Deutsche Bank Natl. Trust Co. v Espinoza

[*1] Deutsche Bank Natl. Trust Co. v Espinoza 2013 NY Slip Op 50926(U) Decided on June 5, 2013 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 This opinion is uncorrected and will not be published in the printed Official Reports.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 June 5, 2013
Supreme Court, Suffolk County

Deutsche Bank National Trust Company, as Trustee for HST Asset Securitization Corporation 2007-OPT1 Mortgage Pass Through Certificates 2007-OPT1, Plaintiff, Jorge Espinoza, ANA C. ESPINOZA, a/k/a Ana Carolina Espinoza, SAND CANYON CORPORATION, f/k/a Option One Mortgage, Defendants.



48404/2009



SHAPIRO, DICARO &

BARAK, LLC

Attys. For Plaintiff

250 Crossing Blvd

Rochester, NY 14624

E. WATERS & ASSOCS. P.C.

Attys. for Defendants Espinoza

140 Grand St. - Ste. P-902

White Plains, NY 10601

Thomas F. Whelan, J.

Upon the following papers numbered 1 to9read on this motion by the plaintiff for a judgment of foreclosure and sale and cross motion by certain defendants to vacate defaults, dismiss the complaint or for leave to [*2]serve late answer; Notice of Motion/Order to Show Cause and supporting papers 1 - 4; Notice of Cross Motion and supporting papers5-7; Answering papers8-9; Replying Affidavits and supporting papers; Other; (and after hearing counsel in support and opposed to the motion) it is,

ORDERED that this motion (#002) by the plaintiff for an order confirming the report of the referee to compute and entry of a judgment of foreclosure and sale is considered under RPAPL 1351, et seq., and is granted; and it is further

ORDERED that the cross motion by the mortgagor defendants, Jorge and Ana Espinoza, for a vacatur of the order of reference, dismissal of the complaint pursuant to CPLR 3211 or, in the alternative, an order excusing their default in answering and granting them leave to appear herein and defend by service of an answer in the form of the proposed answer attached to the moving papers is considered under CPLR 3211 and 3012(d) and is denied.

On December 9, 2009, the plaintiff commenced this action to foreclose a September 21, 2006 mortgage given by the Espinoza defendants to secure a mortgage note of the same date given by defendant Jorge Espinoza in connection with the purchase of residential real property located in Lindenhurst, New York. In October of 2007, the note and mortgage were assigned to the plaintiff in writing by the original lender. The mortgage loan documents were the subject of a modification agreement dated October 24, 2008. Among other things, the modification agreement restated the amounts then due and owing and it adjusted the interest rate of the loan for a term of five years.

In its complaint, the plaintiff alleges that in August of 2009, the Espinoza defendants defaulted in making the payments due under the terms of the note and mortgage as modified by the October 24, 2008 agreement. The plaintiff commenced this action thereafter on December 9, 2009. No appearance by answer or otherwise was made by the Espinoza defendants nor the corporate defendant named in the caption who was joined herein due to its purported ownership interest in a subordinate mortgage.

Within two months of the filing of the complaint, the settlement conference procedures of the type required by CPLR 3408 were undertaken by personnel assigned to the specialized mortgage foreclosure conference part and a screening conference was scheduled for February 16, 2010. An appearance was apparently made by the Espinoza defendants, as this preliminary screening conference was adjourned to April 19, 2010 for a full settlement conference before a court attorney referee. Over the course of the following eighteen months, the Espinoza defendants participated in no fewer than eleven more conferences conducted by the mortgage foreclosure conference part. On November 17, 2011, the matter was released from the conference part without a settlement having been reached and assigned to this court for adjudication of the merits of the claims interposed herein.

Meanwhile, the plaintiff's ex-parte application (#001) for an order fixing the defaults in answering of all defendants and appointing a referee to compute was held hostage by the provisions of 22 NYCRR 202.12-a, which imposes an administrative stay upon all motions made in mortgage foreclosure proceedings until the settlement conference procedures are concluded (see 22 [*3]NYCRR202.12-a[C][7]). As a result, the plaintiff's motion for an order of reference, which was made in March of 2010, was not calendared until December 7, 2011. By order dated, December 13, 2011, the plaintiff's motion for an order fixing the defaults in answering on the part of the defendants and appointing a referee to compute was granted by this court.

