Onewest Bank FSB v Berry

[*1] Onewest Bank FSB v Berry 2009 NY Slip Op 52171(U) [25 Misc 3d 1218(A)] Decided on October 23, 2009 Supreme Court, Suffolk County Whelan, 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 This opinion is uncorrected and will not be published in the printed Official Reports.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 October 23, 2009
Supreme Court, Suffolk County

Onewest Bank FSB, Plaintiff,

against

Douglas Kyle Berry and Amelia Berry, Defendants.



8819-09



McCABE, WEISBERG & CONWAY

Attys. For Plaintiff

145 Huguenot St.

New Rochelle, NY 10801

ENEALIA S. NAU, ESQ.

Atty. For Defendants

854 Fulton St.

Brooklyn, NY 11238

Thomas F. Whelan, J.

ORDERED that this application (#

003) by defendant, Douglas Kyle Berry, for an order vacating his default and for leave to serve a late answer is considered under CPLR 5015(a)(1) and is denied.

The record reflects that the plaintiff commenced this action by filing its summons and complaint with the clerk on March 9, 2009. The moving defendant was served therewith on March 12, 2009 pursuant to CPLR 308(2). The record also reflects that no answer was served nor other appearance made by the moving defendant in response to such service.

By order dated July 7, 2009, the court granted the plaintiff's application for an order (1) substituting Amelia Berry for John Doe # [*2]

1; (2) fixing her default and the default of the moving defendant in answering or otherwise appearing herein; (3) amending the caption to reflect the substitution of Amelia Berry and the name of the plaintiff as Onewest by reason of its merger with the original plaintiff; and (4) for the appointment of a referee to compute. After the filing of the referee's report of amounts due, the plaintiff moved, by motion returnable August 27, 2009, for a judgment of foreclosure and sale. That motion was adjourned to September 11, 2009 and granted without opposition on September 14, 2009.

By notice of "cross motion" dated September 10, 2009, returnable October 2, 2009, defendant, Douglas Kyle Berry, interposed this application to vacate his default in answering and for leave to interpose a late answer. [FN1] The motion is predicated upon claims that the moving defendant possesses a meritorious defense to the plaintiff's claim for foreclosure sale due to the plaintiff's failure to give due notice of any default in payment prior to bringing the action, and that the defendant's default in answering the summons and complaint is excusable due to settlement negotiations and/or a lack of standing on the part of the plaintiff.

Although denominated as a cross motion, the instant application by defendant Berry is procedurally improper, as it was neither noticed nor served within the time limitations required for cross motions set forth in CPLR 2215. Since, however, the plaintiff has submitted substantive opposition, the court will address the merits of the defendant's application.

It is well established that a defendant who moves to be relieved of a default in answering on the grounds of an excusable default, must establish both a justifiable excuse for said default and a meritorious defense to the claims against the moving defendant (see CPLR 5015[a][1]; 3012[d]; Eugene DiLorenzo, Inc. v AC Dalton Lumber Co., Inc., 67 NY2d 138, 501 NYS2d 8 [1986]; Baldwin v Mateogarcia, 57 AD3d 594, 869 NYS2d 217 [2d Dept 2008]; Mora v Scarpitta, 52 AD3d 663, 861 NYS2d 110 [2d Dept 2008]; Grinage v City of New York, 45 AD3d 729, 846 NYS2d 300 [2d Dept 2007]). Where such a motion is coupled with a request to serve a late answer, the motion papers must include a proposed answer and due proof of a meritorious defense (see CPLR 3012[d]; Baldwin v Mateogarcia, 57 AD3d 594, supra ; Bekker v Fleischman, 35 AD3d 334, 825 NYS2d 270 [2d Dept 2006]).

