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PLAINTIFF DID NOT DEMONSTRATE COMPLIANCE WITH THE NOTICE OF DEFAULT PROVISION OF THE MORTGAGE; PLAINTIFF’S MOTION FOR SUMMARY JUDGMENT IN THIS FORECLOSURE ACTION SHOULD NOT HAVE BEEN GRANTED (SECOND DEPT).

The Second Department, reversing Supreme Court, determined that the plaintiff did not demonstrate compliance with the notice of default provision in the mortgage. Therefore, the plaintiff’s motion for summary judgment in this foreclosure action should not have been granted:

… [T]he plaintiff failed to establish, prima facie, that it complied with the condition precedent contained in section 22 of the mortgage agreement regarding the notice of default. The plaintiff’s submissions did not establish that the notice was sent by first class mail or actually delivered to the notice address if sent by other means, as required by the terms of the mortgage agreement … . PNMAC Mtge. Opportunity Fund Invs., LLC v Torres, 2019 NY Slip Op 06523, Second Dept 9-11-19

 

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MORTGAGE WAS NOT ACCELERATED UNTIL THE FORECLOSURE ACTION WAS COMMENCED IN OCTOBER 2016; ACTION FOR THE INSTALLMENT PAYMENTS MISSED DURING THE SIX YEARS PRIOR TO OCTOBER 2016 IS TIMELY (SECOND DEPT).

The Second Department, reversing Supreme Court, determined the mortgage was not accelerated until the foreclosure action was commenced in October, 2016. Therefore the action was not time-barred, except for the mortgages payments due but not paid more than six years prior to October 2016 (missed payments prior to October 2010):

… [C]ontrary to the defendant’s contention, he did not establish that the complaint should be dismissed on statute of limitations grounds through the notices sent to the defendant in February 2009 and May 2009, as those notices did not accelerate the mortgage. The notices indicated that acceleration was a possible future event, but did not constitute an exercise of the mortgage’s acceleration clause … . Rather, the mortgage was only accelerated in October 2016, when the plaintiff served the foreclosure complaint on the defendant seeking immediate payment of the balance of the principal indebtedness. Thus, the Supreme Court should not have granted dismissal of the complaint in its entirety as time-barred. Specifically, the defendant failed to show that the causes of action in the complaint, insofar as they relate to unpaid mortgage installments which accrued within the six-year period immediately preceding the plaintiff’s October 2016 commencement of this foreclosure action, to wit, the unpaid installments which accrued on or after October 6, 2010, were time-barred … .

However, where, as here, the mortgage was payable in installments, there are “separate causes of action for each installment accrued, and the Statute of Limitations [begins] to run, on the date each installment [becomes] due” … . Therefore, since the plaintiff alleged that the defendant made his last payment on mortgage in January 2009 and this action was not commenced until October 6, 2016, the defendant established that any unpaid installments of the mortgage which accrued before the six-year period prior to the plaintiff’s commencement of this mortgage foreclosure action, to wit, unpaid installments from January 2009 through October 5, 2010, are time-barred … . Ditech Fin., LLC v Reiss, 2019 NY Slip Op 06208, Second Dept 8-21-19

 

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THERE WERE NO GROUNDS TO DISTURB THE FACTUAL FINDINGS MADE BY THE JUDGE IN THIS BENCH TRIAL OF A FORECLOSURE ACTION, TWO DISSENTERS ARGUED THE FINDINGS WERE AGAINST THE WEIGHT OF THE EVIDENCE (FIRST DEPT).

The First Department, over a two-justice dissent, determined that the evidence at the bench trial in this foreclosure proceeding supported the judge’s conclusion that plaintiff bank was not the cause of defendant’s inability to obtain financing to payoff the mortgage pursuant to a settlement agreement. The dissenters argued the trial judge’s findings were against the weight of the evidence, primarily because the judge found defendant’s testimony to be “honest and accurate.” The key issue in the appeal was whether there were sufficient grounds to disturb the  judge’s factual findings:

… [W]e perceive no basis on which to disturb the trial court’s determination. As articulated by the Court of Appeals, the standard of review on an appeal from a decision based on findings of fact, resting in large measure on determinations of the credibility of witnesses, made by the court after a bench trial, is as follows:

“[T]he decision of the fact-finding court should not be disturbed upon appeal unless it is obvious that the court’s conclusions could not be reached under any fair interpretation of the evidence, especially when the findings of fact rest in large measure on considerations relating to the credibility of witnesses” (Thoreson v Penthouse Intl., 80 NY2d 490, 495 [1992] …).

