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NOTICE OF APPEARANCE FILED BY DEFENDANT’S ATTORNEY WAIVED ANY SUBSEQUENT OBJECTION TO PERSONAL JURISDICTION IN THIS FORECLOSURE ACTION, ISSUE HEARD ON APPEAL ALTHOUGH NOT RAISED BELOW (SECOND DEPT).

The Second Department, reversing Supreme Court on a ground not raised below, determined that defendant’s attorney’s notice of appearance waived any objection to personal jurisdiction over defendant:

“The filing of a notice of appearance in an action by a party’s counsel serves as a waiver of any objection to personal jurisdiction in the absence of either the service of an answer which raises a jurisdictional objection, or a motion to dismiss pursuant to CPLR 3211(a)(8) for lack of personal jurisdiction” … . Here, in November 2014, the defendant’s attorney appeared in the action on her behalf by filing a notice of appearance dated October 31, 2014, and did not move to dismiss the complaint on the ground of lack of personal jurisdiction at that time, or assert lack of personal jurisdiction in a responsive pleading… . The defendant did not move to dismiss the complaint until September 2015, 10 months after filing a notice of appearance. Under those circumstances, the defendant waived any claim that the Supreme Court lacked personal jurisdiction over her in this action … .

Although the plaintiff raises this issue for the first time on appeal, it involves a question of law that appears on the face of the record, and could not have been avoided if brought to the attention of the Supreme Court … . Deutsche Bank Natl. Trust Co. v Vu, 2018 NY Slip Op 08629, Second Dept 12-19-18

 

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CROSS-MOTION TO EXTEND THE TIME FOR SERVICE OF PROCESS PURSUANT TO CPLR 306-b IN THIS FORECLOSURE ACTION PROPERLY GRANTED, THE JUDGMENT OF FORECLOSURE HAD BEEN VACATED BECAUSE DEFENDANT WAS NOT PROPERLY SERVED INITIALLY (SECOND DEPT).

The Second Department, modifying Supreme Court, determined the judgment of foreclosure should have been vacated because defendant was not served and therefore the court did not acquire personal jurisdiction. However, plaintiff’s timely cross-motion to extend the time for service pursuant to CPLR 306-b was properly granted:

“If service is not made upon a defendant within the time provided in [CPLR 306-b], the court, upon motion, shall dismiss the action without prejudice as to that defendant, or upon good cause shown or in the interest of justice, extend the time for service” … . Good cause requires the plaintiff to demonstrate, as a threshold matter, “reasonably diligent efforts” in attempting to effect service … . In deciding whether, in the interest of justice, to grant an extension of time to serve a summons and complaint, “the court may consider diligence, or lack thereof, along with any other relevant factor in making its determination, including expiration of the Statute of Limitations, the [potentially] meritorious nature of the cause of action, the length of delay in service, the promptness of a plaintiff’s request for the extension of time, and prejudice to defendant” … . “A determination of whether to grant the extension in the interest of justice is generally within the discretion of the motion court” … . Bank United, FSB v Verbitsky, 2018 NY Slip Op 08623, Second Dept 12-19-18

 

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BANK DID NOT DEMONSTRATE COMPLIANCE WITH THE NOTICE PROVISIONS OF REAL PROPERTY ACTIONS AND PROCEEDINGS LAW (RPAPL) 1304, 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 proof defendant was properly served with notice pursuant to Real Property Actions and Proceedings Law (RPAPL) 1304 was insufficient. The bank’s motion for summary judgment should not have been granted:

… [T]he bank 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 Supreme Court’s conclusion, the affidavit of the employee of the plaintiff’s successor in interest failed to establish that the notices were sent to the defendant in the manner required by RPAPL 1304. The affiant did not aver that she was familiar with the mailing practices and procedures of the entity that allegedly sent the RPAPL 1304 notice. Accordingly, her affidavit did not establish proof of a standard office practice and procedure designed to ensure that items are properly addressed and mailed … . Nor was the affidavit of the employee of the plaintiff’s successor in interest sufficient to lay a foundation for the admission of business records to establish a proper mailing. The affiant did not state that the records of the entity that allegedly sent the RPAPL 1304 notice had been incorporated into the records of the plaintiff’s successor in interest and were routinely relied upon by the successor in interest in its business … . Aurora Loan Servs., LLC v Vrionedes, 2018 NY Slip Op 08622, Second Dept 12-19-18

