Bank of NY v Jayaswal

[*1] Bank of NY v Jayaswal 2011 NY Slip Op 51922(U) Decided on October 17, 2011 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 This opinion is uncorrected and will not be published in the printed Official Reports.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 17, 2011
Supreme Court, Suffolk County

The Bank of New York, Plaintiff,

against

Jagannath Jayaswal, PENELOPE JAYASWAL, ET AL, Defendants.



38145-09



DRUCKMAN LAW GROUP, PLLC

Attys. For Plaintiff

242 Drexel Ave.

Westbury, NY 11590

YOUNG LAW GROUP, PLLC

Attys. For Defendants

80 Orville Dr.

Bohemia, NY 11716

Thomas F. Whelan, J.

ORDERED that this motion (#002) by the defendant/mortgagors for an order granting them leave to file a late answer in this mortgage foreclosure action is considered under CPLR 3012(d) and [*2]is denied.

The record reflects that the plaintiff commenced this mortgage foreclosure action by filing in September of 2009. Originated on February 21, 2007, the subject mortgage was given to secure a loan of $499,995.00 under the terms of a Home Equity Credit Line Agreement issued to the defendant mortgagors by a predecessor-in-interest to the plaintiff. This loan constituted a second mortgage on the residential real property of the Jayaswal defendants in Hampton Bays, New York.

In July of 2010, an application for an order of reference, together with a Request for Judicial Intervention were filed in this action with the court. Pursuant to procedures then in effect, the motion was held in abeyance as the action was assigned to the Specialized Mortgage Foreclosure Conference Part. Settlement conferences were held on no fewer than five occasions beginning in August of 2010 and ending on June 23, 2011. During the course of these conferences, the plaintiff's ex-parte application for an order of reference was marked "not-signed - withdrawn" which effected a disposition of the motion without judicial imput.

By the instant motion, the defendants/mortgagors seek, in effect, an order relieving them of their default in answering and for leave to serve and file a late answer to the plaintiff's complaint. For the reasons stated, the motion is denied.

It is well settled that a " defendant who has failed to timely appear or answer the complaint must provide a reasonable excuse for the default and demonstrate a meritorious defense to the action when.... . . . moving to extend the time to answer or to compel the acceptance of an untimely answer' " (Maspeth Federal Sav. & Loan Assn. v Mcgown, 77 AD3d 890, 909 NYS2d 642 [2d Dept 2010], citing Lipp v Port Auth. of NY & NJ, 34 AD3d 649, 649, 824 NYS2d 671 [2d Dept 2006]; see also Lane v. Smith,

84 AD3d 746, 922 N.Y.S.2d 214 [2d Dept 2011]). The determination of what constitutes a reasonable excuse lies within the sound discretion of the Supreme Court (see Maspeth Federal Sav. & Loan Assn. v Mcgown, 77 AD3d 890, supra; Star Indus. Inc. v Innovative Beverages, Inc., 55 A.3d 903, 904, 866 N.Y.S.2d 357 [2d Dept 2008]).

Here, the sole excuse proffered by the moving defendants is advanced in the affidavit of defendant, Jagannath Jayaswal, dated May 4, 2011. In ¶ ¶ 3 -8 of such affidavit, Jayaswal avers as follows:

3. After being personally served [with] Plaintiffs [sic] summons and complaint on October 1, 2009, I became extremely panicked about the possibility of losing my home.

4. In my panicked state, I proactively contacted, via telephone, my current servicer BAC Home Loan Servicing, LP ("BAC") to find out what I can [sic] do to resolve the issues alleged in the complaint.

5. I called the office of the CEO of BAC at (818) 713-2953, on or about October 5, 2009; in which my call was directed to Michelle Lewis, an operation consultant at BAC. Michelle Lewis [*3]explained to me that I should "calm down" and that I should not "worry about" legal paper work served upon me, and that as long as I remained in contact with their home retention department at BAC as well as verbally provided [sic] BAC with a synopsis of my current household income and expenses: that Bac would be able to offer me one of their various loss mitigation programs to resolve the issue at bar.

