Referee Erred in Deciding a Contested Application Without Holding a Hearing

On February 10, 2021, Justice Knipel of the Kings County Commercial Division issued a decision in 52 Monitor St. Lender LLC v. 52 Monitor St. Realty, LLC, 2021 NY Slip Op. 30581(U), holding that a referee erred in deciding a contested application without holding a hearing, explaining:

The report of a referee should be confirmed whenever the findings are substantially supported by the record, and the referee has clearly defined the issues and resolved matters of credibility. CPLR 4403 authorizes a court to confirm or reject a referee's report. The Second Department has repeatedly held that a referee report should be rejected where the referee computed the amount due to the plaintiff without holding a hearing on notice to the defendant, as required by CPLR 4313.

Here, the referee erred in computing the amount due plaintiff without holding a hearing in accordance with CPLR 4313. In addition, the referee issued the Referee Report without considering defendants' October 14, 2020 objections, which defense counsel timely sent to the referee by Federal Express overnight delivery. Rather than holding a hearing on October 22, 2020, in accordance with the notice of hearing, the referee adopted plaintiffs proposed calculations and issued the Referee Report without a hearing. A hearing was necessary because defendants timely objected to plaintiff's proposed calculation based on the accrual of default interest from December 6, 2014.

Indeed, the order of reference specifically ordered that "the Referee appointed herein shall determine the date on which Default Interest began to accrue on the Loan." Under these circumstances, the matter is referred back to the referee for a hearing and a new report computing the amount due to plaintiff: including a determination of the date on which Default Interest began to accrue.

(Internal citations omitted).

New York procedural law (including the special rules applying to litigation in the Commercial Division of the New York courts) is not particularly complex. In New York, a judge can refer certain matters to a referee for consideration. As this decision shows, referees must consider both sides' arguments before making a decision. Contact Schlam Stone & Dolan partner John Lundin at jlundin@schlamstone.com if you or a client have questions regarding New York practice, including the use of referees.