U.S. Bank, N.A. v Arizmendy

[*1] U.S. Bank, N.A. v Arizmendy 2014 NY Slip Op 51275(U) Decided on August 13, 2014 Supreme Court, Queens County Siegal, 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 This opinion is uncorrected and will not be published in the printed Official Reports.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 August 13, 2014
Supreme Court, Queens County

U.S. Bank, N.A., f/k/a Wachovia Bank, N.A., as Indenture Trustee Mast Alt Trust 2004-10, Plaintiff,

against

Maria C. Arizmendy; City of New York Environmental Control Board; City of New York Department of Transportation Parking Violations Bureau and Maria Oleaga, Defendants.



27610/06
Bernice D. Siegal, J.

The following papers numbered 1 to 9 read on this motion for an order vacating Default Judgment for Foreclosure and Sale and ordering the dismissal of the case pursuant to fraud and collusion, misrepresentation CPLR §5015(a)(3); and lack of subject matter jurisdiction and the doctrine of unclean hands.

PAPERS

NUMBERED

Notice of Motion - Affidavits-Exhibits..................................1 - 4

Affirmation in Opposition......................................................5 -9

Upon the foregoing papers, it is hereby ordered that the motion is resolved as follows:

Defendant, Maria C. Arizmendy ("Arizmendy" or "defendant"), moves pursuant to CPLR §5015 for an Order Vacating the Default Judgment For Foreclosure and Sale and an Order dismissing the action. Defendant also argues for relief pursuant to CPLR §2221 (e), although not specifically noticed.

Background

The underlying foreclosure action was commenced on December 12, 2006, based on defendant's default in payment under the terms of the subject note and mortgage. After service of [*2]process was completed, defendant failed to appear herein or answer the complaint, and as a result, the court awarded plaintiff judgment on default. On May 11, 2007, the court entered a final Judgment of Foreclosure and Sale.

The court notes that this is the fourth post-judgment Order to Show Cause brought by the defendant to stay the occurrence of the foreclosure sale. In addition, defendant has filed for bankruptcy three times since the final judgment was issued. Defendant's course of conduct has caused the within Foreclosure and Sale to be delayed approximately four years.

Arizmendy has made a number of similar requests for relief that were all denied. She failed to move to reargue or appeal these decisions.

Arizmendy now contends that the Assignment of Mortgage was fraudulent, that the Assignment was signed by robo-signer Jennifer Anthony, and that the signatures of Notary Jacquelyn Freeman do not match, and were therefore forged. Pursuant to Administrative Order 431/11, plaintiff must complete Form A, which requires a representative of the plaintiff to review and confirm the factual accuracy set forth in the complaint prior to a motion for order of reference. In paragraph 20 of her instant motion, Defendant further argues that plaintiff's representative knew of the alleged fraud, and nevertheless confirmed the legitimacy of the facts alleged in the complaint in violation of Administrative order 431/11. Discussion

Vacatur of Default

Defendant's motion to vacate the default judgment entered against her is denied on the grounds that she did not provide a reasonable excuse for her failure to answer.

Defendant seeks to vacate the default judgment entered against her as a result of newly discovered evidence of alleged fraud. The evidence allegedly includes various documents which were fraudulently notarized and passed off by Plaintiff as legitimate in order to obtain the default judgment. The issue here is whether the Defendant, in its motion to vacate the default judgment entered against her, establishes both a potentially meritorious defense and a reasonable excuse for her default. (see Wells Fargo Bank v. Joshi, 114 AD3d 936 [2nd Dep't 2014]; Bank of New York v. Segui, 42 A.D3d 555 [2nd Dep't 2007].)

It is well settled that "pursuant to CPLR §5015, a court may vacate a judgment or order on the basis of fraud, misrepresentation, or other misconduct of an adverse party.'" (Beltway Capital, LLC v. Soleil, 104 AD3d 628, 631 [2nd Dep't 2013] citing CPLR §5015 (a)(3).)

The courts recognize two types of fraud: extrinsic and intrinsic. Extrinsic fraud "is a fraud practiced in obtaining a judgment such that a party may have been prevented from fully and fairly litigating the matter" (Bank of New York v. Lagakos, 27 AD3d 678 [2nd Dep't 2006]), i.e. causing a party to refrain from appearing on a case "to prevent any possibility of an adverse result." (Shaw v. Shaw, 97 AD2d 403, 403 [2nd Dept 1983].) Extrinsic fraud is present where "defendant might be properly served, but then, through some device, trick or deceit, is led to believe that he or she need not defend the suit." Id. Proof of extrinsic fraud inherently consists of a both a meritorious defense and a justifiable excuse for the default. Id.

