Federal Natl. Mtge. Assn. v Eason

[*1] Federal Natl. Mtge. Assn. v Eason 2019 NY Slip Op 50129(U) Decided on January 29, 2019 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 This opinion is uncorrected and will not be published in the printed Official Reports.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 January 29, 2019
Supreme Court, Suffolk County

Federal National Mortgage Association, Plaintiff,

against

Joette M. Eason; "JOHN DOE # 1-5" AND "JANE DOE # 1-5" SAID NAMES BEING FICTITIOUS, IT BEING THE INTENTION OF PLAINTIFF TO DESIGNATE ANY AND ALL OCCUPANTS, TENANTS, PERSONS OR CORPORATIONS, IF ANY, HAVING OR CLAIMING AN INTEREST IN OR LIEN UPON THE PREMISES BEING FORECLOSED HEREIN, Defendants.



604658/2015



FEIN SUCH & CRANE , LLP

Attorneys for Plaintiff

1400 Old Country Road Suite C103

Westbury, NY 11590

MACCO & STERN, LLP

Attorneys for Defendant

By: Cooper J. Macco, Esq.

2950 Express Dr S Ste 109

Islandia, NY 11749
Robert F. Quinlan, J.

Upon the following papers read on plaintiff's motion for summary judgment and appointment of a referee to compute pursuant to RPAPL § 1321 (Mot. Seq. #002): NYSCEF Docs # 55-71; defendant's opposition and cross-motion of for summary judgment dismissing the action (Mot. Seq. #003): NYSCEF Docs # 72-75; and plaintiff's opposition and reply: NYSCEF Docs # 76-84; it is

ORDERED that plaintiff Federal National Mortgage Association's motion for summary [*2]judgment on the limited issues remaining for trial after the decision of the court placed on the record after oral argument on December 5, 2016 (Mot. Seq. #001), and for an appointment of a referee pursuant to RPAPL § 1321, is denied; and it is further

ORDERED that those portions of defendant Joette Eason's motion for summary judgment seeking dismissal of plaintiff's action based upon claims that plaintiff does not have standing to bring the action and that plaintiff failed to comply with the contractual condition precedent of mailing or serving the notice required by the mortgage are denied; and it is further

ORDERED that the portion of defendant Joette Eason's motion for summary judgment seeking dismissal of plaintiff's action based upon the fact that plaintiff failed to comply with the statutory condition precedents required by RPAPL § 1304 is granted; and it is further

ORDERED that defendant Joette Eason is directed to submit judgment on notice within sixty (60) days of the date of this order.

PRIOR PROCEEDINGS

This is an action to foreclose a mortgage on residential real property located at 493 41st Street, Copiague, Suffolk County, New York. The prior history of this action is contained in the court's decision set forth on the record on December 5, 2016 after oral argument of plaintiff Federal National Mortgage Association's ("plaintiff") prior motion for summary judgment (Mot. Seq. #001). At that time the court granted plaintiff partial summary judgment pursuant to CPLR 3212 (g), setting the default of the non-appearing, non-answering defendants and dismissing all of defendant Joette Eason's ("defendant") affirmative defenses and counterclaims except those involving plaintiff's proof of its standing to bring the action (9th, 10th, 12th and 17th affirmative defenses) , those claiming plaintiff failed to comply with the notice of default required by the mortgage (5th and 13th affirmative defenses) and her 14th affirmative defense to the extent that it claimed plaintiff failed to comply with the statutory condition precedent of mailing of the notices required by RPAPL § 1304. The court set those issues for a limited issue trial pursuant to CPLR § 2218, issued a written discovery and scheduling order which authorized limited discovery on the issues, set a compliance/certification conference for April 12, 2017 and authorized the parties to file successive summary judgment motions on those issues within 30 days of the filing of a note of issue.

Plaintiff filed the note of issue on September 18, 2017, and requested an additional forty-five (45) days time to file the motion, which was granted by order of the court dated October 18, 2017 (NYSCEF Doc. #53). Subsequently, plaintiff notified the court that defendant had been offered a loan modification and asked for additional time to submit its successive motion for summary judgment (NYSCEF Doc. # 54). The motion was filed with the court on January 12, 2018, within the one hundred-twenty (120) day limit set by CPLR 3212 for such motions. Although defendant subsequently served her opposition and cross-motion outside the one hundred-twenty (120) day limit set by CPLR 3212 by approximately two weeks, as plaintiff raised no objection and the cross-motion was based upon the same facts set forth in plaintiff's timely motion, the court has considered it (see Lennard v Khan, 69 AD3d 812 [2d Dept 2010]; Snolis v Clare, 81 AD3d 923 [2d Dept 2011]; Das v Sun Wah Restaurants, 99 AD3d 752 [2d Dept 2012]; Sikorjak v City of New York, _AD3d_, 2019 NY Slip Op 00157 [2d Dept 2019]).

