HSBC Bank, USA, N.A. v Quaranto
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HSBC Bank, USA, N.A. v Quaranto 2018 NY Slip Op 32201(U) August 28, 2018 Supreme Court, Suffolk County Docket Number: 21147/2012 Judge: Howard H. Heckman 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 Fonn Order SUPREME COURT - STATE OF NEW YORK IAS PART 18 - SUFFOLK COUNTY PR ES ENT: HON. HOW ARD H. HECKMAN JR., J.S.C. INDEX NO.: 21147/2012 MOTION D ATE: 8/6/2018 MOTION SEQ. NO.: #003 MG -----------------~---------------------------------------------X HSBC BANK, USA, N.A., Plaintiff~ -against- PLAINTIFF'S ATTORNEY: KNUCKLES, KOMOSTNSKl & MANFRO, LLP 565 T AXTER ROAD, SUITE 590 ELMSFORD, NY 10523 JOHN QUARANTO, et al. , Defendants. ----------------------------------------------------------------X DEFENDANTS' ATTORNEY: HOLLY C. MEYER, ESQ. VETERANS MEMORIAL HWY. BOHEMIA, NY 11716 Upon the following papers numbered I to 39 read on this motion 1-28 : Notice of Motion/ Order to Show Cause and supporting papers_; Notice of Cross Motion and supporting papers_; Answering At1idavits and supporting papers 29-37 : ; Other_ ; (and alier heuring counsel in support and opposed to the motion ) it Replying Affidavits :md supporting papers 38-39 is, ORDERED that this motion by plaintiff HSBC Bank USA, N .A. seeking an order: I) granting summary judgment striking the answer and defendants John Quaranto and Lisa Quaranto; 2) discontinuing the action against defendants designated as "John Doe # 1''through "John Doe #10 3) deeming all appearing and non-appearing defendants in default; 4) amending the caption; and 5) appointing a referee to compute the sums due and owing to the plaintiff in this mortgage foreclosure action is granted; and it is further 11 ; ORDERED that plaintiff is directed to serve a copy of this order amending the caption upon the Calendar Clerk of the Court; and it is funher ORDERED that plaintiff is directed to serve a copy of this order with notice of entry upon all parties who have appeared and not waived further notice pursuant to CPLR 2103(b)(l)(2) or (3) within thirty days of the d ate of this order and to promptly file the aflidavits of service -.v:ith the Clerk of the Court. PlaintifTs action seeks to foreclose a mortgage in the original sum of $350,200.00 executed by defendants John Quaranto and Lisa Quaranto on July 19, 2006 in favor of ABN Amro Mortgage Group. On the same date both mortgagor defendants executed a promissory note promising to re-pay the entire amount of the indebtedness to the mortgage lender. Both mortgagor defendants subsequently executed a loan modification mortgage agreement dated July 29, 2009 creating a single lien in the sum of $360,733.58. By assignment dated June 27, 2012 the mortgage and note \Vere assigned to plaintiff. Plaintiff claims that defendants defaulted under the terms of the mortgage and note by failing to make timely monthly mortgage payments beginning October I, 20 10 and continuing to date. Plaintiff commenced this action by filing a summons, complaint and notice of pendency in the Suffolk County Clerk's Office on July 16, 2012. Defendants John Quaranto and Lisa Quaranto served an answer dated August 3, 2012 asserting four (4) affirmative defenses. [* 2] Plaintiff's motion seeks an order granting summary judgment striking defondants' answer and for the appointment of a referee. Defendant John Quaranto' s opposition seeks an order denying plaintiffs motion and dismissing plaintiffs complaint for failure to prove standing and for failure to prove service and filing of pre-foreclosure notices required under the terms of the mortgage and pursuant to RPAPL 1304 & 1306. The proponent of a summary judgment motion must make a prima facie showing of entitlement to judgment as a matter of law, tendering sufficient evidence to eliminate any material question of fact from the case. The grant of summary judgment is appropriate only when it is clear that no material and triable issues of fact have been presented (Sillman v. Twentieth Centwy-Fox Film Corp., 3 NY2d 395 ( 1957)). The moving party bears the initial burden of proving entitlement to summary judgment (Wine grad v. NYU Medical Center, 64 NY2d 851 ( 1985)). Once such proof has been proffered, the burden shifts to the opposing party who, to defeat the motion, must offer evidence in admissible form, and must set forth facts sufficient to require a trial of any issue of fact (CPLR 