Intrinsic fraud typically rests upon false claims or perjury, and is different from extrinsic fraud, which rests upon an impairment of a party's right to litigate altogether. (Lagakos, 27 AD3d at 679.) Unlike extrinsic fraud, a showing of intrinsic fraud still requires the movant to provide a [*3]reasonable excuse for its failure to appear or otherwise answer in order to vacate a default judgment. (see Bank of NY v. Stradford, 55 AD3d 765, 766 [2nd Dept 2008]; Lagakos, 27 AD3d at 679.)

Defendant does not allege that Plaintiff impeded its ability to answer. Defendant, upon its own volition, and without any undue influence by the Plaintiff, failed to appear or otherwise answer, and extrinsic fraud is therefore inapplicable in this case. The allegations made by the Defendant therefore sound in, and will be classified as, intrinsic fraud.

Defendant refers to Exhibits E and C to establish prima facie evidence that Plaintiff fraudulently confirmed Jacquelyn Freeman's forged signatures in order to both obtain a default judgment against the Defendant and satisfy the requirements of Administrative Order 548/10. However, the documents attached as Exhibit C in Defendant's motion to vacate do not contain any signature purported to be that of Ms. Freeman. Moreover, Defendant's conclusion that Ms. Freeman's signature on the notary portion of the "Assignment of Mortgage," contained in Exhibit E was forged and later passed off as genuine by the Plaintiff is based on the fact that the signatures do not match.

Although the Defendant does not offer forensic handwriting analysis or expert testimony to validate its allegations of forgery, the markedly different signatures may reasonably be deemed a forgery by the trier of fact. As such, the Defendant has a meritorious defense.

"The determination as to what constitutes a reasonable excuse for a default is generally within the sound discretion of the trial court." (Levy Williams Const. Corp v. U.S. Fire Ins. Co., 280 AD.2d 650, 651 [2nd Dept 2001] [Law office failure held to be a reasonable excuse]; see also Deutsche Bank Nat. Trust Co. F. Luden, 91 AD3d 701 [2nd Dept 2012] [attorney failed to file and serve answer deemed reasonable excuse].) The court will not vacate a default judgment where no reason is given for the default. (DeLeo v. Bertucci, 98 AD2d 708, 708 [2nd Dept 1983].) Moreover, "broad, unsubstantiated allegations of fraud on the part of [the] plaintiff" does not constitute a reasonable excuse, "which is required when a CPLR 5015(a)(3) motion alleged intrinsic fraud." (Bank of NY, 55 AD3d 765, 765-66.)

If the alleged fraud was unknown to Arizmendy at the time she was required to answer, then it could not have been the reason for her failure to answer. Defendant's allegations of fraud did not impede her ability to answer within the statutorily prescribed period because, upon Defendant's own admission, her failure to answer preceded her discovery of the allegedly fraudulent assignment. As such, Defendant's allegations of fraud is not a reasonable excuse for her failure to answer.

Defendant has not provided a reasonable excuse for her failure to answer. Accordingly, relief must be denied. (See Wells Fargo Bank v. Malave, 107 AD3d 880 [2nd Dept 2013); Fremont Inv. & Loan v. Bertram, 90 AD3d 988 [2nd Dept 2011]; Bank of NY v. Lagakos, 27 AD3d 678 [2nd Dept 2006]; Fischman v. Gilmore, 246 AD2d 508 [2nd Dept 1998]; Morel v. Clacherty, 186 AD2d 638 [2nd Dept 1992]; Wayasamin v. Wayasamin, 167 AD2d 460 [2nd Dept 1990].)Leave to Renew

Defendant's motion to renew pursuant to CPLR § 2221 (e) is denied on the grounds that she both failed to furnish the required document with her motion papers, by not submitting a copy of the previously denied moving papers, and further failed to provide a reasonable justification for her failure to raise the issue of alleged fraud in her prior motion.

The issue is whether the allegedly forged signature on the assigned note is considered a new fact requiring renewal for the purposes of this motion, where the defendant waited seven years and filed numerous motions after she discovered the allegedly forged documents before she raised the [*4]issue of fraud.

