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IN THIS FORECLOSURE ACTION, THE JUDGE SHOULD HAVE FIRST DETERMINED WHETHER ANY DISTRIBUTEES OF THE DECEASED MORTGAGORS WERE NECESSARY PARTIES [RPAPL 1311 (1)] AND, IF SO, SUMMON THEM PURSUANT TO CPLR 1001 [b]; THE MOTION TO DISMISS FOR FAILURE TO JOIN NECESSARY PARTIES SHOULD NOT HAVE BEEN GRANTED (SECOND DEPT).

The Second Department, reversing Supreme Court, determined there were questions of fact whether any distributees of the deceased mortgagors were necessary parties in this foreclosure action. The motion to dismiss for failure to join necessary parties should not have been granted. The court should have determined whether joinder of any parties was required and then summon them pursuant to CPLR 1001 [b]:

Pursuant to RPAPL 1311(1), “necessary defendants” in a mortgage foreclosure action include, among others, “[e]very person having an estate or interest in possession, or otherwise, in the property as tenant in fee, for life, by the curtesy, or for years, and every person entitled to the reversion, remainder, or inheritance of the real property, or of any interest therein or undivided share thereof, after the determination of a particular estate therein.”

“In certain circumstances, the estate of the mortgagor is not a necessary party to a mortgage foreclosure action” … . In particular, “where a mortgagor/property owner dies intestate and the mortgagee does not seek a deficiency judgment, generally a foreclosure action may be commenced directly against the distributees,” in whom title to the real property automatically vests … .

Here, the plaintiff did not seek a deficiency judgment. However, questions of fact existed, which should have been resolved by the Supreme Court, as to whether any distributees of the deceased mortgagors, other than the defendants herein, retained an interest in the property such that they were necessary parties to the foreclosure action. Further, to the extent that there were such necessary parties to the action, dismissal of the complaint was not the proper remedy; rather, the property remedy in such instance is to direct the joinder of those parties (see CPLR 1001[b] … . NRZ Pass-Through Trust IV v Tarantola, 2021 NY Slip Op 01423, Second Dept 3-10-21

 

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THE FORMER SURROGATE, NOW IN PRIVATE PRACTICE, CANNOT REPRESENT A CLIENT IN A CASE WHICH WAS BEFORE HER AS SURROGATE (THIRD DEPT).

The Third Department, reversing Surrogate’s Court, over a two-justice dissent, determined the former Surrogate, who is now in private practice, cannot represent a client in a proceeding which was before her as Surrogate:

Respondent contends that Surrogate’s Court erred in not granting her motion to disqualify petitioner’s counsel. We agree. Just as a judge may not preside over a case that he or she was previously involved in as an attorney (see Judiciary Law § 14; 22 NYCRR 100.3 [E] [1] [b] [i]), an attorney may not appear for a client in a case that he or she previously presided over as a judge (see Judiciary Law § 17; … see also Rules of Professional Conduct [22 NYCRR 1200.0] rule 1.12 [a]). To that end, Judiciary Law § 17 provides that a “former judge or surrogate shall not act as attorney or counsellor in any action, claim, matter, motion or proceeding, which has been before him [or her] in his [or her] official character.” This prohibition is “absolute” and “establishes a bright-line disqualification rule” … . By our reading, this statute clearly operates to disqualify petitioner’s counsel — who previously presided as the Surrogate over the probate of decedent’s will and the issuance of letters testamentary and letters of trusteeship to respondent — from now representing petitioner in his claims against respondent involving the same estate and the same trust … . To the extent that Surrogate’s Court determined that Rules of Professional Conduct (22 NYCRR 1200.00) rule 1.12 (a) would permit the former Surrogate to represent petitioner in this matter — a finding with which we do not agree — this rule cannot be relied upon to permit a representation agreement that is otherwise precluded by Judiciary Law § 17. Matter of Gordon, 2021 NY Slip Op 01294, Third Dept 3-4-21

 

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A STIPULATION OF SETTLEMENT FOR WHICH A JUDGMENT WAS ENTERED AFTER DECEDENT’S DEATH MAY NOT BE ENTERED IN DECEDENT’S NAME PURSUANT TO CPLR 5016 (d); THEREFORE THE JUDGMENT IS NOT ENTITLED TO PRIORITY IN SETTLING THE ESTATE (THIRD DEPT).

