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PHH MORTGAGE CORPORATION, Plaintiff v. Michael HAMER a/k/a/ Michael J. Hamer, Michelle Hamer, a/k/a Michelle A. Hamer, United States of America, Internal Revenue Service and the New York State Department of Taxation and Finance, Defendants.

No. 2015–0868.

Decided: April 21, 2016

John DiCaro, Esq., Shapiro, DiCaro and Barak, LLC, Attorney for the Plaintiff, PHH Mortgage Corporation. James Nicholson, Esq., Law Offices of James Nicholson, Attorney for the Successful Bidder, Robert Nicholson.

The above-captioned matter is before this court pursuant to plaintiff, PHH Mortgage Corporation's [hereinafter PHH] motion to Vacate the Foreclosure Sale and Relieve the Bid. Prior to the March 3, 2016 return date, the matter was taken on submission, without oral argument. Having reviewed the submissions of the parties, for the reasons set forth below, this court makes the following Findings of Fact and Conclusions of Law.

Findings of Fact:

For the purpose of this motion the facts are for the most part not in dispute and arise out of a foreclosure action by plaintiff, the holder of the Note and Mortgage on the premises located at 279 West Lake Road, Oswego, New York. The underlying action was commenced with the filing of a summons and complaint with the Oswego County Clerk's Office on April 24, 2015. Following service and the filing by plaintiff of a Request for Judicial Intervention, this court granted plaintiff's ex-parte application for an Order of Reference on September 22, 2015. On October 23, 2015, the court granted plaintiff's ex-parte application for Judgment of Foreclosure and Sale, and the Judgment of Foreclosure and Sale was entered with the Oswego County Clerk on October 30, 2015. Following entry, the foreclosure sale in this matter was set for January 25, 2016. On the date of the sale, one of the bidders, Robert Nicholson objected to the court appointed referee submitting a bid on behalf of the plaintiff. The court first contacted plaintiff's firm advising them that a representative of the plaintiff was not in attendance, and next in the absence of the assigned Justice, contacted Justice Seiter who allowed the sale to proceed as scheduled. The successful bidder was Robert Nicholson who bid $90,000.00 for the property subject to the instant action.

Thereafter, by Notice of Motion dated January 27, 2016, PHH moved this court for an Order vacating the January 25, 2016 sale. In its motion, counsel for the plaintiff argues first that the sale should be vacated alleging that the entered Judgment of Foreclosure and Sale, contrary to the objection of the bidder, did not prohibit the referee in this matter from submitting an initial bid on behalf of the plaintiff. In the alternative, plaintiff's counsel alleges that, citing to the discrepancy between the amount bid and the market value [or proposed initial bid by the plaintiff] was so great that the court should set aside the sale through its equitable powers.

In opposition, counsel for Robert Nicholson first alleges in sum and substance, citing to the entered Judgment of Foreclosure and Sale that, by its terms the Judgment directed a representative of the plaintiff to attend the sale, and that, by: “․ cross[ing] out language which stated ‘․ that said Referee shall accept a written bid from the Plaintiff or any other party ․’ Plaintiff sought to have the Referee perform the exact duty that was prohibited by the Court and then failed to provide the Referee notice of the prohibition.” [Bidder Counsel's Affirmation in Opposition at pp. 3–4]. In the alternative, counsel for the purchaser alleges that the discrepancy between the sale price and the value of the property is not so great as to implicate the equitable powers of this court, and if the instant application is denied, the plaintiff will still have the remedy of seeking a deficiency judgment against the defendant, mortgagor.

In reply, counsel for the plaintiff advances two main arguments, first alleging that despite buyer's counsel's averments, the Judgment of Foreclosure and Sale in this matter did not specifically prohibit the referee from submitting an initial bid on behalf of the bank In the alternative, the counsel for the plaintiff argues that the balance the equities in this matter favor PHH.

Conclusions of Law:

As set forth above, before the court is a motion to set aside the foreclosure sale in this matter. Distilled to its essence, the question before this court is first whether the referee in this matter had authority to submit a bid on behalf of the plaintiff, PHH. Here, it is not disputed that plaintiff submitted a proposed Judgment of Foreclosure and Sale which, as submitted provided, in pertinent part: “․ that said Referee shall accept a written bid from the Plaintiff or any other party, provided that it is accompanied by a deposit as provided therein.” [Judgment of Foreclosure at p. 3] However, when executed by the court, the Judgment of Foreclosure and Sale provided: “ ․” and further provided, directly above the strikeout: “That plaintiffs' representative shall attend the sale ․” [Executed Judgment of Foreclosure and Sale at p. 3].

