a!0i5-03(o-j3^ P\ llo^ m. Supreme Courtoft&e^>tateofjj^eto j9or& /^//6^ A. Count? of j^mssi INREMTAXFORECLOSUREACTIONNO.53 NOTICEOFAPPEAL BOROUGH OFBROOKLYN SECTIONS 3,~4.~5. Index No. 8700/15 6, 7, 8, 9, 10, 11, 13, 14, 15, 16 and 21 TAX CLASSES land 2 PLEASETAKENOTICEthatplaintifftheCityofNewYodherebyappeals to the Appellate Divisionofthe Supreme Court, Second Department, from the decision, order andjudgment ofthe Honorable MarkI. Partnow, herein dated March 28, 2019and entered in the officeof the Clerk of King,County on March 29, 2019. Dated: New York, New York April 24, 2019 ZACHARYW. CARTER Corporation Counsel of the City of New York Attorney for Plaintiff The City ofNew York 100 Church Street New York, New York 10007 (212) 356-2502 By: Claude S. Platton Deputy Chief, Appeals Division To: GOLDSTEINHALLPLLC ATTN: Brian J. Markowitz Attorneys for Neighborhood Restore HDFC 80 Broad Street, Suite 303 New York, New York 10004 (646) 768-4127 9 ^IHr QZ^W a3AJ303y_ MU313 AlHnOO S9NIM , ABRAMS, FENSTERMAN, FENSTERMAN, ElSMAN, FORMATO, FERRARA, WOLF & CARONE, LLP ATTN: Andrea Caruso Attorneys for Defendant Gilmer Holding Corp. 3 Dakota Drive, Suite 300 New Hyde Park, New York 11042 (516)328-2300 LAWOFFICEOFDONNESHIAM. HALL ATTN: DonneshiaM. Hall Attorneys for Defendant 1055 Bergen Street HDFC 26 Court Street, Suite 910 Brooklyn, New York 11242 (646) 371-3725 GOLDING& ASSOCIATES, PLLC ATTN: Evelyn Abiola Attorneys for Defendant Shurma 1 Corp. 299 Broadway, Suite 710 New York, New York 10007 (212) 385-2417 RODNEYR. AUSTINPLLC ATTN: Rodney R. Austin Attorney for Defendant Marcia P. Lewis 61-43 186th Street Fresh Meadows, New York 11365 (718) 475-2119 ANGELYND. JOHNSON & ASSOCIATES ATTN: Angelyn D. Johnson Attorneys for Defendant 19 KingslandAvenue HDFC 26 Court Street, Suite 2810 Brooklyn, New York 11242 (718) 875-2145 SlNGH LAW P. A. ATTN: Jaitegh Singh Attorneys for Defendant 463 Classon Avenue HDFC 209 W. 38th Street, Suite 802 New York, New York 10018 (917) 768-4763 CLERK, County of Kings S^ynmt QIaurt xrftt(^ ^tate nf ^ur ^nrb Appritete Biufemn: Second lutiitrial fepartm^nt Informational Statement (Pursuant to 22 NYCRR 1250. 3 [a]) - Civil Case Title: Set forth the title oftlie case as it appears on (lie suinmons. notice ofpelition or order to ForCowtofOrigiaaiinstance sliovv cause by which the inatter was or is to be coinmenced, or as amended. IN REM TAX FORECLOSUREACTION NO. 53 BOROUGHOF BROOKLYN SECTIONS3, 4, 5, 6 , 7, 8, 9, 10, .1- 13, 14, 15, 16 and 21 TAX CLASSES 1 AND 2 Date Notice ofAppeal Filed against ForAppell^ Division Case Type Civil Action D CPLR article 75 Arbitration Filing Type D CPLRarticle78Proceeding Appeal SpecialProceedingOther D OriginalProceedings D HabeasCorpusProceeding D CPLRArticle78 D TransferredProceeding D CPLRArticle 78 D ExecutiveLaw§ 298 D CPLR5704Review L] Eminent Domain D LaborLaw220or220-b D PublicOfficersLaw§ 36 D RealProperty TaxLaw§ 1278 Nature of Suit: Check up to tliree of the following categories which best reflect the nature of the case D Administrative Review D DeclaratoryJudgment D Family Court D Real Property other than foreclosure Informational Statement - Civil D Business Relationships D DomesticRelations D MortgageForeclosure D Statutory Commercial D Contracts Election Law D Estate Matters ]S4iscellaneous D Prisoner Discipline & Parole D Taxation D Torts Appeal PaperAppealed From (Checkone only): Ifan appealhasbeentakenfrom more thanoneorderor judgment bythefiling ofthis notice ofappeal, please indicatethe belowinformationforeachsuchorderor judgment appealed from on a separate sheet of paper. D Amended Decree D Determination D AmendedJudgement D Finding D Interlocutory Decree D Interlocutory Judgment a Judgment D Amended Order D Decision D Decree Court: Dated: Supreme Court D Resettled Order D Ruling D Partial Decree D Resettled Decree D Other(specify): D Resettled Judgment County: Kings Entered: 3/29/2019 03/28/2019 Judge (name in full): Hon. Mark I. Partnow Stage: D Interlocutory D Order ~1 Order & Judgment Index No. : 8700/2015 Final D Post-Final Trial: D Yes S No Prior Unperfected Appeal and Related Casetnformation IfYes: D Jury D Non-Jury Are any appeals arising inthe same action or proceeding currently pending in the court? IfYes, please set forth the Appellate Division Case Number assigned to each such appeal. D Yes No Where appropriate, indicate whether there isanyrelated action or proceeding now inanycourt ofthisoranyother jurisdiction, and if so, the status ofthe case: McConnell Dorce, etal. y. CityofNewYork, etal., CaseNo: 1:19-cv-02216, United States District Court, SouthemDistrict of NewYork, isa classactionlawsuitcommenced onoraboutMarch 12,2019, in partchallenging thetheforeclos'ureTudament as against other properties included in this in rem tax