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ALTHOUGH RPAPL 1320-a, ENACTED WHILE THIS APPEAL WAS PENDING, HAS CHANGED THINGS, THE DEFENDANTS’ LACK-OF-STANDING DEFENSE WAS WAIVED BECAUSE IT WAS NOT RAISED IN THEIR ANSWERS OR PRE-ANSWER MOTIONS; THE BANK’S MOTION FOR SUMMARY JUDGMENT WAS PROPERLY GRANTED (CT APP).

The Court of Appeals, in a brief memorandum with an extensive concurring opinion, determined the defendants in the foreclosure action had waived the lack-of-standing defense by not raising it in their answers or pre-answer motions. The court noted that Real Property Actions and Proceedings Law (RPAPL) 1320-a, which was enacted when this appeal was pending, may allow standing to be raised “at this stage of the litigation:”

… Supreme Court did not err in granting plaintiff’s motions for summary judgment and for a judgment of foreclosure and sale. Defendants failed to raise standing in their answers or in pre-answer motions as required by CPLR 3211 (e) and accordingly, under the law in effect at the time of the orders appealed from, the defense was waived … . Defendants’ argument that ownership is an essential element of a foreclosure action, raised for the first time in support of their motion for reargument at the Appellate Division, is unpreserved for our review. We do not reach the issue of whether RPAPL 1302-a, enacted while this appeal was pending, affords defendants an opportunity to raise standing at this stage of the litigation. Defendants are free to apply to the trial court for any relief that may be available to them under that statute. JPMorgan Chase Bank, N.A. v Caliguri, 2020 NY Slip Op 07660, CtApp 12-17-20

 

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THE PROPERTY TRANSFERRED TO THE DEFENDANT BY WILL UPON THE DEATH OF THE PROPERTY OWNER; THEREFORE THE ESTATE WAS NOT A NECESSARY PARTY IN THIS FORECLOSURE ACTION (SECOND DEPT).

The Second Department, reversing Supreme Court, determined the estate was not a necessary party in this foreclosure action because the property transferred upon the property owner’s death by operation of the will:

Pursuant to a deed dated March 27, 1991, Marjorie Colwell became the owner of certain real property located in Brooklyn (hereinafter the subject property). Colwell died on November 8, 2004. Colwell’s will bequeathed the subject property to the defendant Sonia Gaines, and also named Gaines as the executrix of the estate. …

We disagree with the Supreme Court’s determination that the estate was a necessary party to this action, and that the failure to join the estate warranted vacatur of the order of reference and the judgment of foreclosure and sale and dismissal of the complaint insofar as asserted against Gaines … . 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 curtesy, 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.” Under the circumstances of this case, the estate was not a necessary party to this mortgage foreclosure action. “Generally, title to real property devised under the will of a decedent vests in the beneficiary at the moment of the testator’s death and not at the time of probate” … . US Bank Trust, N.A. v Gaines,2020 NY Slip Op 07623, Second Dept 12-16-20

 

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PLAINTIFF BANK DID NOT PROVE COMPLIANCE WITH THE NOTICE REQUIREMENTS OF RPAPL 1304; JUDGMENT AFTER TRIAL REVERSED (SECOND DEPT).

The Second Department, reversing Supreme Court, determined the plaintiff bank in this foreclosure action did not demonstrate strict compliance with the notice requirements of RPAPL 1304. The judgment after trial was reversed:

… [T]he plaintiff relied upon the testimony of DeCaro [loan verification officer], who, when shown a copy of the 90-day notice, testified that the notice was printed on October 13, 2011, the same date that appears on the notice, that it was sent to the defendants at the subject property, and that such notice was maintained by Wells Fargo in the regular course of business as the plaintiff’s loan servicer. Contrary to the plaintiff’s contention, DeCaro’s testimony was insufficient to demonstrate that it complied with RPAPL 1304. DeCaro did not testify that she had personal knowledge of the purported mailing or of Wells Fargo’s mailing practices, and did not describe the procedure by which the RPAPL 1304 notice was mailed to the defendants by both certified mail and first-class mail … . Although the notice itself stated in bold print, “FIRST CLASS MAIL and CERTIFIED MAIL,” no receipt or corresponding document issued by the United States Postal Service was submitted proving that the notice was actually sent by certified mail more than 90 days prior to commencement of the action. Moreover, the mailing manifest submitted by the plaintiff failed to establish that the notice was actually mailed to the defendants by both certified mail and first-class mail … .

Since the plaintiff failed to provide evidence of the actual mailing, “or proof 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 plaintiff failed to establish its strict compliance with RPAPL 1304 … . US Bank N.A. v Pierre, 2020 NY Slip Op 07622, Second Dept 12-16-20

 

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THE BANK FAILED TO DEMONSTRATE STANDING TO BRING THE FORECLOSURE ACTION WITH ADMISSIBLE EVIDENCE; THE BANK’S MOTION FOR SUMMARY JUDGMENT SHOULD NOT HAVE BEEN GRANTED (SECOND DEPT).

