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THE DOCTRINE OF THE LAW OF THE CASE PRECLUDED CONSIDERATION OF WHETHER THE BANK COMPLIED WITH THE NOTICE PROVISIONS OF RPAPL 1304; THE ISSUE HAD BEEN DETERMINED IN THE BANK’S FAVOR AT THE SUMMARY JUDGMENT STAGE AND SHOULD NOT HAVE BEEN RECONSIDERED, SUA SPONTE, WHEN THE BANK MOVED FOR A JUDGMENT OF FORECLOSURE (SECOND DEPT).

The Second Department, reversing Supreme Court, determined the doctrine of the law of the case precluded the court from sua sponte, considering whether the notice requirements of Real Property Actions and Proceedings Law (RPAPL) 1304 were met by the bank in this foreclosure action. The issue was determined in the bank’s favor in the initial summary judgment proceeding and should not have been considered again when the bank moved to confirm the referee’s report and for a judgment of foreclosure:

… [T]he defendants raised the issue of noncompliance with RPAPL 1304 in their answer, the plaintiff presented evidence of its compliance with the statute on its motion, inter alia, for summary judgment on the complaint, and, in granting that motion, the Supreme Court decided the issue in the plaintiff’s favor. Therefore, pursuant to the doctrine of law of the case … , the court was precluded from reconsidering the issue on the plaintiff’s motion to confirm the referee’s report and for a judgment of foreclosure and sale … . Moreover, since the defendants did not oppose the plaintiff’s motion to confirm the referee’s report and, therefore, did not raise the issue of the plaintiff’s noncompliance with RPAPL 1304 in opposition to the motion, the court should not have raised the issue sua sponte … . Wells Fargo Bank, N.A. v Morales, 2019 NY Slip Op 08891, Second Dept 12-11-19

 

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THE BANK DID NOT DEMONSTRATE COMPLIANCE WITH THE NOTICE PROVISIONS OF REAL PROPERTY ACTIONS AND PROCEEDINGS LAW (RPAPL) 13O4 (SECOND DEPT).

The Second Department, reversing Supreme Court, determined compliance with the notice provisions of Real Property Actions and Proceedings Law (RPAPL) 1304 was not demonstrated by the bank:

… [T]he affidavit of Theresia Ang, assistant vice president for the loan servicer, PHH Mortgage Corporation (hereinafter PHH), which was submitted in support of the motion, was insufficient to establish that the notice was sent to the defendants in the manner required by RPAPL 1304 … . While Ang attested that “a ninety (90) day pre-foreclosure notice” was sent to the defendants “by registered or certified and first class mail,” and attached a copy of the notice along with a proof of filing statement from the New York State Banking Department, “the plaintiff failed to attach, as exhibits to the motion, any documents to prove that the mailing actually happened” … . The plaintiff did not submit an affidavit of service, or proof of mailing by the post office evincing that it served the defendants pursuant to RPAPL 1304 by registered or certified mail and also by first-class mail to their last known address … . Moreover, while Ang attested that she had personal knowledge of the records maintained in PHH’s electronic record keeping system, the plaintiff failed to submit 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” … . KeyBank N.A. v Barrett, 2019 NY Slip Op 08835, Second Dept 12-11-19

 

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TIME TO SERVE DEFENDANT, WHO LIVED IN INDIA, IN THIS FORECLOSURE ACTION WAS PROPERLY EXTENDED IN THE INTEREST OF JUSTICE BUT SUPREME COURT SHOULD NOT HAVE DIRECTED AN ALTERNATIVE METHOD OF SERVICE, CRITERIA EXPLAINED (SECOND DEPT).

The Second Department, modifying Supreme Court, determined the time for serving defendant (Kothary), who lived in India, in this foreclosure action was properly extended in the interest of justice pursuant to CPLR 306-b. But Supreme Court should not have directed an alternative method of service (service upon the defendant’s attorney) pursuant to CPLR 308 (5):

… [W]e agree with the Supreme Court’s determination granting, in the interest of justice, that branch of the plaintiff’s motion which was pursuant to CPLR 306-b to extend the time to serve the summons and complaint upon Kothary. The plaintiff established, among other things, that the action was timely commenced, and that service was timely attempted and was perceived by the plaintiff to have been within the 120-day period but was subsequently found to have been defective … . Additionally, the plaintiff demonstrated that it has a potentially meritorious cause of action, and that there was no identifiable prejudice to Kothary as a consequence of the delay in service … . …

However, the Supreme Court improvidently exercised its discretion in granting that branch of the plaintiff’s motion which was pursuant to CPLR 308(5) to direct an alternative method for service of process by permitting service upon Kothary’s attorney. “CPLR 308(5) vests a court with discretion to direct an alternative method for service of process when it has determined that the methods set forth in CPLR 308(1), (2), and (4) are impracticable” … . “[A] plaintiff seeking to effect expedient service must make some showing that the other prescribed methods of service could not be made” … . Here, at the hearing, Kothary provided the address where he resides in New Delhi … , and the plaintiff failed to submit any evidence that effectuating service in India by any of the authorized methods would have been unduly burdensome … . “That [Kothary] resided in a foreign country did not, by itself, relieve the plaintiff of [its] obligation to make a reasonable effort to effectuate service in a customary manner before seeking relief pursuant to CPLR 308(5)” … . JPMorgan Chase Bank, N.A. v Kothary, 2019 NY Slip Op 08832, Second Dept 12-11-19

 

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THE REFEREE’S REPORT, WHICH IS MERELY ADVISORY AND IS NOT BINDING ON THE COURT, SHOULD NOT HAVE BEEN ACCEPTED BY THE COURT BECAUSE IT WAS BASED UPON BUSINESS RECORDS THAT WERE NOT PROVIDED TO THE REFEREE (SECOND DEPT).