The Third Department, over a dissent, determined a stipulation of settlement in favor of decedent which was the basis of a judgment entered after decedent’s death cannot, pursuant to CPLR 5016 (d), be entered in his or her own name, and therefore is not entitled to priority in settling the estate:

An “accepted offer to compromise pursuant to [CPLR] 3221” (CPLR 5016 [d]) refers to a precise mechanism, which allows a party against whom a claim is asserted, 10 days before trial, to “serve upon the claimant a written offer to allow judgment to be taken against him [or her] for a sum or property or to the effect therein specified, with costs then accrued. If within [10] days thereafter the claimant serves a written notice that he [or she] accepts the offer, either party may file the summons, complaint and offer, with proof of acceptance, and thereupon the clerk shall enter judgment accordingly” (CPLR 3221). Here, there was no written offer or written acceptance; rather, the stipulation occurred on the record before Supreme Court, and the filing in the Clerk’s Office occurred after petitioner secured the judgment and order from Supreme Court … .

We decline to adopt the broad interpretation of CPLR 5016 (d), as petitioner urges … . The Legislature, in creating CPLR 5016 (d), set forth three distinct situations where a post-mortem judgment may be entered against the decedent in his or her own name, thus bestowing priority to the creditor. None of these three provisions was met here. Matter of Uccellini, 2021 NY Slip Op 01303, Third Dept 3-4-21

 

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THE ESTATE IS NOT A NECESSARY PARTY IN THIS FORECLOSURE ACTION; THE REFEREE’S FINDINGS WERE BASED UPON UNPRODUCED BUSINESS RECORDS (SECOND DEPT).

The Second Department, reversing Supreme Court, determined the estate was not a necessary party in this foreclosure action and the referee’s finding were based on unproduced business records:

“The rule is that a mortgagor who has made an absolute conveyance of all his [or her] interest in the mortgaged premises, including his [or her] equity of redemption, is not a necessary party to foreclosure, unless a deficiency judgment is sought on his [or her] bond” … . Here, [decedent] conveyed all of the interest in the subject property prior to his death, and prior to the commencement of the instant action. Moreover, the plaintiff moved to amend the complaint to remove any language seeking a deficiency, and the court granted that motion.

However, “the referee’s findings with respect to the total amount due upon the mortgage were not substantially supported by the record inasmuch as the computation was premised upon unproduced business records” … . Federal Natl. Mtge. Assn. v Home & Prop. Works, LLC, 2021 NY Slip Op 01031, Second Dept 2-17-21

 

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AN AMENDED STIPULATED ORDER CONCERNING THE WIFE’S INTEREST IN THE HUSBAND’S LIFE INSURANCE AND 401k IN THE CONTEXT OF AN ONGOING DIVORCE ACTION, ISSUED AFTER THE HUSBAND’S DEATH, WAS WITHOUT EFFECT EVEN THOUGH THE ORGINAL STIPULATED ORDER WAS ISSUED ONE DAY BEFORE THE HUSBAND’S DEATH; THE DIVORCE ACTION ABATED UPON THE HUSBAND’S DEATH (FOURTH DEPT).

The Fourth Department, reversing Supreme Court, determined that the death of the husband abated the divorce action and an “amended stipulated order” issued after the husband’s death concerning the wife’s interest in the husband’s insurance policy and 401k account was without effect. The original stipulated order had been issued one day before the husband’s death:

It is well settled that “where one party to a divorce action dies prior to the rendering of a judicial determination which dissolves or terminates the marriage, the action abates inasmuch as the marital relationship between the parties no longer exists” … . “Although an exception to this rule exists where the court has made a final adjudication of divorce but has not performed ‘the mere ministerial act of entering the final judgment,’ ” that exception does not apply here inasmuch as the court had merely granted some pretrial orders but had not made any final adjudication of divorce … . In this instance, the husband’s death “abated the . . . action for a divorce and ancillary relief” … . Adams v Margulis, 2021 NY Slip Op 00971, Fourth Dept 2-11-21

 

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THE ESTATE OF A PARTY TO A SEPARATION AGREEMENT MAY SEEK A DOWNWARD MODIFICATION OF THE AGREED MAINTENANCE PAYMENTS; THE DISSENT ARGUED ONLY THE PARTY, NOT THE ESTATE OF THE PARTY, CAN SEEK A DOWNWARD MODIFICATION AND THE MATTER SHOULD BE HANDLED IN PROBATE (FOURTH DEPT).

