E. W. Bank v. L & L Assocs. Holding Corp.

144 A.D.3d 1030

43 N.Y.S.3d 369

2016 N.Y. Slip Op. 07956

In the Matter of EAST WEST BANK, petitioner/plaintiff-appellant,

v.L & L ASSOCIATES HOLDING CORP., et al., respondents/defendants-respondents.

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

Nov. 23, 2016.

Davidoff Hutcher & Citron LLP, Garden City, NY (David I. Lieser and William P. Walter of counsel), for petitioner/plaintiff-appellant.

Forchelli, Curto, Deegan, Schwartz, Mineo & Terrana, LLP, Uniondale, NY (Richard A. Blumberg of counsel), for respondent/defendant-respondent L & L Associates Holding Corp.

Carnell T. Foskey, County Attorney (Lynn, Gartner, Dunne & Covello, LLP, Melville, NY [Joseph Covello, Kenneth L. Gartner, and Tiffany D. Firgenti], of counsel), for respondents/defendants-respondents Beaumont Jefferson, as Nassau County Treasurer, and Nassau County.

CHERYL E. CHAMBERS, J.P., THOMAS A. DICKERSON, COLLEEN D. DUFFY and FRANCESCA E. CONNOLLY, JJ.

In a hybrid proceeding pursuant to CPLR article 78 to review a determination of the Nassau County Treasurer dated August 19, 2013, approving the issuance of a tax deed, and action, inter alia, for a judgment declaring that the tax deed was invalid due to unjust enrichment, the petitioner/plaintiff appeals from a judgment of the Supreme Court, Nassau County (Galasso, J.), dated September 23, 2014, which denied the petition, dismissed the proceeding and, in effect, summarily dismissed the cause of action for a declaratory judgment.

ORDERED that the judgment is reversed, on the law, with costs, the petition and cause of action for a declaratory judgment are reinstated, the branch of the petition which is asserted against L & L Associates Holding Corp. is converted into an action pursuant to RPAPL article 15 to determine adverse claims to real property, the branch of the petition which is asserted against Nassau County and the Nassau County Treasurer is converted into an action for a declaratory judgment, with the petition deemed a complaint, and the matter is remitted to the Supreme Court, Nassau County, for further proceedings in accordance herewith.

The petitioner/plaintiff in this action, East West Bank (hereinafter East West), was the mortgagee of commercial property located in Roslyn Heights, in Nassau County. The property was owned by Roslyn Jane Holdings, LLC (hereinafter Roslyn Jane), the appellant in a companion case (see Matter of Roslyn Jane Holdings, LLC v. Jefferson, 144 A.D.3d 1041, 42 N.Y.S.3d 61, decided herewith). The original mortgagee, United Commercial Bank (hereinafter UCB), which provided the underlying loan to Roslyn Jane, was closed by the California Department of Financial Institutions in November of 2009, and the Federal Deposit Insurance Corporation (hereinafter the FDIC) was appointed as UCB's receiver. In that capacity, also in November of 2009, the FDIC entered into a purchase and assumption agreement (hereinafter PA Agreement) with East West, pursuant to which East West acquired the underlying loan, and received from the FDIC the note, mortgage, and all other documents related to the loan. Pursuant to the PA Agreement, the FDIC executed and delivered to East West a written assignment of the note and mortgage dated April 25, 2014, which was recorded on June 2, 2014.

In February of 2011, L & L Associates Holding Corp. (hereinafter L&L) purchased a tax lien referable to the property at a public auction held by the Nassau County Treasurer as a result of Roslyn Jane's failure to pay taxes. The record indicates that notices of the tax lien sale dated October 20, 2010, and January 19, 2011, were sent to Roslyn Jane "or current owner," at 71 Jane Street, Roslyn Heights, NY 11577. There is no evidence that such a notice was ever sent to the mortgagee of record, which, at the time, was still listed as UCB.

In January of 2013, L & L served notices to redeem on Roslyn Jane, at the same address as above, as well as on UCB, at 27 East Broadway, New York, NY 10002. The notices were sent to each address by certified mail with return receipt and regular first class mail. Although UCB was no longer in existence and its office at 27 East Broadway had long since closed, the return receipt card for the UCB certified mailing was returned with an illegible signature, but without any printed name. The Roslyn Jane certified mailing was returned with the notation "RETURN TO SENDER / UNCLAIMED / UNABLE TO FORWARD." Neither of the notices sent by regular mail was returned.

Thereafter, upon application by L & L, accompanied by an affidavit stating that the notices to redeem had been provided as required by Section 5–51.0 of the Nassau County Administrative Code (hereinafter NCAC), the Nassau County Treasurer issued the subject tax deed conveying the property to L & L.

In the petition, East West alleged, inter alia, that Nassau County failed to comply with the provisions of NCAC § 5–37.0(a) by omitting to send a notice of tax lien sale to UCB. That allegation was based on the results of a Freedom of Information Law request submitted to Nassau County by East West's attorneys on May 12, 2014, which showed that notices of the tax lien sale were sent only to Roslyn Jane. In its answer, Nassau County denied that allegation of the petition and asserted, without any supporting documentation, that "all required notices of the tax lien sale were sent to all parties entitled to receive notice as set forth on the records of Nassau County." In its answer, L & L denied knowledge of what Nassau County did in connection with the tax lien sale. In an affirmation, L & L argued that NCAC § 5–37.0(a) did not require written notice of the tax lien sale to be sent to any mortgagee of record unless such mortgagee's name appeared on Nassau County's tax assessment role. The Supreme Court did not address this issue in the judgment appealed from.

At minimum, the issue of the adequacy of the notices of tax lien sale sent by Nassau County, as framed by the parties themselves, raises an important question as to whether the failure to notify UCB of the impending tax lien sale (whether as a result...