U.S. Bank N.A. v O'Neill

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U.S. Bank N.A. v O'Neill 2018 NY Slip Op 31224(U) June 13, 2018 Supreme Court, Suffolk County Docket Number: 08532/2013 Judge: William G. Ford Cases posted with a "30000" identifier, i.e., 2013 NY Slip Op 30001(U), are republished from various New York State and local government sources, including the New York State Unified Court System's eCourts Service. This opinion is uncorrected and not selected for official publication. [* 1] SHORT FORM ORDER INDEX NO.: 08532/2013 SUPREl\ilE COURT-STATE OF NE"WYORK l.A.S. PART 38 - SUFFOLK COUNTY PRESENT: HON. WILLIAM G. FORD .JUSTICE OF THE SUPREME COURT ~----------------------------~x U.S. BANK NATIONAL ASSOCIATION, as Trustee relating to Chevy Chase Funding LLC Mortgage Ba.e ked Certificates Series 2007-2. Plaintiff, -againstMARY KA TE O'NEILL a/k/a MARY O'NEILL, ".JOHN DOE'', said name being fictitious, it being the intention of plaintiff to designate any and all occupants of premises being foreclosed herein, and any parties, corporations or entities, if any, having or claiming an interest or lien upon the mortgaged premises, Motions Subm it Date: 06/30/16 Mot Seq 002 MD Mot Seq 003 Mot D; RTI I PLAINTIFF'S COUNSEL: Shapiro DiCaro Barak 175 Mile Crossing Boulevard Rochester, New York 14624 OEFENDANT'S COUNSEL: Morrison Tenenbaum PLLC 87 Walker Street, Fl 2 New York, New York 10013 Defendants. On the pending motions, the Court considered the follov.:ing: 1. Notice of Motion & Affirmation in Support dated April 7. 2016 and other supporting papers; 2. Notice of Cross-Motion, Affirmation in Support dated Jun.e 20, 2016 & Affidavit in Support June 22, 2016 & other supporting papers; 3. Reply Affirmation in Further Support & in Opposition to Cross-Motion dated June 27, 2016~ and upon due deliberation and full consideration: it is ORDERED that plaintiff's motion for judgment of foreclosure and sale confirming the referee·s report of amounts due and owing is denied without prejudice with leave to renew on the submission of proper papers as discussed below; and it is further ORDERED that plaintiff's proposed long-form proposed judgment of foreclosure and sale is hereby denied and returned as ''unsigned" as consistent with this dedsion and order; and it is further [* 2] OIU>EREO that <lel'end~tnf s cross-motion to dismiss the complaint is granted in part IP the ~xtent that the matter is rcfrrrL·J to a bearing before court appointed n.:kn.:..: Keith o·Halloran. Esq. on a date to be noticed to defendant by counsel h:- ccrtilicd first class mail. rt':lurn receipt requested to occur no later than 21 days prior to said hearing: and the sank· b uthenvisc denied in all other respects: and it is further ORDERED that defendant sen·e a copy of this <lecisiun and ,mkr with notin.: of ..;ntry b: certified first class mail. return rece ipt requested on plaintiffs rnunsd frirt lmith: am.I it is run her ORD'tREO rhat counsel t<Jr the parties appear bdore this Court for a fnrcdosurl'. stalu~ cl111Jl:n.:nce on Septcmher 26. 2018 at I 0:00 a.m. This is an action to fon~dosl.! a mortgage on premises mon: commonly knO\\·n an<l refi.'.rrcd to as 54 Spring Close Highway. East H<.m1pton. New y,)rk 11937 in Stiffc,lk C1n111ty. Defendant Mary Kate o·Ncill ewcuted a consolidated promissory not~ ch'\led March I 5. 2007 i11 favor o f ChcYy Chase Bank. FSB in the pri ncipal amount of$ 6 75.000 at an adjustublc w111ual intc.rcst rate. The note bears an um.lated endorsement without n.::course lo plainli ff i.·.s. nunk National t\ssociution a.-; Trustee. ll further was secured by a C()nsolidate<l mortgage or the sanh.' date on lbt: subjl!ct propc1iy which was recorded 'vitl1 the Suffolk County Clerk 011 :via} 19. 2007 at Li her 21542. pagt: 214. The consolidated note and mortgage were correctcd and rcll kd \\ ith lbe County Clerk on November 2:\ 008 at Liher 21770. page 469. Tht: note was subsequently transferred hy assignment dakd >l<..wcmbcr 30. 