavits (Affirmations) and Exhibits	231-238
Reply Affidavits (Affirmations) and Exhibits	248-256

This is an action to foreclose on the mortgage encumbering the residential real property known as 761 Hart Street, in Brooklyn, New York. Defendant-borrower Antoine Y. Cherestal failed to timely answer the complaint, and by order dated September 6, 2016, the Court (Noach Dear, J.) denied his motion to vacate his default and compel Plaintiff to accept his late answer. The Court (Dear, J.) granted Plaintiffs subsequent motion for an order of reference and, by order dated March 27, 2018, granted Plaintiffs motion to confirm the referee's report and for a judgment of foreclosure and sale ("JFS"), and also denied Mr. Cherestal's cross-motion to reject the report. On December 4, 2019, the Appellate Division, Second Department, affirmed so much of Justice Dear's orders as denied Mr. Cherestal's motion to vacate his default, but reversed the award of a JFS to Plaintiff because the referee's computations regarding the tax disbursements

and hazard insurance disbursements due to Plaintiff were based on business records that were never submitted to the referee (see NYSCEF doc. #235).

Plaintiff now moves, pursuant to RPAPL 1325, CPLR Article 64, and RPL 254(10), for an order appointing a temporary receiver. CPLR § 6401(a) provides, in pertinent part, that "a temporary receiver of the property may be appointed [] at any time prior to judgment, or during the pendency of an appeal, where there is danger that the property will be removed from the state, or lost, materially injured or destroyed." It is well-settled that this "is an extreme remedy which can only be invoked in cases in which the moving party has made a clear evidentiary showing of the necessity for conservation of the property and protection of the interests of the movant" (Hofman v Hcjfman, 81 A.D.3d 600, 600 [2d Dept 2011]). However, "[w]hen the mortgage entitles the mortgagee to the judicial appointment of a temporary receiver, Real Property Law § 254(10) and RPAPL 1325(1) are the controlling statutes, which displace CPLR 6401, and which allow for the appointment 'without regard to the adequacy of any security of the debt'" (HSBC Bank USA, N.A. v Rubin, 210 A.D.3d 73, 81 [2d Dept 2022] [internal citations omitted], quoting Real Property Law § 254[10]).

Here, Plaintiff relies on paragraph "H" of the "1-4 Family Rider" to the subject mortgage, which provides, in relevant part, that "Lender shall be entitled to have a receiver appointed to take possession of and manage the Property and collect Rents and profits derived from the Property without any showing as to the inadequacy of the Property as security." Plaintiff, thus, contends that the more stringent showing required to obtain a temporary receiver under a traditional CPLR § 6401 analysis is inapplicable (see Rubin, 210 A.D.3d at 81).

In opposition to Plaintiffs motion, Samuel Katz, Esq., of the Law Office of Samuel Katz, PLLC, which is counsel of record to defendant-borrower Cherestal, contends that the "1-4 Family Rider" does not control because, by its own terms, it applies only to 1 -to-4-family residences, and the subject premises is a 6-unit apartment building. In...