Mortgage Foreclosure-Related Handdowns - March 22 and 23, 2022 Edition
First Department
AS Helios LLC v Chauhan, 2022 Slip Op 01959 (March 22, 2022)
The First Department affirmed an order denying the defendant’s motion to vacate an order granting M&T Bank’s motion to quiet title. M&T was named as a defendant in AS Helios’ foreclosure action because M&T had a second mortgage. M&T purchased the subject property at a foreclosure sale. However, the day after the foreclosure sale deed was recorded, the First Department reversed a prior order granting summary judgment to AS Helios on the basis that triable issues of fact existed as to standing and compliance with RPAPL § 1304.
One defendant filed an order to show cause pursuant to which she sought to vacate her default in opposing M&T’s motion for default judgment and to vacate the sale of the subject property pursuant to CPLR § 5015(a)(1) and or CPLR § 5015 (a) in the interest of justice. The motion court denied Defendant’s motion based on a finding that she did not demonstrate reasonable excuse for default or a meritorious defense.
The First Department found that the Defendant had demonstrated a reasonable excuse, which was that “her former attorney never told her about M&T Bank's motion or the order granting it on her default, and that she only learned of these developments after she became unhappy about other aspects of her former attorney's representation and retained new counsel. She further stated that, had she been informed of the motion when made, she would have opposed it.” It also found that Defendant’s motion was not untimely, because Executive Orders 202.8 and 202.67 extended time limitations.
The reason that the First Department affirmed the order denying Defendant’s motion to vacate her default in opposing M&T’s motion for quiet title was that “M&T's title is inviolable as a matter of law.” It so found even though a motion to quiet title was improper, as Article 15 relief must be sought through a counterclaim or action. Additionally, “the fact that M&T Bank's knowledge of the pending appeal was a consequence of its role as a party in that action, standing alone, does not differentiate it from a purchaser who is aware of a pending appeal for any other reason. In either case, unless the original property owner obtains a stay pending appeal, which Chauhan sought but was denied, the order directing a foreclosure sale ‘”represents a valid and conclusive adjudication of the parties' substantive rights, unless and until it is overturned on appeal’".
Second Department
Wilmington Trust, NA v Daddi, 2022 Slip Op 02040 (March 23, 2022)
The Second Department affirmed an order denying a defendant’s motion to renew or reargue a previous motion to vacate a judgment of foreclosure and sale and/or for a hearing on the validity of service of process. “ "In order to warrant a hearing to determine the validity of service of process, the denial of service must be substantiated by specific, detailed facts that contradict the affidavit of service" The process server’s affidavit alleged personal service on the defendant at his home. “[T]he defendant attempted to rebut the presumption of proper service created by the affidavit of service by averring that he left a friend's house approximately 30 minutes prior to the alleged time of service, and that "[n]o process server was at [his] home on March 8, 2016, to serve [him] with court papers" but”completely failed to address the detailed physical description of him set forth in the affidavit of service.”
Bank of Am., N.A. v Greenfeld, 2022 Slip Op 01982 (March 23, 2022)
The Second Department affirmed an order granting a motion for judgment of foreclosure and sale and denied the defendant’s cross-motion to the extent that it sought dismissal for lack of personal jurisdiction, after a traverse hearing was held. Defendant’s cross-motion seeking rejection of the referee’s report was also denied.
Bank of Am., N.A. v Lino, 2022 Slip Op 01983 (March 23, 2022)
The Second Department affirmed an order confirming a referee’s report and granting judgment of foreclosure and sale on the basis that the defendant was not prejudiced by the referee’s failure to notify the defendant and conduct a hearing.
Bank of Am., N.A. v Shirazi, 2022 Slip Op 01984 (March 23, 2022)
The Second Department reversed a judgment of foreclosure and sale and vacated summary judgment because the plaintiff failed to demonstrate that it complied with the provisions of the mortgage requiring a 30-day default notice to be sent. “ Copies of the notice without proof of mailing, along with the affidavit of a representative of the loan servicer averring, based upon her review of unspecified business records which were not attached to the affidavit, that such a notice of default was sent on an unspecified date, was insufficient to satisfy the plaintiff's prima facie burden.“ The Second Department also affirmed the denial of the defendants’ cross-motion to dismiss, as bare denial of receipt of any default notice was insufficient to meet their prima facie burden.
