Opinion
24750-2011
01-14-2019
THE BANK OF NEW YORK MELLON fka The Bank of New York as Trustee for the Certificateholders CWABS, Inc. Asset-Backed Certificates, Series 2005-14, Plaintiff, v. Ronald DOUGHERTY; Cynthia Dougherty ; JP Morgan Chase Bank N.A.; Clerk of the Suffolk County District Court; Capital One Bank U.S.A. N.A.; MSW Florida Capital LLC MSW Capital LLC; Midland Funding LLC, Defendants.
DAVIDSON FINK LLP, Attorneys for Plaintiff, 28 East Main Street, Suite 1700, Rochester, NY 14614-1990 THE RANALLI LAW GROUP, PLLC, Attorneys for Defendant Cynthia Dougherty, 742 Veterans Memorial Highway, Hauppauge, NY 11788
DAVIDSON FINK LLP, Attorneys for Plaintiff, 28 East Main Street, Suite 1700, Rochester, NY 14614-1990
THE RANALLI LAW GROUP, PLLC, Attorneys for Defendant Cynthia Dougherty, 742 Veterans Memorial Highway, Hauppauge, NY 11788
HISTORY
Robert F. Quinlan, J. This is an action to foreclose a mortgage on premises known as 31 13th Street, Bohemia, Suffolk County, New York ("the property") given by defendants Ronald Dougherty and Cynthia Dougherty ("defendants") to Countrywide Home Loans ("Countrywide") a predecessor in interest to plaintiff The Bank of New York Mellon fka The Bank of New York as Trustee for the Certificateholders CWABS, Inc. Asset-backed Certificates, Series 2005-14 ("plaintiff") to secure a note given to Countrywide. Only defendant Cynthia Dougherty ("defendant") filed an answer to plaintiff's complaint. The prior history of this action is set forth in the decision of the court placed on the record on March 2, 2017 after oral argument of plaintiff's motion (Mot. Seq. No.002) seeking summary judgment dismissing defendant's answer, appointing of a referee pursuant to RPAPL § 1321, fixing the default of the non-appearing, non-answering defendants including defendant Ronald Dougherty and to amend the caption. The court granted plaintiff partial summary judgment pursuant to CPLR 3212 (g), which fixed and set the default of the non-answering, non-appearing defendants including defendant Ronald Dougherty, amended the caption and dismissed defendant's second affirmative defense. As there remained questions of fact as to plaintiff's proof of its standing to bring the action (defendant's first, fifth and sixth affirmative defenses), and its compliance with the mailing requirements of the notices required by RPAPL § 1304 and of the filing required by RPAPL § 1306 (defendant's third and fourth affirmative defenses), the court set the action for a limited issue trial pursuant to CPLR § 2218 on those issues, issuing a written discovery and scheduling order, which authorized discovery limited to those issues. The order also authorized the submission of successive summary judgment motions by the parties upon the completion of discovery, within thirty day of filing of a note of issue.
Only defendant moved for summary judgment upon the completion of discovery, seeking dismissal upon a claim that plaintiff had failed to comply with the mailing requirements RPAPL § 1304 and the filing requirements of RPAPL § 1306 (Mot. Seq. # 003). Defendant's motion was denied by the written decision dated January 18, 2018, which set the limited issue trial for February 23, 2018. By way of letter dated February 16, 2018 plaintiff asked the court to extend its time to move for summary judgment, but by order dated February 16, 2018 the court denied the request, as the note of issue had been filed September 6, 2017, the 30 days set by the order of March 2, 2017 to make such a motion had long passed, as well as the 120 day statutory period set by CPLR 3212 (a) for a summary judgment motion and plaintiff had not established good cause for not timely filing such a motion. The order reaffirmed the trial date of February 23, 2018.
