Papers Considered: 1) Phoenix’s Order to Show Cause; Attorney Affirmation; Affidavit of Evan Blum; and Memorandum of Law in Support of Motion to Vacate Default Judgment; 2) Petitioner’s Affidavit in Opposition to Motion; 3) Phoenix’s Reply Affirmation. This is an in rem tax lien foreclosure proceeding pursuant to article 11, title 3 of the Real Property Tax Law brought by petitioner County of Albany, New York, Tax District. This proceeding was commenced by a petition and notice of foreclosure filed October 8, 2015 for parcels of real property on the list of delinquent taxes filed June 11, 2012, for the City of Albany. Among the parcels included on the 2012 list of delinquent taxes were 143 Montgomery Street and Centre Street, collectively known as the Central Warehouse building in Albany. At the time this proceeding was commenced, the record owner of the subject parcels was Sunmark Federal Credit Union. Sunmark failed to file an answer or redeem the subject parcels prior to January 11, 2016, the deadline set forth in the petition and notice of foreclosure (see RPTL 1124 [3]). Accordingly, petitioner was entitled to seek a default judgment of foreclosure with respect to the subject parcels as of January 2016 (see RPTL 1123 [8]). Instead, however, petitioner withdrew the subject parcels, and others, from the foreclosure proceeding in October 2017, and shortly thereafter obtained a default judgment and a severance for the remaining parcels on the 2012 list of delinquent taxes which had not been redeemed or withdrawn. In January 2022, petitioner reinstated the subject parcels to the foreclosure proceeding and, in February 2022, sought and was granted a default final judgment of foreclosure from this Court. The Phoenix of Albany, LLC (“Phoenix”), an entity that acquired the subject parcels from Sunmark in August 2017 — after Sunmark had defaulted in this foreclosure proceeding and petitioner was entitled to a default judgment — now moves this Court for an order pursuant to RPTL 1131 and CPLR 5015 vacating the default judgment of foreclosure dated and entered February 15, 2022. Petitioner has opposed the motion and it is now submitted for decision. An interested person seeking to vacate a default judgment must show a reasonable excuse for the default and a meritorious defense to the foreclosure petition (see CPLR 5015 [a] [1]; Matter of Clinton County [Miner], 39 AD3d 1015, 1016 [3d Dept 2007]). The relevant default in this proceeding occurred when Sunmark failed to file and serve a verified answer or redeem the subject parcels before January 11, 2016. Phoenix offers no explanation for that default and therefore vacatur of the default judgment is not warranted. Even if Phoenix established a reasonable excuse for the default, it has failed to provide a meritorious defense to the foreclosure proceeding (see Matter of County of Albany [Bowles], 91 AD3d 1132, 1133 [3d Dept 2012]; Matter of Clinton County [Miner], 39 AD3d at 1016). Phoenix’s managing member, Evan Blum, submitted an affidavit stating that he is the owner of a note and mortgage involving real property in Pennsylvania and he is under contract to sell the same for $700,000, an amount sufficient to redeem the subject parcels. He has not established that he is actually in possession of sufficient funds to redeem the subject parcels and, in any event, his claim that Phoenix will be able to pay the delinquent tax liens if afforded more time is not a defense to the foreclosure proceeding (see NYCTL 2015-A Trust v. Diffo Props. Corp., 171 AD3d 538, 539 [1st Dept 2019], lv dismissed 34 NY3d 1198 [2020]). The time for a property to be redeemed is set by statute and, in this case, expired in January 2016. Petitioner may — but is not required — to accept payment after the expiration of the redemption period (see RPTL 1110 [2]; Matter of City of Schenectady [Permaul], 201 AD3d 1, 14 n 3 [3d Dept 2021], appeal dismissed, lv to appeal denied 38 NY3d 994 [2022] [referring to "municipalities…settling pending RPTL article 11 proceedings by accepting late tax payments" [emphasis added]; Matter of Clinton County [Fortunatus], 299 AD2d 774, 775 [2002] lvs dismissed 99 NY2d 610 [2003], 100 NY2d 574 [2003] ["barring a timely application and