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IN THIS FORECLOSURE ACTION, THE BANK’S PROOF OF MAILING THE RPAPL 1304 NOTICE WAS INSUFFICIENT (SECOND DEPT). ​

The Second Department, reversing Supreme Court in this foreclosure action, determined the bank’s proof that the RPAPL 1304 notice was properly mialed to the defendant was insufficient:

… [A]lthough Gonzales [an employee of plaintiff Wilmington’s loan servicer] stated in her affidavit that RPAPL 1304 notices were mailed by certified and first-class mail, and attached copies of those notices, Wilmington failed to attach any documents showing that the mailings actually happened … . Further, Gonzales did not aver that she had personal knowledge of the purported mailings, and did not describe any standard office procedure designed to ensure that notices are properly addressed and mailed … . Accordingly, Wilmington failed to establish, prima facie, compliance with RPAPL 1304 … . Wilmington Sav. Fund Socy., FSB v Novis, 2021 NY Slip Op 06720, Second Dept 12-1-21

 

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IN THIS FORECLOSURE PROCEEDING, PLAINTIFF BANK FAILED TO DEMONSTRATE STRICT COMPLIANCE WITH THE NOTICE REQUIREMENTS OF RPAPL 1304; NO FOUNDATION FOR THE SUBMITTED BUSINESS RECORDS (SECOND DEPT).

The Second Department, reversing Supreme Court, determined plaintiff’s summary judgment motion in this foreclosure action should not have been granted. Strict compliance with the notice requirements of RPAPL 1304 was not demonstrated with admissible evidence:

… [I]n support of its motion Bayview [plaintiff, successor-in-interest to the original plaintiff, Bank of America (BoA)] submitted the affidavit of Nicole Currey, a supervisor for Bayview, who attached to her affidavit copies of various documents generated by nonparty Walz Group, Inc. (hereinafter Walz), to establish compliance with the mailing requirements of RPAPL 1304. However, Currey failed to address the nature of the relationship between Walz and BoA , and Bayview’s submissions were insufficient to establish a foundation for the admission of the business records relied upon by Bayview to establish compliance with RPAPL 1304 … . Therefore, Bayview failed to demonstrate, prima facie, its strict compliance with the 90-day notice requirement of RPAPL 1304 … . Bank of Am., N.A. v Evanson, 2021 NY Slip Op 06601, Second Dept 11-24-21

 

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FAILURE TO COMPLY WITH THE NOTICE REQUIREMENTS OF RPAPL 1304 CAN BE RAISED AT ANY TIME; HERE IT WAS RAISED IN OPPOSITION TO THE MOTION TO CONFIRM THE REFEREE’S REPORT; THE PROOF OF COMPLIANCE WAS INSUFFICIENT (SECOND DEPT).

The Second Department, reversing Supreme Court’s grant of summary judgment to the bank in this foreclosure action, noted that the failure to comply with the notice requirements of Real Property Actions and Proceedings Law (RPAPL) 1304 can be raised at any time. Here it was raised in opposition to the bank’s motion to confirm the referee’s report:

… [T]he plaintiff failed to establish that it complied with the requirements of RPAPL 1304. The affidavits of Armenia L. Harrell and La’Shana Farrow, both of whom are officers of Wells Fargo Bank, N.A. (hereinafter Wells Fargo), the servicing agent of the plaintiff, were insufficient to establish that the plaintiff complied with RPAPL 1304. Both Harrell and Farrow attested that they were familiar with Wells Fargo’s records and record-keeping practices. Farrow averred, inter alia, that the plaintiff complied with RPAPL 1304 by mailing the required notices. The record indicates that the 90-day notices appear to have been mailed by ASC (America’s Servicing Company). However, neither Harrell or Farrow attest that they personally mailed the notices or that they were familiar with the mailing practices and procedures of ASC. Therefore, they failed establish proof of standard office practice and procedures designed to ensure that items are properly addressed and mailed … . Moreover, the plaintiff failed to send individually addressed notices to each borrower; rather, the 90-day notices were jointly addressed to the [defendants]. U.S. Bank N.A. v Krakoff, 2021 NY Slip Op 06209, Second Dept 11-10-21

 

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THE MOTION TO DISMISS THIS ACTION TO QUIET TITLE SHOULD NOT HAVE BEEN CONVERTED TO A MOTION FOR SUMMARY JUDGMENT TO WHICH PLAINTIFFS HAD NO OPPORTUNITY TO RESPOND; THE COMPLAINT STATED A CAUSE OF ACTION TO QUIET TITLE PURSUANT TO RPAPL ARTICLE 15 (FIRST DEPT).

