NYSCEF docs 3-18, 20, 25, 27-68 were read and considered in deciding these motions.

Seq. 001 — Plaintiff, Eshagh Netaneli ("plaintiff" or "Netaneli"), moves, by order to show cause, to stay all proceedings, including but not limited to the selling or auctioning of the property located at 32 Aller Boulevard, Roosevelt, New York 11575 (the "property").^[FN1]

Seq. 002 — Defendant Brian J. Davis ("Davis" or "Referee Davis"), appearing pro se, moves for summary judgment dismissing the complaint insofar as asserted against him and for summary judgment on his counter-claims, which seek sanctions against nonparty Sean Sabeti, Esq, and damages against the plaintiff for abuse of process, respectively.

Seq. 003 — Defendant Loan Funder LLC Series 5241 ("Loan Funder" or "Lender") moves, pre-answer, to dismiss the complaint insofar as asserted against it: (1) pursuant to CPLR 3211(a)(1) it, based upon documentary evidence, including Court records signed by plaintiff, and signed Terms of Sale provided to this Court by the plaintiff; (2) pursuant to CPLR 3211(a)(3), on the grounds that the plaintiff does not have standing to sue, as he assigned his auction bid prior to commencing this action; (3) CPLR 3211(a)(7), based on plaintiff's failure to state a cause of [*2]action for fraud, misrepresentation, or breach of contract, or to treat this motion as one for summary judgment against the plaintiff based upon CPLR 3211(c); and (4), pursuant to CPLR §3211(a)(8), for lack of personal jurisdiction, on the grounds that the plaintiff has failed to properly serve the defendant Loan Funder with the summons and complaint.

Alternatively, Loan Funder, seeks to consolidate this action pursuant to CPLR 602 with the pending related foreclosure action, to wit, Loan Funder LLC Series 5241 v Legacy Homes Realty, Ltd. et. al., Index No. 611906/2020 (the "foreclosure action"), and have the foreclosure action transferred to the undersigned; or pursuant 22 NYCRR § 130-1.1, to award Loan Funder costs in the form of reimbursement for actual expenses reasonably incurred and reasonable attorneys' fees resulting from the plaintiff's frivolous conduct in commencing and prosecuting this action and filing affidavits and affirmations asserting material false statements and to impose financial sanctions upon plaintiff and its counsel for engaging in said frivolous conduct.

Insofar as a motion made pursuant to CPLR 3211 requires this Court to accept as true the allegations of the complaint (see Leon v Martinez, 84 NY2d 83, 88 [1994]), the facts are as follows:

On November 15, 2018, nonparty Legacy Homes Realty, Ltd. ("Legacy") purchased the property. Legacy executed a note in the sum of $271,000 in favor of Loan Funder, which was secured by a mortgage on the property. Subsequently, Legacy defaulted on its obligations under the note. On October 27, 2020, Loan Funder commenced the foreclosure action against Legacy. Legacy filed an answer therein. On May 27, 2021, Loan Funder moved, inter alia, for summary judgment on the complaint and for an order of reference. On December 13, 2021, this Court (Sullivan, J.) granted the motion and appointed Davis as referee to, among other things, ascertain and compute the amount due to Loan Funder. Ultimately, Referee Davis ascertained and computed the amount due to Loan Funder to total $376,482. Subsequently, Loan Funder moved to confirm Referee's Report and for a judgment of foreclosure and sale. That motion was granted by short-form order dated March 11, 2022.

An auction date for the sale of the property was scheduled for August 8, 2022. At the auction, the plaintiff was the highest bidder, bidding the sum of, the plaintiff claims, $405,000. The plaintiff paid to Referee Davis a deposit in the sum of $45,000 by several certified checks.

The plaintiff alleges that the representations of Referee Davis and a receipt establish that the purchase price was $405,000. Plaintiff submits, however, that at the closing, Referee Davis demanded that plaintiff had to pay the sum of $445,000 for the property, i.e., $40,000 more than what was documented to the plaintiff and agreed upon, which, plaintiff submits, was in contradiction to the receipt of the documents plaintiff received from Referee Davis on the date of the auction. Davis refused to convey and deliver the deed of the property to plaintiff at the price $405,000.

