WATERTOWN SAVINGS BANK v. DELANEY (2009)

Before the Court is an ex parte application for a Judgment of Foreclosure and Sale, including a request for approval of attorney's fees for counsel to the mortgagee.

The Court has considered the proposed Judgment of Foreclosure and Sale and all prior submitted documents, including an Exhibit that contains the Note and the Mortgage.   No Defendants have appeared in opposition.

A Referee was previously appointed by the Court.   The Report of Referee indicates a balance due Plaintiff as of January 1, 2009 in the total amount of $77,557.92.   Plaintiff's counsel has requested approval for costs in the amount of $1,370.00.   Plaintiff's counsel also seeks reasonable attorneys fees.

 As a general rule, counsel fees are recoverable in a foreclosure action if the agreement authorizes them (Emery v. Fishmarket Inn of Granite Springs, 173 A.D.2d 765, 570 N.Y.S.2d 821;  see Hooper Associates v. AGS Computers, 74 N.Y.2d 487, 549 N.Y.S.2d 365, 548 N.E.2d 903).   There is a difference between an agreement to pay such fees contained in the mortgage document on foreclosure and the agreement to pay such fees in the Promissory Note (see Vardy Holding Company v. Metric Resales, 131 A.D.2d 564, 516 N.Y.S.2d 490;  Lipton v. Specter, 96 A.D.2d 549, 465 N.Y.S.2d 59, lv. den. 61 N.Y.2d 608, 475 N.Y.S.2d 1026, 464 N.E.2d 1004).

 No authority for the attorney fees in the Mortgage has been cited by counsel, and the Court has been unable to locate one in the submitted exhibit.   The Mortgage references “In any lawsuit for foreclosure and sale, Lender will have the right to collect all costs allowed by law”, but that clause only relates to costs, and attorney fees are not included as a cost permitted by the statute.   An additional sentence in the Mortgage specifically stating counsel fees are recoverable is needed.  (See, e.g., Federal Land Bank of Springfield v. Handschuh, 125 Misc.2d 686, 480 N.Y.S.2d 294.)   Use of the general term costs' does not act as specific authority for an award of legal fees, though it is sufficient for collection of other costs of litigation.

The Note does state an obligation on the part of the mortgagor for costs and expenses in enforcing payment of the Note, and “Those expenses include, for example, attorney fees.”   Such a clause in the Mortgage would cure the infirmity.   However, the matter before the Court is not a suit on the Note, but is rather a foreclosure of the security instrument, in which case the language of the Note is not equivalent to an obligation to pay the legal fees in the mortgage foreclosure action, and authority in the Note is not considered the same as authority in the Mortgage (see Vardy Holding Company, 131 A.D.2d 564, 516 N.Y.S.2d 490;  Lipton, 96 A.D.2d 549, 465 N.Y.S.2d 59, lv. denied 61 N.Y.2d 608, 475 N.Y.S.2d 1026, 464 N.E.2d 1004;  Eight Tobey Road Corp. v. Markesteyn, 198 A.D.2d 865, 604 N.Y.S.2d 434).

The amount of fees requested is reasonable considering the type of action, the lack of novelty of issues, the experience of counsel, the time expended, and all other factors that the Court uses in determining reasonableness of attorney's fees.   However, the Court does not have authority to direct payment of such legal fees absent the authorizing language in the security document.

Plaintiff is still permitted, however, to proceed to collect attorney fees by way of a separate action on the Note, as a separate contractual document (Levine v. Infidelity, Inc., 2 A.D.3d 691, 770 N.Y.S.2d 83, lv. to app. dism. 3 N.Y.3d 656, 782 N.Y.S.2d 695, 816 N.E.2d 568;  Brenner v. Alroy, 171 A.D.2d 589, 567 N.Y.S.2d 456;  see also Vacation Village Homeowners' Ass'n Inc. v. Mordkofsky, 254 A.D.2d 650, 679 N.Y.S.2d 435).

The application for judgment of foreclosure and sale is Granted, but the application for attorneys fees is Denied.

JOSEPH D. McGUIRE, J.