TRIAL
At trial plaintiff presented one witness, Mr. Chuck Parks, an employee of Carrington Mortgage Services, LLC ("Carrington"), the present servicer for plaintiff. Through Mr. Park's testimony plaintiff offered into evidence the Limited Power of Attorney executed between plaintiff and Carrington (Plaintiff's Exhibit "1"). The court admitted the document into evidence as it related to the relationship between Mr. Park's employer and plaintiff. Mr. Parks testified as to Carrington's business relationship with plaintiff pursuant to the Limited Power of Attorney and the duties, responsibilities and actions Carrington took thereunder. Without objection, Mr. Parks testified that Carrington maintained plaintiff's records, that he had personal knowledge of how plaintiff's and Carrington's records were made and kept in the regular course of business, and established from his testimony the admissibility of Carrington and plaintiff's business records pursuant to CPLR 4518 (a). He also testified, without objection, that the records of prior servicers were incorporated into Carrington's records and relied upon by Carrington in its business. Through Mr. Parks, without objection, a copy of the original note to Countrywide dated October 24, 2005 and signed by both defendants (Plaintiff' Exhibit "2") was admitted into evidence, which contained an indorsement in blank from Countrywide. A copy of the original mortgage on the property (Plaintiff's Exhibit "3"), also dated October 24, 2005 and signed by defendants was also admitted into evidence without objection.
Plaintiff then marked for identification Plaintiff's Exhibit "4," which Mr. Parks testified was an electronically stored business record of plaintiff maintained by Carrington. He testified, without objection, that this exhibit established that plaintiff had possession of the note as of October 29, 2005 and that the note was held by plaintiff or plaintiff's agent on August 2, 2011, the date the action was filed. When offered into evidence, defendant's objection to Plaintiff's Exhibit "4" was that the servicer who had produced the document, Green Tree Lending, was not the servicer in 2011, and by records which defendant had, but did not attempt to admit into evidence, became plaintiff's servicer after 2011 and remained so until Carrington became servicer. Based on that sole objection, Plaintiff's Exhibit "4" was admitted into evidence as plaintiff's business record as the witness had already established his ability to testify to plaintiff's and Carrington's business records without objection, and in fact had already testified as indicated above.
Without objection, Mr. Parks went on to identify Plaintiff's Exhibits "5" and "6," which he stated were "print screens" from plaintiff's electronic business records that showed the RPAPL § 1304 notices were mailed to defendant by a prior servicer. Defendant objected, stating that the mailings did not come from the prior servicer, but from a company called "Walz" which was retained to mail the notices on behalf of plaintiff and that the witness was not familiar with Walz records. On voir dire by defendant's counsel, Mr. Parks established his familiarity with Walz and its mailing practices and procedures, as Carrington also uses Walz for mailing, that he has reviewed Walz records that establish the mailings of RPAPL § 1304 notices and that these records were the business records of plaintiff and the prior servicer (Bank of America) which had been incorporated into Carrington's records, based on this the court admitted Plaintiff's Exhibit "5." Then, without objection, Mr. Parks not only testified to the information contained in Plaintiff's Exhibit "5," but also to the information contained in Plaintiff's Exhibit "6," not yet in evidence, establishing the content of both documents and establishing that the notices were sent by both regular and certified mail to defendant at the property. When plaintiff moved Plaintiff's Exhibit "6" into evidence, defendant's voir dire and objection were to the fact that no return receipt on the certified mailing was contained in the records and that there were no affidavits of service, therefore the exhibit was inadmissible. Based upon that objection, which the court felt went to the weight to be given to the evidence but not it's admissibility, and as the information contained therein had already been testified to, the court admitted Plaintiff's Exhibit "6" into evidence. The testimony and exhibits established that Plaintiff's Exhibit "5" was mailed on March 28, 2011 by regular first class mail and Plaintiff's Exhibit "6" was mailed on March 29, 2011 by certified mail.
