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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

 

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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

 

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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

 

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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

 

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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

 

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THE BANK’S COMPLIANCE WITH THE NOTICE REQUIREMENTS OF RPAPL 1304 WAS NOT DEMONSTRATED WITH ADMISSIBLE EVIDENCE (SECOND DEPT).

The Second Department, reversing Supreme Court, determined compliance with the notice requirements of RPAPL 1304 was not demonstrated with admissible evidence. Therefore the bank’s motion for summary judgment in this foreclosure action should not have been granted:

… [T]he affidavit of an employee of its loan servicer was insufficient to establish that the notice was sent to the defendant in the manner required by RPAPL 1304. The affiant did not aver that he had personal knowledge of the purported mailings, or that he was familiar with the mailing practices and procedures of the plaintiff, which allegedly sent the notice … . In addition, the plaintiff’s submission of an affidavit of its own employee was similarly insufficient to establish the plaintiff’s strict compliance with RPAPL 1304, since the employee had no personal knowledge of the purported mailings and he did not attest to a standard office mailing procedure designed to ensure that items are properly addressed and mailed … . Further, the plaintiff failed to submit sufficient proof of the actual mailings of the notices by first-class mail … . Ridgewood Sav. Bank v Van Amerongen, 2020 NY Slip Op 08095, Second Dept 12-30-20

 

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CPLR 204(A) IN CONJUNCTION WITH RPAPL 1301(3) TOLLED THE STATUTE OF LIMITATIONS WHILE THE FIRST FORECLOSURE ACTION WAS PENDING, FROM 2010 TO 2013, RENDERING THE SECOND FORECLOSURE ACTION IN 2017 TIMELY (THIRD DEPT).

The Third Department, in a full-fledged opinion by Justice Mulvey, reversing Supreme Court, determined the instant foreclosure action was not time barred because CPLR 204(a) in conjunction with Real Property Actions and Proceedings Law (RPAPL) 1301(3) prohibited bringing the instant action while the first action was pending:

In September 2003, defendant, in exchange for a loan to purchase a residence, executed a note secured by a mortgage on that real property. The note and mortgage were later assigned to plaintiff. After defendant failed to make some payments, on May 5, 2010 plaintiff commenced a foreclosure action against defendant, which Supreme Court (Drago, J.) dismissed on October 30, 2013 for failure to prosecute. In April 2015, Supreme Court (Buchannan, J.) denied plaintiff’s motion to vacate the dismissal. In 2017, plaintiff commenced a second foreclosure action. * * *

CPLR 204 (a) provides that, “[w]here the commencement of an action has been stayed by a court or by statutory prohibition, the duration of the stay is not a part of the time within which the action must be commenced.” * * *

The statute that plaintiff relies on, in conjunction with CPLR 204 (a), is RPAPL 1301 (3), which provides that, while an action for a mortgage debt “is pending or after final judgment for the plaintiff therein, no other action shall be commenced or maintained to recover any part of the mortgage debt, without leave of the court in which the former action was brought.” The purpose of RPAPL 1301 (3) is “to shield the mortgagor from the expense and annoyance of two independent actions at the same time with reference to the same debt … . … [P]laintiff established that the statute was tolled during the pendency of the first foreclosure action, from May 2010 to October 2013. Citimortgage, Inc. v Ramirez, 2020 NY Slip Op 07970, Third Dept 12-24-20

 

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THE BANK DID NOT PRESENT ADMISSIBLE EVIDENCE OF DEFENDANTS’ DEFAULT IN THIS FORECLOSURE ACTION (SECOND DEPT).

The Second Department, reversing Supreme Court, determined the bank did not present admissible evidence of defendants’ default in this foreclosure action:

… [T]he plaintiff failed to establish, prima facie, a default in payment by Vanterpool and Chalas [defendants]. While the plaintiff submitted an affidavit by someone with personal knowledge of the plaintiff’s loan servicer’s business practices and procedures, the affiant failed to submit any business record to substantiate the alleged default … . Further, “[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 Trust, N.A. v Vanterpool, 2020 NY Slip Op 07946, Second Dept 12-23-20

 

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THE BANK PRESENTED INADMISSIBLE EVIDENCE OF STANDING TO BRING THE FORECLOSURE ACTION (SECOND DEPT).

The Second Department, reversing Supreme Court, determined the bank did not submit admissible evidence of standing to bring the foreclosure action:

While a witness may always testify as to matters within his or her personal knowledge through personal observation … , here, Klein [plaintiff’s counsel] did not provide any factual details concerning when Cohn & Roth [Klein’s lawfirm] came into physical possession of the consolidated note and allonges … . Modlin’s [an authorized signatory’s] affidavit was similarly deficient inasmuch as she failed to identify the documents reviewed or any basis for the conclusion that the consolidated note and allonges had been in the plaintiff’s possession and were sent to Cohn & Roth prior to the commencement of the action. Under these circumstances, the statements made by Klein and Modlin constituted inadmissible hearsay and lacked probative value … . U.S. Bank Trust N.A. v Auxila, 2020 NY Slip Op 07945, Second Dept 12-23-20

 

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PLAINTIFF BANK DID NOT DEMONSTRATE STANDING WITH ADMISSIBLE EVIDENCE AND THE LOST NOTE AFFIDAVIT WAS INSUFFICIENT (SECOND DEPT).

The Second Department, reversing Supreme Court, determined the bank did not demonstrate standing with admissible evidence and the lost note affidavit was insufficient:

… [T]he only business record entered into evidence to support DeCaro’s [plaintiff’s loan verification consultant’s] testimony that the plaintiff was in possession of the note on the date of commencement was plaintiff’s Exhibit 7, a computer screen printout of a database tracking system. However, plaintiff’s Exhibit 7 failed to evince the facts for which it was relied upon. More specifically, while DeCaro contended that the document demonstrated that Wells Fargo, as custodian for the plaintiff, received the note July 16, 2005, and that the note was in Wells Fargo’s vault from July 2005 until December 2009, the document, in itself, failed to establish those facts.

Further, pursuant to UCC 3-804, which is intended to provide a method for recovering on instruments that are lost, destroyed, or stolen, a plaintiff is required to submit due proof of the plaintiff’s ownership of the note, the facts which prevent the plaintiff from producing the note, and the note’s terms … . Here, the lost note affidavit, which failed to establish when the note was acquired and failed to provide sufficient facts as to when the search for the note occurred, who conducted the search, or how or when the note was lost, failed to sufficiently establish the plaintiff’s ownership of the note … . HSBC Bank USA, N.A. v Gilbert, 2020 NY Slip Op 07874, Second Dept 12-23-20

 

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