 

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LOST NOTE AFFIDAVIT INSUFFICIENT BECAUSE UCC REQUIREMENTS NOT MET, PROOF OF RPAPL 1304 NOTICE INSUFFICIENT, PROOF OF COMPLIANCE WITH NOTICE CONDITION OF THE MORTGAGE INSUFFICIENT, SUPREME COURT SHOULD NOT HAVE GRANTED THE BANK’S MOTION FOR SUMMARY JUDGMENT IN THIS FORECLOSURE PROCEEDING (SECOND DEPT).

The Second Department, reversing Supreme Court, determined that plaintiff’s motion for summary judgment in this foreclosure action should not have been granted for three reasons: (1) the lost note affidavit was insufficient pursuant to the requirements of the Uniform Commercial Code (UCC); (2) the proof of compliance with the notice requirements of Real Property Actions and Proceedings Law (RPAPL) 1304 was not sufficient; and (3) the plaintiff did not show it had complied the notice condition of the mortgage (a condition precedent ro foreclosure):

Pursuant to UCC 3-804, the owner of a lost note may maintain an action “upon due proof of [1] his [or her] ownership, [2] the facts which prevent his [or her] production of the instrument and [3] its terms” (UCC 3-804). The party seeking to enforce a lost instrument is required to “account for its absence” … .

Here, although 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 establish the facts that prevent the production of the original note … . …

… [T]he 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 proof of a standard office mailing procedure and provided no independent proof of the actual mailing … . …

… [T]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 … . The affidavit of a representative of the plaintiff’s loan servicer claiming that notice of default was sent to the defendant …  was conclusory and unsubstantiated and … was insufficient to prove that the notice was sent in accordance with the terms of the mortgage … . U.S. Bank N.A. v Cope, 2018 NY Slip Op 08709, Second Dept 12-19-18

 

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QUESTIONS OF FACT ABOUT WHETHER PLAINTIFF HAS STANDING IN THIS FORECLOSURE ACTION AND WHETHER THE RPAPL 1304 NOTICE WAS SERVED, PLAINTIFF’S MOTION FOR SUMMARY JUDGMENT SHOULD NOT HAVE BEEN GRANTED (FIRST DEPT)

The First Department, reversing Supreme Court, determined plaintiff’s motion for summary judgment in this foreclosure action should not have been granted. There exist questions of fact on whether plaintiff has standing and whether the RPAPL 1304 notice was served:

The borrower raised a meritorious standing defense based on questions as to the sufficiency of the content of the conclusory lost note affidavit, which does not state that a thorough and diligent search was made based on a review of the business records or anything else, does not state that any search was made or by whom, and does nothing to indicate when approximately the note was lost … .

The borrower also raised a plausible notice defense regarding plaintiff’s service of the requisite 90-day notice under RPAPL 1304 … . AS Helios LLC v Chauhan, 2018 NY Slip Op 08565, First Dept 12-13-18

 

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PROOF THAT DEFENDANT WAS SERVED WITH THE RPAPL 1304 NOTICE IN THIS FORECLOSURE PROCEEDING WAS NOT SUFFICIENT, THE BANK’S MOTION FOR SUMMARY JUDGMENT SHOULD NOT HAVE BEEN GRANTED (FIRST DEPT).

The First Department, reversing Supreme Court, determined that the bank’s motion for summary judgment in this foreclosure action should not have been granted. The proof of service of the RPAPL 1304 notice was deemed insufficient:

Plaintiff failed to establish a presumption that it properly served defendant with RPAPL 1304 notice through proof either of actual mailing or of a standard office practice or procedure for proper addressing and mailing … . Its business operations analyst testified at the hearing on this issue that she was familiar with plaintiff’s record keeping practices and procedures. However, she did not testify either that she was familiar with plaintiff’s mailing procedures or that she was personally aware that RPAPL 1304 notices had been mailed to defendant… . Nor does the fact that some of the RPAPL 1304 notices admitted into evidence at the hearing bear a certified mail number suffice to raise the presumption of proper service … . CitiMortgage, Inc. v Moran, 2018 NY Slip Op 08435, First Dept 12-11-18

 

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PLAINTIFF DID NOT DEMONSTRATE THE CONDITIONS PRECEDENT TO THE ACCELERATION OF THE MORTGAGE DEBT HAD BEEN SATISFIED, PLAINTIFF’S MOTION FOR SUMMARY JUDGMENT SHOULD NOT HAVE BEEN GRANTED (SECOND DEPT).