Mr. Parks then testified to the content of Plaintiff's Exhibit "7," the certificate of filing with the Department of Financial Services ("DFS") required by RPAPL § 1306, which defendant consented to admit into evidence. The certificate was filed March 28, 2011 at 12:00 AM, with the "first step mailing" indicated as mailed on March 25, 2011. As pointed out by defendant and the court, the "first step mailing" date listed by DFS was at variance with the proof of mailing of the RPAPL § 1304 notices presented by defendant, being three days before the first class mailing and four days before the certified mailing, and that as the DFS filing indicated it was at "12:00 AM" (midnight), the filing appeared to have been made before either mailing. No explanation for this discrepancy, or possible error, was offered by Mr. Parks, although possible reasons were given by plaintiff's counsel.
At the conclusion of Mr. Parks, testimony plaintiff rested and as defendant called no witnesses, defendant rested. The court asked the parties to submit simultaneous memorandums of law on the issue raised by the apparent conflict in plaintiff's proof of mailing of the notices required by RPAPL § 1304 and the DFS filing required by RPAPL § 1306. Although the court noted that based upon the evidence admitted it felt that plaintiff had sustained its burden of establishing the mailing of the RPAPL § 1304 notices, the court advised defendant that she could submit on that issue also if she wished. As plaintiff's counsel had just had a death in the family and defendant had just filed a renewed attempt at a loan modification, the court, with the consent of the parties, adjourned the case for a conference on July 11, 2018. As the loan modification application had not yet been resolved by that date, the court, again with consent of the parties, adjourned the case for a further conference on September 26, 2018. As of that date it was learned that the loan modification and negotiations had been unsuccessful, therefore the court issued a written directive to the parties to simultaneously file memorandums of law on November 2, 2018.
DECISION AFTER TRIAL
PLAINTIFF HAS STANDING
After considering the evidence at trial and the parties memorandums of law, the court finds that the preponderance of evidence established that plaintiff had possession of the note, indorsed in blank, at the time the action was filed and thereby proved its standing to bring the action (see Aurora Loan Servs., LLC v. Taylor , 25 N.Y.3d 355, 12 N.Y.S.3d 612, 34 N.E.3d 363 [2015] ; Emigrant Bank v. Larizza , 129 A.D.3d 904, 13 N.Y.S.3d 129 [2d Dept. 2015] ; M & T Bank v. Cliffside Prop. Mgt., LLC , 137 A.D.3d 876, 26 N.Y.S.3d 601 [2d Dept. 2016] ). A "holder" of the note is a person in possession of the negotiable instrument that is payable either to bearer, or an identified person, that is the person in possession of the note ( UCC 1-201 [b] [21], 3-202 [1], 3-204 [2]; see Deutsche Bank Natl. Trust Co. v. Brewton , 142 A.D.3d 683, 37 N.Y.S.3d 25 [2d Dept. 2016] ; U.S. Bank Natl. Assoc. v. Cruz , 147 A.D.3d 1103, 47 N.Y.S.3d 459 [2d Dept. 2017] ). Testimony of a witness, such as presented by plaintiff here, based upon personal knowledge and review of books and business records maintained by plaintiff in the ordinary course of business that establishes facts of plaintiff's possession of the note indorsed in blank at the time the action was commenced is sufficient to establish plaintiff's standing (see Aurora Loan Services, LLC v. Taylor , supra ; Wells Fargo Bank, N.A. v. Charlaff , 134 A.D.3d 1099, 24 N.Y.S.3d 317 [2d Dept. 2015] ; Well Fargo Bank, N.A. v. Joseph , 137 A.D.3d 896, 26 N.Y.S.3d 583 [2d Dept. 2016] ; U.S. Bank, NA v. Ellis , 154 A.D.3d 710, 61 N.Y.S.3d 663 [2d Dept. 2017] ).