PLAINTIFF FAILS TO ESTABLISH STANDING

Although plaintiff attached to the complaint a copy of the original note given by defendant to a predecessor in interest, it only contained undated endorsements to specific entities other than plaintiff and was not endorsed in blank, therefore it is insufficient to establish plaintiff's standing (see US Bank, NA v Zwisler, 147 AD3d 804 [2d Dept 2017]; Nationstar HECM Acquisition Trust 2015-2 v Andrews, 167 AD3d 1025 [2d Dept 2018]). There is also an [*3]allonge, in blank and undated, submitted along with the complaint, apparently endorsed on behalf of the last specific holder of the note, Residential Credit Solutions, Inc. ("Residential"), by Seterus, Inc. ("Seterus"), its purported attorney in fact, but there is no proof that the allonge was attached firmly to the note as required by UCC 3-202 (2) in order to make the note bearer paper, and thereby giving plaintiff standing (see Slutsky v Blooming Grove Inn, 147 AD2d 208 [2d Dept 1989]; HSBC Bank USA, N.A. v Roumiantseva, 130 AD3d 983 [2d Dept 2015]; US Bank, NA v Zwisler, 147 AD3d 804 [2d Dept 2017]; Nationstar HECM Acquisition Trust 2015-2 v Andrews, supra).

Additionally, plaintiff submits an affidavit of an employee of its servicer, which also happens to be Seterus, and although the affiant establishes her ability to testify as to Seterus' records pursuant to CPLR 4518 (a), she never states that a review of Seterus' records show plaintiff's possession of the note with the allonge firmly attached prior to the commencement of the action. In her affidavit the affiant refers to "Exhibit A" attached thereto, containing a number of papers presumably from Seterus' records. The second paper in that exhibit is not clearly a record of Seterus and has on it a number of equivocal statements which the affiant does not attempt to explain. Also among the records in this exhibit are copies of the note with the specific endorsements and the allonge referred to previously, but the affiant does not state, nor is there any other proof, that the allonge is firmly attached to the note.

The assignments of the mortgage cannot act to transfer the note to plaintiff, as the original mortgage was given to Mortgage Electronic Registration Systems, Inc. ("MERS") as nominee for the original lender merely for recording with the Suffolk County Clerk. Any assignment of the mortgage by MERS is ineffective in assigning the note with the mortgage, making any further assignments of the mortgage and note relying upon the MERS assignment invalid (see Bank of New York v Silverberg, 86 AD3d 274 [2d Dept 2011]); Mortgage Elec. Registration Sys., Inc. v Coakley, 41 AD3d 674 [2d Dept 2007]; US Bank, N.A. v Faruque, 120 AD3d 575 [2d Dept 2014]; Aurora Loan Servs., LLC v Baritz, 144 AD3d 618 [2d Dept 2016]).

Plaintiff's submissions have failed to establish its standing, so that portion of plaintiff's motion seeking dismissal of defendant's 9th, 10th, 12th and 17th affirmative defenses is denied.

DEFENDANT HAS NOT PROVEN PLAINTIFF LACKS STANDING

But as defendant's submissions have only raised issues of fact as to plaintiff's standing and not established plaintiff's lack of standing as a matter of law, that portion of defendant's cross-motion seeking summary judgment dismissing the action based upon plaintiff's lack of standing is also denied (see LGF Holdings, LLC v Skydel, 139 AD3d 814 [2d Dept 2016]; MLB Sub I, LLC v Bains, 148 AD3d 881 [2d Dept 2017]; US Bank, N. A. v Cohen, 156 AD3d 844 [2d Dept 2017]). A party seeking summary judgment may not merely point to gaps in an opponent's proof to obtain relief, it must adduce affirmative evidence of entitlement to that relief (see Winegrad v. New York University Medical Center, 64 NY2d 851 [1985]; Gilbert Frank Corp. v. Federal Insurance, 70 NY2d 966 [1988]; Deutsche Bank Natl. Trust Co. v Homar, 163 AD3d 522 [2d Dept 2018]). If plaintiff's submissions raise question of fact as to its standing, they are sufficient to defeat defendant's summary judgment motion (see HSBC Bank USA v Lewis, 134 AD3d 764 [2d Dept 2015]; U. S. Bank, Nat. Assoc. v Noble, 144 AD3d 786 [2d Dept 2016]; Aurora Loan Servs, LLC v. Komarvsky, 151 AD3d 924 [2d Dept 2017]).

