In re Cnty. of Albany

• Decision Date: 27 June 2022
• Docket Number: Index No. 3088-12
• Parties: In the MATTER OF the "In Rem" Delinquent Tax Lien Foreclosure Proceeding Brought Pursuant to Article 11, Title 3 of the Real Property Tax Law by the COUNTY OF ALBANY, New York, Tax District, Those Parcels of Real Property described in the List of Delinquent Taxes filed on June 11, 2012 covering the City of Albany, Albany County.
• Court: New York County Court

76 Misc.3d 574
173 N.Y.S.3d 410

In the MATTER OF the "In Rem" Delinquent Tax Lien Foreclosure Proceeding Brought Pursuant to Article 11, Title 3 of the Real Property Tax Law by the COUNTY OF ALBANY, New York, Tax District, Those Parcels of Real Property described in the List of Delinquent Taxes filed on June 11, 2012 covering the City of Albany, Albany County.

Index No. 3088-12

County Court, New York, Albany County.

Decided on June 27, 2022

173 N.Y.S.3d 411

Eugenia Condon, Esq., County Attorney, Gregory A. Rutnik, Esq., of Counsel, Attorney for Petitioner, Albany

Nolan Heller Kauffman, LLP, John Hartzell, Esq., Attorney for Respondent The Phoenix of Albany, Albany

Stacy L. Pettit, J.

173 N.Y.S.3d 412

76 Misc.3d 575

This is an in rem tax lien foreclosure proceeding pursuant to article 11, title 3 of the Real Property Tax Law brought by petitioner County of Albany, New York, Tax District. This proceeding was commenced by a petition and notice of foreclosure filed October 8, 2015 for parcels of real property on the list of delinquent taxes filed June 11, 2012, for the City of Albany. Among the parcels included on the 2012 list of delinquent taxes were 143 Montgomery Street and Centre Street, collectively known as the Central Warehouse building in Albany. At the time this proceeding was commenced, the record owner of the subject parcels was Sunmark Federal Credit Union. Sunmark failed to file an answer or redeem the subject parcels prior to January 11, 2016, the deadline set forth in the petition and notice of foreclosure (see RPTL 1124 [3] ). Accordingly, petitioner was entitled to seek a default judgment of foreclosure with respect to the subject parcels as of January 2016 (see RPTL 1123 [8] ). Instead, however, petitioner withdrew the subject parcels, and others, from the foreclosure proceeding in October 2017, and shortly thereafter obtained a default judgment and a severance for the remaining parcels on the 2012 list of delinquent taxes which had not been redeemed or withdrawn. In January 2022, petitioner reinstated the subject parcels to the foreclosure proceeding and, in February 2022, sought and was granted a default final judgment of foreclosure from this Court.

The Phoenix of Albany, LLC ("Phoenix"), an entity that acquired the subject parcels from Sunmark in August 2017 — after Sunmark had defaulted in this foreclosure proceeding and petitioner was entitled to a default judgment — now moves this Court for an order pursuant to RPTL 1131 and CPLR 5015

76 Misc.3d 576

vacating the default judgment of foreclosure dated and entered February 15, 2022. Petitioner has opposed the motion and it is now submitted for decision.

An interested person seeking to vacate a default judgment must show a reasonable excuse for the default and a meritorious defense to the foreclosure petition (see CPLR 5015 [a] [1] ; Matter of Clinton County [Miner] , 39 A.D.3d 1015, 1016, 833 N.Y.S.2d 715 [3d Dept. 2007] ). The relevant default in this proceeding occurred when Sunmark failed to file and serve a verified answer or redeem the subject parcels before January 11, 2016. Phoenix offers no explanation for that default and therefore vacatur of the default judgment is not warranted. Even if Phoenix established a reasonable excuse for the default, it has failed to provide a meritorious defense to the foreclosure proceeding (see Matter of County of Albany [Bowles] , 91 A.D.3d 1132, 1133, 936 N.Y.S.2d 763 [3d Dept. 2012] ; Matter of Clinton County [Miner] , 39 A.D.3d at 1016, 833 N.Y.S.2d 715 ). Phoenix's managing member, Evan Blum, submitted an affidavit stating that he is the owner of a note and mortgage involving real property in Pennsylvania and he is under contract to sell the same for $700,000, an amount sufficient to redeem the subject parcels. He has not established that he is actually in possession of sufficient funds to redeem the subject parcels and, in any event, his claim that Phoenix will be able to pay the delinquent tax liens if afforded more time is not a defense to the foreclosure proceeding (see NYCTL 2015-A Trust v. Diffo Props. Corp. , 171 A.D.3d 538, 539, 98 N.Y.S.3d 172 [1st Dept. 2019], lv dismissed 34 N.Y.3d 1198, 123 N.Y.S.3d 565, 146 N.E.3d 530 [2020] ). The time for a property to be redeemed is set by statute and, in this case, expired in January 2016. Petitioner may — but is not required — to accept