3212(b); Zuckerman v. City of New York, 49 NY2d 557 (1980)). Summary j udgment shall only be granted when there are no issues of material fact and the evidence requires the court to direct a judgment in favor of the movant as a matter of law (Friends ofAnimals v. Associated Fur Manufacturers, 46 NY2d I 065 (1979)). Entitlement to summary judgment in favor of the foreclosing plaintiff is established, prima facie by the plaintiffs production of the mortgage and the unpaid note, and evidence of default in payment (see Wells Fargo Bank N.A. v. Erobobo, 127 AD3d 1176, 9 NYS3d 312 (2"d Dept., 2015); Wells Fargo Bank, NA. v. Ali, 122 AD3d 726, 995 NYS2d 735 (2"d Dept., 2014)). Where the plaintiffs standing is placed in issue by the defendant's answer, the plaintiff must also establish its standing as part of its prima facie sho\.\ing (Aurora Loan Services v. Taylor, 25 NY3d 355, 12 NYS3d 612 (2015); Loancare v. Firshing, 130 /\D3d 787, 14 NYS3d 410 (2"d Dept., 2015); HSBC Bank USA, N.A. v. Baptiste, 128 AD3d 77, 10 NYS3d 255 (2"d Dept., 2015)). In a foreclosure action, a plaintiff has standing if it is either the holder of, or the assignee of, the underlying note at the time that the action is commenced (Aurora loan Services v. Taylor, supra.; Emigrant Bank v. Larizza, 129 AD3d 94, 13 NYS3d 129 (2nc1 Dept. , 2015)). Either a written assignment of the note or the physical transfer of the note to the p1aintiff prior to commencement of the action is sufficient to transfer the obligation and to provide standing (Wells Fargo Bank, NA. v. Parker, 125 AD3d 848, 5 NYS3d 130 (2nd Dept., 2015); US Bank v. Guy, 125 AD3d 845, 5 NYS3d 116 (2"J Dept., 2015)). A plaintiff's attachment of a duly indorsed note to its complaint or to the certificate of merit required pursuant to CPLR 30 t 2(b), coupled with an affidavit in which it alleges that it had possession of the note prior to the commencement of the action, has been held to constitute due proof of the plaintiffs standing to prosecute its claims for foreclosure and sale (JPMorgan Chase Bank, N.A. v. Weinberger, 142 AD3d 643, 37 NYS3d 286 (2°d Dept., 2016); FN.MA v. Yakaputz II, Inc., 141 AD3d 506, 35 NYS3d 236 (2nd Dept., 2016); Deutsche Bank National Trust Co. v. Leigh, 137 AD3d 841, 28 NYS3d 86 (2"d Dept., 2016); Nationstar Mortgage LLC v. Catizone. 127 A03d 11 51, 9 NYS3d 315 (2"d Dept., 2015)). Proper service of RPAPL 1304 notices on borrower(s) are conditions precedent to the commencement of a foreclosure action, and the plaintiff has the burden of establishing compliance with this condition (Aurora Loan Services, LLC v. Weisblum, 85 AD3d 95, 923 NYS2d 609 (2"" Dept., 201 1); First National Bank of Chicago v. Silver, 73 AD3d 162, 899 NYS2d 256 (2nJ Dept., 20 l 0)). RP APL 1304(2) provides that notice be sent by registered or certified mail and by first-class -2- [* 3] mail to the last known address of the borrower(s). and if different, to the residence that is the subject of the mortgage. The notice is considered given as of the date it is mailed and must be sent in a separate envelope from any other mailing or notice and the notice must be in 14-point type. At issue is whether the evidence submitted by the plaintiff is sufficient to establish its right to foreclose. The defendant/mortgagor appears not to contest h1s failure to make timely payments due under the terms of the promissory note and mortgage agreement for nearly eight years (* FN-1). Rather, the issues raised by the mortgagor concern whether the proof submitted by the mortgage lender provides sufficient admissible evidence to prove its entitlement to summary judgment based upon defendants/mortgagors' continuing default, plaintiffs compliance with mortgage and statutory pre-foreclosure notice requirements, and plaintiffs standing to maintain this action. CPLR 4518 provides: Business records. (a) Generally. Any writing or record, whether in the form of an entry in a book or otherwise, made as a memorandum or record of any act, transaction, occurrence or event, shall be admissible in evidence in proof of that act, transaction, occurrence or event, if the judge finds that it was made in the regular course of any business and that it was the regular course of such business to make it, at the time of the act, transaction, occurrence or event, or within a reasonable time thereafter. The Court of Appeals in People v. Guidice, 83 NY2d 630, 635 , 612 NYS2d 350 (1994) explained