This is an action to foreclose on a lien filed in the Office of the City Register against the defendant Manuela A. Capote's condominium unit. The action was commenced by the plaintiff, Board of Managers of the Beechhurst Shores at Riverside Drive Condominium, by filing a summons, complaint and notice of pendency on June 17, 2011. The lien, in the amount of $8,410.04, dated March 18, 2011, filed on April 14, 2011 against the condominium unit located at 154-25A Riverside Drive, Unit 7B, Beechhurst, Queens County, New York, is based upon unpaid condominium common charges. The complaint also asserts causes of action for breach of contract, counsel fees and for a money judgment in the amount of $13,484.85 representing amounts due for unpaid condominium assessments, late charges, and interest. Defendant Capote served a verified answer with affirmative defenses dated January 5, 2012.

The complaint asserts that the defendant acquired title to the premises by deed dated August 4, 1982. The complaint also asserts that since February 1, 2010, as a result of defendant Manuela Capote's continual failure to pay Condominium assessments and related expenses, she is presently in arrears in the amount of $13,484.85. The complaint alleges that The Board notified the defendant that she was in arrears, however, defendant failed to make the required payments.

By memorandum decision dated September 19, 2012. this Court granted the plaintiff's motion for summary judgment in favor of the plaintiff on its action for foreclosure of lien and for the appointment of a referee to compute the amounts due and owing to it. The plaintiff was directed to settle an order appointing a referee to compute the sums due to plaintiff and to submit the report to the court. An order appointing Michael Dikman as referee was signed by this Court on December 5, 2012 and entered on December 13, 2012.

Mr. Dikman filed his oath and report of amount due with the County Clerk on March 7, 2013. His report, based upon an affidavit and documentary evidence submitted by Cathy Nemitz, President of the Board of Managers, found that plaintiff was due the sum of $8,410.04 for outstanding condominium assessments as of March 18, 2011, exclusive of counsel fees and other costs and that the plaintiff was due $10,465.55 for condominium assessments from March 18, 2011 through February 1, 2013, for a total of $18,879.59. Plaintiff's counsel submits an affidavit of services in which he asserts that he expended over 37 hours in this matter [*2]and requests counsel fees in the amount of $11,325.00. Based upon the report of the referee, the plaintiff now moves for an order granting a final judgment of foreclosure and sale.

Defendant Capote cross-moves for an order vacating and setting aside the order appointing the referee, dated December 5, 2012, as being void and irregular on the ground that the proposed order was not served upon counsel for the defendant with notice of settlement as directed in this court's memorandum decision dated September 19, 2012. Defendant also cross-moves for an order pursuant to CPLR 4403 rejecting and vacating the Referee's report on the ground that defendant was not given notice of the referee's hearing, was not given an opportunity to testify and present evidence on her own behalf, and was not able to cross-examine plaintiff's witness as to the amount of unpaid charges. Counsel alleges that the referee failed to provide notice of any hearing written, oral, or otherwise.

In support of the cross-motion, counsel Anthony R. Mordente, Esq., states that he was not served with a proposed order appointing a referee and notice of settlement as directed in this Court's memorandum decision dated September 19, 2012. He states that the plaintiff, rather than submitting the order with notice of settlement, submitted an ex-parte order to the court for signing. Counsel states that due to the violation of the court's directive, the court should vacate the order submitted ex-parte as void and irregular. In addition, as set forth above, counsel asserts that as defendant did not waive her right to be present at a referee's hearing, as the referee rendered his report without providing notice of the hearing, and as the referee did not in fact hold an evidentiary hearing, that the referee's report should be voided (citing Community Sav. Bank v. Shaad, 105 AD2d 1063 [4th Dept. 1984][inasmuch as defendant was not given notice and an opportunity to be heard at the referee's hearing, a rehearing is required in order to determine the propriety of the charges]. Here, counsel asserts that a hearing is required as there are sharp disputes regarding the amount of charges due to the condominium for common charges through February 28, 2013.

