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DEFENDANT DID NOT DEMONSTRATE THE FOREIGN CORPORATION WAS DOING BUSINESS IN NEW YORK WITHOUT AUTHORIZATION; DEFENDANT’S MOTION TO DISMISS THE COMPLAINT IN THIS FORECLOSURE ACTION ON THAT GROUND SHOULD NOT HAVE BEEN GRANTED (SECOND DEPT).

The Second Department, reversing Supreme Court, determined a defendant in this foreclosure action brought by a foreign corporation did not demonstrate the corporation was doing business in New York without authorization. Therefore defendant’s motion to dismiss the complaint on that ground should not have been granted:

“Business Corporation Law § 1312(a) constitutes a bar to the maintenance of an action by a foreign corporation found to be doing business in New York without . . . the required authorization to do business there” … . “The purpose of that section is to regulate foreign corporations which are doing business’ within the State, not . . . to enable the avoidance of contractual obligations” … . “[T]he party relying upon this statutory barrier bears the burden of proving that the corporation’s business activities in New York were not just casual or occasional, but so systematic and regular as to manifest continuity of activity in the jurisdiction”… . “[A]bsent proof establishing that the [subject corporation] is doing business in New York, it is presumed that [it] is doing business in [the] State of incorporation, and not in New York” … .

The defendant failed to establish, prima facie, that “[the appellant] conducted continuous activities in [New York] essential to its corporate business” … . Therefore, “the presumption that [the appellant] does business, not in New York but in its State of incorporation has not been overcome” … . JPMorgan Chase Bank, N.A. v Didato, 2020 NY Slip Op 03903, Second Dept 7-15-20

 

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SUPREME COURT SHOULD NOT HAVE CONFIRMED THE REFEREE’S REPORT ABSENT A HEARING (SECOND DEPT).

The Second Department, reversing Supreme Court in this foreclosure action, determined the referee’s report should not have been confirmed in the absence of a hearing on notice to the property owner, TEP:

… [T]he Supreme Court should not have confirmed the referee’s report in the absence of a hearing on notice to TEP (see CPLR 4313 …). Although the notice accompanying the plaintiff’s proposed referee’s oath notified TEP of the due date for the submission of documents to the referee, it did not indicate that the submission of such papers would be in lieu of a hearing … . Further, the Supreme Court erred in rejecting TEP’s contention, raised in opposition to the plaintiff’s motion to confirm the referee’s report and for a judgment of foreclosure and sale, that ” [t]he referee’s findings with respect to the total amount due upon the mortgage were not substantially supported by the record inasmuch as the computation was premised upon unproduced business records'” … . Moreover, the referee’s report also failed to identify any documents or other sources upon which the referee based her finding that the mortgaged premises should be sold in one parcel … . HSBC Bank USA, N.A. v Tigani, 2020 NY Slip Op 03901, Second Dept 7-15-20

 

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PLAINTIFF BANK DID NOT DEMONSTRATE IT HAD STANDING TO BRING THE FORECLOSURE ACTION (SECOND DEPT).

The Second Department, reversing Supreme Court, determined plaintiff bank (US Bank) did not demonstrate it had standing to bring the foreclosure action:

A plaintiff has standing to maintain a mortgage foreclosure action where it is the holder or assignee of the underlying note at the time the action is commenced … . Here, the plaintiff established that Chase had possession of the note at issue at the time this action was commenced. However, the plaintiff failed to establish that Chase had the authority to act on its behalf at that time … . US Bank N.A. v Cusati, 2020 NY Slip Op 03943, Second Dept 7-15-20

 

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PLAINTIFF BANK DID NOT STRICTLY COMPLY WITH THE NOTICE PROVISIONS OF REAL PROPERTY ACTIONS AND PROCEEDINGS LAW (RPAPL) 1304 AND DID NOT DEMONSTRATE DEFENDANT HAD DEFAULTED IN THIS FORECLOSURE ACTION; THE DECISION ILLUSTRATES THE LEVEL OF STRICT COMPLIANCE WITH RPAPL 1304 WHICH IS REQUIRED (SECOND DEPT).