The Second Department, reversing Supreme Court, determined that plaintiff’s motion for summary judgment in this foreclosure action should not have been granted. The mortgage included conditions precedent to the acceleration of the debt and plaintiff’s papers did not demonstrate satisfaction of the conditions precedent:

The mortgage required that the lender give notice of a date by which the borrower must correct a default in order to avoid acceleration. It further required that the date specified in the notice “be at least 30 days from the date on which the notice is given.” The mortgage also provided that notice by first-class mail “is considered given” on the date mailed.

In support of its motion for summary judgment, the plaintiff failed to establish, prima facie, that it complied with this condition precedent to accelerating the mortgage. Specifically, in support of its motion for summary judgment, the plaintiff presented conflicting evidence as to whether it mailed the notice at least 30 days before the date specified in that notice. Inasmuch as the plaintiff’s own evidence submitted in support of the motion demonstrated the existence of a triable issue of fact as to whether the plaintiff complied with the 30-day notice provision, the plaintiff’s motion should have been denied without regard to the sufficiency of the defendant’s opposition papers … . Wilmington Sav. Fund Socy. FSB v Yisroel, 2018 NY Slip Op 08174, Second Dept 11-28-18

FORECLOSURE (PLAINTIFF DID NOT DEMONSTRATE THE CONDITIONS PRECEDENT TO THE ACCELERATION OF THE MORTGAGE DEBT HAD BEEN SATISFIED, PLAINTIFF’S MOTION FOR SUMMARY JUDGMENT SHOULD NOT HAVE BEEN GRANTED (SECOND DEPT))/CONTRACT LAW (FORECLOSURE, (PLAINTIFF DID NOT DEMONSTRATE THE CONDITIONS PRECEDENT TO THE ACCELERATION OF THE MORTGAGE DEBT HAD BEEN SATISFIED, PLAINTIFF’S MOTION FOR SUMMARY JUDGMENT SHOULD NOT HAVE BEEN GRANTED (SECOND DEPT))/EVIDENCE (FORECLOSURE, PLAINTIFF DID NOT DEMONSTRATE THE CONDITIONS PRECEDENT TO THE ACCELERATION OF THE MORTGAGE DEBT HAD BEEN SATISFIED, PLAINTIFF’S MOTION FOR SUMMARY JUDGMENT SHOULD NOT HAVE BEEN GRANTED (SECOND DEPT))

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SUPREME COURT SHOULD NOT HAVE, SUA SPONTE, FOUND THAT A DEFENDANT WHO HAD NOT BEEN SERVED WAS A NECESSARY PARTY AND SHOULD NOT HAVE DISMISSED THE FORECLOSURE ACTION AGAINST OTHER DEFENDANTS ON THAT GROUND (SECOND DEPT).

The Second Department, in this foreclosure action, determined Supreme Court should not have, sua sponte, held that a party (Moreno) was a necessary party and should not have dismissed the complaint against the other defendants on that ground:

Bromley [plaintiff] argues, in effect, that it was denied due process as a result of being unable to contest whether Dual Properties is the fee owner and whether Moreno is a necessary party.

“The lack of notice and opportunity to be heard implicates the fundamental issue of fairness that is the cornerstone of due process” … .

Here, the record does not support the Supreme Court’s conclusion that Moreno’s ownership of the property was “uncontested.” In any event, the court’s determination that Moreno was a necessary party prejudiced Bromley in that “it was never afforded the opportunity to present evidence refuting the court’s sua sponte determination” … .