20 I I Irom Capital One Bank. NA as Successor in Interest to Chevy Chase Hank FSB w the tvl nrlg.a~c Ekctronic Rcgi~tration Systems. Inc. (MERS). recorded by the Count.~· Clerk on February 2-L 2012 at libc:r 22174. page 471. lt was also transferred by assignment from MFRS JS nm:1irn:<.· for Chevy Chase to plaintiff in an assignment dated January 4. 2012. recorded by th...: ( \nltlt) Clerk on February 24. 2012 at Libcr 22174. page 472. Plaintiff pre\·iously determined its standing to litigate in this mutter. having. obtaim:<l default judgment and an order of reference Lmopposcd from Supreme Colirl (Pin~s . J. l in <1 dt•ci"ion :ind ord··r r~·nc-lc1·cd S1.•pt.:-mbt:r 25. 2015. premi,;:,~d upon pt·esent:ni•'" 0f cori<-"' nl' consolidation . extension. modification agreements for the cons1)lida1ion note and mo11g.ag1:. a::> well as respective assignments. Then::after. plaintiff moYcd thi::; Courl for judgment of foreclosure and sa.k to con ti rm the appointed referee's report of amounts due and owing by dcf..::ndant under !he mite. Dl.'fcndant. rt:prcscntcd by counsel. cross-moved to dismiss the complaint making sc\'cral arguments. Chiefly. defendant argues that th1: complaint must be dismissed for plaintiff'" s failure lo seek entry of default within I year of her failure to answer or appear pursuant to CPI.I~ 3~ l 5( e ). Arguing in the altemative. defendant argues that plaintiff has foiled to comply\\ ith RJ>APL I }06 ·s notice r~quirement. which she argues is a condition precedent to maintaining of lhl' foreclosure action. Lastly. defendant by her affidavit and her counsers aftirmarion argues lhal plaintiff failed to comply with CPLR 4313 and RPAPL 1321. having not noticl!d h<.'r of the referee ·s hem-ing or taking of evidence prior to preparing his report. Thus. defemlunt argu1.:s she has suffered se\'ere ~md unfair prejudice having been prevented the opportunity t<' appear. 1)hjcc1 or olh..:rw1s<.: ..:on1<.:st l11c uccuracy ~>f l11e n:!i.:rc1... s co111putulio11. 2 [* 3] Pluintiff ha~ opposed defendant" s application in whole. First. the bank argu.__:s that the matter wa~ commenced ha\'1ng fikd its summons and complaint and notice of pcndcrn::.-. as \.'-el I as st~llutorily rnand<itc<l notic..:s on March 25. 2013. Plaintiff ha<> previously submitted prnnrtil" service on ddendant which defendant has not disputed. indicating that ddi.:ndant was served in Connecticut under CPLR 313 in a manner or method akin to suhs.titutionary service. i.e. scn·icc on a person of suit.able age and discretion under CPLR 308(2 ). ddi\·ering a copy of thc pleading~ on det~ndant" s husband on April 6. 20 13. as reflected by its affidcn·it 01· ser.-ice dall'.d i\pril 8. 2013. fikd with the County Clerk on April l 8. 20 I 3. Gi H!ll substitutiomtr) scr,·icc. dl'.fcudant" s time: to answer. appear or defend the actit)n. \VOuld ha' i: run within 30 da\'S of si:n·ic:.:. nr sometime in late \lay 2013. . Ir contends that it did not abandon this matter <L-> <ldendant urges hc;causc thl! matter proceeding to a mandatory CPLR 3408 foreclosure scukmenl conference\\ ith the Court in January 2014 after commencement and was not reku$Cd to th~ 1.-\S Part until April 201-t Plaintiff m<>n:over argues that all throughout it has objecfrvely e\· inccd <ul intent. purposi: or desire to continu~ its prosecution of the matler. having sought dduult judgment and an order ol' reference by motion in March 2015. which was not dt:ci<led by th~ court until ScptE-mber 2015. Further. pfointiff notes that the time the matter "as in th..:. cou11 ·s foreclosun: scllkmcnt part. where defendant appeared and the parties engaged in ongoing settlement negotiations and discussions. should not be counted against plaimiff s time to mow for en1ry of defauh un<ler CPLR J215(cl. further. plaintiff argues that defendant's application for dismissal is inuppropriatt' particularly where defendant is in tkfault and has nol sought to v<:tt::llc her default. 