U.S. Bank Natl. Assn.

v Mathon

2010 NY Slip Op 52082(U)

Decided on December 1, 2010

Supreme Court, Suffolk County

Spinner, J.

This opinion is uncorrected and will not be published in the printed Official
Reports.

Decided on December 1, 2010

Supreme Court, Suffolk County

U.S. Bank National Association, Plaintiff

against

Sheila Mathon, Hank Mathon, Mortgage Electronic Registration Systems

Inc. as Nominee and Mortgagee of Record, WMC Mortgage Corp., the Law
Offices of Joseph D'Elia, Key Bank of Long Island n/k/a Washington Mutual
Bank, Commissioner of Taxation and Finance, United States of America-
Internal Revenue Service and Shore Park Estates Homeowners Association
Inc., Defendants

2007-30481
Adam M. Marshall Esq.

Cullen & Dykman LLP

Attorneys for Plaintiff

100 Quentin Roosevelt Boulevard

Garden City, New York 11530

Rosicki, Rosicki & Associates P.C.

Former Attorneys for Plaintiff

51 East Bethpage Road

Plainview, New York 11803

Sheila Mathon

Hank Mathon

Defendants Pro Se

815 Anthony Drive

Lindenhurst, New York 11757

Jeffrey Arlen Spinner, J.

ORDER ON MOTION

Mot. Seq. 004-MotD

Original Return Date: September 15, 2010

Final Submit Date: November 17, 2010

Premises

815 Anthony Drive

Lindenhurst, New York 11757

District0103

Section025.00

Block02.00

Lot049.008

This is an action wherein the Plaintiff claims foreclosure of a mortgage dated September 28, 2006 in the
original principal amount of $486,400.00 recorded with the Clerk of Suffolk County, New York on
October 16, 2006 in Liber 21401 of Mortgages at Page 349. The mortgage secures a note of the same
amount and encumbers real property commonly known as 815 Anthony Drive, Lindenhurst, Town of
Babylon, New York and described as District 0103 Section 025.00 Block 02.00 Lot 049.008 on the Tax
Map of Suffolk County. Plaintiff commenced this action by filing a Summons, Verified Complaint and
Notice of Pendency on September 26, 2007. Following the interposition of an Answer by Defendants
then-counsel, summary judgment was granted by Order dated April 14, 2008 and a Referee was
appointed to compute in accordance with RPAPL § 1321. Thereafter, by Order dated January 30, 2009, a
Substitute Referee was appointed. On July 12, 2010, Plaintiff moved for a Judgment of Foreclosure &
Sale and, following the interposition of opposition by Defendants together with the present Order To
Show Cause, the application was voluntarily withdrawn.

Defendants SHEILA MATHON and HANK MATHON ("The Mathons") have moved pro se, by Order To
Show Cause dated August 12, 2010, for a stay of all proceedings under this index number. Their
application recites a number of grounds for the relief demanded including the pendency of a lawsuit in
the United States District Court for the Eastern District of New York brought by the Mathons as plaintiffs
under docket no. 10-CV-3664, the failure of Plaintiff's counsel to serve notice of proceedings upon
Defendants' counsel and finally, that Plaintiff's offer of a loan modification should have operated as a
stay of this action.

As to the claim involving the federal action, this cannot constitute a legally cognizant ground for relief in
the instant matter. In order for such injunctive relief to lie, the competing actions must have full and
complete identity of claims, parties and the relief demanded, Green Tree Fin. Servicing Corp. v. Lewis
280 AD2d 642, 720 NYS2d 843 [2nd Dept. 2001]. In the federal action, there is a lack of identity of the
parties in that the Mathons have impleaded sixteen individuals and entities who are not parties to the
instant action. Moreover, the federal action has been brought under the federal Racketeer Influenced
and Corrupt Organizations Act ("RICO"), 18 USC § 1961 et. seq. which is not a subject of the instant
action. Since there exists such a dissimilarity of both parties and claims between the state and federal
actions, this Court cannot grant injunctive relief under this theory.
Turning next to the claim of a lack of notice to counsel, Plaintiff asserts that since the Mathons
[*2]sought this relief by Order To Show Cause, it has withdrawn its motion for judgment, thus rendering
the application to be academic. Defendants claim that Plaintiff failed to serve their counsel Adam
Gomerman Esq. with notice of their intent to seek judgment. They rely upon this Court's Order of April
14, 2008 which directs, in pertinent part, that "ORDERED that the answer interposed by defendants
SHEILA MATHON and HANK MATHON is hereby stricken and deemed converted to an appearance and
demand in foreclosure, requiring service of all future papers, including but not limited to Notice of Sale,
Notice of Proceedings for Surplus Monies and Notice of Discontinuance of Action upon said
defendants..." It is clear from the language thereof that service is to be made upon Defendants and not
necessarily their attorney. Moreover, Defendants had discharged their counsel prior to the date of the
application, thus rendering this claim to be academic. It must be stated here, however, that this Court
takes a very dim view of the tactic of withdrawal of an application as a way in which to deprive an
adverse litigant of his or her day in court. That being said, the Court finds that this claim for relief is
devoid of legal and factual efficacy and likewise must be denied.

