COMM 2006-C8 Walt Whitman Road, LLC v. Income Star LLC

46 Misc. 3d 893, 1 N.Y.S.3d 877
CourtNew York Supreme Court
DecidedNovember 6, 2014
StatusPublished

This text of 46 Misc. 3d 893 (COMM 2006-C8 Walt Whitman Road, LLC v. Income Star LLC) is published on Counsel Stack Legal Research, covering New York Supreme Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
COMM 2006-C8 Walt Whitman Road, LLC v. Income Star LLC, 46 Misc. 3d 893, 1 N.Y.S.3d 877 (N.Y. Super. Ct. 2014).

Opinion

OPINION OF THE COURT

Emily Pines, J.

Following the court’s May 24, 2013 order discharging the court-appointed Receiver in this commercial foreclosure action, the court opened this closed proceeding based upon information, confirmed by the Appointment Processing Unit of the Office of Court Administration (OCA), that Richard Bellando, who was retained by the Receiver based upon a notice of appointment to serve as property manager of the premises at issue and whose compensation was part of the order approving the Receiver’s final accounting, was ineligible for appointment to that position. Information supporting that conclusion was set forth in Mr. Bellando’s “Application For Appointment Pursuant To Part 36 Of The Rules Of The Chief Judge” (court’s exhibit 1) dated July 1, 2011. A review of the application itself reveals that Mr. Bellando was prohibited from receiving appointments pursuant to part 36 of the Rules of the Chief Judge (22 NYCRR) from the moment that he applied therefore. For that reason, the court issued an order dated October 1, 2014, directing the parties that stipulated to the Receiver’s entire accounting, i.e., the Receiver and the attorney for the plaintiff mortgage holder that consented to the payment of Mr. Bellando’s fees, to appear before the court on October 15, 2014, and show cause why the court should not vacate that portion of its discharge and accounting approval order which approved compensation to Mr. Bellando. A copy of the court’s order dated October 1, 2014 was sent to Mr. Bellando so that he and/or counsel on his behalf could appear on October 15, 2014, if they wanted to participate in the reopening of the proceeding. However, neither Mr. Bellando nor anyone on his behalf appeared before the court on October 15, 2014.

[895]*895On October 15, 2014, the following issue was placed before the Receiver and counsel for plaintiff, the only party that remained in this action. Part 36 of the Rules of the Chief Judge applies to certain persons or entities that perform services for receivers, including property managers (22 NYCRR 36.1 [a] [10] [v]). Section 36.2 (a) specifies that [a]ll appointments of the persons or entities set forth in section 36.1 ... , including those persons or entities set forth in section 36.1(a)(10) . . . who perform services for . . . receivers, shall be made by the judge authorized by law to make the appointment.” Section 36.2 (b) (1) instructs the appointing judge to make such fiduciary appointments from the “appropriate list of applicants established by the Chief Administrator of the Courts.” Upon a finding of good cause, that same section authorizes appointment of a person or entity not on the approved list of applicants (§ 36.2 [b] [2]). However, section 36.2 (c) sets forth specific disqualifications from all categories of appointment under part 36. Section 36.2 (c) (4) (i) states, in relevant part: “No person who is the chair or executive director, or their equivalent, of a State or county political party . . . shall be appointed while that official serves in that position and for a period of two years after that official no longer holds that position.”

Mr. Bellando’s application for appointment (court’s exhibit 1) is dated July 1, 2011 and is stamped “RECEIVED” by the Office of Court Administration on August 30, 2011. On September 14, 2011, the Appointment Processing Unit of the Division of Administrative Services of the Office of Court Administration issued a letter to Mr. Bellando acknowledging receipt of Mr. Bellando’s application for appointment, providing him with a fiduciary ID number (613966), and stating his eligibility for appointments as property manager in Nassau and Suffolk Counties as of September 12, 2011.

Despite the foregoing, a review of the application for appointment shows that on page 6 Mr. Bellando signed an affirmation under penalty of perjury affirming, among other things, that “I am QUALIFIED to file this application because I AM NOT: . . . d. a person who currently serves, or who has served within the last two years ... as chair, executive director, or the equivalent, of a state or county political party.”

As required, Mr. Bellando attached his resume to his application for appointment. Mr. Bellando’s resume sets forth under the heading “INVOLVEMENT AND RECOGNITION,” “Nassau County Independence Party, Executive Director 2011-present.”

[896]*896On February 27, 2012, the date the court was notified by the Receiver that Mr. Bellando was being retained as property manager by the Receiver, Mr. Bellando was on OCA’s list of qualified applicants for appointment as property manager. The court was not aware at that time nor until it learned in September 2014 that, notwithstanding the OCA’s approval of Mr. Bellando’s application for appointment, he was in fact disqualified from appointment pursuant to section 36.2 (c) (4) (i) because, as reflected on his resume, he was the executive director of the Nassau County Independence Party. Therefore, upon learning of Mr. Bellando’s disqualification from appointment, the court raised the issue to the Receiver and counsel for plaintiff to explain to the court why Mr. Bellando’s appointment was not void ab initio.

The court has received a letter from plaintiffs counsel (court’s exhibit 4) and a memorandum of law from the Receiver (court’s exhibit 3). Both also made arguments on the record before the court. Counsel to plaintiff set forth that his client not only selected the Receiver based upon plaintiffs experience with the Receiver in a prior action, but also approved all of the work performed by and fees sought by Mr. Bellando as property manager. The letter dated October 14, 2014 from plaintiff’s counsel states, in relevant part:

“My client was more than satisfied with the services performed by the property manager, whose activities were properly supervised by the receiver and fully disclosed to my client. In short, the entire process was transparent and the protection sought by my client during the foreclosure process was achieved. As the Court is aware, my client stipulated to the final accounting submitted to the Court.” (Court’s exhibit 4.)

With regard to the disqualification of Mr. Bellando from appointment, the letter from plaintiffs counsel states:

“My client has now been fully advised of all these matters. I wish to advise the Court that my client seeks no return of any of the fees or expenses paid to and earned by the property manager. My client . . . believes that the fees paid to the property manager were consistent with [the] agreement and properly earned.” (Court’s exhibit 4.)

The Receiver argues both that there is no requirement within part 36 that appointment of a property manager be accomplished only by court order and that prevailing case law sets forth that [897]*897even where there exists a violation of part 36, where such results in no perceivable harm to the estate, it does not rise to the level of serious breach of fiduciary duty warranting a denial of fees. (See David Realty & Funding, LLC v Second Ave. Realty Co., 14 AD3d 450 [1st Dept 2005].)

As the court set forth on the record on October 15, 2014, it is the court’s interpretation of part 36 that, although the court can consider the recommendation of a receiver in making appointments of persons or entities to perform services for receivers, section 36.2 (a) instructs that “[a]ll appointments of the persons or entities set forth in section 36.1 . . . , including those persons or entities set forth in section 36.1(a)(10) . . .

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Cite This Page — Counsel Stack

Bluebook (online)
46 Misc. 3d 893, 1 N.Y.S.3d 877, Counsel Stack Legal Research, https://law.counselstack.com/opinion/comm-2006-c8-walt-whitman-road-llc-v-income-star-llc-nysupct-2014.