that "the essence of the business records exception to the hearsay rule is that records systematically made for the conduct of business ... are inherently highly trustworthy because they are routine reflections of day-to-day operations and because the entrant's obligation is to have them truthful and accurate for purposes of the conduct of the enterprise." (quoting People v. Kennedy, 68 NY2d 569, 579, 510 NYS2d 853 (1986)). It is a unique hearsay exception since it represents hearsay deliberately created and differs from all other hearsay exceptions which assume that declarations which come within them were not made deliberately with litigation in mind. Since a business record keeping system may be designed to meet the hearsay exception, it is important to provide predictability in this area and discretion should not normally be exercised to exclude such evidence on grounds not foreseeable at the time the record was made (see Trotti v. Estate of Buchanan. 272 AD2d 660, 706 NYS2d 534 (3'd Dept., 2000)). *FN-1. Paragraph five (5) of defendant John Quaranto's affidavit states: " Further, I do not believe that I have defaulted on my loan since October 1, 2010 as the Bank is now saying." Its unclear whether the mortgagor is claiming that he has continued to make monthly payments for nearly the past eight years and is therefore not in default, or whether he is claiming that he made payments for which he has not been credited. -3- [* 4] The three foundational requirements of CPLR 4518(a) are: 1) the record must be made in the regular course of business- reflecting a routine, regularly conducted business activity, needed and relied upon in the perfonnance of business functions; 2) it must be the regular course of business to make the records- (i.e. the record is made in accordance with established procedures for the routine, systematic making of the record); and 3) the record must have been made at the time of the act, transaction, occurrence or event, or within a reasonable time thereafter, assuring that the recollection is fairly accurate and the entries routinely made (see People v. Kennedy, supra@ pp. 579-580)). The "mere filing of papers received from other entities, even if such papers are retained in the regular course of business, is insufficient to qualify the documents as business records." (People v. Cratsley, 86 NY2d 81, 90, 629 NYS2d 992 (1995)). The records will be admissible "if the recipient can establish personal knowledge of the maker's business practices and procedures, or that the records provided by the maker were incorporated into the recipient's own records or routinely relied upon by the recipient in its business." (State of New York v. 1581h Street & Riverside Drive Housing Company, Inc., 100AD3d 1293, 1296, 956 NYS2d 196 (2012); leave denied, 20 NY3d 858 (2013); see also Viviane Etienne Medical Care, P.C. v. Country-Wide Insurance Company. 25 NY3d 498, 14 NYS3d 283 (2015); Deutsche Bank National Trust Co. v. Monica, 131 AD3d 737, 15 NYS3d (3'd Dept., 2015); People v. DiSalvo, 284 AD2d 547, 727 NYS2d 146 (2nd Dept. , 2001); Matter of Carothers v. GEICO, 79 AD3d 864, 914 NYS2d 199 (2nd Dept., 2010) ). The statute (CPLR 451 8) clearly does not require a person to have personal knowledge of each and every entry contained in a business record (see Citibank N.A. v. Abrams, 144 AD3d 1212, 40 NYS3d 653 (3rc1 Dept., 2016); HSBC Bank USA, N.A. v. Sage, 112 AD3d 1126, 977 NYS2d 446 (3'd Dept., 2013); Landmark Capital Inv. Inc. v. LI-Shan Wang. supra.)). As the Appellate Division, Second Department stated in Citigroup v. Kopelowitz, 147 AD3d 1014, 48 NYS3d 223 (2nd Dept. , 2017): "There is no requirement that a plaintiff in a foreclosure action rely on a particular set of business records to establish a prima facie case, so long as the plaintiff satisfies the admissibility requirements ofCPLR 4518(a) and the records themselves actually evince the facts for which they are relied upon." Decisions interpreting CPLR 4518 are consistent to the extent that the three foundational requirements: I) that the record be made in the regular course of business; 2) that it is in the regular course of business to make the record; and 3) that the record must be made at or near the time the transaction occwTed. - if demonstrated, make the records admissible since such records are considered trustworthy and reliable. Moreover, the language contained in the statute