NORTHERN BLVD CORONA LLC v. LLC (2018)

DECISION & ORDER

In an action to foreclose a mortgage, the defendants Northern Blvd Property, LLC, and Yourik Atakhanian appeal from (1) a deficiency judgment and order confirming a referee's report of sale (one paper) of the Supreme Court, Queens County (D.Hart, J.), entered January 12, 2016, upon their failure to answer the complaint, and (2) an order of the same court entered March 8, 2016, which denied their motion, inter alia, to vacate a referee's deed in foreclosure dated December 31, 2014.

ORDERED that the appeal from the deficiency judgment and order confirming the referee's report of sale is dismissed, as no appeal lies from an order or judgment entered upon the default of the appealing party (see CPLR 5511);  and it is further,

ORDERED that the order is affirmed, and it is further,

ORDERED that one bill of costs is awarded to respondents appearing separately and filing separate briefs.

A court may exercise its inherent equitable power to ensure that a foreclosure sale conducted pursuant to a judgment of foreclosure “is not made the instrument of injustice” (Guardian Loan Co. v. Early, 47 N.Y.2d 515, 520, 419 N.Y.S.2d 56, 392 N.E.2d 1240;  see PII Sam, LLC v. Koutsagelos, 119 A.D.3d 846, 989 N.Y.S.2d 363;  Golden Age Mtge. Corp. v. Argonne Enters., LLC, 68 A.D.3d 925, 892 N.Y.S.2d 436;  3–30 Bergman on New York Mortgage Foreclosures § 30.06) and, therefore, may set aside a foreclosure sale “ ‘where fraud, collusion, mistake, or misconduct casts suspicion on the fairness of the sale’ ” (Alkaifi v. Celestial Church of Christ Calvary Parish, 24 A.D.3d 476, 477, 808 N.Y.S.2d 230, quoting Fleet Fin. v. Gillerson, 277 A.D.2d 279, 280, 716 N.Y.S.2d 66;  see Bank of N.Y. v. Segui, 91 A.D.3d 689, 937 N.Y.S.2d 95).  Absent such conduct, the mere inadequacy of price is an insufficient reason to set aside a sale unless the price is so inadequate as to shock the court's conscience (see Dime Sav. Bank of N.Y. v. Zapala, 255 A.D.2d 547, 680 N.Y.S.2d 665;  Polish Natl. Alliance of Brooklyn v. White Eagle Hall Co., 98 A.D.2d 400, 470 N.Y.S.2d 642).  “[I]n most instances,” the fair market value of a mortgaged property “will exceed the winning bid” on that property at a foreclosure sale (Polish Natl. Alliance of Brooklyn v. White Eagle Hall Co., 98 A.D.2d at 407, 470 N.Y.S.2d 642;  see U.S. Bank N.A. v. Testa, 140 A.D.3d 855, 33 N.Y.S.3d 387).

Here, the appellants moved, inter alia, to vacate the referee's deed, arguing that it should be set aside because the defendant Yourik Atakhanian overheard the successful bidders conspiring to rig the bidding at the public auction.  The appellants' evidence, however, was improperly submitted for the first time in reply to the plaintiff's opposition to their motion (see Constantine v. Premier Cab Corp., 295 A.D.2d 303, 743 N.Y.S.2d 516).

Contrary to the appellants' contention, the delay in closing title does not provide an equitable basis to set aside the sale (see Bank of N.Y. v. Segui, 91 A.D.3d 689, 937 N.Y.S.2d 95), and their conduct demonstrates that they contributed to the delay (see id. at 690–691, 937 N.Y.S.2d 95).

Documentary evidence in the form of a letter of intent submitted by the appellants to support their claim that the property had a value of $15 million was likewise improperly submitted for the first time in their reply papers.  The appellants failed to cast suspicion on the fairness of the sale (see PII Sam, LLC v. Koutsagelos, 119 A.D.3d at 846, 989 N.Y.S.2d 363), and the sale price of $10.3 million was not so inadequate as to shock the conscience of the court (see U.S. Bank N.A. v. Testa, 140 A.D.3d at 857, 33 N.Y.S.3d 387;  Dime Sav. Bank of N.Y. v. Zapala, 255 A.D.2d at 548, 680 N.Y.S.2d 665).

MASTRO, J.P., ROMAN, MILLER and CONNOLLY, JJ., concur.