Preview
FILED: DUTCHESS COUNTY CLERK 01/05/2022 09:36 PM INDEX NO. 2021-51452
NYSCEF DOC. NO. 47 RECEIVED NYSCEF: 01/05/2022
FILED: APPELLATE DIVISION - 2ND DEPT 09/27/2021 2021-00930
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Submitted PMby:
NYSCEF DOC. NO. 12 GUNILLA P. PEREZ-FARINGER RECEIVED NYSCEF: 09/27/2021
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Docket No. 2021-00930
M-M2 RE HOLDINGS 1, LLC,
Plaintiff-Respondent,
- against •
BARBARA GIORDANO-LEONAGGEO
and ROGER LEONAGGEO,
Defendants-Appellants,
- and -
JACK GIORDANO, and if he be dead, his respective executors,
administrators, heirs at law, next of kin, distributees, legatees, devisees,
grantees, assignees, judgment-creditors, receivers, trustees committees,
lienors and successors in interest and their husbands, wives, or widows,
executors, administrators, heirs at law, next of kin, distributees, legatees,
devisees, grantees, assignees judgment-creditors, receivers, trustees in
bankruptcy, trustees, committees, lienors, and successors in interest, if
any, and all persons claiming by, through or under any of them, if any, all
of whom and whose names are unknown to plaintiff; and generally all
parties having or claiming to have an interest in or lien upon the
premises described in the complaint or any amendment thereto, by,
through or under said defendant, all of whom and whose place of
residence or business are unknown to the plaintiff and cannot after due
diligent inquiry be ascertained, THE UNITED STATES OF AMERICA,
THE NEW YORK STATE COMMISSIONER OF TAXATION AND
FINANCE, H & L EQUINE, LLC, and “JOHN DOE #1” through “JANE
DOE #10”, the last 10 names begin fictitious and unknown to the
plaintiff, the persons or parties intended being the occupants, tenants,
persons or entities, if any, having or claiming an interest in or lien upon
the mortgaged premises described in the verified complaint,
____ Defendants.
BRIEF FOR DEFENDANTS-APPELLANTS
GUNILLA P. PEREZ-FARINGER
Attorney for Defendants-Appellants
34 South Broadway, Suite 710
White Plains, New York 10601
(914) 574-3708
faringerlaw@gmail.com
Dutchess County Clerk’s Index No. 50487/18
Appeal Press, LLC - (914) 761-3600 - appealpress.com (19210)
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TABLE OF CONTENTS
PRELIMINARY STATEMENT…………………………………………………...1
QUESTIONS PRESENTED………………..……………………………………...2
STATEMENT OF THE CASE……………………………………………….....….3
Plaintiff’s mortgage loan to settle the real estate tax debt
and the purchase of the Land Parcel……………………………………...4
ARGUMENT
POINT I: THE ORDER MUST BE REVERSED BECAUSE
THE COURT BELOW ABUSED ITS DISCRETION…………………………...14
A. The court abused its discretion by ignoring Judge Rosa’s
order to consolidate the cases……………………………………………14
B. The court abused its discretion by taking a statement by
Defendants out of context, thereby
materially altering its meaning…………………………………………..17
POINT II: THE ORDER MUST BE REVERSED BECAUSE THE
COURT BELOW DID NOT ACCEPT AS TRUE THE
EVIDENCE PRESENTED BY THE APPELLANTS………………20
A. The issues of the case are preserved for appeal……………………...20
B. The cases involving the House Parcel and the Land Parcel
are closely related and Defendants are entitled to the
unclean hands defense…………………………………………………23
POINT III: THE ORDER MUST BE REVERSED BECAUSE THERE
ARE GENUINE ISSUES OF MATERIAL FACTS AND
THE BURDEN NEVER SHIFTED…………………………………29
A. Respondent obstructed Appellants’ discovery………………………30
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B. Defendants were fraudulently induced to sell the
Land Parcel to Respondent…………………………………………...37
C. The mortgage is unconscionable and against public policy
and thus unenforceable………………………………………………..44
D. Respondent didn’t have standing to foreclose the mortgage……….48
As to Respondent’s failure to comply with RPAPL……………………48
As to Respondent’s failure to record the mortgage……………………..51
CONCLUSION…………………………………………………………………...54
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TABLE OF AUTHORITIES
Cases:
Adams v. Suozzi, 433 F.3d 220 (2d Cir. 2005)……………………………………44
Alvarez v. Prospect Hospital, 68 NY2d 320 (1986)………………………………29
AXA Versicherung AG v. N.H. Ins. Co., 391 Fed. Appx. 25
(2d Cir. 2010)………………………………………………………………38
Barnosky v. Petteys, 49 AD2d 134 (3d Dept. 1975)………………………………52
Cadlerock Joint Venture, L.P. v. Sol Greenberg & Sons Intl., Inc.,
94 A.D.3d 580 (1st Dept. 2012)……………………………………………36
Catanzaro v. Alvaro (In re. Alvaro),2005 Bankr. Lexis 3483
(U.S. Bankr. Ct. SDNY 2005……………………………………………….53
Celotex v. Catrett, 477 U.S. 317, 322 (1986)………………………………………20
Cioffi v. Habberstad, 22 Misc.3d 839 (Sup. Ct. Nassau Co., 2008)………………35
Currier v. Prudential Ins. Co. of America, 266 AD2d 596 (3d Dept. 1999)………52
In re. Cohen, 63 B.R. 104 (U.S. Bankruptcy Ct. EDNY 1986)……………………52
Dallas Aerospace, Inc. v. CIS Air Corp., 352 F.3d 775 (2d Cir. 2003)……………45
Del Vecchio By Del Vecchio v. Nassau County,
118 AD2d 615 (2d Dept. 1986)…………………………………………….38
Evans v. New York City Tr. Auth., 179 AD3d 105 (2d Dept. 2019)………………22
In re. Estate of Friedman, 64 AD2d 70 (2d Dept. 1978)………………………….47
Gillman v. Chase Manhattan Bank, N.A., 73 (N.Y. 1988)………………………..44
Green v. Covington, 299 AD2d 636 (3d Dept. 2002)………………………………36
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Haines v. Kerner, 404 U.S. 519 (1971)……………………………………………20
Haynes v. Secretary of Department of Public Safety, 455 F.2d. 798………………22
I.C. ex rel. Solovsky v. Delta Galil USA,
135 F.Supp.3d 196, 210 (SDNY 2015)……………………………………..45
Industralease Automated & Scientific Equip. Corp.
