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PLAINTIFF BANK DID NOT DEMONSTRATE COMPLIANCE WITH THE NOTICE PROVISIONS OF REAL PROPERTY ACTIONS AND PROCEEDINGS LAW (RPAPL) 1304 (SECOND DEPT).

The Second Department, reversing Supreme Court, determined plaintiff bank did not demonstrate compliance with the notice provisions of Real Property Actions and Proceedings Law (RPAPL) 1304:

… [T]he plaintiff failed to establish, prima facie, that it complied with RPAPL 1304 … . Although Menyweather [an assistant secretary employed by Nationstar Mortgage LLC, the plaintiff’s loan servicer] stated in his affidavit that the RPAPL 1304 notices were mailed by regular and certified mail, and attached copies of the notices, the plaintiff failed to attach, as exhibits to the motion, any documents establishing that the notices were actually mailed … . The plaintiff failed to submit a 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, although Menyweather attested that he had personal knowledge of the loan servicer’s records, and that those records included the records of the prior servicer, Bank of America, Menyweather did not attest to knowledge of the mailing practices of Bank of America, the entity that allegedly sent the 90-day notices to the defendant … . Since the plaintiff failed to provide evidence of the a ctual mailing, or evidence of a standard office mailing procedure designed to ensure that the items were properly addressed and mailed, sworn to by someone with personal knowledge of the procedure, the plaintiff failed to establish its strict compliance with RPAPL 1304 … . HSBC Bank USA, N.A. v Sawh, 2019 NY Slip Op 08556, Second Dept 11-27-19

 

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FEDERAL BANKRUPTCY STAY TOLLED THE STATUTE OF LIMITATIONS IN A FORECLOSURE ACTION COMMENCED BEFORE THE STAY WENT INTO EFFECT (CT APP).

The Court of Appeals, in a full-fledged opinion by Judge Garcia, over a three-judge dissent, determined an automatic bankruptcy stay tolls the statute of limitations where a party has a pending action at the time the stay was imposed:

New York law tolls the statute of limitations where “the commencement of an action has been stayed by a court or by statutory prohibition” (CPLR 204 [a]). Federal bankruptcy law automatically stays the commencement or continuation of any judicial proceedings against a debtor upon the filing of a bankruptcy petition (see 11 USC § 362 [a]). We must determine whether the bankruptcy stay qualifies as a “statutory prohibition” under CPLR 204 (a), and, if so, whether a party may later avail itself of the toll where, at the time the stay was imposed, that party had a pending action asserting the same claim. … [W]e answer yes to both questions … . * * *

CPLR 204 (a) provides, “[w]here the commencement of an action has been stayed by a court or by statutory prohibition, the duration of the stay is not a part of the time within which the action must be commenced.” The result here depends on our reading of the term “commencement.”

Plaintiff argues that it is impossible for defendant to have been prohibited from “commencing” an action because a foreclosure action had been commenced prior to plaintiff’s bankruptcy filing. Application of plaintiff’s rule would be as follows: Because defendant filed the first foreclosure claim and defendant responded by filing a bankruptcy petition, invoking the automatic stay, commencement of that first action was not “stayed” under the statute and the toll is inapplicable. And when defendant filed a second foreclosure action, and plaintiff again responded by again filing a bankruptcy petition that invoked the automatic stay, “commencement” of that second action was not stayed, once again making the toll inapplicable … . * * *

Neither this Court nor the Legislature has restricted the term “commencement” to the first time a party files a complaint asserting a cause of action; instead the term may also include the commencement of subsequent actions asserting the same claim … . Lubonty v U.S. Bank Natl. Assn.., 2019 NY Slip Op 08520, CtApp 11-25-19

 

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A PERSON NOT NAMED ON THE NOTE AND MORTGAGE IS NOT ENTITLED TO RPAPL 1304 NOTICE OF THE FORECLOSURE ACTION, NOTWITHSTANDING CORRESPONDENCE REQUESTING THAT HE BE ADDED TO THE DOCUMENTS AS A BORROWER (THIRD DEPT).