By the instant motion (#002), the plaintiff moves for an order confirming the report of the referee of sale and for issuance and entry of a judgment of foreclosure and sale. The Espinoza defendants, through the affirmation of their counsel and cross moving papers, oppose the plaintiff's motion and cross move (#003) for vacatur of the order of reference, dismissal of the complaint pursuant to CPLR 3211 or leave to file a late answer. The court shall consider the defendants' cross motion first since the granting thereof may render the plaintiff's motion-in-chief, academic. For the reasons stated below, the cross motion by the Espinoza defendants is denied while the plaintiff's motion-in-chief is granted.

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 Fed. Sav. & Loan Assn. v McGown, 77 AD3d 890, 909 NYS2d 642 [2d Dept 2010], quoting Lipp v Port Auth. of NY & NJ, 34 AD3d 649, 649, 824 NYS2d 671 [2d Dept 2006]; see also Midfirst Bank v Al-Rahman, 81 AD3d 797, 917 NYS2d 871 [2d Dept 2011]; Karalis v New Dimensions HR, Inc, 105 AD3d 707, 962 NYS2d 647 [2d Dept2013]; Swedbank, AB v Hale Ave. Borrower, LLC, 89 AD3d 922, 932 NYS2d 540 [2d Dept,2011]; Community Preservation Corp. v Bridgewater, 89 AD3d 784, 932 NYS2d 378 [2d Dept 2011]; Deutsche Bank Natl. Trust Co. v Rudman, 80 AD3d 651, 914 NYS2d 672 [2d Dept 2010]). This standard governs applications made both prior and subsequent to a formal fixation of a default on the part of the defendants by the court (see Bank of New York v Espejo, 92 AD3d 707, 939 NYS2d 105 [2d Dept 2012]; Integon Natl. Ins. Co. v Norterile, 88 AD3d 654, 930 NYS2d 260 [2d Dept 2011]; Ennis v Lema, 305 AD2d 632, 760 NYS2d 197 [2d Dept 2003]; Landa, Picard & Weinstein v Ruesch, 102 AD2d 813, 476 NYS2d 383 [2d Dept 1984] cf., Guzetti v City of New York, 32 AD3d 234, 820 NYS2d 29 [1st Dept 2006]).

A motion pursuant to CPLR 3012(d) should include a proposed answer, verified by one having knowledge of facts constituting a potentially meritorious defense (see CPLR 3012[d]; Ogman v Mastrantonio Catering, Inc., 82 AD3d 852, 918 NYS2d 375 [2d Dept 2011]; Gross v Kail, 70 AD3d 997, 893 NYS2d 891 [2d Dept 2010]; Baldwin v Mateogarcia, 57 AD3d 594, 869 NYS2d 217 [2d Dept 2007]; Bekker v Fleischman, 35 AD3d 334, 825 NYS2d 270 [2d Dept 2006]). Where the motion is supported only by an affirmation of counsel and a proposed answer that is verified only by counsel without first hand knowledge of the facts alleged, no showing of a meritorious defense is made (see Karalis v New Dimensions HR, Inc, 105 AD3d 707, supra).

Here, the Espinoza defendants defaulted in answering the summons and complaint served upon them in December of 2009 and such defaults were fixed and determined in the order of reference issued on December 13, 2011. In light of their status as parties in default, the cross moving defendants are not entitled to affirmative relief of a non-jurisdictional nature pursuant to CPLR 3211 [*4]or otherwise absent the vacatur of their defaults upon the grounds enumerated in CPLR 5015, 3012(d) or others available to them, if any (see US Bank Natl. Ass'n v Gonzalez, 99 AD3d 694, 952 NYS2d 59 [2d Dept 2012]; Deutsche Bank Trust Co., Am. v Stathakis, 90 AD3d 983, 935 NYS2d 651 [2d Dept 2011]; Holubar v Holubar, 89 AD3d 802, 934 NYS2d 710 [2d Dept 2011]; McGee v Dunn, 75 AD3d 624, 624, 906 NYS2d 74 [2d Dept 2010]; US Bank Natl. Ass'n v Vardales, 39 Misc 3d 1211[A], 2013 WL 1490658 [Sup. Ct. Suffolk County 2013]; Deutsche Bank Natl. Trust Co. v Young, 2012 WL 6019543 [Sup. Ct. Suffolk County 2012]).

