Matter of U.S. Bank N.A. v Kephart
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Matter of U.S. Bank N.A. v Kephart 2019 NY Slip Op 33121(U) October 18, 2019 Supreme Court, Suffolk County Docket Number: 31979/2012 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] Shon Form Order SUPREME COURT - S~ATE OF NEW YORK IAS PART 18 - SU~FOLK COUNTY PRESENT: HON. HOW ARD H. HECKMAN, JR., J .S.C. -------------------------------------------------------------- _)( U.S. BANK N.A., JNDE)( NO.: 31979/2012 MOTION DATE: 10/08/2019 MOTION SEQ. NO.: #003 MG #004 MD CASEDISP PLAINTIFF'S ATTORNEY: LEOPOLD & AS SOCIATES, PLLC 80 BUSINESS PARK DRIVE, # 110 ARMONK, NY 10504 Plaintiffs, -againstROBERT H. KEPHART, et al. , Defendants. -------------------------------------------------------------- -)( DEFENDANT'S ATTORNEY: FRED M. SCHWARTZ, ESQ. 3 17 MIDDLE COUNTRY ROAD SMITHTOWN, NY 11787 Upon the following papers numbered I to 41 read on this motion 1-20 (#003) : Notice of Motion/ Order to Show Cause and supporting papers 1-20 (#003) ; Notice of Cross Motion and supporting papers 21-27 (#004) ; Answering Affidavits ; Other_ ; (and after hearing counsel in and supporting papers 28-35 ; Repl ying Affidavits and supporting papers 36-39 40-41 support and opposed to the motion) it is, ORDERED that the motion by plaintiff for L order: I) confirming the referee's report dated June 6, 2019; 2) granting a judgment of foreclosure and sale; 3) directing the Clerk to re-index the assignment of mortgage recorded on September 15, 2003 at Liber M00020498, Page 502 to correct the description of the mortgaged premises as 14 13 1 Street, Holbrook, New York; 4) reforming the assignment of mortgage recorded on July 27, 20 18 t Liber M00022837, Page 380 to correct the date of the mortgage as March 28, 2003; and 5) discontinuing the action against defendant Robert H. Kephart a/k/a Robert Kephart, is granted; and it is further ORDERED that the cross motion by defendant Marion Kephart seeking an order pursuant to 1 CPLR 4403, 4313 & 5015 & RPAPL 1304: 1) vacl ing the Order dated December 27, 2018 granting s ummary judgment in favor of the plaintiff; a nd 2) is missing pla intiff's complaint or, in the alternative: 3) denying plaintiff's motion; 4) directi g a hearing before the court appointed referee; and 5) denying plaintiff an award for interest and attorneys' fees is denied. Plaintiff's action seeks to foreclose a mortgage in the original sum of $ 149,200.00 executed by defendant Robert Kephart and Marion Kephart bn March 28, 2003 in favor of Continental Capital Corporation. On the same date both mortgagors executed a promissory note promising to repay the entire amount of the indebtedness to the le der. Plaintiff is the assignee of the note and mortgage by assignment dated March 14, 20 17. T e mortgagors have defaulted in making timely payments due under the terms of the mortgage sine December 1, 2009. Plaintiff commenced this action by filing a summons, complaint, and notice f pendency in the Suffolk County Clerk's Office on October 15, 20 12. Defendants/mortgagors serv d an answer dated November 19, 2012. Mortgagor Robert Kephart died on October 14, 2015. By Order dated December 27, 2018 plaintiffs unopposed motion for an order granting summary judgment and for the appointment of a referee to compute the sums due and owing to the plaintiff was granted. [* 2] Plaintiff's motion seeks an order confirming the referee's report and for a judgment of foreclosure and sale. Defendant's cross motion see s an order vacating the December 27, 2018 Order and granting defendant leave to serve opposition to plaintiffs summary judgment motion. Defendant claims that once the prior Order is vacat d, plaintiff's complaint must be dismissed since there is insufficient proof to establish the mortgage ender's compliance with RP APL 1304. Defendant also claims that plaintiff's motion must e denied since the mortgagor has an absolute right to a hearing before the referee and since no int rest and attorneys' fees should be awarded. With respect to defendant's cross motion to acate her default, the record shows that