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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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COURT HAD DISCRETION TO ACCEPT A BELATED ORDER OF REFERENCE SUBMITTED AFTER THE 60-DAY DEADLINE IN 22 NYCRR 202.48 IN THIS FORECLOSURE ACTION, LAW OF THE CASE DOCTRINE DOES NOT APPLY TO A DISCRETIONARY ORDER (SECOND DEPT).

The Second Department determined Supreme Court properly exercised its discretion to accept a belated order of reference in this foreclosure action. The court noted that the law of the case doctrine does not apply to a discretionary ruling:

In this action to foreclose a mortgage, the Supreme Court denied the plaintiffs’ motion for summary judgment on the complaint. On appeal, this Court reversed that determination … . Thereafter, the plaintiffs moved, inter alia, for an order of reference. The Supreme Court, among other things, granted that branch of the motion and directed the plaintiffs to submit an order of reference along with certain supporting documents. The plaintiffs failed to submit the order of reference and supporting documents to the court, allegedly because the documents were lost in the mail.

The plaintiffs made a second motion for an order of reference. The Supreme Court denied this motion without prejudice, finding that the plaintiffs abandoned their motion for an order of reference since they failed to submit the order of reference within 60 days after the signing and filing of the order directing submission, without showing good cause for their failure, in violation of 22 NYCRR 202.48(a). The plaintiffs then moved, inter alia, in effect, to extend the time to submit an order of reference, and for an order of reference. In the order appealed from, the court granted those branches of the plaintiffs’ motion, excusing the plaintiffs’ failure to submit some of the supporting documents the court had directed them to provide in its earlier order.

” It is within the sound discretion of the court to accept a belated order or judgment for settlement'” . “Moreover, a court should not deem an action or judgment abandoned where the result would not bring the repose to court proceedings that 22 NYCRR 202.48 was designed to effectuate, and would waste judicial resources'” … . Solomon v Burden, 2018 NY Slip Op 07480, Second Dept 11-7-18

CIVIL PROCEDURE (BELATED ORDER OR JUDGMENT FOR SETTLEMENT, COURT HAS DISCRETION TO ACCEPT A BELATED ORDER OF REFERENCE SUBMITTED AFTER THE 60-DAY DEADLINE IN 22 NYCRR 202.48 IN THIS FORECLOSURE ACTION, LAW OF THE CASE DOCTRINE DOES NOT APPLY TO A DISCRETIONARY ORDER (SECOND DEPT))/FORECLOSURE (BELATED ORDER OR JUDGMENT FOR SETTLEMENT, COURT HAS DISCRETION TO ACCEPT A BELATED ORDER OF REFERENCE SUBMITTED AFTER THE 60-DAY DEADLINE IN 22 NYCRR 202.48 IN THIS FORECLOSURE ACTION, LAW OF THE CASE DOCTRINE DOES NOT APPLY TO A DISCRETIONARY ORDER (SECOND DEPT))/22 NYCRR 202.48 (BELATED ORDER OR JUDGMENT FOR SETTLEMENT, COURT HAS DISCRETION TO ACCEPT A BELATED ORDER OF REFERENCE SUBMITTED AFTER THE 60-DAY DEADLINE IN 22 NYCRR 202.48 IN THIS FORECLOSURE ACTION, LAW OF THE CASE DOCTRINE DOES NOT APPLY TO A DISCRETIONARY ORDER (SECOND DEPT))/LAW OF THE CASE DOCTRINE (BELATED ORDER OR JUDGMENT FOR SETTLEMENT, COURT HAS DISCRETION TO ACCEPT A BELATED ORDER OF REFERENCE SUBMITTED AFTER THE 60-DAY DEADLINE IN 22 NYCRR 202.48 IN THIS FORECLOSURE ACTION, LAW OF THE CASE DOCTRINE DOES NOT APPLY TO A DISCRETIONARY ORDER (SECOND DEPT))

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MOTION TO DISMISS THE COMPLAINT IN THIS FORECLOSURE ACTION FOR FAILURE TO TIMELY SERVE WITHIN THE 120 DAY WINDOW SHOULD HAVE BEEN GRANTED, CRITERIA FOR ALLOWING LATE SERVICE EXPLAINED (SECOND DEPT).

