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THE “SOLE REMEDY REPURCHASE PROTOCOL” IN THIS RESIDENTIAL MORTGAGE-BACKED SECURITIES CASE REQUIRES NOTICE OF EACH INDIVIDUAL DEFECTIVE LOAN BEFORE THE DEFENDANT IS REQUIRED TO REPURCHASE IT; OF THE 783 NONCONFORMING LOANS, 480 WERE NOT SPECIFICALLY IDENTIFIED; THE DEFENDANT WAS NOT OBLIGATED TO REPURCHASE THE UNIDENTIFIED LOANS (CT APP).

The Court of Appeals, in a full-fledged opinion by Judge DiFiore, reversing the Appellate Division, over an extensive partial dissent, determined that the “sole remedy repurchase protocol” contract provision of the residential-mortgage-backed-securities agreements requires notice of each defective loan before the obligation to repurchase is triggered:

Pursuant to the pooling and service agreement (PSA) establishing the trust, [defendant] DLJ made certain representations and warranties, including that each loan was underwritten in accordance with the originators’ underwriting standards and applicable law, that certain provided documentation was true and accurate, and that none of the loans were “high cost” or “predatory.” … [T]he PSA contains a “sole remedy” provision granting U.S. Bank, as trustee, the limited authority to seek a remedy for any breach by DLJ of these representations and warranties through a contractually established “repurchase protocol” requiring DLJ to cure, repurchase, or substitute a nonconforming mortgage loan within 90 days of notice or independent discovery of such breaching loan. * * *

… [T]he trustee’s expert reviewed 1,059 of the loans in the trust—including both previously noticed and unnoticed loans—and identified 783 allegedly nonconforming loans. Only 303 of these loans had been specifically identified by the trustee in its pre-suit letters; the remaining 480 loans were not listed in the schedules of breaching loans provided to DLJ prior to commencement of the action. * * *

A simple reading of the [agreement] demonstrates that the trustee’s assertion that loan-specific notice is not required is inconsistent with the contractual language of the repurchase protocol. The parties structured the repurchase protocol entirely through the lens of individual “mortgage loans”—clearly contemplating a loan-by-loan approach to the agreed-upon sole remedy for breach. U.S. Bank N.A. v DLJ Mtge. Capital, Inc., 2022 NY Slip Op 01866, Ct App 3-17-22

Practice Point: The plain language of a contract will be enforced. Here in this residential mortgage-backed securities case, under the terms of the contract, the defendant was not required to repurchase nonconforming loans about which it was not specifically notified. Of the 783 allegedly nonconforming loans, defendant was specifically notified of only 303.

 

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A COMPUTER PRINTOUT FROM THE NYS DEPARTMENT OF STATE WEBSITE PURPORTING TO SHOW THE LOCATION OF DEFENDANT’S PRINCIPAL PLACE OF BUSINESS FOR VENUE PURPOSES WAS NOT ADMISSIBLE AS A BUSINESS RECORD (SECOND DEPT).

The Second Department, reversing Supreme Court, determined plaintiff’s submission of a computer printout from the NYS Department of State website was insufficient to prove defendant’s principal place of business was in Kings County. Defendant had submitted its certificate of incorporation designating Richmond County as its principal place of business. Therefore plaintiff did not demonstrate the proper venue for this traffic accident case was Kings County. Plaintiff lived in New Jersey and the accident occurred in Ulster County:

… [T]he plaintiff failed to establish that the defendant’s certificate of incorporation had been amended to designate a principal office located in Kings County … or that the venue selected was otherwise proper. Contrary to the Supreme Court’s conclusion, a computer printout from the website of the New York State Department of State, Division of Corporations, submitted by the plaintiff, did not conclusively establish that Kings County is a proper venue for this action. The printout was not certified or authenticated, and it was not supported by a factual foundation sufficient to demonstrate its admissibility as a business record … . Faulkner v Best Trails & Travel Corp., 2022 NY Slip Op 01770, Second Dept 3-16-22

Practice Point: Here a printout from the NYS Department of State purporting to show the location of defendant’s principal place of business was not admissible in this dispute over proper venue. The printout was not certified or authenticated and was not supported by a factual foundation sufficient for admissibility as a business record.

 

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ALTHOUGH THE INFANT PLAINTIFF COULD NOT IDENTIFY THE CAUSE OF HER SLIP AND FALL; MOTHER, FATHER AND THE DEFENDANTS PROVIDED CIRCUMSTANTIAL EVIDENCE THAT THE FALL WAS CAUSED BY AN IDENTIFIED DEFECT IN THE SIDEWALK, RAISING A QUESTION OF FACT (SECOND DEPT).

