Citibank, N.A. v Feustel

[*1] Citibank, N.A. v Feustel 2018 NY Slip Op 50673(U) Decided on May 9, 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 This opinion is uncorrected and will not be published in the printed Official Reports.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 May 9, 2018
Supreme Court, Suffolk County

Citibank, National Association as Trustee for GSAA Home Equity Trust 2007-9, Asset-Backed Certificates Series 2007-9, Plaintiff,

against

Noel Feustel; Victoria Peterson; Bruce A. Rich as Trustee of the Village of Saltaire, Suffolk County, Capital One Bank USA, NA, George Roy Hill III, Hillary Richard as Trustee of the Village of Saltaire, Suffolk County; Jennifer Friedberg; Midland Funding of Delaware LLC as Successor in Interest to a Chase Account, Patricia Lama; Robert Lynn Cox II as Trustee of the Village of Saltaire, Suffolk County; Scott S. Rosenblum as Mayor of the Village of Saltaire, Suffolk County Susan Okon, the Incorporated Village of Saltaire, Suffolk County, Wells Fargo Bank, N.A., Defendant(s).



35293-2012



GROSS POLOWY, LLC
by: John Ricciardi, Esq.
Attorneys for Plaintiff
900 Merchants Concourse, Ste 412
Westbury, NY 11590

YOUNG LAW GROUP
by: Ivan E. Young, Esq.
Attorney for Defendant, Noel Feustel
80 Orville Drive, Suite 100
Bohemia, New York 11716

Victoria Petersen
Defendant in default
39 South Snedecor Ave.
Bayport, NY 11705
Robert F. Quinlan, J.

PROCEDURAL HISTORY

This is an action to foreclose a mortgage on residential real property known as 39 South Snedecor Avenue, Bayport, Suffolk County, New York ("the property") given by defendants Noel Feustel and Victoria Petersen ("defendant-mortgagors") to Wells Fargo Bank, N.A. ("Wells"), a predecessor in interest to plaintiff Citibank, National Association as Trustee for GSAA Home Equity Trust 2007-9, Asset-Backed Certificate Series 2007-9 ("plaintiff") on May 23, 2007 to secure a note given the same day to Wells by defendant Noel Feustel ("defendant"). The history of this action, up to that point, is set forth in the court's decision placed on the record after oral argument on August 11, 2016 which granted plaintiff partial summary judgment, fixed and set the default of the non-answering defendant-mortgagor Victoria Petersen, amended the caption to remove Barry A. Kamen, PLLC and the "John Doe" defendant so that the caption read as indicated above, and set the action for a limited issues trial pursuant to CPLR § 2218, limited to the issue of plaintiff's proof of mailing of the notices required by RPAPL § 1304 to defendant. The history is further set forth in the court's decisions of December 28, 2017, which denied defendant's motion to vacate plaintiff's note of issue and strike plaintiff's complaint (Mot. Seq. No.003), denied plaintiff's successive motion for summary judgment (Mot. Seq. #004) and denied defendant's cross-motion to renew his argument for dismissal based upon failure to comply with RPAPL § 1304 (Mot. Seq. #005), which decisions set the action for trial on March 2, 2018.

TRIAL

The limited issue trial was held before this court on March 2, 2018 and April 12, 2018. Plaintiff presented Laura Lucas, an employee of Wells, which acted as servicer for plaintiff. Ms. Lucas's testimony established that through powers of attorney Wells acted as servicer for plaintiff, and among Wells duties and responsibilities was mailing the notices required by RPAPL §1304 ("notices") to mortgagors who were in default and subject to a potential foreclosure action. Ms. Lucas established her ability to testify as to the business practices and procedures of Wells and it's business record keeping practices pursuant to CPLR 4518. She also established through her testimony that not only was she trained in the practices and procedures of her employer, but as part of her training by Wells, she was also trained in the practices and procedures of the Walz Group, Inc. ("Walz"), an outside agent that Wells hired to mail the notices on its behalf. She testified to the mailing practices of both Wells and Walz, how they interacted, and identified the records of Wells and Walz which established the mailing of the RPAPL § 1304 notices to defendant on February 16, 2012 by both regular and certified mail.

