Chun v. North American Mortgage Co.

285 A.D.2d 42, 729 N.Y.S.2d 716, 2001 N.Y. App. Div. LEXIS 8317
CourtAppellate Division of the Supreme Court of the State of New York
DecidedAugust 30, 2001
StatusPublished
Cited by17 cases

This text of 285 A.D.2d 42 (Chun v. North American Mortgage Co.) is published on Counsel Stack Legal Research, covering Appellate Division of the Supreme Court of the State of New York primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Chun v. North American Mortgage Co., 285 A.D.2d 42, 729 N.Y.S.2d 716, 2001 N.Y. App. Div. LEXIS 8317 (N.Y. Ct. App. 2001).

Opinions

OPINION OF THE COURT

Wallach, J.

If you ask the very model of a modern court administrator what stands high on the list of priorities, you will find at the top the speedy dispatch of matters pending on the calendar. This case on appeal fully satisfies that important criterion. However, because its disposition lacks most of the other attributes of due process, we are compelled to reverse the outcome and remand the matter for further proceedings.

The facts are substantially undisputed. Plaintiff purchased for $150,000 a cooperative apartment at 200 East End Avenue in Manhattan, with financing secured by a mortgage from the Dime Savings Bank. The mortgage was thereafter assigned to defendant North American Mortgage Co. When plaintiff defaulted on her mortgage payments, North American commenced a foreclosure proceeding. On January 20, 1999, prior to foreclosure, plaintiff and North American entered into a forbearance agreement in which plaintiff acknowledged her arrears for the last eight months of 1998, and North American agreed not to exercise its foreclosure rights and remedies as long as plaintiff abided by the terms of the agreement (i.e., immediate resumption of mortgage payments, plus payoff of the arrears by a down payment and monthly payments through January 2000), with no “event of default,” as defined in the agreement and loan documents. All payments were required to be made by bank or certified check. North American thereafter sold the mortgage to defendant Homecomings Financial Network.

At the same time, plaintiff was behind in her maintenance payments to the co-op. Defendant East River Tenants Corp. had commenced a summary nonpayment proceeding against plaintiff in Civil Court, New York County, which culminated in [44]*44a stipulation of settlement in May 1999, requiring her to cure her arrears and resume timely maintenance payments, or sell the apartment within six months.

Plaintiff allegedly defaulted on her payments under both the forbearance agreement and the maintenance contract. Homecomings foreclosed on the apartment by auctioning the stock and proprietary lease. At the foreclosure sale in October 1999, the successful bidder was defendant Skeen. The closing took place in December, and East River’s claim for maintenance arrears was satisfied from the proceeds.

Plaintiff commenced this action to vacate the foreclosure sale by show cause order in February 2000, alleging that she had made the required payments under the forbearance agreement. In support, plaintiff submitted copies of checks and receipts dated through November 1999, but which were not uniformly dated on any particular day of the month. Skeen states that she was not individually served with plaintiffs summons and complaint, which are dated January 20, 2000.

Because of the short return date on the order to show cause, none of the defendants served any papers in opposition. East River states in its brief that plaintiffs prior counsel had agreed to an adjournment to allow defendants to prepare opposition papers, but the court refused to adjourn the motion for this or any other purpose. All parties participated in oral argument based solely upon the papers and exhibits presented by plaintiff.

In a short form order dated February 20, 2000, the IAS court stated simply that plaintiffs evidence showed she was in default in complying with the forbearance agreement, and dismissed the proceeding. We reverse.

The record, consisting only of plaintiffs moving papers, fails to support the court’s summary resolution. Entirely overlooked was plaintiffs sworn assertion that she had timely made the mortgage payments for October and November 1999, but that those checks were held by Homecomings until after the foreclosure in October, and only then returned to her uncashed. While neither draft was a bank or certified check, as the agreement required, their retention by the payee until after the foreclosure gives rise to a claim of waiver of this condition, and a possible inference of default not by plaintiff but contrived by defendant Homecomings.

The only other event of default urged by defendants is plaintiffs alleged failure to maintain current maintenance pay[45]*45ments to East River pursuant to the stipulation resolving the nonpayment proceeding in Civil Court. That stipulation not only provided an enumeration of plaintiffs maintenance payment obligations, but also granted her six months to effect a sale of the apartment. Nothing in the truncated record before us indicates that East River ever sought to hold plaintiff in default of those stipulated payments and to recover possession of the premises and a money judgment pursuant to that stipulation.

Defendants attempt to justify the disposition on appeal as a proper exercise of the court’s power to dismiss an action sua sponte, based on the facial lack of merits of a pleading. The difficulty with this argument is that the court itself never invoked that power, instead basing its decision on “the evidence provided” (emphasis added). The court was without power to grant summary judgment before joinder of issue on plaintiffs complaint (State Univ. Constr. Fund v Aetna Cas. & Sur. Co., 169 AD2d 52; Republic Natl. Bank v Luis Winston, Inc., 107 AD2d 581). Even were there no triable issue, summary judgment could not be granted prior to joinder of issue (Milk v Gottschalk, 29 AD2d 698).

A serious aspect of due process overlooked by the IAS court was the absence of a notice of cross motion or any other notice to plaintiff that she would be required to respond to a motion to dismiss. Under these circumstances the court was virtually without jurisdiction to grant the relief afforded to defendants (Matter of Briger, 95 AD2d 887, 888; Guggenheim v Guggenheim, 109 AD2d 1012).

The cases cited by defendants are distinguishable. In Macias v New York City Tr. Auth. (240 AD2d 196) we upheld a court’s sua sponte dismissal of a 10-year-old personal injury action where the plaintiff had willfully defied an order to appear for a deposition and her attorney had done nothing to reinstate himself after an eight-month-old order relieving him at his own request. In Waterman v Waterman (128 Misc 2d 665), the plaintiff wife in a divorce action moved for interim appraisal fees. The court held that the predicate for imposing such a financial burden upon the defendant husband would be a validly stated cause of action for (in this instance) cruel and inhuman treatment. Finding the claim before it deficient as a matter of law, the court dismissed the complaint sua sponte, with leave to replead. This 16-year-old decision has been cited only by way of criticism (see, e.g., Metz v Duenas, 183 Misc 2d 751, 753), mostly notably and bitterly in Davis v Davis (138 [46]*46Misc 2d 970, 975-976, affd 144 AD2d 621). Obviously the willful default of both the plaintiff and counsel in Macias, and the interim relief granted in Waterman, bear no relationship to the events preceding the final dismissal in this case.

This Court had recent occasion to exercise sua sponte dismissal authority under extreme circumstances. In Wehringer v Brannigan (232 AD2d 206, appeal dismissed 89 NY2d 980), we dismissed sua sponte an action by a disbarred attorney to recover legal fees based upon the same egregious activities that had brought about his disbarment (in Matter of Wehringer, 135 AD2d 279, appeal dismissed

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Bluebook (online)
285 A.D.2d 42, 729 N.Y.S.2d 716, 2001 N.Y. App. Div. LEXIS 8317, Counsel Stack Legal Research, https://law.counselstack.com/opinion/chun-v-north-american-mortgage-co-nyappdiv-2001.