plaintiff's summary judgment motion was originall served on June 13, 20 17 and made returnable on July 10, 2017. Court records indicate that plaintiff's motion was adjourned by counsel a total of thirteen times until it was submitted without opposi ion on the IAS Part 18 motion calendar on December 18, 20 18. Records show that plaintiff se ed a second motion seeking to discontinue the action against defendant Robert Kephart on August 14, 2018 which was made originally returnable on September 18, 2018. This second motion was a journed twice more on the same dates as plaintiff's original motion and was submitted without opposition on the IAS Part 18 motion calendar on December 18, 2018. Both motions were subseq ently granted by separate Orders dated December 27, 2018. The affidavit submitted by defendant Marion Kephart states that as a result of her husband 's death (defendant Robert Kephart) she was in "a severe emotional state" and "was not made aware that any further proceedings or motions had been fi ed". Defendant states that she heard from an acquaintance that the attorney who represented her nd her husband since November, 2012 "had suffered severe physical and emotional decline mor than two years ago" and that "he (the attorney) had been hospitalized and has resided in a nursing ome for nearly a year". Defendant claims that she consulted with another attorney (who presently epresents her) in July, 2019 and learned for the first time from that attorney's "online search" that ar motion for summary judgment had been granted. It is defendant's position that her former attorney's realth problems provides a reasonable excuse for the failure to serve timely opposition to plaintiff's summary judgment motion and therefore the court should vacate the prior Order and dismiss plaintiff$ complaint based upon the plaintiff's failure to prove service of the RPAPL 1304 90-day notices. A defendant seeking to vacate her default i appearing in an action pursuant to CPLR 5015(a)(l) must provide a reasonable excuse for th default and demonstrate a potentially meritorious defense (see Eugene Dilorenzo, Inc. v. A.C. Dutton Lbr., Co, 67 NY2d 138, 501 NYS2d 8 (1986); Deutsche Bank National Trust Co. v. Gutierrez, 102 AD3d 825, 958 NYS2d 472 (2"d Dept., 2013)). Among the relevant factors to be considered are the extent of the delay, whether there has been prejudice to the opposing party, whether there has been willfulness. the public policy in favor of resolving cases on the merits and whether 'he untimely answer sets forth an arguably meritorious defense to the plaintiff's complaint (se1 Dinstber v. Allstate Insurance Company, 75 AD3d 957, 906 NYS2d 636 (3rd Dept., 2010); Mongomery v. Cranes, Inc., 50 AD3d 81, 855 NYS2d 681 (2"d Dept., 2008)). Defendant has failed to submit sufficient prnof to establish a reasonable excuse for her default in serving timely opposition to plaintiff's or"ginal summary j udgment motion. Defendant's excuse is premised upon a generalized claim of "law office failure" without any direct evidence creating a time line related to her former counsel's illness and/or documentary proof to support her -2 [* 3] claim. Defendant's excuse is centered around clai~s that her husband primarily handled "this matter" and that upon his death she was in a "sever emotional state" which prevented her from being aware of the pendency of this action. Howev r the facts show that the defendant's husband died nearly twenty one months before plaintiff serv d the summary judgment motion. Moreover, while the defendant's claim of " law office failure" i based upon her attorney's physical and emotional disability, there is no evidence submitted to document the time period during which defendant's counsel became disabled. In fact, the ~;y documentary evidence submitted to establish a time line related to his disability was the subrnissi n by plaintiff of a copy of a stipulation signed by defense counsel in early September, 2018 conse ting to the adjournment of plaintiffs motion until November 5, 2018 (with opposition due on 09 ober 23, 2018). And while defense counsel affirms that defendant's