6. The information provided to me by my very own mortgage loan servicer began to appease my fears.

7.Relying upon the legal advice given to me by the Office of the CEO of BAC, my husband [wife] and I did not interpose a timely answer to Plaintiffs [sic] summons and complaint.

8. It was not until I attended several foreclosure conferences that I was advised by a the Court appointed referee that it may be in our (i.e. my wife and I) best interest to hire an attorney.

Defendant Jagannath Jayaswal and his counsel urge the court to excuse the defendants' default in answering by reason of the conversation said defendant allegedly had with Michelle Lewis of BAC, the loan servicer, on October 5, 2009. While there are no allegations that the above recitation of the October 5, 2009 conversation with BAC s "operations consultant" accurately represents the sum and substance of such conversation, the defendants characterize Ms. Lewis' words as "legal advice" which allegedly duped defendant Jagannath Jayaswal into not answering the complaint in a timely manner.

This court finds, however, that these conclusory, self-serving allegations of fact do not constitute a reasonable excuse for the default. It is well settled law that vague, nonspecific and uncorroborated factual assertions, upon which a claim of a reasonable excuse for a default is predicated, are generally insufficient to satisfy the reasonable excuse requirements (see Wells Fargo Bank v Linzenberg, 50 AD3d 674, 853 NYS2d 912 [2d Dept 2008]; Canty v Gregory, 37 AD3d 508, 829 N.YS2d 694 [2d Dept 2007]; Aames Capital Corp. v Davidsohn, 24 AD3d 474, 808 NYS2d 229 [2d Dept 2005]; Desiderio v Devani, 24 AD3d 495, 806 NYS2d 240 [2d Dept 2005] ).

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 Chakmakian v. Maroney,, 78 AD3d 1103, 911 N.Y.S.2d 651 [2d Dept 2010]; Performance Const. Corp. v Huntington Bldg., LLC, 68 AD3d 737, 888 NYS2d 892[2d Dept 2009]; Scarlett v. McCarthy, 2 AD3d 623, 768 N.Y.S.2d 342 [2d Dept 2003]), 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 N.Y.S.2d 689 [2d Dept 2006]) and a justifiable reliance thereon (see American Shoring, Inc. v D.C.A. Const., Ltd,. 15 AD3d 431, 789 NYS2d 722 [2d Dept 2005]).

In the mortgage foreclosure arena, claims that the mortgagor contacted the lender or its [*4]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 (see Onewest Bank FSB v.Berry, 25 Misc 3d 1218(A), 901 NYS.2d 908 [Sup Ct., Suffolk County; Whelan, J., 2009]; Deutsche Bank v. Gillio, 22 Misc 3d 1131[A], 881 NYS2d 362 [Sup Ct., Suffolk County; Whelan, J., 2009]). Confusion or ignorance about legal processes or court procedures have likewise been held not to constitute reasonable excuses for the failure to answer or otherwise appear (see US Bank Nat'l. Assoc. v Slavinski, 78 AD3d 1167, 912 NYS2d 285 [2d Dept 2010]). These results are consistent with the recent statutory amendments some of which obligate foreclosing plaintiffs to give extensive notice to defendant mortgagors regarding the gravity of the subject matter of the foreclosure action, including the need to answer the summons and complaint while others obligate both sides to engage in settlement discussion at court sponsored conferences, albeit, after the time to answer has expired (see Laws of 2008, Ch. 472 § 3—a as amended by the Laws of 2009, Ch. 507 §§ 9;10;25; see also RPAPL §§ 1302; 1303; 1304; 1320; CPLR 3408).

Here, the defendant Jayaswal admits to being served with the summons and complaint in this action on October 9, 2009. The summons contained the following warning mandated by the provisions of RPAPL §1320:

If you do not respond to this summons and complaint by serving a copy of the answer on the attorney for the mortgage company who filed this foreclosure proceeding against you and filing the answer with the court, a default judgment may be entered and you can loose your home.

