Schack Hammers Attorney For Failure To Cancel Foreclosure Action After Delinquent Mortgage Was Paid Off & Subject Property Sold In Private Sale

In Brooklyn, New York, state court Justice Arthur M. Schack hammered another foreclosure attorney in a recent ruling for allowing a foreclosure action to continue despite the fact that the property owner had sold the subject property and paid off the delinquent mortgage over a year ago. Justice Schack stated the folowing (bold text and alterations [...] added, not in the original text):

• On April 6, 2010, I searched ACRIS [the Automated City Register Information System] and discovered that WELLS FARGO executed a satisfaction of the instant mortgage more than ten months ago, on May 20, 2009. The satisfaction was recorded at the Office of the City Register of the City of New York, on June 1, 2009, [...]. Further, ACRIS revealed that defendant HUNTE sold the premises to Milton R. Linguard for $610,000.00, with the deed executed on March 13, 2009. The deed was recorded on June 16, 2009, at the Office of the City Register of the City of New York, [...]. ACRIS also revealed that Mr. Linguard, on March 13, 2009, borrowed $518,500.00 from GOLDEN FIRST MORTGAGE CORP. This was secured by a mortgage recorded at the Office of the City Register of the City of New York, on June 16, 2009, by MERS, as nominee for GOLDEN FIRST MORTGAGE CORP., [...].

• Plaintiff's counsel never had the courtesy to notify the Court that the instant mortgage was satisfied and file a motion to discontinue the instant action. The Court is gravely concerned that: it expended scarce resources on an action that should have been discontinued; and, would have signed an order that could have possibly damaged the credit rating of defendant HUNTE and put an unfair cloud on the title to the subject premises now owned by Mr. Linguard, causing both defendant HUNTE and Mr. Linguard much time and effort to correct an error caused by the failure of plaintiff's counsel to exercise due diligence. The Court notes that [foreclosure attorney Peter G.] Zavatsky, in his affirmation for an award of attorneys' fees, requests that this Court award him $3,000.00 because, he states in ¶ 8 of his affirmation, that he has "been admitted to the Bar of the State of New York for more than thirty (30) years and have devoted my practice to real estate litigation and mortgage foreclosure practice for that entire time . . . and I have lectured on the subject of mortgage foreclosures."

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• The failure of Peter G. Zavatsky, Esq., and his firm, Zavatsky, Mendelsohn & Levy, LLP, to discontinue the instant action since the payoff of the HUNTE mortgage in 2009 appears to be "frivolous." 22 NYCRR §130-1.1 (a) states that "the Court, in its discretion may impose financial sanctions upon any party or attorney in a civil action or proceeding who engages in frivolous conduct as defined in this Part, which shall be payable as provided in section 130-1.3 of this Subpart." Further, it states in 22 NYCRR §130-1.1 (2), that "sanctions may be imposed upon any attorney appearing in the action or upon a partnership, firm or corporation with which the attorney is associated."

It appearing that foreclosure attorney Peter G. Zavatsky, and the Zavatsky, Mendelsohn & Levy, LLP law firm, engaged in "frivolous conduct," and that pursuant to the applicable court rules "[a]n award of costs or the imposition of sanctions may be made . . . upon the court's own initiative, after a reasonable opportunity to be heard," Justice Schack scheduled a hearing affording Mr. Zavatsky and his law firm "a reasonable opportunity to be heard," before deciding whether to hammer them with sanctions for their apparent screw-up in allowing the foreclosure action to proceed, despite the fact that the delinquent mortgage was paid off, a mortgage satisfaction was recorded in the public records, and the subject property was sold off to a third party in a private sale.

For the ruling, see Wells Fargo Bank, N.A. v Hunte, 2010 NY Slip Op 50637 (NY Sup. Ct. Kings County April 14, 2010).