Citimortgage, Inc. v Martinez, 2022 Slip Op 01989 (March 23, 2022)
The Second Department affirmed a judgment of foreclosure and sale because the defendant failed to oppose the plaintiff’s motion for summary judgment, and thus waived her argument that “the plaintiff failed to comply with federal Housing and Urban Development regulations promulgated under 24 CFR 203.604 requiring, inter alia, a "face-to-face" meeting between the mortgagee and the mortgagor prior to commencing a foreclosure action.”
Deutsche Bank Natl. Trust Co. v Musheyev, 2022 Slip Op 01991 (March 23, 2022)
The Second Department affirmed a judgment of foreclosure and sale. The Court first rejected the argument that the defendant failed to provide a complete record on appeal. “"It is the obligation of the appellant to assemble a proper record on appeal." Although the order granting JFS stated, "Motion support to review the proposed judgment. Submit judgment" and Plaintiff did not submit a proposed judgment for almost two years, the Second Department found that the JFS motion was not deemed abandoned pursuant to 22 NYCRR 202.48, because the order granting judgment of foreclosure and sale “did not direct that a proposed judgment had to be settled or submitted on notice.”
Nationstar Mtge., LLC v Pajuelo, 2022 Slip Op 02006 (March 23, 2022)
The Second Department found that the motion court properly granted default judgment against one borrower and properly denied default judgment against a defendant who was not a party to the note or mortgage, rejecting an argument that the plaintiff had an equitable mortgage against the second defendant, a spouse who owned the subject property with the borrower as tenants by the entirety.
Nationstar Mtge., LLC v Pajuelo, 2022 Slip Op 02007 (March 23, 2022)
The Second Department denied a motion for default judgment where the plaintiff sought a judgment declaring that it had an equitable mortgage on the interest of the borrower’s spouse, who owned the subject property as a tenant in common but was not on the note or mortgage. “[A] lthough the defendants are deemed to have admitted to all the factual allegations contained in the complaint and all reasonable inferences that flow from them because they are in default, even considering the admitted factual allegations and all reasonable inferences that flow from them, the plaintiff failed to demonstrate, prima facie, that there was an intent to create a mortgage on [defendant’s] interest in the property.”
PennyMac Corp. v Weinberg, 2022 Slip Op 02010 (March 23, 2022)
The Second Department reversed a judgment of foreclosure and sale and granted the branch of defendants’ cross-motion seeking dismissal pursuant to CPLR § 3215(c). The plaintiff had failed to move for an order of reference within a year of defendants’ default, and their appearance through counsel at a settlement conference did not waive their right to seek dismissal. “Moreover, the defendants' failure to move to vacate their default in answering the complaint or appearing in this action did not operate as a waiver of their right to seek dismissal of the complaint pursuant to CPLR 3215(c).”
U.S. Bank N..A. v Nail, 2022 Slip Op 02034 (March 23, 2022)
The Second Department reversed an order that found, on reargument, that the motion court’s prior order denying the defendants’ motion to dismiss pursuant to CPLR 3211(a)(5) should be vacated. The Defendants had moved to dismiss, and the motion court originally denied the motion. They then moved to reargue, and the motion court, upon reargument, granted their motion to dismiss on statute of limitations grounds. Aegis Mortgage Corporation had commenced a prior action in June of 2008, that prior action was apparently dismissed, and US Bank filed a second action in 2017. However, the Second Department found that the affidavit of an employee of SPS, in which she averred that the note and mortgage had been transferred to SPS in January of 2008, created a triable issue of fact as to whether Aegis had standing to commence the 2008 action, which precluded dismissal of the 2017 action on statute of limitations grounds.