Plaintiff alleges that Davis and Loan Funder attempted to defraud him by increasing the purchase price of the property from $405,000 to $445,000, and that overall, the defendants herein have prepared three different versions of "Terms of Sale" for the property with glaring discrepancies. Plaintiff submits that, in two separate letters, dated August 25, 2022 and February 10, 2023, Loan Funder advised the Court that on the auction date of August 8, 2022, the property was sold for $445,000. According to the plaintiff, the letters included the "Terms of Sale" documents which delineated that a deposit in the sum of $45,000 was received from plaintiff; however, the signatures of the "Terms of Sale" were not signed by the plaintiff. Counsel for the [*3]plaintiff claims that, upon information and belief, the signatures of the plaintiff were forged on two of the "Terms of Sale" documents that were submitted to the Court, and that this material fraudulent misrepresentation was a fraud upon the Court. According to the plaintiff, the defendants' wrongful conduct equates to an act of fraud, and that although he has made several demands to the defendants to either convey the deed of the property at the agreed price of $405,000 or to return the downpayment of $45,000, the defendants have refused to do so.

The complaint contains four causes of action: (1) fraud and misrepresentation against Davis, (2) breach of contract against Davis, (3) breach of contract against Loan Funder, and (4) for attorney's fees, costs, and interest against both defendants.

In support of his motion, inter alia, for summary judgment dismissing the complaint insofar as asserted against him, Referee Davis, appearing pro se, annexes his affidavit wherein he avers that three Terms of Sale were prepared on the date of the auction: one for the referee, one for the lender, and one for the buyer/plaintiff herein. According to Davis, on two of the three Terms of Sale, Davis "inadvertently" wrote the sale price as $455,000, in numerals and in words. Davis avers that these two Terms of Sale were immediately corrected at the table in the courthouse to reflect the proper price of $445,000 ("Forty" replaced "Fifty," and "4" replaced "5"), with the lender's copy showing no changes — i.e., lender's copy showing "Four Hundred and Forty Five Thousand" ($445,000). Davis avers that all three copies of the Terms of Sale were signed by the plaintiff and his partner, nonparty David Badalov.

According to Davis, it was pointed out to the plaintiff at the closing that the upset price was $440,000 and that the bidding only increases from the upset price, it does not decrease. Additionally, according to Davis, the lender's attorney also stated at the closing that the upset price was $440,000, and further stated that had there been no bids above $440,000, the lender would have bought it back. The lender refused to close at the $405,000, and the down payment money remains in the Davis's trust account.

Davis also seeks summary judgment on his two counterclaims, which seek sanctions against plaintiff's counsel, nonparty Sean Sabeti, Esq., pursuant to 22 NYCRR 130-1.2 in the sum of $10,000, and damages against the plaintiff for abuse of process.^[FN2]

In opposition, counsel for plaintiff asserts that inasmuch as the parties have not conducted discovery, defendant's motion is improper and premature. Counsel adds that defendant Davis repeatedly admits in his amended statement of facts, amended affidavit, and amended memorandum of law that he made several mistakes in preparing the Terms of Sale agreements. Counsel asserts that based on his errors and by his own admissions, Referee Davis had to make several corrections to the same Terms of Sale agreements, and that these errors were not caused by the plaintiff who is claiming that his final bid was for $405,000. Counsel for plaintiff argues that there remains a material issue of fact—to wit, whether the handwritten price of the sale at the auction was $405,000 or $445,000. Counsel for plaintiff contends that he has presented an indisputable document that proves he bid for $405,000 and that Referee Davis's [*4]claim that the price was $445,000, i.e., a difference of $40,000, remains as a material dispute.