Accordingly, we disagree with the Supreme Court’s determination to, sua sponte, direct the dismissal of the complaint insofar as asserted against the remaining defendants for failure to join a necessary party. Aurora Loan Servs., LLC v Moreno, 2018 NY Slip Op 08107, Second Dept 11-28-18

FORECLOSURE (SUPREME COURT SHOULD NOT HAVE, SUA SPONTE, FOUND THAT A DEFENDANT WHO HAD NOT BEEN SERVED WAS A NECESSARY PARTY AND SHOULD NOT HAVE DISMISSED THE FORECLOSURE ACTION AGAINST OTHER DEFENDANTS ON THAT GROUND (SECOND DEPT))/JUDGES (SUA SPONTE, FORECLOSURE, SUPREME COURT SHOULD NOT HAVE, SUA SPONTE, FOUND THAT A DEFENDANT WHO HAD NOT BEEN SERVED WAS A NECESSARY PARTY AND SHOULD NOT HAVE DISMISSED THE FORECLOSURE ACTION AGAINST OTHER DEFENDANTS ON THAT GROUND (SECOND DEPT))/SUA SPONTE (FORECLOSURE, SUPREME COURT SHOULD NOT HAVE, SUA SPONTE, FOUND THAT A DEFENDANT WHO HAD NOT BEEN SERVED WAS A NECESSARY PARTY AND SHOULD NOT HAVE DISMISSED THE FORECLOSURE ACTION AGAINST OTHER DEFENDANTS ON THAT GROUND (SECOND DEPT))/CIVIL PROCEDURE  (SUA SPONTE, FORECLOSURE, SUPREME COURT SHOULD NOT HAVE, SUA SPONTE, FOUND THAT A DEFENDANT WHO HAD NOT BEEN SERVED WAS A NECESSARY PARTY AND SHOULD NOT HAVE DISMISSED THE FORECLOSURE ACTION AGAINST OTHER DEFENDANTS ON THAT GROUND (SECOND DEPT))/NECESSARY PARTIES (FORECLOSURE, SUA SPONTE, SUPREME COURT SHOULD NOT HAVE, SUA SPONTE, FOUND THAT A DEFENDANT WHO HAD NOT BEEN SERVED WAS A NECESSARY PARTY AND SHOULD NOT HAVE DISMISSED THE FORECLOSURE ACTION AGAINST OTHER DEFENDANTS ON THAT GROUND (SECOND DEPT))

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IT IS NOT NECESSARY TO HAVE POSSESSION OF THE MORTGAGE, AS OPPOSED TO THE NOTE, AT THE TIME OF THE COMMENCEMENT OF A FORECLOSURE ACTION, EVIDENCE ADMISSIBLE UNDER THE BUSINESS RECORDS EXCEPTION TO THE HEARSAY RULE RAISED A QUESTION OF FACT ABOUT PLAINTIFF’S STANDING (FIRST DEPT).

The First Department determined plaintiff had raised a question of fact about whether it had standing to bring this foreclosure action. The court noted that it is not necessary to have possession of the mortgage, as opposed to the note, at the time the action is commenced. A question of fact about possession of the note was raised by evidence admissible pursuant to the business records exception to the hearsay rule:

“[T]o have standing, it is not necessary to have possession of the mortgage at the time the action is commenced . . . . [T]he note, and not the mortgage, is the dispositive instrument that conveys standing to foreclose under New York law” … . Plaintiff raised a question of fact as to its possession of the note prior to commencement of the action through the affidavit of Anthony D’Addona, who averred that he reviewed the books and records of plaintiff, kept in the ordinary course of business, and that plaintiff was the holder of the note and mortgage. This affidavit was sworn to on September 28, 2015, prior to commencement of this action. “It is well settled that a business entity may admit a business record through a person without personal knowledge of the document, its history or its specific contents where that person is sufficiently familiar with the corporate records to aver that the record is what it purports to be and that it came out of the entity’s files” … . DLJ Mtge. Capital v Mahadeo, 2018 NY Slip Op 07963, First Dept 11-20-18