U.S. Bank N.A. v Wongsonadi, 2022 Slip Op 02035 (March 23, 2022)
The Second Department affirmed a judgment of foreclosure and sale, rejecting the purchaser’s argument that plaintiff did not have standing because an assignment in the chain of title was invalid. It also held that “"as a stranger to the note and mortgage, [the transferee] lacked standing to assert a defense based on the plaintiff's alleged failure to serve the borrower with a notice of default, as required by the mortgage."
Wells Fargo Bank, N.A. v Breuer, 2022 Slip Op 02037 (March 23, 2022)
The Second Department reversed an order granting the borrowers’ motion to confirm a special referee’s report ascertaining the amount of surplus funds due to various claimants and denying a non-party HELOC lender’s motion to confirm in part and reject in part the special referee’s report and to distribute some of the surplus funds to the HELOC lender. The borrowers and the HELOC lender each claimed entitlement to the surplus proceeds. The borrowers claimed that the HELOC lender’s claim was time-barred because it did not seek to foreclose on the HELOC/second mortgage within six years of the date that they stopped making payments. The Second Department found that the referee was wrong to conclude that the HELOC lender’s claim was time-barred, as the letter that the borrowers introduced to demonstrate acceleration did not contain clear and unequivocal language of acceleration. “ Moreover, the applicable statute which governs proceedings to recover surplus funds from a foreclosure sale, RPAPL 1361, did not require JP Morgan to appear in the action to foreclose the primary mortgage prior to the entry of the judgment of foreclosure and sale, in order to preserve its claim to surplus funds.”
Wells Fargo Bank, N.A. v Farfan, 2022 Slip Op 02038 (March 23, 2022)
The Second Department reversed a judgment of foreclosure and sale and vacated an order granting summary judgment. Plaintiff failed to evidence standing because the affidavit upon which it relied recited that the affiant relied on correspondence indicating that the prior custodian of the loan documents was in physical possession of the note prior to commencement of the action.” The affiant “failed to specify which entity generated the subject correspondence, and, to the extent the correspondence was not generated by the plaintiff, failed to state that she was familiar with the record-keeping practices and procedures of the entity that generated the correspondence, or that the correspondence was incorporated into the plaintiff's own records and routinely relied upon by the plaintiff in its own business.” Additionally, the affiant failed to include the record itself.
Standing was at issue in this case because the assignments upon which the plaintiff relied ended at Norwest Mortgage, Inc. and the last assignment in the chain did not state that the note was assigned with the mortgage. “Further, the plaintiff failed to submit evidence to establish that its immediate predecessor by merger, Wells Fargo Home Mortgage, Inc., was formerly known as Norwest Mortgage, Inc., as indicated in the caption on the complaint in this action, or whether Wells Fargo Home Mortgage, Inc., merged with Norwest Mortgage, Inc.,” which the Second Department found did not establish the plaintiff’s standing as an assignee of the note prior to commencement of the action.
Wells Fargo Bank, N.A. v Malik, 2022 Slip Op 02039 (March 23, 2022)
The Second Department affirmed an order denying a defendant’s motion to vacate a judgment of foreclosure and sale pursuant to CPLR § 5015(a)(1) and (4). The motion court rejected a RPAPL § 1304 defense because the defendant was in default and also rejected a defense pursuant to RPAPL § 1351(1), which requires that a judgment of foreclosure and sale direct that a sale take place within 90 days of the date of the judgment. First, the Second Department found that “CPLR 5019(a) provides that ‘”[a] judgment or order shall not be stayed, impaired or affected by any mistake, defect or irregularity in the papers or procedures in the action not affecting a substantial right of a party’” and second, it found that “the plaintiff submitted evidence demonstrating that the foreclosure sale was originally scheduled to be held on May 30, 2017, i.e., within the permitted 90-day period from the date of the judgment of foreclosure and sale, and that the originally scheduled sale was canceled when the defendant filed a Chapter 13 petition in bankruptcy on May 23, 2017, resulting in an automatic stay of the foreclosure proceedings. Thus, the original scheduling of the foreclosure sale complied with the provision in RPAPL 1351(1) requiring the sale to occur within 90 days from the date of the judgment of foreclosure and sale.”