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DEFENDANT DID NOT OFFER A REASONABLE EXCUSE FOR FAILING TO TIMELY ANSWER THE COMPLAINT; DEFENDANT’S MOTION TO VACATE THE DEFAULT JUDGMENT SHOULD NOT HAVE BEEN GRANTED (SECOND DEPT). ​

The Second Department, reversing Supreme Court, determined defendant’s motion to vacate the default judgment should not have been granted because defendant did not offer a reasonable excuse for the failure to timely answer:

Supreme Court should have denied the defendant’s cross motion, in effect, to vacate its default in answering the complaint and to compel the plaintiff to accept its late answer … . “A defendant who has failed to timely answer a complaint and who seeks leave to file a late answer must provide a reasonable excuse for the delay and demonstrate a potentially meritorious defense to the action” … .  Here, the defendant failed to proffer any excuse, let alone a reasonable excuse, for failing to serve an answer prior to the tolling period created by the executive orders issued by former Governor Andrew Cuomo as a result of the COVID-19 pandemic …  as well as its failure to serve an answer or move to compel acceptance of its late answer for months after the expiration of the executive orders. Since the defendant failed to demonstrate a reasonable excuse, it is unnecessary to consider whether it sufficiently demonstrated the existence of a potentially meritorious defense … . 195-197 Hewes, LLC v Citimortgage, Inc., 2022 NY Slip Op 05065, Second Dept 8-31-22

Practice Point: Here defendant’s failure to offer a reasonable excuse for failing to timely answer the complaint required denial of defendant’s motion to vacate the default judgment. Apparently the COVID toll of time limits did not suffice.

 

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EVIDENCE OF COMPLIANCE WITH THE NOTICE-OF-FORECLOSURE MAILING REQUIREMENTS OF RPAPL 1304 FIRST SUBMITTED IN REPLY SHOULD NOT HAVE BEEN CONSIDERED; THE EVIDENCE THE BANK HAD STANDING TO BRING THE FORECLOSURE ACTION WAS INSUFFICIENT (SECOND DEPT). ​

The Second Department, reversing Supreme Court, determined plaintiff’s proof of mailing of the foreclosure notice first submitted in reply should not have been considered, and plaintiff did not demonstrate it had standing to bring the foreclosure action:

… [T]he affidavits that the plaintiff appended to its moving papers failed to establish that the RPAPL 1304 notices were mailed by first-class mail in accordance with RPAPL 1304. While the plaintiff submitted an additional affidavit in reply, with proof of first-class mailing attached, this evidence should not have been considered in the determination of whether the plaintiff met its prima facie burden, as the issue which the new evidence was intended to address was not an issue raised for the first time in the defendants’ opposition, and the defendants were not afforded an opportunity to submit a surreply in response to the plaintiff’s newly submitted evidence in reply … . …

[Re; standing:] …[T]he plaintiff attached to the complaint copies of the 2003 note and 2004 note, which together constituted the consolidated note, and each note was accompanied by an undated purported allonge endorsed to the plaintiff. However, the plaintiff failed to demonstrate that the purported allonges, each of which was on a piece of paper completely separate from the corresponding note, was “so firmly affixed” to the corresponding note “as to become a part thereof,” as required by UCC 3-202(2) … . Wells Fargo Bank, N.A. v Murray, 2022 NY Slip Op 05110, Second Dept 8-31-22

Practice Point: Evidence of compliance with the notice-of-foreclosure mailing requirements of RPAPL 1304 first submitted in reply should not have been considered.

Practice Point: The bank did not demonstrate standing to bring the foreclosure action.

 

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ONCE PLAINTIFF’S FORECLOSURE ACTION WAS DISCONTINUED BY STIPULATION, THE FORECLOSURE COMPLAINT COULD BE AMENDED TO SEEK RECOVERY ON THE NOTE (SECOND DEPT).

The Second Department, reversing Supreme Court, determined the plaintiff, after its foreclosure action was discontinued, could amend the foreclosure complaint to seek recovery on the note:

“‘RPAPL 1301(3) . . . prohibits a party from commencing an action at law to recover any part of the mortgage debt while the foreclosure proceeding is pending or has not reached final judgment, without leave of the court in which the foreclosure action was brought'” ( … see RPAPL 1301[3]). Conversely, “‘where a foreclosure action is no longer pending and did not result in a judgment in the plaintiff’s favor, the plaintiff is not precluded from commencing a separate action without leave of the court'” … .

