In this protracted action that began in 1992, plaintiff Citimortgage, Inc. (Citimortgage) is the current servicer on behalf of Banker's Trust Company of California, N.A. (Banker's Trust), as trustee, in respect of the secured loan on the real property located at 280 Park Avenue South, Apartment 22A, New York City (the Premises). Defendant Tracie Evans (Evans) is the borrower of the loan secured by a mortgage lien on the Premises.

By motion brought via an Order to Show Cause, plaintiff seeks relief (a) vacating and cancelling the prior order dated February 27, 2007 (Heitler, J.); and (b) directing the County Clerk of the County of New York to reinstate the prior order dated June 7, 2002 (Heitler, J.), and the Referee's Deed made between Paul Sklar, Esq., as grantor and plaintiff, as grantee, recorded in the Office of the County Clerk on August 16, 1995 in Reel 2234, Page 937 (the Referee Deed) that was vacated pursuant to the February 27, 2007 order. Defendant filed a cross-motion requesting relief to (1) hold plaintiff liable for its purported breach of the settlement agreement between the parties dated January 31, 2007 (the Settlement Agreement); and (2) require plaintiff to specifically perform the Settlement Agreement by removing or correcting certain allegedly incorrect information contained in Evans' credit report.

For the reasons stated herein, plaintiff's motion is granted, and defendant's cross-motion is denied.

Because the facts for this 15 year-old foreclosure action have been set forth in many prior court decisions, only the relevant background information is described herein for purposes of the current motion and the cross-motion. In 1992, the captioned-plaintiff Security Pacific National Bank commenced a mortgage foreclosure action against Evans. Thereafter, as a result of bank mergers as well as the sale and assignment of the mortgage with respect to the Premises, Citimortgage became the servicer of Banker's Trust in respect of the subject mortgage.

In 1994, plaintiff obtained a Judgment of Foreclosure and Sale against Evans and, in 1995, plaintiff was granted the Referee Deed for the Premises. In 1997, plaintiff obtained a Warrant of Eviction and a Judgment of Possession in housing court against Evans. After numerous unsuccessful challenges by Evans, the Judgment of Foreclosure, the Referee Deed, and the Warrant of Eviction and the Judgment of Possession obtained in housing court were all upheld, and by order dated December 23, 2004 (Heitler, J.), plaintiff's application for a writ of assistance evicting Evans from the Premises was granted. On or about January 11, 2007, the Court of Appeals entered an order dismissing, sua sponte, Evans' appeals.

On January 31, 2007, Citimortgage and Evans, with the assistance of their respective counsel Andrew Roth, Esq. and David Worth, Esq., negotiated and entered into the Settlement Agreement which, provided, among other things, that (1) Evans was to pay $880,000 (the Settlement Funds) to plaintiff within 60 days of January 31, 2007, which was later extended to April 13, 2007 by consent of the parties; (2) starting December 31, 2006 until payment of the Settlement Funds, Evans was to pay plaintiff a monthly sum of $3,000, and such payments (together with prior payments made by Evans pursuant to court orders to the Department of Finance) were to be held in escrow by plaintiff's counsel, to be applied as a credit towards payment of the Settlement Funds; (3) in consideration of the foregoing, plaintiff agreed to sign all documents necessary to vacate the Judgment of Foreclosure and the Referee Deed, and to reconvey title of the Premises to Evans; (4) the parties agreed to execute stipulations dismissing the Summary Proceedings against Evans; and (5) any failure of Evans to timely remit the Settlement Funds would be an event of default under the Settlement Agreement, and in such case, Evans would have 10 days to vacate the Premises, without any right to seek court intervention for injunctive or other forms of relief. The Settlement Agreement was approved by order of the court dated February 27, 2007 (Heitler, J.), and consequently, the Judgment of Foreclosure and the Referee Deed were vacated to facilitate Evans' attempt to procure refinancing.

After signing the Settlement Agreement, Evans sought refinancing for the condominium apartment, and hoped to use the [*3]proceeds thereof to pay the Settlement Funds. In her cross-motion, Evans alleges that the sole reason for her difficulty in obtaining refinancing, despite a credit score in the mid-700s, was due to Citimortgage's incorrect listing on her credit report that, since April 2003 (the time when her mortgage loan was taken over by Citimortgage) she had made 45 late payments, even though such payments were not late or owed. Although Evans concedes that Citimortgage's counsel, Andrew Roth (Roth), initially cooperated in trying to resolve the late payment issue, she alleges that Roth later failed or refused to cooperate in getting her credit report fixed. In support of her allegation, Evans submitted affidavits of (a) Jacqueline Decker, a loan officer of First Platinum Capital Corp. (the Decker Affidavit); (b) Nicholas Iannetti, a loan officer of Home Mortgage Desk (the Iannetti Affidavit); and (c) Thomas Trivisani, a mortgage broker (the Trivisani Affidavit), copies of which are attached as exhibits to the cross-motion (collectively, the Brokers' Affidavits). Notably, the Brokers' Affidavits were signed on or about June 8, 2007, almost two months after the April 13, 2007 deadline when Evans was required to pay plaintiff the Settlement Funds. Yet, Evans argues that plaintiff breached the Settlement Agreement, by failing to act in good faith in correcting or removing the late payments listed in her credit report, and that such failure impaired her ability to obtain refinancing and caused her to default under the Settlement Agreement. Evans further argues that plaintiff should be ordered to specifically perform the Settlement Agreement by correcting the credit report, and that she should be allowed more time to complete the refinancing.

By its counsel, plaintiff filed an opposition to Evans' cross-motion. See Roth Affirmation In Opposition to Cross-Motion and In Support of Order to Show Cause (the Roth Affirmation). Attached as exhibits to the Roth Affirmation are (i) letters and correspondence which purport to show that plaintiff cooperated with Evans and assisted her in correcting her credit report; and (ii) letters from Evans' prospective lender (Eastern Savings Bank) and mortgage broker which purport to show that a refinancing loan has been approved for Evans, and that a closing would be scheduled to take place, upon the receipt of an updated payoff letter from plaintiff. Based on the Roth Affirmation and the exhibits annexed thereto, plaintiff contends that it is entitled to the relief sought in the Order to Show Cause, and that Evans' cross-motion should be dismissed as a matter of law.

After a court hearing was held with respect to the Order to Show Cause, defendant's counsel belatedly submitted a reply to the Roth Affirmation. See Worth Reply Affirmation In Support of Defendant's Cross Motion (the Worth Reply). The Worth Reply contends, among other things, that the Roth Affirmation contained "new matters" (i.e. issues not raised in plaintiff's motion and [*4]defendant's cross-motion), and that the Roth Affirmation was inaccurate and prejudicial. For the reasons discussed below, these contentions are without merit.

Pursuant to the Settlement Agreement, Evans was required to pay the $880,000 Settlement Funds to plaintiff on April 13, 2007. It is undisputed that Evans failed to do so, and the failure is a default under the Settlement Agreement. Yet, Evans argues, without pointing to a specific provision of the Settlement Agreement, that it was plaintiff that breached the Settlement Agreement, by not acting in good faith in removing or correcting the late loan payments listed in Evans' credit report. In other words, Evans argues that plaintiff breached the implied covenant of good faith that is inherent in all contracts. See Dalton v Educational Testing Service, 87 NY2d 384, 389 (1995) ("Implicit in all contracts is a covenant of good faith and fair dealing in the course of contract performance").

Many courts have upheld the often-cited principle that a breach of the implied covenant of good faith claim cannot stand alone, if it is only a substitute for a non-viable breach of contract claim. See e.g. Jacobs Private Equity, LLC v 450 Park LLC, 22 AD2d 337, 348 (1st Dept 2005); Triton Partners LLC v Prudential Sec. Inc., 301 AD2d 411, 411 (1st Dept 2003). Even in the occasional instance where the implied covenant claim is permitted to be asserted as a stand-alone claim, it is recognized that there is a clear tension between "the imposition of a good faith limitation on the exercise of a contract right," and "the avoidance of using the implied covenant of good faith to create new duties that negate explicit rights under a contract." See Richbell Information Services, Inc. v Jupiter Partners, LP, 309 AD2d 288, 302 (1st Dept 2003). In Richbell, the court noted that in order to support a breach of the implied covenant claim, a claimant must show that the other party "exercised a [contract] right malevolently, for its own gain as part of a purposeful scheme designed to deprive [the claimant] of the benefits of [the fruits of the claimant's bargain]." Id. In the instant case, the facts demonstrate that defendant's implied covenant claim is without merit and must be dismissed, as discussed below.

First, even before the Settlement Agreement was executed, plaintiff wrote a letter dated January 29, 2007, which was given to Evans' counsel (and presumably the credit reporting agencies), wherein it was stated that Evans' mortgage account with Citimortgage should be updated to reflect that, as of April 2003, the mortgage "debt has not been in default and there are no outstanding late fees and/or charges owed thereon from such date." A copy of such letter is annexed as Exh. G to the Roth Affirmation. Thereafter, in response to the request of Evans' counsel, Citimortgage wrote another letter, dated February 21, [*5]2007, stating that "since April 2003, no payments to CitiMortgage were due nor have any late charges or arrears been assessed," and that Evans' credit report should be revised and corrected to "reflect this information," and that all payments since 2003 should be marked as "current with no lates." A copy of this letter is annexed as Exh. J to the Roth Affirmation. The record does not reflect that Evans or her counsel has ever claimed or complained that such letter does not satisfy Citimortgage's obligation, if any, under the Settlement Agreement with respect to executing "documents necessary to effectuate the terms of this Settlement Agreement." Settlement Agreement, ¶ 6.

Moreover, Evans and her counsel do not allege that Citimortgage has not fulfilled its duties under the Fair Credit Reporting Act (FCRA), 15 USC § 1681 et seq., which governs the collection, dissemination and use of consumer credit information. Indeed, on its face and by its content, the February 21, 2007 letter apparently satisfies the statutory duties imposed upon Citimortgage, as a "furnisher of information" (as such term is used in the FCRA), with respect to the correction, modification and/or update of Evans' credit information to consumer reporting agencies. See 15 USC § 1681s-2 (responsibilities of furnishers of information to consumer reporting agencies).

Yet, despite her inability to allege any failure on the part plaintiff of its duties under the FCRA, Evans contends that Roth, as plaintiff's counsel and not acting in good faith, failed or refused to verify the veracity of statements contained in the Citimortgage letter when he was contacted by employees of

independent credit bureaus, such as CIS Information Services. Relying on the Brokers' Affidavits, Evans alleges that Roth did not want to cooperate with the credit verifiers, and refused to give them the contact number of a Citimortgage agent who would assist in rectifying the late loan payments listed in her credit report.^[FN1] However, the statements in the Brokers' Affidavits are hearsay, because they seek to introduce out-of-court statements purportedly made by someone other than the affiants (i.e. the credit verifiers), which alleged that Roth told the verifiers that he just wanted the money for Citimortgage and did not want to be involved with the details of Evans' loan or credit report. Decker Affidavit, ¶ 8; Iannetti Affidavit, ¶ 5. In any event, Roth asserts that he "never indicated to anyone that [he] or Citimortgage would not cooperate" and that he has "no recollection of ever communicating with either Ms. Decker or Mr. [*6]Inannetti." See Roth Affirmation, ¶ 8-10. Assuming, arguendo, that the alleged statements of the verifiers were only used to raise an issue of fact as to what Roth might have said to them, Evans still fails to demonstrate that the alleged statements made by Roth were the cause of her inability to obtain refinancing. See Acevedo v York Int'l Corp., 31 AD3d 255, 258 (1st Dept 2006) ("even if the hearsay statement was properly used to raise an issue of fact as to whether York employees had spilled oil, plaintiff still failed in bridging the gap as to causation"). The fact that a "hard money" lender, Eastern Savings Bank, indicated in its letter dated June 7, 2007, that it was prepared to schedule a closing date, but needed an updated payoff letter to do so, undercuts any demonstration that Roth's alleged statements prevented her from refinancing.^[FN2] See Exh. M to Roth Affirmation. Although the court is sympathetic to the fact that Evans faced difficulties refinancing, she has not demonstrated that it was Citimortgage's actions that prevented her from doing so.

Furthermore, Evans' allegation that Roth acted in bad faith is undermined by the letter written by her counsel on March 30, 2007, a copy of which is annexed as Exh. K to the Roth Affirmation. In the letter, counsel noted that the title report for the Premises listed several prior judgments against Evans, but he indicated that none of which would affect Evans' ability to close. Counsel also requested Citimortgage to write yet another letter, but "without any reference" that it would come from Citimortgage's "default litigation department." Toward the end of the letter, counsel wrote: "Now that this is finally near the end ... my client asked me to thank you and your client for your help in getting this done." Receptive to Evans' further request, by letter dated April 3, 2007, a copy of which is annexed as Exh. L to the Roth Affirmation, Citimortgage wrote: "This letter will confirm that upon receipt of $880,000.00 in bank or certified funds on or before April 13, 2007, CitiMortgage will issue a full satisfaction of Mortgage with regard to [*7][Evans'] Mortgage."

Based on the foregoing, any allegation that Roth or Citimortgage acted in bad faith is without merit. The record, on the whole, shows that Roth and Citimortgage cooperated with Evans in good faith in correcting her credit report, with the view of assisting her in the procurement of refinancing before the April 13, 2007 deadline.

In conclusion, because Evans has defaulted under the Settlement Agreement, plaintiff Citimortgage is entitled to the contract remedies specified in the Settlement Agreement. Evans' breach of the implied covenant of good faith claim is without merit, because she has failed to show that Citimortgage "exercised a [contract] right malevolently, for its own gain as part of a purposeful scheme designed to deprive [her] of the benefits of [the fruit of her bargain under the Settlement Agreement]." Richbell, 309 AD2d at 302, supra. For the same reasons, the Worth Reply is without merit, as it fails to show that the Roth Affirmation is inaccurate or prejudicial.

Accordingly, it is hereby

ORDERED that the relief requested by plaintiff Citimortgage in the Order to Show Cause is granted; and it is further

ORDERED that the various forms of relief requested by defendant Tracie Evans in the cross-motion are denied; and it is further

ORDERED that the prior order of this court, dated February 27, 2007 (Heitler, J.), is hereby cancelled and vacated; and it is further

ORDERED that the County Clerk is hereby directed to reinstate this court's prior order dated June 7, 2002 (Heitler, J.) and the decision dated July 9, 2001 on which such order was based (Heitler, J.), as well as the Referee's Deed recorded in the Office of the County Clerk of the County of New York, on August 16, 1996, in Reel 2234 at Page 937; and it is further

ORDERED that if any issue arises regarding eviction of any person at the Premises, plaintiff is directed to seek relief in the housing court.

This constitutes the Decision and Order of the court.

Dated: January 14, 2008

ENTER:

____________________

J.S.C.