The Fourth Department, over a dissent, determined that the estate of a party to a separation agreement that was merged but not incorporated into a judgment of divorce could seek a downward modification of the maintenance payments. The dissent argued only the party to the agreement, not the estate of the party, could seek a downward modification based on extreme hardship:

FROM THE DISSENT:

… [T]his Court recently held that plaintiff and defendant’s decedent entered into a Separation and Property Settlement Agreement (settlement agreement), which was incorporated but not merged into a judgment of divorce, whereby decedent agreed to pay lifetime maintenance to plaintiff that continued even in the event of decedent’s death … . * * *

Pursuant to the Domestic Relations Law, “[w]here . . . [a separation agreement] remains in force, no modification of an order or judgment incorporating the terms of said agreement shall be made as to maintenance without a showing of extreme hardship on either party” (§ 236 [B] [9] [b] [1] …). A modification of maintenance based on extreme hardship is thus, personal to the parties who contracted as to the amount of maintenance in the separation agreement and, as noted, a modification of that amount has only been awarded in situations involving personal hardships. In my view, an “estate” can never establish a personal hardship and thus, is never entitled to a downward modification of maintenance. While defendant in this case submitted evidence that the continued payment of the maintenance obligation would pose a hardship on the estate, such a hardship is not upon any party to the settlement agreement. Indeed, it is only a hardship upon the beneficiaries of decedent’s estate who wish to maximize their inheritance. In my view, any difficulty in the estate’s ability to pay the amount of lifetime maintenance agreed to by decedent is an issue that should be raised by the estate in the probate court when determining the reserve funds to be set aside to satisfy the maintenance obligation. Gardner v Zammit, 2021 NY Slip Op 00707, Fourth Dept 2-5-21

 

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THE ESTATE OF THE HUSBAND WAS NOT A NECESSARY PARTY IN THIS FORECLOSURE ACTION; THE PROPERTY PASSED TO THE WIFE UPON THE HUSBAND’S DEATH (SECOND DEPT).

The Second Department, reversing Supreme Court, determined the husband’s (Thomas’s) estate was not a necessary party in this foreclosure action because the property passed to the decedent’s wife (Judy) upon Thomas’s death:

… [T]he plaintiff’s submission of the deed and Thomas’s death certificate established prima facie that Thomas and Judy had held the subject property as a married couple, and that they remained married at the time of his death. Therefore, Thomas’s death “result[ed] in the defeasance of the deceased spouse’s coextensive interest in the property” … , and the surviving spouse automatically inherited his ownership interest in the property. Moreover, the plaintiff explicitly provided that it would not seek a deficiency judgment against Thomas’s estate … . Based upon the foregoing, the plaintiff established that Thomas’s estate was not a necessary party to foreclosure and the plaintiff was entitled to discontinue the action against Thomas, remove his name from the caption, and to vacate the stay which arose upon Thomas’s death … . U.S. Bank N.A. v Auteri, 2021 NY Slip Op 00588, Second Dept 2-3-21

 

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SURROGATE’S COURT HAD THE AUTHORITY TO APPROVE, NUNC PRO TUNC, A METHOD OF SERVICE ON AN OUT-OF-STATE PARTY ACCOMPLISHED WITHOUT PRIOR COURT APPROVAL (SECOND DEPT).

The Second Department, in a full-fledged opinion by Justice Duffy, in a matter of first impression, determined Surrogate’s Court had the authority to approve, nunc pro tunc, service upon an out-of-state party by a method which was not in compliance with the Surrogate’s Court Procedure Act (SCPA). Here the attempts at service which complied with the SCPA were unsuccessful. Without procuring permission from court, the executor served the party by first class mail and the letter was not returned. Surrogate’s court approved the service by mail nunc pro tunc:

… [S]ince we find that the Surrogate’s Court had the authority to deem service on the appellant complete, nunc pro tunc, pursuant to SCPA 307(3)(b), which allows for substituted service such as regular first-class mail, the remaining issue to address is whether the court properly determined that such substituted service was valid; to wit, whether service on the appellant by regular first-class mail met the requirements of due process such that personal jurisdiction over the appellant was established … . * * *