The Second Department, reversing Supreme Court, determined plaintiff bank did not demonstrate standing to bring the foreclosure action. The bank’s motion for summary judgment should not have been granted:

The plaintiff failed to present admissible evidence establishing that the plaintiff or its counsel was in possession of the note at the time of commencement of the action. In support of its motion, the plaintiff submitted the affidavit of Howard R. Handville, a senior loan analyst at Ocwen Financial Corporation whose indirect subsidiary is Ocwen Loan Servicing, LLC (hereinafter Ocwen), the plaintiff’s loan servicer. Handville attested that he reviewed the servicing records maintained by Ocwen in its ordinary course of business, that prior servicers’ records were integrated into Ocwen’s records and relied upon by Ocwen and that “[b]ased on [his] review of the Servicing Records, the original Note and Mortgage for the Loan were physically delivered to Plaintiff’s custodian on April 25, 2007, prior to the commencement of this foreclosure action.” Handville further averred that “[s]ince that date, the original Note and Mortgage have remained in the physical possession of Plaintiff or its counsel.” Even if Handville’s affidavit was sufficient to lay a proper foundation for the admission of the “Servicing Records,” the affidavit was insufficient to establish standing because the records themselves were not submitted by the plaintiff. “‘[I]t is the business record itself, not the foundational affidavit, that serves as proof of the matter asserted’ … , and ‘a witness’s description of a document not admitted into evidence is hearsay’ … . Deutsche Bank Natl. Trust Co. v Schmelzinger, 2020 NY Slip Op 07543, Second Dept 12-16-20

 

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THE BANK DID NOT DEMONSTRATE THE NOTICE REQUIREMENTS OF RPAPL 1304 WERE COMPLIED WITH; SUMMARY JUDGMENT IN FAVOR OF THE BANK SHOULD NOT HAVE BEEN GRANTED (SECOND DEPT).

The Second Department, reversing Supreme Court, determined the notice requirements of RPAPL 1304 were not demonstrated and, therefore, the bank’s motion for summary judgment in this foreclosure action should not have been granted:

Since the plaintiff failed to provide evidence of the actual mailing by either certified mail or first-class mail, “or proof 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” … , it failed to establish, prima facie, that it complied with RPAPL 1304. Since the plaintiff failed to satisfy its prima facie burden with respect to RPAPL 1304, those branches of its motion which were for summary judgment on the complaint insofar as asserted against the defendants, to strike their answer, and for an order of reference should have been denied, regardless of the sufficiency of the defendants’ opposition papers … . US Bank N.A. v McQueen, 2020 NY Slip Op 07423, Second Dept 12-9-20

 

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THE ESTATE WAS A NECESSARY PARTY IN THIS FORECLOSURE ACTION BECAUSE OF THE POTENTIAL FOR A DEFICIENCY JUDGMENT AGAINST THE DECEDENT; DEFENDANT’S CROSS MOTION FOR LEAVE TO SUBSTITUTE HERSELF AS ADMINISTRATOR OF THE ESTATE SHOULD HAVE BEEN GRANTED (SECOND DEPT).

The Second Department, reversing Supreme Court, determined decedent’s estate was a necessary party in this foreclosure action and defendant’s cross motion pursuant to CPLR 1015 for leave to substitute herself as administrator should have been granted:

In a mortgage foreclosure action, “[t]he rule is that a mortgagor who has made an absolute conveyance of all his [or her] interest in the mortgaged premises, including his equity of redemption, is not a necessary party to foreclosure, unless a deficiency judgment is sought” … . Here, the judgment of foreclosure and sale contains language providing for a potential deficiency judgment against the decedent if the sale of the property does not cover the amount due to the plaintiff. Consequently, the decedent’s estate was a necessary party to the action … . Specialized Loan Servicing, LLC v Kalinin, 2020 NY Slip Op 07417, Second Dept 12-9-20

 

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THE LOST NOTE AFFIDAVITS SUBMITTED BY THE PLAINTIFF IN THIS FORECLOSURE ACTION WERE INVALID; PLAINTIFF’S MOTION FOR LEAVE TO ENTER A DEFAULT JUDGMENT SHOULD NOT HAVE BEEN GRANTED (SECOND DEPT).

The Second Department, reversing Supreme Court, determined the plaintiff bank’s motion to leave to enter a default judgment in this foreclosure action should not have been granted. The lost note affidavits were invalid:

Pursuant to UCC 3-804, “[t]he owner of an instrument which is lost, whether by destruction, theft or otherwise, may maintain an action in his [or her] own name and recover from any party liable thereon upon due proof of his [or her] ownership, the facts which prevent his [or her] production of the instrument and its terms.”

