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PLAINTIFF IN THIS FORECLOSURE ACTION DID NOT DEMONSTRATE COMPLIANCE WITH THE NOTICE REQUIREMENTS OF RPAPL 1304; EVIDENCE OFFERED FOR THE FIRST TIME IN REPLY CAN BE CONSIDERED IF THE OPPOSING PARTY HAS THE OPPORTUNITY TO RESPOND (SECOND DEPT).

The Second Department, reversing Supreme Court in this foreclosure action, determined plaintiff did not demonstrate it had complied with the notice requirements of RPAPL 1304. The court noted that evidence submitted in reply was properly considered because the opposing party had an opportunity to respond:

… [T]he plaintiff failed to establish, prima facie, that it strictly complied with RPAPL 1304. RPAPL 1304(1) provides that at least 90 days before a lender, an assignee, or a mortgage loan servicer commences an action to foreclose the mortgage on a home loan as defined in RPAPL 1304, such lender, assignee, or mortgage loan servicer must give notice to the borrower. RPAPL 1304(1) sets forth the requirements for the content of such notice and RPAPL 1304(2) further provides that such notice must be sent “by registered or certified mail and also by first-class mail” to the last known address of the borrower. “[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” … .

Here, even considering the affidavit of Victoria Bressner submitted by the plaintiff for the first time in opposition to the defendant’s cross motion, the plaintiff failed to establish strict compliance with RPAPL 1304. Bressner did not have personal knowledge of the purported mailing and did not make the requisite showing that she was familiar with the plaintiff’s mailing practices and procedures to establish “proof of a standard office practice and procedure designed to ensure that items are properly addressed and mailed” … . Moreover, the record indicates that the notices were not mailed by the plaintiff. LNV Corp. v Sofer, 2019 NY Slip Op 02860, Second Dept 4-17-19

 

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SUPREME COURT SHOULD NOT HAVE DISMISSED THE FORECLOSURE COMPLAINT IN THE ABSENCE OF THE PRECONDITIONS REQUIRED BY CPLR 3216 (SECOND DEPT).

The Second Department, reversing Supreme Court, determined that the court was without power to dismiss for neglect to prosecute because the preconditions in CPLR 3216 were not met. Supreme Court dismissed the complaint in this foreclosure action, finding that plaintiff bank had not complied with an oral directive issued at a status conference:

Following settlement conferences held pursuant to CPLR 3408, the action was released from the foreclosure settlement conference part without any resolution. In an order … (hereinafter the dismissal order), the Supreme Court directed dismissal of the action on the ground that the plaintiff failed to comply with an oral directive issued at a status conference … , to resume prosecution of the action. …[T]he plaintiff moved to vacate the dismissal order and to restore the action to the calendar. [T]he Supreme Court … denied the plaintiff’s motion. …

“A court may not dismiss an action based on neglect to prosecute unless the statutory preconditions to dismissal, as articulated in CPLR 3216, are met” … . Specifically, issue must have been joined, at least one year must have elapsed since joinder of issue, the defendant or the court must have served on the plaintiff a written demand to serve and file a note of issue within 90 days, and the plaintiff must have failed to serve and file a note of issue within the 90-day period (see CPLR 3216[b] …). Here, the Supreme Court was without power to direct dismissal of the action on the ground of failure to prosecute because the plaintiff was not served with a written demand to serve and file a note of issue within 90 days … . Citimortgage, Inc. v Ferrari, 2019 NY Slip Op 02847, Second Dept 4-17-19

 

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THE PROOF REQUIRED FOR SUMMARY JUDGMENT, FOR BOTH PLAINTIFFS AND DEFENDANTS, IN FORECLOSURE ACTIONS, ON WHETHER THERE HAS BEEN COMPLIANCE WITH THE RPAPL 1304 NOTICE PROVISIONS, EXPLAINED; PRIOR DECISIONS HOLDING THAT A DEFENDANT’S DENIAL OF RECEIPT OF NOTICE WAS SUFFICIENT SHOULD NO LONGER BE FOLLOWED (SECOND DEPT).