… [T]he Executor undertook diligent but unsuccessful attempts to serve the appellant pursuant to SCPA 307(2) before regular first-class mail service was undertaken. Moreover, this is not a circumstance where the appellant had no knowledge of the proceeding that was taking place. Here, the appellant acknowledged that she (1) received a copy of the notice of probate at the time of the commencement of the probate proceeding, (2) immediately retained an attorney to represent her interests in the probate proceeding, and (3) subsequently received a copy of the will. The appellant was also aware of the scheduled hearing on July 12, 2017, in advance of that date, and neither she nor her attorney at that time chose to attend the proceeding. Thus, we find that the substituted service on the appellant by regular first-class mail satisfied the requirements of due process … . Matter of Pollina, 2020 NY Slip Op 08068, Second Dept 12-30-20

 

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THE ADMINISTRATOR OF THE ESTATE COULD SUE FOR DECEDENT’S CONSCIOUS PAIN AND SUFFERING BUT, BECAUSE THE WRONGFUL DEATH ACTION HAD NOT BEEN LISTED AS AN ASSET IN THE BANKRUPTCY PROCEEDING, THE ADMINISTRATOR DID NOT HAVE THE CAPACITY TO SUE ON BEHALF OF THE DISTRIUBUTEE FOR WRONGFUL DEATH (SECOND DEPT).

The Second Department, reversing (modifying) Supreme Court in this wrongful death action, determined that the plaintiff, who was the administrator of the estate and the sole distributee, could bring an action for conscious pain and suffering because that claim was personal to the decedent and part of the estate. But, because the wrongful death action, which vested in the plaintiff/distributee upon death, was not listed as an asset in the plaintiff’s bankruptcy proceedings, to which the decedent was not a party, the plaintiff did not have the capacity to bring that claim:

… [T]he plaintiff, as the administrator of the decedent’s estate, had the capacity to prosecute the cause of action to recover damages for conscious pain and suffering. A cause of action brought on behalf of a deceased to recover damages for conscious pain and suffering is “personal to the deceased and belongs to the estate, not the distributees” … . The decedent was not a party to the bankruptcy proceeding. Accordingly, the bankruptcy did not affect the plaintiff’s capacity to prosecute the cause of action to recover damages for conscious pain and suffering on behalf of the decedent’s estate … .

The Supreme Court, however, should have granted those branches of the defendants’ separate motions which were to dismiss the cause of action to recover damages for wrongful death insofar as asserted against each of them. “A cause of action to recover damages for wrongful death is a property right belonging solely to the distributees of the decedent and vests in them at the decedent’s death” (… EPTL 5-4.4 [a]). It is undisputed that the cause of action to recover damages for wrongful death vested in the plaintiff as the sole distributee of the estate prior to the filing of the bankruptcy petition. Accordingly, as the plaintiff failed to schedule the wrongful death claim in the bankruptcy proceeding, it is subject to dismissal in this action on the ground that the plaintiff lacks the capacity to pursue the claim … . Vinogradov v Bay Plaza Apts Co., LLC, 2020 NY Slip Op 08104, Second Dept 12-30-20

 

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THE REAL PROPERTY PASSED TO THE BENEFICIARY IN THE WILL UPON DEATH, NOT UPON SUBSEQUENT PROBATE; THEREFORE THE CONVEYANCE WAS VALID AND THE DEED SHOULD NOT HAVE BEEN DEEMED VOID (SECOND DEPT).

The Second Department, reversing Surrogate’s Court, determined plaintiff’s deed inherited the real property upon decedent’s death, not after probate. Therefore the conveyance of the property by the beneficiary, McKenzie, to plaintiff was valid:

… [T]he decedent’s will, unequivocally and without limitation, devised McKenzie one third of the residuary estate, and this interest vested in McKenzie at the moment of the decedent’s death … . Although the vesting of McKenzie’s interest was “subject to the executor[‘s] duty to ensure that all debts and obligations of the estate[ ] were met” … , the defendants failed to establish, prima facie, that McKenzie’s conveyance of her interest impeded the executor’s duties, and thus, failed to establish, prima facie, that McKenzie’s interest had not yet vested when she conveyed it to the plaintiff after the decedent’s death … .  72634552 Corp. v Okon, 2020 NY Slip Op 07845, Second Dept 12-23-20

 

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