Judge Sanctions Bank, Law Firm in Foreclosure Case

Judge Sanctions Bank, Law Firm in Foreclosure Case
The New York Law Journal by Andrew Keshner  -  December 28, 2011

A state judge has hit HSBC Bank and a Rochester law firm with sanctions in a case where he already dismissed with prejudice a foreclosure action and unsuccessfully demanded that a top HSBC executive appear at a sanctions hearing. Brooklyn Supreme Court Justice Arthur M. Schack issued a maximum $10,000 sanction against HSBC and a $5,000 sanction against the law firm of Shapiro, DiCaro & Barak, holding that both parties engaged in "frivolous conduct" during an attempted foreclosure against Bedford-Stuyvesant homeowner Ellen Taher.  Justice Schack, who is known for taking hard looks at foreclosure actions, held last summer that the bank lacked standing and called assertions made in an attorney affirmation "patently false." He also ordered Irene Dorner, the CEO of HSBC North America Holdings, to personally appear at a sanction hearing, but she did not and instead appeared through counsel (NYLJ, July 14 and 18).  In his Dec. 22 sanctions ruling, Justice Schack faulted HSBC's attorney at Mayer Brown for claiming that the bank only learned in July of the foreclosure from its servicer, Ocwen Loan Servicing. "HSBC sounds like a combination of Pontius Pilate and Sergeant Schultz in the classic 1960's television comedy, Hogan's Heroes. HSBC washes its hands of any responsibility and places any blame upon Ocwen, its servicer for the Taher mortgage," the judge wrote in HSBC Bank v. Taher, 9320-2009, later saying the bank could not "claim ignorance."  Justice Schack also faulted Frank Cassara, an attorney for Shapiro DiCaro, for not explaining that an HSBC representative in his attorney affirmation was an Ocwen employee, saying "a reasonable attorney" would have do so. The "course of conduct" of Shapiro DiCaro and Mr. Cassara "was not reasonable," he wrote.  An HSBC spokesman said that the bank "did not service this loan and neither prepared nor filed any of the underlying legal documents presented to the court. HSBC's role in this case is limited to that of Trustee."  Goldberg Segalla represented Shapiro DiCaro. Patrick B. Naylon of Goldberg Segalla noted that the underlying foreclosure dismissal is being appealed. "Moreover, we intend to appeal this most recent decision as well," he wrote in an e-mail. "We do not believe an attorney or a client should be punished while proceeding in reliance on existing law. Mortgage foreclosures are not popular cases these days, but our system provides for zealous representation by attorneys for anyone appearing before the Judiciary. Protecting attorneys who appear for currently unpopular clients or causes from unwarranted sanctions is of the utmost importance to our system of Justice."

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