HSBC Bank USA, N.A. v Ahmad

[*1] HSBC Bank USA, N.A. v Ahmad 2018 NY Slip Op 50564(U) Decided on April 17, 2018 Supreme Court, Suffolk County Quinlan, 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 This opinion is uncorrected and will not be published in the printed Official Reports.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 April 17, 2018
Supreme Court, Suffolk County

HSBC Bank USA, N.A., as Trustee in Trust for the Certificate Holders of ACE Securities Corp. Home Equity Loan Trust, Series 2006-FM2 Asset-Backed Pass-Through Certificates, Plaintiff,

against

Shakil Ahmad; Shabana Shakil; Capital One Bank USA N.A., et al., Defendant(s).



18904-2012



RAS BORISKIN, LLC

Attorneys for Plaintiff

900 Merchants Concourse, Suite 106

Westbury, NY 11590

MACCO & STERN LLP

Attorneys for Defendant

2950 Express Drive South, Suite 109

Islandia, NY 11749
Robert F. Quinlan, J.

Upon the following papers numbered 1 to 18 read on this motion by plaintiff to vacate the note of issue: Notice of Motion and supporting papers 1-18; Answering Affidavits and supporting papers; (and after hearing counsel in support and opposed to the motion) it is,

ORDERED that the unopposed motion by plaintiff HSBC Bank USA. N.A., as Trustee in Trust for the Certificateholders of Ace Securities Corp. Home Equity Loan Trust, Series 2006-FM2 Asset-Backed Pass-Through Certificates to vacate the note of issue filed in this action to foreclose a mortgage is denied; and it is further

ORDERED that this action is scheduled for trial before this part in accordance with the [*2]court's prior orders on Friday, August 3, 2018 in the Cromarty Court Complex, 210 Center Drive, 4th floor, Courtroom 17, Riverhead, NY at 9:30AM. Failure to appear and answer the calendar ready for trial will serve as basis for dismissal of the action or striking of defendant's remaining affirmative defenses and answer pursuant to 22 NYCRR 202.27 by the court.

As the mortgaged property that is the subject of this foreclosure action is located in Suffolk County, New York, plaintiff HSBC Bank USA. N.A., as Trustee in Trust for the Certificateholders of Ace Securities Corp. Home Equity Loan Trust, Series 2006-FM2 Asset-Backed Pass-Through Certificates ("plaintiff") has chosen to use the courts and laws of the State of New York to enforce its rights. In choosing to do so plaintiff must comply with the laws, regulations and procedures of this state.

PRIOR PROCEEDINGS

Plaintiff's motion for summary judgment was denied, as was defendant Shabana Shakil's cross-motion to dismiss, by the court's order placed on the record on November 3, 2016 after oral argument, but defendant's alternative application to file an amended answer was granted. The court issued a written order at that time which directed, inter alia, a certification conference be held on March 15, 2017 and authorized successive summary judgment motions after the certification conference, but no later than 30 days after the filing of the note of issue. The certification conference was adjourned twice, but on April 12, 2017 both parties appeared, confirmed there was no outstanding discovery, certified that the case was ready for trial and the court issued a compliance conference order directing that a note of issue be filed by May 19, 2017. Plaintiff filed the note of issue on May 19, 2017 and the action appeared for a pre-trial conference on July 5, 2017 where a trial date of September 25, 2017 was set.

On September 21, 2017 plaintiff's counsel contacted the court and asked to adjourn the action because defendant had filed an application for a loan modification and plaintiff had directed counsel to adjourn the case . The court granted the adjournment of the trial to October 16, 2017. On October 13, 2017 plaintiff's counsel again contacted the court seeking an adjournment of the trial as defendant had been approved for a loan modification. The trial was adjourned to January 9, 2018. Apparently the loan modification was not successfully completed.

The court's computer records show that both counsel appeared for trial on January 9, 2018, not January 29th as stated in plaintiff's counsel's affirmation in support of this motion, but defendant was not available so an adjournment was necessary. Both parties sought to agree to the filing of a late summary judgment motion, but the court pointed out that there were holdings by the Second Department that found it an abuse of discretion to allow summary judgment motions filed over 120 days after the filing of a note of issue without establishing "good cause" (see Goldin v New York & Presbyt. Hosp., 112 AD3d 578 [2d Dept 2013];St. John's Univ. v Butler Rogers Baskett Architects, P.C., 105 AD3d 728 [2d Dept 2013]; St. John's Univ. v Butler Rogers Baskett Architects, P.C., 105 AD3d 728 [2d Dept 2013]; Nationstar Mtg., LLC v Weisblum, 143 AD3d 866 [2d Dept 2016]). The court's computer notes show, and the court recalls, that there was no discussion of vacating plaintiff's note of issue at that time. Plaintiff now moves to vacate the note of issue, but does not clearly articulate the reason for seeking vacatur in its papers.

