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PROOF OF STANDING DID NOT MEET THE REQUIREMENTS OF THE BUSINESS RECORDS EXCEPTION TO THE HEARSAY RULE (SECOND DEPT).

The Second Department, reversing Supreme Court, determined the evidence of standing did not meet the business record exception to the hearsay rule:

Here, since Thrasher [plaintiff’s loan officer] did not allege that she was personally familiar with the plaintiff’s record-keeping practices and procedures, a proper foundation for the admission of the records was not provided, rendering them inadmissible to establish that the subject note was possessed by or assigned to the plaintiff prior to the commencement of the action. Moreover, even if a proper foundation had been set forth in the Thrasher affidavit, Thrasher’s assertions as to the contents of the records is inadmissible hearsay to the extent that the records she purports to describe were not submitted with her affidavit. While 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 (seeCPLR 4518[a]…). Furthermore, although the plaintiff submitted an endorsed copy of the note in support of its motion for summary judgment, after having appended an unendorsed copy of the note to the complaint, the plaintiff failed to eliminate a triable issue of fact as to whether the plaintiff was in possession of the original note at the time the action was commenced … . U.S. Bank Natl. Assn. v 22 S. Madison, LLC, 2019 NY Slip Op 01635, Second Dept 3-6-19

 

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BANK’S FAILURE TO SUBMIT EVIDENCE WHICH MET THE CRITERIA OF THE BUSINESS RECORDS EXCEPTION TO THE HEARSAY RULE REQUIRED DENIAL OF THE BANK’S MOTION FOR SUMMARY JUDGMENT IN THIS FORECLOSURE ACTION, THE BANK’S FAILURE TO COMPLY WITH THE RPAPL 1304 NOTICE AND MAILING CRITERIA REQUIRED THAT DEFENDANT’S MOTION FOR SUMMARY JUDGMENT BE GRANTED (SECOND DEPT).

The Second Department, reversing Supreme Court, determined the bank’s evidence in this foreclosure action did not meet the requirements of the business records exception to the hearsay rule and therefore the bank’s summary judgment motion should not have been granted in this foreclosure action. The court further held that defendant’s motion for summary judgment based upon the bank’s failure to comply with the notice requirements of RPAPL 1304, an issue that can be raised at any time, should have been granted:

The plaintiff failed to demonstrate that the records Wallace relied upon were admissible under the business records exception to the hearsay rule (see CPLR 4518[a]). Wallace did not attest to personal knowledge of SLS’s record-keeping business practices and procedures  … . Wallace also failed to attest that the records were made in the regular course of SLS’s business and that it was the regular course of SLS’s business to make them, at the time of the act, transaction, occurrence, or event, or within a reasonable time thereafter (see CPLR 4518[a] …). Thus, Wallace failed to lay a proper foundation for the admission of records, and her assertions based on these records were inadmissible … . Bank of N.Y. Mellon v Weber, 2019 NY Slip Op 01383, Second Dept 2-27-19

 

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IN THIS FORECLOSURE ACTION THE MORTGAGE COMPANY DID NOT DEMONSTRATE STANDING WITH PROOF MEETING THE REQUIREMENTS OF THE BUSINESS RECORDS EXCEPTION TO THE HEARSAY RULE (SECOND DEPT).

The Second Department, reversing Supreme Court, determined plaintiff mortgage company did not demonstrate standing with proof meeting the requirements of the business records exception to the hearsay rule:

In support of its motion, the plaintiff submitted the affidavit of Melissa Black, an employee of the plaintiff’s loan servicer, who alleged, based upon a review of business records maintained by the loan servicer, that the plaintiff had been “in continuous possession of the note and mortgage since June 26, 2007.” However, because Black did not attest that she was personally familiar with the plaintiff’s record-keeping practices and procedures, the plaintiff failed to demonstrate that the records relied upon by Black were admissible under the business records exception to the hearsay rule (see CPLR 4518[a] … ). In any event, the submissions by the plaintiff of different copies of the note raise a triable issue of fact, inter alia, as to whether the note was assigned to the plaintiff prior to the commencement of the action … . EMC Mtge. Corp. v Tinari, 2019 NY Slip Op 01392, Second Dept 2-27-19

 

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PROOF OF MAILING REQUIREMENTS OF RPAPL 1304 NOT MET, BANK’S SUMMARY JUDGMENT MOTION IN THIS FORECLOSURE ACTION SHOULD NOT HAVE BEEN GRANTED (SECOND DEPT).