foreclosure action. Original Proceeding Commenced by: D Orderto ShowCause D Notice ofPetition D Writof HabeasCorpus Date Filed: Statute authorizing commencement of proceeding jn the Appellate Division: ProceedingTransferred Pursuantto CPLR7804(g) Court: Choose Court Judge (name in full): Court: Jud e (name in full): County: Choose Countv Order of Transfer Date: CPLR 5704 Review of Ex Parte Order: Choose Court County: Choose Countv Dated: Description of Appeal, Proceeding or Application and Statement of Issues Description: Ifanappeal, brieflydescribethe paperappealedfrom. Iftheappealisfrom anorder,specifytherelief requested and whether the motion wasgranted or denied. Ifan original proceeding commenced inthis court ortransferred pursuanttoCPLR7804(g) brieflydescribetheobjectofproceeding. Ifanapplication underCPLR5704,brieflydescribethe nature of the ex parte order to be reviewed. This is an appeal seeking reversal ofthe OrderandJudgment ofHon. Mark I. Partnow, dated March 282019. granting sixmotions made bysixowners ofproperties included intheabove-titled multi-property in rem tax foreclosure action, which motions sought vacatur ofthe foreclosure judgments as against the sTxproperties. Informational Statement - Civil is sues: Specify the issues proposed to be raised on the appeal proceeding, or application for CPLR 5704 review, the grounds for reversal, or modification to be advanced and the specific relief sought on appeal. The ordershould be reversed on the following grounds, interalia: Notice ofthe commencement ofthe in rem foreclosure actionwasproperly givento theownersofthe property at issue;properties need not'be "distressed" according to the statutory definition to be included in an in rem foreclosure action^ the conclusive presumption ofregularity ofan in rem foreclosure judgment four months after itse'ntrvactsas f-st-at?e_OLIimi!ati?ns ,al?d P,recludes challenge thereto; the City's discretion to determine anapplicatTon" is absolute !OLre,den1.?io-n afterthe expiration ofthe mandatory redemption period; and the cTtyrs"in"rem foreclosure process doesnotcreate a takingwithoutjust compensation as interested parties-ha've an opportunity to redeem. Party Information Instructions: Fill inthe nameofeach partyto theactionor proceeding, one name perline. Ifthisform isto befiledforan appeal, indicatethestatusofthepartyinthecourtoforiginalinstanceandhis,her,oritsstatusinthiscourt,ifany. Ifthis form isto befiledfora proceeding commenced inthiscourt, fill in onlythe party's name and his, her, or'its status inthis court. No. 1 Party Name Original Status CityofNewYork Plaintiff Nonparty Defendant 2 NeighborhoodRestore HDFC 3 Gilmer Holding Corp. 4 1055 Bergen Street HDFC 5 Shurma 1 Corp. 6 Marda P. Lewis 7 19 KingslandAvenue HDFC 8 463 Classon Avenue HDFC 9 10 11 12 13 14 15 16 17 18 19 20 Informational Statement - Civil Defendant Defendant Defendant Defendant Defendant Appellate Division Status Appellant Appellant Respondent Respondent Respondent Respondent Respondent Respondent Attorney Information Instructions: Fill in the names ofthe attorneys or firms for the respective parties. Ifthis form is to be filed with the notice of petition or orderto show cause bywhich a special proceeding isto becommenced inthe Appellate Division, only the name ofthe attorney for the petitioner need be provided. Inthe event that a litigant represents herselfor himself, the box marked "Pro Se" must be checked andthe appropriate information for that litigant must besupplied in the spaces provided. Attorney/Firm Name: Claude S. Platton/NewYork City LawDepartment Address: 100ChurchStreet, Room6-169 City:NewYork State:NY Zip:10007 Telephone N0:212-356-2502 E-mail Address: cplatton@law. nyc. gov Attorney Type: D Retained D Assigned Government D Pro Se D Pro HacVice Party or Parties Represented (set forth party number(s) from table above)^ V«-VV-f-^^«X'^f»^Xit.Mf.r-V,WVV-VW/X.XVM.»WXS.^. SW»X-f.KVWfV^.W^ . Attorney/Firm Name: Brian J. Markowitz/Goldstein Halt PLLC Address:80 Broad Street, Suite 303 City:NewYork StaterNY Zip:iooo4 Telephone N0:646-768-4127 E-mail Address: bmarkowitz@goldsteinhall. com AttorneyType: ~ Retained D Assigned D Government D ProSe D Pro MacVice Party or Parties Represented (set forth party number(s) from table above):2 '^^.»^-.,t-*^.i^»,»y^.»»^^.^^«^i«-w^^»^.x^.^^^^^^^y^»^a»-*».^»^»»^y,w»,.^^^^ . Attorney/Firm Name: Andrea Caruso/ Abrams, Fensterman, Fensterman, Eisman, Formato, Ferrara, Wolf& Carone, LLP Address:3 Dakota Drive Suite300 City:NewHydePark State:NY Zip: 11042 Telephone No:516-328-6638 E-mail Address: ACaruso@Abramslaw. com Attorney Type: " Retained D Assigned D Government D ProSe D Pro MacVice Party or Parties Represented (set forth party number(s) from table above):3 ».»yyyx!^.^^».»x^»^^.yaw^y^a»y-^^^^»»^^;»;»iry.