The Second Department, reversing Supreme Court, determined defendants’ motion pursuant to CPLR 306-b to dismiss the complaint in this foreclosure action (with regard to defendant Joseph) because it was not served within 120 days of filing should have been granted. The court explained the criteria for allowing extra time to serve:

As relevant here, CPLR 306-b provides that “[s]ervice of the summons and complaint . . . shall be made within one hundred twenty days after the commencement of the action.” Further, “[i]f service is not made upon a defendant within the time provided in this section, 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’ and interest of justice’ are two separate and independent statutory standards” … . “To establish good cause, a plaintiff must demonstrate reasonable diligence in attempting service” … . “If good cause for an extension is not established, courts must consider the interest of justice’ standard of CPLR 306-b” … , which “requires a careful judicial analysis of the factual setting of the case and a balancing of the competing interests presented by the parties” … . “Unlike an extension request premised on good cause, a plaintiff [seeking an extension in the interest of justice] need not establish reasonably diligent efforts at service as a threshold matter” … . “However, 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” … . “No one factor is determinative—the calculus of the court’s decision is dependent on the competing interests of the litigants and a clearly expressed desire by the Legislature that the interests of justice be served” … .

The plaintiff failed to establish that it exercised reasonably diligent efforts in attempting to effect proper service of process upon Joseph and, thus, failed to show good cause … . Further, the plaintiff failed to establish that an extension of time was warranted in the interest of justice … . Where the plaintiff’s delay in serving a defendant is protracted, and the defendant has no notice of the action for a protracted period of time, an inference of substantial prejudice arises …  The plaintiff failed to rebut the inference of substantial prejudice that arose due to its protracted delay in serving Joseph, as it failed to come forward with any proof that Joseph had notice of this action prior to being served more than 5½ years after the action was commenced … . Moreover, the plaintiff failed to explain its more than six-month delay in moving for relief pursuant to CPLR 306-b after it effectuated service upon Joseph … . Under theses circumstances, the plaintiff failed to establish its entitlement to an extension of time to serve Joseph under the interest of justice standard … , and its motion should have been denied. Wells Fargo Bank, NA v Barrella, 2018 NY Slip Op 07486, Second Dept 11-7-18

FORECLOSURE (MOTION TO DISMISS THE COMPLAINT IN THIS FORECLOSURE ACTION FOR FAILURE TO TIMELY SERVE WITHIN THE 120 DAY WINDOW SHOULD HAVE BEEN GRANTED, CRITERIA FOR ALLOWING LATE SERVICE EXPLAINED (SECOND DEPT))/CIVIL PROCEDURE (MOTION TO DISMISS THE COMPLAINT IN THIS FORECLOSURE ACTION FOR FAILURE TO TIMELY SERVE WITHIN THE 120 DAY WINDOW SHOULD HAVE BEEN GRANTED, CRITERIA FOR ALLOWING LATE SERVICE EXPLAINED (SECOND DEPT))/CPLR 306-b MOTION TO DISMISS THE COMPLAINT IN THIS FORECLOSURE ACTION FOR FAILURE TO TIMELY SERVE WITHIN THE 120 DAY WINDOW SHOULD HAVE BEEN GRANTED, CRITERIA FOR ALLOWING LATE SERVICE EXPLAINED (SECOND DEPT))

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THE DEFENSE OF LACK OF STANDING WAS NOT RAISED IN THE ANSWER AND WAS THEREFORE WAIVED, JUDGE SHOULD NOT HAVE, SUA SPONTE, DISMISSED THE COMPLAINT ON THAT GROUND (SECOND DEPT).

The Second Department, reversing Supreme Court, determined plaintiff’s motion for a default judgment and an order of reference should have been granted. By not raising lack of standing as a defense in the answer, the defense was waived. Supreme Court did not have the authority to, sua sponte, deny plaintiff’s motion on that ground:

… [U]nder this Court’s well-established precedent, as articulated in Wells Fargo Bank Minn., N.A. v Mastropaolo (42 AD3d 239), the defense of lack of standing is waived if not raised by the defendant in an answer or pre-answer motion to dismiss. Accordingly, by failing to answer the complaint or to make a pre-answer motion to dismiss the complaint, the defendants waived the defense of lack of standing … . Under the circumstances of this case, we remit the matter to the Supreme Court, Kings County, for further proceedings before a different Justice. Wells Fargo Bank, N.A. v Halberstam, 2018 NY Slip Op 07485, Second Dept 11-7-18