The Second Department, in a full-fledged opinion by Justice Iannacci, reversing Supreme Court, fleshed out the proof required for summary judgment, for both plaintiffs and defendants, with respect to compliance with the notice requirements of Real Property Actions and Proceedings Law (RPAPL). The court noted that prior decisions holding that a defendant’s denial of receipt of notice was enough should no longer be followed:

Here, the plaintiff failed to establish, prima facie, that it complied with RPAPL 1304. Although Crampton [assistant vice president of Specialized Loan Servicing, LLC] stated in her affidavit that the RPAPL 1304 notices were mailed by certified and regular first-class mail, and attached copies of those notices, the plaintiff failed to attach, as exhibits to the motion, any documents to prove that the mailing actually happened. There is no 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, while Crampton attested that she was in receipt of the prior loan servicer’s records, that she had personal knowledge of the business practices for mailing of notices by Wilmington, and that the 90-day notice was sent in compliance with RPAPL 1304, she did not attest to knowledge of the mailing practices of Bank of America, the entity that allegedly sent the notices to the defendant. * * *

Even in the face of a plaintiff’s failure to establish, prima facie, that a notice was properly mailed on a motion for summary judgment on the complaint, this Court has held that a defendant still has to meet its burden, on a cross motion for summary judgment dismissing the complaint, of establishing that the condition precedent was not fulfilled … . Here, the defendant provided no particulars supporting her claim that Bank of America never mailed the RPAPL 1304 notice to her last known address. The defendant only stated that she never received the notice. The defendant did not confirm that she still lived at the address shown on the notice on the date it was purportedly mailed, that she had been receiving other mail at that address, and that she was never contacted by the United States Post Office about mail for which she was required to sign. We hold that a simple denial of receipt, without more, is insufficient to establish prima facie entitlement to judgment as a matter of law dismissing the complaint for failure to comply with the requirements of RPAPL 1304. To the extent that our prior decisions are to the contrary, they should no longer be followed. Citibank, N.A. v Conti-Scheurer, 2019 NY Slip Op 02846, Second Dept 4-17-19

 

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DENIAL OF DEFENDANT’S MOTION TO VACATE HIS DEFAULT IN THIS FORECLOSURE ACTION DID NOT PRECLUDE DEFENDANT’S MOTION TO DISMISS BASED UPON PLAINTIFF BANK’S FAILURE TO MOVE FOR A JUDGMENT OF FORECLOSURE WITHIN ONE YEAR AS REQUIRED BY KINGS COUNTY LOCAL RULE 8 (SECOND DEPT).

The Second Department, reversing Supreme Court, determined the denial defendant’s motion to vacate a default judgment did not preclude defendant’s motion to dismiss the foreclosure action based upon plaintiff bank’s failure to comply with Rule 8 (Kings County Supreme Court Uniform Civil Rules) :

In August 2013, the plaintiff commenced this mortgage foreclosure action against the defendant Andy McAlpin (hereinafter the defendant) and others. The defendant did not answer or appear in the action, and in February 2014, the plaintiff moved, inter alia, for leave to enter a default judgment and for an order of reference. In an order dated October 24, 2014, the Supreme Court granted the plaintiff’s motion. The plaintiff did not move for a judgment of foreclosure and sale, and in May 2016, the defendant moved, inter alia, pursuant to CPLR 5015(a)(4) to vacate the order of reference and to dismiss the complaint insofar as asserted against him on the ground that he had not been served with the summons and complaint, for leave to serve a late answer, and to dismiss the complaint on the ground that the plaintiff failed to comply with Part F, rule 8, of the Kings County Supreme Court Uniform Civil Term Rules (hereinafter Rule 8). Rule 8 requires a plaintiff in a foreclosure action to file a motion for a judgment of foreclosure within one year of entry of the order of reference. …

Contrary to the Supreme Court’s determination, the defendant was not precluded from seeking relief under Rule 8 by the denial of that branch of his motion which was to vacate his default … . Bank of Am., N.A. v McAlpin,b2019 NY Slip Op 02843, Second Dept 4-17-19

 

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PURSUANT TO AN EXCEPTION IN 22 NYCRR 202.5-b, USING THE NYSCEF ELECTRONIC FILING SYSTEM DID NOT CONSTITUTE PROPER SERVICE OF A NOTICE OF ENTRY ON DEFENDANTS, THE TIME FOR DEFENDANTS TO ANSWER THEREFORE NEVER STARTED TO RUN AND DEFENDANTS WERE NOT IN DEFAULT (SECOND DEPT).

