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FAILURE TO TAKE TIMELY STEPS TO SETTLE THE ORDER IN THIS FORECLOSURE ACTION RENDERED THE ACTION ABANDONED PURSUANT TO 22 NYCRR 202.48 (SECOND DEPT).

The Second Department, reversing Supreme Court, determined the foreclosure action was abandoned because no steps were taken to settle the order:

“Proposed orders . . . with proof of service on all parties where the order is directed to be settled or submitted on notice, must be submitted for signature, unless otherwise directed by the court, within 60 days after the signing and filing of the decision directing that the order be settled or submitted” (22 NYCRR 202.48[a]). “Failure to submit the order . . . timely shall be deemed an abandonment of the motion or action, unless for good cause shown” (22 NYCRR 202.48[b]). These provisions are not applicable where the decision does not explicitly direct that the proposed judgment or order be settled or submitted for signature (see Funk v Barry, 89 NY2d 364). However, the direction to “settle” order “ordinarily entails more complicated relief,” and therefore “contemplates notice to the opponent so that both parties may either agree on a draft or prepare counter proposals to be settled before the court” (id. at 367 …). Here, Nationstar failed to timely settle the order pursuant to the requirements of 22 NYCRR 202.48(a), and did not show good cause for its failure to do so … . Accordingly, the Supreme Court should have granted that branch of the defendant’s motion which was pursuant to 22 NYCRR 202.48 to deem, as abandoned, Nationstar’s motion. Aurora Loan Servs., LLC v Yogev, 2021 NY Slip Op 03297, Second Dept 5-26-21

 

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THE BANK IN THIS FORECLOSURE ACTION DID NOT PROVIDE SUFFICIENT PROOF OF COMPLIANCE WITH THE NOTICE REQUIREMENTS OF RPAPL 1304 AND THE MORTGAGE (SECOND DEPT).

The Second Department, reversing Supreme Court, determined the bank in this foreclosure action did not submit sufficient proof of compliance with the notice requirements of RPAPL 1304 and the mortgage:

Although the plaintiff submitted copies of the 90-day notices purportedly sent to [defendant] Jimenez, the plaintiff failed to demonstrate, prima facie, that the notices were actually mailed, either through an affidavit of service, other proof of mailing by the post office, or evidence of a standard office mailing procedure designed to ensure that items are properly addressed and mailed, sworn to by someone with personal knowledge of the procedure … . The unsubstantiated and conclusory assertion in an affidavit of a representative of the plaintiff’s loan servicer that the 90-day notice was sent in accordance with RPAPL 1304 is insufficient to establish that the notice was actually mailed to Jimenez by first-class and certified mail … . Moreover, the affiant based her assertions upon her review of unspecified business records without attaching any such business records to her affidavit … . “It is the business record itself, not the foundational affidavit, that serves as proof of the matter asserted” … .

Similarly, the plaintiff failed to demonstrate, prima facie, that it complied with the notice of default provisions of the consolidated mortgage, which required the plaintiff to send a notice of default to Jimenez at the notice address by first-class mail and to provide a 30-day cure period. Copies of the notice without proof of mailing, along with the affidavit of a representative of the loan servicer averring, based upon her review of unspecified business records which were not attached to the affidavit, that such a notice of default was sent on an unspecified date, was insufficient to satisfy the plaintiff’s prima facie burden … .  Wilmington Trust, N.A. v Jimenez, 2021 NY Slip Op 03212, Second Dept 5-19-21

 

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PROOF OF DEFENDANTS’ DEFAULT WAS INADMISSIBLE HEARSAY BECAUSE THE UNDERLYING BUSINESS RECORDS WERE NOT SUBMITTED WITH THE SUMMARY JUDGMENT MOTION (SECOND DEPT).