VACATUR OF NOTE OF ISSUE DENIED

Vacatur of a note of issue is governed by 22 NYCRR 202.21(e), which requires that such a motion be made within twenty (20) days after service of the note of issue and certification of readiness, and requires a showing of why the case is not ready for trial, if a material fact in the certificate is incorrect, or if the certificate fails to comply with 22 NYCRR 202.21in a material respect. Plaintiff's motion fails to meet this criteria as it is well outside the twenty day window and fails to show an inaccuracy or failure to comply with the requirements of the section. This provision cannot form the basis for plaintiff's request. The rule goes on to provide that after twenty days, the party seeking to vacate the note of issue must establish "good cause." A movant after twenty days must have a satisfactory explanation for the untimeliness or the application is to be denied (see Allen v Hiraldo, 144 AD3d 434 [2d Dept 2016]; Bundhoo v Wendy's, 152 AD3d 734 [2d Dept 2017]; Macaluso v Glengariff Corp., 153 AD3d 915 [2d Dept 2017]). Plaintiff fails to establish good cause in its submissions requiring denial of the motion.

The only reason given by plaintiff in support of it's motion to strike the note of issue appears to be that plaintiff wishes to participate in further negotiations with defendant. There is no proof submitted that the certificate of readiness and note of issue filed by plaintiff materially failed to comply with the requirements of 22 NYCRR 202.21. There is no proof submitted that there is outstanding discovery or any other factor that demonstrates that the case is not ready for trial so as to warrant the vacating of the note of issue (see Sloveny v Nasso, 153 AD3d 962 [2d Dept 2017).

"DUAL TRACKING" NOT GOOD CAUSE TO VACATE A NOTE OF ISSUE

If the basis for plaintiff's application is because the rules issued by the Federal Consumer Financial Protection Bureau (CFPB) prohibit "dual tracking" (12 C.F.R. §1024.41) and therefore it cannot proceed to trial, the application is denied. The court notes that 12 C.F.R. §1024.41 governs a servicer's response to a loss mitigation application. 12 C.F.R.§1024.41(c) (3) (I) (D) (2) provides that where a borrower makes application and a judicial foreclosure has already been commenced, "the servicer cannot conduct a foreclosure sale before evaluating the borrower's complete application." Further, 12 C.F.R.§1024.41(g) prohibits a servicer from either holding a foreclosure sale or moving for a sale if a borrower makes a loan mitigation application within certain time constraints. In comments on the servicing rules, the CFPB has stated that "nothing in 1024.41(g) prohibits a servicer from continuing to move forward with a foreclosure process (assuming that the first notice or filing was made before a servicer received a complete loss mitigation application) so long as the servicer does not take an action that will directly result in the issuance of a foreclosure judgment or order of sale, or a foreclosure sale (see Mortgage Servicing Rules, 78 Fed. Reg. at 10833-35). The trial and decision here will not directly result in the issuance of a foreclosure judgment or sale, therefore these rules against "dual tracking" are inapplicable. Additionally, CFPB Official Bureau Interpretations advise that if a servicer takes reasonable steps to avoid a ruling on a motion with an application pending, whether successful or not in avoiding a dispositive motion or order, as long as the servicer did not take direct action resulting in issuance of a foreclosure judgment, the servicer has not violated the rules (see Mortgage Servicing Rules, 78 Fed. Reg. at 10833-35). In any event, a violation by the servicer/lender of the prohibition against "dual tracking" merely affords a borrower a separate action in federal court against the servicer/lender for the assessment of a monetary penalty, it is not a defense to a state foreclosure action.

There are few cases that can be found in New York that address this issue, among them are this court's decision in Deutsche Bank Nat. Trust Co. v Cybula, 57 Misc 3d 1215 (A), 2017 NY Slip Op 51473 (U) (Sup Ct, Suffolk County 2017), and two decisions by Justice Thomas F. Whelan of this court, Countrywide Home Loan Servicing, L. P. v Crespo, 46 Misc 3d 1226 (A), 2015 NY Slip Op 50306 (U) (Sup Ct, Suffolk County 2015) and Federal National Mortgage Assoc. v Karastamatis, 52 Misc 3d 1007 (Sup Ct, Suffolk County 2016), holding that a claim of "dual tracking" is neither a defense in a foreclosure action or a basis to stay a foreclosure action. Federal courts have similarly interpreted the "dual tracking" requirements (see Roosevelt Cayman Asset Company II v Mercado, 259 F. Supp.3d 1[US Dist Ct, Puerto Rico 2016]; Zaychick v Bank of America, N.A. [US Dist Ct, SD FL 2015]).