In his reply, Referee Davis contends first that he joins in the Lender's motion [Seq. 003] to consolidate this action with the foreclosure action. According to Davis, "[w]e should not have two different Supreme Court judges on these cases." More substantively, Referee Davis submits that the fact that the plaintiff's partner, David Badalov, who also signed the Terms of Sale, did not join in the plaintiff's lawsuit, or provide an affidavit for his motion, speaks volumes; specifically, Davis submits that "if the selling price were really $40,000 less than what the lender is seeking, certainly, the partner would be submitting an affidavit to that effect." According to Davis, "as it stands, [the lender's attorney], me as the Referee, [the buyer's attorney] for the closing, and Mr. Badalov by his silence, all agree that the sales price was $445,000.00." Finally, Referee Davis replies that, based upon the Court of Appeals ruling in Lane v Chantilly Corporation (251 NY 435 [1929]), holding that "a referee is the surrogate of the Court," he "cannot" be sued and therefore he should be granted judgment on his counterclaims for sanctions and abuse of process.

In support of its motion to dismiss, counsel for the lender argues that insofar as it has not entered into any contract with plaintiff, it bears no liability for its purported breach. Loan Funder's attorney submits that, in this case, the Terms of Sale is an agreement signed by the referee and the plaintiff (as one of two purchasers); therefore, it, as the foreclosing lender, has no liability thereunder. Counsel for the lender also argues that the plaintiff's claim for attorneys' fees, costs and interests fails as a matter of law. Additionally, counsel contends that plaintiff has failed to assert any cause of action for fraud or misrepresentation as against the lender. Finally, counsel for the lender argues that if it is not entitled to dismissal at this juncture, this action should be consolidated with the foreclosure action and transferred to the judge presiding in that action pursuant to CPLR 602.

In opposition, counsel for plaintiff argues that the defendants herein have a common desire for this case to be dismissed and "as such they will support each other's position to make these mistakes go away." Counsel for plaintiff argues that "the paramount question is how it would be possible" for the lender to substantially increase the amount specified in the Judgment of Foreclosure and Sale ($376,482.84) to the upset price ($440,000), an increase of $63,517.16 in only five months.

In reply, counsel for the lender argues that the plaintiff has failed to refute, with admissible evidence, that there was any contract between it and the plaintiff and that, in any event, the Terms of Sale in a foreclosure proceeding is between the purchaser and the foreclosure court, and not the lender (the foreclosing plaintiff). Counsel also notes that the plaintiff has failed to refute the governing case law that a party cannot recover legal fees except where authorized by statute or agreement, which the plaintiff has failed to assert herein. Counsel notes that the plaintiff has failed to address, let alone demonstrate, the validity of his fraud claims as asserted in the complaint against the lender. Finally, counsel for the lender reiterates (as in its motion papers) that sanctions are required herein pursuant to 22 NYCRR 130-1.1(c) because even in his opposition plaintiff does not address why his prior affidavit and complaint contradict a court produced document, i.e., a memo of sale with his signature submitted with the motion to dismiss; that plaintiff does not deny that he signed the memo of sale wherein he agreed that the sale price was $445,000; and that the upset price was $440,000.

This Court notes at the outset that despite the failure of both defendants to offer any legal support to substantiate their argument that "any relief sought by the Plaintiff regarding the sale of the foreclosed property, including canceling the sale and getting his down payment returned, should have been brought before Justice Sullivan under the foreclosure action's index number" (doc. 39), this Court nonetheless agrees; the plaintiff has improperly commenced this new and separate action, rather than intervening in the foreclosure action.

The law is clear. "The primary purpose of the judgment of foreclosure is to divest the mortgagor [and others] of ownership and to make the property, or its proceeds, available to the mortgagee in satisfaction of his claim" (Da Costa v Hamilton Republican Club of Fifteenth Assembly Dist., 187 Misc. 865, 868 [Sup Ct, New York County 1946]; see RPAPL 1353[3]; Nutt v Cuming, 155 NY 309, 313 [1898]; Hope v Shevill, 137 AD 86, 90 [2d Dept 1910], affd 204 NY 563 [1912]).