v.R.M.E. Enterprises, 58 AD2 482, 498…………………………………...44
Kopsidas v. Krokos, 294 AD2d 406 (2d Dept. 200)………………………………43
Matter of Kover, 1345 AD3d 64 (1st Dept. 2015)………………………………..19
Lancaster v. Kindor, 98 AD2d 300 (1st Dept. 1984)……………………………...22
Leighton v. Leighton, 46 AD3d 264 (1st Dept. 2007)……………………………..29
Lonner v. Simon Prop., Group, Inc., 57 AD3d 100,110
(2d Dept. 2008)…………………………………………………………….37
Malik v. Coughlin, 133 Misc.2d 245 (Albany Co. 1986)…………………………22
Nandy v. Albany Medical Center Hospital,
155 AD2d 833 (3rd Dept. 1989)…………………………………………….20
Pellegrini v. Brock, 2009 NY Slip Op 6721 (1st Dept.)…………………………...20
Pentony v. Saxe, 2 AD3d 1076, 1076 (3rd Dept. 2003)…………………………...52
Pinella v. Crescent St. Corp., 176 AD3d 985 (2d Dept. 2019)………………….37
Rosell v. Int’l Cosmetic Surgery PC,
2007 NY Misc. Lexis 8290 (NY Co. 2007)……………………………….22
Rovello v. Orofino Realty Co., 40 NY2d 633 (1976)……………………………..21
Skura v. Wojtlowski, 165 AD3d 1196, 1200 (2d Dept. 2018);……………………30
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Steele v. Polymer Research Corp., 1987 U.S. Dist. Lexis 5270
(SDNY 1987)………………………………………………………………19
Triestman v. Fed. Bureau of Prisons, 47 F3d 471 (2d Cir. 2006)…………………22
United States v. Parks, 2018 U.S. Dist. Lexis 172829 (WDNY 2018)………49, 50
United States v. Tonawanda Coke Corp.,
636 Fed. Appx. 24, 27 (2d Cir. 2016)……………………………………….23
Wells Fargo Bank N.A. v, Erabobo, 127 AD3d 1176 (2d Dept. 20015)……………48
Statutes:
Banking Law §590(2)(a)(i-ii)…………………………………………………….50
CPLR 3212(f)……………………………………………………………………..36
CPLR 6501………………………………………………………………………..49
New York General Obligations Law Section 5-703………………………………52
New York Property Law §291……………………………………………………51
RPAPL §1303……………………………………………………………………..49
RPAPL §1304……………………………………………………………………..50
RPAPL §1331……………………………………………………………………..49
Truth In Lending Act………………………………………………………………50
Other authorities:
2006 Report of the Advisory Comm. on Civil Practice………………………..35, 36
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Rules of Professional Conduct Rule 3.1(b)(3)…………………………………….19
Rules of Professional Conduct Rule 3.3(a)(1)…………………………………….19
Uniform Rules for New York State Trial Courts, Part 221………………………..35
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PRELIMINARY STATEMENT
The Defendants-Appellants, Barbara Giordano-Leonaggeo (“Giordano”,
“Defendant” or “Appellant”) and Roger Leonaggeo (“Leonaggeo”) (collectively
“Leonaggeos”, “Defendants” or “Appellants”) appeal so much from the Judgment
of Foreclosure and Sale dated December 28, 2020 and Decision and Order granting
the motion for summary judgment of Plaintiff-Respondent M-M2 RE Holdings 1,
LLC, an alter ego of its owner Michael Milea (“Milea”, “Plaintiff” or “Respondent”)
and striking Defendants’ amended answer, of the Supreme Court of the State of New
York, County of Dutchess (Hon. Peter Forman), and from each and every part
thereof.
The subject matter of this case is the property known as 150 Homan Road in
the Hamlet of Stanfordville, County of Dutchess, State of New York, parcel grid No.
51845, a 12.8 acres parcel of land improved by a single family residence (“House
Parcel” or “Property”) which is Appellants’ primary residence.
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QUESTIONS PRESENTED
1. Can a plaintiff’s unconscionable and fraudulent conduct in one case, which is
an integral part of another case, form the basis for a finding of unclean hands
in the latter case?
Answer: The Court below answered this question in the negative, in direct
contradiction of a previous order.
2. Can a plaintiff’s statements and its own interpretation of the evidence,
regardless of their veracity, constitute sufficient grounds for a ruling of
summary judgment?
Answer: The court below answered this question in the affirmative.
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STATEMENT OF THE CASE
This appeal is the result of a deeply tragic and labyrinthine tale spanning over
one and a half decade and involving three (at one point in time four) valuable parcels
of land in the hamlet of Stanfordville, Dutchess County (“County”), State of New
York. The properties are or were owned by Defendants, Barbara Giordano-
Leonaggeo and Roger Leonaggeo, third-generation horse farmers in Stanfordville,
New York.
The properties, located in close proximity to each other in the hamlet of
Stanfordville, consist of a “House Parcel” a “Land Parcel” and a “Stable Parcel”.
This appeal concerns issues relating to the House Parcel and the Land Parcel. The
Stable Parcel is not directly relevant to this appeal.
Over and over again throughout the years Appellants have fallen prey to a
series of unscrupulous purported friends, business partners and real estate investors
engaging them in several highly unethical and fraudulent land transactions. As a
result, the Leonnageos are now the defendants in no less than four currently
ongoing, closely interrelated legal actions, three of them brought by Michael Milea,
the Plaintiff-Respondent herein, upon information and belief the sole owner and
officer of at least 31 real estate, commercial funding and hard money lending holding
companies. All 31 companies are apparent alter egos of Mr. Milea, , three of which
are the plaintiffs in Mr. Milea’s actions against Appellants.
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This case concerns the foreclosure of a mortgage on the House Parcel in favor
of Respondent in the amount of $35,732.00 (“Mortgage”, or “Loan”).
However, the gravamen of the case is the fraudulent transfer of title to the
Land Parcel, a 101-acre parcel of unimproved tract of land located at 107 Homan
Road, Village of Stanfordville, County of Dutchess, State of New York to Mr.
Milea, which was executed simultaneously with the execution of the Mortgage on
the House Parcel, on October 11, 2016. The Land Parcel is the subject matter of a
quiet title action, M-M2 RE Holdings 4, LLC v. Barbara Giordano-Leonaggeo et al.,
Dutchess County Index No. 50671/2018 (“Land Parcel case”).
In her order in the Land Parcel case dated May 21, 2019 Hon. Maria Rosa
granted Appellants’ motion to consolidate the two actions (R 528-29) on the ground
of factual issues relating to both cases, however this order was simply ignored by
Judge Forman. As a result, the consolidation of the two cases ordered by Judge Rosa
was never implemented and was not even mentioned by Judge Forman in the order
appealed from, which granted Plaintiff’s motion for summary judgment (R 28-34).
An order to show cause to grant Milea title to the Lant Parcel, and the Leonaggeos’
cross-motion for contemp are currently pending in the Land Parcel case.
Plaintiff’s mortgage loan to settle the real estate tax debt
and the purchase of the Land Parcel
In the fall of 2016 Appellants found themselves in serious tax delinquency
and were in danger of losing their home to the County. They discussed their situation
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with non-party Susan Budai, a real estate broker and eventually a purported personal
friend of the Leonaggeos, who held a small mortgage on the Stable Parcel. Ms. Budai
became interested in working together with the Leonaggeos on their project New
York Center for Animal Rehabilitation and Training (“NY-CART”), specializing in
equine and canine.
When Defendants were facing the dire situation of being unable to pay
their real estate taxes due in the amount of $35,732.00 Ms. Budai introduced them
to her friend, Respondent Michael Milea. Mr. Milea offered to lend them the funds
to settle the tax debt, secured by a mortgage on the House Parcel (“Mortgage” or
“Loan”). Under the terms of the loan the 15 percent interest was payable in monthly
installments of $446.66 with the entire principal of $35,732.49 due in a balloon
payment only one year later, on October 1, 2017. (R 446).