prior counsel "had been sufering from a long-term physical and emotional disability" and currently resides in a "nursing facilit'', there is no affidavit submitted either by former counsel (who present counsel concedes presfntly has an "improved mental state") or from former counsel's colleague, or any other individual~who is familiar with former counsel's physical and mental condition including former counsel's p sician, which could establish counsel's condition during the time period when plaintiffs m tion was pending and thereafter submitted without opposition. Absent submission of such pr of which would provide details to establish "law office failure" and/or documentary evidence which would show that his disability took place during the time period that the default occurred, there is insufficient evidence submitted to establish a reasonable excuse for defendant's months long def: ult in serving any opposition to plaintiffs motions. Having fai led to provide any reasonable excuse for the prolonged delay in seeking to vacate her default, it is unnecessary to consider whether defendant has demonstrated the existence of an arguably meritorious defense (Deutsche Bank National Trust Co. v. Rudman, 80 AD3d 651, 914 NYS2d 672 (2"d Dept., 2011); Deutsche Bank Nati9nal Trust Co. v. Gutierrez, 102 AD3d 825, 958 NYS2d 472 (2"d Dept.,2013 ); Deutsche Bank Natignal Trust Co. v. Pietranico, 102 AD3d 724, 957 NYS2d 868 (2"d Dept.,2013 ); Wells Fargo Bank, NA. v. Russell, 101 AD3d 860, 955 NYS2d 654 (2"d Dept.,2012)). With respect to defendant's attempt to assert the non-jurisdictional defense of a failure to serve an RP APL 1304 notice as a predicate for dis~issing the complaint, defendant remains in default in serving timely opposition to plaintiffs oqginal summary judgment motion and therefore cannot seek dismissal absent legal grounds to vacate that default. As recited above she has provided no reasonable excuse for her default and therefore thls non-jurisdictional defense cannot be asserted at this juncture of this proceeding. Put simply, any alleged fai lure to comply with the statutory notice provision (RP APL 1304) does not constitute a jurisdictional defect which would provide independent grounds for a defendant who was in ddfault to vacate her default in appearing (see Kondaur Capital Corp. v. McAuliffe, 156 AD3d 77S, 67 NYS3d 653 (2"d Dept., 20 17); HSBC Bank USA, NA. v. Hasis, 154 AD3d 832, 62 NYS3d 467l(2"d Dept., 2017); Bank ofAmerica, NA. v. Agarwal, 150 AD3d 651 , 57 NYS3d 153 (2"d Dept.r 2017); Deutsche Bank National Trust Company v. Lopez, 148 AD3d 475, 49 NYS3d 123 (1 51 Dept., 2017); PHH Mortgage C01p., v. Celestin, 130 AD3d 703, 11 NYS3d 871 (2"d Dept., 2015); Pritcnardv. Curtis, 101AD3d1502, 957 NYS2d 440 (3'd Dept., 2012); Deutsche Bank National Trust C . v. Posner, 89 AD3d 674, 933 NYS2d 52 (2"d Dept., 2011)). Plaintiffs unopposed summary judgment motion which was granted by Order dated -3- [* 4] December 27, 2018 was a determination that plaintir had made a prima facie showing of its entitlement to foreclose the mortgage and resulted i ~he dismissal of ~ll affirmative ~efens~s which were asserted (and which should have been asserted m the defendants answer. Havmg failed to oppose the summary judgment motion, defendant c~nnot now seek to assert an RP APL 1304 defense for the first time in opposition to plaintiffs current motion seeking a judgment of foreclosure and sale. The court's determination awarding summary judgment to the plaintiff is the "law of the case" and such finding precludes further consideration of 11 non-jurisdictional defenses which have been waived as a result of defendant's failure to timely o ,pose plaintiffs summary judgment motion and which were dismissed by this court's prior order (se Madison Acquisition Group, LLC v. 7614 Fourth Real Estate Development, LLC, 134 AD3d 83, 20 NYS3d 418 (2"d Dept., 2015); Certain Underwriters at Lloyd's ofLondon v. North Shore ignature Homes, Incorporated, 125 AD3d 799, 1 NYS3d 841 (2nd Dept., 2015)). With respect to plaintiffs motion to confi the referee's report, no legal basis exists to deny