subsequent order vacating the default judgment of foreclosure, a tender of the past due taxes following entry of the judgment of foreclosure was untimely"]; see also Miner v. Clinton County, NY, 541 F3d 464, 474 [2d Cir 2008], cert denied 556 US 1128 [2009] ["New York law expressly permits counties to establish a deadline for redemption and to reject offers of payment after that date"]). Phoenix asserts that this Court should vacate the default judgment because petitioner failed to comply with several provisions of the RPTL regarding the reinstatement of withdrawn foreclosure proceedings. Assuming, without deciding, that Phoenix has standing to bring this motion,1 the Court nevertheless concludes that Phoenix’s argument lacks merit. Phoenix insists that, when petitioner decided to reinstate the foreclosure proceedings for the subject parcels, petitioner was required to: (1) file the certificates of reinstatement of the proceeding against both the subject parcels with the County Clerk within ten days of issuance (see RPTL 1138 [4] [c]); (2) file a petition of foreclosure to reinstate the foreclosure proceeding (see RPTL 1138 [4] [d]); (3) publish notice setting a redemption deadline at least three months following the date of the first publication of the notice (see RPTL 1124); and (4) mail notice of the new foreclosure petition to Phoenix (see RPTL 1125). Phoenix argues that petitioner’s failure to comply with these provisions of the RPTL resulted in Phoenix not receiving notice of the reinstatement and not being able to exercise its right to redeem the subject parcels. Phoenix contends that the affidavit of Blum and the docket for this proceeding confirm that Phoenix did not receive notice of the filing of the certificates of reinstatement, or the additional petition purportedly required by RPTL 1138 and, therefore, has established a reasonable excuse for failing to timely appear and redeem the subject parcels. First, with respect to the filing of the certificates of reinstatement, the Court is not convinced that petitioner failed to comply with RPTL 1138. RPTL 1138 addresses reinstatement of a withdrawn foreclosure proceeding. If an enforcing officer determines that a parcel is no longer eligible for withdrawal from foreclosure, the enforcing officer shall reinstate the withdrawn foreclosure proceeding (see RPTL 1138 [4] [a]). “The enforcing officer shall issue a certificate of reinstatement setting forth the reasons for the reinstatement of the proceeding” (RPTL 1138 [4] [b]). “If the parcel has been marked ‘withdrawn’ on a list of delinquent taxes that has been filed pursuant to [RPTL 1122], the enforcing officer shall file a copy of the certificate with the county clerk within ten business days from the issuance of the certificate” (RPTL 1138 [4] [c]). The certificates of reinstatement for these parcels are dated January 14, 2022 and were purportedly filed that same date. Phoenix provides two printouts of the docket for this proceeding. The first, printed on February 9, 2022,2 does not appear to include the two certificates of reinstatement for the subject parcels, although it includes documents filed after January 14, 2022 (specifically, certificates of reinstatement for other parcels on this delinquent tax list which were filed on January 27, 2022). The second docket, printed on March 3, 2022, does appear to include the certificates for the subject parcels and indicates they were filed on January 14, 2022. Counsel for Phoenix avers that he personally visited the County Clerk’s office on February 23 and 24, 2022, to inspect the files for this proceeding yet did not uncover the January 14, 2022 certificates of reinstatement. Also included with Phoenix’s papers is a copy of the certificate of reinstatement for one of the two parcels which was attached as an exhibit to the affidavit of regularity submitted by petitioner with its proposed judgment of foreclosure. The certificate of reinstatement is dated January 14, 2022 and bears a stamp of the County Clerk’s office indicating that it was received by that office on January 14, 2022 at 2:26 pm. Additionally, the assistant county attorney averred in his affidavit of regularity that the “parcels were both reinstated to this