FORECLOSURE (THE DEFENSE OF LACK OF STANDING WAS NOT RAISED IN THE ANSWER AND WAS THEREFORE WAIVED, JUDGE SHOULD NOT HAVE, SUA SPONTE, DISMISSED THE COMPLAINT ON THAT GROUND (SECOND DEPT))/STANDING (FORECLOSURE, THE DEFENSE OF LACK OF STANDING WAS NOT RAISED IN THE ANSWER AND WAS THEREFORE WAIVED, JUDGE SHOULD NOT HAVE, SUA SPONTE, DISMISSED THE COMPLAINT ON THAT GROUND (SECOND DEPT))/CIVIL PROCEDURE (FORECLOSURE, STANDING, THE DEFENSE OF LACK OF STANDING WAS NOT RAISED IN THE ANSWER AND WAS THEREFORE WAIVED, JUDGE SHOULD NOT HAVE, SUA SPONTE, DISMISSED THE COMPLAINT ON THAT GROUND (SECOND DEPT))/JUDGES (SUA SPONTE DISMISSAL, FORECLOSURE, THE DEFENSE OF LACK OF STANDING WAS NOT RAISED IN THE ANSWER AND WAS THEREFORE WAIVED, JUDGE SHOULD NOT HAVE, SUA SPONTE, DISMISSED THE COMPLAINT ON THAT GROUND (SECOND DEPT))/SUA SPONTE (THE DEFENSE OF LACK OF STANDING WAS NOT RAISED IN THE ANSWER AND WAS THEREFORE WAIVED, JUDGE SHOULD NOT HAVE, SUA SPONTE, DISMISSED THE COMPLAINT ON THAT GROUND (SECOND DEPT))

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REAL PROPERTY LAW 329 PROVIDES THAT THE OWNER OF PROPERTY CAN BRING ACTIONS TO CANCEL RECORDED ASSIGNMENTS OF MORTGAGE, SUPREME COURT SHOULD NOT HAVE GRANTED DEFENDANTS’ MOTIONS TO DISMISS ON THE GROUND THE PLAINTIFF LACKED STANDING (SECOND DEPT).

The Second Department, reversing (modifying) Supreme Court, determined that plaintiff had the statutory right to bring an action to cancel of record certain assignments of mortgage:

The Supreme Court should not have granted those branches of the separate motions of the defendants, which were pursuant to CPLR 3211(a) to dismiss the causes of action to cancel of record the subject assignments of mortgage insofar as asserted against each of them on the ground that the plaintiffs lacked standing. Real Property Law § 329 provides that “[a]n owner of real property . . . may maintain an action to have any recorded instrument in writing relating to such real property . . . other than those required by law to be recorded . . . declared void or invalid, or to have the same canceled of record as to said real property.” The plaintiffs, as owners of the subject property, have standing under Real Property Law § 329 to challenge the recorded assignments and seek to have them removed as a cloud on their title … . Silverberg v Bank of N.Y. Mellon, 2018 NY Slip Op 07167, Second Dept 10-24-18

REAL PROPERTY LAW (REAL PROPERTY LAW 329 PROVIDES THAT THE OWNER OF PROPERTY CAN BRING ACTIONS TO CANCEL RECORDED ASSIGNMENTS OF MORTGAGE, SUPREME COURT SHOULD NOT HAVE GRANTED DEFENDANTS’ MOTIONS TO DISMISS ON THE GROUND THE PLAINTIFF LACKED STANDING (SECOND DEPT))/FORECLOSURE (REAL PROPERTY LAW 329 PROVIDES THAT THE OWNER OF PROPERTY CAN BRING ACTIONS TO CANCEL RECORDED ASSIGNMENTS OF MORTGAGE, SUPREME COURT SHOULD NOT HAVE GRANTED DEFENDANTS’ MOTIONS TO DISMISS ON THE GROUND THE PLAINTIFF LACKED STANDING (SECOND DEPT))/ASSIGNMENTS OF MORTGAGE (REAL PROPERTY LAW 329 PROVIDES THAT THE OWNER OF PROPERTY CAN BRING ACTIONS TO CANCEL RECORDED ASSIGNMENTS OF MORTGAGE, SUPREME COURT SHOULD NOT HAVE GRANTED DEFENDANTS’ MOTIONS TO DISMISS ON THE GROUND THE PLAINTIFF LACKED STANDING (SECOND DEPT))

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PLAINTIFF DID NOT PROVIDE SUFFICIENT PROOF IT HAD NOTIFIED DEFENDANT OF THE FORECLOSURE ACTION PURSUANT TO RPAPL 1304, DEFENDANT’S SUMMARY JUDGMENT MOTION SHOULD HAVE BEEN GRANTED (SECOND DEPT).