Because of their carefully developed plans to open the animal rehabilitation
center they were confident that by the time the balloon payment was due they would
be in a financial position to pay it off, and they accepted the offer. The Court is
respectfully requested to take judicial notice of the fact that according to the internet
real estate listing service Zillow, the current estimated value of the House Parcel is
over 800,000.
The final deadline to settle the tax debt with the County was October 11, 2016
and the closing of the mortgage transaction (“Closing”) was set for that very day.
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However, only one day before the closing, in the evening of October 10, 2016,
Milea suddenly called Defendants with a whole new condition: a demand that they
sold him the Land Parcel for $25,000 as a condition for entering into the mortgage
transaction.
The main issue in both cases is Respondent’s allegation that it was Ms.
Giordano who offered to sell the Land Parcel to Milea for $25,000, several days
before the closing of the mortgage transaction, however this is a patently false
notion, as will be discussed below. Defendants never intended to sell the Land
Parcel.
Five years previously the estimated value of the 101-acre Land Parcel was
$995,000, as per the Broker’s Opinion of Value letter issued by Ms. Budai dated
April 17, 2011 (R 519), and its value has increased significantly since. In February
2020, a 105 acre tract of land directly across the street from the subject Land Parcel
was sold for $1.8 Million; in fact, that parcel was the result of a subdivision from the
subject Land Parcel in 2004, in a transaction unrelated to this case.
In his deposition Mr. Milea, an experienced real estate developer, agreed that
the estimated value of the Land Parcel was “absolutely” $995,000. (R 649).
Even so, Plaintiff demanded to purchase the Land Parcel for $25,000, a tiny
fraction of its value, as a condition for the loan of less than $36,000 needed to clear
the tax delinquency on the Leonaggeos’ home, valued at over $800,000. Milea
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claimed that “his attorney [Jordan Haug] would not let him do the deal” without also
buying the Land Parcel. (Deposition transcript of Ms. Giordano, R 201). Mr. Haug
has denied this allegation (R 70).
Being faced with the imminent risk of losing their home to foreclosure,
Defendants were under extreme stress and time restraints, a fact Plaintiff admits that
he was fully aware of (Deposition transcript of Mr. Milea, R 628). Under these
circumstance they simply had no other alternative than accepting the demand, after
several previous failed attempts to secure financing, and being one day away from
losing their home to a tax auction.
The $25,000 purchase price for the one-million dollar property came with an
option to buy it back at a price of $50,000 within a year. But this is not all: in addition
to these very harsh terms Plaintiff, in another surprise move, at the closing table
presented them with yet another demand: that they pay him land lease fees in the
amount of $1,000 per month. Plaintiff’s final ultimatum was that in order to finalize
the deal, Defendants had to pay the entire year’s rent of $12,000 upfront at the
closing table.
All in all, Respondent’s plan was to generate $37,000 in profit on his $25,000
land purchase, equaling 150 percent profit to be paid by Defendants in exchange for
a loan of less than $36,000 to pay off their real estate taxes (in addition to the 15
percent interest on the Land Parcel mortgage), in a year’s time.
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After the $12,000 had been paid at the closing, the remainder of the $25,000
sales price for the 101-acre land went to fees and expenses, reducing Defendants to
leave emptyhanded from the closing. Plaintiff’s own attorney, Mr. Haug, told
Defendants that he had been instructed to “make sure that all of the $25,000… gets
used up at the closing and we walk out with nothing.” (Deposition transcript of Roger
Leonaggeo, R 340-341).
The closing of the two transactions, the mortgage on the House Parcel and the
sale of the Land Parcel, took place on the same day under extreme time pressure,
and with the surprise terms imposed by Respondent at the very last moment.
There is nothing in the record to explain why, even in view of the fact that
The Leonaggeo’s were introduced to Milea with little time remaining before the tax
deadline, Respondent waited until the absolute last moment and held the closings
the same day as the final deadline of the payment of the taxes, creating an extremely
rushed and pressured situation and bringing the Appellants to the brink of losing
their home to the County.
Ms. Budai had introduced Mr. Milea to Appellants as a personal friend, a
private individual who was willing to lend them the funds to pay off their real estate
tax debt. She was a trusted friend of the Appellants, and they saw no reason not to
doubt her honesty.
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However, it was only at the closing table that they learned that in reality the
parties to the transactions were not Mr. Milea at all but two of his companies, H-H
RE Holdings, LLC 1 (the House Parcel) and H-H RE Holdings, LLC 4 (the Land
Parcel), entities that they had never before heard of. Ms. Budai’s true intentions were
later revealed, when she for no explained reason backed out of the animal
rehabilitation project, thereby placing the Leonaggeos in even worse financial
circumstances, and inexplicably lowering her valuation of the Land Parcel to 20
percent of her previous estimation, to only $200,000, in apparent support of
Plaintiff’s case. (R 522) and when it became known to Defendants that she, without
their knowledge, was negotiating with Milea about the possibility of combining all
three parcels, the House Parcel, the Land Parcel and the Stable Parcel, into one
mortgage. (Giordano Aff., R 547).
Ms. Budai introduced Appellants to the idea of executing a new mortgage,
which would include all three parcels, and, as an added incentive both Budai and
Milea himself now expressed interest in being financially involved in the
Defendants’ animal rehabilitation center project. After lengthy discussions between
the parties they finally agreed only to consolidate all three parcels under one
mortgage. After a long delay Milae’s attorney, Jordan Haug, finally provided the
Leonaggeos with the purported mortgage modification document on August 11,
2017. R 547.
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However, the document they received was nothing but a simple mortgage
modification. It was a 48-page document entitled “Construction Loan Agreement”
(R 664). Incredibly, the title of the document is “Construction Loan Agreement made
by Barbara Giordano-Leonaggeo, Roger Leonaggeo and M-M2 RE Holdings 4, LLC
as borrower to and for the benefit of M-M2RE Holdings 1, LLC, as lender”, in an
amount of up to $125,000. That is, Milea attempted to issue a “construction loan”
where he appeared both as the borrower and the lender with the power to foreclose
on the loan, as both entities are without doubt alter egos of Milea. Defendants’
attorney warned them that the document was not a mortgage modification and
advised them not to sign it, and they declined.
Following the closings of the loan and sales transactions Defendants learned
that the deed for the sale of the Land Parcel was recorded the same day, October 11,
2016 (R 460). (Previous to the transactions relevant to this case both parcels had
been the subject of various procedures to secure title to them with Ms. Leonaggeo,
who inherited them from her parents).
However, while the Land Parcel deed was recorded right away, as expected,
the mortgage on the House Parcel was incongruously reported lost by Plaintiff’s
attorney, Jordan Haug, even though the transactions underlying the two documents
were conducted at the same time. It was not until over ten months after the
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transaction, on August 29, 2017, that the mortgage on the House Parcel was
recorded, together with an affidavit by Mr. Haug (R 428-449).