173 N.Y.S.3d 413

payment after the expiration of the redemption period (see RPTL 1110 [2] ; Matter of City of Schenectady [Permaul] , 201 A.D.3d 1, 14 n. 3, 158 N.Y.S.3d 279 [3d Dept. 2021], appeal dismissed, lv to appeal denied 38 N.Y.3d 994, 168 N.Y.S.3d 2, 188 N.E.3d 128 [2022] [referring to "municipalities ... settling pending RPTL article 11 proceedings by accepting late tax payments" [emphasis added]; Matter of Clinton County [Fortunatus] , 299 A.D.2d 774, 775, 751 N.Y.S.2d 81 [2002] lvs dismissed 99 N.Y.2d 610, 757 N.Y.S.2d 820, 787 N.E.2d 1166 [2003], 100 N.Y.2d 574, 764 N.Y.S.2d 382, 796 N.E.2d 473 [2003] ["barring a timely application and subsequent order vacating the default judgment of foreclosure, a tender of the past due taxes following entry of the judgment of foreclosure was untimely"]; see also Miner v. Clinton County, N.Y. , 541 F.3d 464, 474 [2d Cir. 2008], cert denied 556 U.S. 1128, 129 S.Ct. 1625, 173 L.Ed.2d 996 [2009] ["New York law expressly permits counties to establish a deadline for redemption and to reject offers of payment after that date"]).

76 Misc.3d 577

Phoenix asserts that this Court should vacate the default judgment because petitioner failed to comply with several provisions of the RPTL regarding the reinstatement of withdrawn foreclosure proceedings. Assuming, without deciding, that Phoenix has standing to bring this motion,¹ the Court nevertheless concludes that Phoenix's argument lacks merit.

Phoenix insists that, when petitioner decided to reinstate the foreclosure proceedings for the subject parcels, petitioner was required to: (1) file the certificates of reinstatement of the proceeding against both the subject parcels with the County Clerk within ten days of issuance (see RPTL 1138 [4] [c] ); (2) file a petition of foreclosure to reinstate the foreclosure proceeding (see RPTL 1138 [4] [d] ); (3) publish notice setting a redemption deadline at least three months following the date of the first publication of the notice (see RPTL 1124 ); and (4) mail notice of the new foreclosure petition to Phoenix (see RPTL 1125 ). Phoenix argues that petitioner's failure to comply with these provisions of the RPTL resulted in Phoenix not receiving notice of the reinstatement and not being able to exercise its right to redeem the subject parcels. Phoenix contends that the affidavit of Blum and the docket for this proceeding confirm that Phoenix did not receive notice of the filing of the certificates of reinstatement, or the additional petition purportedly required by

76 Misc.3d 578

173 N.Y.S.3d 414

RPTL 1138 and, therefore, has established a reasonable excuse for failing to timely appear and redeem the subject parcels.

First, with respect to the filing of the certificates of reinstatement, the Court is not convinced that petitioner failed to comply with RPTL 1138. RPTL 1138 addresses reinstatement of a withdrawn foreclosure proceeding. If an enforcing officer determines that a parcel is no longer eligible for withdrawal from foreclosure, the enforcing officer shall reinstate the withdrawn foreclosure proceeding (see RPTL 1138 [4] [a] ). "The enforcing officer shall issue a certificate of reinstatement setting forth the reasons for the reinstatement of the proceeding" ( RPTL 1138 [4] [b] ). "If the parcel has been marked ‘withdrawn’ on a list of delinquent taxes that has been filed pursuant to [ RPTL 1122 ], the enforcing officer shall file a copy of the certificate with the county clerk within ten business days from the issuance of the certificate" ( RPTL 1138 [4] [c] ).

The certificates of reinstatement for these parcels are dated January 14, 2022 and were purportedly filed that same date. Phoenix provides two printouts of the docket for this proceeding. The first, printed on February 9, 2022,² does not appear to include the two certificates of reinstatement for the subject parcels, although it includes documents filed after January 14, 2022 (specifically, certificates of reinstatement for other parcels on this delinquent tax list which were filed on January 27, 2022). The second docket, printed on March 3, 2022, does appear to include the certificates for the subject parcels and indicates they were filed on January 14, 2022. Counsel for Phoenix avers that he personally visited the County Clerk's office on February 23 and 24, 2022, to inspect the files for this proceeding yet did not uncover the January 14, 2022 certificates of reinstatement. Also included with Phoenix's papers is a copy of the certificate of reinstatement for one of the two parcels which was attached as an exhibit to the affidavit of regularity submitted by petitioner with its proposed judgment of foreclosure. The certificate of reinstatement is dated January 14, 2022 and bears a stamp of the County Clerk's office indicating that it was received by that office on January 14, 2022 at 2:26 pm. Additionally, the assistant county attorney

76 Misc.3d 579

averred in his affidavit of regularity that the "parcels were both reinstated to this proceeding ... by Certificates of Reinstatement dated January 14, 2022 and filed with the Albany County Clerk on January 14, 2022."

Based on the facts provided, it appears that petitioner complied with the relevant provisions of RPTL 1138...