Opinion
070426-2014
01-07-2019
HSBC BANK, USA NATIONAL ASSOCIATION AS TRUSTEE FOR OPTEUM MORTGAGE ACCEPTANCE CORPORATION, Asset-Backed Pass-Through Certificates Series 2005-4, Plaintiff, v. Anthony PATRICOLA; Virginia Patricola; Mortgage Electronic Registrations Systems, Inc. as Nominee for RBS Citizens, NA; Teachers Federal Credit Union; and Toni Patricola, Defendants.
Shapiro, Dicaro & Barak, LLC, Attorneys for Plaintiff, 175 Mile Crossing Boulevard Rochester, NY 14624 Fine Law Offices, Attorney for Defendants Patricola, 535 Broad Hollow Rd, Suite A3, Melville, NY 11747
Shapiro, Dicaro & Barak, LLC, Attorneys for Plaintiff, 175 Mile Crossing Boulevard Rochester, NY 14624
Fine Law Offices, Attorney for Defendants Patricola, 535 Broad Hollow Rd, Suite A3, Melville, NY 11747
Robert F. Quinlan, J.
HISTORY
This is an action to foreclose a mortgage upon residential real property located at 556 West Alwick Avenue, West Islip, Suffolk County, New York ("the property") given by defendants Anthony and Virginia Patricola ("defendants") to a predecessor in interest to plaintiff HSBC Bank, USA National Association as Trustee for Opteum Mortgage Acceptance Corporation, Asset-backed Pass-through Certificates Series 2005-4 ("plaintiff'). The background and history of this action are set forth in the court's decision and order of August 15, 2017 which granted plaintiff partial summary judgment pursuant to CPLR 3212 (g) which set a limited issue trial pursuant to CPLR § 2218 on the issue of plaintiff's compliance with the notice requirements of RPAPL § 1304. In addition to proof of mailing, the decision noted that plaintiff's submissions raised two other issues: that the notices were addressed to both defendants on one "paper;" and a separate notice was enclosed in the same envelope.
TRIAL
The action proceeded to trial on the limited issues on July 13, 2018. Plaintiff presented one witness, Danielle Dunbar, a litigation manager for TIAA FSB ("TIAA"). She testified to the history of the mergers between her original employer EverHome Mortgage Company ("EverHome") in 2011 with EverBank and the final merger of EverBank and TIAA -CREF Trust Company, FSB, resulting in the entity for which she now works, TIAA. Through her testimony plaintiff admitted into evidence, upon consent of defendants, Plaintiff's Exhibits "1" through "3," and a copy of the limited power of attorney between plaintiff and EverHome, dated May 7, 2013 (Plaintiff's Exhibit "4"). Plaintiff's Exhibit "4" set forth the responsibilities and duties of EverHome and plaintiff under the power of attorney and used the name "EverBank" when referring to EverHome in the document. From this, and the testimony of Ms. Dunbar, it is clear that the terms "EverBank" and "EverHome" are used interchangeably to refer to the same entity.
Ms. Dunbar established her familiarity with the business practices and procedures of EverHome and TIAA and provided testimony that established the ability of those records to be admitted into evidence pursuant to CPLR 4518 (a). Pursuant to CPLR 4518 (a), she also identified Plaintiff's Exhibits "5" and "6," the mailings sent by EverHome to defendants pursuant to RPAPL § 1304, which were also admitted into evidence upon consent of defendants. Each was mailed in an envelope addressed to both defendants at the property and contained in each envelope a page addressed to both defendants containing the language required by RPAPL § 1304, a page of housing counseling agencies, and a page that was a federal required notice to service members concerning their rights. She testified that her review of the business records showed Plaintiff's Exhibit "5" was sent by certified mail and Plaintiff's Exhibit "6" by regular first class mail. She also identified Plaintiff's Exhibit "7," admitted into evidence pursuant to CPLR 4518 (a) and upon defendants' consent, as a letter log history relating to the file maintained on defendants' loan, which she said verified the mailings of both set of notices to defendants. She provided credible and sufficient testimony that established her familiarity with the mailing practices and procedures of EverBank/EverHome that insured that the mailings were made to defendants at the property, and in doing so established the mailing of Plaintiff's Exhibits "5" and "6" to defendants on December 16, 2013 by both regular first class and certified mail, more than ninety (90) days before the action was commenced (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] ); New York & Presbyt. Hosp. v. Allstate Ins. Co. (29 AD3d 547 [2d Dept 2006] ; Citimortgage v. Banks , 155 AD3d 936 [2d Dept 2017] ; U.S. Bank, N.A. v Sims , 162 AD3d 825 [2d Dept 2018] ; Deutsche Bank Natl. Trust Co. v. Heitner , 165 AD3d 1038 [2d Dept 2018] ).
