State of New York
Supreme Court : County of Monroe

- against -

Index No. 2000/4352

ANDREW V. SIRACUSE, J.

This summary judgment dispute cannot be understood without a short background discussion. The large-scale funding of luxury houses in the Rochester area built by the Amico construction firm ended in criminal prosecutions against the Amicos and their associates and a large number of foreclosure proceedings. At least three of the properties were purchased by the individual defendant in this action, James Pezzulo. In all three the mortgage lender has brought foreclosure actions, and Mr. Pezzulo has opposed foreclosure in each.

Another of these cases, with identical parties and all but identical papers, came before acting Supreme Court Justice Frederick T. Henry in Ontario County. In a decision dated June 26, 2001, he denied the plaintiff's motion for summary judgment on the grounds that there were "significant issues regarding how mortgages in [defendant Pezzulo's] *** name on numerous properties were procured particularly in light of his income of $25,000 a year. The Defendant has asserted that many of these documents may contain forged signatures. To the extent the Defendant claims that facts essential to deny the plaintiff's motion may exist, but cannot be stated because of the absence of complete discovery, the plaintiff's motion for summary judgment is denied without prejudice to renew following the completion of discovery."

With all respect to Justice Henry, this Court cannot follow his decision. The defenses raised by Mr. Pezzulo are facially defective, and the discovery demands are unrelated to any issue bearing on the lender's entitlement to a judgment of foreclosure.

Mr. Pezzulo has raised five affirmative defenses, only one of which is more than boilerplate, and moves for discovery to be compelled before having to answer a summary judgment motion. The problem is that nothing he asserts would support a defense running against the bank. Although the plaintiff's language is blunt, it is difficult not to agree that the defendant's one substantial affirmative defense is absurd. He claims that the bank defrauded him by using an appraisal that overvalued the property substantially. But the function of the appraisal is to determine the value of the security, in this case the house. The bank lent Mr. Pezzulo $453,800 secured by property that was worth less than half that sum, but Mr. Pezzulo received that amount and used it to buy the house; the bank has not and surely will not recover the money it lent. Mr. Pezzulo is faced with foreclosures and possible liability on deficiency judgments, but the bank has unquestionably lost money.

Defendant's papers strongly suggest that the bank was involved in a criminal enterprise, but the object of this enterprise appears to have been to get bank loans for far more than could be secured by the property. There is certainly much that raises questions about these transactions, but the basic fraud was committed on the banks, not on the purchasers. It may well have been negligent for the banks to rely on the fraudulently inflated appraisals submitted by appraisers in league with the builders, but negligence in looking after its own interests does not constitute fraud on another.

The affirmative defenses, then, can be dismissed as a matter of law. There remains the issue of discovery, and here, too, while Justice Henry cogently states the applicable law, the Court must disagree with his application of those principles. Mr. Pezzulo states that he has been told that some of the documents made in connection with the mortgage had forged signatures instead of his own. As hearsay, of course, this assertion cannot defeat summary judgment; but more to the point, it provides no basis for discovery on relevant issues because he does not contest the signatures on the note and mortgage. The entirety of the contract is contained in these documents, and whatever falsifications existed in documents submitted in order to induce the bank to grant the loan are not relevant to the binding force of the contract that Mr. Pezzulo entered into at closing. Similarly, defendant argues that the bank should not have extended the mortgage loan to him because his annual income is only $25,000, not $25,000 a month as some of the allegedly forged documents supposedly state; but he does not deny that he knew he was taking possession of this expensive property--among others--and was obligating himself to pay the mortgage payments appearing on the face of these documents.

Throughout the entire transaction the lender here appears to be as much or more of a victim than anyone else. The defendant's extremely contentious language is not only unsupported by the facts and unsupportable logically; it is unprofessional and uncalled-for as well. If the answer were not to be stricken and summary judgment granted, the court would have granted a motion under CPLR 3024 (b) to have this slanderous material omitted. However, since the plaintiff has amply established its right to a judgment of foreclosure, its motion is granted, with costs, and the defendant's cross-motion denied.

The court notes that an answer was also submitted on behalf of defendant Wm. Morse. The plaintiff has also moved to strike this answer, and this aspect of its motion is unopposed. It is therefore granted, without costs or disbursements, and the same order, prepared by Mr. Katz, may serve to address both branches of the motion.

DATED: Rochester, New York

July 23, 2001

Andrew V. Siracuse, J.S.C.

Design © 1997 Michael Steinberg. No copyright subsists in the decision texts, which are government documents.

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