Furthermore, for unknown reasons the mortgage’s property description
included all three parcels, which was not corrected until after Plaintiff commenced
the within action for foreclosure on February 23, 2018. The mortgage was released
from the Stable Parcel and the Land Parcel on November 21, 2018 and March 5,
2020, respectively. (R 450, 454) (It is not known why the incorrectly recorded
mortgage was not released from the two properties at the same time),
Most egregiously, in an act of patently fraudulent misrepresentation,
Defendants were repeatedly made to believe by Plaintiff and his attorneys that they
were selling the Land Parcel to him subject to a previously existing mortgage in the
amount of $35,000 held by an individual by the name of Richard von der Lieth (“von
der Lieth); this was confirmed by Respondent’s inquiries about the monthly
mortgage payments and request for copies of all relevant documents. (See email
dated October 10, 2016, R 576).
However, while the undersigned was preparing the documents for a motion in
the ongoing Land Parcel case, it was discovered that Appellants had been
fraudulently induced to believe that Mr. Milea was assuming the mortgage to Mr.
von der Lieth, while in fact they are still responsible for said mortgage. The Land
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Parcel deed stating that the “Premises are not subject to a credit line mortgage” is
reproduced on page 461 of the record.
Because of the extremely high-pressure conditions at the closing, and,
notably, the fact that they were not provided with the contract of sale or any other
documents in advance of the transactions, there was no time for the Leonaggeos to
go over all the documents they were instructed to sign at the closing table. In
addition, they were under the impression that Milea’s intentions were to do them a
favor and help them to save their home, albeit temporarily, and saw no reason to
doubt the truth of what they had previously been told about the transactions.
Because they had been assured that von der Lieth’s mortgage had been paid
off by Respondent as part of the sale they naturally stopped making the monthly
payments, and as a result they are now the defendants in a foreclosure action by von
der Lieth, Richard von der Lieth v. Barbara Giordano et al., Dutchess Index No.
2021-51452.
Had Appellants been aware of the fact that they were still responsible for a
$35,000 (excluding interest) mortgage after having been compelled to sell a tract of
land believed to be worth $1 Million to Plaintiff for $25,000 and offered to buy it
back in a year for twice the amount, in addition to $12,000 in land lease fees, and
had they not been on the verge of losing their home, they would naturally never have
accepted the deal. By their reasonable reliance on the repeated statements by
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Plaintiff and his counsel that the conveyance was made subject to the mortgage they
fell prey to a patently fraudulent transaction.
When the one-year deadline to buy back the Land Parcel, as a result of Ms.
Budai and other investors having lost interest in the animal rehabilitation project, the
plans to build the “NY-CART” center never came to fruition, and Defendants’
expectations to pay off Milea’s mortgage and other debt with the anticipated income
from the center could not be realized.
Therefore, when the option to buy-back the Land Parcel for $50,000 and the
balloon payment of the mortgage on the House Parcel came due on October 1, 2017,
Defendants found themselves without the means to meet either obligation. Plaintiff
then offered them a one-year extension of the buy-back option at a reduced monthly
rent of $500, but for unknown reasons the Leonaggeos’ attorney at the time advised
against it and they declined. Plaintiff then commenced the within action for
foreclosure on February 23,. 2018, and the quiet title action on the Land Parcel on
March 15, 2018
Plaintiff’s motion for summary judgment for foreclosure was granted on
November 19, 2020 (R 29) and the Judgment of Foreclosure was entered on
December 28, 2020. (R 4) In addition to having lost their home to foreclosure the
court entered a deficiency judgment against them in the amount of $52,855.09; in
addition they owe Plaintiff $30,000.00 in legal fees and $1,585.00 for costs and
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disbursements. Defendants filed their Notice of Appeal om January 28, 2021 (R 3).
The quiet title case regarding the Land Parcel is still ongoing; in addition, they are
the defendants in the case brought by von der Lieth.
ARGUMENT
POINT I: THE ORDER MUST BE REVERSED BECAUSE
THE COURT BELOW ABUSED ITS DISCRETION
C. The court abused its discretion by ignoring Judge Rosa’s
order to consolidate the cases
On May 21, 2019 Judge Maria Rosa granted Defendants’ motion in the case
M-M2 RE Holdins LLC 4 v. Giordano-Leonaggeo et al., Index No. 50671/18 (Land
Parcel case) to consolidate the two cases for the purpose of discovery (R 64) and
denied Plaintiff’s motion for summary judgment on the ground that Defendants
raised a material issue of facts based on their affirmative defense of unclean hands.
In her order Judge Rosa stated:
ORDERED that Defendant’s motion to consolidate this action
with a foreclosure for residential real property [House Parcel case]
where the live at 150 Homan Road is granted. There are related factual
issues surrounding the closing of the mortgage in the foreclosure action
and the transfer of property in this action. Wherefore, the action
pending before this [sic] court (Forman, J.) under Index Number 2018-
50487 is hereby consolidated for purposes of discovery with this action
under Index Number 2018-50671. As the action before Judge Forman
is older, the consolidated action is now before Judge Forman. The
parties are directed to appear for a conference before the Hon. Peter M.
Forman on both actions on June 10, 2019 at 10:00 a.m.
14
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However, in the order appealed from, Judge Forman’s order granting Plaintiff
summary judgment for foreclosure (the House Parcel) and striking Defendant’s
answer dated November 19, 2020 (R 145), while mentioning Judge Rosa’s
consolidation of the cases (R 31, footnote) the court does not discuss it or otherwise
Preview