Thus, that portion of defendant's cross-motion seeking dismissal based upon plaintiff's lack of standing is denied.

MAILING OF NOTICES REQUIRED BY MORTGAGE AND RPAPL § 1304 NOT PROVEN

Although the court notes that the affidavit submitted by defendant neither admits or denies receiving the notice of default required by the mortgage, or the RPAPL § 1304 notices, [*4]once defendant's affirmative defenses raised those issues plaintiff was required to establish the mailing or service of the notice of default and the mailings of the RPAPL § 1304 notices as part of its prima facie case (as to mortgage notice see GE Capital Mtg. Services, Inc. v Mittelman, 238 AD2d 471 [2d Dept 1997]; Norwest Bank Minn. v Sabloff, 297 AD2d 722 [2d Dept 2002]; Wells Fargo Bank, N.A. v Osias, 156 AD3d 942 [2d Dept 2017]; as to the RPAPL § 1304 notices see Bank of New York v. Aquino, 131 AD3d 1186 [2d Dept 2015]; Cenlar FSB v. Weisz, 136 AD3d 855 [2d Dept 2016]; M & T Bank v Joseph, 152 AD3d 579 [2d Dept 2017]).

Here the submissions makes it clear that the mortgage default notice was mailed by Residential. As noted, the affiant employed by Seterus only established her ability to testify as to Seterus' records pursuant to CPLR 4518 (a). Her claim that Seterus incorporated the records of prior servicers in its records is insufficient to establish the mailing of the notice by Residential. An affidavit of an employee of plaintiff's present servicer which fails to establish the affiant's personal knowledge of business practices and procedures of a prior servicer is inadmissible as to that prior servicers records as it fails to meet the requirements of CPLR 4518 (a) and as such fails to provide proof of mailing based upon affiant's review of those business records (see Aurora Loan Servs., LLC v Mercius, 138 AD3d 650 [2d Dept 2016]; JPMorgan Chase Bank v. Kutch, 142 AD3d 536 [2d Dept 2016]; Aurora Loan Servs., LLC v Vrionedes, 167 AD3d 829 [2d Dept 2018]; Federal National Mortgage Assoc. v Marlin, _AD3d_, 2019 NY Slip Op 00095 [2d Dept 2019]).

Even if the affiant had been able to testify to the mailing of the notice of default by Residential, her testimony would still have been insufficient to establish the mailing, just as it is insufficient to establish the mailings of the RPAPL § 1304 notices by Seterus. If an affiant merely submits dated copies of the notices of default and states that a review of the business records establishes that the notices were mailed by both regular and certified mail on a certain date without additional proof of mailing, such proof has been held to be unsubstantiated, conclusory and insufficient to establish the mailing required by either the mortgage or RPAPL § 1304 (see Citimortgage, Inc. v Espinal, 134 AD3d 876 [2d Dept 2015]; U. S. Bank, N.A. v Carey, 137 AD3d 894 [2d Dept 2016]; US Bank, NA v Sabloff, 153 AD3d 879 [2d Dept 2017]; Wells Fargo Bank, N.A. v Mandrin, 160 AD3d 1014 [2d Dept 2018]; US Bank, NA v Henderson, 163 AD3d 601[ 2d Dept 2018]); Wells Fargo Bank, N.A. v Sakizada, _AD3d_, 2019 NY Slip Op 00162 [2d Dept 2019]). To establish mailing, plaintiff's affiant may provide proof of actual mailing or a description of its office's practice and procedure for mailing (see New York & Presbyt. Hosp. v Allstate Ins. Co. (29 AD3d 547 [2d Dept 2006]; Citimortgage Inc. v Banks 155 AD3d 936 [2d Dept 2017]).

Actual proof of the mailing of either the default notice, or the RPAPL § 1304 notices, is established by submission of an affidavit of service (see Emigrant Mortgage Co., Inc. v Persad, 117 AD3d 676 [2d Dept 2014]; Investors Savings Bank v Salas, 152 AD3d 752 [2d Dept 2017]) or an affidavit of mailing (see JPMorgan Chase Bank, NA v Schott, 130 AD3d 875 [2d Dept 2015]; Wells Fargo v Moza, 129 AD3d 946 [2d Dept 2015]). Proof of mailing may also be established through business records that detail a standard of office practice or procedure designed to ensure that items are properly addressed and mailed (see Vivane Etienne Med. Care, P.C. v Country Wide Ins. Co., 25 NY3d 498 [2015]; Residential Holding Corp. v Scottsdale Ins. Co., 286 AD2d 679 [2d Dept 2001]); Deutsche Bank Natl. Trust Co. v Heitner, 165 AD3d 1038 [2d Dept 2018]; US Bank, N.A. v Cope, 167 AD3d 965 [2d Dept 2018]).