FORECLOSURE (IT IS NOT NECESSARY TO HAVE POSSESSION OF THE MORTGAGE, AS OPPOSED TO THE NOTE, AT THE TIME OF THE COMMENCEMENT OF A FORECLOSURE ACTION, EVIDENCE ADMISSIBLE UNDER THE BUSINESS RECORDS EXCEPTION TO THE HEARSAY RULE RAISED A QUESTION OF FACT ABOUT PLAINTIFF’S STANDING (FIRST DEPT))/STANDING (FORECLOSURE, IT IS NOT NECESSARY TO HAVE POSSESSION OF THE MORTGAGE, AS OPPOSED TO THE NOTE, AT THE TIME OF THE COMMENCEMENT OF A FORECLOSURE ACTION, EVIDENCE ADMISSIBLE UNDER THE BUSINESS RECORDS EXCEPTION TO THE HEARSAY RULE RAISED A QUESTION OF FACT ABOUT PLAINTIFF’S STANDING (FIRST DEPT))/BUSINESS RECORDS (FORECLOSURE, IT IS NOT NECESSARY TO HAVE POSSESSION OF THE MORTGAGE, AS OPPOSED TO THE NOTE, AT THE TIME OF THE COMMENCEMENT OF A FORECLOSURE ACTION, EVIDENCE ADMISSIBLE UNDER THE BUSINESS RECORDS EXCEPTION TO THE HEARSAY RULE RAISED A QUESTION OF FACT ABOUT PLAINTIFF’S STANDING (FIRST DEPT))/HEARSAY (BUSINESS RECORDS, FORECLOSURE, (IT IS NOT NECESSARY TO HAVE POSSESSION OF THE MORTGAGE, AS OPPOSED TO THE NOTE, AT THE TIME OF THE COMMENCEMENT OF A FORECLOSURE ACTION, EVIDENCE ADMISSIBLE UNDER THE BUSINESS RECORDS EXCEPTION TO THE HEARSAY RULE RAISED A QUESTION OF FACT ABOUT PLAINTIFF’S STANDING (FIRST DEPT))

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PLAINTIFF BANK DID NOT MEET FACE TO FACE WITH DEFENDANT BEFORE THREE MONTHLY MORTGAGE PAYMENTS WERE MISSED, PLAINTIFF’S MOTION FOR SUMMARY JUDGMENT IN THIS FORECLOSURE ACTION SHOULD NOT HAVE BEEN GRANTED (FOURTH DEPT).

The Fourth Department, reversing Supreme Court, determined plaintiff’s motion for summary judgment in this foreclosure action should not have been denied. Plaintiff bank did not seek a face to face meeting with defendant before three mortgage payments were missed:

In her pro se answer to the amended complaint, defendant alleged that the loan was subject to Federal Housing Administration guidelines and that plaintiff failed to comply with the regulations of the Department of Housing and Urban Development requiring the mortgagee to undertake certain pre-foreclosure measures, including a face-to-face meeting with the mortgagor, with respect to such loans. Although defendant did not specifically cite 24 CFR 203.604, the regulation establishing the face-to-face meeting requirement, in her answer, we afford the pro se answer a liberal reading … , and conclude that defendant “sufficiently apprise[d] plaintiff” that she was challenging plaintiff’s compliance with the requirements of that regulation … .

Plaintiff failed to establish that it complied with the requirements of 24 CFR 203.604 and thus failed to establish that it was entitled to judgment as a matter of law on the amended complaint… . More specifically, plaintiff did not arrange or attempt to arrange a face-to-face interview with defendant at any time “before three full monthly installments . . . [were] unpaid” (§ 203.604 [b]). Instead, the first attempt was made in June 2011, i.e., more than six months after the first installment went unpaid. Moreover, plaintiff did not establish that it sent notices to defendant by certified mail, as required by section 203.604 (d).  Bank of Am., N.A. v Spencer, 2018 NY Slip Op 07573, Fourth Dept 11-9-18

FORECLOSURE (PLAINTIFF BANK DID NOT MEET FACE TO FACE WITH DEFENDANT BEFORE THREE MONTHLY MORTGAGE PAYMENTS WERE MISSED, PLAINTIFF’S MOTION FOR SUMMARY JUDGMENT IN THIS FORECLOSURE ACTION SHOULD NOT HAVE BEEN GRANTED (FOURTH DEPT))/BANKING LAW (FORECLOSURE, PLAINTIFF BANK DID NOT MEET FACE TO FACE WITH DEFENDANT BEFORE THREE MONTHLY MORTGAGE PAYMENTS WERE MISSED, PLAINTIFF’S MOTION FOR SUMMARY JUDGMENT IN THIS FORECLOSURE ACTION SHOULD NOT HAVE BEEN GRANTED (FOURTH DEPT))

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