                          State of New York
                   Supreme Court, Appellate Division
                      Third Judicial Department
Decided and Entered: July 17, 2014                     517271
________________________________

AGILITY FUNDING, LLC,
                    Respondent,
      v

DOUGLAS WHOLEY et al.,                      MEMORANDUM AND ORDER
                    Appellants,
                    et al.,
                    Defendants.
________________________________


Calendar Date:   June 6, 2014

Before:   Lahtinen, J.P., Stein, Egan Jr., Devine and Clark, JJ.

                             __________


      Newell & Klingebiel, Glens Falls (Mark C. Rehm of counsel),
for appellants.

      Nolan & Heller, LLP, Albany (Justin A. Heller of counsel),
for respondent.

                             __________


Egan Jr., J.

      Appeal from an order of the Supreme Court (McKeighan, J.),
entered March 15, 2013 in Warren County, which, among other
things, granted plaintiff's motion for partial summary judgment.

      In August 2005, plaintiff made certain loans to Rolf
Ronning in connection with his attempts to, insofar as is
relevant here, develop a subdivision known as the "Saddlebrook
Property" in the Town of Bolton, Warren County. The property,
which consisted mostly of vacant land, was improved by a single-
family residence located on lot No. 3 thereof. Thereafter, in
December 2006, defendants Douglas Wholey and Pamela Wholey
(hereinafter collectively referred to as defendants) entered into
                              -2-                517271

a contract with Ronning to purchase lot Nos. 3 and 4 in the
planned subdivision for $675,000. In conjunction therewith,
defendants gave Ronning a deposit in the amount of $33,750;
Ronning, in turn, allegedly granted defendants the right to
occupy a portion of the premises prior to closing. When the
property failed to close due to an apparent lack of subdivision
approval, defendants entered into a second contract with Ronning
in September 2008, which was merged with the prior contract.
Pursuant to the terms of this latter agreement, the purchase
price was reduced to $660,000, and defendants tendered an
additional $100,000 deposit.

      Ronning defaulted on his loans and, in October 2008,
plaintiff commenced a foreclosure action against him and others;
as defendants' contracts with Ronning were not duly recorded in
the Warren County Clerk's office, defendants were not named as
parties to the foreclosure action. Nonetheless, in April 2009,
during the pendency of the foreclosure action, plaintiff,
defendants, Ronning and another entered into an agreement
permitting defendants to purchase lot Nos. 3 and 4 upon approval
of a short sale from IndyMac Federal Bank, which held a prior
mortgage on the property, subject to various terms and
conditions. This transaction, however, was not realized and, in
June 2009, plaintiff was granted a judgment of foreclosure and
sale. Plaintiff purchased the property at the ensuing
foreclosure sale, satisfied the prior IndyMac mortgage and
pursued various approvals for the subdivision.

      In November 2009, defendants advised Ronning that they were
terminating "any and all contracts" relative to lot Nos. 3 and 4
and demanded a return of their deposit moneys. Thereafter, in
March 2010, plaintiff informed defendants that it had acquired
subdivision approval for the Saddlebrook development and inquired
as to whether they were still interested in purchasing the
subject lots. Defendants, through their attorney, indicated that
they would not be proceeding with the transaction.

      Despite the underlying judgment of foreclosure, plaintiff's
resulting acquisition of the property, defendants' termination of
their contracts with Ronning and their corresponding rejection of
plaintiff's offer to sell them the lots at issue, defendants
                              -3-                517271

continued to assert an interest in the property and, indeed,
apparently continued to occupy the improved premises until such
time as plaintiff succeeded in having them evicted in September
2010. As a result, plaintiff commenced this strict foreclosure
action (see RPAPL 1352) against, among others, defendants in
August 2012. Defendants answered, counterclaimed and raised
various affirmative defenses. Plaintiff thereafter moved for,
among other things, summary judgment on its strict foreclosure
cause of action against defendants and dismissal of defendants'
affirmative defenses and counterclaim. Supreme Court granted
plaintiff's motion in this regard finding, in essence, that
defendants' own conduct deprived them of any right of redemption
that they otherwise may have possessed in the subject lots. This
appeal by defendants ensued.

      We affirm. To the extent that defendants contend that
plaintiff's motion for summary judgment was untimely, we note
that this issue is unpreserved for our review (cf. Finsel v
Wachala, 79 AD3d 1402, 1403 n 2 [2010]) and, in any event, is
lacking in merit. Plaintiff moved for summary judgment after
issue was joined and prior to the filing of the note of issue;
hence, its motion was timely (see CPLR 3212 [a]; Oakes v Muka, 56
AD3d 1057, 1058 [2008]).

      Turning to the merits, plaintiff commenced the underlying
strict foreclosure action to extinguish defendants' claimed right
of redemption in the subject parcels (see RPAPL 1352; Bass v D.
Ragno Realty Corp., 111 AD3d 863, 864-865 [2013]). In support of
their subsequent motion for summary judgment, plaintiff tendered,
among other things, the underlying judgment of foreclosure and
sale, the referee's deed transferring the property – including
the subject lots – to plaintiff and documentation evidencing
defendants' termination of "any and all contracts" with Ronning
relative to the lots at issue, their subsequent rejection of
plaintiff's offer to sell them such lots and their eventual
eviction therefrom. Such proof, in our view, was more than
sufficient to discharge plaintiff's initial burden on the motion
for summary judgment. In opposition, defendants tendered the
affidavit of Douglas Wholey, wherein he conceded that defendants
terminated their contract with Ronning and thereafter rejected
plaintiff's offer to sell them the lots at issue, thereby – as
                                -4-                517271

Supreme Court found – effectively extinguishing any possessory
interest that they otherwise may have had in the property. Under
these circumstances, Supreme Court properly granted plaintiff
summary judgment on its strict foreclosure cause of action
against defendants. In light of this conclusion, it necessarily
follows that Supreme Court also properly dismissed defendants'
first and second affirmative defenses for failure to state a
cause of action.

      As for defendants' third affirmative defense, "[a]ssuming,
without deciding, that the defense of unclear hands is applicable
to a mortgage foreclosure action, defendants failed to present
evidence of immoral or unconscionable conduct by plaintiff, or
that any such conduct was directly related to or caused"
defendants' inability to purchase the subject lots (PHH Mtge.
Corp. v Davis, 111 AD3d 1110, 1112 [2013], lv dismissed 23 NY3d
940 [2014] [internal quotation marks and citations omitted]).
Accordingly, Supreme Court properly dismissed this affirmative
defense. We reach a similar conclusion with regard to
defendants' counterclaim for fraud, as the record fails to
demonstrate, among other things, that plaintiff made a knowing
misrepresentation regarding its willingness to sell the subject
lots to defendants. Further, defendants' claimed injuries –
whether in the form of the failed real estate transaction or the
loss of their deposit moneys – are not the product of any action
undertaken or representation made by plaintiff but, rather, are
directly attributable to the alleged misdeeds perpetrated by
Ronning.1 For all these reasons, defendants' counterclaim was
properly dismissed. Defendants' remaining arguments, to the
extent not specifically addressed, have been examined and found
to be lacking in merit.

        Lahtinen, J.P., Stein, Devine and Clark, JJ., concur.




    1
        Defendants assert that Ronning appropriated the deposit
moneys that were supposed to be held in the escrow account
established under the purchase and sale contract and spent such
funds prior to his death.
                        -5-                  517271

ORDERED that the order is affirmed, with costs.




                       ENTER:




                       Robert D. Mayberger
                       Clerk of the Court