The Second Department, reversing Supreme Court, determined defendant’s motion for summary judgment should have been granted. Plaintiff did not provide sufficient proof demonstrating it provided the notice required by RPAPL 1304:

… [T]he defendant established his prima facie entitlement to judgment as a matter of law by submitting his own affidavit attesting that he had not received any notice pursuant to RPAPL 1304 … . In opposition, the plaintiff submitted only a copy of the required notice, but failed to submit any evidence that the notice was mailed in the manner required by the statute. Specifically, the plaintiff did not submit “an affidavit of service, . . . 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” … . Thus, the plaintiff failed to demonstrate that it strictly complied with the requirements of RPAPL 1304, notwithstanding the label on the notice stating “Certified Article Number” and “Senders Record” and listing a 20-digit number on the top of the letter … . Thus, since the plaintiff did not raise a triable issue of fact in opposition to the defendant’s prima facie showing that the plaintiff failed to satisfy the condition precedent of proper service of RPAPL 1304 notice upon him … . Deutsche Bank Natl. Trust Co. v Heitner, 2018 NY Slip Op 07090, Second Dept 10-24-18

FORECLOSURE (PLAINTIFF DID NOT PROVIDE SUFFICIENT PROOF IT HAD NOTIFIED DEFENDANT OF THE FORECLOSURE ACTION PURSUANT TO RPAPL 1304, DEFENDANT’S SUMMARY JUDGMENT MOTION SHOULD HAVE BEEN GRANTED (SECOND DEPT))/REAL PROPERTY ACTIONS AND PROCEEDINGS LAW (RPAPL) (FORECLOSURE, PLAINTIFF DID NOT PROVIDE SUFFICIENT PROOF IT HAD NOTIFIED DEFENDANT OF THE FORECLOSURE ACTION PURSUANT TO RPAPL 1304, DEFENDANT’S SUMMARY JUDGMENT MOTION SHOULD HAVE BEEN GRANTED (SECOND DEPT))/EVIDENCE (FORECLOSURE, NOTICE, PLAINTIFF DID NOT PROVIDE SUFFICIENT PROOF IT HAD NOTIFIED DEFENDANT OF THE FORECLOSURE ACTION PURSUANT TO RPAPL 1304, DEFENDANT’S SUMMARY JUDGMENT MOTION SHOULD HAVE BEEN GRANTED (SECOND DEPT))

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PLAINTIFF DID NOT SUBMIT ADMISSIBLE PROOF OF DEFAULT, MOTION TO INTERVENE WAS UNTIMELY, JUDICIARY LAW 489 WAS NOT VIOLATED (SECOND DEPT).

The Second Department, reversing Supreme Court, determined that the plaintiff did not submit admissible proof that defendant was in default. The evidence did not meet the business records exception to the hearsay rule. The court also held that a nonparty’s motion to intervene was properly denied as untimely and the Judiciary Law 489 affirmative defense was properly struck. Judiciary Law 489 prohibits buying another’s debt for the purpose of bringing a court action, but debts exceeding $500,000 are exempt. The debts purchased here exceeded $500,000:

The determination to deny Fulton Holdings’ motion for leave to intervene in the action was a provident exercise of discretion. “Intervention under CPLR 1012 and 1013 requires a timely motion” … . Here, Fulton Holdings’ motion was not timely, as it was not made until approximately 14 months after Fulton Holdings had notice that the foreclosure action was pending … . …

Here, the plaintiff failed to submit evidence of default in admissible form. To evince the mortgagor’s default, the plaintiff submitted the affidavits of Igor Fleyshmakher, the plaintiff’s managing member, and Frank Quintana, the president of 179 Court Street Holding Corp. (hereinafter 179 Court), a prior holder of the mortgage. Fleyshmakher and Quintana both attested to the date of the last payment allegedly received on the mortgage. However, the plaintiff failed to demonstrate the admissibility, under the business records exception to the hearsay rule, of any records relied upon by Fleyshmakher and Quintana (see CPLR 4518[a]…). Neither Fleyshmakher nor Quintana laid a foundation for, or even identified, the records upon which they relied. Moreover, neither the plaintiff nor 179 Court acquired its interest in the mortgage until after the alleged default date. Thus, neither Fleyshmakher nor Quintana could have established the loan’s payment history up to and including the date of default by relying on their respective employers’ records. Neither Fleyshmakher nor Quintana asserted that they consulted or relied on the records of 179 Court’s predecessor-in-interest. Under these circumstances, the plaintiff failed to establish, prima facie, the mortgagor’s default … . Fulton Holding Group, LLC v Lindoff, 2018 NY Slip Op 07096, Second Dept 10-24-18