MAILING OF FEBRUARY 16, 2012 NOTICES ESTABLISHED

Ms. Lucas' credible testimony established Wells' procedures for employing Walz to mail their notices, that Wells provided Walz with a template for the notices, as well as information as to the defaulting borrowers, including loan numbers, mailing addresses and other information necessary to prepare and send the notices. She produced business records of Wells, which through her testimony were admitted into evidence pursuant to the exception to the rule against hearsay set forth in CPLR 4518. These records, Exhibits # "17" and "16," showed that Wells electronically sent the information necessary to generate the notices to defendant to Walz on February 16, 2012. She also testified that Wells' records contained copies of the notices sent to defendant by both certified and regular mail (Exhibits # "3," "5," "7" and "10"), and that two sets [*2]of the required mailings were sent to defendant at the property because Wells records (Exhibit "16") listed the address of the property both as "S. Snedecor Avenue" and "South Snedecor Avenue." Additionally, because of her training, personal knowledge and experience with the mailing process developed and used by Wells and its mailing agent Walz, she established her familiarity with Walz's procedures and records for mailing. She testified that when Walz mailed the notices pursuant to the instructions of Wells, they sent an email to Wells as a record of that mailing: Exhibits "4" and "6" for the notices sent by regular mail (Exhibits # "3" and "5"), Exhibits # "8" and "11" for the notices sent by certified mail ("Exhibits # "7" and "10"). Exhibits # "4," "6," "8," and "11," upon receipt the emails were made a part of Wells business records and uploaded into it's computer system. They were relied upon by Wells in the regular course of its business. These records established that the notices were mailed on February 16, 2012 by Walz on behalf of Wells, the same day the information was e-mailed to Walz by Wells. As they were records made for Wells by its agent Walz, of services it performed on behalf of Wells, made part of Wells records and relied upon by Wells for proof of compliance with RPAPL § 1304, these are business records of Wells and the credible testimony of Ms. Lucas established their admissibility under CPLR 4518 (see People v. Crastley, 86 NY2d 81 [1995]; People v. DiSalvo, 284 AD2d 547 [2d Dept 2001]; Corsi v. Town of Bedford, 58 AD3d 225 [2d Dept 2008];Deutsche Bank National Trust Company v. Monica, 131 AD3d 737 [3rd Dept 2015]).

The credible evidence and testimony presented on the trial of this case is certainly more than the mere filing of papers received from another entity which has been found not to qualify as a business record under CPLR 4518 (see Standard Textile Company, Inc. v National Equipment Rental, Ltd., 80 AD2d 911 [2d Dept 1981]). In fact, it meets the hallmark mentioned in holdings of the Second Department which have precluded admission of records under CPLR 4518 because an affiant failed to establish his/her familiarity and personal knowledge of either the plaintiff's, or another entities', record keeping practices and procedures (see Aurora Loan Servs., LLC v Mercius, 138 AD3d 650 [2d Dept 2016]; US Bank Natl. Assoc. v Handler, 140 AD3d 948 [2d Dept 2016];JPMorgan Chase Bank v. Kutch, 142 AD3d 536 [2d Dept 2016]; Deutsche Bank Natl. Trust Co. v Brewton, 142 AD3d 683 [2d Dept 2016]; HSBC Mtg Servs, Inc v Royal, 142 AD3d 952 [2d Dept 2016]; Aurora Loan Servs., LLC v Bartiz, 144 AD3d 618 [2d Dept 2016]; Arch Bay Holding, LLC v Albanese, 146 AD3d 849 [2d Dept 2017]; Citimortgage, Inc. v Pappas, 147 AD3d 900 [2d Dept 2017]; Aurora Loan Servs., LLC v Ang, 150 AD3d 649 [2d Dept 2017]; Bank of NY v Willis, 150 AD3d 652 [2d Dept 2017]; Aurora Loan Servs., LLC v. Komarovsky, 151 AD3d 924 [2d Dept 2017]; Deutsche Bank Natl. Trust Co. v Carlin, 152 AD3d 491 [2d Dept 2017]; M & T Bank v Joseph, 152 AD3d 579 [2d Dept 2017]; Wells Fargo Bank, NA v Talley, 153 AD3d 583 [2d Dept 2017]; Bank of NY Mellon v Cutler, 154 AD3d 910 [2d Dept 2017]; Bank of NY Mellon v Alli,156 AD3d 597 [2d Dept 2017];Bank of New York Mellon v Lopes, 158 AD3d 662 [2d Dept 2018]; US Bank, N.A. v Ballin, 158 AD3d 786 [2d Dept 2018]; One West Bank, FSB vv Berino, 158 AD3d 811 [2d Dept 2018]). Here Ms. Lucas has established her familiarity and personal knowledge through her training by Wells in Walz's business record keeping practices and procedures, the principle reason for inadmissibility set forth in the preceding cases, and in doing so established the records admissibility pursuant to CPLR 4518. Additionally, as these Walz records were sent to Wells as part of their business relationship with Walz acting as mailing agent for Wells, they became part of Wells' business records and [*3]admissible pursuant to CPLR 4518.