The Second Department, reversing Supreme Court, determined that fact that the infant plaintiff, who was four at the time of her slip and fall, could not identify the cause of her fall did not require summary judgment in defendant’s favor. The cause of the fall may be established  by circumstantial evidence:

“In a trip-and-fall case, a defendant may establish its prima facie entitlement to judgment as a matter of law by submitting evidence that the plaintiff cannot identify the cause of his or her fall” … . However, “‘[t]hat does not mean that a plaintiff must have personal knowledge of the cause of his or her fall'” … . A determination “that a defective or dangerous condition was the proximate cause of an accident can be established in the absence of direct evidence of causation and may be inferred from the facts and circumstances underlying the injury” … . …

… [T]he plaintiffs submitted, among other things, the affidavit of the mother of the infant plaintiff who averred that she observed the infant plaintiff fall and that the fall was caused by a defective condition of a sidewalk in the park … . The mother also identified the location of the alleged defective sidewalk in a photograph that was included in the submission of both the plaintiffs and the … defendants … . In support of their respective motions, the … defendants had also submitted, inter alia, transcripts of the deposition testimony of the infant plaintiff, who testified, among other things, that her mother had seen her fall, and of her father, who averred that, at the time of the incident, he ran over to his daughter immediately after her fall and that, at that time, her body was partly on the sidewalk at issue. E. F. v City of New York, 2022 NY Slip Op 01769, Second Dept 3-16-22

Practice Point: Although the infant plaintiff could not identify the cause of her slip and fall, which is usually a fatal evidentiary problem, mother, father and defendants provided circumstantial evidence which raised a question of fact about an identified sidewalk defect as the cause of the fall.

 

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THE AFFIDAVITS SUBMITTED BY THE BANK IN THIS FORECLOSURE ACTION DID NOT DEMONSTRATE COMPLIANCE WITH THE NOTICE REQUIREMENTS OF RPAPL 1304 (SECOND DEPT).

The Second Department, reversing Supreme Court, determined the affidavits submitted by the plaintiff bank to demonstrate compliance with the notice requirements of RPAPL 1304 were insufficient:

… [N]either counsel in her affirmation, nor a contract management coordinator for the plaintiff’s loan servicer in an affidavit submitted in support of the motion, averred that they had personal knowledge of the mailing, or that the mailing was sent by both certified mail and first-class mail. Moreover, neither counsel nor the loan servicer’s representative described any standard office procedure designed to ensure that the notices were mailed, and no domestic return receipts for the mailings were submitted in support of the motion … . Deutsche Bank Natl. Trust Co. v LoPresti, 2022 NY Slip Op 01767, Second Dept 3-16-22

​Practice Point: Proof of compliance with the notice requirements of RPAPL 1304 failed in this foreclosure action.

 

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IN THIS CHILD VICTIM’S ACT PROCEEDING PLAINTIFF ALLEGED ABUSE BY A PRIEST AND TEACHER IN ELEMENTARY SCHOOL; PLAINTIFF ALLEGED THE SCHOOL WAS OVERSEEN BY DEFENDANTS PARISH AND DIOCESE; THE 2ND DEPARTMENT HELD THE BREACH OF FIDUCIARY DUTY CAUSE OF ACTION SHOULD HAVE BEEN DISMISSED BECAUSE THERE WAS NOTHING UNIQUE ABOUT THE RELATIONSHIP BETWEEN DEFENDANTS AND PLAINTIFF, AS OPPOSED TO THE RELATIONSHIPS WITH THE OTHER PARISHIONERS (SECOND DEPT).

The Second Department, reversing Supreme Court, determined the parish and diocese defendants’ motions to dismiss the breach of fiduciary duty cause of action in this Child Victims Act case should have been granted. Plaintiff alleged he was sexually abused when he was 10 in 1973 by a priest and teacher in elementary school. Plaintiff alleged the parish and the school were overseen by the diocese:

“[T]he elements of a cause of action to recover damages for breach of fiduciary duty are (1) the existence of a fiduciary relationship, (2) misconduct by the defendant, and (3) damages directly caused by the defendants misconduct” … .. A cause of action to recover damages for breach of fiduciary duty must be pleaded with particularity under CPLR 3016(b) … .