FORECLOSURE (PLAINTIFF DID NOT SUBMIT ADMISSIBLE PROOF OF DEFAULT, MOTION TO INTERVENE WAS UNTIMELY, JUDICIARY LAW 489 WAS NOT VIOLATED (SECOND DEPT))/EVIDENCE (FORECLOSURE, PLAINTIFF DID NOT SUBMIT ADMISSIBLE PROOF OF DEFAULT, MOTION TO INTERVENE WAS UNTIMELY, JUDICIARY LAW 489 WAS NOT VIOLATED (SECOND DEPT))/HEARSAY (BUSINESS RECORDS EXCEPTION, FORECLOSURE, PLAINTIFF DID NOT SUBMIT ADMISSIBLE PROOF OF DEFAULT, MOTION TO INTERVENE WAS UNTIMELY, JUDICIARY LAW 489 WAS NOT VIOLATED (SECOND DEPT))/BUSINESS RECORDS EXCEPTION TO THE HEARSAY RULE (FORECLOSURE, PLAINTIFF DID NOT SUBMIT ADMISSIBLE PROOF OF DEFAULT, MOTION TO INTERVENE WAS UNTIMELY, JUDICIARY LAW 489 WAS NOT VIOLATED (SECOND DEPT))/CIVIL PROCEDURE (FORECLOSURE, PLAINTIFF DID NOT SUBMIT ADMISSIBLE PROOF OF DEFAULT, MOTION TO INTERVENE WAS UNTIMELY, JUDICIARY LAW 489 WAS NOT VIOLATED (SECOND DEPT))/CPLR 4518 (FORECLOSURE, PLAINTIFF DID NOT SUBMIT ADMISSIBLE PROOF OF DEFAULT, MOTION TO INTERVENE WAS UNTIMELY, JUDICIARY LAW 489 WAS NOT VIOLATED (SECOND DEPT))/CPLR 1012, 1013 (FORECLOSURE, PLAINTIFF DID NOT SUBMIT ADMISSIBLE PROOF OF DEFAULT, MOTION TO INTERVENE WAS UNTIMELY, JUDICIARY LAW 489 WAS NOT VIOLATED (SECOND DEPT))/DEBTOR-CREDITOR (JUDICIARY LAW 489, PLAINTIFF DID NOT SUBMIT ADMISSIBLE PROOF OF DEFAULT, MOTION TO INTERVENE WAS UNTIMELY, JUDICIARY LAW 489 WAS NOT VIOLATED (SECOND DEPT))/JUDICIARY 489 FORECLOSURE, PLAINTIFF DID NOT SUBMIT ADMISSIBLE PROOF OF DEFAULT, MOTION TO INTERVENE WAS UNTIMELY, JUDICIARY LAW 489 WAS NOT VIOLATED (SECOND DEPT))

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BANK’S EVIDENCE OF STANDING TO BRING THE FORECLOSURE ACTION INSUFFICIENT (SECOND DEPT).

The Second Department, reversing Supreme Court, determined that plaintiff bank did not demonstrate standing to bring the foreclosure action:

Where, as here, the note has been endorsed in blank, the purported holder of the note must establish its standing by demonstrating that the original note was physically delivered to it prior to the commencement of the action (see UCC 3-202[1]; 3-204[2]…). The plaintiff attempted to establish its standing through the affidavit of Jonathan Manko, an officer of Bank of America, N.A., the purported servicing agent for the plaintiff. Manko averred that he reviewed all of the documents attached to his affidavit and “authenticate[d] them as coming directly from the loan file at issue herein and kept in the ordinary course of business.” Manko averred that this action was commenced on December 30, 2010, and at that time, the plaintiff was in possession of the original note and mortgage. However, the plaintiff failed to demonstrate that the records Manko relied upon were admissible under the business records exception to the hearsay rule (see CPLR 4518[a]) because Manko, an officer of Bank of America, N.A., did not attest that he was personally familiar with the plaintiff’s record-keeping practices and procedures … . Bank of N.Y. Mellon v Selig, 2018 NY Slip Op 06874, Second Dept 10-17-18

FORECLOSURE (BANK’S EVIDENCE OF STANDING TO BRING THE FORECLOSURE ACTION INSUFFICIENT (SECOND DEPT))/CIVIL PROCEDURE (FORECLOSURE, STANDING, BANK’S EVIDENCE OF STANDING TO BRING THE FORECLOSURE ACTION INSUFFICIENT (SECOND DEPT))/EVIDENCE (FORECLOSURE, STANDING, BANK’S EVIDENCE OF STANDING TO BRING THE FORECLOSURE ACTION INSUFFICIENT (SECOND DEPT))/HEARSAY (FORECLOSURE, BANK’S EVIDENCE OF STANDING TO BRING THE FORECLOSURE ACTION INSUFFICIENT (SECOND DEPT))/BUSINESS RECORDS EXCEPTION TO HEARSAY RULE (FORECLOSURE, BANK’S EVIDENCE OF STANDING TO BRING THE FORECLOSURE ACTION INSUFFICIENT (SECOND DEPT))

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