01~ this point, ph1intiff specifically notes thal having defau lted. defendm1t h(tS waived all jmisdii.:tional affirmative defenses such as plaintiffs alleged failure to strictly compl;- v. ith RPAPL nolic<.: requirements. furthermore. plaintiff emphasizes that defendant has maJc no effort or proffering any rcasonabk excuse for her default. Lastly. plaintiff arguo::s that dd~ndanl sutfrrt!d tlll prejudice, assuming sht: was not properly noticed prior h. referee· s computaLinn. Plaimi ff alsu 1 argues that defendant offers no proof disputing ilw ummmts <lue and tming that appear in thi.: rclcrcc ·s report. Taking these contentions in rum. the Court at tht: outset m.:knowkJgcs thl' validity of plaintiffs contentions concerning defendant"s ''"aivl'r uf affim1ativc defenses by her default in appearance and pleading. It is black ktter law within the Second Department that .. J t llw absence of a reasonable excllse renders it unnecessary to determine ... tbc cxistl'ncc or :i potentially meritorious defense to the action" (JlSBC Bauk USA. 1 Vat. Ass'11 v Smurl. 155 AD3d 843. 63 N YS3d 700 [2d Dept 2017]). The determination or \.Vha.t constiturcs a rt:asonabk excuse lies within the sound discretion of the Supreme Courf' ~One W. Bank, FSB 1• Va/tie':.. 128 AD3d 655. 655. 8 NYS3d 419. 420 f2d Dept 2015 I). !Iere. pla.i11tiff is entirely correct that defendant's papers e:ue siknt on any artkulaLion or a n.:asonabk excuse for her prior defaulc in appearing in thi$ matter. Mori.! important. e'en if defendant were to argue that ongoing negotiations lulled her into a Culst: si:nsc: or sccurit). thl' Scwnd Department has held that .. participation in settlement conlerenccs and loan mouiti..:ation negotiations'· do not constitute a n.:asonable excuse for default (Fed. Nat. 1 \.tor1g . Ass'11 v Zupata. l 43 l\DJJ 857. 858. 40 NYS3d 4.38. 440 [2d Dc:pl 20 I 61). lJc:i1ling. s4uarel) wilh Llt:lemlant ·s .... .' [* 4] cnntt.:ntions here. the S<:!cond Dc:pa11mem has plainly declined to dismiss fon:-d->surc actions l(ir faiiure to comply with RP APL 1306 were defendant has dcfoultcc.L ruling that con:;tituteJ wai\\:r (!!SBC Bank USA, Nat. Ass'11 ,,. /Jasis. l 54 AD3<l 832. 83-L 6:2 NY83d 467. -i70 I ~ d Dept 2017][h<.)lding since the tlclen<lnnt never moved to \·acat<: his c.lefoult in appl.:!aring or an s \\~ring lhl' complaint. he is precludt.:d from raising the plaintiffs alkgcd failure lo rn111ply wilh I\.PAl' I. 13061). Thus. this record makes dear to the Court thal <lelendant has no n::asnnahk ~:xcus~ fM failing to appear. Accordingly. the Court need not considc;r defendant's attempt at raising plaintiffs failure tll comply with RPAPI . I ~06 as an a fiinnath·e defense warramintr tlisrni..;sa l. Thus. that aspect of <.kfondant · ~ mntion is denied. ~. Turning to the question of timeliness of plaintiffs applic:i.tion. ddcndnnt corrl..!ctly stall.!:-. the general proposition holding thm .. [tjhe language of CPLR J2 l 5(c::) is not. .in 1hc flrst i11sta11cc. discretionary. but mandatory. inasmuch as courts ·shall" dismiss daims for which Jel"ault judgments an:: not sought within the requisite one-year period. as those claims are then deemed abandoned .. (HSBC Bank USA . Nat. Ass'11 v Grellt1. 145 AD3d 669. 671. 4-4 ·ysJd 56. 58 l?d D1.:pt 2016]). However. she fails to take notice an exception \Vhich the Court linds appl icable ht:re. C'PLR 321S(c) states. in perlinent part: --u the plaintiff fai ls to take proceedings for the entry of judgmen t within one year after the tkfoulr. the court shall not c.:ntcr judgment but shall dismiss the complaint as abaw..lonL'd. without costs. upon its O\\·n initiative or on motion. unless sut1icient cause is s hO\rn why rhe cnmplain1 ::.hon Id not be dismissed:· To avoid dismissal pursuant to C'PLR 32 I 5(c), it is not necessary for a plaintiff to actually obtain a default judgment within one y;.:ar of th1..