Therefore, the testimony and evidence presented by plaintiff at trial has established the mailing of two sets of notices on February 16, 2012, each set including one notice sent by certified mail and one sent by regular mail. The content of the notices are compliant with the requirements of RPAPL § 1304. As this action was not commenced until November 20, 2012, these mailing establish compliance with RPAPL§ 1304.

In an attempt to rebut this proof, defendant testified that he was self-employed and ran his business from the property, that he was always at home when the mail was delivered and he did not recall receiving any of the notices. Plaintiff's proof establishing mailing of the notices required by RPAPL § 1304 creates a rebuttable presumption that defendant received the mailing, which is sufficient to overcome defendant's simple denial of receipt of the notices (see Countrywide Home Loans, Inc. v Brown, 305 AD2d 626 [2d Dept 2003], Groog v South Road Associates, LLP, 74 AD3d 1021 [2d Dept 2010]; Emigrant Mtge Co., Inc v Persad, 117 AD3d 676 [2d Dept 2014]; Flagstar Bank, FSB v Mendoza, 139 AD3d 898 [2d Dept 2016]). Plaintiff's burden is to establish mailing of the notices to defendant, not receipt. Additionally, the court notes that defendant's testimony was not that he did not receive the notices, but that he did not recall receiving them.

MAILING OF JUNE 4, 2012 NOTICES NOT ESTABLISHED

The court agrees with defendant's position that the proof of a second mailing of notices offered by plaintiff, purportedly on June 4, 2012, addressed to both defendant and the other defaulting defendant borrower, were not established to have been made by both certified and regular mail as required by RPAPL § 1304. These notices were mailed directly by Wells itself, and Ms. Lucas established her ability to testify as to Wells business records concerning them and their mailing pursuant to CPLR 4518. Yet, even when read in conjunction with Exhibits "16" and "17," Exhibits "13,""14," and "15," admitted into evidence, only establish the mailing of the notices by certified mail, not by regular mail. Proof of mailing by both methods is required to comply with the statute. As plaintiff offered no reason why these mailing were made in light of the mailing of February 16, 2012, nor did defendant raise any issue as to why the mailings occurred, only objecting to the proof of these mailings and the list of housing counseling agencies as indicated below purportedly mailed with them, the court will not speculate as to why this set of mailings were made.

The argument made by defendant's counsel that somehow because the June mailings contained a different list and number of housing counseling agencies than the February mailings, the February mailings were defective, is without merit. The February mailings contained a list of five housing counseling agencies in the Suffolk County region and were sufficient in that regard.