Plaintiff's submissions fail to establish actual proof of mailing or the existence of business records that establish a standard office practice or procedure to ensure mailing of the notice of default required by the mortgage or the notices required to be mailed by RPAPL § 1304.

For these reasons, plaintiff's application to dismiss defendant's 5th, 13th and 14th affirmative defenses are denied.

DEFENDANT HAS NOT ESTABLISHED MAILINGS DID NOT OCCUR

As noted above, defendant neither acknowledges or denies receipt of the notices, only claiming plaintiff has not established their mailing. Although defendant's application is to dismiss for plaintiff's failure to establish these mailings, just as with standing, in order to sustain her burden she has to prove the mailings did not occur. This she has not done, and plaintiff's failure to adequately establish the mailings is an insufficient basis upon which to grant defendant's motion to dismiss (see Flagstar Bank, FSB v Campbell, 137 AD3d 853 [2d Dept 2016]; US Bank N.A. v Weinman, 123 AD3d 1108 [2d Dept 2014]; HSBC Bank, USA, NA v Ozcan, 154 AD3d 822 [2d Dept 2017]).

HOUSING COUNSELOR LIST INSUFFICIENT - DISMISSAL GRANTED

Defendant also seeks dismissal based upon plaintiff's violation of the mandate of RPAPL § 1304 (2) that the notice include a list of at least 5 housing counseling agencies, as designated by the division of housing and community renewal, that served the region where the borrower-defendant resided. The designation of the region that included Suffolk County has changed a number of times up until the statute reached its present form that requires that the agencies serve the county where the property is located. Because it has been a dedicated foreclosure part, the court is aware that in 2014 when the notices were mailed, Suffolk County was part of the Long Island Region along with Nassau County. This is confirmed by the list of housing counselors attached as part of plaintiff's submission of the RPAPL § 1304 notices which lists "Long Island Region - Counties In Region - Nassau Suffolk." The list here includes three agencies in Suffolk County, one in Nassau County and one in Queens County. Clearly this list fails to comply with the statutorily mandated condition precedent to suit set forth in RPAPL § 1304 (2). Here there is no question of fact, both parties agree the list of housing counseling agencies include only four in the "Long Island Region," not the required five. The argument of plaintiff that Queens County neighbors Nassau County, "so it is close," is without merit in the face of the mandate of the statute.

Proper service of the information required by RPAPL §1304 on defendant is a condition precedent to the commencement of a foreclosure action, and in support of its motion plaintiff must provide sufficient admissible evidence to prove its strict compliance with the mandates of the statute, failure to do so requires denial of its motion (see Aurora Loan Servcs v. Weisblum, 85 AD3d 95 [2d Dept 2011]). Substantial compliance is not the standard set by the statute, the mandate that 5 housing counseling agencies in the region must be included along with the notice must be fully met. As plaintiff's submissions show that the list contains only 4 housing counseling agencies in the region, the list is indisputably defective on its face. Defects in the content of the mailing required by RPAPL § 1304 (2), except in rare circumstances not present here, are not error or omissions that may be disregarded by the court pursuant to CPLR 2001 (see Aurora Loan Servcs v. Weisblum, 85 AD3d at 107, 108). As plaintiff's submissions fail to meet the mandates of the statute, denial of its motion for summary judgment is required.

Based on the same defect, defendant's cross-motion for summary judgment must be granted (see Hudson City Savings Bank v. DePasquale, 113 AD3d 595 [2d Dept 2014], Flagstar Bank v Damaro, 145 AD 858 [2d Dept 2016]). This is a mandatory condition precedent that cannot be disregarded (see Aurora Loan Servcs v. Weisblum, supra). Strict compliance with the requirements of RPAPL § 1304 is required, failure to do so will result in denial of summary judgment, no matter the sufficiency of opposing papers (see Hudson City Sav. Bank v DePasquale, supra). Plaintiff has failed to comply with one of the underpinnings of the legislation, its intent to provide a defendant-mortgagor access to legal assistance in an attempt to avoid foreclosure. The court finds itself compelled by the language of the statute and the clear holdings of the Second Department to apply the strict standard of compliance with RPAPL § 1304 and dismiss the action. As the statute of limitations here only commenced with the filing of the summons and complaint in 2015, plaintiff is not faced with that potential bar to a further foreclosure action.

Plaintiff's action is dismissed; defendant is directed to submit judgment on notice within 60 days of this order.

This constitutes the Order and decision of the Court.

Dated: January 29, 2019

_______________________________________

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