Thus, the judgment of foreclosure and sale is final in certain of its aspects (see Gray v Bankers Trust Co. of Albany, N.A., 82 AD2d 168, 170-171 [3d Dept 1981]; Morris v Morange, 38 NY 172, 173 [1868]; Bondy v Aronson & List Realties, 227 AD 136, 138 [4th Dept 1929]; Clark v Levy, 130 AD 389, 393 [1st Dept 1909]) but interlocutory in others:

"A judgment of foreclosure is always final in part and interlocutory in part; final as to determining the rights of the plaintiff under the mortgage; interlocutory with respect to the sale; final as to the amounts to be paid . . . , interlocutory with respect to the legality of the proceedings upon the sale, the proper distribution of the proceeds thereof and as to any rights in the distribution of any surplus."

Indeed, the law provides that rights of lienors are barred and foreclosed, not upon the date of the judgment, but from and after the sale and conveyance:

"A judgment entered in a foreclosure action is final for all purposes of review, but in other respects it is interlocutory. All of the proceedings for the sale . . . take place thereafter. The provision barring others [see RPAPL §1353(3)] . . . of necessity relates to the final concluding act, that of the sale of the premises. . . . [A]s soon as the sale is made, confirmed, and conveyance delivered, that provision of the judgment becomes operative and of full force, and the parties . . . are . . . barred and foreclosed"

(Nutt v Cuming, 155 NY at 313; see In Ray v JP Morgan Chase Bank, N.A., 145 AD3d 812 [2d Dept 2016]; Zoller v HSBC Mtge. Corp. [USA], 135 AD3d 932, 932-933 [2d Dept 2016]; Carnavalla v Ferraro, 281 AD2d 443, 443 [2d Dept 2001]; United Capital Corp. v 183 Lorraine Street Associates, 251 AD2d 400 [2d Dept 1998]).

Here, inasmuch as the auction sale in the foreclosure action was not "made, confirmed and conveyance delivered," the judgment of foreclosure and sale issued thereunder does not become operative, and is without full force and effect (Nutt v Cuming, 155 NY at 313).

The fact remains that, in commencing this action, the plaintiff herein, a prospective purchaser of the property subject to foreclosure, is preventing the foreclosure action from being "disposed." Title to the foreclosed property has yet to be transferred. Plaintiff's deposit of $45,000 was made under the foreclosure action. Moreover, in this action, plaintiff seeks relief for, inter alia, breach of contract against the defendants with the contract being the Terms of Sale; to that end, the Terms of Sale were also issued under the foreclosure index number. For these reasons, the central claim by the plaintiff must be brought under the foreclosure action as [*5]well.

The Court is aware that the plaintiff herein is not a party to the foreclosure action. To pursue his remedies, however, the plaintiff must seek leave to intervene in the foreclosure action (see generally, Countrywide Bank, FSB v Snipes, 223 AD3d 700, 701-702 [2d Dept 2024] [holding that the Supreme Court should have granted the purchaser's motion to intervene in the foreclosure action]; U.S. Bank, N.A. v Qurachi, 163 AD3d 888, 889 [2d Dept 2018] [holding that the Supreme Court properly denied that branch of the motion of the nonparty successful bidder at the foreclosure auction where that nonparty did not seek leave to intervene]; JP Morgan Chase Bank, N.A. v Kalpakis, 91 AD3d 722, 723 [2d Dept 2012] [holding that the Supreme Court properly granted that branch of the movants' motion which was for leave to intervene, as the movants established that they may have an ownership interest in the property that is the subject of the foreclosure proceeding]).

Accordingly, it is hereby,

ORDERED and ADJUDGED, that plaintiff's, motion (Seq. 001) for an order staying all proceedings including but not limited to the selling or auctioning of the property is DENIED, and the ACTION IS DISMISSED IN ITS ENTIRETY; and it is further,

ORDERED, that the defendants' respective motions — Seqs. 002 and 003 — are DENIED as academic; and it is further,

ORDERED, that Referee Davis is directed to continue holding, in escrow, plaintiff's $45,000 deposit until such time as the foreclosure action has come to a resolution.

Any applications not specifically addressed are herewith DENIED.

The parties remaining contentions have been considered and do not warrant discussion.

This constitutes the decision, order, and judgment of this Court.