Supreme Court’s rejection of defendant’s claim — a claim based on testimony not only lacking support in the contemporaneous documentary evidence, but inconsistent with that evidence — more than passes muster under this highly deferential standard. Security Pac. Natl. Bank v Evans, 2019 NY Slip Op 06138, First Dept 8-13-19

 

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MOTION TO QUASH SUBPOENA ISSUED TO ATTORNEY WHO REPRESENTED THE ORIGINAL BORROWERS AGAINST PROPERTY SUBJECT TO FORECLOSURE PROCEEDINGS SHOULD NOT HAVE BEEN QUASHED, CIVIL CONTEMPT ACTION AGAINST THE ATTORNEY SHOULD NOT HAVE BEEN DISMISSED, CRITERIA FOR BOTH TYPES OF PROCEEDINGS EXPLAINED (SECOND DEPT).

The Second Department determined the subpoona issued by the current owners of property subject to a foreclosure action (the Frankels) to the attorney (Satran) who represented the parties who initially took out the loan (the Confinos) should not have been quashed, the action for civil contempt against the attorney should not have been dismissed, and attorney-client privilege could only be asserted at a subsequent deposition:

“A party or nonparty moving to quash a subpoena has the initial burden of establishing either that the requested disclosure is utterly irrelevant to the action or that the futility of the process to uncover anything legitimate is inevitable or obvious'” … . ” Should the [movant] meet this burden, the subpoenaing party must then establish that the discovery sought is material and necessary to the prosecution or defense of [the] action'” … .

Here, Satran failed to meet his initial burden of demonstrating either that the requested disclosure was “utterly irrelevant” to the action or that the “futility of the process to uncover anything legitimate is inevitable or obvious” … . * * *

Additionally, the Supreme Court should have granted the Frankels’ motion to hold Satran in civil contempt for failure to comply with the subpoena by failing to appear for a deposition. “To prevail on a motion to hold another in civil contempt, the moving party must prove by clear and convincing evidence (1) that a lawful order of the court, clearly expressing an unequivocal mandate, was in effect, (2) that the order was disobeyed and the party disobeying the order had knowledge of its terms, and (3) that the movant was prejudiced by the offending conduct'” … . ” To satisfy the prejudice element, it is sufficient to allege and prove that the contemnor’s actions were calculated to or actually did defeat, impair, impede, or prejudice the rights or remedies of a party'” … .

Here, it was undisputed that Satran failed to comply with the subpoena by failing to appear for a deposition and that he had knowledge of the terms of the subpoena. Moreover, the Frankels demonstrated that Satran’s conduct prejudiced their right under CPLR 3101(a)(4) to obtain all information relevant and necessary to their defense of the present action and their cross claims against the Confinos … . Wells Fargo Bank, N.A. v Confino, 2019 NY Slip Op 06114, Second Dept 8-7-19

 

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BANK DID NOT SUBMIT SUFFICIENT PROOF OF A LOST NOTE AND COMPLIANCE WITH NOTICE REQUIREMENTS IN THIS FORECLOSURE ACTION; SUMMARY JUDGMENT SHOULD NOT HAVE BEEN GRANTED (SECOND DEPT).

The Second Department, modifying Supreme Court, determined the bank, inter alia,  did not demonstrate compliance with the RPAPL 1304 notice provisions and failed to submit sufficient proof of a lost note in this foreclosure action:

… [A]lthough the plaintiff came forward with evidence establishing that the note was assigned to it and establishing the note’s terms, the affidavit of lost note submitted in support of its motion failed to establish the facts that prevent the production of the original note (see UCC 3-804 …). Additionally, we note that Riley’s out-of-state affidavit lacked a certificate of conformity as required by CPLR 2309(c), although such defect by itself would not be fatal to the plaintiff’s motion … .

Further, the evidence submitted in support of the plaintiff’s motion failed to establish, prima facie, that the plaintiff strictly complied with RPAPL 1304. Proper service of the RPAPL 1304 notice containing the statutorily mandated content is a condition precedent to the commencement of a foreclosure action … . The plaintiff failed to submit an affidavit of service or any proof of mailing by the post office demonstrating that it properly served the defendant pursuant to the terms of the statute … . Contrary to the plaintiff’s contention, the affidavit of a representative of its loan servicer was insufficient to establish that the notice was sent to the defendant in the manner required by RPAPL 1304, as the representative did not provide evidence of a standard office mailing procedure and provided no independent evidence of the actual mailing … .