The Second Department, reversing Supreme Court, determined plaintiff bank was not entitled to summary judgment in this foreclosure action. Plaintiff did not demonstrate compliance with the notice provisions of Real Property Actions and Proceedings Law (RPAPL) 1304 and did not demonstrate defendant defaulted. The decision illustrates the level of strict compliance with RPAPL 1304 which is required by the courts:

The version of RPAPL 1304(2) as it existed at that time required that the 90-day notice provide a list of five housing counseling agencies “that serve the region where the borrower resides.” …

… Here, the notice prepared by the plaintiff listed, as one of the required five housing counseling agencies, an agency located more than 300 miles away from the defendants’ residence. … [I]t is the plaintiff’s burden, on its motion for summary judgment, to demonstrate its strict compliance with the applicable provisions of RPAPL 1304. By failing to submit evidence that the Watertown agency served the region wherein the defendants resided, the plaintiff failed to establish its prima facie entitlement to judgment as a matter of law and thus its motion for such relief should have been denied … . …

Additionally, the affidavit submitted by the plaintiff for the purpose of demonstrating that it properly served its 90-day notice did not specify that the notice was served in an envelope that was separate from any other mailing or notice (see RPAPL 1304 [2]). While the plaintiff attempted to remedy this deficiency in its reply papers, even assuming that its reply affidavit may properly be considered … , that affidavit contained only a conclusory assertion that the mailing was done in a separate envelope, with no assertion by the affiant that she had any personal knowledge of the actual mailing or proof of a standard office mailing procedure designed to ensure that items are properly addressed and mailed … .

The plaintiff also failed to establish, prima facie, the defendants’ default in payment. While the affidavit submitted by the plaintiff made the requisite showing that the affiant was familiar with the plaintiff’s recordkeeping practices and procedures with respect to the defendants’ payment history, the affiant failed to submit any business record substantiating the alleged default. Conclusory affidavits lacking a factual basis are without evidentiary value … . USBank N.A. v Haliotis, 2020 NY Slip Op 03819, Second Dept 7-8-20

 

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PLAINTIFF DID NOT DEMONSTRATE COMPLIANCE WITH THE NOTICE PROVISIONS OF REAL PROPERTY ACTIONS AND PROCEEDINGS LAW (RPAPL) 1304 AND 1306 IN THIS FORECLOSURE ACTION; PROOF REQUIREMENTS EXPLAINED IN SOME DEPTH (SECOND DEPT).

The Second Department, reversing Supreme Court, determined the plaintiff loan services company (Aurora/Nationstar) did not demonstrate compliance with the notice requirements of Real Property Actions and Proceedings Law (RPAPL) 13O4 and 1306. Therefore, Aurora’s motion for summary judgment in this foreclosure action should not have been granted. The court, noting that “lack of notice’ may be raised at any time, explained defendant did not waive the “lack of notice” defense because defendant denied the plaintiff’s complaint-allegations of compliance and raised the issue in opposition to plaintiff’s motion for summary judgment. The Second Department further found defendant was not entitled to summary judgment because “lack of notice” was not demonstrated as a matter of law. The decision provides a valuable explanation of the proof requirements for compliance with RPAPL 1304 and 1306:

In support of its motions, Aurora submitted the affidavit of Jerrell Menyweather, a document execution specialist employed by Nationstar, along with a copy of a 90-day notice addressed to the defendant, and a proof of filing statement pursuant to RPAPL 1306 from the New York State Banking Department. Although Menyweather stated in the affidavit that the RPAPL notices were sent to the defendant at her last known address and the subject property, Menyweather did not have personal knowledge of the mailing, and Aurora failed to provide any documents to prove that the notices were actually mailed … . Aurora also failed to submit a copy of any United States Post Office document indicating that the notices were sent by registered or certified mail as required by the statute … . Furthermore, Menyweather did not aver that he was familiar with Aurora’s mailing practices and procedures, and therefore did not establish proof of a standard office practice and procedure designed to ensure that items are properly addressed and mailed … . Nationstar Mtge., LLC v Matles, 2020 NY Slip Op 03793, 7-8-20

 

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ATTEMPTS TO DE-ACCELERATE THE DEBT, INCLUDING VOLUNTARY DISCONTINUANCES AFTER THE DEATH OF THE DEFENDANT, WERE INEFFECTUAL, THE FORECLOSURE ACTION IS TIME-BARRED (THIRD DEPT).