Here, the court finds that, contrary to plaintiffs' counsel's assertion that: “Despite the handwritten notation, the Judgment did not expressly prohibit the Referee from being Plaintiff's or its assignee's representative at the sale in order to start the bidding as the stated bid amount provided her at the sale [,]” [Plaintiffs' Counsel's Affirmation in Support of Motion at ¶ 9] such notation may not, as plaintiff's counsel urges, be read in vacuum. Here, the court finds that, the requirement that plaintiff's representative attend the sale, coupled with striking the language in the proposed Judgment of Foreclosure, forbade the Referee from accepting written bid or bids on behalf of the plaintiff, and further clearly provided that its representative attend the sale. The court notes that such change was made in this, and other Judgments of Foreclosure and Sale submitted to it by plaintiff's1 and other firms.

Here, it is clear that a referee is not an agent of any of the parties to an action in foreclosure, but rather an officer of the court, appointed by it to sell the real property subject to the action. [see Jorgenson v. Endicott Trust Company, 100 A.D.2d 647 (3rd Dept.1984). Furthermore, as succinctly observed by the Appellate Division, Third Department in National Bank of Stamford v. Van Keuren, 184 A.D.2d 92 (3rd Dept.2002):

There can be little dispute that it is the court, not the parties, who is in absolute control of the workings of a judicial foreclosure (see, 73 N.Y. Jur 2d, Judicial Sales, § 1, at 517). The appointed Referee is an officer of the court and must perform his duties impartially without regard to the interests of any particular person in the proceeding (Riggs v. Pursell, 66 N.Y.193, 198; Goldberg v. Feltman's of Coney Is., 205 Misc. 858, 864; 73 N.Y. Jur 2d, Judicial Sales, § 5, at 519–520).

Id. at 95. Thus, insofar as plaintiff failed to follow the Ordered directive of the court that its representative be present coupled with the deletion of the language allowing the referee to accept written bids, the court finds that the bidder correctly objected to the referee's authority to submit bids on behalf of the plaintiff, and thus, the sale was conducted in accordance with the dictates of the Judgment of Foreclosure.

Nor is the court persuaded that the sale should be set aside on equitable grounds. It is well settled that: “Absent fraud, collusion or other irregularity, a foreclosure sale will not be set aside solely upon inadequacy of the sale price unless the inadequacy is so great that it shocks the conscience of the court (Glenville and 110 Corp. v. Tortora, 137 A.D.2d 654, 655, lv. denied 72 N.Y.2d 806).” Manufacturers & Traders Trust Co. v. Niagara Square Associates, 199 A.D.2d 975, 976 (4th Dept.1993),, 83 N.Y.2d 845. In the instant action, there are no allegations of fraud or collusion, and the property was sold at auction for $90,0000.00, approximately sixty-four [64%] of the amount of the initial bid of $141,500.00 proposed by the bank. Thus the court finds that the sale price was not so inadequate to shock its conscience. [see, Manufacturers & Traders Trust Co. v. Niagara Square Associates, supra, [fifty percent of the appraised value insufficient to set aside the sale]; Crossland Mortgage Corporation v. Frankel, 192 A.D.2d 571 (2nd Dept.1993), lv denied, 83 N.Y.2d 845 [successful bid of $55,000.00 for a property where the representative of the bank was to bid $160,000.00–$200,000 .00 but failed to do so, did not shock the conscience of the court]; Frank Buttermark Plumbing & Heating Corp. v. Sagarese, 119 A.D.2d 540 (2nd Dept.1986); app.denied, 68 N.Y.2d 607 [“The sale of these premises at 30% of the defendants' uncorroborated opinion as to their fair market value is not so unconscionably low as to warrant vacatur of the sale.” Id.]. As the Appellate Division, First Department observed in Thorton v. Citibank, 226 A.D.2d 162 (1st Dept.1986); app.denied, 89 N.Y.2d 805, reargument denied, 89 N.Y.2d 1031: “As foreclosure sales often result in prices ‘substantially less' than market value (Guardian Loan Co. v.. Early, 47 N.Y.2d 515, 518), the price received herein was not ‘fundamentally unfair’ (see, Polish Natl. Alliance v. White Eagle Hall Co., 98 A.D.2d 400, 409).”

Thus, in light of the foregoing, plaintiff, PHH Mortgage Corporation's motion to Vacate the Foreclosure Sale and Relieve the Bid, is in all respects DENIED. The foregoing constitutes the Decision of this court. Counsel for the defendant is to submit an Order consistent herewith to the court within twenty [20] days of receipt.


1.  The court notes that this is not an isolated change to the proposed judgment. A brief search of the records of the Oswego County Clerk reveals that this court has consistently modified the language of Judgments from plaintiff's firm as it did in this matter. [See, e.g., J.P. Morgan Chase v. Stephen Edwards, Oswego County Index No.: 2014–1737]; J.P. Morgan Chase v. Martin Castleman, Oswego County Index No.: 2014–0294]; PHH Mortgage v. Heather Rogers, Oswego County Index No.2014–2031]; PHH Mortgage v. Christopher Treece, Oswego County Index No.2015–1695; U.S. Bank National v. David Harrington, Oswego County Index No.2014–1490], as well as submissions of other firms requiring the attendance of a representative of a particular plaintiff to attend the sale.


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