Wells Fargo Bank N.A. v. Podeswik

• Decision Date: 13 February 2014
• Citation: 981 N.Y.S.2d 230,2014 N.Y. Slip Op. 01045,115 A.D.3d 207
• Parties: WELLS FARGO BANK N.A., Successor by Merger to Wells Fargo Bank Minnesota, N.A., as Trustee Formerly Known as Norwest Bank Minnesota, N.A., as Trustee for the Delta Funding Home Equity Loan Asset–Backed Certificate Series 1999–2, Plaintiff–Respondent, v. David J. PODESWIK, as Administrator of the Estate of Kathryn Podeswik, Deceased, Delta Funding Corporation, David Jay, Bob Jay, Les Paulson, Lisa Loomis, Michelle Winter and Amanda Roberts, Defendants–Appellants. (Action No. 1.) Hilary Lesniak, as Administrator of the Estate of Kathryn Podeswik, Deceased, Plaintiff–Appellant, v. Wells Fargo Bank N.A., Successor by Merger to Wells Fargo Bank Minnesota, N.A., as Trustee Formerly Known as Norwest Bank Minnesota, N.A., as Trustee for the Delta Funding Home Equity Loan Asset–Backed Certificate Series 1999–2, Delta Funding Corporation, Ocwen Loan Servicing LLC, American Security Insurance Co., and Peter T. Roach, Esq., Defendants–Respondents, et al., Defendants. (Action No. 2.).
• Court: New York Supreme Court — Appellate Division

115 A.D.3d 207

981 N.Y.S.2d 230

2014 N.Y. Slip Op. 01045

WELLS FARGO BANK N.A., Successor by Merger to Wells Fargo Bank Minnesota, N.A., as Trustee Formerly Known as Norwest Bank Minnesota, N.A., as Trustee for the Delta Funding Home Equity Loan Asset–Backed Certificate Series 1999–2, Plaintiff–Respondent,

v.David J. PODESWIK, as Administrator of the Estate of Kathryn Podeswik, Deceased, Delta Funding Corporation, David Jay, Bob Jay, Les Paulson, Lisa Loomis, Michelle Winter and Amanda Roberts, Defendants–Appellants. (Action No. 1.)

Hilary Lesniak, as Administrator of the Estate of Kathryn Podeswik, Deceased, Plaintiff–Appellant,

v.Wells Fargo Bank N.A., Successor by Merger to Wells Fargo Bank Minnesota, N.A., as Trustee Formerly Known as Norwest Bank Minnesota, N.A., as Trustee for the Delta Funding Home Equity Loan Asset–Backed Certificate Series 1999–2, Delta Funding Corporation, Ocwen Loan Servicing LLC, American Security Insurance Co., and Peter T. Roach, Esq., Defendants–Respondents, et al., Defendants. (Action No. 2.).

Supreme Court, Appellate Division, Fourth Department, New York.

Feb. 13, 2014.

Laurie A. Lesniak, White Plains, for Plaintiff–Appellant.

Harris, Chesworth, O'Brien, Johnstone & Welch, LLP, Rochester (Letty L. Laskowski of Counsel), for Plaintiff–Respondent and Defendant–Respondent Wells Fargo Bank N.A., Successor by Merger to Wells Fargo Bank Minnesota, N.A., as Trustee Formerly Known as Norwest Bank Minnesota, N.A., as Trustee for the Delta Funding Home Equity Loan Asset–Backed Certificate Series 1999–2 and for Defendant–Respondent Ocwen Loan Servicing LLC.

Kenney Shelton Liptak Nowak LLP, Buffalo (Robert A. Crawford, Jr., of Counsel), for Defendant–Respondent American Security Insurance Co.

PRESENT: CENTRA, J.P., FAHEY, LINDLEY, SCONIERS, and WHALEN, JJ.

CENTRA, J.P.:

On this appeal, we must decide whether to vacate an order that modified a default judgment of foreclosure by including an additional parcel. We conclude, inter alia, that plaintiff has made a clear showing of entitlement to such vacatur.

Facts and Procedural History

These two actions have a lengthy factual and procedural history. In March 1997, Kathryn Podeswik (decedent) purchased two adjacent parcels of real property in Herkimer County; Parcel No. 1 is improved by a two-family dwelling, and Parcel No. 2 is improved by a four-family dwelling. Both parcels were used as rental property. On June 2, 1999, which was approximately one year prior to her death, decedent executed a note and mortgage in the amount of $60,000 covering Parcel No. 1 in favor of the predecessor of Wells Fargo Bank NA (Wells Fargo), plaintiff in action No. 1 and a defendant in action No. 2. The mortgage description shows that the mortgage encumbered only Parcel No. 1. Also on that date, decedent executed a second note and second mortgage in the amount of $31,700 covering Parcel No. 2 in favor of Wells Fargo's predecessor. Although the mortgages list the address of both properties as “124–128 East Main Street,” Parcel No. 1 and Parcel No. 2 were defined by different metes and bounds, and the two mortgages were recorded separately in the Herkimer County liber of mortgages.

Decedent died intestate on May 6, 2000, and her husband, David J. Podeswik, a defendant in action No. 2, was named administrator of her estate. In June 2005, Podeswik ceased making payments on the first mortgage, prompting Wells Fargo to commence an action seeking to foreclose the first mortgage in late 2006 or early 2007 (action No. 1). The complaint, notice of pendency, and attached schedule A listed only the first mortgage and Parcel No. 1. Decedent's estate (Estate) was named as a defendant and defaulted in the action. Supreme Court (Daley, J.) issued a default judgment of foreclosure in October 2007, and Wells Fargo purchased the property at the subsequent public auction.