The Third Department, over a two-justice concurrence, determined the statute of limitations began to run in 2009 when the mortgage debt was accelerated in this foreclosure action and the attempts to subsequently de-accelerate the debt after the death of the defendant, including voluntary discontinuances, were ineffectual. Therefore the action was time-barred:

With respect to the notices of discontinuance in the 2009 and 2013 actions, we note that we, as well as other Appellate Divisions, have held that the voluntary discontinuance of an action, without more, will not generally constitute an affirmative act that revokes a lender’s election to accelerate a debt … . * * *

In the 2009 action, plaintiff filed its notice of voluntary discontinuance roughly 13 months after decedent had passed away, without having sought substitution of a legal representative to act on behalf of decedent’s estate (see CPLR 1021; see also SCPA 1002, 1401, 1402 [1] [b]). Thus, as the action was stayed and there was no substitution of a proper defendant, the notice of voluntary discontinuance filed in the 2009 action was without effect. …  As for the notice of discontinuance filed in the 2013 action, plaintiff commenced that action against decedent, despite the fact that she had died more than two years earlier. As a result, the 2013 action was a nullity from its inception and the subsequent notice of voluntary discontinuance was void … .

We similarly find that, under the circumstances of this case, the July 2015 and September 2015 notices did not constitute affirmative acts that would notify decedent’s legal representative that the prior debt acceleration was revoked, that the debt was de-accelerated and that the loan was reinstated to installment payments. Irrespective of the content and substance of the July 2015 and September 2015 notices, plaintiff addressed the notices to decedent, who had been deceased for more than four years, and mailed them to the mortgaged property. The record reflects that the September 2015 letter, which was sent by both regular mail and certified mail, was returned as undeliverable. Beneficial Homeowner Serv. Corp. v Heirs at Large of Ramona E. Thwaits, 2020 NY Slip Op 03709, Third Dept 7-2-20

 

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REAL PROPERTY ACTIONS AND PROCEEDINGS LAW (RPAPL) 1304 NOTICE REQUIREMENTS NOT MET; PLAINTIFF BANK’S MOTION FOR SUMMARY JUDGMENT IN THIS FORECLOSURE ACTION SHOULD NOT HAVE BEEN GRANTED (SECOND DEPT).

The Second Department, reversing Supreme Court, determined plaintiff bank did not demonstrate compliance with the notice provisions of Real Property Actions and Proceedings Law (RPAPL) 1304. Therefore plaintiff’s motion for summary judgment in this foreclosure action should not have been granted:

… [T]he plaintiff failed to establish its entitlement to judgment as a matter of law with respect to compliance with the notice requirement of RPAPL 1304. Proper service of RPAPL 1304 notice containing the statutorily mandated content is a condition precedent to the commencement of the foreclosure action, and failure of a plaintiff to make this showing requires denial of its motion for summary judgment … . The lender must submit proof of mailing (such as an affidavit of service or domestic return receipts with attendant signatures) or an affidavit either from the individual who performed the actual mailing or an individual with personal knowledge of the lender’s standard office mailing procedure … . Here, the unsubstantiated and conclusory statement of the plaintiff’s attorney in an affidavit submitted in support of the motion that RPAPL 1304 notice was properly mailed to the defendant is insufficient to establish compliance with the statute as a matter of law … . Ventures Trust 2013-I-H-R by MCM Capital Partners, LLC v Williams, 2020 NY Slip Op 03561. Second Dept 6-24-20

 

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PLAINTIFF BANK DID NOT DEMONSTRATE COMPLIANCE WITH THE NOTICE OF DEFAULT PROVISIONS OF THE MORTGAGE AND THE NOTICE REQUIREMENTS OF REAL PROPERTY ACTIONS AND PROCEEDINGS LAW (RPAPL) 1304; PLAINTIFF’S MOTION FOR SUMMARY JUDGMENT SHOULD NOT HAVE BEEN GRANTED (SECOND DEPT).

