A vintage cartoon (from the New Yorker?) has a bunch of New York people at a cocktail party, and the balloon for each of them simply says “Real Estate.” NY Prime Holding LLC v Nationstar Mtge., LLC  2019 NY Slip Op 30857(U)  March 27, 2019  Supreme Court, New York County  Docket Number: 157879/2018 Judge: John J. Kelley  is the story of a Harlem townhouse passed around in a game of musical real estate parcels.  A foreclosure action is filed on the very last day possible and ends the first round of the game.  The second round starts with a Judiciary Law § 487 claim.

“On October 8, 2008, Badrul Islam (hereinafter Badrul) purchased real property located at
280 West 127th Street in Manhattan (the property) from Jason Hutto Franklin and Jermaine
Hutto. On that date, Badrul gave a mortgage on the property to Golden First Mortgage Corp. (GFMC) in consideration of a $972,000 loan. GFMC designated Mortgage Electronic Recording Systems, Inc. (MERS), as its nominee. Badrul allegedly defaulted in the repayment of the
mortgage loan. On October 29, 2009, Federal National Mortgage Association (hereinafter
Fannie Mae) commenced a foreclosure action (hereinafter the 2009 foreclosure action) against
Badrul, Franklin, and Hutto, among others, in the Supreme Court, New York County, under
Index No. 115280/09. MERS, however, did not transfer or assign the mortgage and underlying
promissory note to Fannie Mae until June 5, 2010. By order dated October 3, 2010, the
Supreme Court (Schlesinger, J.) denied Fannie Mae’s motion for summary judgment on the
complaint in the 2009 foreclosure action, without prejudice to renewal upon proper papers
showing that it had standing to prosecute the action.

Over the next several years, ownership of the property was transferred by deed on
numerous occasions. On October 5, 2012, Badrul deeded the property to K&S Holding Trading
Corp. On December 13, 2012, K&S Holding Trading Corp. deeded the property to Kitty Hawk
Holdings, LLC. On March 13, 2014, Kitty Hawk Holdings, LLC, deeded the property to Jericho
NY Prime Holding, LLC. On April 17, 2014, Jericho NY Prime Holding, LLC, deeded the
property to the plaintiff, NYPH. During that period of time, the mortgage given by Badrul, then
held by Fannie Mae, remained unsatisfied and remained a mortgage of record.

By order dated April 2, 2015, the Supreme Court (Schlesinger, J.) denied Fannie Mae’s
renewed motion for summary judgment on the complaint in the 2009 foreclosure action, and
dismissed the complaint in that action, without prejudice.

Inasmuch as the 2009 foreclosure action was commenced on October 29, 2009, thus
accelerating Badrul’s obligations under the note and mortgage, Fannie Mae or its assignee had
six years from that date, or until October 29, 2015, to recommence an action to foreclose on the
subject mortgage. Thereafter, any person with an interest in the mortgaged property could
maintain an action to cancel the mortgage (see generally RPAPL 1501 [4]; Milone v US Bank
Natl. Assn., 164 AD3d 145, 156 [2d Dept 2018]; Mizrahi v US Bank, Natl. Assn., 156 AD3d 617[2d Dept 2017]; NMNT Realty Corp. v Knoxville 2012 Trust, 151 AD3d 1068, 1069-1070 [2d
Dept 2017]). On October 27, 2015, Fannie Mae assigned the mortgage and note to the
defendant Nationstar. On October 29, 2015, Nationstar, represented by the defendant law firm
SOB, commenced a new foreclosure in the Supreme Court, New York County, under Index No.
452981 /15 (hereinafter the 2015 foreclosure action), naming NYPH and Badrul as defendants. ”

“In the meantime, on August 23, 2018, NYPH commenced the instant action to recover
against SOB for violation of Judiciary Law § 487, against SOB, Nationstar, Provest, Oliver,
Zienkowicz, and a person named Baharul Islam (Baharul) to recover for abuse of process and
fraud, and for a declaration that the judgment entered in the 2015 foreclosure action is null and
void. The gravamen of NYPH’s complaint is that Nationstar and SOB, as its attorneys, knew
that Badrul did not live on Paulding Avenue in the Bronx, and that they purposely served the
summons and complaint in the 2015 foreclosure action upon Baharul, an unrelated person with
a similar name who did reside there. NYPH asserts that this service was a ruse to trick it and
the court into believing that service had been made upon the correct person at the correct
address, and that the defendants lied in order to secure a default judgment against Badrul, who
actually never received notice of that action in time to defend it. NYPH thus contends that the
judgment in the 2015 foreclosure action was secured by fraud and abuse of process, and that it
has been damaged by virtue of being divested of its ownership interest in the property. ”

“The complaint fails to state a cause of action because it constitutes an improper
collateral attack upon the judgment entered in the 2015 foreclosure action. Any claim that the
judgment of foreclosure was obtained by fraud must be made the subject of a motion to vacate
the judgment in that action, pursuant to CPLR 5015(a)(3), on the ground that it was secured by
extrinsic fraud (see Country Wide Home Loans, Inc. v Harris, 136 AD3d 570 [1st Dept 2016)
[judgment properly vacated where mortgagee knew that nonparty to foreclosure action had an
interest in subject property, yet purposefully refused to name or join him in action]). “The
remedy for fraud allegedly committed during the course of a legal proceeding must be exercised
in that lawsuit by moving to vacate the civil judgment (CPLR 5015[a][3]), and not by another
plenary action collaterally attacking that judgment” (St. Clement v Londa, 8 AD3d 89, 90 [1st
Dept 2004); see Kai Lin v Department of Dentistry, Univ. of Rochester Med. Ctr., 120 AD3d 932
[4th Dept 2014); Parker & Waichman v Napoli, 29 AD3d 396, 399 [1st Dept 2006); Vinokur v
Penny Lane Owners Corp., 269 AD2d 226 [1st Dept 2000)).

This rule applies to claims under Judiciary Law§ 487 as well. In Yalkowsky v Century
Apts. Assocs. (215 AD2d 214, 215 [1st Dept 1995)), the Court dismissed a cause of action
against an attorney who allegedly lied to the Civil Court to obtain a judgment in a landlord-tenant
dispute that defeated a tenant’s constructive eviction defense. The Court explained that, even if
it could be proven that the landlord’s attorney lied to the Civil Court, the “plaintiff’s remedy lies
exclusively in that lawsuit itself, i.e., by moving pursuant to CPLR 5015 to vacate the civil
judgment due to its fraudulent procurement, not a second plenary action collaterally attacking
the judgment in the original action”” (id.; see Crouse v McVickar, 207 NY 213, 217 [1912)). ”