The issue of the claim of the forbearance/modification agreement, however, is an entirely different
situation, one that is considerably troubling to this Court. Defendants assert (and Plaintiff does not in
any way controvert) that on April 17, 2009, without the benefit of counsel, they executed a three page
document entitled "Home Affordable Modification Trial Period Plan" which was propounded to them by
Plaintiff. Indeed, a copy of the same is appended as Exhibit C to the Affidavit of Thomas E. Reardon.
According to Defendants (and again, not controverted by Plaintiff), they timely remitted to Plaintiff the
three payments of $ 1,736.00 required thereunder and in compliance therewith, followed with nine
more monthly payments in the same amount. According to Defendants (and once again, not
controverted by Plaintiff), they continued to send monthly payments of $ 1,736.00, doing so in
compliance with a letter from Plaintiff's servicer Chase Home Finance LLC dated June 1, 2009 and
appended to their Order To Show Cause. In relevant part, this letter states, in bold face type, as follows;

"If you make all [3] trial period payments on time and comply with all applicable program guidelines, you
will have qualified for a final modification. However, there may be a period of time between your last
trial payment and your first modification payment as we finalize the documents and get them back from
you. During that interval, you should make a continuation payment at the trial period amount, and an
extra coupon has been provided for that purpose.That payment will be applied as a principal reduction
payment on your loan after your final modification is effective."

It is undisputed that Defendants sent thirteen payments to Chase Home Finance LLC totalling $
22,568.00 in reliance upon both the aforementioned April 17, 2009 Trial Modification and the
subsequent June 1, 2009 letter and further, that the same were accepted by Plaintiff, presumably under
the terms and conditions dictated by Plaintiff. According to Defendants, they regularly inquired as to the
status of the final modification and were variously informed that all documents had been received, the
application was with underwriting and finally, underwriter had approved the final modification.
Notwithstanding the continuing stream of payments from Defendants and the verbal representations
made to them, Chase Home Finance LLC, by letter dated April 15, 2010 (two days shy of one year
following execution of the Trial Modification) notified Defendants that a loan [*3]modification would
not be offered to them due to their inability to meet the existing guidelines therefor. The reason stated
for the denial was the inability to meet HAMP guidelines by modifying the payments to equal 31% of
Defendants' gross monthly income.

In opposition to the foregoing, the Affidavit of Thomas E. Reardon, Assistant Vice-President of Chase
Home Finance LLC (Plaintiff's servicing agent), plainly acknowledges the foregoing assertions by
Defendants but states, in Paragraph 7, that "...Due to a combination of factors, however, including
missing documents, the submission of stale financial data and a significant influx of Trial Plan
applications, the Mathons' Trial Plan was not reviewed by the underwriting department until on or about
April 2, 2010." The Affidavit does state that on June 30, 2010 the Mathons applied for a new
modification but that they failed to supply all necessary documents for consideration. However,
nowhere in Plaintiff's submissions to this Court is there any substantiation of this claim nor is the issue
of Defendants' payments addressed. Too, there is no proof of any computation or other calculation
explaining the basis for denial herein.

In further opposition to Defendants' motion, Plaintiff has submitted the Affidavit of Adam M. Marshall
Esq., an associate in the firm of Cullen & Dykman LLP. Mr. Marshall states under oath, in Paragraph 9
thereof, that "Since the Mathons moved by Order to Show Cause to stay the foreclosure on August 12,
2010, further efforts have been made to provide the Mathons with a loan modification based on
verifiable income. On October 12, 2010, Plaintiff withdrew its Motion for Judgment of Foreclosure and
Sale. In addition, a new application for a loan modification was forwarded to the Mathons. However, the
Mathons have abjectly refused to complete the application or supply the financial documents requested
therein." This Affidavit by counsel seems to be somewhat at odds with the averments of Mr. Reardon
and is amply rebutted by Defendants' motion papers. Defendants have appended a plethora of
documents dating from April 30, 2010 through July 28, 2010 evidencing their application for a new
modification (which appears to be a HAMP modification identical to the one that Plaintiff had just
rejected) as well as their cooperation with the demands of Plaintiff regarding the same. Even so, while
Defendants were assiduously attempting to re-negotiate a modification, Plaintiff was instructing its
counsel to continue prosecution of the foreclosure action. It is painfully obvious to this Court that
Defendants relied upon representations made by Plaintiff and acted affirmatively based upon those
representations, all to their serious detriment.

There has been no disclosure by Plaintiff to this Court as to whether or not this loan in foreclosure is
deemed to be "sub-prime" or "high cost" in nature. Moreover, no mandatory settlement conference has
been held in this matter though same is plainly required pursuant to CPLR § 3408.

