Judge stalls foreclosure on Fleischmanns Theater

By Jay Braman Jr.
An attempt by the Village of Fleischmanns to foreclose on the long-vacant Fleischmanns Theater building for non-payment of village taxes has been blocked by Delaware County Judge Carl Becker.
The judge determined last week that the owner of the property, or the local bank that holds a mortgage on the property, has a right to pay the delinquent taxes and maintain ownership. The village disagrees with the court’s decision and is expected to file an appeal of Judge Becker’s decision in state court as soon as this week. A call to Mayor Morrel for comment on the action was not returned by the time the News went to press yesterday.
According to court papers obtained by the Catskill Mountain News, ownership of the theater building has been in limbo for much of this year. Fleischmanns officials claim that they have followed the law and that everything has been done properly with their foreclosure proceeding. But the local bank that holds the mortgage on the building, and which stands to suffer a substantial loss if the village is allowed to foreclose, says otherwise.
The Delhi-based Delaware National Bank of Delhi (DNBD), which holds a mortgage on the property through its Margaretville branch, told the court that it would have paid the past-due taxes to protect its first mortgage on the property, but was told in May by Fleischmanns Village Clerk Lorraine DeMarfio that the payment had already been made by the owner, thus making any action on the bank’s part unnecessary. School and county taxes on the property are current.

Spring foreclosure start
The village began foreclosure proceedings last spring due to an outstanding debt of $18,864 for taxes that remained unpaid between 1999 and 2007. The theater’s co-owner, Brian Dowd, and DNBD went to court earlier this month, asking that the village’s foreclosure proceedings be stopped.
On December 14 Delaware County Judge Carl F. Becker agreed with the bank’s attorneys, who said they had a right to pay the taxes and keep the property in the name of the owners, Richard and Brian Dowd of Onteora Associates. Complicating the matter is a bankruptcy filing by Onteora Associates.
“The court finds…that it would work an undue hardship on the bank and derivatively on its customer to permit foreclosure under these circumstances,” Becker wrote in his decision. “Therefore, the judgment of foreclosure is vacated and the Village of Fleischmanns is ordered to accept payment of past due village taxes in the amount of $19,250.82 by either the bank or the property owners. Payment shall be made within five days of the entry of this order.” Following Becker’s order, the village again refused to accept payment of the taxes by the bank citing a pending appeal.
Attorneys for the DNBD, from the Binghamton law firm of Coughlin and Gerhart, LLP, argued that just prior to the May 5, 2009 deadline to pay the back taxes, a DNBD employee called the Village’s Enforcement Officer, Lorraine DeMarfio, asking if the delinquent taxes had been paid and was told they had been.
According to court documents, DeMarfio denies receiving the call. The Village of Fleischmanns is represented by the law firm Bond Schoeneck and King, PLLC of Albany.