In the spring of 2007, Podeswik was removed as administrator of the Estate, and Hilary Lesniak, the plaintiff in action No. 2, was appointed administrator. Lesniak and her attorney began communicating with Wells Fargo about the first and second mortgages in April 2007, and those communications continued until at least May 2009. The Estate commenced action No. 2 against Wells Fargo and others in November 2009 alleging, inter alia, tortious interference with contract. According to the Estate, despite the fact that no foreclosure action had been commenced with respect to Parcel No. 2, Wells Fargo had notified the tenants of that property around December 2006 that they needed to vacate the premises because of a foreclosure action. Around February 2007, the tenants vacated the premises and, shortly thereafter, the pipes in the abandoned residence froze and burst, causing extensive damage.

Meanwhile, it appears from the record that, when Wells Fargo sought title insurance following its purchase at the auction, it became aware that the judgment of foreclosure covered only Parcel No. 1. Wells Fargo contacted Lesniak's attorney and requested that the Estate execute a deed in lieu of foreclosure for Parcel No. 2 to correct an “error in the foreclosure action.” Wells Fargo indicated that, if it did not receive the deed, it would move to reopen the foreclosure action to amend it by including Parcel No. 2. Lesniak did not execute the deed and, in August 2009, before the Estate commenced action No. 2, Wells Fargo moved for a nunc pro tunc order in action No. 1 to amend the judgment of foreclosure (nunc pro tunc motion). Despite having communicated with Lesniak and her attorney for over two years, Wells Fargo served the notice of motion only on Podeswik, who was still the Estate's representative of record with respect to the foreclosure action; Lesniak was not aware of the motion.

In the nunc pro tunc motion, Wells Fargo sought “an Order deeming the pleadings, lis pendens, judgment of foreclosure and sale and all other documents filed in the instant foreclosure action corrected nunc pro tunc, pursuant to CPLR [ ]2001 and in the interests of justice, to correct a recurring error in the legal description stated.” In the affirmation in support of the motion, Wells Fargo's attorney asserted that “the Property described [in the first mortgage] by its common address, contains two parcels, Parcel # 1 and Parcel # 2.” After receiving no opposition, Supreme Court (Daley, J.) granted the motion, and its order thereon was entered on September 21, 2009 (nunc pro tunc order). The nunc pro tunc order states that the “mortgage instrument, pleadings, lis pendens, judgment of foreclosure and sale and all other documents filed in the instant foreclosure action are deemed to contain, nunc pro tunc, the correct Schedule A–Legal Description annexed to this Order and made a part hereof.” The “correct Schedule A” contains the legal description of both Parcel No. 1 and Parcel No. 2.

The Estate now appeals from an order and judgment of Supreme Court (Gall, J.) deciding various motions related to the two actions. As relevant to this appeal, the court denied the Estate's motion pursuant to CPLR 5015 seeking, inter alia, to vacate the nunc pro tunc order in action No. 1. The court also granted the motion of Peter T. Roach, Esq., a defendant in action No. 2, for summary judgment seeking dismissal of the complaint against him in action No. 2 and sua sponte dismissed the complaint against all defendants in action No. 2. We conclude that the order and judgment insofar as appealed from should be reversed.

Analysis

I

We first address the Estate's motion pursuant to CPLR 5015 to vacate the nunc pro tunc order issued in action No. 1. Although the Estate did not specify any particular subdivision of that statutory provision as a ground for its motion, we conclude based on the arguments made in support of the motion that the Estate was seeking vacatur pursuant to CPLR 5015(a)(3) or (4), and we agree with the Estate that the nunc pro tunc order should have been vacated on those grounds.

First, we agree with the Estate that the court (Gall, J.) should have granted the motion to vacate the nunc pro tunc order because the court (Daley, J.) was without subject matter jurisdiction to issue the nunc pro tunc order ( seeCPLR 5015[a][4] ). Wells Fargo moved for the nunc pro tunc order pursuant to CPLR 2001, which provides that a “court may permit a mistake, omission, defect or irregularity ... to be corrected, upon such terms as may be just, or, if a substantial right of a party is not prejudiced, the mistake, omission, defect or irregularity shall be disregarded.” The court erred in granting the nunc pro tunc motion because Wells Fargo was not seeking to correct a mere ministerial or clerical mistake ( see Meenan v. Meenan, 103 A.D.3d 1277, 1278–1279, 960 N.Y.S.2d 285). We conclude that, based on its discussions with Lesniak's attorney and, indeed, based on the plain language of the two mortgages it held, Wells Fargo either was aware or should have been aware that the judgment of foreclosure concerned only Parcel No. 1, and that it had failed to commence a foreclosure action with respect to Parcel No. 2. The complaint in action No. 1 clearly sets forth that Wells Fargo was foreclosing only the first mortgage; there is nothing in the complaint or lis pendens in action No. 1 referencing the second mortgage or Parcel No. 2. Rather than commencing a foreclosure action with respect to Parcel No. 2, Wells Fargo improperly sought to amend the judgment of foreclosure by adding an entirely separate parcel, and made representations to the court that it merely sought to correct a simple clerical mistake. In issuing the nunc pro tunc order, the court made a substantive amendment to the judgment of foreclosure without jurisdiction ( see Helmer v. McKerrow, 207 A.D.2d 967, 968, 617 N.Y.S.2d 417;cf. Key Bank Natl. Assn. v. Stern, 14 A.D.3d 656, 657, 789 N.Y.S.2d 297). Without jurisdiction, “the default [nunc pro tunc order] is a nullity and must be vacated” ( 2837 Bailey...