Here, pursuant to the so-ordered stipulation and the plaintiff’s release of the mortgage, the cause of action to foreclose the mortgage was, in effect, discontinued, without the entry of any judgment in the plaintiff’s favor … . Since the cause of action to foreclose the mortgage was no longer pending, the plaintiff was not precluded from seeking to recover on the note by RPAPL 1301(3), “‘a statute which must be strictly construed'” … .

Furthermore, “there is no reason the plaintiff could not seek such relief by seeking leave to amend its complaint, rather than by commencing a new action” … . Stewart Tit. Ins. Co. v Zaltsman, 2022 NY Slip Op 05107, Second Dept 8-31-22

Practice Point: Here the foreclosure action was discontinued and plaintiff was allowed to amend the foreclosure complaint to seek recovery on the note.

 

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PLAINTIFF BANK’S FAILURE TO COMPLY WITH A STATUS-CONFERENCE SCHEDULING ORDER IN THIS FORECLOSURE ACTION WAS NOT A SUFFICIENT GROUND FOR THE “SUA SPONTE” DISMISSAL OF THE COMPLAINT (SECOND DEPT).

The Second Department, reversing Supreme Court, determined the judge should not have, sua sponte, dismissed the complaint in this foreclosure action based upon plaintiff’s failure to file a motion for judgment of foreclosure by a specified date:

… [A] status conference order was entered … which … directed the plaintiff to file a motion for a judgment of foreclosure and sale by December 20, 2017, and warned that “failure to comply with the terms of this order may result in the dismissal of this action without prejudice.” The plaintiff failed to file a motion for a judgment of foreclosure and sale as directed by the status conference order. … [T]he Supreme Court, … sua sponte, directed dismissal of the complaint without prejudice. …

“‘A court’s power to dismiss a complaint, sua sponte, is to be used sparingly and only when extraordinary circumstances exist to warrant dismissal'”… . Here, the plaintiff’s failure to comply with the directive of the status conference order was not a sufficient ground upon which to direct dismissal of the action … . U.S. Bank N.A. v Stuart, 2022 NY Slip Op 05055, Second Dept 8-24-22

Practice Point: Generally, appellate courts will reverse a “sua sponte” dismissal of a complaint.

 

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ALTHOUGH NEW YORK DID NOT HAVE JURISDICTION OVER THE MICHIGAN CUSTODY ORDER; FAMILY COURT SHOULD HAVE EXERCISED TEMPORARY EMERGENCY JURISDICTION AND HELD A HEARING ON THE CHILD’S SAFETY; THE CHILD WAS IN NEW YORK DURING FATHER’S PARENTING TIME WHEN FATHER BROUGHT A NEGLECT/CUSTODY PETITION IN NEW YORK (THIRD DEPT).

The Third Department, reversing Family Court, determined, although Family Court properly dismissed father’s neglect/custody petition on the ground New York did not have jurisdiction over the Michigan custody order, Family Court should have ordered a hearing about the child’s safety pursuant to the court’s temporary emergency jurisdiction. The child was in New York during father’s parenting time at the time father filed the petition:

Under the UCCJEA [Uniform Child Custody Jurisdiction and Enforcement Act], a New York court has jurisdiction to make an initial child custody determination under certain limited circumstances … . Here, the parties agreed that, as Michigan is the home state of the child, none of these statutory factors apply. Nevertheless, Domestic Relations Law § 76-c provides that “New York courts have ‘temporary emergency jurisdiction if the child is present in this state and it is necessary in an emergency to protect the child, a sibling or parent of the child'” … .

The AFC [attorney for the child] and the father contend that the allegations set forth in the petition were sufficient to warrant Family Court to conduct a hearing. We agree. Matter of Chester HH. v Angela GG., 2022 NY Slip Op 05002, Third Dept 8-18-22

Practice Point: Although New York did not have jurisdiction over a Michigan custody order and therefore properly dismissed father’s neglect/custody petition brought in New York when the child was in New York, Family Court should have exercised its temporary emergency jurisdiction and held a hearing on the child’s safety.

 

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THE NONPARTY SUBPOENA SHOULD NOT HAVE BEEN QUASHED AND THE RELATED PROTECTIVE ORDER SHOULD NOT HAVE BEEN ISSUED (SECOND DEPT).