The Second Department, reversing Supreme Court, determined plaintiff bank did not submit sufficient evidence of compliance with the notice-of-default provisions of the mortgage and did not demonstrate the loan was a reverse mortgage exempt from the notice requirement of Real Property Actions and Proceedings Law (RPAPL) 1304:

Although the plaintiff submitted a purported notice of default … , the plaintiff failed to submit an affidavit attesting to the mailing of the purported … notice, whether it was mailed at all, and if so, whether the mailing was by first class mail or, if otherwise, whether notice was actually delivered to [defendant’s] notice address, as required by the provisions in sections 15 and 22 of the mortgage agreement. …

… [T]he attorney’s affirmation submitted by the plaintiff which stated that the purported … notice was “in full compliance with the terms of the mortgage” was unsubstantiated and conclusory. Neither the attorney’s affirmation nor the copy of the purported … notice established “that the required notice was mailed by first class mail or actually delivered to the notice address if sent by other means, as required by the mortgage agreement” … . …

… [T]he plaintiff also failed to establish, as a matter of law, its compliance with the 90-day notice requirements of RPAPL 1304. “[P]roper service of RPAPL 1304 notice on the borrower or borrowers is a condition precedent to the commencement of a foreclosure action, and the plaintiff has the burden of establishing satisfaction of this condition” … . Deutsche Bank Natl. Trust Co. v Crimi, 2020 NY Slip Op 03376, Second Dept 6-17-20

 

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UNDER THE TERMS OF THE MORTGAGE, THE DEATH OF THE BORROWER DID NOT ACCELERATE THE DEBT; BECAUSE THE DEBT WAS NOT ACCELERATED THE INSTALLMENT PAYMENTS FOR THE SIX YEARS PRIOR TO THE COMMENCEMENT OF THE FORECLOSURE ACTION WERE STILL OWING AND THE ACTION WAS NOT BARRED BY THE STATUTE OF LIMITATIONS (FOURTH DEPT).

The Fourth Department, reversing Supreme Court, determined the foreclosure action should not have been dismissed as time-barred, noting that the death of the borrower did not accelerate the debt. Therefore the installment payments due during the six year prior to commencing the action were still owing:

An action to foreclose a mortgage is subject to a six-year statute of limitations (see CPLR 213 [4]). Here, the note provided that decedent agreed to repay the loan in monthly installments from September 2007 to August 2032. “[W]ith respect to a mortgage payable in installments, there are separate causes of action for each installment accrued, and the [s]tatute of [l]imitations [begins] to run, on the date each installment [becomes] due” … . Plaintiff commenced this foreclosure action on September 15, 2017. Therefore, recovery for the installments due within the six years prior to that date, i.e., September 15, 2011, is not barred by the statute of limitations. To the extent that plaintiff seeks recovery for installments due before that date, recovery is barred by the statute of limitations … . * * *

We reject defendants’ contention that the debt accelerated automatically upon decedent’s death. The mortgage provides that there is a default upon decedent’s death, but it does not provide that the death of decedent would automatically accelerate the debt. Rather, the mortgage provides that the lender may accelerate the debt upon a default and, here, defendants did not establish that plaintiff chose to accelerate the debt at any time before the complaint was filed … . Wilmington Sav. Fund Socy. FSB v Deliberto, 2020 NY Slip Op 03297, Fourth Dept 6-12-20

 

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BANK DID NOT PROVE COMPLIANCE WITH RPAPL 1303; BANK’S MOTION FOR SUMMARY JUDGMENT IN THIS FORECLOSURE ACTION SHOULD NOT HAVE BEEN GRANTED (SECOND DEPT).

The Second Department, reversing Supreme Court, determined the bank’s motion for summary judgment in this foreclosure action should not have been granted because the bank did not prove compliance with the notice provisions of Real Property Actions and Proceedings Law (RPAPL) 1303:

“Proper service of the notice required by RPAPL 1303 notice is a condition precedent to the commencement of a foreclosure action, and it is the plaintiff’s burden to show compliance with that statute” … .

Here, in support of its motion, the plaintiff submitted the process server’s affidavit indicating that a notice was served with the summons and complaint. However, the plaintiff did not submit a copy of the RPAPL 1303 notice allegedly served, and the process server made no averments that the notice served complied with the requirements of RPAPL 1303 concerning content and form. The plaintiff, therefore, failed to demonstrate, prima facie, that it complied with RPAPL 1303 … . Flagstar Bank, FSB v Hart, 2020 NY Slip Op 03217, Second Dept 6-10-20

 

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