Speak to an Attorney or go to the court where your case is pending for further information on how to answer the summons and complaint and protect your property.

Sending payment to your mortgage company will not stop this foreclosure action.

YOU MUST RESPOND BY SERVING A COPY OF THE ANSWER ON THE ATTORNEY FOR THE PLAINTIFF (MORTGAGE COMPANY) AND FILING THE ANSWER WITH THE COURT.

In light of the new statutory framework, this court has held that 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 Onewest Bank FSB v.Berry, 25 Misc 3d 1218(A), 901 NYS2d 908 [Sup Ct., Suffolk County; Whelan, J., 2009], supra; Deutsche Bank v Gillio, 22 Misc 3d 1131[A], 881 N.YS2d 362 [Sup Ct., Suffolk County; Whelan, J., 2009] supra; cf. Emigrant Mortgage Company, Inc v Abbey, 2011 WL 972555 [Sup. Ct. Queens Cty. Mcdonald, J]). 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 and demonstrates justifiable reliance thereon, will a [*5]vacatur of a default in answering be excused as reasonable (see CPLR 5015[a][3]; Midfirst Bank v Al-Rahman, 81 AD3d 797, 917 NYS2d 871 [2d Dept 2011]; Tribeca Lending Corp. v. Crawford, 79 A.D3d 1018, 916 NYS2d 116 [2d Dept 2010]; Bank of New York v. Stradford, 55 AD3d 765, 869 N.YS2d 554 [2d Dept 2008], supra ; Wells Fargo v Lizenberg, 50 AD3d 674, 853 NYS.2d 912 [2d Dept 2008], supra ; Aames Capital Corp. v Davidsohn, 24 AD3d 474, 808 NYS.2d 229 [2d Dept 2005], supra; American Shoring, Inc. v D.C.A. Const., Ltd,. 15 AD3d 431, 789 NYS2d 722 [2d Dept 2005], supra; Miller v Lanzisera, 273 AD2d 866, 709 NYS2d 286 [4th Dept 2000], supra).

Jayaswal's claims that the servicing agent of the plaintiff gave him "legal advice" which duped him into defaulting rather than answering the summons and complaint in a due and timely manner are insufficient to establish a reasonable excuse for the default. For these allegations constitute nothing but vague, conclusory and unsubstantiated claims that the plaintiff's servicing agent engaged in acts of extrinsic fraud of the type contemplated by CPLR 5015 (a)(3). Assuming, without so finding, that the recitation of the words employed by Ms. Lewis as alleged by Mr. Jayaswal in his supporting affidavit is both complete and accurate, the words attributed to Ms. Lewis do not constitute "legal advice". Nor is there any evidence of justifiable reliance thereon for several reasons, including: 1) Mr. Jayaswal's receipt of the summons that included the RPAPL §1320 bold-face type notice which indicated that an answer was required and that information about its preparation should be obtained from an attorney or the court; and 2) Mr. Jayaswal knowledge that he was speaking to an "operations consultant" whose authority to speak on behalf of the plaintiff in this action was neither expressed nor reasonably inferable from the circumstances surrounding that single phone conversation which was initiated by Mr. Jayaswal (see Loschiavo v Port Authority of New York, 58 NY2d 1040, 462 NYS2d 440 [1983]; Oddo v Edo Marine Air, 4 AD3d 774, 826 NYS2d 343 [2d Dept 2006]).

The failure to demonstrate a reasonable excuse for their defaults obviates the necessity for an examination into whether the moving defendants possess at least one potentially meritorious defense (see Deutsche Bank National Trust Co. v Rudman, 80 AD3d 651, 914 NYS2d 672 (see 2d Dept 2011]). In any event, the moving papers failed to demonstrate possession of any such defense on the part of the moving defendants (see Deutsche Bank Nat. Trust Co. v. Pietranico, ___ Misc 3d ___, 928 NYS2d 818 [Sup. Ct. Suffolk Cty. Whelan, J 2011]).

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

Dated:__________________________________________________

THOMAS F. WHELAN, J.S.C.