Here, although the plaintiff submitted sufficient evidence establishing that it was the owner and holder of the note and establishing the note’s terms, the lost note affidavits submitted by the plaintiff failed to establish the facts that prevent the production of the original note … . Neither affidavit identifies who conducted the search for the lost note or explains “when or how the note was lost” … . Capital One, N.A. v Gokhberg, 2020 NY Slip Op 07345, Second Dept 12-9-20

 

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THE BANK DID NOT DEMONSTRATE COMPLIANCE WITH THE NOTICE REQUIREMENTS OF RPAPL 1304; THE BANK’S MOTION FOR SUMMARY JUDGMENT SHOULD NOT HAVE BEEN GRANTED (SECOND DEPT).

The Second Department, reversing Supreme Court, determined the bank’s summary judgment motion should not have been granted because the bank did not demonstrate compliance with the notice requirements of RPAPL 1304:

“In a residential foreclosure action, a plaintiff moving for summary judgment must tender sufficient evidence demonstrating the absence of material issues as to its strict compliance with RPAPL 1304” … . RPAPL 1304(1) provides that “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.” “The statute further provides the required content for the notice and provides that the notice must be sent by registered or certified mail and also by first-class mail to the last known address of the borrower” … . Strict compliance with RPAPL 1304 is a condition precedent to the commencement of a foreclosure action … . Proof of the requisite mailings “can be established with proof of the actual mailings, such as affidavits of mailing or domestic return receipts with attendant signatures, or proof 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” … . …

… [W]ith respect to the mailing by first-class mail, “[t]he presence of 20-digit numbers on the copies of the 90-day notices submitted by the plaintiff, standing alone, did not suffice to establish, prima facie, proper mailing under RPAPL 1304” … . As to Babik’s [the loan servicer’s employee’s] affidavit, not only did Babik “not attest to personal knowledge of the mailing [or] set forth any details regarding … [the loan servicer’s] mailing practices or procedures” … , she did not aver that a 90-day notice was sent in accordance with the statute … . Wilmington Sav. Fund Socy., FSB v Hershkowitz, 2020 NY Slip Op 07427, Second Dept 12-9-20

 

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THE SECOND MOTION FOR SUMMARY JUDGMENT SHOULD HAVE BEEN DENIED; SUCCESSIVE SUMMARY JUDGMENT MOTIONS ARE GENERALLY PROHIBITED (SECOND DEPT).

The Second Department, reversing Supreme Court, determined the prohibition against successive summary judgment motions applied and the second motion should have been denied:

“Generally, successive motions for summary judgment should not be entertained, absent a showing of newly discovered evidence or other sufficient cause” … . “Evidence is not newly discovered simply because it was not submitted on the previous motion” … . “Rather, the evidence that was not submitted in support of the previous summary judgment motion must be used to establish facts that were not available to the party at the time it made its initial motion for summary judgment and which could not have been established through alternative evidentiary means” … . “Successive motions for summary judgment should not be made based upon facts or arguments which could have been submitted on the original motion for summary judgment” … . Wells Fargo Bank, NA v Carpenter, 2020 NY Slip Op 07426, Second Dept 12-9-20

 

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PURPORTED MORTGAGE PAYMENTS MADE AFTER THE EXPIRATION OF THE STATUTE OF LIMITATIONS FOR A FORECLOSURE ACTION DID NOT REVIVE THE STATUTE OF LIMITATIONS FOR THE PURCHASERS OF THE ENCUMBERED PROPERTY OR THE BANK WHICH ISSUED A MORTGAGE SECURED BY THE ENCUMBERED PROPERTY (THIRD DEPT).

The Third Department, reversing Supreme Court, determined mortgage payments allegedly made after the expiration of the statute of limitations for a foreclosure action did not revive the statute of limitations as against defendants, who purchased the encumbered property, and defendant bank which issued a mortgage secured by the property:

… [T]he tolling or revival effect of partial payments differs as between the payor — the Gureckis — and subsequent purchasers — defendants (see General Obligations Law § 17-107 [2]). [A] qualifying partial payment that is made before the expiration of the statute of limitations will renew the statute of limitations against any subsequent purchaser (see General Obligations Law § 17-107 [2] [2d par] .. ). In contrast, a qualifying partial payment that is made after the expiration of the statute of limitations will only revive the statute of limitations as to a subsequent purchaser who did not give value or who had actual notice of the making of the payment … . Here, … at the time that [the payments] were made the statute of limitations had expired. Given that the record is clear that defendants are purchasers for value and plaintiff put forth no evidence that defendants had actual notice of the … payments, the payments did not have the effect of reviving the statute of limitations as to defendants (see General Obligations Law § 17-107 [2] …). Gurecki v Gurecki, 2020 NY Slip Op 07257, Third Dept 12-3-20

 

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