The First Department, reversing Supreme Court, determined defendant’s motion to dismiss the complaint seeking to quiet title should not have been converted to a summary judgment motion. The complaint stated a cause of action to quiet title pursuant to RPAPL article 15:

… [T]he court should not have converted defendant’s motion to dismiss into a motion for summary judgment under CPLR 3211(c), since plaintiffs did not agree to “charting a summary judgment course,” and the case did not involve a “purely legal question without any disputed issues of fact” … . Conversion of the motion prejudiced plaintiffs, who had no opportunity to respond to the contentions raised by defendant for the first time in reply … . …

“To maintain a cause of action to quiet title [to real property], a plaintiff must allege actual or constructive possession of the property and the existence of a removable cloud on the property, which is an apparent title to the property, such as in a deed or other instrument, that is actually invalid or inoperative” (…see RPAPL 1515; RPAPL 1501[1]). Here, the complaint adequately alleges facts that, if established, could support a finding that plaintiffs attained equitable title arising from the contract of sale they allegedly entered into with codefendant … for 25% of the property, as well as their payment of the agreed price and exclusive and actual occupancy of an apartment in the property … . Davis v Augoustopoulos, 2021 NY Slip Op 05772, First Dept 10-21-21

 

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THERE WAS A QUESTION OF FACT WHETHER THE PLAINTIFF’S FAILURE TO INCLUDE DEFENDANT IN THE ORIGINAL FORECLOSURE PROCEEDING WAS THE RESULT OF “WILFUL NEGLECT;” THEREFORE, PURSUANT TO RPAPL 1523, DEFENDANT’S “WILFUL-NEGLECT” AFFIRMATIVE DEFENSE IN THIS REFORECLOSURE ACTION SHOULD NOT HAVE BEEN DISMISSED (SECOND DEPT).

The Second Department, reversing Supreme Court, determined defendant’s affirmative defense to the reforeclosure should not have been dismissed. Plaintiff had not named defendant in its original foreclosure action, apparently because a quitclaim deed adding defendant to the title was not discovered in the title search. Defendant demonstrated there had been a prior foreclosure action in which defendant had been named as a party. Therefore, there was a question of fact whether the failure to name defendant in the original foreclosure action was the result of “wilful neglect:”

To prevail in a reforeclosure action, the plaintiff must demonstrate that the defect in the original foreclosure action “was not due to fraud or wilful neglect of the plaintiff and that the defendant or the person under whom he claims was not actually prejudiced thereby” (RPAPL 1523[2] [emphasis added]).

Pursuant to the language of RPAPL 1523 … the plaintiff had the burden of demonstrating … both that the defect in the underlying foreclosure action was not the result of fraud or the wilful neglect of the foreclosure plaintiff, and that the defect did not prejudice the defendant (see RPAPL 1523[1], [2]). * * *

Contrary to the plaintiff’s contention, the evidence of the prior foreclosure action in which the defendant was named as a party raised a triable issue of fact as to whether the plaintiff’s failure to name her as a defendant in the underlying foreclosure action was the result of “wilful neglect” (RPAPL 1523[2] …). U.S. Bank N.A. v Lomuto, 2021 NY Slip Op 05363, Second Dept 10-6-21

 

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SENDING THE 90-DAY FORECLOSURE NOTICE TO TWO BORROWERS IN THE SAME ENVELOPE DOES NOT COMPLY WITH THE REQUIREMENTS OF RPAPL 1304, WHICH IS A CONDITION PRECEDENT TO A FORECLOSURE ACTION; BECAUSE THE NOTICE WAS NOT SENT TO EACH BORROWER IN A SEPARATE ENVELOPE THE FORECLOSURE ACTION WAS PROPERLY DISMISSED (SECOND DEPT).

The Second Department, in a full-fledged opinion by Justice Wooten, over a strong dissent, determined RPAPL 1304 requires that the 90-day notice of foreclosure proceedings be sent to each borrower in separate envelopes. Here a single envelope with the RPAPL 1304 notice addressed to both borrowers did not comply with the statute and the foreclosure action was properly dismissed by Supreme Court:

