SRP 2012-4, LLC v. Darkwah

198 A.D.3d 938

156 N.Y.S.3d 343

SRP 2012–4, LLC, appellant,

v.Bobby P. DARKWAH, etc., et al., defendants;

Nasir Samdani, nonparty-respondent.

2019–07629

Index No. 715559/16

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

Argued—June 8, 2021

October 20, 2021

Richland & Falkowski, PLLC, Astoria, N.Y. (Michal Falkowski and Daniel Richland of counsel), for appellant.

Rothkrug Rothkrug & Spector, LLP, Great Neck, N.Y. (Simon H. Rothkrug of counsel), for nonparty-respondent.

MARK C. DILLON, J.P., LEONARD B. AUSTIN, COLLEEN D. DUFFY, BETSY BARROS, JJ.

DECISION & ORDER

In an action to foreclose a mortgage, the plaintiff appeals from an order of the Supreme Court, Queens County (Rudolph E. Greco, Jr., J.), entered June 27, 2019. The order, insofar as appealed from, granted those branches of the motion of nonparty Nasir Samdani which were to set aside a foreclosure sale held on April 26, 2019, and to direct the referee to return the down payment to nonparty Nasir Samdani.

ORDERED that the order is affirmed insofar as appealed from, with costs.

In December 2016, the plaintiff commenced this action to foreclose a mortgage (hereinafter the subordinate mortgage), which secured a loan in the amount of $133,600, encumbering certain real property in Queens owned by the defendants Bobby P. Darkwah and Charlotte Boadu (hereinafter together the defendants). Another mortgage, senior to the subordinate mortgage (hereinafter the senior mortgage), securing a loan in the amount of $534,400, also encumbered the property. In February 2019, upon the default of the defendants, the Supreme Court entered a judgment of foreclosure and sale in favor of the plaintiff.

Thereafter, in April 2019, a foreclosure sale of the property was conducted. Nonparty Nasir Samdani was the successful bidder. Approximately two weeks after the foreclosure sale, Samdani moved to set aside the foreclosure sale on the ground that the plaintiff had failed to disclose that a senior mortgage encumbered the property, to vacate the judgment of foreclosure and sale pursuant to CPLR 5015(a), and to direct the referee to return the down payment to him. The plaintiff opposed Samdani's motion. In an order entered June 27, 2019, the Supreme Court, inter alia, granted those branches of Samdani's motion which were to set aside the foreclosure sale and direct the referee to return the down payment in the sum of $52,000. The plaintiff appeals.

Samdani's status as a nonparty did not preclude him from seeking relief in this action (see e.g. Cicorelli v. Hikey's Carting, Inc., 66 A.D.3d 626, 887 N.Y.S.2d 176 ). "[O]nly those persons whose rights have been injuriously affected are entitled to have a judicial sale set aside" ( Hamilton v. Hittleman, 224 A.D. 390, 390–391, 231 N.Y.S. 158 ). Here, as the successful bidder at the foreclosure sale, Samdani had standing, as an interested person, to move to set aside the sale on the ground that, after the purchase, he discovered that the property was encumbered by a senior mortgage in the principal amount of $534,400.

Contrary to the plaintiff's contention, this Court's determination in U.S. Bank, N.A. v. Qurachi, 163 A.D.3d 888, 80 N.Y.S.3d 441 does not control our determination here, as it is factually inapposite. There, the nonparty, a successful bidder at a foreclosure auction, who, on appeal, sought to set aside the foreclosure sale (see id. at 889, 80 N.Y.S.3d 441 ), failed to seek leave to intervene in the action and "did not present any evidence of fraud, collusion, mistake, or misconduct in connection with the foreclosure sale that would warrant setting the sale aside" ( id. ). In contrast, here, Samdani sought leave to intervene before the Supreme Court and demonstrated that the plaintiff failed to disclose the existence of the senior mortgage encumbering the property before Samdani submitted his winning bid for the property.

The Supreme Court providently exercised its discretion in granting those branches of Samdani's motion which were to set aside the foreclosure sale and direct the referee to return his down payment. Generally, 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’ " ( Paragon Fed. Credit Union v. Skarla, 186 A.D.3d 840, 841, 127 N.Y.S.3d 781, quoting Fleet Fin. v. Gillerson, 277 A.D.2d 279, 280, 716 N.Y.S.2d 66 ). A court "may exercise its inherent equitable power over a sale made pursuant to its judgment or decree to ensure that it is not made the instrument of injustice" ( Guardian Loan Co. v. Early, 47 N.Y.2d 515, 520, 419 N.Y.S.2d 56, 392 N.E.2d 1240 ). Here, neither the complaint, the judgment of foreclosure and sale, nor the terms of sale disclosed the existence of another mortgage encumbering the real property or that the mortgage at issue was...