^^Myy<»^^^,a»^.jF^»»^^>,»^^*.-^.^y^ Attorney/Firm Name: DooneshiaM. Hall/LawOfficeofDonneshiaM. Hall . Address:26 Court Street, Suite 910 City: Brooklyn State:N. Y. Zip:11242 Telephone N0:646-371-3725 E-mail Address: donneshiahall. esq@gmail. com AttorneyType: Z Retained D Assigned D Government D ProSe D Pro HacVice Party or Parties Represented (set forth party number(s) from table above):4 K^-<^^/<. ^»W^^»»T^^^<»y^^^^^a»^l^rf^»^-. ^»y^»^y^^. ^*-^/^y^»»^^y»»^^. Attorney/Firm Name: EvelynAbioia/Goiding& Associates,PLLC B^*»^^rf^*'^<-. ^^^ Address: 299 Broadway Suite 710 City:NewYork State: NY Zip: 10007 Telephone NO:212-385-2417 E-mail Address: evelynabiola@gmail. com Attorney Type: . . Retained D Assigned D Government D ProSe D Pro HacVice Party or Parties Represented (set forth party number(s) from table above):5 'a'^.^^»»<»^<'.^w^^»-^y»^y^r-»»»»-^^^»^.^,^;,y,-^r.»».^^;^y*'^^^.^^^^^^^^^/w^..T^-^^ Attorney/Firm Name: Rodney R. Austin/ Rodney R. Austin PLLC Address:61-43 186th Street City: FreshMeadows State:N.Y. E-mail Address: Attorney Type: Zip:11365 r-l Retained D Assigned D Government Party or Parties Represented (set forth party number(s) from table above):6 Informational Statement - Civil Telephone N0:718-475-2119 rodney@raustinlaw. com D Pro Se D Pro Hac Vice Attorney Information Instructions: Fill in the names ofthe attorneys or firms for the respective parties. Ifthis form isto befiled with the notice ofpetition ororderto showcause bywhich a special proceeding isto becommenced intheAppellate Division, onlythe nameoftheattorneyforthepetitioner needbeprovided. Intheeventthata litigant represents herselfor himself, theboxmarked "ProSe"mustbechecked andtheappropriate information forthat litigant must besupplied in the spaces provided. Attomey/Firm Name;AngelynD.Johnson/AngelynD.Johnson& Associates Address:26 Court Street, Suite 2810 City:Brooklyn State: N.Y. Zip:11242 Telephone N0:718-875-2145 E-mail Address: ajohnson@adj-law. com AttorneyType: Retained D Assigned D Government D ProSe D ProHacVice Party or Parties Represented (set forth party number(s) from table e^»^^, »a^^^y. ^^^-»y^y^». »^. ^^, ^^^»». ^.y^^^^. y^^^^y. y^, ^^^y^^. ^^^^^^,. ^^, ^,, yy.^,^ r^A1-^^-^-^. ^. ^. ^^. ^. ^. ^. ^f^^. ^. ^^-.. ^ ^. ^ ^^. ;^.< Attorney/Firm Name: JaiteghSingh/SinghLawP.A. Address:209W. 38th Street, Suite 802 City:NewYork State:N.Y. Zip:10018 Telephone No:917-768-4763 E-mailAddress:jt@mannysingh.com Attorney Type: Z Retained D Assigned D Government D Pro Se Party5>jj:>arties Represented (set forth party number(s) from table above):8 D Pro HacVice Attorney/Firm Name: Address: City: State: Zip: Telephone No: E-mail Address: AttorneyType: D Retained D Assigned D Government D ProSe D ProMacVice ?il?Y-OLPJLI^!?55fPI?^. n.t.e?l..(??t_fortl! P?t1y number(s)from table above): Attorney/Firm Name: Address: city: State: Zip: Telephone No: E-mail Address: AttorneyType: D Retained D Assigned D Government D ProSe D ProMacVice Party or Parties Represented (set forth party number(s) from table above): Attorney/Firm Name: Address: city: State: Zip: TelephoneNo: E-mail Address: Attorney Type: D Retained D Assigned D Government D ProSe D Pro HacVice Party or Parties Represented (set forth party number(s) from table above): Attorney/Firm Name: Address: city: State: Zip: Telephone No: E-mail Address: Attorney Type: D Retained D Assigned D Government D Pro Se D Pro MacVice Partyor PartiesRepresented(setforth party number(s) from tableabove):2 informational Statement - Civil STvmins judgT"i <"l^ acBfia Pag» < of 69 AtanIASTenn, PartFRP2oftheSupreme Court of theStateofNewYork, heldinandfortheCountyof Kings^attheCourthouse,atCivicCenter,Brooklyn, NewYork, anthe28thdayofMarch, 2019. PRESENT: HON.MARKI. PARTNOW, Justice. INREMTAXFORECLOSUREACTIONNO .53 BOROUGHOFBROOKLYN SECTIONS3, 4, 5, 6, 7, 8, 9, 10, 11, 13 14, 15, 16AND21 IndexNo. 8700/15 TAX CLASSES 1 AND 2 Thefollowin rsnumber 1 to 41readherein: MotionSequenceNumbers: 9, 10, 11. 12. 13. 14 Papers Numherfri Notice ofMotion/Order to Show Cause/ Petition/Cross Motion and Affidavits (Affinnations) Annexed 1-3 Opposing Affidavits.(Affirmations). 4- 2 - Reply Affidavits (Affinnations). 19-24 46-48 17 41 65 Memoranda of Law____ 123- 5 86 I 0-121 140 88 89. 90 SupplementalAffinnationsin FurtherSupport. Reply to Surreply 98-103 40 4 .63 64 70-8 85 104-118. 