proceeding…by Certificates of Reinstatement dated January 14, 2022 and filed with the Albany County Clerk on January 14, 2022.” Based on the facts provided, it appears that petitioner complied with the relevant provisions of RPTL 1138; however, there may have been some delay or office failure within the County Clerk’s office which prevented the documents from appearing on the docket in a timely manner. Papers are deemed filed when they are delivered to the County Clerk even if they are not placed in the County Clerk’s case file (see Matter of Conti v. Clyne, 120 AD3d 884, 885 [3d Dept 2014], lv denied 23 NY3d 908 [2014]; Matter of Laidlaw Energy & Envtl., Inc. v. Town of Ellicottville, 60 AD3d 1284, 1285 [4th Dept 2009]). Furthermore, “[a] presumption of validity attaches to tax foreclosure proceedings, and the property owner bears the burden of affirmatively establishing any defense alleging a jurisdictional defect or invalidity in the tax or proceeding” (Matter of County of Otsego [Opalecky], 103 AD3d 1020, 1021 [3d Dept 2013]; see RPTL 1134). “Upon commencement of a foreclosure action, due process does not require that affected real property owners be informed of each and every statutory requirement set forth in RPTL article 11″ (Matter of County of Broome [Cekic], 162 AD3d 1348, 1349 [3d Dept 2018], lv dismissed 32 NY3d 1052 [2018]). Here, there is no evidence to suggest that the January 14, 2022 time stamp of the County Clerk’s office on the certificate of reinstatement is inaccurate, or that the later docket printout showing the certificates of reinstatement for the subject parcels as filed on January 14, 2022 is false or inaccurate. Moreover, despite Phoenix’s characterization of RPTL 1138 (4) (c) as “statutorily required notice,” this provision contains no language indicating that the filing of the certificate of reinstatement is a required form of notice to the parties having an interest in the property. Rather, the certificate of reinstatement updates the list of delinquent taxes, which acts as a notice of pendency to provide notice to persons “who take a subsequent interest in the realty” (Lin v. County of Sullivan, 100 AD3d 1076, 1077 [3d Dept 2012]). For example, at the time Phoenix acquired the subject parcels, they were contained on the list of delinquent taxes, which acted as a notice of pendency to advice Phoenix of their foreclosure status. It is axiomatic that due process requires notice of an action and an opportunity to be heard (see Mullane v. Cent. Hanover Bank & Tr. Co., 339 US 306, 313 [1950]; Matter of County of Wayne [Schenk], 169 AD3d 1501, 1502 [4th Dept 2019], appeal dismissed 34 NY3d 1138 [2020]; Matter of County of Broome [Ritter], 86 AD3d 817, 819 [3d Dept 2011], lv denied 17 NY3d 716 [2011]; Maple Tree Homes, Inc. v. County of Sullivan, 17 AD3d 965, 966 [3d Dept 2005], appeal dismissed 5 NY3d 782 [2005]). Beyond that, however, courts have repeatedly held that tax districts are not required to provide “‘additional notices as each step in the foreclosure proceeding [is] completed’” (Matter of County of Clinton [Bouchard], 29 AD3d 79, 82 [3d Dept 2006], quoting Weigner v. City of New York, 852 F2d 646, 652 [2d Cir1988], cert denied 488 US 1005 [1989]; see Matter of Orange County Commr. of Fin. [Helseth], 18 NY3d 634, 640 [2012]; Matter of County of Wayne [Schenk], 169 AD3d at 1502). Accordingly, the Court finds that petitioner complied with the provisions of RPTL 1138 (4) regarding the execution and timely filing of the certificates of reinstatement. Phoenix further argues that petitioner failed to comply with RPTL 1138 (4) (d), which states: “The enforcing officer shall file a petition of foreclosure pertaining to the affected parcel as soon thereafter as is practicable. In no event, however, shall such petition be filed sooner than twenty-one months after lien date, or, in the case of property which is subject to a three or four year redemption period, sooner than thirty-three or forty-five months after lien date, respectively.”3 It is undisputed that petitioner did not file, publish and mail a second petition and notice of foreclosure for the subject parcels after the certificates of reinstatement were executed. Rather, based on Sunmark’s