Defendants presented defendant Anthony Patricola, who testified on direct examination that he did not receive the mailings; a statement weakened by his admission on cross-examination that his recollection of non-receipt of the mailings was not absolute. The court notes that defendant Virginia Patricola was not called to testify that she did not receive the mailings, and her failure to so testify could allow the court to draw an inference that she had received them, as their mailing had been established by plaintiff's evidence. But receipt of the RPAPL § 1304 notices is not the issue, as the statute requires only that plaintiff establish the mailing of the notices, not receipt ( RPAPL § 1304 ; see Deutsche Bank National Trust Co. v. Jimenez , –––Misc 3d––––, 2018 NY Slip Op 28373 [Sup Ct, Suffolk County 2018] ).
Although the court found Ms. Dunbar's testimony established the mailing of Plaintiff's Exhibits "5" and "6" to defendants at the property, after both counsel had summed up, the court asked for post-trial memorandums of law, to be submitted simultaneously on October 18, 2018, on the issues of the notices being addressed to both defendants on one "paper" and whether the inclusion in the same envelope of a "notice to service members" was a violation of the prohibition in RPAPL § 1304 (2).
RPAPL § 1304 NOTICE REQUIRED TO BE SENT TO EACH BORROWER
In its post-trial memorandum of law, plaintiff states that "There cannot be any serious contention that applicable law expressly requires that the 90-day notice be sent to each borrower, separately." (page 3, line 20-21). Although that is an admission that each borrower was to receive an individual copy of the notice, plaintiff argues that the language of RPAPL § 1304 (1) in effect at the time this action was commenced was ambiguous as the law only required the notice to be sent to "the borrower." Plaintiff posits that if the language had been drafted more clearly to state that the notice was to be sent to "each borrower" or by using some other term that connoted that each borrower was to receive an individual copy of the notice, the problem that plaintiff now faced would have been averted. Plaintiff could have averted it by a close reading of the statute and an understanding of it's purpose.
This court has recently held that a mailing by both certified and first class mail of an RPAPL § 1304 notice addressed to both borrowers was insufficient to comply with the mandatory mailing requirements of the statute and dismissed plaintiff's complaint (see Deutsche Bank National Trust Co. V. Jimenez , supra). The court could find no appellate law on the issue. Only four trial court decisions that address the issue were found: two stated that a notice addressed to both borrowers complied with the statutory scheme ( Hudson City Savings Bank v. D'Ancona , 2017 NY Slip Op 31917 (U) (Sup Ct, Suffolk County 2017, Heckman, J) and Wells Fargo Bank v Frank , Index No. 26871-2013 (Sup Ct, Suffolk County 2018, Hinrichs, J); and two held that a separate notice to each borrower was required ( US Bank National Association v. Diaz , 2018 NY Slip Op 30436 (U) (Sup Ct, Queens County 2018, Gavrin, J) and Wells Fargo Bank, N.A. v. Yapkowitz , 59 Misc 3d 1227 (A), 2018 NY Slip Op 50726 (U) (Sup Ct, Rockland County 2018, Marx, J). The two decisions sustaining the mailings merely state that the proof of the mailings had been sufficiently established, noting that addressing the notices to both borrowers does not violate the statute.
In US Bank National Association v. Diaz , supra , Justice Gavrin found the mailing of the notice addressed to both defendants was insufficient to comply with the requirements of RPAPL § 1304, citing Aurora Loan Svcs v. Wesiblum , supra (for brevity, herein after referred to a "Weisblum ") and adding a short discussion in a footnote referring to Aurora Loan Servs v. Komarvsky, 151 AD3d 924 (2d Dept 2017). In Aurora Loan Servs v. Komarvsky , the Second Department held that where both borrowers had signed the mortgage, and later both signed a CEMA, both must be "served" with the RPAPL § 1304 notice, but the decision does not state if there were separate mailings.
Justice Marx in Wells Fargo Bank, N.A. v Yapkowitz , supra , relied upon the rationale of Wesiblum . He discussed the arguments raised in Wesiblum and the legislative intent in enacting the HEPTA statutes to preserve and guard home ownership and equity, to aid borrowers by making them aware of alternatives to foreclosure, and providing them with housing counseling agencies to assist them. He recognized that the facts before him, just as here, differed from those in Wesiblum , but concluded that mailing only one notice addressed to both borrowers resulted in the same infirmity as in Weisblum . Pointing to the fact that in Weisblum the Second Department rejected plaintiff's argument and held that actual or constructive notice/receipt of the mailed notice by one borrower is insufficient to provide notice to the other borrower, as it would contravene the policy of the statute, he concluded that a single notice addressed to both borrowers would have the same result. Such a notice improperly shifted the responsibility placed by the Legislature on the lender/servicer to provide the information required by the statute to each borrower from the lender/servicer ( RPAPL § 1304 [2 ] ) to a co-borrower. He further pointed out that to hold otherwise ignores reality, as many foreclosure actions involve divorces where the parties cannot be relied upon to communicate with each other. As the mailing to the borrower of the notice is a mandatory condition precedent to a foreclosure action, Justice Marx concluded that applying the rationale of Weisblum it is clear that one joint notice addressed to both is insufficient to satisfy RPAPL § 1304.