The Second Department, reversing Supreme Court in this foreclosure action, determined plaintiff bank did not present sufficient proof of compliance with the notice requirements in Real Property Actions and Proceedings Law (RPAPL) 1304:

The plaintiff submitted the affidavit of Sherry Benight, an officer of the plaintiff’s loan servicer, Select Portfolio Servicing, Inc. (hereinafter SPS), stating that her review of records maintained by SPS revealed that a “[ninety-day pre-foreclosure notice] dated September 13, 2012, . . . was sent to Borrower(s) by certified and first class mail.” A copy of the notice to Fisher was annexed to Benight’s affidavit, which contained a bar code with a 20-digit number below it, but no language indicating that a mailing was done by first-class or certified mail, or even that a mailing was done by the U.S. Postal Service … . Further, Benight did not make the requisite showing that she was familiar with the plaintiff’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 … . U.S. Bank N.A. v Fisher, 2019 NY Slip Op 01444, Second Dept 2-27-19

Similar issues and result in US Bank N.A. v Rode, 2019 NY Slip Op 01446, Second Dept 2-27-19

 

 

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BANK ENTITLED TO JUDGMENT UNDER THE DOCTRINE OF EQUITABLE SUBROGATION (SECOND DEPT).

The Second Department determined plaintiff was entitled to summary judgment pursuant to the equitable subrogation theory in this foreclosure action:

… [T]he plaintiff commenced this action to foreclose a mortgage in the principal amount of $480,000, which it alleged was secured by real property in Brooklyn, owned by the defendants Tzilia Dalfin (hereinafter Tzilia) and Angel E. Daflin (hereinafter Angel), who have been divorced since the 1990s. It is undisputed that $453,900.03 of the proceeds of the mortgage were used to pay off Tzilia and Angel’s prior mortgage on the property as well as outstanding taxes. * ** *

Under the doctrine of equitable subrogation, “[w]here property of one person is used in discharging an obligation owed by another or a lien upon the property of another, under such circumstances that the other would be unjustly enriched by the retention of the benefit thus conferred, the former is entitled to be subrogated to the position of the obligee or lien-holder” … . Even if, as Angel contends, his signature on the subject mortgage was forged, the plaintiff could still recover against him on the theory of equitable subrogation based upon its payoff of the prior mortgage and liens against his property at the closing of the subject mortgage … .

… [T]he plaintiff established its … entitlement to judgment as a matter of law on a theory of equitable subrogation by submitting evidence that $453,900.03 of the proceeds of the subject mortgage were used to pay off the prior mortgage and taxes for which Angel was liable … . Wells Fargo Bank, N.A. v Dalfin, 2019 NY Slip Op 01255, Second Dept 2-20-19

 

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JUDGE SHOULD NOT HAVE, SUA SPONTE, DISMISSED THE FORECLOSURE ACTION WHEN PLAINTIFF BANK ATTEMPT TO TO BRING PREVIOUSLY FILED PAPERS INTO COMPLIANCE WITH SUBSEQUENT ADMINISTRATIVE ORDERS (SECOND DEPT).

The Second Department, reversing Supreme Court, determined the judge should not have, sua sponte, dismissed the foreclosure action when plaintiff bank attempted to bring previously filed documents into compliance with subsequent administrative orders:

“A court’s power to dismiss a complaint, sua sponte, is to be used sparingly and only when extraordinary circumstances exist to warrant dismissal”… . Here, the plaintiff’s counsel attempted to comply, in good faith, with Administrative Orders 548/10 and 431/11 of the Chief Administrative Judge, which did not exist at the time of the commencement of the action, or at the time of the plaintiff’s prior motion for an order of reference. Under such circumstances, dismissal was not warranted. Nothing in the Administrative Orders requires the dismissal of an action merely because the plaintiff’s counsel discovers that there was some irregularity or defect in a prior submission, nor is the plaintiff effectively required to commence an entirely new action … . JP Morgan Chase Bank, N.A. v Laszlo, 2019 NY Slip Op 01205, Second Dept 2-20-19

 

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STIPULATION OF DISCONTINUANCE OF THE PRIOR FORECLOSURE ACTION DID NOT DE-ACCELERATE THE DEBT, INSTANT FORECLOSURE ACTION IS THEREFORE TIME-BARRED (SECOND DEPT).

The Second Department determined the prior action for foreclosure accelerated the debt and the subsequent stipulation of discontinuance did not de-accelerate the debt. The instant foreclosure action was therefore time-barred:

… [D]efendant established that the six-year statute of limitations began to run on the entire debt on April 21, 2008, the date the plaintiff accelerated the mortgage debt by commencing the prior action … . Since the plaintiff did not commence this action until December 15, 2015, more than six years later, the defendant sustained his initial burden of demonstrating, prima facie, that this action was untimely … . The burden then shifted to the plaintiff to present admissible evidence establishing that the action was timely or to raise a question of fact as to whether the action was timely … .

The plaintiff failed to meet its burden. Contrary to its contention, the plaintiff failed to raise a question of fact as to whether it affirmatively revoked its election to accelerate the mortgage within the six-year limitations period. Its execution of the stipulation of discontinuance did not, by itself, constitute an affirmative act to revoke its election to accelerate, since the stipulation was silent on the issue of the election to accelerate, and did not otherwise indicate that the plaintiff would accept installment payments from the defendant … . Bank of N.Y. Mellon v Craig, 2019 NY Slip Op 00846 [169 AD3d 627], Second Dept 2-6-19

 

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IN THIS ACTION TO CANCEL AND DISCHARGE A MORTGAGE BASED UPON THE RUNNING OF THE STATUTE OF LIMITATIONS FOR A FORECLOSURE ACTION, THE BANK RAISED A QUESTION OF FACT WHETHER THE BANK WHICH SERVED THE 2008 COMPLAINT SEEKING FORECLOSURE HAD STANDING AND, THEREFORE, WHETHER THE DEBT WAS ACCELERATED IN 2008 (SECOND DEPT).