1 9 126-139 Affidavits(AfBrmatioas)inFurtherOpposition Surreply AfGnnations 67-69 91 92-93 23 4 18 4 66 9495 6 97 122 141 Upontheforegoingpapers,thisisaninremforeclosure actioncommencedbytheCity ofNewYork (the City) onJuly 14, 2015,pursuant to title 11, chapter 4 oftheAdministrative Code ofthe City ofNewYork, to simultaneously foreclose on numerous tax delinquent properties. TheCity commenced this foreclosure actionby fillingtwoduplicate original veriJBed lists of delinquent taxes (see Admimstrative Code § 11-405 [d]). These lists Plintolt WK2018 87W)miSJu(!am8nl(UI«d3QOTa Paee2«f68 includedtaxclassoneandtaxclasstwopropeniesdesignatedontheKingsCountytaxmap, sections 3, 4, 5, 6,7, 8, 9, 10, 11,13, 14, 15, 16,and21,whichwereencumbered byunpaid taxliensheldandownedbytheCity. ThesetaxUenswereallegedlydueandunpaidfor a periodofatleastoneyearfromthedateonwhichthetax,assessment,orotherlegalcharge represented therebybecamea lien,asrequired byAdministrative Code § 1 1-404. Among theseproperties werethesixproperties thatarethesubject ofthesixinstantmotions, file.d under motion sequence numbers 9, 10, 11, 12, 13, and 14. The owners ofthe sixseparate properties now at issue failed to interpose answers, and,thus,werein defaultinthisforeclosure action. Theownersclaimthattheydidnot receiveactualnoticeofthisaction. Withrespecttoeachofthesixproperties, thetaxesowed representonly a small fi-actionofAevalue ofthe land. On November 27, 2017, this court signed a Judgment ofForeclosure, which was entered on December 14, 2017. The Judgment of Foreclosure provided that the CommissionerofFinancewasauthorizedtoprepareandexecutea deedconveyingeitherto the City or a qualified thirdparty designated bythe Commissioner ofHousing Preservation and Development full and complete title to each ofthe properties bcluded in the in rem foreclosure action, and that, upon the execution of such a deed, the grantee would have possession and be seized of an estate in fee simple absolute in such land, and the owner would be foreclosed ofits right, title, interest, or equity ofredemption in the property as providedinAdniinistrative Code§ 11-412and§ 11-412. 1,exceptasotherwiseprovidedin P"rt8l):4 3019 B7I10BID5JailnmmldatedMms Page 3 of89 Administrative Code § 11-424 and § 11-424. 1. The Judgment of Foreclosure further providedthatunlessanduntiltheCommissioaer ofFinanceexecuteda deedconveying the parcels ofrealproperty pursuant toAdministrative Code § 11-412to theCity ortoa third partydeemedquaIiHedanddesignatedbyfheCommissionerof HousingPreservationand Development, theownersofthelandwouldcontinuetohavealloftherightsofanowner. TheCitybroughtthisinremtaxlienforeclosure actiononthebasisthattheproperties at issue were distressed properties. The ability of the City to institute in rcm tax lien foreclosureactionsonthebasisthatparcelsconstituteddistressedpropertiesoriginatedin 1996,whentheAdministrative CodewasamendedbyLocalLawNo.37. UnderLocalLaw No. 37, Administrative Code § 11-401 was amended to, among other things, add the definitionof"distressedproperty. " LocalLawNo.37addedAdministrativeCode§ 11401. 1,whichprovides forinremforeclosure procedures fordistressed properties. Pursuant toAdministrative Code§ 11-401. 1 (c),anyparceldeterminedtobea distressedproperty is subjecttoaninremforeclosureaction. AdministrativeCode§ 11-412. 1 wasalsoadded, whichprovides specialprocedures relatingtothefinaljudgment andthereleaseofclassone andclasstworealproperties. Othersections oftheAdministrative Codewerealsoamended to incorporate thechangesreflected bythesenewmodified inremforeclosure procedures which pertain to distressed properties. In 1997,LocalLawNo. 69 furtheramendedAdministrative Code § 11-405. The memorandum insupportofthisamendmentnotedthatLocalLaw37of1996"wasofcritical Pitnlad:*3<2l)18 870M015 Judgnrffl daad 308-18 Pag»1<]f89 importance totheCity'sAnti-Abandonment program,becauseitenabledtroubledproperties tobeplacedinthehandsofresponsibleprivateownersforrehabilitationandmaintenance." Itnotedthat"[t]herehabilitation ofmanyofthesedistressedproperties wouldprobablybe economicallyfeasibleonlywithloansreceivedfrom...HPD ..,8AandParticipationLoan programs." The Commissioner ofFinancetransferred four ofthe sixproperties now at issue pursuant to the Third Party Transfer Program. The Third Party Transfer Program is a programjointlyadministeredbytheNewYorkCityDepartmentofHousingPreservationand Development (HPD) andtheNewYork CityDepartment ofFinance(theDOF),whichis usedfortaxdelinquent,distressedresidentialproperties inlfteCity. TheThirdPart^Transfer Program derives its authority from the City's discretion to convey eligibletax-foreclosed propertytoqualifiedthirdpartiesdesignatedbytheCommissionerofHousingPreservation andDevelopment,pursuanttoAdministrativeCode§ 11-412. 1 (b)(1). AdministrativeCode § 11.412. 1 (b)(1)providesthatthecourtisto"makea finaljudgmentauthorizingtheaward ofpossession ofanyparcel ofclass oneorclasstwo realproperty described in thelist of delinquenttaxesnotredeemedorwithdrawnasprovided in... chapter[four] andastowhich no answer is interposed. " Administrative Code § 11-412. 