Trustco Bank v Alexander

[*1] Trustco Bank v Alexander 2009 NY Slip Op 50996(U) [23 Misc 3d 1129(A)] Decided on May 12, 2009 Supreme Court, Saratoga County Nolan, J. Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431. This opinion is uncorrected and will not be published in the printed Official Reports.

Decided on May 12, 2009
Supreme Court, Saratoga County

Trustco Bank, Plaintiff,

against

James E. Alexander, Defendant.



2008-3351



Overton, Russell, Doerr and Donovan, LLP

Attorneys for Plaintiff

19 Halfmoon Executive Park Drive

Clifton Park, New York 12065

Legal Aid Society of Northeastern

New York, Inc.

Attorneys for Defendant

55 Colvin Avenue

Albany, New York 12206

Thomas D. Nolan, J.

In December 2005, defendant James E. Alexander, borrowed $342,000.00 at 6.0% annual interest from plaintiff in whose favor he signed a bond providing for monthly payments of $2,050.50 for 30 years and executed a mortgage on his single-family residence at 27 Rebecca Drive, Town of Greenfield, Saratoga County.

As an initial matter, the mortgage is not a high cost or subprime or nontraditional mortgage. CPLR 3408 therefore does not apply, and thus a mandatory settlement conference is not required before the action may proceed to judgment.

Defendant failed to make the monthly payment due in March 2008 and those coming due thereafter. On September 3, 2008, plaintiff commenced this foreclosure action by filing a summons and complaint, and on September 10, 2008, a copy of the summons and complaint was served, by personal delivery, upon defendant at First Saratoga Funding, a business defendant [*2]owned, located at 258 Ushers Road, Suite 203, Clifton Park, New York. Then, on September 21, 2008, plaintiff filed an amended complaint after it realized that its initial complaint did not include the notice required by Real Property Actions and Proceedings Law § 1303.[FN1] On October 17, 2008, after three unsuccessful attempts to serve defendant by personal delivery, a copy of summons and the amended complaint pursuant to CPLR 308 (4) was affixed to the door of 10 Dyer Drive, Clifton Park, New York, and a second copy was mailed to defendant at that address which plaintiff identified as defendant's actual dwelling address.

In his answer to the amended complaint, defendant denies its material allegations and asserts affirmative defenses that the court lacks personal jurisdiction over him; that plaintiff failed to mitigate damages, or "deal" reasonably or in good faith with defendant, or engage in reasonable and appropriate loss mitigation; that the complaint fails to state a cause of action; and that plaintiff failed to comply with "various" State and Federal statutes in "the inception, closing, servicing and/or management of this loan and/or commencement of this action".

In support of its motion for summary judgment, plaintiff offers a copy of the pleadings, a copy of the bond and mortgage, and an affidavit from a bank vice-president detailing the loan transaction, the nature of defendant's default, and the balance allegedly due and addressing the merits of defendant's affirmative defenses.

Defendant opposes the motion and cross-moves for summary judgment dismissing plaintiff's action principally on the contention that plaintiff's failure to deliver the correct RPAPL 1303 notice with its initial complaint renders void the service by personal delivery on September 10, 2008. Next, defendant contends that the "nail and mail" service of a copy of the summons and amended complaint on October 17, 2008 was also ineffective in that 10 Dyer Drive, Clifton Park, New York was not defendant's residence or dwelling. Defendant asserts, notwithstanding his occasional stays at his girlfriend's house at 10 Dyer Drive, that 27 Rebecca Drive at all relevant times was and is his residence and dwelling place and the "nail and mail" service at his lady friend's address was ineffective to secure jurisdiction over him. Defendant also in his affidavit explains the circumstances which resulted in his default in making the monthly loan payments, namely that First Saratoga Funding, his mortgage brokerage business, failed; that his six year relationship with the mother of his son came to an end, and he was ordered to pay child support; and finally, that in his current job as a sales representative for a New Jersey based mortgage company, he is unable to generate sufficient income to pay the loan or support the modification or refinancing of the loan.[FN2] If the merits of plaintiff's motion were reached, defendant states that he "would like very much to stay in my home"; "has no other place to go at this time", and lacks "sufficient funds to secure and pay for a new place...". Defendant's attorney, in addition to the legal arguments advanced, urges that plaintiff as a community [*3]"hometown" bank should work with defendant to "fashion [a] creative solution" and consider "various options, including forbearance, loan modification, restructuring of the loan or a combination of [these options]" and negotiate with defendant in good faith to reach an acceptable modification rather than pursue foreclosure of the mortgage or insist that defendant satisfy the arrears in full before reinstating the loan.

In opposing the cross motion, plaintiff's vice-president contends that 10 Dyer Drive, Clifton Park was defendant's residence in October 2008 and asserts, without supporting evidence, that mail plaintiff sent to defendant at 27 Rebecca Drive was returned by the post office and indicated a forwarding address of 10 Dyer Drive, Clifton Park, New York and alleges that when plaintiff's process server went to the mortgaged property, he found it "vacant". Plaintiff states that defendant's personal circumstances are unfortunate but that his inability to make his monthly payments is "beyond the plaintiff's control" and cannot excuse his failure to satisfy his legal obligation.