Two of the three grounds underlying the moving defendants' demands for the affirmative relief of dismissal of this action pursuant to CPLR 3211 rest upon the non-jurisdictional grounds of lack of capacity or standing to sue and legal insufficiency (see CPLR 3211[a][3]; [a][7]). Under the case authorities cited immediately above (see e.g,. US Bank Natl. Ass'n v Gonzalez, 99 AD3d 694, supra), the court need not address these grounds until and unless the Espinoza defendants are successful in vacating their default pursuant to CPLR 3012(d) which requires a demonstration of a reasonable excuse and at least one meritorious defense to the plaintiff's claims for foreclosure and sale.

The third ground advanced for dismissal is characterized by defense counsel as one resting upon a purported lack of subject matter jurisdiction pursuant to CPLR 3211(a)(2). Upon a reading of the complaint, it is evident that the true nature of this claim is a purported absence of standing on the part of the plaintiff due to its failure to demonstrate that it was the owner or holder of the note and mortgage at the time of commencement of this action via a valid written assignment or otherwise. However, this claim lacks merit as appellate case authorities have repeatedly instructed that a standing defense is not a jurisdictional in nature (see Deutsche Bank Natl. Trust Co. v Hunter, 100 AD3d 810, 954 NYS2d 181 [2d Dept 2012; Wells Fargo Bank Minn., N.A. v Mastropaolo, 42 AD3d 239, 243—244, 837 NYS2d 247 [2d Dept 2007]). Instead, the defense of standing is merely an affirmative defense that is waived if not raised in a timely pre-answer motion to dismiss or in an answer (see HSBC Bank USA, N.A. v Taher, 104 AD3d 815, 962 NYS2d 301 [2d Dept 2013]; US Bank Natl. Ass'n v Tate, 102 AD3d 859, 958 NYS2d 722 [2d Dept 2013]; Bank of New York v Alderazi, 99 AD3d 837, 951 NYS2d 900 [2d Dept 2012]; U.S. Bank Natl. Ass'n v Denaro, 98 AD3d 964, 950 NYS2d 581 [2d Dept 2012]; U.S. Bank v Emmanuel, 83 AD3d 1047, 921 NYS2d 320 [2d Dept 2011]; Wells Fargo Bank Minn., N.A. v Mastropaolo, 42 AD3d 239, supra). The court considers the demand for dismissal pursuant to CPLR 3211 as one bordering on frivolous in light of defense counsel's citation to one or more of these case authorities. In any event, the court will not consider this demand for this affirmative relief, absent a successful demonstration of the grounds required for excusing the Espinozas' defaults in answering pursuant to CPLR 3012(d) as demanded by them in their cross moving papers.