If the prohibition against "dual tracking" is the purported "good cause" for plaintiff's application, it fails. Aside from the issue stated above, if the court accepted plaintiff's argument, defendant could almost indefinitely delay the trial of this action by repeatedly filing loan modification applications. The court must have control over its calendar and be able to set this matter for trial so that a final resolution can be had.

AVOIDANCE OF CPLR 3012 (a) OR TO CONTINUE NEGOTIATIONS NOT GOOD CAUSE

If an alternative reason for plaintiff's application is to vacate the note of issue and have the case removed from the court's trial calendar so that it can file a successive motion for summary judgment without reference to CPLR 3012 (a), the court finds that reason unconvincing and without good cause. Although not stated as a reason in plaintiff's submission, the court recalls the conference of January 9th when the court denied plaintiff's request, with consent of defendant, to file another summary judgment motion rather than schedule a trial.

Although it authorizes a court to set a shorter time, CPLR 3012 (a) requires that any motion for summary judgment be made within 120 days of the filing of a note of issue. Here, the court chose to set an earlier date of 30 days after the filing of the note of issue. The court would have entertained requests for extension of that time up to the 120 day limit, yet plaintiff made no such requests before the expiration of the 120 day period. When plaintiff called to adjourn the trial dates as indicated above, there was never a request to file a "late" successive summary judgment motion, that conversation occurred for the first time on January 9, 2018.

To successfully file a "late motion" after the statutory period, the moving party must establish a good cause for the delay, similar to that referred to above to vacate a note of issue after the 20 day time period (see Brill v. City of New York, 2 NY3d 648 [2004]; Dettman v Page, 18 AD3d 422 [2d Dept 2005]). A review of plaintiff's counsel's affirmation in support of the motion supplies nothing more than an interest to continue to negotiate.

If plaintiff wishes to negotiate and not try the case, then it can remove the case from the court's inventory by filing a stipulation of discontinuance and revoke the acceleration of the debt, or move for an order discontinuing the action and remove it for the court's inventory. This action has been pending since 2012, all cases must eventually be brought to resolution. As in most civil actions, a trial is an ultimate consequence if an action cannot be resolved between the parties. Here the court's prior decision has limited the issues for this trial. Plaintiff provides no good cause to avoid this trial.

If the court grants plaintiff's motion and vacates the note of issue, plaintiff could move [*3]again for summary judgment as it will not have the bar of the time limit set by filing the note of issue. A valid reason for granting multiple summary judgment motions is to further the ends of justice while eliminating an unnecessary burden on court resources which would otherwise require a trial (see Detko v McDonald's Restaurants of New York, Inc, 198 Ad2d 208 [2d Dept 1993]; Valley National Bank v INI Holding, LLC, 95 AD3d 1108 [2d Dept 2012]; Kolel Damsek Eliezer, Inc. v Schlesinger, 139 AD3d 810 [2d Dept 2016]; Rose v Horton Med. Ctr., 29 AD3d 977 [2d Dept 2006]; Landmark Capital Investments, Inc. v Li-Shan Wang, 94 AD3d 418 [1st Dept 2012]). Yet, this court hastens to point out that most of the successive summary judgment motions it has authorized in limited issue trials set in foreclosure actions, have resulted only in further delay. Despite the clear line of rulings by the Second Department on the sufficiency, and insufficiency, of affidavits and proof of such core issues as plaintiff's standing and/or the mailing of notices required by the mortgage or statute, the affidavits submitted in these successive motions generally remain defective; in a few cases the same rejected affidavits have been merely resubmitted. This does not eliminate the burden on court resources, but in fact further burdens those resources. These motions do not resolve the issues, but just delay their ultimate resolution at a trial, further burdening the court's time and inventory of cases.

Plaintiff's motion is denied.

The action remains on the court's trial calendar for Friday, August 3, 2018 at 9:30 AM, which gives the parties ample time to negotiate a settlement if they wish. If none is reached, the court expects the parties to be ready to try the case that day, as recognizing that witnesses for plaintiffs travel substantial distances to attend, the court only places one limited issue foreclosure trial a day on its trial calendar.

Nothing in this order is intended to impede settlement discussions which counsel can pursue up to, and through, trial. Alternatively, if plaintiff wishes to negotiate with defendant outside of the courts of the State of New York, it is free to discontinue this action and pursue those negotiations.

Failure to appear and answer the calendar ready for trial will serve as basis for dismissal of the action, or striking of defendant's remaining affirmative defenses and answer pursuant to 22 NYCRR 202.27.

This constitutes the Order and decision of the Court.

Dated: April 17, 2018

Hon. Robert F. Quinlan, J.S.C.