The Third Department, reversing Supreme, determined that a person who was not named as a borrower on the note and mortgage was not entitled to notice of the foreclosure action pursuant to RPAPL 1304. The plaintiff mortgage company’s motion for summary judgment should have been granted:

The record contains correspondence that reveals that a representative from Monroe Title, the title insurer for PHH Mortgage, recognized that Robert Johnson, not Brad Johnson, was the party making all payments on the mortgage. …The record also contains two letters … , on Robert Johnson’s behalf, to PHH Mortgage representative …, wherein [the writer] requests that the mortgage be modified to list Robert Johnson as the borrower. However, despite these communications, the modification did not occur and Brad Johnson continued to be the sole signatory on both instruments. Inasmuch as it is evident from the record that Brad Johnson is the only individual listed as a borrower on all relevant documents, including the note and mortgage, Robert Johnson was not a borrower and was not entitled to RPAPL 1304 notices  … . Federal Natl. Mtge. Assn. v Johnson, 2019 NY Slip Op 08472. Third Dept 11-21-19

 

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THE BANK DID NOT PRESENT SUFFICIENT PROOF OF COMPLIANCE WITH THE NOTICE OF DEFAULT PROVISIONS OF THE MORTGAGE; THE BANK NEED NOT AFFIRMATIVELY ADDRESS COMPLIANCE WITH RPAPL 1304 NOTICE REQUIREMENTS IF THE ISSUE IS NOT RAISED IN THE ANSWER; REPLY PAPERS CAN PRESENT EVIDENCE FOR THE FIRST TIME IN RESPONSE TO ISSUES FIRST RAISED IN OPPOSITION TO PLAINTIFF’S MOTION FOR SUMMARY JUDGMENT; BUT REPLY PAPERS MAY NOT PRESENT, FOR THE FIRST TIME, EVIDENCE ADDRESSING AN ISSUE RAISED IN THE DEFENDANT’S ANSWER (SECOND DEPT).

The Second Department, reversing Supreme Court, determined the plaintiff bank (Aurora) did not provide sufficient proof of providing notice of default to defendants. The Second Department noted that the bank need not affirmatively prove compliance with the notice requirements of RPAPL 1304 because the issue was not raised in defendant’s answer. The court also noted that evidence submitted in reply papers addressing matters raised for the first time in opposition to plaintiff’s motion for summary judgment can be considered, but evidence submitted for the first time in reply papers addressing issues which were raised in the answer should not be considered:

In support of its motion, Aurora submitted two affidavits. The first affidavit was from Laura McCann, Vice President of Aurora, the loan servicer responsible for sending the notices of default. The second affidavit was from A.J. Loll, Vice President of Nationstar Mortgage, LLC, the current plaintiff and loan servicer. While McCann attested that Aurora was responsible for “providing notices pursuant to the terms of the note and mortgage evidencing the mortgage loan at issue, and specifically for providing notices such as the notice required under Section 22 of the mortgage,” nowhere in her affidavit did she attest to the actual mailing or delivery of those notices. As to the second affidavit, while Loll attested, inter alia, that “[t]he servicing records show that a 30-day letter was mailed to [the] defendants . . . … , which letter advised Defendants of their default,” and attached a purportedly “true copy” of the 30-day letter as Exhibit I, the affidavit did not contain a statement that the 30-day notice was sent in a manner according with the terms of the mortgage, i.e., “mailed by first class mail or . . . actually delivered to [borrower’s] notice address if sent by other means.” Moreover, Loll’s affidavit “did not contain a statement that [Loll] was familiar with [Aurora’s] mailing practices and procedures,” so as to establish “proof of a standard office practice and procedure designed to ensure that items are properly addressed and mailed” … . While Loll claimed that servicing records show that a 30-day letter was mailed to the defendants, she did not identify what those records are and did not authenticate them as business records and attach them to her affidavit … . Nationstar Mtge., LLC v Tamargo, 2019 NY Slip Op 08197, Second Dept 11-13-19

 

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BANK DID NOT SUBMIT SUFFICIENT PROOF OF DEFENDANT’S DEFAULT OR COMPLIANCE WITH RPAPL 1304 NOTICE REQUIREMENTS; 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’s (Chase’s) motion for summary judgment in this foreclosure action should not have been granted, The court held: (1) the conclusory affidavit submitted by the bank  to prove defendant’s default had no probative value, the business record itself should have been provided; (2) compliance with the mailing provisions of RPAPL 1304 was not proven by the bank; (3) failure to comply with the notice provisions of RPAPL 1304 can be raised as a defense at any time; and (4) by not raising the failure to provide the notice required by the mortgage in the answer or a motion to amend the answer, the defendant waived that defense:

Here, the affidavit of Mimoza Petreska, a vice president of Chase, submitted in support of Chase’s motion, inter alia, for summary judgment on the complaint insofar as asserted against the defendant, was insufficient to establish the defendant’s default in payment under the note … . The only business record annexed to Petreska’s affidavit with regard to the default was a copy of the notice of default dated May 15, 2012, which merely stated, in conclusory fashion, that the defendant’s loan was in default. Conclusory affidavits lacking a factual basis are without evidentiary value … . Moreover, “[w]hile 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” … . “[I]t is the business record itself, not the foundational affidavit, that serves as proof of the matter asserted” … . JPMorgan Chase Bank, N.A. v Akanda, 2019 NY Slip Op 08180, Second Dept 11-13-19

 

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PLAINTIFF DID NOT SUBMIT SUFFICIENT PROOF OF COMPLIANCE WITH RPAPL 1304 AND DID NOT SUBMIT SUFFICIENT PROOF OF STANDING; PLAINTIFF’S MOTION FOR SUMMARY JUDGMENT IN THIS FORECLOSURE ACTION SHOULD NOT HAVE BEEN GRANTED (SECOND DEPT).

The Second Department, reversing Supreme Court, determined the plaintiff did not demonstrate compliance with the RPAPL 1304 notice requirements and did not demonstrate standing:

… [T]he plaintiff failed to establish, prima facie, that it complied with RPAPL 1304. In support of its motion, the plaintiff submitted the affidavit of a representative of its loan servicer. The affidavit was insufficient to establish that the notice was sent to the defendant in the manner required by RPAPL 1304, as the representative did not attest to knowledge of the mailing practices of the entity which sent the notice, and provided no independent proof of the actual mailing … . Since the plaintiff failed to provide proof of the actual mailing, 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, the plaintiff failed to establish its strict compliance with RPAPL 1304 … . …

… [T]he plaintiff appended a copy of the note to the complaint, but the plaintiff is not the original lender, and the note was not endorsed. In support of its motion for summary judgment, the plaintiff submitted an allonge bearing an undated endorsement in blank, as well as the affidavit of a representative of the loan servicer, dated March 31, 2016, who stated that the plaintiff was in possession of the note, but who did not attest that the plaintiff possessed the note prior to the commencement of the action, or that she had personal knowledge of such possession. The plaintiff’s submissions therefore failed to establish, prima facie, that the plaintiff was the holder of the note at the time of commencement of this action in March 2015 … . Bank of N.Y. Mellon v Ettinger, 2019 NY Slip Op 07759, Second Dept 10-30-19

 

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PLAINTIFF SUBMITTED INSUFFICIENT PROOF THAT THE NOTICE REQUIRED BY RPAPL 1304 AND THE MORTGAGE WAS PROVIDED TO DEFENDANTS; PLAINTIFF’S MOTION FOR SUMMARY JUDGMENT IN THIS FORECLOSURE ACTION SHOULD NOT HAVE BEEN GRANTED (SECOND DEPT).

The Second Department, reversing Supreme Court, determined plaintiff did not present sufficient evidence to demonstrate compliance with Real Property Actions and Proceedings Law (RPAPL) 1304 or with the notice provisions of the mortgage:

… [T]he plaintiff failed to attach, as exhibits to the motion, any documents to prove that the mailing actually happened … . Nor did [plaintiff’s employee] attest that she had personal knowledge of the mailing practices of her employer at the time the RPAPL 1304 notices allegedly were sent. Accordingly, “[s]ince the plaintiff failed to provide proof of the actual mailing, 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, the plaintiff failed to establish its strict compliance with RPAPL 1304” … .

The plaintiff also failed to establish, prima facie, that a notice of default in accordance with section 22 of the mortgage was properly transmitted to the defendants prior to the commencement of this action. [Plaintiff’s employee’s] unsubstantiated and conclusory statements that a representative … mailed such notice “[i]n accordance with the provisions of the Mortgage” to the defendants at their last known address at least 30 days prior to commencement of the action, even combined with copies of the notices of default and envelopes, with no evidence as to the date the envelopes were sent, “failed to establish that the required notice was mailed to the defendant[s] by first-class mail or actually delivered to [their] notice address’ if sent by other means, as required by the mortgage agreement” … . U.S. Bank N.A. v defendants., 2019 NY Slip Op 07806, Second Dept 10-30-19

 

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A LETTER INDICATING THE DEBT WOULD BE ACCELERATED IF THE ARREARS WERE NOT PAID DID NOT SERVE TO ACCELERATE THE DEBT IN THIS FORECLOSURE ACTION; DEFENDANT DID NOT DEMONSTRATE THE BANK FAILED TO COMPLY WITH THE NOTICE REQUIREMENTS OF RPAPL 1304 (SECOND DEPT).