Likewise, the plaintiff failed to establish, prima facie, that it complied with the condition precedent contained in the mortgage requiring it to give notice of default prior to demanding payment in full … . U.S. Bank N.A. v Cope, 2019 NY Slip Op 06111, Second Dept 8-7-19

 

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PLAINTIFF LOAN SERVICING COMPANY WAIVED THE TIME OF THE ESSENCE PROVISION BY ITS RELENTLESS EFFORTS TO PREVENT THE FORECLOSURE SALE TO THE HIGHEST BIDDER (TO EXACT A HIGHER PRICE); THE SANCTIONS IMPOSED ON PLAINTIFF WERE NOT SUPPORTED BY A WRITTEN DECISION AS REQUIRED BY THE CONTROLLING REGULATION; SANCTIONS ASPECT REMITTED (FOURTH DEPT).

The Fourth Department determined plaintiff loan company waived the time of the essence provision in this foreclosure sale to the highest bidder, Fox, by its relentless attempts to prevent the sale from going forward (to exact a higher purchase price). The Fourth Department noted that the sanctions imposed upon plaintiff were not supported by a written decision as required by 22 NYCRR 130-1.1 and remanded for compliance with the regulation:

We reject plaintiff’s contention that the court erred in determining that Fox did not breach the time is of the essence clause. It is well settled that “[a] party may waive timely performance even where the parties have agreed that time is of the essence” … , and that such a waiver may be accomplished by the conduct of a party … . Here, we agree with the court that plaintiff’s relentless attempts to prevent the sale from going forward constituted a waiver of the time is of the essence clause.

We also reject plaintiff’s further contention that the court erred in determining that plaintiff engaged in frivolous conduct and in imposing sanctions for such conduct. We conclude that plaintiff’s conduct was “completely without merit in law and cannot be supported by a reasonable argument for an extension, modification or reversal of existing law[, and was] undertaken primarily to delay or prolong the resolution of the litigation” (22 NYCRR 130-1.1 [c] [1], [2] …). Nevertheless, we conclude that the court erred in failing to comply with 22 NYCRR 130-1.2 because “it failed to set forth in a written decision the conduct on which . . . the imposition [of sanctions] is based, the reasons why the court found the conduct to be frivolous, and the reasons why the court found the amount . . . imposed to be appropriate’ ” … . We therefore modify the order by vacating the fourth ordering paragraph and we remit the matter to Supreme Court for compliance with 22 NYCRR 130-1.2 … . Bayview Loan Servicing, LLC v Strauss, 2019 NY Slip Op 05866, Fourth Dept 7-31-1

 

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PLAINTIFF DID NOT DEMONSTRATE COMPLIANCE WITH THE NOTICE/MAILING REQUIREMENTS AND THEREFORE DID NOT DEMONSTRATE PERSONAL JURISDICTION OVER DEFENDANTS, THE REFEREE’S REPORT SHOULD NOT HAVE BEEN CONFIRMED (SECOND DEPT).

The Second Department, reversing Supreme Court, determined the referee’s report in this foreclosure action should not have been confirmed because plaintiff did not demonstrate compliance with the notice requirements:

… [T]he Supreme Court should not have confirmed the Referee’s report. The plaintiff failed to submit any evidence at the hearing of compliance with the mailing requirement of CPLR 308(2) and, thus, failed to demonstrate that personal jurisdiction had been obtained over the defendants … . Federal Natl. Mtge. Assn. v Puretz, 2019 NY Slip Op 05958, Second Dept 7-31-19

 

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THE BANK’S MOTION TO VACATE A DEFAULT JUDGMENT IN THIS FORECLOSURE ACTION SHOULD NOT HAVE BEEN GRANTED BECAUSE OF THE BANK’S UNEXCUSED FAILURE TO APPEAR AT A SCHEDULED CONFERENCE IN VIOLATION OF 22 NYCRR 202.27(c) (SECOND DEPT).

The Second Department, reversing Supreme Court, determined plaintiff bank’s unexcused failure to appear at a scheduled conference required denial of the bank’s motion to vacate a default judgment:

Although CPLR 3215(c) was not an appropriate ground upon which to dismiss the complaint because the plaintiff initiated proceedings for the entry of a judgment by moving for an order of reference within one year of the defendant’s default …, dismissal of the complaint was appropriate pursuant to 22 NYCRR 202.27(c) since the plaintiff failed to appear for the scheduled October 2012 conference.

A plaintiff seeking to vacate a default in appearing at a conference is required to demonstrate both a reasonable excuse for its default and a potentially meritorious cause of action (see CPLR 5015[a][1] … ). Although “[t]he determination of whether an excuse is reasonable is committed to the sound discretion of the motion court” … , the defaulting party must submit evidence in admissible form establishing both a reasonable excuse and a potentially meritorious cause of action or defense … .