As indicated above, to succeed on an application to vacate a default upon the granting of leave to serve a late answer pursuant to CPLR 3012(d), the moving party must set forth a reasonable excuse for the default in answering and demonstrate his or her possession of a meritorious defense to the plaintiff's claims (see Swedbank, AB v Hale Ave. Borrower, LLC, 89 AD3d 922, supra; Community Preservation Corp. v Bridgewater, 89 AD3d 784, supra; Deutsche Bank Natl. Trust Co. v Rudman, 80 AD3d 651, supra; Maspeth Fed. Sav. & Loan Assn. v McGown, 77 AD3d 890, [*5]supra). A review of the defendants' cross moving papers reveals that no meritorious excuse for their extremely lengthy default that occurred some three and one-half years ago was advanced. The failure to advance any excuse warrants a denial of the defendants' cross motion for relief pursuant to CPLR 3012(d) (see HSBC Mtge. Corp. v Morocho, ___ AD3d___, 2013 WL 1983724 [2d Dept 2013]; Deutsche Bank Natl. Trust Co. v Rudman, 80 AD3d 651, supra; Emigrant Mtge. Co., Inc. v Teel, 74 AD3d 1275, 1276, 903 NYS2d 250 [2d Dept 2011]). Morever, the failure to proffer an excuse obviates the need for inquiry into the issue of the existence of a meritorious defense (see Bank of America, N.A. v Gowrie, ___ AD3d ___, 963 NYS2d 878 [2d Dept 2013]; Deutsche Bank Natl. Trust Co. v Pietranico, 102 AD3d 724, 957 NYS2d 868 [2d Dept 2013]; Tribeca Lending Corp. v Correa, 92 AD3d 770, 938 NYS2d 599 [2d Dept 2012]). The court thus denies those portions of the cross motion wherein the Espinoza defendants seek a vacatur of their defaults in answering together with a vacatur of the December 13, 2011 order of reference and leave to file an answer in the form of the one attached to the cross moving papers.

The defendants' failure to succeed on the application to vacate their defaults in answering, warrants a denial of their demands for dismissal of the complaint pursuant to CPLR 3211(a)(7) (see US Bank Natl. Ass'n v Gonzalez, 99 AD3d 694, supra; Deutsche Bank Trust Co., Am. v Stathakis, 90 AD3d 983, supra; Holubar v Holubar, 89 AD3d 802 supra; McGee v Dunn, 75 AD3d 624, supra). Even if it were otherwise, all of the grounds advanced by the defendants for dismissal of the complaint rest upon claims that the plaintiff lacks standing to prosecute its claim for foreclosure and sale. Since, however, a lack of standing is not a jurisdictional defect nor an element of the plaintiff's claim for foreclosure sale, but instead, is merely an affirmative defense which must be due and timely raised by one possessed of such defense, all the defendants' demands for dismissal were waived by their failure to assert such defense in such manner (see HSBC Bank USA, N.A. v Taher, 104 AD3d 815, supra; US Bank Natl. Ass'n v Tate, 102 AD3d 859, supra; Bank of New York v Alderazi, 99 AD3d 837, supra; U.S. Bank Natl. Ass'n v Denaro, 98 AD3d 964, supra).

Finally, the court rejects defense counsel's challenges to the affirmation of plaintiff's counsel

submitted on this motion pursuant to Administrative Order 548-10, as amended by Administrative Order 438-11. By order dated February 28, 2011, this court declared that these Administrative Orders and a subsequently promulgated provision of court Rule 202.12—a, requiring the submission of this affirmation during the course of a mortgage foreclosure action were ultra vires and otherwise invalid (see LaSalle Bank, N.A. v Pace, 31 Misc 3d 627, 919 NYS2d 794 [Sup. Ct., Suffolk County 2011]) That order was appealed and recently affirmed in an order issued by the Second Department. Therein, the Appellate Division described the attorney affirmation as "not itself substantive evidence or a new argument supporting summary judgment" (see LaSalle Bank, N.A. v Pace, 100 AD3d 970, 955 NYS2d 161 [2d Dept 2012]). The defendants are thus preluded from relying upon perceived deficiencies in counsel's affirmation in an effort to forestall the plaintiff's entitlement to the remedy of foreclosure and sale.

In view of the foregoing, the cross motion (#003) by the Espinoza defendants for a vacatur of their defaults, dismissal of the complaint and/or leave to serve a late answer is denied. The plaintiff's motion-in-chief (#002) for confirmation of the report of the referee to compute and for [*6]entry of judgment of foreclosure and sale is granted. The plaintiff's moving papers clearly demonstrated the plaintiff's entitlement to such relief (see RPAPL 1351).

Proposed judgment, as modified by the court, has been marked signed.

Dated: June 5, 2013_____________________________

THOMAS F. WHELAN, J.S.C.