1 (b) (1) authorizes the Commissioner ofFinanceto"prepare, executeandcausetoberecordeda deedconveying eithertothecityortoa thirdpartydeemedqualified anddesignatedbythecommissioner of housingpreservation anddevelopment full andcomplete tideto suchlands." Printed: 4»a)is V7WOW S Juiignimt dalad reaflt P«gi>5»r6S According to the City, thepurpose ofthe Third Party Transfer Program is to encourage prompt payment of tax arrears, and, if the arrears are not paid, to transfer distressedresidentialbuildings,whichhaveunpaidtaxarrears,quicklytonewowners,who have the expertise to address problems and to complete prompt rehabilitation of the properties. UndertheThirdPartyTransferProgram,theCity initiates inrem foreclosure actionsagainsttaxdelinquentbuildingsinpoorconditionandobtainsforeclosurejudgments. AfterreviewbytheCityCouncil,HPDthenoverseestheconveyanceofthepropertiesto responsible newowners foundtobequalifiedtorehabilitate andmanagetheproperties. UndertheThirdPartyTransferProgram,theCommissioner ofFinancemayexecute a deedtopre-qualifiedthirdparties,pursuanttoratespromulgatedbyHPD(28RCNYch8), without an intervening period ofCity ownership, ortothe City itself(^ee Administrative Code§ 11-412. 1 [b]). Therules (28 RCNY§ 8-03) establishstandardsthatmaybe consideredforqualificationandselectionofthirdpartiesforthird-partytransfer.According totheCity,theaimoftheThirdPartyTransferProgramistopreserveaffordablehousing. TheThirdPartyTransferProgramisintendedtotargetonlydistressedpropertiesthatneed substantialrehabilitation. The in rem foreclosure procedure for distressed properties is in contrast to the procedureusedbytheCitytohandlemosttaxdelinquenciesaffectingbuildingsin fairor good condition, which is to sell the tax lien to a trust, which, in turn, uses the liens as collateral toissuebonds,whoseproceedspayofftfieCity'sliens{seeAdministrative Code Wiiint vwaia 87W2015 Judgnwnt dawd »2m8 PagaaofW § 11-319). Under the Third Party Transfer Program, the Commissioner of Housing PreservationandDevelopmentisauthorizedtoremovedistressedpropertyfromthistaxlien dispositionprocess(seeAdministrative Code§ 11-401. 1). Here,theCitydidnotproceedby wayofa saleoftaxHenswithrespecttothesubjectproperties, but,rather,claimingthatthe properties were distressed, it utilized the Third Party Transfer Program to obtain the properties by foreclosinguponthem inrem. Neighborhood Restore Housing Development Fund Corporation (Neighborhood Restore) isa third-party transferee undertheThirdPartyTransferProgram. Byforeclosing inremandtransferringtitletoNeighborhoodRestorepursuanttotheThirdPartyTransfer Program,,theownersarecompletelydivestedoftheirpropertyownership,andaftercrediting ^ thetaxdeficiency, therearenoproceeds ofsalesoftheproperties paidtotheowners(see Adniinistrative Code§ 11-428). Theownersarecompletely strippedofalloftheirequityin theirproperties. Motion SeauencfiJSumber13 Gilmer Holding Corp. (Gilmer) moves, by order to show cause, under motion sequence number 13, for anorder: (1) preliminarily enjoining tfaeCity and its agencies » and/orNeighborhood Restore from encumbering ortransferring realproperty located at23 MacDonough Street,Brooklyn, NewYork 11216,designatedontheKingsCountytaxmap as Block 1851, Lot 63 (the MacDonough Street property); (2) vacating its default; (3) extendingtheredemptionperiodtoallowitanopportunitytoredeemtheMacDonoughStreet Pr6]teie 87CIM01SJudgmsnldafd3f2a<18 Pag«7«f88 property; (4)vacatingtheJudgmentofForeclosure ^ itrelatedtotheMacDonough Street property; and(5)restoring itstitle totheMacDonough Streetproperty. Factualand ProceduralBac round Gilmerisa corporationwhosesoleassetwastheMaeDonoughStreetproperty. The MacDonough Street property is a 19-family, rent-stabilized apartment building, with an estimatedvalueofoverthreemilliondollars. GilmerisownedbytheCallender family,and theMacDonough Streetproperty hasbeenintheCallender family since 1968whenRonald Callender (who is now deceased), the father of the present board members of Gilmer. purchasedit. TheMacDonoughStreetpropertywasformerlymanagedandcontrolledbyMichael Callender, who was the president of Gilmer. Michael Callender was removed as the presidentofGilmerata shareholders'meetingheldonAugust27,2018. MichaelCallender is the brother ofLynne Callender andMarciaCallender, who arethe boardmembers of Gilmer. LaMarrJones is the secondcousinoftheseboardmembers. Atthetimethatthisinremtaxforeclosureactionwascommencedbythefilingofthe listofdelinquenttaxesonJuly14, 2015,theMacDonoughStreetpropertyhadanoutstanding taxbill of$100,688.20,plusa waterandsewerlienintheamountof$20,061. 