· default. As long as ·'proceedings'· arc being taken. and those proceedings mani fl·~t an intent not to abandon the ca!ie but to seek a judgment the case should 1101 h~ dismissed. Taking Lhe preliminary step to\var<l obtaining a default judgment or foreclosure and sate by moving for an order of reforence \vithin one year or the dcfc.:n<lant's default is sufficient to timely initiate proceedings for c.:ntry ofju<lg.mcnl pursu::mt l<) CPLR 321 S(c) (Wells Fargo B"11k, N.A. v Lilley. 154 AD3d 795. 796. 62 NYS3d 15:5. 157 l 2d Dept :?017llfinding rlaintitTs ap.plic.~1 tion fe>r 0rd,!r of rcfor~~n~c within <• n..: y(·~•r <>fthc d.-r..m,l:mt o.:' default indicated an int\:!nt not to abandon the foreclosure action l: see aiso Stale of New York Mortg.AgencyvLi11ke11berg, 150AD3d 1035, 1037. 5:5NYS3cl126. 128 ['2d Dept 2017][rcasoni.ng that "ltJnking the preliminary step toward obtaining a default judgment of foreclosure and sale by moving for an order of reference within one year of the defondant':-, default i$ sufficit:Ill w ti mely initiate pro<.:eeding.s for entry of judgment pursuant to CPI .R 3215(c)]). Even \\.fo.!re a bank is not exactly timely in moving for de fault judgment \\·ithi11 thi: I f'L''-lr timeframe. our courts haw exercisl.!d leniency permitting such a movant 10 ··to cstahli:-;h ·sufficient cause· wby the complaint should not he dismissed· premised on a showing that it had a reasonable cxcu.se for the delay in taking proceedings for tht.> e111ry of a default judgment i.111d that it has a potentially meritorious cause of action ffl"ells f'(lrMo Bank. NA. v Bonamw. 1-46 AD3d 844. 845-46. 45 NYS3d 173. 174 r:!d Dl'pt 20171: see also A urora Loan Services, I.LC 1· ll~vo. 130 AD3d 763. 764. 13 NYS3d 554. 555-56 [2d Dept 2015 ]: accorcl Bank <~{New Yori• Mt.!/1011 vAdago. 155 !\DJd 594, 595. 63 NYSJu 495. 497 l2tl Dept 2017llont: ~~..:.eption to UK· 4 [* 5] othl!rwisc mandator) language of CPLR 321 5(<:) is that the foilur~ to timely St:l:'k a dl'faull on an unanswered compla int .. . may be excused if ·sttfficil.'nt cause is shown why the complaint should lllH be dismissed. I: HSBC Bank USA . Nat. Ass'n"' Traore. 139 .\D3d 1009. 1010. 32: YS:>J 283. 2g..i f'.!d Dept 20 I G] ffi.lt is not necessary for a plaintiff t0 actua lly ohtain a defoult judgmen t within one year of the default in order to aYoid dismissal pursuant to CPLR 32 l :\kJ. but rathL:r. it sulliccs that the plainti IT timdy takes ..the: prelimi1mr) step t0\1,:ard obtaining. a tkfoull judgment of foreclosure and sale by mo\·ing for an order of ret-.:rcnce·· to estabiish that it ··initiated proceedings for ~ntry of a judgment within one year of the dcfoulf' !'or the purpos1.:s of sa tist'y ing CPLR 32 I 5(c)ll. Here. g iven that the court has previously determined plaintiffs fo reclosure acti~m meritorious finding plaintiff has standing to litigate and ha.s a"vunJ~<l <lduult judgml:nt and an order of relerencc. ::ilbeit not exactly to the letter of the timeframt: .set out in ('Pl .R 32 l 5( c ). thi s Court will not dismis!:> plaintiffs compbint in the manner suggcstc.:d by ck:lendant. W hile nm precisely timcl:. it remains clear that certain delays were due lo ongoing sc ttkmcnt discussions in the foreclosure scitlemcnt conference part prior lo th~ commencement t)l"<.lispositiH: motion practice before !AS. This is all the more the case where the Jaw unmistakably states th;1t --defondant may waive the right to seek a dismissal purs uant to CPLf< 321 S(c) by sen·ing an answer or taking "any other steps which may be viewed as a formal or informal appearance" (IlSBC Ba11k USA, Nat. Ass'11 v Grella. 1-J.5 l\D3d 669. 670 - 71. 4-J. i\iY S}d 5(l. 58 f2d Dept 2016 j). Here. a simple search of the court file indicates that ddi.!ndant appc<m:<l before the foreclosure sdtkment conference part on at lea:)T one occasion. on .lammry i I. :w I 4 So. eYen despite her default. she has parlicipatcd and thus has prcn ided addi tional an<l am pk grounds for this Courl to <lclcm1inc s ht: has waived the rig.ht to seek dismissal under CPL!