US Bank v Hasan

[*1] US Bank v Hasan 2014 NY Slip Op 50115(U) Decided on February 1, 2014 Supreme Court, Kings County Dear, 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 This opinion is uncorrected and will not be published in the printed Official Reports.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 February 1, 2014
Supreme Court, Kings County

US Bank, Plaintiff,

against

Gamal Hasan et al, Defendant.



27161/09



Hogan Lovells LLP for Plaintiff US Bank

Richard A. Klass, Esq. for Defendant Mohamad Hasan

Noach Dear, J.

Upon the foregoing cited papers, the Decision/Order on this Motion is as follows:

This is the unusual case wherein the parties agree as to all of the relevant facts and the Court is faced solely with issues of law. In 2005, Defendant Gamal Hasan (henceforth, "Gamal") borrowed money from CIT Group securing the loan with a mortgage on the premises located at 72 Downing Street. Defendant Mohamad Hasan (henceforth, "Mohamad") did not sign the note and signed the mortgage as a "Non-Obligor Spouse Owner." Defendants defaulted and the instant foreclosure action was commenced in 2009. A 90 day (RPAPL 1304) notice was timely sent to Gamal only. Though served with the summons and complaint and RPAPL 1303 notices, neither Gamal nor Mohamad (henceforth, "Defendants") appeared and both are currently in default. Numerous motion papers and court orders were sent to Defendants and this Court granted Plaintiff a default judgment against both Defendants and an Order of Reference in late [*2]2011. About two years later, in November 2013, Mohamad appeared through counsel and filed the instant Order to Show Cause and motion seeking to vacate his default and dismiss this action for failure to comply with RPAPL 1304.[FN1]

This Court, thus, must decide whether a 1304 notice needed to be sent to Mohamad and, if such a notice was required, whether its absence is sufficient to mandate vacating his default and dismissing the case against him.

I. Plaintiff Had No Obligation to Send A RPAPL 1304 Notice to Mohamad

RPAPL 1304 states in relevant part: "at least ninety days before a lender, an assignee or a mortgage loan servicer commences legal action against the borrower, including mortgage foreclosure, such lender, assignee or mortgage loan servicer shall give notice to the borrower..." of certain statutorily mandated information. It is clear, however, that the notice need only be sent to a "borrower." While the statute does not define that term, logic dictates that a "borrower" is someone who, at a minimum, either received something and/or is responsible to return it. Mohamad not only did not sign the note herein, his "non-obligor" status is clearly delineated on the mortgage and various riders. To the extent that it appears that only Gamal was obligated to repay the loan, only he was the "borrower."

Mohamad's counsel argues that this case is factually similar to Aurora Loan Svcs, LLC v Weisblum, 85 AD3d 95 [2d Dept 2011]. While it is true that, in that case, the Court found that a spouse who signed the mortgage but not the note was a borrower, the instant facts differ significantly. In Weisblum, both spouses executed the mortgage, are collectively defined therein as "borrower" and, as "borrower", agreed to pay the amounts due under the mortgage. By contrast, Mohamad is specifically referred to as a "non-obligor" rather than "borrower [FN2]", and seemingly had no obligation to pay the amounts due under the mortgage.

This Court is cognizant of the fact that Plaintiff is attempting to foreclose on Mohamad's interest in the subject property and that the information contained in the 1304 notice would likely have been as useful to him as to a "borrower." However, just as there is no obligation to send a RPAPL 1304 notice in cases where the lien is based on something other than a loan or, in cases based on a loan, to tenants, junior lienholders, and others whose rights might be extinguished in a foreclosure action, no such notice need be sent to a "non-obligor" owner of the property.

II. A Failure To Send A 1304 Notice Would Not Deprive This Court Of Subject Matter Jurisdiction

It is true that "proper service of the RPAPL 1304 notice containing the statutorily-mandated content is a condition precedent to the commencement of the foreclosure action" and that a "plaintiff's failure to show strict compliance requires dismissal" (Weisblum, 85 AD3d at [*3]103). The parties argue, however, whether a failure to send the required notice is a jurisdictional defect. Mohamad argues in the affirmative and that, as a result, this Court lacks subject matter over him and must vacate his default and dismiss the action as to him. Plaintiff strongly disagrees, positing that a failure to provide statutory notices is a defense that an appearing defendant may raise during litigation.