Here, the moving defendant failed to establish a justifiable excuse for his failure to answer the plaintiff's summons and complaint. While claims of ongoing settlement negotiations between a defendant and a plaintiff to a pending action may, under certain circumstances, constitute a reasonable excuse for a default in answering (see Scarlett v McCarthy, 2 AD3d 623, 768 NYS2d 342 [2d Dept 2003]; cf. American Shoring, Inc. v D.C.A. Constr. Ltd., 15 AD3d 431, 789 NYS2d 722 [2d Dept 2005]), the movant must demonstrate a good faith belief in settlement that is supported by substantial evidence (see Armstrong Trading, Ltd. v MBM Enter., 29 AD3d 835, 815 NYS2d 689 [2d Dept 2006]). [*3]

In the mortgage foreclosure arena, claims that the mortgagor contacted the lender or its servicing agent in an attempt to secure a loan modification agreement are, without more, insufficient to establish a good faith belief in settlement and the concomitant reasonable excuse for the mortgagor's failure to answer the summons and complaint. This result is consistent with the recent statutory amendments by which plaintiffs in mortgage foreclosure actions are required to engage in settlement conferences in actions involving sub-prime, high-cost and non-traditional residential mortgage loans (see Laws of 2008, Ch. 472 § 3-a; see also RPAPL §§ 1302; 1304; CPLR 3408). The purpose of these settlement conferences is to engage the parties in settlement discussions that are aimed at modifying, in a manner favorable to the borrower, qualifying residential mortgage loans that are the subject of a pending foreclosure action.[FN2]Since the scheduling of these settlement conferences under the legislative and regulatory provisions that require them postdates the time within which the defendant's answer is due (see 22 NYCRR § 202.12-a), the mere engagement in discussions aimed at a potential modification of the subject mortgage loan may not serve as a means to open up an otherwise inexcusable default in answering the summons and complaint by the defendant/mortgagor (see Deutsche Bank v Gillio, 22 Misc 3d 1131[A], 881 NYS2d 362 [ Sup Ct., Suffolk County; Whelan, J., 2009]; cf. Option One v Massanet, 2009 WL 380734 [Sup Ct., Richmond County; Maltese, J,. 2009]). It is only in those cases wherein the moving defendant advances specific and substantiated allegations that the plaintiff or its agents engaged in acts constituting extrinsic fraud, that is, wrongful acts of trickery or deceit which allegedly induced the moving defendant into defaulting or otherwise wrongfully deterred him or her from litigating the plaintiff's claims, will a vacatur of a default in answering be excused as reasonable (see CPLR 5015[a][3]; see also Bank of New York v Stradford, 55 AD3d 765, 869 NYS2d 554 [2d Dept 2008]; Wells Fargo v Lizenberg, 50 AD3d 674, 853 NYS2d 912 [2d Dept 2008]; Aames Capital Corp. v Davidsohn, 24 AD3d 474, 808 NYS2d 229 [2d Dept 2005]).

Here, the moving papers failed to establish by substantial proof the defendant's good faith belief in a settlement of the plaintiff's claims or that the plaintiff engaged in wrongful conduct which rises to the level of actionable extrinsic fraud under CPLR 5015(a)(3). The self-serving, vague and unsubstantiated statements of the defendant and those of his co-worker regarding telephone conversations allegedly had with representatives of the plaintiff prior and subsequent to the commencement of this action are insufficient to establish a reasonable excuse for his default.

The court further finds that the defendant failed to establish a meritorious defense to the plaintiff's claims for foreclosure and sale of the mortgaged premises. The defendant's mere denials of his receipt of the plaintiff's notices of default are not sufficient to establish the plaintiff's non-compliance with a condition precedent to its right to foreclose. In any event, this defense, which is listed as an affirmative defense in CPLR 3015[a] and is thus required to be pleaded as such, was waived by the defendant's failure to assert it in an answer or in a pre-answer notice to dismiss the complaint (see CPLR 3015[a]; 3211[e]). Since it is now well established that an affirmative defense that has been waived by a failure to assert it in an answer or pre-answer motion to dismiss may not [*4]be relied upon to establish the meritorious defense that is required to support an application to vacate a default under CPLR 5015(a)(1), the moving defendant's assertion of such a defense on this motion is unavailing (see HSBC Bank v Dammond, 59 AD3d 679, 875 NYS2d 490 [2d Dept 2009]). The defendant's alternative claim that the plaintiff lacks standing to prosecute its claims for foreclosure and sale are equally unavailing (id.).

In view of the foregoing, the instant motion is in all respects denied.

DATED: _____________________________________________

THOMAS F. WHELAN, J.S.C. Footnotes

Footnote 1: Although the moving papers contain reference to a proposed answer, no such answer was attached to the moving papers.

Footnote 2: The court notes that the loan at issue is not one that is subject to the conference procedures mandated by CPLR 3408 or the Laws of 2008, Ch. 472 § 3-a.