Thursday, March 25, 2010

Justice Schack Admonishes Steven J. Baum Again

Here, Plaintiff Lasalle Bank, N.A., (“Lasalle”) sought a judgment of foreclosure and sale on default against the defendant borrower.  subordinate lender MERS as nominee of First Franklin Financial Corp. (“Franklin”) also sought relief pursuant to RPAPL 1351(3) and 1354(3).  Defendant borrower purchased the subject premises financing 100% of the purchase with two mortgages.  The first mortgage is held by Lasalle and constituting 80% of the purchase price.  The second mortgage is held by Franklin constituting the other 20%.

Justice Schack denied without prejudice Plaintiff Lasalle’s motion for a judgment of foreclosure and sale on default because it failed to comply with CPLR 3215(f) which requires an affidavit of facts executed by an officer of Lasalle or by someone with a valid power of attorney from Lasalle.  Schack also denied without prejudice the relief requested by Franklin for the same reason.  Schack noted that although the Plaintiff supplied a power of attorney for this purpose, Plaintiff is required to submit either an original copy of the power of attorney or a copied certified pursuant to CPLR 2105—i.e. that Plaintiff’s counsel compared the copy with the original document and found it to be a true and complete copy.

Most interestingly, Schack chastised Plaintiff’s counsel, Steven J. Baum, P.C., for the simultaneous representation of Lasalle and Franklin since Franklin holds clearly holds a divergent interest from that of Lasalle. Franklin holds a second mortgage that is subordinate to that of Plaintiff’s.  Schack pointed out that such a simultaneous representation is a violation of 22 NYCRR 1200.24 of the Disciplinary Rules of the Code of Professional Conduct.  Simultaneous representation of this sort is permitted only if the lawyer can (i) competently represent the interest of each party and (ii) if each consents to the representation after full disclosure of the implications of simultaneous representation and the advantages and risks involved.  Accordingly, Schack order Baum to demonstrate that Lasalle and Franklin gave such consented—no doubt Baum will be able to produce an after-the-fact consent.  Whether he can demonstrate that he can competently represent both parties still remains to be see…

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