CME Group Ltd. v. Cellini

• Decision Date: 02 July 1997
• Parties: , 1997 N.Y. Slip Op. 97,388 CME GROUP, LTD., Plaintiff, v. Joseph CELLINI et al., Defendants.
• Court: New York Supreme Court

Page 740

661 N.Y.S.2d 740

173 Misc.2d 404, 1997 N.Y. Slip Op. 97,388

CME GROUP, LTD., Plaintiff, v. Joseph CELLINI et al., Defendants.

Supreme Court, Westchester County.

July 2, 1997.

Clair & Gjertsen, Scarsdale, for defendants.

Katz & Katz, P.C., White Plains, for plaintiff.

JOAN B. LEFKOWITZ, Justice.

Plaintiff obtained a judgment of foreclosure and sale on September 10, 1996. Defendant Cellini, the mortgagor, had defaulted in the action and his attorney did not file a notice of appearance.

The real property foreclosed consists of residential rental units purchased by Mr. Cellini as an investment. The property is located in the City of Yonkers. The judgment required that the sale take place at the Westchester County Courthouse, 111 Grove Street, White Plains, New York and publication be in the Reporter Dispatch, a newspaper published and distributed throughout the County of Westchester.

Due publication was made and notices of sale were posted at the Bulletin Boards of the Westchester County Clerk's Office (part of the Courthouse), the County Office Building and in the Courthouse, all in White Plains, as well as the Bulletin Boards at the Post Office, Public Library and City Hall, all in Yonkers.

A sale was conducted in the lobby of the Courthouse in White Plains. Plaintiff and a disinterested third-party bid on the property, which plaintiff ultimately won with a $100,00 bid.

Defendant Cellini moves to vacate the judgment of sale on the grounds that the notice of sale was not published in a newspaper published in the City of Yonkers as required by § 231(2)(a) of the Real Property Actions & Proceedings Law (hereafter "RPAPL") ¹ and that the notice failed to specify the location in the Courthouse where the sale occurred. Defendant Cellini also argues that since he was making monthly payments to plaintiff during his three petitions in bankruptcy, he should have received personal notice of the sale and that the plaintiff was estopped from going forward with the foreclosure by reason of the payments.

Generally, a "court may exercise its equitable powers to set aside a judicial sale only where fraud, collusion, mistake, or exploitive overreaching casts suspicion on the fairness of the sale." Crossland Mtg. Corp. v. Frankel, 192 A.D.2d 571, 572, 596 N.Y.S.2d 130 (2d Dep't 1993), app. den. 82 N.Y.2d 655, 602 N.Y.S.2d 804, 622 N.E.2d 305 (1993).

Insofar as is relevant, § 231(2)(a) of the RPAPL states: "Notice of such sale shall be given by the officer making it by publishing a notice of the time and place of the sale ... in a newspaper published in the county in which the property is located ... unless the property is situated ... in a city ... in which a daily ... newspaper is published." Older cases construing the predecessor version of the statute as contained in the Civil Practice Act, strictly interpreted the legislation and held deviations therefrom jurisdictional. de Winter & Loeb, 1995 & 1996 Supplementary Practice Commentaries to RPAPL § 231, McKinney's Consol. Laws of New York, Book 49 1/2 ( §§ 1 to 1000), 1997 Pocket Part, p. 6. However, since enactment of CPLR 2003 (effective September 1, 1963, L.1962, ch. 308) the statutory requirements with respect to judicial sales have not been considered jurisdictional. CPLR 2003 provides:

"At any time within one year after a sale made pursuant to a judgment or order, but not thereafter, the court, upon such terms as may be just, may set the sale aside for a failure to comply with the requirements of the civil practice law and rules as to the notice, time or manner of such sale, if a substantial right of a party was prejudiced by the defect. This section does not apply to judicial sales made pursuant to article 9 of the uniform commercial code."

CPLR 2003 has been held applicable to judicial sales in mortgage foreclosure proceedings. Gegerson v. Northern Operating Corp., 41 A.D.2d 837, 342 N.Y.S.2d 424 (2d Dep't 1973). Thus, it has been held to be a mere irregularity and not a jurisdictional defect that no publication occurred. Marine Midland Bank, N.A. v. Landsdowne Mgt. Assoc., Inc., 193 A.D.2d 1091, 598 N.Y.S.2d 630 (4th Dep't 1993), app. den. 82 N.Y.2d 656, 602 N.Y.S.2d 805, 622 N.E.2d 306 (1993); see Criterion Capital Corp. v. Valven Holding Corp., 23 A.D.2d 878, 259 N.Y.S.2d 946 (2d Dep't 1965), lv. dismissed 16 N.Y.2d 482, 261 N.Y.S.2d 1026, 209 N.E.2d 563 (1965); also see Schnall v. Sayville Manor & Beach Club, 12 Misc.2d 274, 172 N.Y.S.2d 184 (Sup.Ct.Suffolk 1958) (failure to post in Town where property located not ground to vacate sale).