Mr. Dikman, the referee appointed herein, submits an "affirmation in limited opposition," stating that he did not believe that a hearing was required as the usual and customary practice is to take testimony in affidavit form. Moreover, he states that he had no documentation containing the name and address of any other party requiring notice. He states that the defendant's answer was not provided to him and the defendant's [*3]attorney did not contact him prior to his rendering the referee's report.

Stuart Halper, Esq., plaintiff's counsel, submits an affirmation in opposition to the cross-motion in which he concedes that this court's memorandum decision dated September 19, 2012, required that he settle an order on notice for the appointment of a referee. He states however, that he served the menorandum decision with notice of entry on September 27, 2012. He then filed a proprsed order which was signed by this court on December 5, 2012. He claims that this order was served in proposed form with the motion for summary judgment and thus, he asserts that the defendant was provided with notice of the proposed order. Counsel also contends that the defendant had full knowledge of the name and address of the referee and failed to reach out to the referee seeking a hearing. Plaintiff also claims that the defendant is not entitled to a hearing as the defendant did not request a hearing nor did the defendant call the referee or submit any documentary evidence to the referee to rebut the evidence provided by the plaintiff. Plaintiff also claims that in light of the fact that the defendant had notice of the signed order appointing the referee, it was incumbant upon the defedant to submit evidence to the referee or to request a hearing. Citing RPAPL 1321, counsel states that whether the referee holds a hearing is within the discretion of the referee. However, as the defendant did not submit any evidence to the referee, plaintiff asserts that the referee properly exercised his discretion in not holding a hearing.

In reply, defendant states that the referee was not provided with the proper documents needed to be able to determine if a hearing or notice of hearing should have been sent to defendant Capote. In addition, citing Shultis v Woodstock Land Dev. Assocs., 195 AD2d 677 [3rd Dept. 1993] counsel states that under certain circumstances the referee should conduct a hearing upon notice in a mortgage foreclosure action.

Accordingly, this Court finds that although the order of reference was not submitted on notice as required in this court's memorandum decision, this Court finds that the defendant has not shown how it was prejudiced by the particular order or reference entered in this case which appointed Michael Dikman, Esq. as referee. Defendant as not submitted a proposed counter-order with its motion or shown what language it sought to have added or deleted from the order signed in this case. [*4]

However, under the circumstances of this case, wherein the defendant had answered the complaint and raises questions of fact as to the actual amount owed by the defendant to the plaintiff, this court finds that the defendant was prejudiced by the failure of the referee to hold a hearing in this matter and to provide the defendant with notice and an opportunity to be heard, to cross-examine the plaintiff's witnesses, and to submit proof regarding the amount owed to the plaintiff for common charges (see CPLR 4313; 243 W. 98th Condo. v Shapiro, 12 AD3d 591 [2d Dept. 2004]; Shultis v Woodstock Land Dev. Assoc., 195 AD2d 677 [3rd Dept. 1993]; cf: Adelman v Fremd, 234 AD2d 488 [2d Dept.1996]).

Therefore for all of the above stated reasons it is hereby,

ORDERED, that the branch of the defendant's cross- motion to vacate the order of reference dated September 12. 2012 is denied, and it is further,

ORDERED, that the referee's report dated February 26, 2013 is vacated and the matter is remitted to Referee Dikman to hold an evidentiary hearing on notice to all parties concerning the amount owed to the plaintiff by the defendant, and it is further,

ORDERED, that the plaintiff's motion for a judgment of foreclosure and sale is denied without prejudice to renew following the submission of the referee's report, the findings of which shall be based upon an evidentiary hearing for which plaintiff as well as the defendant and her counsel shall be provided with notice, and it is further,

ORDERED, that any additional referee's fees resulting from the referee's hearing shall be borne equally by both parties, and, it is further,

ORDERED, that the plaintiff shall serve a copy of this order with notice of entry on the defendant's attorney and on referee Michael Dikman, Esq.

Dated: August 26, 2013

Long Island City, NY

______________________________

ROBERT J. MCDONALD

J.S.C.