14,fora total amountof$120,749.34. LaMarrJones,ina swornaffidavitbyhim,atteststhatinDecember 2017,allmailaddressedtoGilmerwasmailedto627BainbridgeStreet,Brooklyn,New York, theDepartment ofStateprocess addressonfile withthe Secretary ofState, andwas WnlstWimw B70&BDI5JudgmentdatedMa/l 9 "anetcfse forwarded to his office located at 17 State Street, Suite 4000, New York, New York. He statesthatsincethattime,theDepartment ofStateprocessaddressforGilmerwaschanged withfheSecretary ofStateto behisofiRceaddress. Heattests thathehadaccesstoGilmer's mailandwasawareofthemailthatGilmerreceived,andthatGihnerhadnotreceivedany notice relating to the instant inrem foreclosure action, whichwascommenced against the MacDonough Street property. He asserts that this action was improperly commenced as againsttheMacDonoughStreetpropertysinceitwasnota distressedproperty. Adniinistrative Code § 11-401 (4) defines "distressed property" as follows: Distressedproperty.* Anyparcelofclassoneorclasstworeal property that is subjectto a taxlien or lienswitha lien or Hens to value ratio, as determined by die commissioner of finance, equal to orgreater than fifteen percent andthatmeets one ofthe followingtwo criteria: i. such parcel has an average of five or more hazardous or immediately hazardous violations of record of the housing maintenancecodeperdwellingunit; or ii. such parcel is subject to a lien or liens for any expenses mcurred by the department of housing preservation and development for the repair or the elimination ofany dangerous or unlawful conditions therein, pureuant to section 27-2144 of this code, in an amount equal to or greater than one thousand dollars." TheCityconcedesthattheMacDonoughStreetproperty,wasnotdistressedaccording tothestatutory defmition ofAdministrative Code§ 11-401(4)sincethetotalcategoiyB and C codehousingviolationsontheMacDonoughStreetpropertywas45,or2.4 perdwelling unit, and there wereno HPD Emergency Repair Program charges totaling over $1,000. Nevertheless,theCityproceededwiththisinremforeclosureactionasiftheMacDonough 8 Pilnlad: 2015 B700G018JudsmaillialadSBMS Pag«SofB9 Street was a distressed property and included it in its Third Party Transfer Program. Subsequent to the July 14, 2015 commencement of this action, Gilmer and the DepartmentofEnvironmentalProtection(theDEP)enteredintoa PaymentAgreement, dated May 12, 2016(theDEPAgreement), withrespect toanopenbalance af$42, 042. 47inwater and sewer charges forthe service period ofJuly 1, 2014 to June30, 2016. Under Ae DEP Agreement, Gilmeragreedtomake120monthlypaymentsof$258.69forunpaidwaterand sewer chai-ges, wilh the total amount to equal $31,042. 80 in principal and $14,085.37 in interest. TheDEPAgreementprovidedthatthefailuretosatisfythisdebtmayresultinthe mclusion oftheproperty ina Citytaxliensale. Gilmermadea downpaymentof$11.000 and23 installmentpaymentsunderfheDEPAgreement, eachinthesumof$258.69. The last mstalknent payment was made by Gilmer on June 21, 2018. On November 2, 2017, Gihner, by Michael Callender, entered into a Property Collection Installment Agreement (the Installment Agreement) with the DOF, which providedforaninstallmentpaymentplantopayallofthethenoutstandingpropertytaxes. Thetotal amount dueunderthe InstallmentAgreementwas $169, 948. 18. Theamount ofthe downpaymentwas$25,492.23,whichwaspaidbyGilmer,asevidencedbya copyofthe check annexed tothismotion. TheInstallment Agreement startdatewasNovember 2. 2017. anditprovidedfor40installmentsintheamountof$7,843.96each,tobepaidquarterlyby Gilmer with the first installment date beginning on January 1,2018. The downpayment mcluded the sum of$500 for a foreclosure penalty and $35 for a foreclosure search fee. 870af2l)1SJudgnlant dated 3121119 PagslOcim Thesepayments weremadebyGilmertoremove theMacDonough Streetproperty fromthe in rem foreclosure action. The Installment Agreement provided as follows: "I understand that if any payment that I am required to make underthis Installment Agreement is unpaid for sixmonths, the agreement will be in default and may be cancelled and my property may beincluded indienext tax lien sale conducted by AeCity ofNewYork. Theproperty mayalsobecomeeligible forinrem foreclosure... I understandthatsuchconsequence of defaultmaybeavoidedifI pay all outstanding installments and current taxes and charges, including interest, prior to the date of the next tax lien sale followmg such default." DespitetheCity'sentryintotheInstalknentAgreement withGilmer, theCitydidnot remove the MacDonough Street property from the list ofdelinquent parcels or request a severance ofit when submitting the in remjudgment roll in this in rem foreclosure action (see Admitiistrative Code § 11-405 [c]; § 11-409 [g]). Instead, onNovember 27, 2017, approximately threeweeksaftertheNovember2, 2017InstallmentAgreementwasexecuted and the $25,492. 23 down payment waspaid by Gilmer, and before the first installment was due, this court signed the Judgment of Foreclosure, which was entered on December 14. 