While it has been said that size and circulation of a proper newspaper, within the meaning of RPAPL § 231(2)(a), is not relevant (Guardian Fed. Sav. & Loan Assn. v. Horse-Hawk Holding Corp., 72 A.D.2d 737, 421 N.Y.S.2d 244 [2d Dep't 1979]), "[t]he purpose of publishing and posting the notice of sale is to notify potential bidders so that fair value may be realized on the property sold." 2 Bergman on New York Mortgage Foreclosures, § 30.03[1][a], p. 30-11; see Wayman v. Zmyewski, 218 A.D.2d 843, 629 N.Y.S.2d 871 (3rd Dep't 1995); Southold Sav. Bank v. Gilligan, 76 Misc.2d 30, 350 N.Y.S.2d 303 (Sup.Ct.Suffolk 1973). It is only when the latter purpose is frustrated that the sale may be set aside by reason of improper publication or other irregularity. Wayman v. Zmyewski, supra (sale to be held on steps of Courthouse, held in lobby, and bidder was plaintiff and proof submitted that another bidder went to the advertised place but could not find the referee and others interested in the sale; sale vacated); Trustco Bank New York v. Collins, 213 A.D.2d 819, 623 N.Y.S.2d 642 (3rd Dep't 1995) (issue of sale location deviation raised on appeal for first time in case, no prejudice found; sale not vacated); Long Is. Sav. Bank v. Valiquette, 183 A.D.2d 877, 584 N.Y.S.2d 127 (2d Dep't 1992) (sale to be held on steps of courthouse, held inside due to inclement weather, other bidders present, no prejudice; sale not vacated); Weil v. Laube, 134 Misc. 454, 235 N.Y.S. 14 (Sup.Ct.Westchester 1929), aff'd, 227 App.Div. 729, 236 N.Y.S. 919 (2d Dep't 1929) (sale to be held at main entrance of Courthouse, held in rotunda, proof submitted that other bidders could not find out where sale was; sale vacated). There does not appear to be any reported decision in this state directly in point involving publication in the wrong newspaper and a motion to vacate after the sale.

"No rule or measure has ever been devised by which we may determine in every case, with definite certainty, whether a defect is jurisdictional or is a mere irregularity." Valz v. Sheepshead Bay Bungalow Corp., 249 N.Y. 122, 134, 163 N.E. 124 (1928). In Valz, the statute directed publication of the supplemental summons and complaint on non-resident defendants in two newspapers. The Court ordered the publication in two specific newspapers. By inadvertence, the plaintiff published in a newspaper not specified in the order. The mortgage foreclosure went to sale on default. Thereafter, the Court issued a nunc pro tunc order permitting publication in the newspapers used by the plaintiff. Subsequently, the non-residents moved to vacate the sale for improper publication. The Court of Appeals held that the expectations of the statute were met and the original defect in the publication in the wrong newspaper was a mere irregularity and not a jurisdictional defect.

It is important to note that lack of jurisdiction is an issue that ordinarily may be raised without regard to time limits absent a waiver. Matter of Fry v. Tarrytown, 89 N.Y.2d 714, 658 N.Y.S.2d 205, 680 N.E.2d 578 (1997); CPLR 5015(a)(4); Siegel, Practice Commentaries to CPLR C:5015:3, McKinney's Consol. Laws of New York, Book 7B (CPLR 4507 to 5100), p. 465. CPLR 2003 imposes a one-year time limit on raising issues with respect "to the notice, time or manner of such sale." The imposition of a time limit is strong evidence that a defect concerning publication is an irregularity and not jurisdictional.

At bar, there has been no proof offered that the publication in the Reporter Dispatch, rather than its affiliate published in Yonkers, the Herald Statesman, prejudiced the parties or prevented bidders from attending the sale. The Court holds that such failure to publish in strict accordance with RPAPL § 231(2)(a) is a mere irregularity and is not a ground of itself to vacate the sale. The Court is aware of the unreported decision of Justice Colabella in State Street Bank & Tr. Co. v. Armento (Supreme Ct. Westchester, Index No. 14798/95, decided March 31, 1997) which directed that a republication occur prior to the sale in the Herald...