CPLR § 2221 (e) sets out the requirements for a motion for leave to renew. A motion for leave to renew: 1) shall be identified specifically as such; 2) shall be based upon new facts not offered on the prior motion that would change the prior determination or shall demonstrate that there has been a change in the law that would change the prior determination; and 3) shall contain reasonable justification for the failure to present such facts on the prior motion. (CPLR § 2221 (e)). Although renewal motions generally should be based on newly discovered facts that were not offered on the previous motion, courts have discretion to relax this requirement and to grant such a motion in the interest of justice. (Liberty Mut. Ins. Co. v. Allstate Ins. Co., 237 AD2d 260, 262 [2nd Dept 1997].) However, "while it may be within the court's discretion to grant renewal upon facts known to the moving party at the time of the original motion a motion for leave to renew is not a second chance freely given to parties who have not exercised due diligence in making their first factual presentation.'" (Renna v. Gullo, 19 AD3d 472, 473 [2nd Dept 2005] citing to Rubinstein v. Goldman, 225 AD2d 328, 328-29 [1st Dept 1996].)

Defendant contends that Plaintiff filed the assignment with the Queens County Clerk's office a year after commencing this action, and that the allegedly fraudulent assignment is a new fact not offered on the prior motion. Defendant argues that the prior determination would have been different had this new document been available. Defendant further argues that she first became aware of the assignment when Plaintiff filed the documents with the Queens County Clerk's office a year after the commencement of this action. Plaintiff, on the other hand, denies that the assignment was previously unknown to the Defendant by affirming that it attached a valid copy of the assignment to the summons and complaint.

As a procedural matter, the Defendant failed to properly furnish the required documents with her motion papers by not submitting a copy of the previously denied moving papers. (CPLR § 2214 (c).; see Biscone v. JetBlue Airways, Corp., 103 AD3d 158, 177 [2nd Dept 2012]. Moreover, Defendant did not, in her relief requested portion of her motion to vacate cover page, indicate that she seeks to move for a leave to renew pursuant to CPLR 2221 (e). Accordingly, Defendant's motion to renew is defective.

Even if the application was not defective, the motion to renew would be denied on the merits. Had Defendant exercised due diligence, it is highly likely she would have gained access to the assignment documents in 2006, when this action was filed by a lender other than the one from which she had originally secured the mortgage and note. More importantly, Defendant held off through numerous motions and hearings spanning over seven years to raise the issue of fraud on documents it had ultimately obtained in 2007. Defendant's motion does not provide a reasonable justification for her failure to present such facts on the prior motion, and she will therefore not be afforded a second chance for her failure to exercise due diligence in both filing procedurally correct motion papers and in raising the issue of in her previous motions, where she had access to the allegedly fraudulent documents.Unclean Hands

Although Defendant's final argument, that the doctrine of unclean hands precludes Plaintiff from equitable relief, may satisfy the meritorious defense prong of vacating the default judgment entered against her, she nevertheless does not satisfy the second prong because she fails to present a justifiable excuse for her failure to answer. Therefore, Defendant's motion to vacate the default [*5]judgment on the grounds of alleged unclean hands is denied.Subject Matter Jurisdiction

Whether a litigant has standing requires an inquiry into whether that party has "an interest in the lawsuit that the law will recognize as a sufficient predicate for determining the issue at the litigant's request." (Caprer v. Nussbaum, 36 AD3d 176, 182 [2nd Dept 2006].) "In a mortgage foreclosure action, a plaintiff has standing where it is both the holder or assignee of the subject mortgage and the holder or assignee of the underlying note at the time the action is commenced." (Bank of NY v. Silverberg, 86 AD3d 274, 279 [2nd Dept 2011].) Moreover, "an assignee of a mortgage does not have a right or standing to foreclose a mortgage unless the assignment is complete at the time of commencing the action." (LaSalle Bank Natl. Assn. v. Ahearn, 59 AD3d 911 [3rd Dept 2009].)

Furthermore, a party waives the defense of lack of standing as a result of her failure to "interpose an answer or file a timely pre-answer motion [that] assert[s] the defense." (HSBC Bank, USA v. Dammond, 59 AD3d 490, 490 [2nd Dept 2009].)

Whether or not Plaintiff has an interest in this lawsuit is undisputed. Moreover, Plaintiff was in fact the assignee of both the mortgage and the note at the time it filed this lawsuit. Finally, Exhibit D of Defendant's own motion indicates that the assignment of the mortgage was completed on May of 2006, and Exhibit A of the same indicates that the Plaintiff filed this action and served the summons and complaint on the Defendant in December of 2006. Therefore, Defendant's contention that the Plaintiff lacks standing to bring this action is without merit.

Finally, Defendant waived the defense of lack of standing when she failed to interpose an answer asserting the defense. Id.Conclusion

For the reasons set forth above, Defendant's motion to vacate the default judgment entered against her is denied in its entirety.

Dated:August 13, 2014 ___________________________

Bernice D. Siegal, J. S. C.