The Second Department, reversing Supreme Court, determined the nonparty subpoena should not have been quashed and the related protective order should not have been issued. The nonparty, Bijari, listed for sale the real property where plaintiff was injured. Plaintiff sought information about the sale because the information could be relevant to whether the homeowner’s exemption to Labor Law 240(1) and 241(6) applied:

CPLR 3101(a)(4), concerning disclosure from nonparties to an action, provides that “[t]here shall be full disclosure of all matter material and necessary in the prosecution or defense of an action, regardless of the burden of proof, by: . . . any other person, upon notice stating the circumstances or reasons such disclosure is sought or required” … .. Under that statute, the party who served the subpoena has an initial minimal obligation to show that the nonparty was apprised of the circumstances or reasons that the disclosure is sought … . Once that is satisfied, it is then the burden of the person moving to quash a subpoena to establish either that the requested disclosure “is utterly irrelevant to the action or that the futility of the process to uncover anything legitimate is inevitable or obvious” … . …

For a protective order to be issued, the party seeking such an order must make a “factual showing of ‘unreasonable annoyance, expense, embarrassment, disadvantage, or other prejudice'” … . “‘Trial courts are vested with broad discretion to issue appropriate protective orders to limit discovery. . . . [T]his discretion is to be exercised with the competing interests of the parties and the truth-finding goal of the discovery process in mind'” … . Here, Bijari failed to make the requisite showing pursuant to CPLR 3103(a) to warrant the issuance of a protective order with regard to the subpoena…. . Nunez v Peikarian, 2022 NY Slip Op 04969, Second Dept 8-17-22

Practice Point: Here in this Labor Law 240(1) and 241(6) action the plaintiff subpoenaed a nonparty who listed for sale the property where plaintiff was injured. The information plaintiff sought was relevant to whether the homeowner’s exemption to Labor Law 240(1) and 241(6) applied. The subpoena should not have been quashed and the related protective order should not have been issued.

 

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AN AGREEMENT SIGNED BY THE PLAINTIFF IN THIS MEDICAL MALPRACTICE ACTION REQUIRING THE DEPOSITION OF EXPERT WITNESSES 120 DAYS BEFORE TRIAL IS VOID AND UNENFORCEABLE AS AGAINST THE POLICY UNDERLYING THE EXPERT DISCLOSURE PROVISIONS OF THE CPLR (SECOND DEPT).

The Second Department, in a full-fledged opinion by Justice Maltese, determined the agreement signed by plaintiff in this medical malpractice action which required the deposition of expert witnesses 120 days before trial was void and unenforceable:

The issue on this appeal is whether the defendants Benjamin M. Schwartz, M.D., and Island Gynecologic Oncology, PLLC (hereinafter together the defendants), may enforce a provision in an agreement that the defendant physician’s receptionist asked the injured plaintiff to sign among other routine medical releases prior to undergoing surgery. Pursuant to this provision, if a patient commenced a medical malpractice action against the defendant physician, each party’s counsel would have the right to depose the other parties’ expert witness(es) at least 120 days before trial. We hold that this provision is unenforceable as against public policy and, in any event, the defendants waived the right to enforce the provision. Furthermore, the entire agreement is unenforceable because the Supreme Court found certain other provisions to be unenforceable, the defendants do not challenge the court’s holding regarding those provisions on appeal, and those provisions are not severable from the remainder of the agreement, including the provision at issue on appeal. * * *

Requiring experts to be made available for deposition 120 days before trial also directly contradicts the provision in CPLR 3101(d)(1)(i) that gives trial courts the discretion to “make whatever order may be just” in the event that a party retains an expert in an insufficient period of time before the commencement of trial to provide appropriate notice. This statutory provision reflects the important public policy of allowing courts to retain discretion in their role as gatekeeper in determining the admissibility of expert testimony … . For all of the foregoing reasons, we conclude that, here, the public policy in favor of freedom of contract is overridden by these other important and countervailing public policy interests … . Mercado v Schwartz, 2022 NY Slip Op 04962, Second Dept 8-17-22

Practice Point: An agreement signed by a patient, who became a plaintiff in this medical malpractice action, which required the deposition of expert witnesses 120 days before trial is void and unenforceable as against the policy underlying the expert disclosure provisions of the CPLR.