The Second Department, reversing Supreme Court, determined defendant’s motion for summary judgment contending the bank’s action was time barred and the bank failed to comply with RPAPL 1304 should have been denied. The 2010 letter from the bank which mentioned that the loan would be accelerated if the arreats were not paid did not serve to accelerate the debt. And defendant (Grella) did not demonstrate the bank failed to comply with the notice requirements of RPAPL 1304:

On or about December 12, 2010, the loan servicer sent Grella a notice of default which demanded payment of the arrears, and stated, in relevant part, that “[u]nless the payments on your loan can be brought current by January 11, 2011, it will become necessary to require immediate payment in full (also called acceleration) of your Mortgage Note. . . . If funds are not received by the above referenced date, we will proceed with acceleration.” Thereafter, the note and the mortgage were assigned to the plaintiff. …

Contrary to Grella’s contention, the language in the 2010 notice of default did not serve to accelerate the loan, as it “was nothing more than a letter discussing acceleration as a possible future event, which does not constitute an exercise of the mortgage’s optional acceleration clause” … . …

Here, as the moving party, Grella was required to affirmatively demonstrate that the plaintiff failed to strictly comply with the notice requirements of RPAPL 1304 … . Grella failed to make such a showing.  HSBC Bank USA, N.A. v Grella, 2019 NY Slip Op 07388, Second Dept 10-16-19

 

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THE BANK DID NOT SUBMIT PROOF OF COMPLIANCE WITH THE FILING REQUIREMENTS OF RPAPL 1306 IN THIS FORECLOSURE ACTION, THE BANK’S MOTION FOR SUMMARY JUDGMENT SHOULD NOT HAVE BEEN GRANTED (SECOND DEPT).

The Second Department, reversing Supreme Court, determined that the bank’s motion for summary judgment in this foreclosure action should not have been granted because the bank did not submit proof of compliance with the filing requirements of RPAPL 1306:

Pursuant to RPAPL 1306, lenders “shall file with the superintendent of financial services . . . within three business days of the mailing of the notice required by [RPAPL 1304]” a form containing certain information regarding the borrower and the mortgage (RPAPL 1306[1]; see RPAPL 1306[2]). RPAPL 1306(1) further states that “[a]ny complaint served in [an action] initiated pursuant to [RPAPL article 13] shall contain, as a condition precedent to such [action], an affirmative allegation that at the time the [action] is commenced, the plaintiff has complied with the provisions of this section.”

Here, in support of its motion, the plaintiff failed to submit any evidence of compliance with RPAPL 1306. JPMorgan Chase Bank, N.A. v Lyon, 2019 NY Slip Op 07060, Second Dept 10-2-19

 

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DEFENDANT IN THIS FORECLOSURE ACTION WAS A ‘BORROWER’ AND THEREFORE WAS ENTITLED TO THE 90-DAY NOTICE REQUIRED BY RPAPL 1304; THE BANK HAD ARGUED SHE WAS NOT A BORROWER BECAUSE SHE DID NOT SIGN THE NOTE (SECOND DEPT).

The Second Department, reversing Supreme Court, determined defendant in this foreclosure action was a “borrower” within the meaning of RPAPL 1304 and therefore she was entitled to the required 90-day notice, which she did not receive. That bank argued that she was not a borrower because only her deceased husband signed the note. However she was named on the mortgage and she signed the mortgage:

While RPAPL 1304 provides that the notice shall be sent to the “borrower,” that term is not defined in the statute (see RPAPL 1304). It is undisputed that only the defendant’s deceased husband, Solomon Forman, is identified as a “borrower” in the note which is secured by the mortgage. That is not determinative in this case. In the mortgage instrument, the defendant is referred to as a borrower. On the first page of the mortgage instrument, under the heading entitled “Words Used Often in this Document,” the defendant is identified, along with her husband, as ” Borrower.'” The defendant is also designated as “Borrower” under her signature on the signature page of the mortgage instrument. While the plaintiff contends that this standard mortgage form mischaracterizes the defendant as a borrower, any ambiguities in the language of the document must be construed against the plaintiff, as the plaintiff is the party who supplied the document … . Bank of N.Y. Mellon v Forman, 2019 NY Slip Op 07045, Second Dept 10-2-19

 

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