The Second Department, reversing Supreme Court, determined that a notice of entry in this foreclosure action, although the NYSCEF electronic filing system was used, was not properly served and therefore defendants’ time to answer never started running and defendants were not in default:

Contrary to the determination of the Supreme Court, since the plaintiff never served the Dedvukaj defendants with notice of entry of the June 2015 order denying their motion to dismiss the complaint, their answer was timely served, as their time to answer never started to run (see CPLR 3211[f] …). …

Pursuant to 22 NYCRR 202.5-b, the court rule governing electronic filing for the Supreme Court, a party may serve an interlocutory document upon another party by filing the document electronically: “Upon receipt of [the] interlocutory document, the NYSCEF site shall automatically transmit electronic notification to all e-mail service addresses in such action . . . . Except as provided otherwise in subdivision (h)(2) of this section, the electronic transmission of the notification shall constitute service of the document on the e-mail service addresses identified therein” … .

Subdivision (h)(2), which appears in a subsection entitled “Entry of Orders and Judgments and Notice of Entry,” provides, in relevant part: “[a] party may serve [an order or judgment and written notice of its entry] electronically by filing them with the NYSCEF site and thus causing transmission by the site of notification of receipt of the documents, which shall constitute service . . . by the filer. In the alternative, a party may serve a copy of the order or judgment and written notice of its entry in hard copy by any method set forth in CPLR 2103(b)(1) to (6). If service is made in hard copy by any such method and a copy of the order or judgment and notice of its entry and proof of such hard copy service are thereafter filed with the NYSCEF site, transmission by NYSCEF of notification of receipt of those documents shall not constitute additional service of the notice of entry on the parties to whom the notification is sent” … . JBBNY, LLC v Dedvukaj, 2019 NY Slip Op 02692, Second Dept 4-10-19

 

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WHETHER THE ENDORSEMENT WAS AFFIXED TO THE NOTE, A STANDING REQUIREMENT, WAS NOT RAISED BY THE DEFENDANTS ON APPEAL AND THEREFORE COULD NOT BE CONSIDERED BY THE APPELLATE COURT (SECOND DEPT).

The Second Department, over a partial dissent, determined that the plaintiff had established standing to bring the foreclosure action. The issue whether the endorsement was affixed to the note, the issue raised by the dissent, was not raised on appeal, according to the majority, and therefore could not be considered:

We disagree with our dissenting colleague on the issue of whether the plaintiff established that the note was properly endorsed pursuant to the Uniform Commercial Code and, thus, validly transferred to it. The defendants’ brief, at most, mentions in passing UCC 3-202(1) along with other boilerplate legal discussion, but then relates the UCC provision to an argument that the plaintiff failed to prove the authority of the assignor to negotiate the note. Further, in challenging the endorsement itself, the defendants focus in their brief on the plaintiff’s failure to establish the signature and authority of David A. Spector, whose name is on the endorsement, and the plaintiff’s failure to prove the chain of assignments, but the defendants do not actually raise the issue of the affixation of the endorsement to the note. The defendants’ brief focuses almost entirely upon the enforceability of the assignment, not the issue of physical possession of the note or endorsement. To the extent physical possession is argued by the defendants, their argument is that the plaintiff failed to prove when the note was received and the circumstances of its delivery, without raising any issue about this particular endorsement being firmly affixed to the note. As a result, the dispositive basis of the dissent, having not been argued on appeal, is simply not before us to consider. It is not appropriate for us to decide an appeal “on a distinct ground that we winkled out wholly on our own” … , where no party has had notice and an opportunity to be heard on this ground. Green Tree Servicing, LLC v Molini, 2019 NY Slip Op 02686, Second Dept 4-10-19

 

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RECORDS SUBMITTED BY THE BANK DID NOT MEET THE REQUIREMENTS OF THE BUSINESS RECORDS EXCEPTION TO THE HEARSAY RULE, BANK’S MOTION FOR SUMMARY JUDGMENT SHOULD NOT HAVE BEEN GRANTED (SECOND DEPT). ​

The Second Department, reversing Supreme Court, determined the records submitted by the bank (Deutsche Bank) did not meet the requirements of the business records exception to the hearsay rule:

Here, in support of its motion, Deutsche Bank submitted the mortgage, the note, and the affidavit of Nicholas Collins, a vice president of Ocwen Loan Servicing, LLC (hereinafter Ocwen), Deutsche Bank’s loan servicer, in which Collins averred, inter alia, that the defendant defaulted by failing to make the payments due under the note and mortgage after January 1, 2008. The plaintiff also submitted a limited power of attorney dated June 7, 2012, which demonstrated that Ocwen was authorized to act on Deutsche Bank’s behalf. However, Deutsche Bank failed to demonstrate that the records relied upon by Collins, including those relating to the defendant’s alleged default, were admissible under the business records exception to the hearsay rule, since Collins, who was employed by Ocwen, did not attest that he was personally familiar with the record-keeping practices and procedures of the plaintiff (see CPLR 4518[a] … ). Thus, Collins failed to lay a proper foundation for admission of the records on which he relied, including the records concerning the defendant’s payment history, and therefore, his assertions based on those records were inadmissible … . Deutsche Bank Trust Co. Ams. v Blount, 2019 NY Slip Op 02500, Second Dept 4-3-19