The Second Department, reversing Supreme Court, determined defendants’ default in this foreclosure action was not demonstrated because the relevant business were described but not submitted. The description was therefore hearsay:

… [T]he plaintiff submitted copies of the note and mortgage, and an affidavit of Sherry Benight, an officer of Select Portfolio Servicing, Inc. (hereinafter SPS), the servicer for the loan. Based on her review of business records in the possession of SPS, Benight averred that the defendants defaulted in payment in August 2014. However, the only business records annexed to and incorporated in the affidavit with regard to the default was a notice of default dated March 3, 2015 … . Although Benight established that she was familiar with SPS’s record-keeping practices and procedures, no payment records were proffered with the motion. “‘[W]hile a witness may read into the record from the contents of a document which has been admitted into evidence, a witness’s description of a document not admitted into evidence is hearsay'” … . “[I]t is the business record itself, not the foundational affidavit, that serves as proof of the matter asserted” … . U.S. Bank N.A. v Rowe, 2021 NY Slip Op 03209, Second Dept 5-19-21

 

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THE BANK’S PROOF OF COMPLIANCE WITH THE NOTICE REQUIREMENTS OF RPAPL 1304 WAS INSUFFICIENT (SECOND DEPT).

The Second Department, reversing Supreme Court, determined the proof of the bank’s compliance with the notice requirements of RPAPL 1304 in this foreclosure action was insufficient:

… [T]he plaintiff relied on an affidavit of James Green, a vice president of loan documentation for Wells Fargo, who averred that, based on his review of Wells Fargo’s business records, the required notice was sent by both certified mail and first-class mail. Green attached evidence of a certified article number, but did not attach any evidence of a first-class mailing. He did not aver that he had personal knowledge of the mailing, did not describe any standard office procedure designed to ensure that the notices are mailed, and did not attach domestic return receipts for the mailing … . Deutsche Bank Natl. Trust Co. v Ezeji, 2021 NY Slip Op 03164, Second Dept 5-19-2021

 

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APPELLANT PURCHASED THE PROPERTY WHILE THE FORECLOSURE ACTION WAS PENDING; APPELLANT’S MOTION TO INTERVENE SHOULD HAVE BEEN GRANTED (SECOND DEPT). ​

The Second Department, reversing Supreme Court, determined appellant’s motion to intervene in this foreclosure action should have been granted:

The plaintiff commenced this action to foreclose a mortgage given by the defendant Kathleen O. Nocella. Nocella defaulted in appearing in the action. During the pendency of the action, nonparty Henry Irving, LLC (hereinafter the appellant), acquired title to the subject property. In September 2017, the plaintiff moved, inter alia, for leave to enter a default judgment and for an order of reference. The appellant cross-moved, inter alia, for leave to intervene in the action. …

The appellant was entitled to intervene as of right pursuant to CPLR 1012(a) since it established that the representation of its interest by the parties would be inadequate, that the action involved the disposition of title to real property, and that it would be bound and adversely affected by a judgment of foreclosure and sale (see CPLR 1012[a][2], [3]; 6501 …). Contrary to the court’s determination, neither the fact that the appellant obtained its interest in the subject property after this action was commenced and the notice of pendency was filed, nor the fact that the defendants defaulted in answering or appearing, definitively bars intervention … . Moreover, since the appellant’s cross motion, inter alia, for leave to intervene was made before an order of reference or judgment of foreclosure and sale was issued, the plaintiff was not prejudiced by the timing of the cross motion … . Bank of Am., NA v Nocella, 2021 NY Slip Op 03159, Second Dept 5-19-21

 

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PLAINTIFF BANK DID NOT DEMONSTRATE COMPLIANCE WITH THE NOTICE REQUIREMENTS OF RPAPL 1304 AND THE MORTGAGE IN THIS FORECLOSURE ACTION (SECOND DEPT).