default in 2016, petitioner submitted an affidavit of regularity and the proposed final default judgment of foreclosure to the Court for issuance. “In construing a statute, [the court's] primary objective is to determine the Legislature’s intention, giving due effect to the plain meaning of unambiguous statutory language” (Matter of Rubeor v. Town of Wright, 134 AD3d 1211, 1212 [3d Dept 2015], lv denied 27 NY3d 902 [2016]; see Matter of Albany Law School v. New York State Off. of Mental Retardation & Dev. Disabilities, 19 NY3d 106, 120 [2012]). “‘Statutes which relate to the same subject matter must be construed together unless a contrary legislative intent is expressed’” (Matter of County of Orange [Al Turi Landfill, Inc.], 75 AD3d 224, 234 [2d Dept 2010], quoting Matter of Dutchess County Dept. of Social Servs. v. Day, 96 NY2d 149, 153 [2001]; see McKinney’s Cons Laws of NY, Book 1, Statutes §221). “The courts must ‘harmonize the various provisions of related statutes and…construe them in a way that renders them internally compatible’” (Matter of County of Orange [Al Turi Landfill, Inc.], 75 AD3d at 234, quoting Matter of Aaron J., 80 NY2d 402, 407 [1992]; see McKinney’s Cons Laws of NY, Book 1, Statutes §97, 98; Matter of Durante Bros. Constr. Corp. v. St. John’s Cemetery, 33 AD3d 5, 8 [2d Dept 2006]). In the instant proceeding, a petition and notice of foreclosure was duly filed and served in accordance with the RPTL. Sunmark, the interested party at the time the list of delinquent taxes was filed, knowingly defaulted, thus forfeiting all rights to the subject parcels. Phoenix acquired the subject parcels from Sunmark after the default and prior to the withdrawal of the subject parcels. Accordingly, at the time Phoenix obtained the subject parcels, petitioner was entitled to a final judgment of foreclosure and a deed to the subject parcels (see RPTL 1123 [8] ["In the event of failure to redeem or answer by any person having the right to redeem or answer, such person shall be in default and shall be barred and forever foreclosed from all his or her right, title and interest in and to the parcels described in such petition and a judgment in foreclosure may be taken by default as provided by this title"]; RPTL 1131 ["In the event of a failure to redeem or answer by any person having the right to redeem or answer, such person shall forever be barred and foreclosed of all right, title, and interest and equity of redemption in and to the parcel in which the person has an interest and a judgment in foreclosure may be taken by default as provided by (RPTL 1136 [3])”]; RPTL 1136 [3] ["When no answer has been interposed. The court shall make a final judgment awarding to such tax district the possession of any parcel of real property described in the petition of foreclosure not redeemed as provided in this title and as to which no answer is interposed as provided herein. In addition thereto such judgment shall contain a direction to the enforcing officer of the tax district to prepare, execute and cause to be recorded a deed conveying to such tax district full and complete title to such parcel"]). Although petitioner was entitled to a final judgment of foreclosure, it withdrew the subject parcels on the ground that “if the tax district were to acquire the parcel, there is a significant risk that it might be exposed to a liability substantially in excess of the amount that could be recovered by enforcing the tax lien” (RPTL 1138 [1]). In February 2022, petitioner reinstated the withdrawn foreclosure proceeding and sought a final judgment of foreclosure by default as to the parcels “preparatory to conveying them to a third party.”4 Inasmuch as petitioner had already “file[d] a petition of foreclosure pertaining to the affected parcel[s]” in October 2015, petitioner was in compliance with the RPTL and was not required to file a second petition of foreclosure in order to reinstate the withdrawn foreclosure proceeding. It is noted that RPTL 1138 does not refer to a second petition, or an amended petition, only a petition, which had been filed here. Reinstatement, by definition, means “ [t]o place again in a former state or position; to restore” (Black’s Law Dictionary). Accordingly, the