“A fiduciary relationship exists between two persons when one of them is under a duty to act for or to give advice for the benefit of another upon matters within the scope of the relation” … .Two essential elements of a fiduciary relationship are de facto control and dominance … .

Here, the amended complaint did not allege facts that would give rise to a fiduciary relationship between the plaintiff and the defendants. The amended complaint failed to allege facts that demonstrated that the plaintiff’s relationship with the defendants was somehow unique or distinct from the defendants’ relationships with other parishioners generally … . J. D. v Roman Catholic Diocese of Brooklyn, 2022 NY Slip Op 01766, Second Dept 3-16-22

Practice Point: Here the breach of a fiduciary duty cause of action against the parish and diocese which oversaw the elementary school where plaintiff allegedly was sexually abused was dismissed. There was nothing unique about the relationship between the defendants and plaintiff which set it apart from the relationships with the other parishioners.

 

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THE AFFIDAVIT SUBMITTED BY THE BANK TO PROVE (1) STANDING TO FORECLOSE THE REVERSE MORTGAGE, (2) DEFAULT AND (3) NOTICE WAS NOT ACCOMPANIED BY THE RELEVANT BUSINESS RECORDS, RENDERING THE AFFIDAVIT HEARSAY (FIRST DEPT). ​

The Second Department, reversing Supreme Court, determined the bank’s summary judgment motion in this reverse mortgage foreclosure proceeding should not have been granted.  The affidavit submitted to prove standing, default and notice was not accompanied by the relevant business records, rendering the affidavit inadmissible hearsay:

CIT Bank [plaintiff] submitted an affidavit of its assistant secretary, Elizabeth Birk, who, upon review of the business records maintained by CIT Bank, averred that CIT Bank was the “holder of the instrument of indebtedness at the time this action was commenced,” the borrower was “in default,” the “mortgage debt remains unpaid,” and a default notice “was thereafter duly sent.” However, since Birk failed to attach or otherwise incorporate any of CIT Bank’s business records to her affidavit, her assertions regarding the contents of such business records constituted inadmissible hearsay … . CIT Bank, N.A. v Fernandez, 2022 NY Slip Op 01764, Second Dept 3-16-22

Similar issue (no business records attached to the bank’s affidavit demonstrating defendant’s default) and result in JPMorgan Chase Bank, Natl. Assn. v Newton, 2022 NY Slip Op 01777, Second Dept 3-16-22

Practice Point: An affidavit submitted in support of summary judgment which purports to demonstrate what business records say, but which is not accompanied by those business records, in inadmissible hearsay.

 

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THE PLAINTIFF’S COMPLAINT IN THIS FORECLOSURE ACTION DID NOT INCLUDE ALLEGATIONS OF COMPLIANCE WITH RPAPL 1306, WHICH IS A CONDITION PRECEDENT TO SUIT (SECOND DEPT).

The Second Department, reversing Supreme Court, determined the bank did not include in its complaint in this foreclosure action the allegation it had complied with RPAPL 1306, which is a condition precedent to suit:

RPAPL 1304(1) provides that, “with regard to a home loan, at least ninety days before a lender, an assignee or a mortgage loan servicer commences legal action against the borrower . . . , including mortgage foreclosure, such lender, assignee or mortgage loan servicer shall give notice to the borrower.” “RPAPL 1306 provides, in . . . part, that within three business days of the mailing of the foreclosure notice pursuant to RPAPL 1304(1), every lender or assignee ‘shall file’ certain information with the superintendent of financial services, including ‘at a minimum, the name, address, last known telephone number of the borrower, and the amount claimed as due and owing on the mortgage, and such other information as will enable the superintendent to ascertain the type of loan at issue'” … . RPAPL 1306(1) further provides that any complaint served in a foreclosure proceeding “shall contain, as a condition precedent to such proceeding, an affirmative allegation that at the time the proceeding is commenced, the plaintiff has complied with the provisions of this section.”

Here … the complaint did not contain an allegation that the plaintiff complied with RPAPL 1306. Thus, a condition precedent to suit was not satisfied, and the plaintiff failed to establish its entitlement to summary judgment on the complaint … . USA Residential Props., LLC v Jongebloed, 2022 NY Slip Op 01835, Second Dept 3-16-22

Practice Point: If the bank does not allege in its foreclosure complaint compliance with the requirements of RPAPL 1306, it has not satisfied a condition precedent to suit.