FILED: DUTCHESS COUNTY CLERK 01/05/2022 09:36 PM INDEX NO. 2021-51452 NYSCEF DOC. NO. 47 RECEIVED NYSCEF: 01/05/2022 FILED: APPELLATE DIVISION - 2ND DEPT 09/27/2021 2021-00930 To he 12:32 Submitted PMby: NYSCEF DOC. NO. 12 GUNILLA P. PEREZ-FARINGER RECEIVED NYSCEF: 09/27/2021 fork i»«prrmr Court ApppUatf Ittttaion - §frmt& ippartmpnt Docket No. 2021-00930 M-M2 RE HOLDINGS 1, LLC, Plaintiff-Respondent, - against • BARBARA GIORDANO-LEONAGGEO and ROGER LEONAGGEO, Defendants-Appellants, - and - JACK GIORDANO, and if he be dead, his respective executors, administrators, heirs at law, next of kin, distributees, legatees, devisees, grantees, assignees, judgment-creditors, receivers, trustees committees, lienors and successors in interest and their husbands, wives, or widows, executors, administrators, heirs at law, next of kin, distributees, legatees, devisees, grantees, assignees judgment-creditors, receivers, trustees in bankruptcy, trustees, committees, lienors, and successors in interest, if any, and all persons claiming by, through or under any of them, if any, all of whom and whose names are unknown to plaintiff; and generally all parties having or claiming to have an interest in or lien upon the premises described in the complaint or any amendment thereto, by, through or under said defendant, all of whom and whose place of residence or business are unknown to the plaintiff and cannot after due diligent inquiry be ascertained, THE UNITED STATES OF AMERICA, THE NEW YORK STATE COMMISSIONER OF TAXATION AND FINANCE, H & L EQUINE, LLC, and “JOHN DOE #1” through “JANE DOE #10”, the last 10 names begin fictitious and unknown to the plaintiff, the persons or parties intended being the occupants, tenants, persons or entities, if any, having or claiming an interest in or lien upon the mortgaged premises described in the verified complaint, ____ Defendants. BRIEF FOR DEFENDANTS-APPELLANTS GUNILLA P. PEREZ-FARINGER Attorney for Defendants-Appellants 34 South Broadway, Suite 710 White Plains, New York 10601 (914) 574-3708 faringerlaw@gmail.com Dutchess County Clerk’s Index No. 50487/18 Appeal Press, LLC - (914) 761-3600 - appealpress.com (19210) FILED: DUTCHESS COUNTY CLERK 01/05/2022 09:36 PM INDEX NO. 2021-51452 NYSCEF DOC. NO. 47 RECEIVED NYSCEF: 01/05/2022 TABLE OF CONTENTS PRELIMINARY STATEMENT…………………………………………………...1 QUESTIONS PRESENTED………………..……………………………………...2 STATEMENT OF THE CASE……………………………………………….....….3 Plaintiff’s mortgage loan to settle the real estate tax debt and the purchase of the Land Parcel……………………………………...4 ARGUMENT POINT I: THE ORDER MUST BE REVERSED BECAUSE THE COURT BELOW ABUSED ITS DISCRETION…………………………...14 A. The court abused its discretion by ignoring Judge Rosa’s order to consolidate the cases……………………………………………14 B. The court abused its discretion by taking a statement by Defendants out of context, thereby materially altering its meaning…………………………………………..17 POINT II: THE ORDER MUST BE REVERSED BECAUSE THE COURT BELOW DID NOT ACCEPT AS TRUE THE EVIDENCE PRESENTED BY THE APPELLANTS………………20 A. The issues of the case are preserved for appeal……………………...20 B. The cases involving the House Parcel and the Land Parcel are closely related and Defendants are entitled to the unclean hands defense…………………………………………………23 POINT III: THE ORDER MUST BE REVERSED BECAUSE THERE ARE GENUINE ISSUES OF MATERIAL FACTS AND THE BURDEN NEVER SHIFTED…………………………………29 A. Respondent obstructed Appellants’ discovery………………………30 i FILED: DUTCHESS COUNTY CLERK 01/05/2022 09:36 PM INDEX NO. 2021-51452 NYSCEF DOC. NO. 47 RECEIVED NYSCEF: 01/05/2022 B. Defendants were fraudulently induced to sell the Land Parcel to Respondent…………………………………………...37 C. The mortgage is unconscionable and against public policy and thus unenforceable………………………………………………..44 D. Respondent didn’t have standing to foreclose the mortgage……….48 As to Respondent’s failure to comply with RPAPL……………………48 As to Respondent’s failure to record the mortgage……………………..51 CONCLUSION…………………………………………………………………...54 ii FILED: DUTCHESS COUNTY CLERK 01/05/2022 09:36 PM INDEX NO. 2021-51452 NYSCEF DOC. NO. 47 RECEIVED NYSCEF: 01/05/2022 TABLE OF AUTHORITIES Cases: Adams v. Suozzi, 433 F.3d 220 (2d Cir. 2005)……………………………………44 Alvarez v. Prospect Hospital, 68 NY2d 320 (1986)………………………………29 AXA Versicherung AG v. N.H. Ins. Co., 391 Fed. Appx. 25 (2d Cir. 2010)………………………………………………………………38 Barnosky v. Petteys, 49 AD2d 134 (3d Dept. 1975)………………………………52 Cadlerock Joint Venture, L.P. v. Sol Greenberg & Sons Intl., Inc., 94 A.D.3d 580 (1st Dept. 2012)……………………………………………36 Catanzaro v. Alvaro (In re. Alvaro),2005 Bankr. Lexis 3483 (U.S. Bankr. Ct. SDNY 2005……………………………………………….53 Celotex v. Catrett, 477 U.S. 317, 322 (1986)………………………………………20 Cioffi v. Habberstad, 22 Misc.3d 839 (Sup. Ct. Nassau Co., 2008)………………35 Currier v. Prudential Ins. Co. of America, 266 AD2d 596 (3d Dept. 1999)………52 In re. Cohen, 63 B.R. 104 (U.S. Bankruptcy Ct. EDNY 1986)……………………52 Dallas Aerospace, Inc. v. CIS Air Corp., 352 F.3d 775 (2d Cir. 2003)……………45 Del Vecchio By Del Vecchio v. Nassau County, 118 AD2d 615 (2d Dept. 1986)…………………………………………….38 Evans v. New York City Tr. Auth., 179 AD3d 105 (2d Dept. 2019)………………22 In re. Estate of Friedman, 64 AD2d 70 (2d Dept. 1978)………………………….47 Gillman v. Chase Manhattan Bank, N.A., 73 (N.Y. 1988)………………………..44 Green v. Covington, 299 AD2d 636 (3d Dept. 2002)………………………………36 iii FILED: DUTCHESS COUNTY CLERK 01/05/2022 09:36 PM INDEX NO. 2021-51452 NYSCEF DOC. NO. 47 RECEIVED NYSCEF: 01/05/2022 Haines v. Kerner, 404 U.S. 519 (1971)……………………………………………20 Haynes v. Secretary of Department of Public Safety, 455 F.2d. 798………………22 I.C. ex rel. Solovsky v. Delta Galil USA, 135 F.Supp.3d 196, 210 (SDNY 2015)……………………………………..45 Industralease Automated & Scientific Equip. Corp. v.R.M.E. Enterprises, 58 AD2 482, 498…………………………………...44 Kopsidas v. Krokos, 294 AD2d 406 (2d Dept. 200)………………………………43 Matter of Kover, 1345 AD3d 64 (1st Dept. 2015)………………………………..19 Lancaster v. Kindor, 98 AD2d 300 (1st Dept. 1984)……………………………...22 Leighton v. Leighton, 46 AD3d 264 (1st Dept. 2007)……………………………..29 Lonner v. Simon Prop., Group, Inc., 57 AD3d 100,110 (2d Dept. 2008)…………………………………………………………….37 Malik v. Coughlin, 133 Misc.2d 245 (Albany Co. 1986)…………………………22 Nandy v. Albany Medical Center Hospital, 155 AD2d 833 (3rd Dept. 1989)…………………………………………….20 Pellegrini v. Brock, 2009 NY Slip Op 6721 (1st Dept.)…………………………...20 Pentony v. Saxe, 2 AD3d 1076, 1076 (3rd Dept. 2003)…………………………...52 Pinella v. Crescent St. Corp., 176 AD3d 985 (2d Dept. 2019)………………….37 Rosell v. Int’l Cosmetic Surgery PC, 2007 NY Misc. Lexis 8290 (NY Co. 2007)……………………………….22 Rovello v. Orofino Realty Co., 40 NY2d 633 (1976)……………………………..21 Skura v. Wojtlowski, 165 AD3d 1196, 1200 (2d Dept. 2018);……………………30 iv FILED: DUTCHESS COUNTY CLERK 01/05/2022 09:36 PM INDEX NO. 2021-51452 NYSCEF DOC. NO. 47 RECEIVED NYSCEF: 01/05/2022 Steele v. Polymer Research Corp., 1987 U.S. Dist. Lexis 5270 (SDNY 1987)………………………………………………………………19 Triestman v. Fed. Bureau of Prisons, 47 F3d 471 (2d Cir. 2006)…………………22 United States v. Parks, 2018 U.S. Dist. Lexis 172829 (WDNY 2018)………49, 50 United States v. Tonawanda Coke Corp., 636 Fed. Appx. 24, 27 (2d Cir. 2016)……………………………………….23 Wells Fargo Bank N.A. v, Erabobo, 127 AD3d 1176 (2d Dept. 20015)……………48 Statutes: Banking Law §590(2)(a)(i-ii)…………………………………………………….50 CPLR 3212(f)……………………………………………………………………..36 CPLR 6501………………………………………………………………………..49 New York General Obligations Law Section 5-703………………………………52 New York Property Law §291……………………………………………………51 RPAPL §1303……………………………………………………………………..49 RPAPL §1304……………………………………………………………………..50 RPAPL §1331……………………………………………………………………..49 Truth In Lending Act………………………………………………………………50 Other authorities: 2006 Report of the Advisory Comm. on Civil Practice………………………..35, 36 v FILED: DUTCHESS COUNTY CLERK 01/05/2022 09:36 PM INDEX NO. 2021-51452 NYSCEF DOC. NO. 47 RECEIVED NYSCEF: 01/05/2022 