confirmation of the referee's report. Plaintiffs sub . issions establish its entitlement to a judgment of foreclosure and sale based upon the referee 's report and findings (see US. Bank, N.A. v. Saraceno, 147 AD3d 1005, 48 NYS3d 163 (2nd Dept., 2017); SBC Bank USA, N.A. v. Simmons, 125 AD3d 930, 5 NYS3d 175 (2nd Dept., 2015)). Whereas the court is not bound by the referee' s report of the damages due the plaintiff, the report of a referee shjuld be confirmed in circumstances where the findings are substantially supported by the evidence in the record (CitiMortgage, Inc. v. Kidd, 148 AD3d 767, 49 NYS3d 482 (2"d Dept., 2017); Matte o/Cincotta, 139 AD3d 1058, 32 NYS3d 610 (2"d Dept., 2016)). In this case the plaintiff submitt d sufficient evidence in the form of an "affidavit of payment default" from the mortgage servicer/attdmey-in-fact's (Rushmore Loan Management Services LLC's) assistant secretary dated May 25, 2017, which testimony, together with copies of the note and mortgages and business records, provides sufficient admissible evidence to establish the accuracy of the referee's computations. The admisJibility of the servicer/attorney-in-fact's representative's testimony and business records we¥ established by this Court's prior Order dated December 27, 2018 granting summary judgment in favor of the plaintiff and with plaintiffs submission of the actual business records in compliance with this Court's September 12, 2019 (see Bank ofNew York Mellon v. Gordon, 171AD3d197, 97 NYS3d 286 (2nd Dept., 2019) there is sufficient evidence to support the calculations of thlreferee and to confirm the finding that the mortgaged premises be sold in one parcel (see Citi ortgage, Inc. v. Kidd, supra.; Hudson v. Smith, 127 AD3d 816, 4 NYS3d 894 (2"d Dept., 2015)). C ntrary to defense counsel's stated objection concerning plaintiffs submission of those business r ecords, there is no proof that the records provided to the court and defendant were not the records which were reviewed and relied upon as set forth in the Rushmore representative's May 25, 20 17 affidavit. The fact that there have been additional entries to those business records after M~y 25, 2017 as a result of the mortgagors' continuing default does not contradict plaintiffs re~resentative's testimony that these records were the actual records reviewed by the Rushmore assist nt secretary. With respect to the issue of whether a referee's hearing is required, the relevant statutes clearly grant the appointing court the prerogative and authority to limit the powers of the referee. CPLR 431 1 provides: R 4311. Order of reference. -4· [* 5] An order of reference shall direct the referfe to determine the entire action or specific issues, to report issues, to perform p~rticular acts, or to receive and report evidence only. It may specify or limit the p1wers of the referee and the time for filing his report and may fix a time and plac for the hearing (emphasis supplied). CPLR 4313 provides: R4313. Notice. Except where the reference is to a judicial hearing officer or a special referee, upon the entry of an order of reference, the c erk shall send a copy of the order to the referee. Unless the order of refere11ce o herwise provides, the referee shall forthwith notify the parties of a time and pla e for the first hearing to be held within twenty days after the date of the order or sh 1 forthwith notify the court that he declines to serve (emphasis supplied). Relevant therefore are these statutory prono ncements that an order of reference may specify or limit the powers of the referee. "A referee has n power beyond that li mited in the order of reference" (L.H Feder C01poration v. Bozkurtian, 48 AD2d 70 1, 368 NYS2d 247 (2"d Dept., 1975) citing In re Starr, 245 AD 5, 289 NYS 753 (2nd Dept., 1935)) and the referee's duty in a foreclosure action is purely ministerial with the referee deemed a ministerial officer bound to follow precisely the provisions of the order of appointment (O'Brien!v. Spitzer, 24 AD3d 9, 802 NYS2d 737 (2"d Dept., 2005); reversed on other grounds, 7 NY3d 2f, 9, 818 NYS2d 844 (2006). Decisions dating to 1853 confirm