specifically authorizes the court discretion to determine admissibility by stating "if the judge finds" that the three foundational requirements are satisfied the evidence shall be admissible . The two affidavits submitted from the mortgage servicer' sfattorney-in-fact's (CitiMortgage's) vice presidents of document control provide the evidentiary foundation for establishing the mortgage lender's right to foreclose. The affidavits set forth the employee's review of the business records maintained by the loan servicer; the fact that the books and records are made in the regular course of CitiMortgage's business; that it was Citilviortgage's regular course of business to maintain such records; that the records were made at or near the time the underlying transactions took place; and that the records were created by an individual with personal knowledge of the underlying transactions. Based upon the submission of these two affidavits, together with a copy of the limited power of attorney dated April 5, 2011 authorizing Ci ti Mortgage as agent to act on behalf of the mortgagee, the plaintiff has provided an admissible evidentiary foundation which satisfies the business records exception to the hearsay rule with respect to the issues raised in this summary judgment application. -4- [* 5] I. With respect to the issue of standing, plaintiffs agent's affidavit attesting to HSBC Bank USA's physical possession of the original note, with allonge attached, beginning April 9, 2012 and continuously since that date which date is prior to commencement of this action on July 16, 2012, together with documentary evidence in the form of a copy of the original promissory note with the attached allonge indorsed to the plaintiff by the first vice president of the original mortgage lender, provides sufficient evidence to establish the plaintiffs standing to prosecute this forec losure action (Aurora Loan Services v. Taylor, supra. ; Wells Fargo Bank, NA v. Parker, supra.; U.S. Bank, NA. v. Ehrenfeld, 144 AD3d 893, 41NYS3d269 (2 00 Dept., 2016); GMAC v. Sidberry, 144 AD3d 863, 40 NYS3d 783 (2nd Dept., 2016)). Any alleged issues concerning the mortgage assignments are therefore irrelevant to the issue of standing since plaintiff has established possession of the promissory note prior to commencing this action (FNMA v. Yakaputz JI, Inc., 141 AD3d 506, 35 NYS3d 236 {2 11d Dept., 2016); Deutsche Bank National Trust Company v. Leigh, 137 AD3d 841 , 28 NYS3d 86 (2nd Dept., 2016)). With respect to the issue of the defendant's default in making payments, in order to establish prima facie entitlement to judgment as a matter of law in a forec losure action, the plaintiff must submit the mortgage, the unpaid note and admissible evidence to show default (see PennyMac Holdings, Inc. V Tomanelli, 139 AD3d 688, 32 NYS3d 181 (2"d Dept., 2016); North American Savings Bank v. Esposito-Como, 141 AD3d 706, 35 NYS3d 491 (2"d Dept., 2016); Washington Mutual Bank v. Schenk. 112 AD3d 615, 975 NYS2d 902 (2n° Dept., 2013)). Plaintiff has provided admissible evidence in the form of a copy of the note and mortgage, and an affidavit attesting to the defendants/mortgagors' undisputed default in making timely mortgage payments sufficient to sustain its burden to prove defendants have defaulted under the terms of the parties agreement by failing to make timely payments since October 1, 20 l 0 (CPLR 4518; see Wells Fargo Bank, NA. v. Thomas, supra. ; Citigroup v. Kopelowitz, supra.)). Accordingly, and in the absence of any proof to raise an issue of fact concerning the defendants' continuing default, plaintiffs application for summary judgment based upon defendants' breach of the mortgage agreement and promissory note must be granted. With respect to service of the pre-foreclosure RP APL 1304 90-day notices, the proof required to prove strict compliance with the statute (RPAPL 1304) can be satisfied: I) by plaintiffs submission of an affidavit of service of the notices (see CiJiMortgage, Inc. v. Pappas, 14 7 AD3d 900, 4 7 NYS3d 415 (2n<1 Dept., 2017); Bank of New York Mellon v. Aquino, 131 AD3d 1186, 16 NYS3d 770 (2"d Dept.• 2015); Deutsche Bank National Tru.•,;J Co. v. Spanos. I 02 AD3d 909, 961 NYS2d 200 (2"d Dept., 2013)); or 2) by plaintiff's submission of sufficient proof to establish proof of mailing by the post office (see HSBC Bank USA, N.A. v. Ozcan, 154 AD3d 822. 