Rules of Professional Conduct Rule 3.1(b)(3)…………………………………….19 Rules of Professional Conduct Rule 3.3(a)(1)…………………………………….19 Uniform Rules for New York State Trial Courts, Part 221………………………..35 vi FILED: DUTCHESS COUNTY CLERK 01/05/2022 09:36 PM INDEX NO. 2021-51452 NYSCEF DOC. NO. 47 RECEIVED NYSCEF: 01/05/2022 PRELIMINARY STATEMENT The Defendants-Appellants, Barbara Giordano-Leonaggeo (“Giordano”, “Defendant” or “Appellant”) and Roger Leonaggeo (“Leonaggeo”) (collectively “Leonaggeos”, “Defendants” or “Appellants”) appeal so much from the Judgment of Foreclosure and Sale dated December 28, 2020 and Decision and Order granting the motion for summary judgment of Plaintiff-Respondent M-M2 RE Holdings 1, LLC, an alter ego of its owner Michael Milea (“Milea”, “Plaintiff” or “Respondent”) and striking Defendants’ amended answer, of the Supreme Court of the State of New York, County of Dutchess (Hon. Peter Forman), and from each and every part thereof. The subject matter of this case is the property known as 150 Homan Road in the Hamlet of Stanfordville, County of Dutchess, State of New York, parcel grid No. 51845, a 12.8 acres parcel of land improved by a single family residence (“House Parcel” or “Property”) which is Appellants’ primary residence. 1 FILED: DUTCHESS COUNTY CLERK 01/05/2022 09:36 PM INDEX NO. 2021-51452 NYSCEF DOC. NO. 47 RECEIVED NYSCEF: 01/05/2022 QUESTIONS PRESENTED 1. Can a plaintiff’s unconscionable and fraudulent conduct in one case, which is an integral part of another case, form the basis for a finding of unclean hands in the latter case? Answer: The Court below answered this question in the negative, in direct contradiction of a previous order. 2. Can a plaintiff’s statements and its own interpretation of the evidence, regardless of their veracity, constitute sufficient grounds for a ruling of summary judgment? Answer: The court below answered this question in the affirmative. 2 FILED: DUTCHESS COUNTY CLERK 01/05/2022 09:36 PM INDEX NO. 2021-51452 NYSCEF DOC. NO. 47 RECEIVED NYSCEF: 01/05/2022 STATEMENT OF THE CASE This appeal is the result of a deeply tragic and labyrinthine tale spanning over one and a half decade and involving three (at one point in time four) valuable parcels of land in the hamlet of Stanfordville, Dutchess County (“County”), State of New York. The properties are or were owned by Defendants, Barbara Giordano- Leonaggeo and Roger Leonaggeo, third-generation horse farmers in Stanfordville, New York. The properties, located in close proximity to each other in the hamlet of Stanfordville, consist of a “House Parcel” a “Land Parcel” and a “Stable Parcel”. This appeal concerns issues relating to the House Parcel and the Land Parcel. The Stable Parcel is not directly relevant to this appeal. Over and over again throughout the years Appellants have fallen prey to a series of unscrupulous purported friends, business partners and real estate investors engaging them in several highly unethical and fraudulent land transactions. As a result, the Leonnageos are now the defendants in no less than four currently ongoing, closely interrelated legal actions, three of them brought by Michael Milea, the Plaintiff-Respondent herein, upon information and belief the sole owner and officer of at least 31 real estate, commercial funding and hard money lending holding companies. All 31 companies are apparent alter egos of Mr. Milea, , three of which are the plaintiffs in Mr. Milea’s actions against Appellants. 3 FILED: DUTCHESS COUNTY CLERK 01/05/2022 09:36 PM INDEX NO. 2021-51452 NYSCEF DOC. NO. 47 RECEIVED NYSCEF: 01/05/2022 This case concerns the foreclosure of a mortgage on the House Parcel in favor of Respondent in the amount of $35,732.00 (“Mortgage”, or “Loan”). However, the gravamen of the case is the fraudulent transfer of title to the Land Parcel, a 101-acre parcel of unimproved tract of land located at 107 Homan Road, Village of Stanfordville, County of Dutchess, State of New York to Mr. Milea, which was executed simultaneously with the execution of the Mortgage on the House Parcel, on October 11, 2016. The Land Parcel is the subject matter of a quiet title action, M-M2 RE Holdings 4, LLC v. Barbara Giordano-Leonaggeo et al., Dutchess County Index No. 50671/2018 (“Land Parcel case”). In her order in the Land Parcel case dated May 21, 2019 Hon. Maria Rosa granted Appellants’ motion to consolidate the two actions (R 528-29) on the ground of factual issues relating to both cases, however this order was simply ignored by Judge Forman. As a result, the consolidation of the two cases ordered by Judge Rosa was never implemented and was not even mentioned by Judge Forman in the order appealed from, which granted Plaintiff’s motion for summary judgment (R 28-34). An order to show cause to grant Milea title to the Lant Parcel, and the Leonaggeos’ cross-motion for contemp are currently pending in the Land Parcel case. Plaintiff’s mortgage loan to settle the real estate tax debt and the purchase of the Land Parcel In the fall of 2016 Appellants found themselves in serious tax delinquency and were in danger of losing their home to the County. They discussed their situation 4 FILED: DUTCHESS COUNTY CLERK 01/05/2022 09:36 PM INDEX NO. 2021-51452 NYSCEF DOC. NO. 47 RECEIVED NYSCEF: 01/05/2022 with non-party Susan Budai, a real estate broker and eventually a purported personal friend of the Leonaggeos, who held a small mortgage on the Stable Parcel. Ms. Budai became interested in working together with the Leonaggeos on their project New York Center for Animal Rehabilitation and Training (“NY-CART”), specializing in equine and canine. When Defendants were facing the dire situation of being unable to pay their real estate taxes due in the amount of $35,732.00 Ms. Budai introduced them to her friend, Respondent Michael Milea. Mr. Milea offered to lend them the funds to settle the tax debt, secured by a mortgage on the House Parcel (“Mortgage” or “Loan”). Under the terms of the loan the 15 percent interest was payable in monthly installments of $446.66 with the entire principal of $35,732.49 due in a balloon payment only one year later, on October 1, 2017. (R 446). Because of their carefully developed plans to open the animal rehabilitation center they were confident that by the time the balloon payment was due they would be in a financial position to pay it off, and they accepted the offer. The Court is respectfully requested to take judicial notice of the fact that according to the internet real estate listing service Zillow, the current estimated value of the House Parcel is over 800,000. The final deadline to settle the tax debt with the County was October 11, 2016 and the closing of the mortgage transaction (“Closing”) was set for that very day. 5 FILED: DUTCHESS COUNTY CLERK 01/05/2022 09:36 PM INDEX NO. 2021-51452 NYSCEF DOC. NO. 47 RECEIVED NYSCEF: 01/05/2022 However, only one day before the closing, in the evening of October 10, 2016, Milea suddenly called Defendants with a whole new condition: a demand that they sold him the Land Parcel for $25,000 as a condition for entering into the mortgage