a court's authority to limit a referee's duties as evidenced in McCracken v. Valentine, 5 1 Seid. 42, 9 NY 42 (1853) where the court stated: "where an order of reference is expressly limited to the subject of payments due on the mortgage obliga ion, the referee has no discretion and is bound to pursue only the directions contained in the decree." In this case the authority of the referee was recifically defined by this Court's Order of Reference which limited the referee's power and au hority and explicitly stated that: "No hearing shall be required ... " By limiting the referee's dutiesr as statutorily authorized, the defendant retained the right to submit relevant, admissible evidence in bpposition to the referee's computations directly to this Court. Instead defendant has chosen to makJ generalized and conclusory objections without providing any relevant, admissible evidence to eithdr support her claims or to contradict the evidence presented by the plaintiffs representative. This co~rt recognizes that the referee's report is advisory only which leaves the court as the ultimate arbiter of the issues referred. However the only relevant, admissible, and credible evidence submitted is the proof submitted by the plaintiff in support of the referee's computations. Based upon these circumstances the defendant has been afforded an opportunity to submit relevant, admissible evidence in opposition to the referee's findings sufficient to either contradict the referee's calculations or to pfovide sufficient credible proof for the court to modify the referee 's computations. Absent the sub ission of any testimonial or documentary proof to contradict the referee's findings, the only relevan proof before this court has been submitted by the plaintiff and therefore no legal basis exists to de~y plaintiffs motion to confirm the referee's report since the court is the ultimate arbiter of the amount of damages due the plaintiff (see Deutsche Bank National Trust Company v. Zlotoff et al.. 77 AD3d 702, 908 NYS2d 612 (2"d Dept., 201O); FDIC v. 65 Lenox Road Owners Corporation, 270 AD2d 303, 704 NYS2d 613 (2"d Dept., 2000); Adelman v. Fremd, 234 AD2d 488, 651 NYS2d 604 (2"d Dept., 1996); Stein v. American Mortgage -5 [* 6] Banking, Ltd. 216 AD2d 458, 628 NYS2d 162 (2"d ~ept., 1995)). Finally, with respect to defendant's remainink objections to plaintiff's application for interest and reasonable attorneys' fees, neither claim has legfl merit. With respect to the interest to be awarded, the recovery of interest is within the court'f discretion and the exercise of such discretion should be governed by the particular facts of the cas~ including "wrongful" conduct on the part of either party (see BAC Home Loan Servicing, LP v. Jackson, 159 AD3d 861 , 74 NYS3d 59 (2"d Dept., 2018); Greenport Mortgage C01poration v. Lamber{i, 155 AD3d I 004, 66 NYS3d 32 (2"d Dept., 2018); CitiCorp Trust Bank v. Vidaurre, 155 AD3d f34, 65 NYS3d 237 (2"d Dept., 2017)). In this record there is no proof of wrongful conduct on the art of either party. While there appears to have been a delay in seeking judgment, the record shows hat one of the mortgagors died in October, 2015 causing a delay and thereafter the parties consented o adjourn plaintiffs summary judgment motion for a period in excess of eighteen months. Moreove the record shows that the mortgagors have been in default for nearly a decade causing the mortgage ~~ nder to subsidize their continued residence by payment for taxes and hazard insurance. Under sue' circumstances no legal or equitable grounds exist to deny the plaintiff an award of interest. As t~ attorneys' fees, plaintiff has submitted sufficient evidence for this court to award such fees ~s are reasonable and the amount is set forth in the judgment of foreclosure and sale signed on this date. a~d Accordingly, defendant's motion is denied plaintiff's motion is granted. The proposed judgment of foreclosure and sale has been signed simultaneously with execution of this order. HON. HOWARD H. HECKl\llAN, JR. Dated: October 18, 2019 J.S.C. -6-
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