1042 II Realty, Inc. v. PHH Mortgage Corporation

Nature of the Filing

The text is a letter from Defendant PHH Mortgage Corporation, identified as formerly known as Ocwen Loan Servicing, LLC. It explains the basis for a requested motion seeking an adverse inference based on the deposition testimony of Plaintiff 1042 II Realty, Inc.’s corporate witness, Sanford Solny. The text does not contain a ruling granting or denying that request.

Underlying Dispute

The plaintiff brought an action under Article 15 of New York’s Real Property Actions and Proceedings Law seeking to cancel and discharge the defendant’s mortgage. According to the defendant’s description, the mortgage debt was accelerated when the defendant’s predecessor began a foreclosure action on May 8, 2009. The defendant argues that discontinuing that foreclosure action properly ended the acceleration and left the debt within the applicable time limit for collection. The plaintiff’s position, as described by the defendant, is that the discontinuance occurred more than six years after the foreclosure action began and therefore did not effectively undo the acceleration.

The defendant stated that 1042 II Realty was formed in July 2014 and issued checks to allegedly purchase the property from Candido Rodriguez two days after its formation. Rodriguez deeded the property to the plaintiff on October 21, 2015, while the foreclosure action was pending. The defendant’s predecessor moved to discontinue that action on December 22, 2015, and the court granted the motion by an order dated June 6, 2016.

Deposition and Requested Inference

At a July 8, 2021 deposition, Solny appeared for the plaintiff as a corporate member. The defendant stated that Solny invoked the Fifth Amendment privilege against self-incrimination in response to numerous questions, citing an impending criminal indictment. The questions concerned how the plaintiff learned about the property, the purchase price and source of funds, the timing of the checks and deed, the closing, the plaintiff’s knowledge of the mortgage and foreclosure, and its intentions regarding mortgage, tax, and insurance payments.

The defendant argued that these answers were relevant to whether the plaintiff materially changed its position in detrimental reliance on the mortgage debt allegedly becoming time-barred. The defendant requested adverse inferences—negative factual conclusions based on a party’s refusal to answer questions—in particular that the plaintiff knowingly purchased the property for $18,000 while the mortgage and foreclosure were pending, did not intend to pay the mortgage, and did not intend to pay property taxes or insurance. These were the defendant’s requested conclusions, not findings stated by the court.

Procedural Status

The visible text ends with a directive stating that, if the defendant wished to file a more detailed motion, it had to do so by August 13, 2021; the plaintiff’s opposition was due by August 20, 2021; and the defendant’s reply was due by August 27, 2021. Judge Valerie E. Caproni therefore set a briefing schedule in the text provided. The text does not state whether the court later granted, denied, or otherwise resolved the requested adverse-inference motion.