You are here: / Foreclosure
, ,

THE REFEREE’S REPORT IN THIS FORECLOSURE ACTION WAS BASED UPON BUSINESS RECORDS WHICH WERE NOT PRODUCED AND SHOULD NOT HAVE BEEN CONFIRMED; ALTHOUGH DEFENDANTS DEFAULTED, THE REFEREE’S REPORT FUNCTIONS AS AN INQUEST ON DAMAGES WHICH THE DEFENDANTS CAN CONTEST (SECOND DEPT).

The Second Department, reversing Supreme Court, determined the referee’s report in this foreclosure action should not have been confirmed because it was based upon business records that were not produced. The court noted that the fact that defendants had defaulted did not preclude them from contesting the amount owed:

… [T]he referee’s report should not have been confirmed because it was based upon unproduced business records … . The fact that the defendants defaulted in appearing did not mean that they were precluded from contesting the amount owed … . The referee’s report served the function of an inquest on damages, which must be based upon admissible evidence … . Wilmington Sav. Fund Socy., FSB v Moriarty-Gentile, 2021 NY Slip Op 00328, Second Dept 1-20-21

 

,

THE AFFIDAVITS SUBMITTED TO PROVE DEFENDANTS’ DEFAULT IN THIS FORECLOSURE ACTION WERE NOT BASED UPON PERSONAL KNOWLEDGE AND DID NOT ATTACH THE BUSINESS RECORDS RELIED UPON (SECOND DEPT).

The Second Department, reversing Supreme Court, determined the plaintiff bank did not submit admissible proof of defendants’ default:

“There is no requirement that a plaintiff in a foreclosure action rely on any particular set of business records to establish a prima facie case, so long as the plaintiff satisfies the admissibility requirements of CPLR 4518(a), and the records themselves actually evince the facts for which they are relied upon” … . Here, neither Joanne Orelli, a senior vice president of Flushing Bank, who verified the complaint, nor Mark Levin, the managing member of the plaintiff, who submitted an affidavit in support of the motion, stated that they had personal knowledge of the default. Moreover, to the extent their knowledge was based on their review of business records, they did not identify what records they relied on and did not attach them to the verified complaint or the affidavit … . Flatbush Two, LLC v Morales, 2021 NY Slip Op 00294, Second Dept 1-20-21

 

,

THE ONE-YEAR PERIOD FOR TAKING A JUDGMENT RUNS FROM THE DEFAULT AFTER THE FILING AND SERVING OF THE ORIGINAL COMPLAINT, NOT A SUBSEQUENT AMENDED COMPLAINT (FIRST DEPT).

The First Department, reversing Supreme Court, determined the one-year period for taking a judgment after a default runs from the default after the filing and serving of the original complaint, not the amended complaint:

The mortgage foreclosure action should have been dismissed as against original borrower Melissa Eaton, pursuant to CPLR 3215(c), because plaintiff failed to “take proceedings for the entry of judgment” within one year of Eaton’s default. The time to seek a default judgment should be measured from the default in responding to the original, not the amended, complaint … . Although an amended complaint supersedes the original complaint, and therefore requires a new responsive pleading to avoid default … , allowing the filing of an amended complaint to effectively cure a failure to timely move for a default in responding to the original complaint would create an exception that swallows the rule. Because plaintiff did not move for a default judgment until well after one year after Eaton’s default in responding to the original complaint, and because plaintiff fails to offer any excuse for this delay … , dismissal was appropriate under CPLR 3215(c) — notwithstanding plaintiff’s inability to bring a new action due to expiration of the statute of limitations … . MTGLQ Invs., L.P. v Shay, 2021 NY Slip Op 00237, First Dept 1-14-21

 

,

THE REFEREE’S REPORT IN THIS FORECLOSURE ACTION WAS BASED UPON INADMISSBILE HEARSAY AND THEREFORE SHOULD NOT HAVE BEEN CONFIRMED (SECOND DEPT).

The Second Department, reversing Supreme Court, determined the referee’s report should not have been confirmed because it was based on inadmissible hearsay:

… [T]he affidavit of an assistant vice president of Rushmore Loan Management Services, LLC, submitted for the purpose of establishing the amount due and owing under the subject mortgage loan, “constituted inadmissible hearsay and lacked probative value because the affiant did not produce any of the business records he purportedly relied upon in making his calculations” … . Thus, the referee’s findings with respect to the total amount due upon the mortgage were not substantially supported by the record … . Accordingly, the Supreme Court should have denied the plaintiff’s motion to confirm the referee’s report … . Wilmington Sav. Fund Socy., FSB v Isom, 2021 NY Slip Op 00203, Second Dept 1-13-21

 

, , ,

THE DEBT WAS ACCELERATED WHEN THE BANKRUPTCY STAY WAS LIFTED; THE FORECLOSURE ACTION WAS THEREFORE TIME-BARRED; DISAGREEING WITH THE 2ND DEPARTMENT, THE DEFENDANTS DID NOT NEED TO INTERPOSE A COUNTERCLAIM TO CANCEL THE MORTGAGE PURSUANT TO RPAPL 1501 (THIRD DEPT).