ATTEMPT TO RAISE DEFECT IN NOTICE AFTER TRIAL

The attempt by defendant's counsel, after the close of all evidence and after the conclusion of both parties arguments on the evidence presented at the trial in support of their motions for either a verdict for plaintiff or a dismissal for defendant, to raise for the first time a claim that there was a defect in the notices themselves was without merit and not considered by the court. This action has been litigated by two experienced attorneys for almost six years. An answer was filed by defendant which raised as a Sixth Affirmative Defense "plaintiff failed to comply with NY RPAPL § 1304 by not providing defendant with all of the required notices in [*4]proper form." Discovery was had in this action even before the case was assigned to this part, as the court's computer records show that a preliminary conference was held on November 7, 2013 in the court's Differentiated Case Management Part resulting in a Differentiated Case Management Order/Stipulation dated November 7, 2013. The parties engaged in extensive motion practice, including oral argument of plaintiff's original motion for summary (Mot. Seq. #001) and defendant's cross-motion to dismiss (Mot. Seq. #002) before this court on August 11, 2016, after which the court set this limited issue trial solely on the mailing of the notices and authorized a further period of discovery on that issue. Since the decision of August 11, 2016, there have been the three additional motions filed by the parties referred to above and now the trial of this action which started on March 2, 2018 and concluded on April 12, 2018. At no time did defendant raise in opposition to plaintiff's motions or in support of his cross-motions, whether on paper, at oral argument or during this trial, a claim supported by evidentiary proof that the notices failed to meet the standard set by the statutory language of RPAPL § 1304. As such, any claim has been by now waived.

LISTING BANKING DEPT NOT DFS IN NOTICE NOT FATAL

The court notes that one of the possible claims by defendant would be that the both sets of notices, sent after the disbanding of the New York State Banking Department ("Banking Dept.") and its replacement by the New York State Department of Financial Services ("DFS"), were defective because they still listed the Banking Dept. and not DFS. The amendment to RPAPL § 1304 (1) effective October 3, 2011 required notices sent after that date to include the following language: "If you need further information, please call the New York State Department of Financial Services' toll-free helpline at 1-877-BANK-NYS (1-877-226-5697) or visit the Department's website at http://www.banking.state.ny.us." Here, the notices mailed by Walz and Wells were probably old notices as they still included "New York State Banking Department" instead of DFS, but the phone number and web address remained the same in both the old and new notices, as well as the statute. Changes to the statutorily mandated language in reference to the phone number and website did not come until the amendments to RPAPL § 1304 (1) effective as of July 18, 2012.

This defect in referring to the Banking Dept. rather than DFS is one which can be excused pursuant to CPLR § 2001, as it is the phone number and website, each of which connected with DFS, which was the important information. Although case law has required "strict compliance" with the statute (see Aurora Loan Services v Weisblum, 85 AD3d 95 [2d Dept 2011]), the court in Weisblum, supra recognized there may be situations where a defect or irregularity could be so minor as to be overlooked. In Aurora Loan Service, LLC v Weisblum, supra, at 107-108, in response to an argument by plaintiff that the failure to give the notice to one defendant could be considered to be a defect or irregularity that a court could overlook pursuant to CPLR § 2001, the Second Department stated that although CPLR § 2001 could not apply to the facts in that case, it declined to express an opinion when, if ever, a defect or irregularity in a notice might be so minimal as to warrant the exercise of the court's discretion to disregard it under CPLR § 2001. The irregularity here is so minimal and inconsequential that it calls for the court to exercise its discretion pursuant to CPLR § 2001 (see Citimortgage, Inc. v. Bunger, 58 Misc 3d 333[Sup Ct, Suffolk County 2017]).

DEBT COLLECTION LANGUAGE NOT A DEFECT

The other potential "defect," which defendants counsel have raised on other occasions before this court, is the inclusion of the federally mandated "debt collection" language at the bottom of the notice. RPAPL § 1304 (1) in all of its variations since its inception has not mandated that only the statutorily required language be present in the notice. In the version of the statute applicable at the time of these notices, the introductory language to the section before the mandated language states that the "lender, assignee or mortgage loan servicer shall give notice to the borrower in at least fourteen-point type which shall include the following:" and then sets forth the mandatory language (emphasis added). Clearly the use of the word "include" anticipates that the notice may "include" additional language to the mandatory statutory requirements. The requirement in RPAPL § 1304 (2) is that the notice shall be sent in a separate envelope from any other mailing or notice, not that the notice must contain only the statutory language. Therefore, the inclusion of the "debt collection " language is not a defect.