transaction. The main issue in both cases is Respondent’s allegation that it was Ms. Giordano who offered to sell the Land Parcel to Milea for $25,000, several days before the closing of the mortgage transaction, however this is a patently false notion, as will be discussed below. Defendants never intended to sell the Land Parcel. Five years previously the estimated value of the 101-acre Land Parcel was $995,000, as per the Broker’s Opinion of Value letter issued by Ms. Budai dated April 17, 2011 (R 519), and its value has increased significantly since. In February 2020, a 105 acre tract of land directly across the street from the subject Land Parcel was sold for $1.8 Million; in fact, that parcel was the result of a subdivision from the subject Land Parcel in 2004, in a transaction unrelated to this case. In his deposition Mr. Milea, an experienced real estate developer, agreed that the estimated value of the Land Parcel was “absolutely” $995,000. (R 649). Even so, Plaintiff demanded to purchase the Land Parcel for $25,000, a tiny fraction of its value, as a condition for the loan of less than $36,000 needed to clear the tax delinquency on the Leonaggeos’ home, valued at over $800,000. Milea 6 FILED: DUTCHESS COUNTY CLERK 01/05/2022 09:36 PM INDEX NO. 2021-51452 NYSCEF DOC. NO. 47 RECEIVED NYSCEF: 01/05/2022 claimed that “his attorney [Jordan Haug] would not let him do the deal” without also buying the Land Parcel. (Deposition transcript of Ms. Giordano, R 201). Mr. Haug has denied this allegation (R 70). Being faced with the imminent risk of losing their home to foreclosure, Defendants were under extreme stress and time restraints, a fact Plaintiff admits that he was fully aware of (Deposition transcript of Mr. Milea, R 628). Under these circumstance they simply had no other alternative than accepting the demand, after several previous failed attempts to secure financing, and being one day away from losing their home to a tax auction. The $25,000 purchase price for the one-million dollar property came with an option to buy it back at a price of $50,000 within a year. But this is not all: in addition to these very harsh terms Plaintiff, in another surprise move, at the closing table presented them with yet another demand: that they pay him land lease fees in the amount of $1,000 per month. Plaintiff’s final ultimatum was that in order to finalize the deal, Defendants had to pay the entire year’s rent of $12,000 upfront at the closing table. All in all, Respondent’s plan was to generate $37,000 in profit on his $25,000 land purchase, equaling 150 percent profit to be paid by Defendants in exchange for a loan of less than $36,000 to pay off their real estate taxes (in addition to the 15 percent interest on the Land Parcel mortgage), in a year’s time. 7 FILED: DUTCHESS COUNTY CLERK 01/05/2022 09:36 PM INDEX NO. 2021-51452 NYSCEF DOC. NO. 47 RECEIVED NYSCEF: 01/05/2022 After the $12,000 had been paid at the closing, the remainder of the $25,000 sales price for the 101-acre land went to fees and expenses, reducing Defendants to leave emptyhanded from the closing. Plaintiff’s own attorney, Mr. Haug, told Defendants that he had been instructed to “make sure that all of the $25,000… gets used up at the closing and we walk out with nothing.” (Deposition transcript of Roger Leonaggeo, R 340-341). The closing of the two transactions, the mortgage on the House Parcel and the sale of the Land Parcel, took place on the same day under extreme time pressure, and with the surprise terms imposed by Respondent at the very last moment. There is nothing in the record to explain why, even in view of the fact that The Leonaggeo’s were introduced to Milea with little time remaining before the tax deadline, Respondent waited until the absolute last moment and held the closings the same day as the final deadline of the payment of the taxes, creating an extremely rushed and pressured situation and bringing the Appellants to the brink of losing their home to the County. Ms. Budai had introduced Mr. Milea to Appellants as a personal friend, a private individual who was willing to lend them the funds to pay off their real estate tax debt. She was a trusted friend of the Appellants, and they saw no reason not to doubt her honesty. 8 FILED: DUTCHESS COUNTY CLERK 01/05/2022 09:36 PM INDEX NO. 2021-51452 NYSCEF DOC. NO. 47 RECEIVED NYSCEF: 01/05/2022 However, it was only at the closing table that they learned that in reality the parties to the transactions were not Mr. Milea at all but two of his companies, H-H RE Holdings, LLC 1 (the House Parcel) and H-H RE Holdings, LLC 4 (the Land Parcel), entities that they had never before heard of. Ms. Budai’s true intentions were later revealed, when she for no explained reason backed out of the animal rehabilitation project, thereby placing the Leonaggeos in even worse financial circumstances, and inexplicably lowering her valuation of the Land Parcel to 20 percent of her previous estimation, to only $200,000, in apparent support of Plaintiff’s case. (R 522) and when it became known to Defendants that she, without their knowledge, was negotiating with Milea about the possibility of combining all three parcels, the House Parcel, the Land Parcel and the Stable Parcel, into one mortgage. (Giordano Aff., R 547). Ms. Budai introduced Appellants to the idea of executing a new mortgage, which would include all three parcels, and, as an added incentive both Budai and Milea himself now expressed interest in being financially involved in the Defendants’ animal rehabilitation center project. After lengthy discussions between the parties they finally agreed only to consolidate all three parcels under one mortgage. After a long delay Milae’s attorney, Jordan Haug, finally provided the Leonaggeos with the purported mortgage modification document on August 11, 2017. R 547. 9 FILED: DUTCHESS COUNTY CLERK 01/05/2022 09:36 PM INDEX NO. 2021-51452 NYSCEF DOC. NO. 47 RECEIVED NYSCEF: 01/05/2022 However, the document they received was nothing but a simple mortgage modification. It was a 48-page document entitled “Construction Loan Agreement” (R 664). Incredibly, the title of the document is “Construction Loan Agreement made by Barbara Giordano-Leonaggeo, Roger Leonaggeo and M-M2 RE Holdings 4, LLC as borrower to and for the benefit of M-M2RE Holdings 1, LLC, as lender”, in an amount of up to $125,000. That is, Milea attempted to issue a “construction loan” where he appeared both as the borrower and the lender with the power to foreclose on the loan, as both entities are without doubt alter egos of Milea. Defendants’ attorney warned them that the document was not a mortgage modification and advised them not to sign it, and they declined. Following the closings of the loan and sales transactions Defendants learned that the deed for the sale of the Land Parcel was recorded the same day, October 11, 2016 (R 460). (Previous to the transactions relevant to this case both parcels had been the subject of various procedures to secure title to them with Ms. Leonaggeo, who inherited them from her parents). However, while the Land Parcel