foreclosure proceeding was restored to its former position prior to withdrawal, that is, to the position that Sunmark had defaulted and petitioner was entitled to a default final judgment of foreclosure (see RPTL 1123 [8]; 1131; 1136).5 The Court acknowledges that, in some cases, it may be necessary for the petitioner in an tax lien foreclosure proceeding to file a petition following reinstatement of a withdrawn parcel. Parcels may be withdrawn “at any time prior to final judgment” (RPTL 1138 [1]), including before a petition and notice of foreclosure is filed, and even before the list of delinquent taxes is filed. RPTL 1122, entitled “filing of list of delinquent taxes,” provides that, “[t]en months after lien date the enforcing officer of each tax district shall execute a list of all parcels of real property, except those excluded from such list in the manner provided by [RPTL 1138], affected by delinquent tax liens held and owned by such tax district” (emphasis added). RPTL 1123, entitled “petition of foreclosure,” provides that the petition of foreclosure shall apply to those parcels which are listed on or attached to the petition.6 Accordingly, there may be cases where a parcel is withdrawn prior to the petition being filed and therefore is not subject to the petition of foreclosure for the relevant tax lien year. Or a parcel that is subject to a petition of foreclosure may be withdrawn prior to the expiration of the period to redeem the property or interpose an answer. In those cases, the petitioner may need to file a petition following its reinstatement of withdrawn parcels. However, where, as here, the time to answer or redeem has long ago passed, and the interested party has lost all rights to the property, it defies logic to interpret RPTL 1138 to require petitioner to start a whole new foreclosure proceeding by filing and serving a petition on Phoenix, publishing the notice and mailing a copy to Phoenix, and providing Phoenix three months to file an answer or redeem the subject parcels. The Court finds that Phoenix’s “strained interpretation would lead to an ‘unreasonable [and] absurd consequence[ ]‘” (Matter of American Tax Funding, LLC v. Saita, 107 AD3d 1134, 1135 [3d Dept 2013], quoting Matter of County of Albany v. Hudson Riv.-Black Riv. Regulating Dist., 97 AD3d 61, 69 [3d Dept 2012], lv denied 19 NY3d 816 [2012]). Phoenix’s reliance on Matter of Foreclosure of Tax Liens by County of Rensselaer (Riverside Ave. Corp.), (16 AD3d 928, 930 [3d Dept 2005]) is misplaced.7 Phoenix asserts that this case supports its argument because the tax district in that matter filed a second petition of foreclosure for the two parcels in question after they were withdrawn then reinstated. The Third Department did not explicitly address the issue of whether a new petition was required under RPTL 1138 (4); rather, it held that a new index number was not required with respect to the tax district’s second petition because the RPTL filing requirements take precedence over CPLR requirements and under the RPTL, “a taxing authority does not merely reinstate a parcel’s eligibility for foreclosure, it reinstates the ‘withdrawn foreclosure proceeding itself’” (id., quoting RPTL 1138 [4] [d]). Moreover, the facts of that case are substantially different, as the respondent in that matter had appeared and answered the initial petition (see Matter of Foreclosure of Tax Liens by County of Rensselaer [Riverside Ave. Corp.], 16 AD3d at 928, n 1), so a default judgment was not warranted, and the tax district, with respect to reinstatement, was attempting to collect tax payments for additional years when it filed a new petition. Here, neither Phoenix nor Sunmark formally appeared in this proceeding by filing an answer, and the tax district is not attempting to collect any additional taxes related to the subject parcels; rather, it is seeking the default judgment to which it was entitled in 2016. Nor does the legislative history support Phoenix’s argument. RPTL article 11 was overhauled in 1993 (see L 1993, Ch 602). At that time, the overarching intent of the bill was to “reduce the cost of the tax enforcement process by establishing new procedures that are more efficient and equitable” (Bill