First, the principles governing foreclosure. "Entitlement to a judgment of foreclosure may be established, as a matter of law, where a mortgagee produces both the mortgage and unpaid note, together with evidence of the mortgagor's default, thereby shifting the burden to the mortgagor to demonstrate, through both competent and admissible evidence, any defense which could raise a question of fact". HSBC Bank USA v Merrill, 37 AD3d 899 (3rd Dept 2006). The affidavit of a bank officer based upon review of the business records is sufficient to satisfy plaintiff's prima facie burden. Charter One Bank FSB v Leone, 45 AD3d 958 (3rd Dept 2007). Here, plaintiff meets its threshold burden demonstrating entitlement to summary judgment. In any event, defendant admits that he has not made for more than one year the payments called for in the bond.

The first issue is whether plaintiff's initial service by personal delivery of a copy of the summons and complaint, which concededly did not include the up-to-date statutorily required notice required by RPAPL 1303, secured jurisdiction over the defendant. If such service were effective, the validity of plaintiff's second "nail and mail" service need not be considered.

RPAPL 1303 was enacted in 2006 as part of the "Home Equity Theft Protection Act" and imposed, in foreclosure actions of owner-occupied one to four-family dwellings, the requirement that a specific notice be delivered to the defendant-mortgagor with the summons and complaint. Again, defendant contends that plaintiff's failure to deliver the proper notice renders the service made on September 10, 2008 a nullity.

The court reviewed the filings in the Saratoga County Clerk's office. Plaintiff's original complaint, filed September 3, 2008, includes as page 19, the then just recently out-of-date version of the RPAPL 1303 notice required to be delivered with the summons complaint in mortgage foreclosures affecting all owner-occupied residences commenced before September 1, 2008 (Court Exhibit A). Plaintiff's affidavit of service states such notice was delivered personally to defendant with the summons and complaint on September 10, 2008 at his place of business. Defendant does not controvert he was served there; yet his counsel urges that such service was "akin to the failure to provide sufficient or adequate notice of the nature of the proceeding, as in a bare summons, thereby warranting dismissal" (Affidavit of Debra J. Willsey, Esq., paragraph 9). Again, RPAPL 1303 was amended as part of the New York "Foreclosure Prevention and Responsible Lending Act" effective August 8, 2008 and a "revised" notice (Court [*4]Exhibit B) was required to be delivered with the summons and complaint in foreclosure actions commenced on or after September 1, 2008.

The issue then is whether plaintiff's failure to deliver in the first instance the revised notice is a fatal subject matter jurisdictional defect. It is not. First, defendant offers no precedent to support a contrary determination. Further, CPLR 2001 permits the court to disregard any mistake, omission, defect or irregularity when a substantial right to the adverse party is not prejudiced. The plaintiff's delivery of an outdated RPAPL 1303 notice to defendant should be disregarded here for two major reasons. First, defendant is a "sophisticated" mortgagor having owned and operated until recently a mortgage brokerage business and therefore was well aware that he was in danger of losing his home and also that he should be "wary" of foreclosure rescue scams, the two warnings added to the § 1303 notice. Second, the defendant notwithstanding outdated notice retained counsel and answered the amended complaint. Plaintiff's failure to deliver the "revised" version of RPAPL 1303 notice did not prejudice defendant, and the mistake is properly disregarded.

Plaintiff's action was therefore properly commenced by filing, and personal jurisdiction was acquired over defendant by the service of a copy of the summons and complaint by personal delivery to him on September 10, 2008 at his place of business.

Defendant's remaining defenses lack merit.

Plaintiff's motion is granted, without costs.

Defendant's cross motion is denied, without costs.

Plaintiff is to submit an order providing for the appointment of a referee to compute the amounts due under the mortgage except attorney's fees and to report whether the property can be sold in one parcel on five (5) days' notice to defendant. Following the reference, plaintiff is to give defendant five (5) days' notice of plaintiff's application for judgment of foreclosure and sale.

This memorandum shall constitute the decision of the court. All papers, including this decision, are being returned to plaintiff's counsel. The signing of this decision shall not constitute entry or filing under CPLR 2220. Counsel is not relieved from the applicable provisions of that section relating to filing, entry and notice of entry.

DATED: May 12, 2009

Ballston Spa, New York

Hon. Thomas D. Nolan, Jr.

Supreme Court Justice Footnotes

Footnote 1:RPAPL 1303 was amended effective August 5, 2008 and the notice that is required to be delivered to the mortgagor with the summons and complaint in a foreclosure action was revised to add additional information. Court Exhibit A (annexed hereto) is a copy of the notice which plaintiff delivered to defendant with its original complaint. Court Exhibit B (annexed hereto) is a copy of a revised notice.

Footnote 2:Defendant has been discharged in bankruptcy from personal liability to plaintiff on the bond.