The Third Department, in a full-fledged opinion by Justice Clark, determined the debt was accelerated when the automatic bankruptcy stay was lifted. Therefore the foreclosure action was untimely and the mortgage was properly cancelled pursuant to RPAP 1501:

… [T]he mortgage was accelerated on December 8, 2011, the date on which the bankruptcy court issued the order lifting the automatic bankruptcy stay as to plaintiff’s predecessor in interest and its assignees and/or successors in interest … . By filing a proof of claim in the bankruptcy proceeding and shortly thereafter seeking affirmative relief from the automatic bankruptcy stay, plaintiff’s predecessor in interest communicated a clear and unequivocal intent to accelerate the entire mortgage debt … . …

Supreme Court did not err in discharging and canceling the mortgage. RPAPL 1501 (4) states, as relevant here, that, where the statute of limitations period for the commencement of a mortgage foreclosure action has expired, “any person having an estate or interest in the real property subject to such encumbrance may maintain an action . . . to secure the cancellation and discharge of record of such encumbrance, and to adjudge the estate or interest of the plaintiff in such real property to be free therefrom” … . Contrary to the Second Department, we do not read RPAPL 1501 (4) as stating that the cancellation and discharge of a mortgage can only be obtained by commencing an action or interposing a counterclaim for such relief … .

… [D]efendants did not interpose a counterclaim seeking to discharge and cancel the mortgage. However, defendants requested, in their answer, dismissal of the complaint and such “other and further relief as [Supreme Court] deem[ed] just and equitable” and thereafter specifically requested in their cross motion that the mortgage be discharged and canceled. MTGLQ Invs., L.P. v Wentworth, 2021 NY Slip Op 00064, Third Dept 1-7-21

 

, ,

PLAINTIFF’S MOTION TO RESTORE THE FORECLOSURE ACTION TO THE CALENDAR SHOULD HAVE BEEN GRANTED; ABSENT SPECIFIC AFFIRMATIVE DEFENSES PLAINTIFF BANK NEED NOT PROVE COMPLIANCE WITH STATUTORY AND CONTRACTUAL NOTICE REQUIREMENTS (SECOND DEPT).

The Second Department, reversing Supreme Court in this foreclosure action, determined plaintiff’s motion to restore the matter to the calendar should have been granted and plaintiff’s motion for summary judgment should have been granted. The court noted that defendant had not waived the defense of standing but plaintiff submitted sufficient proof of standing and held plaintiff, in the absence of specific affirmative defenses, need not present proof of compliance with statutory and contractual notice requirements:

The defendant’s contention that the plaintiff was required to demonstrate its compliance with statutory and/or contractual notice requirements in order to establish its entitlement to judgment as a matter of law is without merit … . Specifically, the defendant’s sixth affirmative defense generally and conclusorily alleged that the “plaintiff has failed to comply with all conditions precedent to commencement of this action.” This Court has held such language to be insufficient to raise the issue of the plaintiff’s compliance with either statutory or contractual notice requirements ( … CPLR 3013). Absent there being a cognizable affirmative defense alleging non-compliance with statutory or contractual notice requirements, the plaintiff was not required to address those issues as part of its prima facie burden in moving for summary judgment … . In opposition, the defendant failed to raise a question of fact that the plaintiff failed to comply with statutory or contractual notice requirements. One W. Bank, FSB v Rosenberg, 2020 NY Slip Op 08070, Second Dept 12-30-20

 

,

THE REFEREE REPORT IN THIS FORECLOSURE ACTION RELIED ON HEARSAY AND THEREFORE SHOULD NOT HAVE BEEN CONFIRMED (SECOND DEPT).

The Second Department, reversing Supreme Court, determined the calculations made by the referee were based on hearsay and therefore the referee’s report in this foreclosure action should not have been confirmed:

The calculations of the referee were based upon the affidavit of Veronika Steen, Assistant Vice President of the plaintiff’s successor-by-merger. Steen averred that she had personal knowledge of the matter through her review of the relevant documents, and that she had “[a]nnexed . . . a breakdown of the amounts due.” However, the documents produced include the agreements between the parties, not the payment history. Thus the computation was improperly premised upon unproduced business records … . Accordingly, the plaintiff’s motion to confirm the referee’s report and for a judgment of foreclosure and sale should have been denied. We therefore remit the matter to the Supreme Court … for a new report computing the amount due to the plaintiff in accordance herewith. Hudson City Sav. Bank v DePasquale, 2020 NY Slip Op 08047, Second Dept 12-30-12

 

,

THE FORECLOSURE ACTION WAS TIME-BARRED; THE DISCONTINUANCE DID NOT DE-ACCELERATE THE DEBT (SECOND DEPT).