The Second Department, reversing Supreme Court, determined the plaintiff bank did not demonstrate compliance with the notice requirements of RPAPL 1304 and the mortgage. Therefore the bank’s motion for summary judgment in this foreclosure action should not have been granted:

… [T]he plaintiff failed to submit proof of the actual mailings, such as the affidavits of mailing or domestic return receipts with attendant signatures, or proof of a standard mailing procedure designed to ensure that items are properly addressed and mailed, sworn to by someone with personal knowledge of the procedure. Instead, the plaintiff relied on the affidavit of an employee of the plaintiff’s loan servicer, who did not attest that she had personal knowledge that the notices were mailed, or attest to a standard office mailing procedure designed to ensure that items are properly addressed and mailed … .

Likewise, relying on the same affidavit, the plaintiff failed to establish compliance with the requirements for a notice of default pursuant to sections 15 and 22 of the mortgage agreement. Statements in the employee’s affidavit, “which asserted that the notice of default was sent in accordance with the terms of the mortgage, [were] unsubstantiated and conclusory and . . . , even when considered together with the copy of the notice of default, failed to show that the required notice was in fact mailed by first class mail or actually delivered to the designated address if sent by other means, as required by the subject mortgage” … . U.S. Bank N.A. v Peykar, 2021 NY Slip Op 03077, Second Dept 5-12-21

 

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THE ESTATE WAS A NECESSARY PARTY IN THIS FORECLOSURE ACTION; SUPREME COURT SHOULD HAVE ORDERED THE JOINDER OF THE ESTATE INSTEAD OF DISMISSING THE COMPLAINT (SECOND DEPT).

The Second Department, reversing Supreme Court, determined Supreme Court properly held that the estate was a necessary party in this foreclosure action, but failing the include the estate did no warrant dismissal of the complaint. Rather, the court should directed that the estate be joined as a party:

Supreme Court did not err in finding that the estate was a necessary defendant. “Pursuant to RPAPL 1311(1), ‘necessary defendants’ in a mortgage foreclosure action include, among others, ‘[e]very person having an estate or interest in possession, or otherwise, in the property as tenant in fee, for life, by the courtesy, or for years, and every person entitled to the reversion, remainder, or inheritance of the real property, or of any interest therein or undivided share thereof, after the determination of a particular estate therein'” … . Particularly where, as here, the plaintiff seeks a deficiency judgment, and alleges a default in payment subsequent to the death of the deceased mortgagor, the estate of the mortgagor is a necessary party to the foreclosure action … . However, dismissal of the complaint was not the proper remedy; rather, the proper remedy was to direct the joinder of the estate as a defendant (see CPLR 1001[b] …). BAC Home Loans Servicing, L.P. v Williams, 2021 NY Slip Op 02780, Second Dept 5-5-21

 

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PLAINTIFF DID NOT DEMONSTRATE STANDING TO BRING THE FORECLOSURE ACTION AND DID NOT PROVIDE SUFFICIENT PROOF OF COMPLIANCE WITH THE NOTICE REQUIREMENTS OF RPAPL 1304 (SECOND DEPT).

The Second Department, reversing Supreme Court, determined the plaintiff did not demonstrate standing to bring the foreclosure action, the defendants properly raised plaintiff’s failure to comply with the notice requirements of RPAPL 1304 in opposition to the plaintiff’s summary judgment motion, and the plaintiff’s proof of compliance with the notice requirements was insufficient:

… [T]he plaintiff failed … to establish its standing to commence this action. The copy of the note submitted in support of the plaintiff’s motion contained two additional pages, the first entitled “Allonge to Note” and the second entitled “Note Allonge.” However, as the defendants correctly contend, the plaintiff did not submit any evidence to indicate that the purported allonges were so firmly affixed to the note so as to become a part thereof (see UCC 3-202[2] …). …

… [S]ince the proper service of a RPAPL 1304 notice is a condition precedent to the commencement of a foreclosure action, the defendants could properly raise this defense for the first time in their opposition to the plaintiff’s motion for summary judgment, and the burden of establishing prima facie compliance with the requirements of RPAPL 1304 was with the plaintiff … . …