2017. LaMarr Jones asserts that Gilmer relied on the DOF's representations in the Installment Agreement and assumed the MacDonough Street property had been removed from thein rem action. Heattests thatGilmer didnotreceiveanynoticesrelatingto this action, nor wasGilmer told that the MacDonough Street property was beingplaced in the 10 Mnud: a»35«W prior to the September 6, 2018 deed to Neighborhood Restore, in an effort to redeem the Rutland Road property, but her efforts were rebuffed. The City relies upon KingHolding Corp. v City ofN. Y. Dept. ofHous. Preserv. & Dev. (24 AD3d 395, 396 [1stDept 2005], /v ^wW6 NY3d 712 [2006]), which held that "[ajbsent a showing of fraud or illegality, " its "discretion to grant or deny a release of propertypursuanttoAdministrativeCodeoftheCityofNewYork§ 11-424(g)is'absolute,' and thus it need not state reasons for refusing such a release. " It contends that it was. therefore, within its discretion to transfer the Rutland Road property to Neighborhood Restore, as a qualified third party, rather than allowing Ms. Lewis to redeem the Rutland Road property, because the mandatory four-month redemption period had expired. Administrative Code § 11-424 governs an application to the City for the release of property acquired by inrem tax foreclosure. Inorder to seektherelease of suchproperty, anapplicant must establish thatheor sheis a party whohadaninterest in tiie subject real property as "either owner, mortgagee, lienor, or encumbrancer at the time of the city's acquisition thereof. " Due to the City's error, Ms. Lewis was unable to establish that shewas an owner ofthe Rutland Roadproperty {see Administradve Code § 11-424 [a] [1]). Ms. Lewisasserts that her efforts to redeem theRutland Roadproperty afterthe Judgment of Foreclosure wasissued,butpriortotheendofthefour-month mandatory redemption period, werehampered becausethe DOFwouldnotprovide herwith information becauseshewas notlistedonitsrecordsastheowneroftheRutlandRoadproperty. SheatteststhattheDOF 35 mnteii:4»3noie STW101S JuBsnrnt datod 3128/18 P<0e38o(«8 toldhertorectifythiserrorwiAHPD,whileHPDinformedhertoresolve thiserrorwiththe DOF. Aftermakingnumerousattemptstoresolvetheissueofownership,Ms.Lewis,upon advice firomdieCity, paid feesto register theRutland Roadproperty withHPD, inorder to prcsCTveherownership,withoutknowingorbeinginfonnedthatshenolongerhadtitleto theRutiaadRoadpropertyduetotheJudgmentofForeclosure. TheCity,instead,accepted Ms. Lewis' registration fees, thereby acknowledging and representing to her that she continuedtoretainherownershipinterestintheRutlandRoadproperty. Significantly,this took place prior to the time the deedwas executedtransferring title to the Rutland Road property toNeighborhoodRestore. TheCity neverreturned Ms. Lewis' registration fees. The City thereby misled andmisrepresented to Ms. Lewisthat shecontinued to ownthe RutlandRoadproperty. "[W]here a governmental subdivision acts or comports itself wrongfully or negligently,inducingreliancebya partywhoisentitledtorelyandwhochangeshis[orher] position to his[orher] detriment or prejudice, thatsubdivision should be estopped from asserting a rightordefensewhichitotherwise couldhaveraised"(Benderv NewYorkCity Health & Hasps. Corp., 38 NY2d 662, 668 [1976]; see also Hillv City ofNew York, 151 AD3d 1032, 1033 [2dDept 2017]). Ifthe City hadnotifiedMs. Lewisthatshecouldnot register AeRutland Roadproperty because sheno longer owned it, shewould havehadthe opportunity up until September 6, 2018, the date on whichthe Commissioner ofFinance 36 Wnlad. omiB 870aaoi5 Judgmml dated aaa/is deededtheRutlandRoadpropertytoNeighborhoodRestore,toseekdiscretionaryreliefjfrom the City, notwithstanding the fact that more than four months hadpassed from the date of entry oftheJudgment ofForeclosure (seeAdministrative Code § 11-424 [g]): Ifsuchrelief hadbeengranted,Ms.LewiscouldhaveredeemedtheRutlandRoadpropertyuponpayment infallofthetaxarrearsandotherfees(seeid.). Thus,thereisanissueofequitableestoppel raised here (see Matter ofEmporium Mgt. Corp,, 121 AD3d at984). Ms. Lewis has also assertedthattheCity's failureto correct its erroroflistingthepriorownerastheownerof the RuUandRoadproperty causedherto have a problem in obtaining a loan to aidherin redeeming the Rutland Road property. TheCityarguesthatthefactthatMs.LewishassubstantialequityintheRutlandRoad property overitslienisirrelevant anddoesnotprovidea reasonforvacatingtheJudgment ofForeclosure. It contends thatMs.Lewisforfeited all ofherequity in theRutland Road property because ofher failure to interpose an answer in this in rem foreclosure action pursuant to Administrative Code § 1 l-409. (d). This argument is rejected. The loss ofMs. Lewis'entireequityintheRutlandRoadproperty wheresheneverabandonedit,soughtto satisfyherarrears,andwasready,willing,andabletoredeemit,wasnevertheintentionof