 

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THE AFFIDAVIT FROM THE LOAN SERVICER PURPORTING TO DEMONSTRATE DEFENDANTS’ DEFAULT IN THIS FORECLOSURE ACTION DID NOT AVER THAT THE AFFIANT HAD THE AUTHORITY TO ACT FOR THE PLAINTIFF BANK (SECOND DEPT).

The Second Department, reversing Supreme Court, determined the defendants’ default was not demonstrate by the complaint, which was not verified, or by the affidavit from the loan servicer, which did not aver that the affiant had the authority to act on behalf of the plaintiff bank in this foreclosure proceeding:

… Supreme Court erred in granting that branch of the plaintiff’s motion which was for leave to enter a default judgment and order of reference. “Where, as here, a foreclosure complaint is not verified, CPLR 3215(f) states, among other things, that upon any application for a judgment by default, proof of the facts constituting the claim, the default, and the amount due are to be set forth in an affidavit ‘made by the party'” …  Here, the plaintiff submitted an affidavit executed by a contract management coordinator for the plaintiff’s purported loan servicer. However, there is no evidence in the record demonstrating that the affiant had the authority to act on behalf of the plaintiff … . U.S. Bank, N.A. v Stiene, 2022 NY Slip Op 01833, Second Dept 3-16-22

​Practice Point: Here, in this foreclosure action, the affidavit from the loan servicer which purported to demonstrate defendants’ default did not demonstrate the affiant had the authority to act on behalf of the bank.

 

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DEFENDANT’S COMPLAINTS TO THE UNITED STATES TENNIS ASSOCIATION (USTA) ABOUT PLAINTIFF’S BULLYING OF HER SON AT JUNIOR TOURNAMENTS WERE PROTECTED BY QUALIFIED PRIVILEGE; ANY STATEMENTS ALLEGED TO HAVE BEEN FALSE WERE NOT MOTIVATED BY MALICE; THE DEFAMATION ACTION SHOULD HAVE BEEN DISMISSED (SECOND DEPT).

The Second Department, reversing Supreme Court, in a full-fledged opinion by Justice Zayas, determined that the defamation action should have been dismissed. Defendant’s son was a tennis player who participated in United State Tennis Association (USTA) junior tournaments. Defendant communicated with the USTA alleging that plaintiff, another tennis player, was bullying defendant’s son. The only statements attributed to defendant alleged to have been defamatory were allegations plaintiff had been “kicked out” of tennis programs because of his behavior. The Second Department held that the complaints about bullying were privileged and the statements alleged to have been defamatory were not demonstrated to have been made with malice:

… [T]he defendant established … that her email to [the USTA] was protected by a qualified privilege. The defendant unquestionably had an interest, as a parent, in complying with [USTA’s] request that she put her concerns in writing and thus reporting, in a more formal way, serious allegations of bullying—none of which, it bears emphasizing, were alleged to be defamatory—that, in her view, put her son’s physical and emotional well-being at risk … .* * *

[Re: malice:]The extensive submissions … make clear that no factfinder could reasonably conclude that the defendant was not motivated, at least in substantial part, by legitimate concerns for her son’s emotional well-being and physical safety. Porges v Weitz, 2022 NY Slip Op 01823, Second Dept 3-16-22

Practice Point: Defendant’s complaints to the United State Tennis Association about plaintiff’s bullying her son at junior tournaments were protected by qualified privilege. Any statements alleged to have been false were not motivated by malice. Therefore the defamation action should have been dismissed.

 

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THE DEFENDANT WAS NOT PRODUCED FOR SENTENCING; HIS RIGHT TO BE PRESENT AT SENTENCING WAS THEREFORE VIOLATED, REQUIRING REMITTAL FOR RESENTENCING (SECOND DEPT).

The Second Department, remitting the matter for resentencing, noted that defendant was deprived of his right to be personally present at his sentencing:

A defendant has a fundamental right to be “personally present at the time sentence is pronounced” … . Here, the defendant was not produced at sentencing on the convictions of assault in the first degree and criminal possession of a weapon in the fourth degree, and the record is devoid of any indication that he expressly waived his right to be present (see CPL 380.40[2] …). … Supreme Court’s failure to have the defendant produced at the sentencing proceeding … violated the defendant’s fundamental right to be present at the time of sentence…. People v Umar, 2022 NY Slip Op 01818, Second Dept 3-16-22

Practice Point: A defendant has a fundamental right to be personally present at sentencing. Violation of that right requires remittal and resentencing.

 

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