In Deutsche Bank National Trust Co. V. Jimenez , supra, this court agreed with and adopted Justice Marx' rationale, but also pointed to another factor in the statutory scheme that supports the conclusion that the Legislature intended each borrower to receive a separate notice. Since its original enactment there have been six amendments to RPAPL § 1304. As pointed out by plaintiff in its post-trial memorandum, the versions of RPAPL §§ 1304 (1) and (2) in effect at the time plaintiff mailed the notices only referred to "borrower" in the singular. That reference continued through the following amendments until the amendment effective December 20, 2016, which remains in effect today. Amending RPAPL § 1304 (1) by adding a plural reference to "borrowers," reading: "before a lender... commences a legal action against a borrower, or borrowers ...such lender ...shall give notice to the borrower ...which shall include the following...." (emphasis added). The requirements of RPAPL § 1304 (2) were not changed and continue to read "Such notice shall be sent by such lender ... to the borrower ,...." as in all prior versions (emphasis added). This court found the addition of the term "borrowers" to RPAPL § 1304 (1), and the unchanged use of "borrower" later in RPAPL § 1304 (1) and in RPAPL § 1304 (2) to be significant. It shows the Legislature's realization of the consequence of holdings stemming from Weisblum, and that the choice and use of the words have significance in the statutory scheme. By adding the plural "borrowers," the Legislature recognized that there is usually more than one borrower/defendant. Although recognizing that "plural," it retained the "singular" in the requirements for the giving of the notice. This would be in keeping with the intent of the HEPTA statutes that all borrowers be made aware of their rights and options. It is also consistent with the Court of Appeals stated principle that "A court cannot amend a statute by inserting words that are not there nor will a court read into a statute a provision which the Legislature did not see fit to enact.... an inference must be drawn that what is omitted or not included was intended to be omitted and excluded" ( Chemical Specialties Mfrs. Ass'n v. Jorling , 85 NY2d 382, 394 ; see also People v. Silburn , 31 NY3d 144, 174 [2018] ; People v. Tiger , 32 NY3d 91 [2018] ). The substitution of "borrowers" for "borrower" in part of the statute and the failure to make such a substitution later in the statute shows the intent of the Legislature in the original enactment in using the "singular" term "borrower" was literal, each borrower was to receive the notice advising each of the possibility foreclsoure, informing each of them of their rights and how to obtain assistance.
MORTGAGE LANGUAGE NOT TRANSFERRABLE TO STATUTORY CONDITION PRECEDENT
The court finds that plaintiff's argument that the contract language in paragraph 15 of the mortgage, that notice to one mortgagor is deemed notice to all is, should be made applicable to the mailing requirement of RPAPL § 1304 by the holding in Weisblum is without merit. Plaintiff supplies no case law, only its own interpretation of Weisblum , to support such a conclusion. Although the court in Weisblum did look to the contract to help interpret who was a "borrower," as the statute did not define the term, that is significantly different from looking to the mortgage contract to modify the terms and intent of the statutory language that each "borrower" receive the statutorily required notice. In fact, if the Second Department in Weisblum had accepted plaintiff's argument it would have found that the notice to Mr. Weisblum alone was sufficient notice to Ms. Weisblum and would not have held as it did.
RPAPL § 1302 DOES NOT NEGATE RPAPL § 1304 COMPLIANCE
Plaintiff's additional argument that non-compliance with RPAPL § 1304 is not a defense to this action is without merit and support in case law. Plaintiff argues that as RPAPL § 1302 (1)(b) requires that only a foreclosure complaint for any "high-cost" or "subprime" home loan must allege compliance with the requirements of RPAPL § 1304, and that since RPAPL § 1302 (2) makes it a defense in such an action that RPAPL § 1304 was violated, a violation of RPAPL § 1304 is only a valid defense to "subprime" or "high cost" home loan foreclosures. As the home loan in this action is neither "subprime" or "high cost," plaintiff argues that RPAPL § 1304 compliance is not an available defense. The argument ignores the body of case law dealing with RPAPL § 1304 compliance.
In relying on this argument, plaintiff fails to recognize the 2009 amendment to RPAPL § 1304 (1). The original statute, effective September1, 2008 through January 13, 2010, required a plaintiff to send the "90 day notice" only in actions involving "subprime" or "high cost" home loans. The 2009 amendment, effective January 14, 2010, and applicable to this action, required the notice be sent in all home loans before a foreclosure action could be filed. That change remains in effect until at least 2020. So, although the pleading requirement in RPAPL § 1302 was never changed, the condition precedent to commencing any home loan foreclosure action was changed. As a condition precedent to the action, plaintiff's failure to comply with RPAPL § 1304 is an obvious defense to an action.