theThirdPartyTransferProgram. TheThirdPartyTransferProgram isananti-abandonment programwhichhastheameliorativepurposeofenablingtroubledpropeniestobeplacedin the hands ofresponsible private owners for rehabilitation and maintenance, and was not intendedtopermittheCitytostripa propertyownerofallofthesurplusmoniesaboveits 37 Plinlad: 4f3ffii;lS 8700001S Judsinanl datod Mafia Page 33 c( 89 lien by its unjustified refusal to accept payments from a property owner who has not abandoned hisorherpropaty andis seekingtopayall arrears andmaintain andrehabilitate thepropertyhimselforherself. TheCity'sapplicationoftheThirdPartyTransferProgram to stripMs.LewisofherpropertyrightsintheRutlandRoadpropertyunderminestheThird PartyTransferProgram'sbeneficialintentanddistortsitspurposeso asto worka grave injustice upon Ms. Lewis. In any event, the court has inherent authority to vacate its own Judgment of Foreclosure, which was obtained on Ms. Lewis' default, '"for sufficient reason andin the interests ofsubstantial justice'" (Matter ofCounty ofOntario [Middlebrook], 59AD3d at 1065,quoting Woodson, 100NY2dat68;seealso Matter ofCounty ofGenesee [Spicola], 125AD3dat\477;Matter ofCounty ofGenesee[Butlak], 124AD3dat 1331). Here.there issufficient reasontovacatethedefaultjudgment intheinterests ofsubstantialjustice. The blatmtinfinnitiesintheprocedureemployedbytheCitytodivestMs.Lewisofherequity in theRutland Roadproperty, andthe City's flagrantdisregard ofMs. Lewis' rights and equity intheRutland Roadproperty, warrant anorder vacating theJudgment ofForeclosure with respect to the Rutland Road property. Concl sion Accordingly, Ms. Lewis' motion is granted to the extent that the Judgment of Foreclosure isvacatedwithrespecttotheRutlandRoadproperty, thetransferoftheRutland 38 Piintmi:wmns 8700S015JlKSmmtdaud3.2B1S paa»More6 RoadpropertytoNeighborhoodRestoreisvacatedandsetaside,andMs.Lewis'titletothe Rutland Road property is restored. Motion Se ucnceNum er9 Shurma1 Corp.(Shunna)moves,byorderto showcause,undermotionsequence number9,foranorder: (1)dismissingthisactionwithrespecttorealproperty locatedat315 Haman Street, Brooklyn, NewYork 1 1237, whichis designated onthe Kings Countytax mapasBlock3219,Lot41(theHarmanStreetproperty);or,inthealternative, (2)vacating that portion of the Judgment of Foreclosure in fhis action, dated November 27, 2017. pertaining totheHarman Streetproperty; (3)restraining anyfuturesaleortransfer oftitle of theHannan Streetproperty until further orderofthe court; aiid(4) tolling theredemption periodtoallowit,astheequityowneroftheHarmanStreetproperty,anopportunitytopay offthe liens and/orcontest fhe amount claimedto be due. F?CtS and Procedural BaGkground The Harman Street property was foreclosed upon in this action, which, as noted above, was conunenced on July 14, 2015, pursuant to the City's Third Party Transfer Program. Shurma did not interpose an answer in this action. As discussed above, the Judgment ofForeclosure wassigned onNovember 27, 2017 andwasentered onDecember 14, 2017. Shunnafiledits instantorderto showcause, datedAugust31, 2018. ShunnaassertsthatfhechargeswhichbecameliensontheHannanStreetproperty originated6omanactionwhichwascommencedagainsttheHarmanStreetpropertybyHPD 39 PiWBd:B»42a(6? financial aidliens for City funds given for repairs made by the former 7A administrator of theHarman Streetproperty. These arethe charges that Shurma claims were improperly imposed on the Harman Street property. Shurma maintains that it was not given an opportunity todisputethechargesdespitebeinggivena rightto dosoin anorderintheCivil Courtaction, dated September 10, 2009. Shurmaalso assertsthat it has not beengiven propercreditformanyofthechargesthatit paid. TheCityclaimsthatShurma'srightto challenge the underlying tax liens is now untimely, andthat it was entitled to foreclose on these liens bybringing this action inrem against theHarman Street property, pursuant to the ThirdPartyTransferProgram. Discussion Shunnadeniesreceivingnoticeofthisforeclosureaction. TheCityattachesa printout with tracking numbers and a notice offoreclosure datedJuly 24, 2017. Online fiveofthe printout, it states, under addressee, Shurma-1 Corp., 315 Harman Street, Brooklyn, NY 11237-6924. However, this is a multi-unit building, and this address has no apartment number, andit is unclear whoreceived the document. TheCity arguesthat actual notice is unmaterial, claiming that it complied with the in rem notice procedures set forth in Administrative Code§ 11-406,which,asdiscussedabove,havebeenupheldassatisfying constitutional dueprocessrequirements m MatterofISCAEnters. (77NY2dat701-702). AspointedoutbyShunna,however, itdefieslogicthatShunnawouldwillfully ignore noticeofaninrem foreclosure actionbasedonemergencyrepairlienswhileconsistently 42 Pn'ntnl: