Upon the foregoing papers, the motion (No. 673) of defendant LARUBIO PROPERTIES, LLC, inter alia, to vacate the judgment of foreclosure and sale dated January 25, 2008 against the premises known as 87 Wandel Avenue, Staten Island, New York is granted to the extent indicated; and the cross-motion (No. 681) for like relief of defendant CUCAMONGA, LLC is denied as academic.

Plaintiff commenced this action to foreclose a purchase money note and mortgage given in connection with plaintiff's sale of the property known as 87 Wandel Avenue in Staten Island, New York to defendant LARUBIO PROPERTIES LLC (hereinafter LARUBIO). Said property included a one-family dwelling, as well as a large, undeveloped area of land located adjacent thereto. To the extent relevant, the contract of sale allegedly provided for the tentative subdivision and subsequent development of the vacant land next to the dwelling. It appears from the papers submitted to the Court that separate notes and mortgages were executed relative to the property on which the dwelling was located, and the as-yet undivided vacant portion of the property. It is further alleged that defendant CUCAMONGA, LLC (hereinafter CUCAMONGA) also executed multiple mortgages with the plaintiff, the first on the portion of property where the dwelling was located, and the second on the undeveloped area of land. It is undisputed that following the closing, the anticipated subdivision never occurred. In addition, it is claimed that when defendant LARUBIO failed to make the required payments under purchase money note and mortgage on the undeveloped section, plaintiff commenced the underlying foreclosure action. Defendant LARUBIO failed to answer the complaint, while defendant CUCAMONGA filed a Notice of Appearance and Waiver, which purportedly required plaintiff to serve its counsel with notice of any application for judgment. A Judgment of Foreclosure and Sale was thereafter granted based on LARUBIO's default. According to plaintiff, prior notice of his application was served upon CUCAMONGA.

In its Order to Show Cause dated April 3, 2008, defendant LARUBIO seeks to vacate the judgment and stay any sale claiming that its default was unintentional, i.e., the product of a misunderstanding regarding the state of settlement negotiations between itself and plaintiff. According to LARUBIO, it was involved in active negotiations with plaintiff, and it believed that no legal action would be necessary on its

part while the parties were still attempting to resolve the development issues concerning the vacant property. LARUBIO further contends that it has a meritorious defense. According to LARUBIO, the amount of its mortgage was subject to reduction in the event that the property could not be subdivided. Thus, the principal balance sought in the foreclosure action is purportedly inaccurate. In addition, LARUBIO contends that plaintiff's rights of foreclosure and sale are limited to the unimproved portion of the property, while the judgment which was entered covers the entire parcel. [*2]

In its cross-motion to vacate the judgment of foreclosure and sale, defendant CUCAMONGA contends that plaintiff failed to comply with the stipulation requiring notice of its application for the entry of judgment. Absent notice, CUCAMONGA contends that the judgment should be vacated. In addition, CUCAMONGA contends that its stipulation with plaintiff shows that his right to foreclose is limited to the undeveloped portion of the property. Accordingly, so much of the judgment of foreclosure and sale as purports to cover the entire parcel is claimed to be improper.

It is well settled that a defendant seeking to vacate a default judgment must demonstrate both a reasonable excuse for the default and the existence of a meritorious claim or defense (see CPLR 5015[a][1]; Quis v. Bolden, 298 AD2d 375; Mena v. Choon-Ket Kong, 269 AD2d 575). In exercising its discretion to determine whether an excuse is reasonable, the court is enjoined to consider such relevant factors as (1) the extent of the delay, (2) the prejudice or lack of prejudice to the opposing party (see Albin v. First Nationwide Network Mtge. Co., 188 AD2d 575), (3) the lack of wilfulness (see Workman v. Amato, 231 AD2d 627), and (4) the strong public policy in favor of resolving cases on their merits (id.).

Here, it is the opinion of this Court that defendant LARUBIO has sufficiently demonstrated its right to vacatur of the default judgment entered in the foreclosure action by claiming that (1) the parties were in the midst of negotiations with respect to the possibility of subdividing the subject property, (2) the balance claimed to be due under the purchase money mortgage was subject to reduction in the event that the anticipated subdivision could not be accomplished, and (3) defendant LARUBIO mistakenly believed that plaintiff's attorney (who was also his former attorney) was acting on behalf of both parties to effect a resolution, and would not take any further legal action while the negotiations continued (see Scarlett v.

McCarthy, 2 AD3d 623). In addition, keeping in mind the strength of the public policy favoring the resolution of matters on their merits, defendant LARUBIO has demonstrated the existence of viable defenses, including, inter alia, the amount actually due under the mortgage in view of the purported reduction in principal if the property could not be subdivided and developed as contemplated at the time of sale, and the extent of plaintiff's right to foreclose on the entire parcel. Finally, there has been no significant delay in bringing this application, and the Court finds no resulting prejudice to the plaintiff, whose opposition to the motion has been found to be without merit.

In view of the foregoing disposition, the cross-motion of defendant CUCAMONGA, LLC is largely academic. Moreover, insofar as it has already appeared in the action and waived its right to answer, it is only entitled to the notice specified in its stipulation with plaintiff's counsel.

Accordingly, it is

ORDERED that the motion brought by defendant LARUBIO PROPERTIES, LLC is granted to the extent of vacating the Judgment of Foreclosure and Sale dated January 25, 2008, and extending said defendant's time to answer until 20 days after the service upon it of a copy of this Decision and Order with notice of entry; and it is further

ORDERED that the Clerk shall enter an Order vacating and setting aside the foregoing judgment; and it is further

ORDERED that the cross-motion of defendant CUCAMONGA, LLC is denied as moot.

The foregoing constitutes the Decision and Order of the Court.

DATED: MAY 20, 2008/s/

HON. THOMAS P. ALIOTTA, J.S.C