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An appeals court yesterday invalidated a ruling on a contested foreclosure by Supreme Court Justice Marylin Diamond, saying she should have disclosed that she owned stock in a bank that was party to the litigation. The Appellate Division, First Department, found that the judge was obligated under Judiciary Law �14 to reveal any potential conflict of interest for the benefit of both parties. The ruling arose from a foreclosure contested by Anthony DeRosa, a Manhattan litigant who has accused Justice Diamond and other judges of having conflicts of interest. Mr. DeRosa has been interviewed about Justice Diamond by the Commission on Judicial Conduct and says he has cooperated with an FBI investigation into the judge. “Justice Diamond should have recused herself from the case, or else, at a minimum, disclosed her interest to the parties in order to give them an opportunity to waive her disqualification,” the court wrote in DeRosa v. JP Morgan Chase, 1918. “Because Justice Diamond failed to follow this course, she was without power to hear the case, and the orders appealed are null and void.” Rather than sending the case back for a new trial judge, however, the appeals court took the rare step of examining the record and deciding the case on its own. It reached the same conclusion that Justice Diamond had. In a dissent, Justice Richard T. Andrias agreed that Justice Diamond had a conflict but said the majority’s decision to rule on the case de novo was “unprecedented” and uncalled for in such a “garden variety” case. The case, Justice Andrias said, should have been returned to the Supreme Court for reassignment. Richard Godosky of Godosky & Gentile, who represents Justice Diamond, said, “The judge is very gratified that the Appellate Division affirmed her findings and apologizes for not being aware of the rule concerning the ownership of shares in JP Morgan Chase, although it was a subsidiary of JP Morgan Chase that was a party in this case, JP Morgan Chase Mortgage Corporation.” Under New York case law, the Commission on Judicial Conduct can adopt the findings of appellate courts in disciplinary proceedings against judges. The 4-1 ruling is the latest chapter in the courthouse drama of Mr. DeRosa, a litigant who has garnered considerable press through his accusations against Manhattan judges while fighting for an Upper West Side apartment he claims was foreclosed on without proper notice. In another suit involving Mr. DeRosa’s apartment, five Supreme Court justices recused themselves from his case before a judge agreed to take it (NYLJ Feb. 4, 2004). JP Morgan Chase foreclosed on Mr. DeRosa’s apartment after he lost his job and stopped paying his mortgage. The bank sold the apartment at auction in March 2001. Mr. DeRosa contested the sale in court, arguing that he was never notified of the auction. He claimed he had the money to pay his mortgage. Justice Diamond dismissed Mr. DeRosa’s complaint but did not reveal that she and her husband owned stock in Chase. After Mr. DeRosa searched Justice Diamond’s financial disclosure statements for 2001 and 2002, he began to argue that the judge should not have presided over the case. De Novo Ruling Yesterday the First Department agreed, citing Matter of Harkness Apt. Owners Corp. v. Abdus-Salaam, 232 AD2d 309 (1996). However, the majority also said that since it was being asked to consider a pure question of law that could be answered on the full record of Justice Diamond’s proceeding, it would decide the merits of the case. The court found that Chase did attempt to send notice to Mr. DeRosa, though his apartment was misnumbered and his ZIP code incorrect. They also noted that notice of the sale was published in Newsday. They dismissed the argument that the Newsday notice was invalid because it printed the wrong year of the sale � 2000 rather than 2001 � saying the error would have been apparent on its face. The court added that Mr. DeRosa should have anticipated a foreclosure, since he did not pay his mortgage for six months. In his dissent, Justice Andrias said the majority was breaking with the court’s traditional role by deciding the case on its own. He said he could find only one case, in 1928, in which the First Department took original jurisdiction, and that case presented extraordinary circumstances: ambulance chasing and the local bar association’s power to investigate and discipline attorneys for it. “To act as the nisi prius court and decide this motion as if it came directly to us is unprecedented,” Justice Andrias wrote. “It would, in effect, deprive any party aggrieved by our decision of an additional layer of appeal, and sets an unfortunate precedent.” The majority responded that it would serve “no constructive purpose” to follow Justice Andrias’ suggestion. David B. Cohen, Mr. DeRosa’s attorney, responded angrily to the de novo ruling and said he would seek an appeal. “It’s just bad judging,” Mr. Cohen said. “This appellate court is really all wet on this case.” Jeffrey M. Eilender of Schlam Stone & Dolan, who represents the purchaser of Mr. DeRosa’s apartment, said he was pleased that the First Department decided to step in and decide the case. “This is a routine mortgage case, but it became a circus,” Mr. Eilender said. “I’m really happy that the First Department put its foot down and decided to end it.” Justices Angela M. Mazzarelli, Betty Weinberg Ellerin, David Friedman and Luis A. Gonzalez concurred on the majority.

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