64 NYS3d 38 (2nd Dept., 2017); Nationstar Mortgage, LLC v. LaPorte, 162 AD3d 784, _ NYS3d_ (2"d Dept., 2018 ); CitiMortgage, Inc. v. Pappas, supra pg. 901; see Wells Fargo Bank, NA. v. Trupia, 150 AD3d 1049, 55 NYS3d 134 (2nd Dept., 2017)). Once either method is established a presumption of receipt arises (see Viviane Etienne Medical Care. P.C. v. Country-Wide Insurance Co., supra.; Flagstar Bank v. Mendoza, 139 AD3d 898, 32 NYS3d 278 (2 00 Dept., 2016); Residenlial Holding Corp. v. Scollsda/e Insurance Co., 286 AD2d 679, 729 NYS2d 766 (2nd Dept., 2001 )). In this case, the record shows that there is sufficient evidence to prove that mailing by certified and first class mail was done by the post office proving strict compliance with RPAPL 1304 mailing requirements and to prove compliance with filing requirements pursuant to RPAPL 1306. Plaintiff has submitted proof in the form of an affidavit from the mortgage service representative, -5- [* 6] who is authorized and trained to access the servicer' s business records, confirming that the mailings were done on December 20, 2011 which was more than 90 days prior to commencing this action; together with four (4) copies of the 90 day notices- two addressed to the mortgagors at the mortgaged premises by first class mailing, and two addressed to the mortgagors at the mortgaged premises containing twenty digit certified article (tracking) numbers (71078381654402028613- to Lisa Quaranto & 71078381654402028606- to John Quaranto); together with a copy of the mortgage servicer's business record referred to as the "Consolidated Note Report" for this loan confirming the certified and first class mailing to the mortgagors at the mortgaged premises and confirming completion of the RP APL 1306 filing requirements. Such proof is entirely consistent with the evidence submitted by the plaintiff in HSBC Bank USA, N.A . v. Ozcan supra. which the appellate court determined was in strict compliance with RP APL 1304 requirements (see also Bank of America, N.A. v. Brannon, 156 AD3d 1, 63 NYS3d 352 (P1 Dept., 2017)). Defendant and defense counsel's conclusory denial of service, is not supported by any relevant, admissible evidence sufficient to raise a genuine issue of fact which would defeat plaintiffs summary judgment motion (see PHH Mortgage Corp., v. Muricy, 135 AD3d 725, 24 NYS3d 137 (2"d Dept., 20 16); HSBC Bank v. Espinal, 137 AD3d 1079, 28 NYS3d 107 (2"d Dept., 2016)). With respect to defendant's claim that the notice of default required pursuant to the terms of the mortgage was not served, defendants have waived their right to assert this defense by failing to assert this defense in their answer (see CPLR 3108: Emigrant Bank v. Marando, 143 J\D3d 856, 39 NYS3d 83 (2nd Dept., 2016); Signature Bank v. Epstein, 95 AD3d I 199, 945 NYS2d 347 (2nd Dept., 20 12); Wilmington Trustv. Sukhu, 155 AD3d 591, 63 NYS3d 853 (P1 Dept.,2017)). Moreover, even were the court to address this issue plaintiff has submitted sufficient proof of service of the mortgage default notice as required under the terms of the mortgage by submission of the mortgage service representative's affidavit attesting to timely service, together with a copy of mortgage default notice dated November 30, 20 I 0, which was addressed to the defendants at the mortgaged residential premises. Such evidence provides sufficient proof to establish plaintiffs compliance with mortgage requirements and defendant and defense counsel's conclusory claim of plaintiff's alleged failure to prove service of such notices fails to raise any genuine issue of fact sufficient to defeat plaintiffs summary judgment motion (see PHH Mortgage Corp. v. Muricy, supra.) Finally, defendants have failed to rai~e any admissible evidence to support their remaining affirmative defenses in opposition to plaintiffs motion. Accordingly, those defenses must be deemed abandoned and arc hereby dismissed (see Kronick v. L.P. Therault Co., Inc., 70 AD3d 648, 892 NYS2d 85 (2°d Dept., 201 O); Citibank, N.A, v. Van Brunt Properties, LLC, 95 ADJd 1158, 945 NYS2d 330 (2nd Dept., 2012); Fiagstar Bank v. Bellafiore, 94 ADJd 0144, 943 NYS2d 551 (2nd Dept., 2012); Wells Fargo Bank Alfinnesota, N.A . v. Perez, 41 AD3d 590, 837 NYS2d 877 (2"d Dept., 2007)). Accordingly, plaintiffs motion seeking summary judgment is granted. The proposed order 1 :.:::e::::~:~: s:gned simultaneouslywith emuti~ Hon. Howard H. Heckman Jr. -6-
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