… [W]hile 30-day notices of default were separately mailed to each of the defendants, the 90-day notice, which was sent via certified and first-class mail, was jointly addressed to the defendants. While the record reflects that “F. Yapkowitz” signed for and accepted delivery of the 90-day notice sent via certified mail, receipt of the notice is inconsequential. Even assuming, arguendo, that both of the defendants had signed for and accepted delivery of the 90-day notice, the plaintiff would not have demonstrated strict compliance with the requirements of RPAPL 1304 by mailing a notice jointly addressed to both of the borrowers in the same envelope. Since it is undisputed that the 90-day notice to each of the borrowers was sent in the same envelope, the plaintiff failed to establish its compliance with RPAPL 1304, a condition precedent to the commencement of the action. Wells Fargo Bank, N.A. v Yapkowitz, 2021 NY Slip Op 05139, Second Dept 9-29-21

 

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PROOF OF MAILING OF THE RPAPL 1304 NOTICE TO THE CORRECT ADDRESS WAS NOT INCLUDED IN THE INITIAL MOTION PAPERS AND THEREFORE WAS NOT PART OF PLAINTIFF’S ATTEMPT TO MAKE OUT A PRIMA FACIE CASE; IN ADDTIION, THE PROOF OF MAILING OF THE RPAPL 1304 NOTICE WAS DEFICIENT (SECOND DEPT).

The Second Department, reversing Supreme Court, determined the defendant failed to demonstrate compliance with the RPAPL 1304 notice requirements in this foreclosure action. The proof of mailing to the correct address was first provided in reply papers for the motion to confirm the referee’s report and was not part of plaintiff’s initial summary judgment motion. And the proof of mailing was not supported by proof of the affiant’s knowledge of the mailing practices and procedures of the party which actually mailed the documents:

Although Cantu [plaintiff’s default servicing officer] stated in his affidavit that the RPAPL 1304 notices were mailed by certified and first-class mail to the defendants at the property, and he attached copies of 90-day notices with corresponding certified and first-class envelopes, Cantu did not attach the 90-day notices and envelopes addressed to the property where the defendants resided or any United States Post Office documentation showing that the purported mailings to the property actually occurred … . To the extent the plaintiff relies on copies of the 90-day notices with corresponding certified and first-class envelopes addressed to the property which were submitted for the first time in its reply papers on its subsequent motion … to confirm the referee’s report, those documents were insufficient to satisfy the plaintiff’s prima facie burden on its initial motion … for summary judgment … . “A party seeking summary judgment should anticipate having to lay bare its proof and should not expect that it will readily be granted a second or third chance” … . Further, while Cantu asserted that he had personal knowledge of the plaintiff’s procedures for creating and maintaining its business records, he did not attest that he was familiar with the mailing practices and procedures of Walz, the third-party entity that he acknowledged sent the notices … . Thus, the plaintiff failed to establish proof of standard office practices and procedures designed to ensure the notices were properly addressed and mailed … . Caliber Home Loans, Inc. v Weinstein, 2021 NY Slip Op 05021, Second Dept 9-22-21

 

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THE AFFIDAVITS SUBMITTED TO DEMONSTRATE THE FAIR MARKET VALUE OF THE FORECLOSED PROPERTY IN THIS ACTION SEEKING A DEFICIENCY JUDGMENT PURSUANT TO RPAPL 1371 (2) WERE DEFECIENT; SUPREME COURT PROPERLY ORDERED A HEARING TO ESTABLISH THE FAIR MARKET VALUE (SECOND DEPT).

The Second Department in this foreclosure proceeding seeking a deficiency judgment determined Supreme Court properly ordered a hearing to establish the fair market value of the property. The submitted affidavits were not sufficient:

“RPAPL 1371(2) permits the mortgagee in a mortgage foreclosure action to recover a deficiency judgment for the difference between the amount of indebtedness on the mortgage and either the auction price at the foreclosure sale or the fair market value of the property, whichever is higher” …  When a lender moves to secure a deficiency judgment against a borrower, “the court . . . shall determine, upon affidavit or otherwise as it shall direct, the fair and reasonable market value of the mortgaged premises as of the date such premises were bid in at auction or such nearest earlier date as there shall have been any market value thereof” … . “It is the lender who bears the initial burden of demonstrating, prima facie, the property’s fair market value as of the date of the auction sale”… . “RPAPL 1371 does not require the court to hold an evidentiary hearing; however, where ‘a triable issue as to the reasonable market value is presented, that issue should not be decided upon affidavits, but by the court or a referee, so that the witnesses may be subject to observation and cross-examination'” … . …

The appraisal … was not certified, nor was it accompanied by an affidavit of the appraiser. Moreover, the appraisal stated that the value indicated by the income approach was in the amount of $450,000, while the value indicated by the sales comparison approach was in the amount of $480,000. There was no explanation as to why the Supreme Court should accept the value based on the income approach as opposed to the sales comparison approach. U.S. Bank, N.A. v 199-02 Linden Blvd. Realty, LLC, 2021 NY Slip Op 04991, Second Dept 8-15-21