Here, the plaintiff alleged only that the failure of its two prior attorneys to timely file the attorney affirmation in accordance with the January 2011 order caused the delay in prosecuting this action, and failed to proffer any evidentiary support therefor or any excuse for its failure to appear at the October 2012 conference. Moreover, the record reflects that the plaintiff did not take any action for almost four years to cure its default after the action was marked off the calendar. Since the plaintiff failed to demonstrate a reasonable excuse for its default … , we need not reach the issue of whether it had asserted a potentially meritorious cause of action … . Wells Fargo Bank, N.A. v McClintock, 2019 NY Slip Op 06015, Second Dept 7-31-19

 

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PLAINTIFF BANK WAS ENTITLED TO AN ORDER REQUIRING THE COUNTY CLERK TO RECORD A MORTGAGE, THE ORIGINAL OF WHICH HAD ALLEGEDLY BEEN LOST; AN ATTORNEY AFFIDAVIT IS AN APPROPRIATE VEHICLE FOR THE SUBMISSION OF DOCUMENTS IN ADMISSIBLE FORM (SECOND DEPT).

The Second Department, reversing Supreme Court, determined plaintiff bank was entitled to an order requiring the county clerk to accept a copy of a mortgage for recording (the original allegedly had been lost and was never recorded). The Second Department further determined that an attorney affidavit was an appropriate vehicle for the submission of the documents to be recorded, which were in admissible form:

The plaintiff established its prima facie entitlement to judgment as a matter of law on the first cause of action, which sought an order directing the Suffolk County Clerk to accept a copy of the mortgage for recording. The County Clerk has a statutory duty that is ministerial in nature to record a written conveyance if it is duly acknowledged and accompanied by the proper fee (see Real Property Law §§ 290[3]; 291; County Law § 525[1]). “Accordingly, the Clerk does not have the authority to refuse to record a conveyance which satisfies the narrowly-drawn prerequisites set forth in the recording statute” … . Here, the copy of the mortgage submitted on the motion, which is notarized, was subject to recording … . Contrary to the Supreme Court’s determination, the complaint adequately stated a cause of action for this relief … , and the plaintiff’s failure to submit an affidavit of someone with personal knowledge of the facts was not fatal to the motion. The affidavit or affirmation of an attorney, even if he or she has no personal knowledge of the facts, may serve as the vehicle for the submission of acceptable attachments which provide evidentiary proof in admissible form, e.g., documents and transcripts … . JPMorgan Chase Bank, N.A. v Wright, 2019 NY Slip Op 05966, Second Dept 7-31-19

 

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FORECLOSURE ACTION ABANDONED, BANK FAILED TO INITIATE DEFAULT JUDGMENT PROCEEDINGS WITHIN ONE YEAR (SECOND DEPT).

The Second Department, reversing Supreme Court, determined that plaintiff bank had abandoned the foreclosure action by failure to move for a default judgment within one year. The bank’s participation in mandatory settlement conferences did not constitute the initiation of an action for a default judgment:

CPLR 3215(c) provides, in part, that if the plaintiff fails to take proceedings for the entry of judgment within one year after the defendant’s default, “the court shall not enter judgment but shall dismiss the complaint as abandoned, without costs, upon its own initiative or on motion” … . “The language of CPLR 3215(c) is not, in the first instance, discretionary, but mandatory, inasmuch as courts shall’ dismiss claims … for which default judgments are not sought within the requisite one-year period, as those claims are then deemed abandoned” … . However, the failure to timely seek a default judgment may be excused if “sufficient cause is shown why the complaint should not be dismissed” … . To establish sufficient cause as required by CPLR 3215(c), a plaintiff must proffer a reasonable excuse for the delay in timely moving for a default judgment and demonstrate that it has a potentially meritorious cause of action … .

… [A]fter this action was released from the mandatory foreclosure settlement conference part in July 2016, the plaintiff was authorized to proceed with the prosecution of this action. However, despite the fact that the appellants failed to answer or otherwise appear in the action after being served with process, the plaintiff took no steps to initiate proceedings for the entry of a default judgment against the appellants. The plaintiff’s participation in the mandatory foreclosure settlement part conferences did not constitute the initiation of proceedings for the entry of a default judgment. Moreover, more than one year passed from the time that the plaintiff was authorized to resume prosecution of this action prior to the appellants moving in October 2017 to dismiss the complaint as abandoned …. In light of the plaintiff’s failure to meet its burden to show sufficient cause why the complaint should not be dismissed as abandoned, it is not necessary to address the issue of whether the plaintiff demonstrated that it had a potentially meritorious cause of action … . HSBC Bank USA, N.A. v Slone, 2019 NY Slip Op 05963, Second Dept 7-31-19

 

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