The Second Department, reversing Supreme Court, determined defendant’s motion for summary judgment in this foreclosure action should have been granted. The action was time-barred. The debt was accelerated when the foreclosure action was started and the discontinuance did not de-accelerate the debt:

Plaintiff’s … contention—that the stipulation of discontinuance in the 2007 action revoked the acceleration of the debt—is likewise without merit. … Here, the stipulation of discontinuance in the 2007 action is silent on the issue of the revocation of the election to accelerate and does not otherwise indicate that the plaintiff would accept installment payments from the defendant and thus did not constitute an affirmative act revoking acceleration … . Deutsche Bank Natl. Trust Co. v Ebanks, 2020 NY Slip Op 08035, Second Dept 12-30-20

 

, ,

THE REFEREE’S REPORT IN THIS FORECLOSURE ACTION WAS BASED ON HEARSAY; THE SECOND MORTGAGE WAS NOT DEMONSTRATED TO MEET THE REQUIRMENTS OF RPAPL 1351 (SECOND DEPT).

The Second Department, reversing Supreme Court, determined the referee’s report was based upon hearsay and should not have been confirmed. In addition, the proof a second mortgage met the requirements of RPAPL 1351 and 1354 was insufficient:

“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” … . Here, the affidavit executed by an employee of the plaintiff’s loan servicer, which was submitted by the plaintiff for the purpose of establishing the amount due and owing under the mortgage loan, constituted inadmissible hearsay and lacked probative value because the affiant failed to produce any of the business records upon which she purportedly relied in making her calculations … . Consequently, the referee’s findings with respect to the total amount due upon the mortgage were not substantially supported by the record … .

… In an action to foreclose a mortgage commenced by a first mortgagee, a second mortgagee may move for a provision in the judgment of foreclosure and sale that any surplus moneys from the foreclosure sale be applied to satisfy the debt owed by the defendant to the second mortgagee (see RPAPL 1351[3]). Such a motion may be granted if “it appears to the satisfaction of the court” that there exists no more than one other mortgage on the subject premises which is “then due” and subordinate only to the plaintiff’s mortgage but is entitled to priority over all other liens and encumbrances other than those described RPAPL 1354(2), and if the motion of the second mortgagee is “made without valid objection of any other party” (RPAPL 1351[3]).

Here, [the] motion papers insufficient, prima facie, to meet the requisite standard (see RPAPL 1351[3]) … . U.S. Rof III Legal Tit. Trust 2015-1 v John, 2020 NY Slip Op 08099, Second Dept 12-30-20

 

,

THE ACTION SHOULD NOT HAVE BEEN DISMISSED PURSUANT TO CPLR 3216 FOR FAILURE TO PROSECUTE; ISSUE HAD NOT BEEN JOINED AND OTHER CONDITIONS PRECEDENT TO DISMISSAL WERE NOT MET (SECOND DEPT).

The Second Department, reversing Supreme Court, determined plaintiff’s motion to vacate the conditional order dismissing the action for failure to prosecute pursuant to CPLR 3216 should not have been granted:

The conditional order constituted a defective 90-day notice pursuant to CPLR 3216. The court was without authority to issue a 90-day notice since issue was not joined in the action (see CPLR 3216[b][1] … ). Moreover, the conditional order failed to state that the plaintiff’s failure to comply “will serve as a basis for a motion” by the court to dismiss the action for failure to prosecute … . The purported dismissal was not properly effectuated since the court never directed the parties to show cause why the action should not be dismissed, and failed to issue a formal order of dismissal on notice to the parties as required by CPLR 3216 … . Moreover, the conditional order was erroneous since it directed the plaintiff to move for an order of reference, even though the plaintiff had already moved for an order of reference. Accordingly, we grant the plaintiff’s motion to vacate the conditional order and restore the action to the active calendar. U.S. Bank N.A. v Thompson, 2020 NY Slip Op 08098, Second Dept 12-30-20

 

Categories

Sign Up for the Mailing List to Be Notified When the Site Is Updated.

  • This field is for validation purposes and should be left unchanged.

Copyright © 2026 New York Appellate Digest, Inc.
Site by CurlyHost | Privacy Policy