 

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DEFENDANT SHOULD HAVE BEEN ESTOPPED FROM CLAIMING THE ADDRESS IN THE AFFIDAVIT OF SERVICE WAS NOT HIS DWELLING PLACE; DEFENDANT TOOK AFFIRMATIVE STEPS TO MISLEAD THE PARTY ATTEMPTING TO SERVE HIM (SECOND DEPT). ​

The Second Department, reversing Supreme Court, determined defendant should have been estopped from claiming the address in the affidavit of service was not his “dwelling plaice” because defendant misled the party attempting to serve him:

Estoppel, in this context, may preclude a defendant “from challenging the location and propriety of service of process if that defendant has engaged in affirmative conduct which misleads a party into serving process at an incorrect address” … . For example, “where a defendant willfully misrepresented his address or violated a statutory notification requirement … , or where he ‘engaged in conduct calculated to prevent the plaintiff from learning his actual place of residence’ … , he may be estopped from asserting the defense of defective service” … .

Here, the record established that the defendant engaged in “affirmative conduct which misl[ed] a party into serving process at an incorrect address” … . Hudson Val. Bank, N.A. v Eagle Trading, 2022 NY Slip Op 04956, Second Dept 8-17-22

Practice Point: A party who affirmatively takes steps to mislead the party attempting to serve him will be estopped from claiming the address in the the affidavit of service is not his dwelling place.

 

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THE LETTER SENT TO THE BORROWER BY THE BANK IN THIS FORECLOSURE ACTION DID NOT EXPLICITLY INDICATE THE DEBT WAS BEING IMMEDIATELY ACCELERATED; THEREFORE THE DEBT HAD NOT BEEN ACCELERATED AND THE FORECLOSURE ACTION WAS NOT TIME-BARRED (SECOND DEPT).

The Second Department, reversing Supreme Court, determined the letter sent by the bank to the borrower in this foreclosure action did not accelerate the debt and therefore did not trigger the six-year statute of limitations:

… [A] ” ‘letter discussing acceleration as a possible future event, . . . does not constitute an exercise of the mortgage’s optional acceleration clause'” …  “The determinative question is not what the noteholder intended or the borrower perceived, but whether the contractual election was effectively invoked” … . Here, a letter sent to the defendants … , did not effectively accelerate the mortgage debt, as this letter merely discussed acceleration as a possible future event … . HSBC Bank USA v Pantel, 2022 NY Slip Op 04954, Second Dept 8-17-22

Practice Point: A letter from the bank to the borrower which discussed the acceleration of the mortgage debt but did not indicate the debt was in fact accelerated did not trigger the six-year statute of limitations on the foreclosure action. The foreclosure action was not, therefore, time-barred.

 

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PLAINTIFF BANK DID NOT DEMONSTRATE THE RPAPL 1304 NOTICE OF FORECLOSURE WAS PROPERLY MAILED AND THE DEFECT COULD NOT BE CURED BY THE SECOND AFFIDAVIT SUBMITTED IN REPLY (SECOND DEPT). ​

The Second Department, reversing Supreme Court, determined plaintiff bank did not demonstrate compliance with the mailing requirements of RPAPL 1304 and the defect was not cured by an affidavit submitted in reply:

… [T]he plaintiff submitted the affidavit of Kolette Modlin, an authorized officer of Caliber Home Loans, Inc. (hereinafter Caliber), the loan servicer for the plaintiff’s successor in interest. Modlin stated that she had reviewed the plaintiff’s business records, which had been verified for accuracy, incorporated into Caliber’s records, and relied upon by Caliber in the ordinary course of its business, and determined that 90-day notices were mailed by first-class and certified mail to the defendant at the mortgaged premises. The plaintiff also submitted copies of the 90-day notices that were allegedly sent to the defendant. However, the plaintiff failed to attach, as exhibits to the motion, any documents establishing that the notices were actually mailed … . Moreover, although Modlin attested that she had personal knowledge of Caliber’s records, and that those records included the plaintiff’s records, Modlin did not attest to knowledge of the mailing practices of the plaintiff, which was the entity that allegedly sent the 90-day notices to the defendant … . Contrary to the plaintiff’s contention, although it submitted with its reply papers a second affidavit from Modlin, along with documentary evidence in the form of a letter log purportedly establishing the mailing of the 90-day notices, the plaintiff could not, under the circumstances, rely on the second affidavit to correct deficiencies inherent in the original one … . Ditech Fin., LLC v Cummings, 2022 NY Slip Op 04949, Second Dept 8-17-22

Practice Point: Plaintiff bank did not submit the records proving the notice of foreclosure was properly mailed and the affiant did not demonstrate familiarity with the mailing procedures used by the party which mailed the notice. The defects were not cured by a second affidavit submitted in reply. The bank’s motion for summary judgment should not have been granted.

 

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