There is limited case law relating to the issue at hand. In the Second Department Weisblum decision, failure to serve a proper 1304 Notice was deemed to require dismissal for failure to meet a "condition precedent." No mention was made therein as to why this omission mandated such a result — that is, whether the issue is subject matter jurisdiction which cannot be waived, like personal jurisdiction which is waivable but a lack of which is enough to vacate a default and void prior proceedings, akin to standing which is a waivable affirmative defense and does not alone suffice to vacate a default judgment, or some sort of non-jurisdictional absolute defense to the action. It is clear that a dismissal for failure to provide the required notice is not a final decision on the merits of the case. Rather, as with jurisdictional issues or standing, the dismissal is without prejudice and, if the infirmities are corrected, a new complaint seeking the same relief may be filed.

Pritchard v Curtis, 101 AD3d 1502 [3d Dept 2012] quotes Weisblum and argues that the Second Department did not view the conditions precedent to be jurisdictional (Id, at 1504). Rather, according to the Pritchard court, there is a significant difference between situations where a court lacks jurisdiction over a category of cases and those where the failure to meet a condition precedent requires dismissal of a specific case despite the court having jurisdiction over the subject matter (Id. [quoting Copeland v Salomon, 56 NY2d 222,227 [1982]]). RPAPL 1302[2] states that a failure to meet the foreclosure notice requirements of RPAPL 1304 are a defense to a home foreclosure action, not that it deprives a court of subject matter jurisdiction and, thus, it is clear that in such a case the court would not be deprived of jurisdiction (Id).

Several subsequent Supreme Court decisions have cited both Weisblum and Pritchard in situations involving defendants seeking to vacate default judgments on the basis of an alleged failure to provide notice subject to RPAPL 1304. In both Citimortgage v Pembleton, 39 Misc 3d 454 [Sup Ct, Suffolk County 2013] (cited in support of Plaintiff) and Cadelrock v Callender, 41 Misc 3d 903 [Sup Ct, Kings County 2013] (cited in support of Mohamad), courts found that the "condition precedent" argument was a potentially meritorious defense but that a separate reasonable excuse for the default was necessary to secure vacatur of the default pursuant to CPLR 5015(a)(1).

Herein, however, Mohamad seeks vacatur under CPLR 5015(a)(4), alleging merely that this Court lacks subject matter jurisdiction as a result of Plaintiff's admitted failure to serve him with a 1304 Notice. No arguments or excuse for his default has been offered. Though it is possible to interpret the "condition precedent" and mandatory dismissal language of Weisblum as treating the notice requirements as a jurisdictional issue, this Court believes that the narrower interpretation advanced in Pritchard is correct. Logic dictates that where, as here and in Weisblum, it is clear that the Court would maintain jurisdiction over those defendants as to whom [*4]all statutory mandates were met [FN3], the Court has subject matter jurisdiction [FN4] over the case as a whole.

Based on the above it is hereby

ORDERED that Defendant Mohamad Hasan's motion to vacate his default and dismiss this action is DENIED in its entirety.

The foregoing constitutes the decision and order of the Court.

ENTER:

_______________________________

Hon. Noach Dear, A.J.S.C. Footnotes

Footnote 1: If the Court were to grant Mohamad's motion, the case against Mohamad only would be dismissed. Though his counsel told the Court that it would be in no one's best interest to allow the case to proceed against the other defendants and have a new, separate action against his client following service of all of the required notices, the Court sees no reason to dismiss the case as to those who were served the proper notices.

Footnote 2: The line above which Mohamad signed contains the word "borrower" pre-printed below the end. However, this Court feels that the added "non-obligor" language added in each instance below the signature line intended for Mohamad's use supercedes the contradictory wording of the form.

Footnote 3: In Weisblum, the Court provided separate reasons for dismissal as to each spouse despite finding that Patti Weisblum was not served with any 1304 notice. Implied is that, absent some other flaw as to Steven Weisblum, the case would not have been dismissed as to him.

Footnote 4: Though the result would be akin to where personal jurisdiction is lacking as to one defendant (that is, dismissal without prejudice as to only that defendant), the failure to meet a condition precedent would certainly not deprive the court of personal jurisdiction over that defendant.