PennyMac Corp. v. Bongiovanni
Categories
Attorneys and Parties
Brief Summary
Mortgage foreclosure; calculation of amounts due under a referee's report, including attorneys' fees and other charges, and a claim for sanctions based on alleged bad-faith settlement negotiations under CPLR 3408 [requires good-faith settlement negotiations in residential foreclosure settlement conferences].
The Supreme Court confirmed the referee's report as modified, excluded only $233,670.40 in forbearance principal from the 'Other Charges,' denied sanctions against the plaintiff for alleged lack of good-faith negotiation, awarded the plaintiff $144,000 in attorneys' fees, and entered a judgment of foreclosure and sale.
The Appellate Division modified the order and judgment by increasing the excluded 'Other Charges' from $233,670.40 to the full $279,475.30.
The plaintiff conceded that, in addition to the forbearance principal, the referee improperly included $15,375 in attorneys' fees, $301.46 in foreclosure expenses, and $30,128.44 in prior servicer corporate advances in the amount due. The order of reference excluded attorneys' fees from the referee's computation, and the plaintiff waived the remaining disputed charges.
Background
PennyMac Corp. brought a mortgage foreclosure action against, among others, Sebastian Bongiovanni. After the defendant defaulted, the Supreme Court granted the plaintiff leave to enter a default judgment and issued an order of reference directing a referee to compute the amount due. The referee reported that the plaintiff was owed, among other sums, $279,475.30 in 'Other Charges,' consisting of $233,670.40 in forbearance principal, $15,375 in attorneys' fees, $301.46 in foreclosure expenses, and $30,128.44 in prior servicer corporate advances. Bongiovanni moved to set aside the referee's report and sought sanctions, arguing the plaintiff failed to negotiate in good faith.
Lower Court Decision
The Supreme Court partially granted Bongiovanni's motion by excluding only the $233,670.40 forbearance principal from the 'Other Charges.' It otherwise confirmed the referee's report as modified, denied sanctions under CPLR 3408, granted the plaintiff a judgment of foreclosure and sale, and separately awarded $144,000 in attorneys' fees.
Appellate Division Reversal
The Appellate Division held that the Supreme Court should have excluded the entire $279,475.30 listed as 'Other Charges,' not just the forbearance principal. It modified the foreclosure judgment accordingly. The court otherwise affirmed, including the denial of sanctions and the separate award of $144,000 in reasonable attorneys' fees to the plaintiff.
Legal Significance
The decision reinforces that in a foreclosure action, contractual attorneys' fees may be awarded only if they are reasonable and supported by proof of services actually rendered. It also shows that amounts included in a referee's computation must strictly conform to the order of reference and the plaintiff's proven entitlement. Even where attorneys' fees are recoverable under the loan documents, they may not be folded into a referee's computation if the order of reference excludes them.
A foreclosure plaintiff can recover reasonable contractual attorneys' fees, but the referee's report must exclude charges not authorized by the order of reference or not properly supported. Here, the plaintiff kept its $144,000 fee award but lost the entire $279,475.30 in disputed 'Other Charges' from the amount due under the foreclosure judgment.