Since an action claiming foreclosure of a mortgage is one sounding in equity, Jamaica Savings Bank v.
M.S. Investing Co. 274 NY 215 (1937), the act by Plaintiff of commencing of this action inescapably
invokes the Court's equity jurisdiction. While it is to be noted that the formal distinctions between an
action at law and a suit in equity have been abolished in New York (see CPLR 103, Field Code Of 1848 §§
2, 3, 4, 69), the Supreme Court nevertheless is fully vested with equity jurisdiction and the distinct rules
governing equity are still extant, Carroll v. Bullock 207 NY 567, 101 NE 438 (1913). Speaking generally
and broadly, it is the settled law of this jurisdiction that [*4]"Stability of contract obligations must not be
undermined by judicial sympathy..." Graf v. Hope Building Corporation 254 NY 1 (1930). However, it is
true with equal force and effect that equity must not and cannot slavishly and blindly follow the law,
Hedges v. Dixon County 150 US 182, 192 (1893). Finally, as decreed by our Court of Appeals in the
matter of Noyes v. Anderson 124 NY 175 (1890) "A party having a legal right shall not be permitted to
avail himself of it for the purposes of injustice or oppression..." 124 NY at 179.

In the matter of Eastman Kodak Co. v. Schwartz 133 NYS2d 908 (Sup. Ct., New York County, 1954),
Special Term stated that "The maxim of "clean hands" fundamentally was conceived in equity
jurisprudence to refuse to lend its aid in any manner to one seeking its active interposition who has been
guilty of unlawful, unconscionable or inequitable conduct in the matter with relation to which he seeks
relief." 133 NYS2d at 925, citing First Trust & Savings Bank v. Iowa-Wisconsin Bridge Co. 98 F 2d 416 (8th
Cir. 1938), cert. denied 305 US 650, 59 S. Ct. 243, 83 L. Ed. 240 (1938), reh. denied 305 US 676, 59 S Ct.
356 83 L. Ed. 437 (1939); General Excavator Co. v. Keystone Driller Co. 65 F 2d 39 (6th Cir. 1933), cert.
granted 289 US 721, 53 S. Ct. 791, 77 L. Ed. 1472 (1933), aff'd 290 US 240, 54 S. Ct. 146, 78 L. Ed. 793
(1934).

Here, the Court has serious and grave concerns regarding Plaintiff's conduct in this matter, which
appears to be rife with bad faith. This can be amply seen by the acceptance of multiple payments
following the three trial payments, the promise albeit unfulfilled of the permanent modification and the
verbal assurances that the modification had been approved juxtaposed with the vague denial issued one
year after the trial agreement, the spurious claims of non-cooperation by Defendants, the seeming offer
of a "new" modification and the withdrawal of the motion for judgment in an apparent attempt to divest
this Court of jurisdiction to deal with this Order To Show Cause.

It is the province and indeed the obligation of the trial court to assess and to determine issues regarding
credibility, Morgan v. McCaffrey 14 AD3d 670 (2nd Dept. 2005). In the matter before the Court, the
pendulum of credibility seems to swing heavily in favor of Defendants. When the conduct of Plaintiff in
this proceeding is viewed in its entirety, it compels the Court to invoke the ancient and venerable
principle of "Falsus in uno, falsus in omni" (Latin; "false in one, false in all") upon Defendant which, after
review, is wholly appropriate in the context presented, Deering v. Metcalf 74 NY 501 (1878).
Regrettably, the Court has, thus far, been unable to find even a scintilla of good faith respecting
Plaintiff's conduct. Plaintiff comes before this Court with seemingly unclean hands demanding equitable
relief against Defendants.

After careful consideration, it is the determination of this Court that this matter be set down for a
hearing to explore whether Plaintiff has acted in good faith, whether or not sanctions should be imposed
upon Plaintiff or whether the Court should consider the invocation of other remedial measures.

It is, therefore

ORDERED that the application of Defendants SHEILA MATHON and HANK MATHON be and the same is
hereby granted to the extent set forth herein; and it is further [*5]
ORDERED that a hearing shall be convened in this matter, to be held on January 12, 2011 at 2:30 p.m.,
Courtroom 229A, Supreme Court, 1 Court Street, Riverhead, New York 11901; and it is further

ORDERED that said hearing shall not be adjourned except upon order of the Court; and it is further

ORDERED that any relief not expressly granted herein is hereby denied; and it is further

ORDERED that within ten (10) days of the date of entry hereof, Plaintiff's counsel shall serve a copy of
this Order upon the Calendar Clerk of the Supreme Court, upon Defendants and all parties entitled to
notice.

This shall constitute the Decision and Order of this Court.

Dated: December 1, 2010

Riverhead, New York

E N T E R:

______________________________________

JEFFREY ARLEN SPINNER, J.S.C.