 

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JUDGE’S SUA SPONTE DISMSSAL OF THE COMPLAINT IN THIS FORECLOSURE ACTION DEPRIVED PLAINTIFF OF NOTICE AND A CHANCE TO BE HEARD, A VIOLATION OF DUE PROCESS (SECOND DEPT).

The Second Department, reversing Supreme Court, determined the judge should not have, sua sponte, dismissed the complaint as abandoned without giving plaintiff a chance to be heard in this foreclosure action:

… [B]y notice of motion dated August 15, 2014, the plaintiff … moved, inter alia, to extend its time to serve a copy of the order of reference with notice of entry … , nunc pro tunc, to March 23, 2007 (hereinafter the second extension of time motion). In an order dated February 26, 2015 (hereinafter the February 2015 order), the Supreme Court denied the second extension of time motion, and, sua sponte, directed the dismissal of the complaint as abandoned, noting, inter alia, that “[t]he order of reference at issue was signed in 2007” and the appointed referee was no longer on the fiduciary list. …

The Supreme Court’s sua sponte determination to direct dismissal of the complaint deprived the plaintiff of notice and opportunity to be heard and amounted to a denial of the plaintiff’s due process rights (see CPLR 3216 … ). Accordingly, the court should have granted that branch of the plaintiff’s motion which was to vacate the February 2015 order. Chase Home Fin., LLC v Plaut, 2019 NY Slip Op 02494, Second Dept 4-3-19

 

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NOTE HOLDER’S COMPLIANCE WITH NOTICE REQUIREMENTS OF RPAPL 1304 NOT DEMONSTRATED, MOTION FOR SUMMARY JUDGMENT IN THIS FORECLOSURE ACTION SHOULD NOT HAVE BEEN GRANTED (SECOND DEPT).

The Second Department, reversing Supreme Court, determined respondent (the holder of the note) did not demonstrate compliance with the notice provisions of RPAPL 1304. Therefore respondent’s motion for summary judgment in this foreclosure action should not have been granted:

“[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” … . “The statute requires that such notice . . . be sent by registered or certified mail, and also by first-class mail, to the last known address of the borrower” … . …

The respondent, which submitted only a copy of the required notice, and did not submit any evidence that the notice was mailed in the manner required by the statute, failed to meet its prima facie burden with respect to the notice requirements of RPAPL 1304. Specifically, the respondent did not submit “an affidavit of service, [or] proof of mailing by the post office evincing that it properly served the defendant pursuant to RPAPL 1304 [by registered or certified mail and also by first-class mail to his last known address]” … , 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” … . Marchai Props., L.P. v Fu, 2019 NY Slip Op 02511, Second Dept 4-3-19

 

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NO PROOF NOTE WAS IN POSSESSION OF PLAINTIFF WHEN THE ACTION WAS COMMENCED, PLAINTIFF’S MOTION FOR SUMMARY JUDGMENT IN THIS FORECLOSURE ACTION SHOULD NOT HAVE BEEN GRANTED (FIRST DEPT).

The First Department, over a two justice dissent, reversing Supreme Court, determined the evidence of standing was insufficient and plaintiff’s motion for summary judgment in this foreclosure action should not have been granted. The majority held there was no proof the plaintiff was in possession of the note when the action was brought:

On or about September 17, 2014, plaintiff executed a power of attorney appointing Ocwen Loan Servicing, LLC (Ocwen) as its attorney-in-fact with power to enforce its rights with regard to loans included in the PSA [pooling and service agreement].

Two years after that, on October 19, 2016, plaintiff moved for summary judgment. Plaintiff submitted an affidavit by Kyle Lucas, an employee of a company whose indirect subsidiary is Ocwen. Lucas alleged that plaintiff had had physical possession of the note since June 6, 2007, but he failed to identify any document which provided the basis for his knowledge. A copy of defendant’s note, endorsed in blank … , was attached to plaintiff’s summary judgment motion. However, there is nothing in the record that proves when the note was physically delivered to plaintiff. Deutsche Bank Natl. Trust Co. v Guevara, 2019 NY Slip Op 02412, First Dept 3-28-19

 

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