 

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THE BANK IN THIS FORECLOSURE ACTION WAS NOT REQUIRED TO MEET THE 90-DAY-NOTICE REQUIREMENT OF RPAPL 1304 BECAUSE THE DEFENDANT HAD MOVED FROM THE RESIDENCE; HOWEVER THE BANK WAS STILL REQUIRED BY RPAPL 1304 TO PROVIDE NOTICE OF THE FORECLOSURE TO THE DEFENDANT; THE PROOF THAT NOTICE WAS MAILED WAS INSUFFICIENT (SECOND DEPT).

The Second Department determined the loan in question in this foreclosure proceeding was a “home loan” within the meaning of RPAPL 1304 and therefore the notice requirements of RPAPL 13O4 applied. The bank argued the loan was not a “home loan” because the defendant no longer lived on the property. The Second Department held that, because the defendant had moved, the 90-day-notice required by RPAPL 1304 did not apply, but the bank was still obligated to notify the defendants of the foreclosure action. Because the bank did not submit sufficient proof of compliance with the notice provisions of RPAPL 1304, the bank’s motion for summary judgment was properly denied:

… [W]hile finding, pursuant to RPAPL 1304(3), that “[g]iven that Defendant no longer occupies the residence as his principal dwelling place, the ninety-day period specified in the notice is inapplicable,” the Supreme Court properly concluded that “Defendant’s loan qualified as a ‘home loan’ under RPAPL § 1304(5) due to the fact that the home was Defendant’s primary residence from the time of the loan until he was transferred to California in 2011,” and that, “[t]herefore, Plaintiff needed to serve statutory notice pursuant to RPAPL § 1304 on Defendant by first class mail and certified mail.” …

To establish its compliance with the notice requirements of RPAPL 1304, the plaintiff submitted the affidavit of its employee, Takesha Brown, a document execution specialist. Although Brown stated in her affidavit that the RPAPL 1304 notices were mailed by certified and regular first-class mail, she did not attest to having personal knowledge of the mailing, and the plaintiff failed to attach, as exhibits to the motion, any documents to prove that the notices were actually mailed to the defendant … . In addition, the plaintiff failed to provide “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” … . Nationstar Mtge., LLC v Jong Sim, 2021 NY Slip Op 04979, Second Dept 9-15-21

 

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IN THE CONTEXT OF THIS COMPLICATED FORECLOSURE DECISION, THE 2ND DEPARTMENT EXPLAINED (1) WHEN EVIDENCE SUBMITTED IN REPLY CAN BE CONSIDERED AND (2) THE CRITERIA FOR THE BUSINESS RECORDS EXCEPTION TO THE HEARSAY RULE (SECOND DEPT).

The Second Department, reversing Supreme Court in this foreclosure action, addressed (1) when evidence presented in reply can be considered and (2) how to meet the criteria of the business records exception to the hearsay rule:

Supreme Court … should have considered the Lee affidavit … . … [T]he defendant did not object to the plaintiff’s submission of the Lee affidavit, despite its being submitted for the first time in reply, and does not raise any objection to its admission on appeal. In any event, “[a]lthough a party moving for summary judgement cannot meet its prima facie burden by submitting evidence for the first time in reply” … , the Lee affidavit was an exception to that rule, as it was submitted in response to a specific argument raised for the first time in opposition to the plaintiff’s motion and in support of the defendant’s cross motion … , and the defendant could have responded to the Lee affidavit in his reply papers in further support of his cross motion … . * * *

… [W]hile the Lee affidavit was sufficient to lay a proper foundation for the admission of a business record pursuant to CPLR 4518(a) … , Lee failed to identify the records upon which she relied in making the statements, and the plaintiff failed to submit copies of the records themselves. “[T]he business record exception to the hearsay rule applies to a ‘writing or record’ … . . . [and] it is the business record itself, not the foundational affidavit, that serves as proof of the matter asserted” … . “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” … . Thus, Lee’s assertions as to the contents of the plaintiff’s records were “inadmissible hearsay to the extent that the records she purport[ed] to describe were not submitted with her affidavit” … . Moreover, while “a witness may always testify as to matters which are within his or her personal knowledge through personal observation” … , Lee did not attest to such personal knowledge regarding the physical whereabouts of the consolidated note during the relevant time … . U.S. Bank N.A. v Pickering-Robinson, 2021 NY Slip Op 04775, Second Dept 8-25-21​

 

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