Further, plaintiff chose to plead compliance with RPAPL § 1304 in paragraph 5 (c) of its complaint, which was denied by defendant's answer. In doing so, plaintiff placed the burden of proof of compliance upon itself (see Bank of NY Mellon v. Aquino , 131 AD3d 1186 [2d Dept 2015] ; Zarabi v. Movahedian , 136 AD3d 895 [2d Dept 2016] ; JPMorgan Chase Bank, N.A. v. Kutch , 142 AD3d 536 [2d Dept 2016] ; Emigrant Mortg. Co. v. Lifshitz , 143 AD3d 755 [2d Dept, 2016] ; Bank of New York Mellon v. Zavolunov , 157 AD3d 754 [2d Dept 2018] ).
As plaintiff's proof established that it sent only a notice by regular first class mail and certified mail addressed to both defendants, which the court has found to be insufficient to establish strict compliance with the condition precedent of RPAPL § 1304, the court finds that plaintiff has not sustained it's burden of proof upon the trial and plaintiff's complaint is dismissed for its failure to comply with this condition precedent to a foreclosure action (see Aurora Loan Services v. Weisblum , 85 AD3d 95 (2d Dept 2011) ;US Bank National Association v. Diaz , supra ; Wells Fargo Bank, N.A. v. Yapkowitz , supra ; Deutsche Bank National Trust Co. V. Jimenez , supra).
VIOLATION OF RPAPL § 1304 (2)
The version of RPAPL § 1304 (2) in effect at the time that this action was commenced required that the notice "shall be sent by lender, assignee or mortgage loan servicer in a separate envelope from any other mailing or notice." In a number of decisions this court has held that RPAPL § 1304 did not at the time the notices were mailed, and does not now, require that the notice "only" contain the language mentioned in the body of RPAPL § 1304 (1), as the statute states that plaintiff or servicer " shall give notice to the borrower ...which shall include the following " (emphasis added), clearly implying that more than just the statutory language may be part of the notice (see Beneficial Homeonwer Services Corp. v. Jordon-Thompson, 57 Misc 3d 1213 [A], 2017 N Y Slip Op. 51424 [U] [Sup Ct, Suffolk County 2017]; Citimortgage, Inc. v. Bunger , 58 Misc 3d 333 [Sup Ct, Suffolk County 2017] ; Citibank, N.A. v. Feustel, 58 Misc 3d 1205 [A], 2017 NY Slip Op 51929 [U][Sup Ct, Suffolk County 2017]; Bank of New York Mellon v. Govan . 61 Misc 3d 1213 [A], 2018 NY Slip Op 5149 [U] [Sup Ct, Suffolk County 2018]; JPMorgan Chase Bank, N.A. v. Lebovic , 61 Misc 3d 1215 [A], 2018 NY Slip Op 51528 [U] [Sup Ct, Suffolk County 2018] ).
Unlike the above cases, there is nothing in this case that shows that the "notice of service members rights" is part of one single notice; although the court may have referred to it as a "page" of the Plaintiff's Exhibits "5" and "6," there is no pagination indicated on it that makes it appear to be part of one notice. The fact that Ms. Dunbar may have referred to the three pages of plaintiff's two exhibits as "the 90 day notice" is not controlling; it is the content and form of the actual documents that controls. From its title alone it appears to be a stand alone "mailing or notice" enclosed in the same envelope in violation of the prohibition of RPAPL § 1304 (2). Plaintiff's argument that this might be helpful and non-prejudicial to defendants is irrelevant to the requirement of strict compliance with RPAPL§ 1304, which mandates dismissal for non-compliance (see Aurora Loan Svcs v. Weisblum , supra ; Deutsche Bank Natl. Trust Co. v. Spanos , 102 AD3d 909 [2d Dept 2013] ; Flagstar, FSB v. Damaro , 145 AD3d 858 [2d Dept 2016] ; Bank of America, N.A. v. Kessler , Sup Ct, Westchester County, November 30, 2017, Scheinkman, J., Index # 54789-2014) ].
Therefore, the proof at trial showed plaintiff violated RPAPL § 1304[2]'s prohibition of placing an additional "mailing or notice" in the same envelope with the statutorily required notice and serves as a second ground for dismissal of plaintiff's action.
As at trial plaintiff has failed to establish its strict compliance with the requirements of RPAPL § 1304 (1) and (2) an indicated above, plaintiff has failed to establish it's entitlement to judgment and it is;
ORDERED that plaintiff's action is dismissed.
This constitutes the Order and decision of the Court.
Submit judgment upon notice.