Carr Holdings, LLC v. Martinez
2022 NY Slip Op 03094
N.Y. App. Div.2022Background
- In July 2009 the property owners took out a home equity conversion (reverse) mortgage in favor of Wells Fargo; the mortgage included a second mortgage in favor of HUD. The reverse mortgage was later assigned to Nationstar Mortgage, LLC (doing business as Champion).
- The Village of Hempstead held a tax lien sale on May 7, 2015 for unpaid 2014 taxes; BR Madison, LLC purchased the tax lien certificate and, after the statutory redemption period passed, received a deed to the property in August 2018. BR Madison conveyed the property to plaintiff in September 2018.
- Plaintiff sued under RPAPL article 15 to quiet title, naming the borrowers, Champion (Nationstar), HUD, and others, and sought a declaration that plaintiff owned the property free of liens.
- Champion answered asserting, inter alia, that the tax sale was void under 28 U.S.C. § 2410 because HUD held a federal interest; Champion argued plaintiff failed to comply with § 2410. HUD filed a limited appearance but did not answer.
- The Supreme Court granted plaintiff’s summary judgment motion as to Champion and denied Champion’s cross-motion; it declared plaintiff owner free and clear. Champion appealed. The Appellate Division affirmed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Champion may assert HUD's rights under 28 U.S.C. § 2410 to challenge the tax sale | Plaintiff: Champion is not HUD and cannot invoke HUD’s federal protections; plaintiff's title is valid. | Champion: The tax sale is void for failure to comply with § 2410; Champion may raise that defense. | Court: Champion may not assert HUD’s § 2410 rights because there is no evidence Champion is HUD’s agent or assignee; Champion cannot stand in HUD’s shoes. |
| Whether alleged noncompliance with § 2410 creates triable issues preventing quiet-title judgment | Plaintiff: Any § 2410 contention by Champion is not cognizable and does not create triable issues of fact. | Champion: § 2410 noncompliance undermines the tax sale’s validity and raises triable issues. | Court: Any alleged § 2410 noncompliance does not create triable issues as to plaintiff’s right to extinguish Champion’s interest because Champion cannot assert HUD’s rights. |
Key Cases Cited
- Bank of Am., N.A. v. Gulnick, 170 A.D.3d 1365 (App. Div. 2d Dep’t) (addresses limits on third parties asserting rights of federal mortgagee)
- LPP Mtge. Ltd. v. Gold, 44 A.D.3d 718 (App. Div. 2d Dep’t) (similar rule that non-assignees cannot assert federal lien rights)
- RCR Servs. v. Herbil Holding Co., 229 A.D.2d 379 (App. Div. 2d Dep’t) (discusses related standing principles)
- Windward Bora, LLC v. Wilmington Sav. Fund Socy., FSB, 982 F.3d 139 (2d Cir.) (federal appellate perspective on related mortgage sale issues)
- Kasdon v. United States, 707 F.2d 820 (4th Cir.) (party cannot assert rights belonging to the United States)