NOMURA HOME EQUITY LOAN INC v. VACCHIO (2008)

In this mortgage foreclosure action, that prong of the motion of non-party Adam Abdelhamid to intervene is denied, and that prong of the motion which is to vacate as to him the Order of Possession, dated March 31, 2008, previously issued herein is granted and said Order is vacated as to Adam Abdelhamid.   All other requests for relief are denied.

Plaintiff mortgagee foreclosed on its mortgage, obtained a judgment of foreclosure and thereafter purchased the mortgage premises which are known as 2961 Morgan Drive, Wantagh, New York. This action was commenced in 2006 and proposed intervenor became a tenant at the mortgaged premises pursuant to a one year lease after the filing of a lis pendens and the commencement of this action.   Proposed intervenor contends that he is not a defendant, is not bound by the lis pendens, his tenancy may not be affected by the foreclosure, and he may not be evicted pursuant to the terms of this Court's prior order.

 The purpose of a notice of pendency, which is authorized by CPLR § 6501 is to prevent the acquisition of an interest in the subject matter of the suit, to the prejudice of the plaintiff because otherwise, there would be no end to any suit, the justice of the court would be evaded and great hardship to the suitor would be necessarily introduced.  Cayuga Indian Nation of New York v. Fox, 544 F.Supp. 542, 547-8 (N.D.N.Y.1982).   Where, as is here, a motion to intervene is made after judgment of foreclosure and after a sale, intervention is not available Lakeville Manufacturing Co. v. Herman Homes, Inc., 14 A.D.2d 551, 218 N.Y.S.2d 1016 (2d Dept.1961);  LaMarche v. Rosenblum, 50 A.D.2d 636, 374 N.Y.S.2d 443 (3d Dept.1975).

Proposed intervenor contends that his lease is for one year, is not a conveyance which is entitled to recordation under the recording acts, RPL § 290(3) and thus, his tenancy obtained after the lis pendens was filed may not be affected because, argues proposed intervenor, the last sentence of CPLR § 6501 provides that “a person whose conveyance or incumbrance is recorded after the filing of the notice is bound by all proceedings taken in the action after such filing to the same extent as if he were a party.”

Although some courts have previously adopted this interpretation, see Medford II, LLC v. Scope International Inc., 9 Misc.3d 1117(A), 2005 WL 2496502 (Dist. Ct. Suffolk Cty.2005);  Green Point Savings Bank v. Defour, 162 Misc.2d 476, 618 N.Y.S.2d 169 (Sup.Ct. Kings Cty.1994), to do so does violence to the statutory scheme designed to afford protection to those plaintiffs who are entitled to the rights afforded to them by the filing of a lis pendens and carves out a separate niche for a tenancy created after the filing of a lis pendens where none seems to have been intended by the legislature.

 In order to terminate the interest of one who is an occupant of a property prior to the foreclosure, that occupant must be named as a defendant and if not so named, the tenancy survives the foreclosure.  Matter of SI Bank and Trust v. Sheriff of City of New York, 300 A.D.2d 667, 751 N.Y.S.2d 794 (2d Dept.2002);  Nationwide Associates, Inc. v. Brunne, 216 A.D.2d 547, 629 N.Y.S.2d 769 (2d Dept.1995);  Mortgage Electronic Registration Systems, Inc. v. Anuforo, 15 Misc.3d 1124(A), 2007 WL 1191626 (Sup.Ct. Nassau Cty.2007).   But, an occupant, such as the proposed intervenor, who attains possession of property in foreclosure after the filing of a lis pendens does not enjoy greater rights than one who occupies before the commencement simply by reason of the after acquired possession.

 It remains that a notice of pendency is constructive notice to any person who purchases from any defendant named in the notice and a person whose conveyance is recorded after the filing of the notice is similarly bound.  Green Point Savings Bank v. St. Hilaire, 267 A.D.2d 203, 699 N.Y.S.2d 458 (2d Dept.1999).   This rule has similar application to a tenancy created after the filing of a notice of pendency.  West 56th and 57th Street Corp. v. Pearl, 242 A.D.2d 508, 662 N.Y.S.2d 312 (1st Dept.1997).

The last sentence of CPLR § 6501 is not to be read as limiting the rights of the filer of a notice of pendency but rather to clarify that the holder of an interest which is obtained prior to the filing of the notice of pendency, but is recorded thereafter is nevertheless bound by all proceedings taken after the filing to the same extent as if the person was a party.  Letizia v. Flaherty, 207 A.D.2d 567, 615 N.Y.S.2d 487 (3rd Dept.1994).   The legislative history of CPLR § 6501 indicates that the purpose of the second sentence is “to make clear that a conveyance subsequently recorded although previously executed is subject to the notice”, Third Report of Advisory Committee on Practice and Procedure, 151 (1959).   This interpretation was followed in Lewis v. Rodriguez, 155 Misc.2d 12, 587 N.Y.S.2d 121 (Sup.Ct. Bronx Cty.1992) where an occupant in a building claimed to have an unrecorded deed that predated the filing of a notice of pendency and the court held that the plaintiff's rights were superior to the claimed ownership rights even though she was not served or made a party.

The holding reached here is consistent with the goal and purposes of permitting a notice of pendency to be filed.   See 5303 Realty Corp. v. O & Y Equity Corp., 64 N.Y.2d 313, 486 N.Y.S.2d 877, 476 N.E.2d 276 (1984), namely, that a court retain the ability to effect justice by preserving its power over the property which is the subject of the suit.

 Intervention is not appropriate here because allowing proposed intervenor to become a defendant will not enhance his rights.   Although it is correct that the proposed intervenor faces the loss of his tenancy, it is apparent that his intervention will not alter the result as he has no defense to the plaintiff's right to foreclose and there are no common issues of law or fact to be considered.   See Matter of Glass v. Glass, 29 A.D.3d 347, 815 N.Y.S.2d 36 (1st Dept.2006);  Bankers Trust Co., of Cal., N.A. v. Dudley, 13 A.D.3d 567, 788 N.Y.S.2d 398 (2d Dept.2004);  Citibank, N.A. v. Plagakis, 8 A.D.3d 604, 779 N.Y.S.2d 576 (2d Dept.2004).

 Intervention as of right is thus not applicable here.  CPLR § 1012.   Since the sole claim of the proposed intervenor is that his tenancy survive the foreclosure, there are no common questions of law and fact relating to the issue of plaintiff's right to foreclose, thereby rendering inapplicable the availability of permissive joinder pursuant to CPLR § 1013.

 RPAPL § 221, which authorizes the court to issue an order of possession, by its terms may only be employed to oust a party (or his representative or successor) who is bound by the judgment.   To the extent that the order issued here applies to persons such as the proposed intervenor in possession who are not named defendants, the order is vacated.   See Tri-Land Properties, Inc. v. 115 West 28th St. Corp., 267 A.D.2d 142, 701 N.Y.S.2d 16 (1st Dept.1999);  County Fed. Sav. & Loan Assn. v. First PA. Realty Corp., 29 A.D.2d 675, 287 N.Y.S.2d 614 (2d Dept.1968) affd. 23 N.Y.2d 680, 295 N.Y.S.2d 931, 243 N.E.2d 149 (1968);  Gibbs v. Kinsey, 170 A.D.2d 1049, 566 N.Y.S.2d 117 (4th Dept.1991) cf. Citibank N.A. v. Plagakis, 21 A.D.3d 393, 800 N.Y.S.2d 192 (2d Dept.2005).

The statutory scheme supports the foregoing because RPAPL § 713.5 provides that a special proceeding may be maintained where, as here, no landlord tenant relationship exists upon the grounds that the property has been sold in foreclosure.  Matter of SI Bank & Trust v. Sheriff of City of New York, Supra.

In brief, the tenancy of the proposed intervenor is by virtue of its having been created after the filing of the notice of pendency, subordinate to the lien of plaintiff's mortgage and is thus extinguished by the foreclosure.   However, the possession of the proposed intervenor may not be displaced by way of the Writ of Assistance Order issued by this Court pursuant to RPAPL § 221 because the proposed intervenor was never named as a defendant in this action, thus requiring the use of some other lawful means of bringing his possession of the mortgaged premises to an end.   See e.g. RPAPL § 713.5.

This shall constitute the Decision and Order of this Court.

DANIEL R. PALMIERI, J.