{ 3215(c). ll1crcfore. 1hat branch of defendant" s morion is denied. Despite all of this. plaintiff sti II is not successful in its efforts to secure ju<lgmc.:nt of fo reclosure today. Defendant is also correct that entry ofjudgm..;nt of forec losure of s;'IL- ;rnd confim1ation of the referee's report of amounts dt1e and owing '" here borro,vcr was not noti<.:~d of the hearing and was not afforded an opportu11ity to be heard. participate ore object is ckar c;nor. Second Department precccknt ckarly so holds. The prc\'ailing law in lhe Second Department is that it is reversible error forthe nisi prius conn to conlirm a refereo..: · s repot absent the holding ofa he:'l ring wh"·rc it is rcqi1e~ted (Aurora Lonn Services, Ll. C ,. Tnylor . I l ·t /\fYhl 627. 629. 980 NYS2d 475. 477 [2d Dept 2014]. C!{l"d.25 N Y3d 355 12015 l[Suprcmo..: Court crr\!d i 11 confinning the referee's report computing the amount d uc to the plaintiff without ho ldi nµ a hearing on notice]: Citimortg., /Ile. v Kidd. 148 AIBd 767. 768. 49 NY S3d 4 82. 484 L2<l D~pt 2017j[Supremc Court erred in conlinning the referee's report .. . it should be- o..:onfirmed '.vhc::ncver the lin<lings are substantially supported hy the recordl: see also 2-20 Rcrgman lHl No..:' \ York :-Vton gage Foredosures § 20.06 [20 I 7JI lajlthough a defaulling defendant is not entitled tu notice of a referee · s hearing. nonetheless. a defaulting defendant docs have thl' ri ght to ha\·c its claim considered-for example. a credit on a mortgage-to the extent that it relates w lhc.: sum due on the mortgage J ). It is settled that Supreme Coun is the ultimate arbiter of the dis pute and possesses the power to reject the Reteree's rcpo n. make new or independent tine.lings. to c,msider the parties· evidence anew. Howt:!ver. defendant is not necessarily guaranteed a hearing and such a r1:.'ljllt''l for the same ma:- be denied \vhere d~fendant is not otherwise prejudiced by tht: inabi lity tu :iubmit e' id1.:111.:1.: r.iirecLl)' to 11Je Rdi.:n;e (A cltdman v f'"remrf. 234 A D2u 488. ~89. n:'i I NY ~.:'.tl 5 [* 6] 6114. '10512<1 Dc::pt l 9961!applying CPLR .+-W3]). StateJ J i ll~r~ml~. rnoti1.n1 wurts ar~ <itTirmcd \\hc::rc <lcf1;;n<lunts have had ful l. lair and ample opportunity tel rai'>t' objection and subn1i1 proof on any an<l all the issues bcfor-: the rdcrcc 1m computation. prior to ctinfirm:ltion o f th~ report and rccommcn<lation . Thus. umkr those <: i rc:um~tance-;. dd°,:ndanthorrowcr' s request for a ht!aring may be denied as unm:cessa~ ( Deutsche Bani. Sat. Tr. Co. i· Zl<>toff. 77 ADJd 702. 908 NYS1<l 612 [2d Dept 2010 j). counlt:r,·ail in ~ Under tht: presently presented circumstances in this mauc:r. this Comt finds n11 ccm1pdling reasons to deviate from precedent: opplicd here. the motion n:cord indicates dclend:rnt has in the most general rcrms denied by affida,·it hm·ing been noticed for the rdcrcc · :-. hearing. In response. plaintiff docs not address this <.knial. arguing that it caus~d th.:kndant llll prejudice. Howe\'er. on this point. a triabl.: question or foct ari~cs where defendant by S\\llrll kstimony spccifi<.:ally claims she has been prejudiced imofor as the rcforcc has co.ilculatcd an amount due and (mfog hy defendant v. hich she disputes. While it is true that del't.:n<font · s ol~icction is unspecific. plaintiff has not persuaded this Court that the refcrl..'c \\·c nt forn ar<l \\ ith carrying out his duty 011 notice to the defendant. Thus. this Court will not confirrn ~aid n:pon. unless and until. il is on actual notice lo the defendant. reaSl> nahly calculated to apprise hl..'r olthc penckncy of such a hearing. and affording an opp{)nunity to appear to object or Jisputi: said computation. fhe foregoing constitutes the decision and orckr or this Cot111. Dated: .June 13. :w 18 Rivcrhi:aJ. >JC\\ York WILUAt\1 G. FORD, .J.S.C. x Fl:'l!A t OJSPOSITION 6 NON-FINAL Dl~POSrt ION

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