The Second Department, reversing Supreme Court, determined the bank had raised a question of fact about whether the mortgage had been accelerated such that the six-year statute of limitations for bringing a foreclosure action had run:

Pursuant to RPAPL 1501(4), a person having an estate or an interest in real property subject to a mortgage can seek to cancel and discharge that encumbrance where the period allowed by the applicable statute of limitations for the commencement of an action to foreclose the mortgage has expired, provided that the mortgagee or its successor was not in possession of the subject real property at the time the action to cancel and discharge the mortgage was commenced … . An action to foreclose a mortgage is governed by a six-year statute of limitations (see CPLR 213[4] ….). “[E]ven if a mortgage is payable in installments, once a mortgage debt is accelerated, the entire amount is due and the Statute of Limitations begins to run on the entire debt” … . …

The defendants raised a triable issue of fact as to whether Greenpoint had standing to commence the 2008 foreclosure action and, therefore, whether the service of the 2008 complaint was effective to constitute a valid exercise of the option to accelerate the debt … . The affidavits submitted by the defendants were sufficient to raise a triable issue of fact as to whether the note was physically delivered to the defendant U.S. Bank, National Association (hereinafter US Bank), on September 27, 2006, two years before US Bank’s assignor, Greenpoint, commenced the 2008 foreclosure action … . Halfon v U.S. Bank, Natl. Assn., 2019 NY Slip Op 00860, Second Dept 2-6-19

 

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PLAINTIFF, AFTER FAILING TO ARGUE THAT DEFENDANTS WAIVED THE LACK OF STANDING DEFENSE BEFORE SUPREME COURT, COULD NOT RAISE DEFENDANTS’ WAIVER OF THE DEFENSE FOR THE FIRST TIME ON APPEAL, PLAINTIFF DID NOT DEMONSTRATE STANDING TO COMMENCE THE FORECLOSURE ACTION (SECOND DEPT).

The Second Department determined plaintiff did not demonstrate standing to bring the foreclosure action, and, further, could not raise defendant’s waiver of the lack-of-standing defense for the first time on appeal:

The defense of lack of standing in an action to foreclose a mortgage is waived if the defendant does not raise it in a pre-answer motion to dismiss or as an affirmative defense (see CPLR 3018[b]…). Here, in opposition to the plaintiff’s motion for summary judgment and in support of their cross motion to dismiss, the defendants argued that the plaintiff lacked standing to commence this action. The plaintiff, in its “reply . . . in further support of plaintiff’s motion for summary judgment, and in opposition to defendant’s [sic] cross-motion to dismiss,” entirely disregarded the defendants’ waiver of the standing defense. Instead, the plaintiff sought to establish that it had standing to commence the action. Now, having litigated the standing defense on the merits in the Supreme Court—both on the original motion and in opposition to reargument—the plaintiff argues on appeal that the issue of standing was waived. Having neglected to raise that dispositive issue in the Supreme Court, the plaintiff may not raise it for the first time on this appeal … .

The plaintiff also failed, on the merits, to establish prima facie that it had standing to commence the action. The loan servicer’s affidavit, which asserted that the named plaintiff “was in possession of the Note at the time of commencement of this action,” provided no specifics as to the date of delivery or the date of commencement. The plaintiff’s conclusory assertion as to possession on the date of commencement is insufficient to establish standing … . BAC Home Loans Servicing, LP v Alvarado, 2019 NY Slip Op 00584, Second Dept 1-30-19

 

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PLAINTIFF BANK DID NOT DEMONSTRATE NOTICE BY PROOF WHICH MET THE REQUIREMENTS OF THE BUSINESS RECORDS EXCEPTION TO THE HEARSAY RULE, THEREFORE THE 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 did not demonstrate compliance with Real Property Actions and Proceedings Law (RPAPL) 1304 and, therefore, the bank’s motion for summary judgment should not have been granted:

… [T]he plaintiff failed to submit an affidavit of service or proof of mailing by the post office evincing that it properly served the defendant pursuant to RPAPL 1304. Contrary to the plaintiff’s contention, its submission of an affidavit of the employee of its servicer was not sufficient to establish that the notices were sent to the defendant in the manner required by RPAPL 1304. While mailing may be proved by documents meeting the requirements of the business records exception to the hearsay rule under CPLR 4518 … , here, the affiant did not aver that he was familiar with the servicer’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 … . The affiant’s unsubstantiated and conclusory statements were insufficient to establish that the RPAPL 1304 notice was mailed to the defendant by first-class and certified mail … . Wells Fargo Bank, N.A. v Moran, 2019 NY Slip Op 00637, Second Dept 1-30-19

Similar issue and result in Fifth Third Mtge. Co. v Seminario, 2019 NY Slip Op 00589, Second Dept 1-30-19

 

 

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