Court Denies Lender’s Motion Seeking Appointment Of Receiver And Denies Its Motion For Summary Judgment
In an action pending in the Nassau County Supreme Court, Berkman, Henoch defeated: (i) the lender’s application for the appointment of a temporary receiver during the pendency of the foreclosure action; (ii) and the lender’s subsequent motion for summary judgment.
Simultaneous with the commencement of its foreclosure action against a south shore beach club, Carver Federal Savings Bank, in reliance on the language of the loan documents, sought the appointment of a temporary receiver. In denying Carver’s request, the Supreme Court, Nassau County (Murphy, J.S.C.) observed that because the parties’ loan documents did not contain the required explicit language set forth in Section 254 of the Real Property Law, Carver was not entitled to the appointment of a receiver.
The Court then considered if Carver was entitled to the appointment of a receiver pursuant to CPLR 6401, which permits such an appointment when the real property at issue is in danger of being lost, damaged or destroyed. The Court in again denying Carver’s request, agreed with Berkman Henoch’s contention that the evidence presented failed to “show that the subject property was in in danger of irreparable loss or material injury warranting such an extreme remedy.”
The Court also denied Carver’s subsequent motion for summary judgment. In concluding that issues of fact exist, the Court explained that it was unclear if the borrowers “were actually behind in payments when the debt was accelerated. Berkman Henoch successfully argued that “insurance proceeds, which were paid to [Carver] to repair the premises, should have been [and were not] credited against the amounts due by the [borrower], since the [borrower] made the repairs using its own fund[s].”
Additionally, the Court noted that during a conference with the counsel, Berkman Henoch indicated that the beach club’s members were neither named in the complaint nor served with the complaint. As a result, the Court determined that these members/renters are necessary parties that did not receive “fair notice” of the complaint and/or the foreclosure action.
The beach club was represented by Bruce J. Bergman, Esq. (author of the four-volume treatise, Bergman on New York Mortgage Foreclosures), Martin Valk, Esq. and Nicholas S. Tuffarelli, Esq. – members of Berkman Henoch’s Foreclosure and Litigation Departments.
Copies of the Court’s Decision and Order rejecting Carver’s application to appoint a temporary receiver and Short Form Order denying Carver’s motion for summary judgment: