DLJ MORTGAGE v. 44 BRUSHY NECK

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Docket Number

Nos. 2006-11032, 2006-11034, 2007-04081.

Attorney(S)

George O. Guldi, Westhampton Beach, N.Y., for appellant. Shapiro DiCaro, LLP, Rochester, N.Y. (Robert S. Leni of counsel), for respondent.

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Smart Summary

Factual and Procedural Background

This case arises from an action to foreclose a mortgage involving the appellant, 44 Brushy Neck, Ltd., and the respondent, DLJ Mortgage Capital, Inc. During the pendency of the action, the mortgagor Walter E. Guldi died. The Supreme Court, Suffolk County, granted the plaintiff summary judgment on the complaint, allowed the plaintiff to discontinue the action against the deceased mortgagor, denied the appellant's cross motion to stay the action pending substitution of a personal representative for the deceased, and confirmed a referee’s report finding that $1,494,848.61 was due under the mortgage and promissory note. The appellant appealed from these orders and the judgment. The case proceeded through the Appellate Division of the Supreme Court of New York, Second Department.

Legal Issues Presented

Whether the Supreme Court properly granted summary judgment to the plaintiff on the foreclosure complaint.
Whether the plaintiff was entitled to discontinue the action against the deceased mortgagor without substitution of a personal representative.
Whether the court erred in denying the appellant’s cross motion to stay the action pending substitution of the estate representative.
Whether the judgment should be modified to remove the deceased mortgagor’s name from the caption.
Whether the appellant’s motion to vacate the judgment based on alleged misrepresentation by the plaintiff was properly denied.

Arguments of the Parties

The opinion does not contain a detailed account of the parties' legal arguments.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
Matter of Aho, 39 NY2d 241, 248	Termination of right of direct appeal upon entry of judgment	Dismissed the appeal from the order dated October 11, 2006, because the right of direct appeal ended with the judgment entry; issues were reviewed on appeal from the judgment.
Matter of Einstoss, 26 NY2d 181, 189	Death of a party divests court jurisdiction until personal representative is substituted	Recognized the general rule but noted exceptions where the demise does not affect merits, allowing continuation without substitution.
Bova v Vinciguerra, 139 AD2d 797, 799	Exception to stay pending substitution when party’s death does not affect merits	Supported the court’s decision not to stay the action despite the mortgagor’s death.
Alaska Seaboard Partners Ltd. Partnership v Grant, 20 AD3d 436, 437	Further support for exception to strict stay requirement pending substitution	Reinforced the court’s discretion in continuing the case without substitution.
Federal Natl. Mtge. Assn. v Connelly, 84 AD2d 805	Mortgagor who conveyed all interest is not necessary party to foreclosure absent deficiency judgment	Supported plaintiff's right to discontinue action against deceased mortgagor since no deficiency judgment was sought.
Verdrager v Verdrager, 230 AD2d 786, 787	Authority for modifying judgment caption under CPLR 5019(a)	Justified modifying the judgment to remove the deceased mortgagor’s name from the caption.
Green v Morris, 156 AD2d 331	Supporting authority for correction of judgment caption	Further supported the modification of the judgment caption.
Young v Casabonne Bros., 145 AD2d 244, 248	Additional precedent for correcting judgment caption	Used to support the court’s modification of the judgment caption.
Di Prospero v Ford Motor Co., 105 AD2d 479, 480	Precedent allowing modification of judgment caption for clerical errors	Applied to justify conforming the judgment caption to the court’s prior order.

Court's Reasoning and Analysis

The court dismissed the appeal from the October 11, 2006 order because the right of direct appeal ended with the entry of judgment, but reviewed the issues on appeal from the judgment. The court held that the plaintiff properly discontinued the action against the deceased mortgagor because the mortgagor had conveyed all interest in the property to the appellant, and the plaintiff waived seeking a deficiency judgment. Although the general rule is that death of a party divests jurisdiction until a personal representative is substituted, an exception exists where the death does not affect the merits of the case, permitting continuation without substitution. The court found this exception applicable here. The judgment was modified to remove the deceased mortgagor’s name from the caption to conform with the prior order directing such removal. The appellant’s remaining contentions, including the motion to vacate the judgment based on alleged misrepresentation, were found to be without merit.

Holding and Implications

DISMISSED in part and AFFIRMED as modified in part.

The appeal from the order dated October 11, 2006 was dismissed for lack of direct appeal rights post-judgment entry. The judgment was modified to remove the deceased mortgagor’s name and affirmed in all other respects. The order dated March 16, 2007 denying the appellant’s motion to vacate was affirmed. The plaintiff was awarded costs. This decision directly affects the parties by confirming the foreclosure judgment and permitting discontinuance against the deceased mortgagor without substitution, but it does not establish new precedent beyond applying existing legal principles regarding substitution and foreclosure procedure.

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DLJ MORTGAGE CAPITAL, INC., Respondent, v. 44 BRUSHY NECK, LTD., Appellant, et al., Defendants.

Ordered that the appeal from the order dated October 11, 2006 is dismissed; and it is further,

Ordered that the judgment is modified, on the law, by deleting the name Walter E. Guldi from the caption thereof; as so modified, the judgment is affirmed insofar as appealed from; and it is further,

Ordered that the order dated March 16, 2007 is affirmed insofar as appealed from; and it is further,

Ordered that one bill of costs is awarded to the plaintiff.

The appeal from the order dated October 11, 2006 must be dismissed because the right of direct appeal therefrom terminated with the entry of judgment in the action ( see Matter of Aho, 39 NY2d 241, 248). The issues raised on the appeal from the order dated October 11, 2006, are brought up for review and have been considered on the appeal from the judgment ( see CPLR 5501 [a] [1]).

The Supreme Court properly permitted the plaintiff to discontinue the action against the mortgagor, who died during the pendency of the action. As a general rule, if a cause of action survives the death of a party, such death divests the court of jurisdiction until a duly appointed personal representative is substituted for the deceased party ( see Matter of Einstoss, 26 NY2d 181, 189). Nevertheless, "where a party's demise does not affect the merits of a case . . . there is no need for strict adherence to the requirement that the proceedings be stayed pending substitution" ( Bova v Vinciguerra, 139 AD2d 797, 799; see Alaska Seaboard Partners Ltd. Partnership v Grant, 20 AD3d 436, 437).

In the instant case, after receiving notice of the mortgagor's death, the plaintiff elected to waive its right to seek a deficiency judgment against the mortgagor and chose to discontinue the action against him. The rule is that a mortgagor who has made an absolute conveyance of all his interest in the mortgaged premises, including his equity of redemption, is not a necessary party to foreclosure, unless a deficiency judgment is sought ( see Federal Natl. Mtge. Assn. v Connelly, 84 AD2d 805). In a deed recorded in June 2004 the deceased mortgagor duly conveyed all his interest in the subject property to the appellant. Therefore, inasmuch as the plaintiff elected not to seek a deficiency judgment, it was entitled to discontinue the action against the mortgagor and to remove his name from the caption of the action.

The amended caption set forth in the judgment of foreclosure and sale erroneously included the deceased mortgagor's name, despite the directive contained in the order dated October 11, 2006 that the name be deleted. We therefore modify the judgment to conform the caption to the order dated October 11, 2006 ( see CPLR 5019 [a]; Verdrager v Verdrager, 230 AD2d 786, 787; Green v Morris, 156 AD2d 331; Young v Casabonne Bros., 145 AD2d 244, 248; Di Prospero v Ford Motor Co., 105 AD2d 479, 480).

The appellant's remaining contention is without merit.