… [I]n order to establish its compliance with the notice requirements of RPAPL 1304, the plaintiff submitted two affidavits from its “authorized signer,” Tracy A. Duck. However, contrary to the Supreme Court’s determination, neither affidavit was sufficient to establish the plaintiff’s strict compliance with the notice requirements of RPAPL 1304. Among other things, Duck did not aver that she was familiar with the mailing practices and procedures of the entity that purportedly sent the notices … . Moreover, the business records attached to Duck’s second affidavit were insufficient to establish compliance with RPAPL 1304 … . LNV Corp. v Almberg, 2021 NY Slip Op 02791, Second Dept 5-5-21

 

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THE PROCESS SERVER IN THIS FORECLOSURE ACTION MET THE DUE DILIGENCE REQUIREMENTS OF CPLR 308 (4); THE COMPLAINT SHOULD NOT HAVE BEEN DISMISSED FOR LACK OF PERSONAL JURISDICTION (SECOND DEPT).

The Second Department, reversing Supreme Court, determined defendants’ motion to dismiss for lack of personal jurisdiction should not have been granted. The process server for the bank in this foreclosure action satisfied the due diligence requirement for service pursuant to CPLR 308 (4):

There were four attempts to serve the defendants at their residence at times when they could reasonably have been expected to be found there, including attempts on a late weekday evening, an early weekday morning, a weekend evening, and a weekday afternoon … . As the plaintiff established by a preponderance of the credible evidence that personal jurisdiction was acquired over the defendants, the Supreme Court should have denied the defendants’ motion to dismiss the complaint insofar as asserted against them … and decided the plaintiff’s motion, inter alia, for summary judgment on the merits instead of, in effect, denying it as academic. Wilmington Trust Co. v Gewirtz, 2021 NY Slip Op 02562, Second Dept 4-28-21

 

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SUPREME COURT SHOULD NOT HAVE, SUA SPONTE, DETERMINED DEFENDANT IN THIS FORECLOSURE ACTION WAIVED DISMISSAL FOR FAILURE TO TIMELY MOVE FOR A DEFAULT JUDGMENT BECAUSE THE ISSUE WAS DISPOSITIVE AND NEVER LITIGATED; THE BANK’S FAILURE TO TIMELY MOVE FOR A DEFAULT JUDGMENT PURSUANT TO CPLR 3215 (C) REQUIRED DISMISSAL OF THE BANK’S ACTION (SECOND DEPT).

The Second Department, reversing Supreme Court, determined plaintiff-bank’s failure to move for a default judgment within one year required dismissal of the complaint pursuant to CPLR 3215 (c). The court noted that Supreme Court should not have, sua sponte, held defendant waived dismissal pursuant to CPLR 3215 (c) because the issue had never been litigated:

Although the Supreme Court keenly observed that the defendants had filed a notice of appearance in the first action in October 2014, it should not have, sua sponte, determined that such notice of appearance constituted a waiver of their right to seek dismissal of the complaint pursuant to CPLR 3215(c), as the parties never litigated the issue of waiver. Since that branch of the defendants’ cross motion which was pursuant to CPLR 3215(c) to dismiss the complaint had “‘dispositive import'” … , the court should have notified the parties of the waiver issue and afforded them an opportunity to be heard prior to determining the cross motion on a ground neither side argued. …

“The language of CPLR 3215(c) is not, in the first instance, discretionary, but mandatory, inasmuch as courts ‘shall’ dismiss claims (CPLR 3215[c]) for which default judgments are not sought within the requisite one-year period, as those claims are then deemed abandoned” … . “‘Failure to take proceedings for entry of judgment may be excused, however, upon a showing of sufficient cause,’ which requires the plaintiff to ‘demonstrate that it had a reasonable excuse for the delay in taking proceedings for entry of a default judgment and that it has a potentially meritorious action'” … . Wells Fargo Bank v Aucapina, 2021 NY Slip Op 02561, Second Dept 4-28-21

 

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