The Second Department, reversing Supreme Court, determined the referee’s report should not have been accepted because it was based upon business records which were not in evidence:

… Supreme Court should have granted that branch of the defendant’s cross motion which was to reject the referee’s report. “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” … . “The referee’s findings and recommendations are advisory only and have no binding effect on the court, which remains the ultimate arbiter of the dispute” … .

Here, in addition to the outstanding principal amount of the loan, along with accrued interest and charges, the referee included $507,095.35 in “Tax Disbursements” and $27,705.00 in “Hazard Insurance Disbursements” as part of the total amount due to the plaintiff. The defendant correctly objected to the inclusion of these disbursements on the ground that they were calculated based on business records that were never produced by the plaintiff or submitted to the referee (see CPLR 4518[a] …). HSBC Bank USA, N.A. v Cherestal, 2019 NY Slip Op 08660, Second Dept 12-4-19

 

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PLAINTIFF BANK DID NOT DEMONSTRATE COMPLIANCE WITH THE NOTICE PROVISIONS OF REAL PROPERTY ACTIONS AND PROCEEDINGS LAW (RPAPL) 1304 (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:

… [T]he plaintiff failed to establish, prima facie, that it complied with RPAPL 1304 … . Although Menyweather [an assistant secretary employed by Nationstar Mortgage LLC, the plaintiff’s loan servicer] stated in his affidavit that the RPAPL 1304 notices were mailed by regular and certified mail, and attached copies of the notices, the plaintiff failed to attach, as exhibits to the motion, any documents establishing that the notices were actually mailed … . The plaintiff failed to submit a copy of any United States Post Office document indicating that the notice was sent by registered or certified mail as required by the statute … . Further, although Menyweather attested that he had personal knowledge of the loan servicer’s records, and that those records included the records of the prior servicer, Bank of America, Menyweather did not attest to knowledge of the mailing practices of Bank of America, the entity that allegedly sent the 90-day notices to the defendant … . Since the plaintiff failed to provide evidence of the a ctual mailing, or evidence of a standard office mailing procedure designed to ensure that the items were 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 … . HSBC Bank USA, N.A. v Sawh, 2019 NY Slip Op 08556, Second Dept 11-27-19

 

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PLAINTIFF BANK DID NOT SUBMIT SUFFICIENT PROOF OF ITS STANDING TO BRING THE FORECLOSURE ACTION (SECOND DEPT).

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

… [W]hile the plaintiff alleged that the note had been endorsed to it, the plaintiff failed to submit sufficient evidence to demonstrate that a copy of the note with the endorsement was attached to the complaint. The only copy of the complaint that appears in the record before us was submitted as an exhibit in support of Williams’s [defendant’s] motion, and the version of the note accompanying that copy of the complaint did not include the endorsement. The plaintiff’s attempt to establish standing through the submission of the affidavit of Morgan Battle Ames, a contract management coordinator for the plaintiff’s loan servicer, was also insufficient. Ames stated that she had “personal knowledge of the stated facts and circumstances and books and records maintained by [the loan servicer],” and that the “information in this affidavit is taken from [the loan servicer’s] business records,” which were “recorded by persons with personal knowledge of the information in the business record.” Since Ames failed to attest that she was personally familiar with the record-keeping practices and procedures of the entity that generated the subject business records, she failed to demonstrate … . HSBC Bank USA, N.A. v Williams, 2019 NY Slip Op 08554, Second Dept 11-27-19

 

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DEFICIENCIES IN THE BANK’S PROOF OF DEFAULT, STANDING AND THE AMOUNT OWED COULD NOT BE CURED BY SUBMITTING ADDITIONAL PROOF IN THE REPLY PAPERS IN THIS FORECLOSURE ACTION (SECOND DEPT).