deed was recorded right away, as expected, the mortgage on the House Parcel was incongruously reported lost by Plaintiff’s attorney, Jordan Haug, even though the transactions underlying the two documents were conducted at the same time. It was not until over ten months after the 10 FILED: DUTCHESS COUNTY CLERK 01/05/2022 09:36 PM INDEX NO. 2021-51452 NYSCEF DOC. NO. 47 RECEIVED NYSCEF: 01/05/2022 transaction, on August 29, 2017, that the mortgage on the House Parcel was recorded, together with an affidavit by Mr. Haug (R 428-449). Furthermore, for unknown reasons the mortgage’s property description included all three parcels, which was not corrected until after Plaintiff commenced the within action for foreclosure on February 23, 2018. The mortgage was released from the Stable Parcel and the Land Parcel on November 21, 2018 and March 5, 2020, respectively. (R 450, 454) (It is not known why the incorrectly recorded mortgage was not released from the two properties at the same time), Most egregiously, in an act of patently fraudulent misrepresentation, Defendants were repeatedly made to believe by Plaintiff and his attorneys that they were selling the Land Parcel to him subject to a previously existing mortgage in the amount of $35,000 held by an individual by the name of Richard von der Lieth (“von der Lieth); this was confirmed by Respondent’s inquiries about the monthly mortgage payments and request for copies of all relevant documents. (See email dated October 10, 2016, R 576). However, while the undersigned was preparing the documents for a motion in the ongoing Land Parcel case, it was discovered that Appellants had been fraudulently induced to believe that Mr. Milea was assuming the mortgage to Mr. von der Lieth, while in fact they are still responsible for said mortgage. The Land 11 FILED: DUTCHESS COUNTY CLERK 01/05/2022 09:36 PM INDEX NO. 2021-51452 NYSCEF DOC. NO. 47 RECEIVED NYSCEF: 01/05/2022 Parcel deed stating that the “Premises are not subject to a credit line mortgage” is reproduced on page 461 of the record. Because of the extremely high-pressure conditions at the closing, and, notably, the fact that they were not provided with the contract of sale or any other documents in advance of the transactions, there was no time for the Leonaggeos to go over all the documents they were instructed to sign at the closing table. In addition, they were under the impression that Milea’s intentions were to do them a favor and help them to save their home, albeit temporarily, and saw no reason to doubt the truth of what they had previously been told about the transactions. Because they had been assured that von der Lieth’s mortgage had been paid off by Respondent as part of the sale they naturally stopped making the monthly payments, and as a result they are now the defendants in a foreclosure action by von der Lieth, Richard von der Lieth v. Barbara Giordano et al., Dutchess Index No. 2021-51452. Had Appellants been aware of the fact that they were still responsible for a $35,000 (excluding interest) mortgage after having been compelled to sell a tract of land believed to be worth $1 Million to Plaintiff for $25,000 and offered to buy it back in a year for twice the amount, in addition to $12,000 in land lease fees, and had they not been on the verge of losing their home, they would naturally never have accepted the deal. By their reasonable reliance on the repeated statements by 12 FILED: DUTCHESS COUNTY CLERK 01/05/2022 09:36 PM INDEX NO. 2021-51452 NYSCEF DOC. NO. 47 RECEIVED NYSCEF: 01/05/2022 Plaintiff and his counsel that the conveyance was made subject to the mortgage they fell prey to a patently fraudulent transaction. When the one-year deadline to buy back the Land Parcel, as a result of Ms. Budai and other investors having lost interest in the animal rehabilitation project, the plans to build the “NY-CART” center never came to fruition, and Defendants’ expectations to pay off Milea’s mortgage and other debt with the anticipated income from the center could not be realized. Therefore, when the option to buy-back the Land Parcel for $50,000 and the balloon payment of the mortgage on the House Parcel came due on October 1, 2017, Defendants found themselves without the means to meet either obligation. Plaintiff then offered them a one-year extension of the buy-back option at a reduced monthly rent of $500, but for unknown reasons the Leonaggeos’ attorney at the time advised against it and they declined. Plaintiff then commenced the within action for foreclosure on February 23,. 2018, and the quiet title action on the Land Parcel on March 15, 2018 Plaintiff’s motion for summary judgment for foreclosure was granted on November 19, 2020 (R 29) and the Judgment of Foreclosure was entered on December 28, 2020. (R 4) In addition to having lost their home to foreclosure the court entered a deficiency judgment against them in the amount of $52,855.09; in addition they owe Plaintiff $30,000.00 in legal fees and $1,585.00 for costs and 13 FILED: DUTCHESS COUNTY CLERK 01/05/2022 09:36 PM INDEX NO. 2021-51452 NYSCEF DOC. NO. 47 RECEIVED NYSCEF: 01/05/2022 disbursements. Defendants filed their Notice of Appeal om January 28, 2021 (R 3). The quiet title case regarding the Land Parcel is still ongoing; in addition, they are the defendants in the case brought by von der Lieth. ARGUMENT POINT I: THE ORDER MUST BE REVERSED BECAUSE THE COURT BELOW ABUSED ITS DISCRETION C. The court abused its discretion by ignoring Judge Rosa’s order to consolidate the cases On May 21, 2019 Judge Maria Rosa granted Defendants’ motion in the case M-M2 RE Holdins LLC 4 v. Giordano-Leonaggeo et al., Index No. 50671/18 (Land Parcel case) to consolidate the two cases for the purpose of discovery (R 64) and denied Plaintiff’s motion for summary judgment on the ground that Defendants raised a material issue of facts based on their affirmative defense of unclean hands. In her order Judge Rosa stated: ORDERED that Defendant’s motion to consolidate this action with a foreclosure for residential real property [House Parcel case] where the live at 150 Homan Road is granted. There are related factual issues surrounding the closing of the mortgage in the foreclosure action and the transfer of property in this action. Wherefore, the action pending before this [sic] court (Forman, J.) under Index Number 2018- 50487 is hereby consolidated for purposes of discovery with this action under Index Number 2018-50671. As the action before Judge Forman is older, the consolidated action is now before Judge Forman. The parties are directed to appear for a conference before the Hon. Peter M. Forman on both actions on June 10, 2019 at 10:00 a.m. 14 FILED: DUTCHESS COUNTY CLERK 01/05/2022 09:36 PM INDEX NO. 2021-51452 NYSCEF DOC. NO. 47 RECEIVED NYSCEF: 01/05/2022 However, in the order appealed from, Judge Forman’s order granting Plaintiff summary judgment for foreclosure (the House Parcel) and striking Defendant’s answer dated November 19, 2020 (R 145), while mentioning Judge Rosa’s consolidation of the cases (R 31, footnote) the court does not discuss it or otherwise