Jacket, L 1993, ch 602 at 15). The stated purpose of the overhaul was to “comprehensively revise[ ] and strengthen [ ] procedures for the collection of real property taxes, while giving local governments greater administrative flexibility’” (Moore v. County of Essex, 49 Misc 3d 979, 982-983 [Sup Ct, Essex County 2015], quoting Assembly Mem in Support, Bill Jacket, L 1993, ch 602 at 4). According to the bill jacket, specifically with respect to RPTL 1138, “[d]espite the withdrawal of the foreclosure proceeding, the tax lien and the lis pendens against the parcel would remain intact, so that the proceeding could be reinstated expeditiously if the circumstances that justified the withdrawal should change (e.g., when a bankruptcy proceeding is concluded)” (Bill Jacket, L 1993, ch 602 at 45 [emphasis added]). Requiring tax districts to commence new foreclosure proceedings for each and every parcel that is withdrawn and reinstated, including parcels where the respondent has defaulted in appearing, is neither efficient nor equitable. Pursuant to Phoenix’s interpretation, a respondent who defaulted in the foreclosure proceeding could then file for bankruptcy, prompting a withdrawal from the foreclosure proceeding (see RPTL 1138 [1] [c]), have the bankruptcy proceeding dismissed, prompting a reinstatement, and then be entitled to a new opportunity to redeem the property or answer the foreclosure petition. A respondent could file for bankruptcy multiple times, thus delaying resolution of the matter indefinitely. The instant foreclosure proceeding involves delinquent taxes that are over ten years old. Phoenix acquired the subject parcels in 2016, and had constructive notice of the pending tax foreclosure proceedings at that time (see RPTL 1122 [6] [b]; [7]; CPLR 6501; Lin v. County of Sullivan, 100 AD3d 1076, 1077 [3d Dept 2012], supra; Solomon v. City of New York, 171 AD2d 739, 741 [2d Dept 1991]; Matter of Tref Realty Corp. v. City of New York, 135 AD2d 862, 863 [2d Dept 1987], appeal dismissed 72 NY2d 833 [1988]). In the almost six years since Phoenix acquired the subject parcels, Phoenix has not resolved this proceeding by paying the delinquent taxes. Phoenix has, however, commenced litigation, including the instant motion practice and a matter in bankruptcy court that stayed determination of this motion. “Ownership carries responsibilities” (Kennedy v. Mossafa, 100 NY2d 1, 11 [2003]; accord Lakeside Realty LLC v. County of Sullivan, 140 AD3d 1450, 1454 [3d Dept 2016], lv denied 28 NY3d 905 [2016]; Matter of County of Sullivan [Dunne --- Town of Bethel], 111 AD3d 1232, 1235 [3d Dept 2013]). “Simply put, [Phoenix] ‘was responsible for protecting [its] ownership interests and chargeable with notice that failure to pay [the] taxes could result in foreclosure’” (Matter of County of Sullivan [Dunne --- Town of Bethel], 111 AD3d at 1235, quoting Matter of County of Sullivan [Yong Tuk Yun], 82 AD3d 1560, 1562 [3d Dept 2011]). Phoenix’s efforts to hold the subject parcels indefinitely while disregarding its obligation to pay the real property taxes are not supported by the law. Accordingly, the Court finds that Phoenix’s argument regarding the reinstatement procedures of RPTL 1138 does not establish a reasonable excuse for the default. Finally, as previously noted, Phoenix has failed to provide a meritorious defense to the tax foreclosure petition. Due process was provided to Sunmark in the form of notice of the proceeding and an opportunity to be heard, and no challenge to the validity of the tax or other meritorious defense has been raised. The only defense Phoenix provides is a dubious promise to pay the taxes sometime in the future, a proffer Phoenix could have made to petitioner at any time over the past six years. Therefore, it is hereby ORDERED that Phoenix’s motion to vacate the default judgment of foreclosure is denied. This constitutes the decision and order of the court. All papers, including this decision and order, are being returned to petitioner. The signing of this decision and order shall not constitute entry or filing under CPLR 2220. Counsel is not relieved from the applicable provisions of that section relating to filing, entry and notice of entry. Dated: June 27, 2022