The Second Department, reversing Supreme Court, determined plaintiff bank did not submit sufficient proof of defendants’ default, standing or the amount owed, and the deficiencies could not be cured by a second affidavit submitted in reply:

… [T]he plaintiff submitted the affidavit of its assistant vice president, Keith Weinkauf. As to the defendants’ alleged default, Weinkauf stated that the defendants “fail[ed] to make the full payment due on the [m]aturity [d]ate” of the note. On the issue of standing, Weinkauf averred that “[e]ffective March 31, 2016, Montauk Credit Union merged into Bethpage Federal Credit Union.” Further, with respect to the amount owed by the defendants, Weinkauf stated that the current unpaid principal balance due on the note was $58,165.61, plus interest, late charges, and fees. However, apart from producing a copy of the note itself, Weinkauf submitted no evidence in admissible form with his affidavit to establish the existence of a default, the plaintiff’s standing, or the calculation of the unpaid amount owed by the defendants … . Although the plaintiff later submitted, with its reply papers, a second affidavit from Weinkauf, along with supporting documentary evidence, to establish its standing, the plaintiff could not, under the circumstances presented, rely on the second affidavit to correct deficiencies inherent in the original one … . Bethpage Fed. Credit Union v Luzzi, 2019 NY Slip Op 08550, Second Dept, 11-27-19

 

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FEDERAL BANKRUPTCY STAY TOLLED THE STATUTE OF LIMITATIONS IN A FORECLOSURE ACTION COMMENCED BEFORE THE STAY WENT INTO EFFECT (CT APP).

The Court of Appeals, in a full-fledged opinion by Judge Garcia, over a three-judge dissent, determined an automatic bankruptcy stay tolls the statute of limitations where a party has a pending action at the time the stay was imposed:

New York law tolls the statute of limitations where “the commencement of an action has been stayed by a court or by statutory prohibition” (CPLR 204 [a]). Federal bankruptcy law automatically stays the commencement or continuation of any judicial proceedings against a debtor upon the filing of a bankruptcy petition (see 11 USC § 362 [a]). We must determine whether the bankruptcy stay qualifies as a “statutory prohibition” under CPLR 204 (a), and, if so, whether a party may later avail itself of the toll where, at the time the stay was imposed, that party had a pending action asserting the same claim. … [W]e answer yes to both questions … . * * *

CPLR 204 (a) provides, “[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 result here depends on our reading of the term “commencement.”

Plaintiff argues that it is impossible for defendant to have been prohibited from “commencing” an action because a foreclosure action had been commenced prior to plaintiff’s bankruptcy filing. Application of plaintiff’s rule would be as follows: Because defendant filed the first foreclosure claim and defendant responded by filing a bankruptcy petition, invoking the automatic stay, commencement of that first action was not “stayed” under the statute and the toll is inapplicable. And when defendant filed a second foreclosure action, and plaintiff again responded by again filing a bankruptcy petition that invoked the automatic stay, “commencement” of that second action was not stayed, once again making the toll inapplicable … . * * *

Neither this Court nor the Legislature has restricted the term “commencement” to the first time a party files a complaint asserting a cause of action; instead the term may also include the commencement of subsequent actions asserting the same claim … . Lubonty v U.S. Bank Natl. Assn.., 2019 NY Slip Op 08520, CtApp 11-25-19

 

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A PERSON NOT NAMED ON THE NOTE AND MORTGAGE IS NOT ENTITLED TO RPAPL 1304 NOTICE OF THE FORECLOSURE ACTION, NOTWITHSTANDING CORRESPONDENCE REQUESTING THAT HE BE ADDED TO THE DOCUMENTS AS A BORROWER (THIRD DEPT).

The Third Department, reversing Supreme, determined that a person who was not named as a borrower on the note and mortgage was not entitled to notice of the foreclosure action pursuant to RPAPL 1304. The plaintiff mortgage company’s motion for summary judgment should have been granted:

The record contains correspondence that reveals that a representative from Monroe Title, the title insurer for PHH Mortgage, recognized that Robert Johnson, not Brad Johnson, was the party making all payments on the mortgage. …The record also contains two letters … , on Robert Johnson’s behalf, to PHH Mortgage representative …, wherein [the writer] requests that the mortgage be modified to list Robert Johnson as the borrower. However, despite these communications, the modification did not occur and Brad Johnson continued to be the sole signatory on both instruments. Inasmuch as it is evident from the record that Brad Johnson is the only individual listed as a borrower on all relevant documents, including the note and mortgage, Robert Johnson was not a borrower and was not entitled to RPAPL 1304 notices  … . Federal Natl. Mtge. Assn. v Johnson, 2019 NY Slip Op 08472. Third Dept 11-21-19

 

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JUDGE SHOULD NOT HAVE DENIED, SUA SPONTE, PLAINTIFF’S MOTION FOR A JUDGMENT OF FORECLOSURE ON A GROUND NOT RAISED BY ANY PARTY (SECOND DEPT).

The Second Department, reversing Supreme Court, determined the judge should not have, sua sponte, denied plaintiff’s motion for a judgment of foreclosure on a ground not raised by the parties:

… [T]he Supreme Court should not have denied its motion for a judgment of foreclosure and sale upon finding that DLJ [plaintiff] failed to show that the defendants were properly served. The defendants did not oppose DLJ’s motion on any ground, including lack of personal jurisdiction. Therefore, the court should not have, sua sponte, raised the issue of the propriety of service …

Moreover, DLJ demonstrated its entitlement to a judgment of foreclosure and sale by submitting evidence establishing the merits of its unopposed motion and the referee’s findings and report … . DLJ Mtge. Capital, Inc. v Ramnarine, 2019 NY Slip Op 08392, Second Dept 11-20-19

 

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