WELLS FARGO BANK v. ADR LLC (2024)

DECISION & ORDER

In an action to foreclose a mortgage, the nonparty Yehoshua Elazar ADR, LLC, appeals from an order of the Supreme Court, Kings County (Lawrence Knipel, J.), dated March 1, 2022.  The order denied that nonparty's motion to vacate an order of reference and a judgment of foreclosure and sale.

ORDERED that the order is affirmed, with costs.

In February 2008, the plaintiff commenced this action against, among others, the defendant Nigel Welsh to foreclose a mortgage on certain real property located in Brooklyn (hereinafter the subject property).  Welsh failed to timely appear or answer the complaint.  On December 18, 2013, the plaintiff moved, inter alia, for leave to enter a default judgment against Welsh and for an order of reference.  On January 27, 2014, Welsh moved, among other things, for leave to serve a late answer.  In an order dated March 18, 2014, the Supreme Court denied Welsh's motion, among other things, for leave to serve a late answer, and, in an order dated July 25, 2014, the court granted the plaintiff's motion, inter alia, for leave to enter a default judgment against Welsh and for an order of reference.  On July 29, 2015, the court issued a judgment of foreclosure and sale.

By deed dated March 30, 2021, and recorded on April 28, 2021, Welsh conveyed his interest in the subject property to the nonparty-appellant, Yehoshua Elazar ADR, LLC (hereinafter Yehoshua).  Yehoshua did not move to intervene or to be substituted for Welsh in this action.  Instead, in January 2022, Yehoshua moved pursuant to CPLR 5015(a) to vacate the order of reference and the judgment of foreclosure and sale.  In support of its motion, Yehoshua contended, inter alia, that it was permitted to move to vacate the order of reference and the judgment of foreclosure and sale pursuant to CPLR 1018 without formal substitution because it was the successor in interest to Welsh.  Yehoshua further contended that vacatur of the order of reference and the judgment of foreclosure and sale was warranted pursuant to CPLR 5015(a) in the interest of substantial justice because the plaintiff failed to provide sufficient proof in admissible form of Welsh's default under the terms of the note.  In an order dated March 1, 2022, the Supreme Court denied Yehoshua's motion.  Yehoshua appeals.

Pursuant to CPLR 1018, “[u]pon any transfer of interest, the action may be continued by or against the original parties unless the court directs the person to whom the interest is transferred to be substituted or joined in the action” (Wells Fargo Bank, NA v. McKenzie, 183 A.D.3d 574, 575, 123 N.Y.S.3d 148).  Contrary to Yehoshua's contention, in the absence of formal substitution, Yehoshua, as successor to Welsh's interest in the subject property, was only entitled to defend the action in Welsh's name (see CPLR 1018;  Wells Fargo Bank, NA v. McKenzie, 183 A.D.3d at 575, 123 N.Y.S.3d 148), not in its own name.  In any event, Yehoshua failed to establish any basis upon which to vacate the order of reference or the judgment of foreclosure and sale in the interest of substantial justice (see Kopsick v. Town of Hempstead, 213 A.D.3d 830, 832, 185 N.Y.S.3d 170;  Countrywide Home Loans Servicing, L.P. v. DiGiovanni, 205 A.D.3d 676, 677, 165 N.Y.S.3d 718).

The parties’ remaining contentions either are without merit or need not be reached in light of our determination.

Accordingly, the Supreme Court properly denied Yehoshua's motion to vacate the order of reference and the judgment of foreclosure and sale.

CONNOLLY, J.P., MALTESE, CHRISTOPHER and LANDICINO, JJ., concur.