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Posted: March 4, 2017

Motion to Correct Judgment Cannot be Used to Litigate New Issues

On February 15, 2017, Justice Ramos of the New York County Commercial Division issued a decision in DLJ Mortgage Capital, Inc. v. Hoey, 2017 NY Slip Op. 30303(U), denying a motion to correct a judgment because it sought to litigate new issues, explaining:

A court has the inherent power to correct any mistake, defect or irregularity in the papers or procedures in the action not affecting a substantial right of a party. A motion to correct is properly denied when the correction does not involve a mere mistake, defect, or irregularity in the judgment, but raises an issue which was not previously litigated in the action. Nunc pro tunc treatment may not be used when third parties have substantive rights in play that may be altered by recording a fact as of a prior date when it did not then exist.

Here, the Assignees have not established that the Judgment contains a mistake, defect or irregularity, and therefore, the judgment should not be changed. First, DLJ did not move for summary judgment on the fifth and seventh causes of action in motion 049. In the Judgment, this Court only directed Halifax to convey title to certain real properties to the named transferees by executing deeds and other such documents as may be necessary. This Court neither declared DLJ to be a beneficial holder nor intended to impose an equitable lien on the fraudulently conveyed properties. Second, the issue of whether the Judgment relates back to the date the notices of pendency filed by DLJ was not previously litigated in motion 049, and therefore cannot be regarded as a mere mistake, defect, or irregularity in the Judgment.

In addition, the correction sought by the Assignees would alter other parties’ substantive rights, including the Stout Entities. DLJ and the Stout Entities have stipulated to resolve all issues of priority in the Listed Properties in Kings County, Supreme Court, and the court has ordered that the Stout Entities have priority over DLJ. Nunc pro tunc treatments sought by the Assignees include declaring DLJ as a beneficial holder of the Listed Properties and imposing equitable lien on those properties, which is contrary to what the court held in the Halifax Action. Therefore, this Court cannot grant to the Assignees the relief they seek.

(Internal quotations and citations omitted).

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