Any other claim of defect not addressed by the court has been waived by defendant by failing to raise it before the conclusion of the trial.

As plaintiff has established at trial the mailing of the notices required by RPAPL § 1304, that issue is resolved in plaintiff's favor, defendant's answer is dismissed and stricken and plaintiff is granted an order of reference pursuant to RPAPL § 1321.

ORDERED that the answer of defendant is dismissed and stricken and plaintiff is granted an order of reference pursuant to RPAPL § 1321; and it is further

ORDERED that as the court had marked plaintiff's prior proposed order of reference "not signed" after denying its prior motions for summary judgment, plaintiff is directed to serve a new order of reference in conformity with this decision within 45 days of the date of the decision, which in addition to the usual language, shall include the following language:

ORDERED that plaintiff is to include in any proposed order of judgment of foreclosure and sale language complying with the Suffolk County Local Rule for filing of the Suffolk County Foreclosure Surplus Monies form contained in Suffolk County Administrative Order # 41-13; and it is further

ORDERED, that, if a prior notice of pendency is outdated, plaintiff is directed to file a successive notice of pendency at least twenty (20) days prior to the submission of any proposed judgment of foreclosure and sale, submitting a copy thereof with proof of filing with any proposed judgment of foreclosure and sale; and it is further

ORDERED that within 30 days of the date of this order, plaintiff is to serve a copy of the order of reference upon all parties who have appeared in this action, as well as upon the referee and thereafter file the affidavits of service with the Clerk of the Court; and it is further

ORDERED that within 60 days of the date of this order, plaintiff is to provide the referee, and defendants who have appeared, all papers and documents necessary for the referee to perform the determinations required by this order, "plaintiff's submissions"; defendant(s) may submit written objections and proof in support thereof, "defendant's objections," to the referee within 14 days of the mailing of plaintiff's submissions; and it is further

ORDERED that the referee's report is to be prepared and submitted to plaintiff within 30 days of receipt of plaintiff's submissions, and the referee's report is to be submitted by plaintiff with its application for a judgement of foreclosure and sale; and it is further

ORDERED that the referee's duties are defined by this order of reference (CPLR 4311, [*5]RPAPL § 1321), and the referee has no power beyond that which is limited by this order of reference to the ministerial functions of computing amounts due and owing to plaintiff and determining whether the premises can be sold in parcels; the referee shall hold no hearing, take no testimony or evidence other than by written submission, and make no ruling on admissibility of evidence; the referee's report is merely advisory and the court is the ultimate arbiter of the issues, if defendant's objections raise issues as to the proof of amounts due and owing the referee is to provide advisory findings within his/her report; and it is further

ORDERED that if defendant's objections have been submitted to the referee, defendant(s) shall also submit them to the court if opposing plaintiff's application for a judgment of foreclosure and sale; failure to submit defendant's objections to the referee will be deemed a waiver of objections before the court on an application for a judgment of foreclosure and sale; failure to raise and submit defendant's objections made before the referee in opposition to plaintiff's application for a judgment of foreclosure and sale shall constitute a waiver of those objections on the motion; and it is further

ORDERED that plaintiff is to file an application for a judgment of foreclosure and sale within 120 days of the date of this order (by this the court refers to the "to be submitted new proposed order of reference") ; and it is further

ORDERED that this action shall be calendared for a status conference on Wednesday, September 26, 2018 at 9:30 AM in Part 27 for the court to monitor the progress of this action. If a judgment of foreclosure and sale is filed with the court before that date, no appearance will be necessary; and it is further

ORDERED that failure to comply with any term of this order will not form the basis for a motion to dismiss the action, but will be the subject of the status conference at which future compliance will be determined.

This constitutes the Order and decision of the Court.

Dated: May 9, 2018
Hon. Robert F. Quinlan, J.S.C.