Here plaintiff's witness testified that his employer Carrington maintained plaintiff's business records, that he had personal knowledge of how plaintiff's and Carrington's records were made and kept in the regular course of business, and established his ability to testify to Carrington and plaintiff's business records pursuant to CPLR 4518 (a). He also testified that the records of prior servicers were incorporated into Carrington's records and relied upon by Carrington in its business. There is no requirement that plaintiff rely on any particular set of business records to establish a prima facie case as long as it satisfies the admissibility requirements of CPLR 4518 (a) and the records and testimony evince the facts for which they are relied upon (see Citigroup v. Kopelowitz , 147 A.D.3d 1014, 48 N.Y.S.3d 223 [2d Dept. 2017] ; HSBC Bank USA, N.A. v. Ozcan , 154 A.D.3d 822, 64 N.Y.S.3d 38 [2d Dept. 2017] ; Aurora Loan Servs., LLC v. Vrionedes , 167 A.D.3d 829, 91 N.Y.S.3d 150 [2d Dept. 2018] ). A copy from the electronically stored business record of plaintiff, as well as his testimony, showed that plaintiff had possession of the note as of October 29, 2005 and that it was held by plaintiff or plaintiff's agent on August 2, 2011, the date the action was filed. This testimony and evidence admitted at the trial establishes plaintiff's possession of the note, indorsed in blank at the time the action was commenced, and therefore its standing; therefore, defendant's first, fifth and sixth affirmative defenses are dismissed.
MAILING OF RPAPL § 1304 NOTICES ESTABLISHED
There is no challenge to the adequacy of the content of the RPAPL § 1304 notices or of the list of housing counseling agencies submitted with them, defendant's only claim is that plaintiff has not established the mailings.
To establish mailing, plaintiff may provide proof of actual mailing or description of its office's practice and procedure for mailing (see New York & Presbyt. Hosp. v. Allstate Ins. Co., 29 A.D.3d 547, 814 N.Y.S.2d 687 [2d Dept. 2006] ; Citibank, N.A. v. Wood , 150 A.D.3d 813, 55 N.Y.S.3d 109 [2d Dept. 2017] ; Citimortgage Inc. v. Banks ,155 A.D.3d 936, 64 N.Y.S.3d 121 [2d Dept. 2017] ). Due proof of the mailing of the RPAPL § 1304 notice is established by submission of an affidavit of service (see Emigrant Mortgage Co., Inc. v. Persad , 117 A.D.3d 676, 985 N.Y.S.2d 608 [2d Dept. 2014] ; Investors Savings Bank v. Salas , 152 A.D.3d 752, 58 N.Y.S.3d 600 [2d Dept. 2017] ), an affidavit of mailing (see JP Morgan Chase Bank, NA v. Schott , 130 A.D.3d 875, 15 N.Y.S.3d 359 [2d Dept. 2015] or through business records that show a standard of office practice or procedure for mailing(see Viviane Etienne Med. Care, P.C. v. Country-Wide Ins. Co. , 25 N.Y.3d 498, 14 N.Y.S.3d 283, 35 N.E.3d 451 [2015] ; Residential Holding Corp. v. Scottsdale Ins. Co. , 286 A.D.2d 679, 729 N.Y.S.2d 776 [2d Dept. 2001] ); Citimortgage v. Banks , 155 A.D.3d 936, 64 N.Y.S.3d 121 [2d Dept. 2017] ; Deutsche Bank Natl. Trust Co. v. Heitner , 165 A.D.3d 1038, 87 N.Y.S.3d 116 [2d Dept. 2018] ). It is this last method which plaintiff relies upon in this case.
Here, Mr. Parks' testimony, as well as exhibits admitted into evidence as business records, showed that the business records of Carrington and plaintiff, which contained the incorporated records of prior servicers, including Bank of America on whose letterhead the notices were mailed, included proof of mailing of the RPAPL § 1304 notices by regular first class mail on March 28, 2011 and by certified mail on March 29, 2011 to defendant at the property. When defendant challenged Mr. Parks claim, asserting that the notices were mailed by Walz, not by Bank of America, Mr. Parks established that he had personal knowledge of Walz' practices and procedures for mailing the RPAPL § 1304 notices as evidenced by the business records admitted into evidence. On voir dire, he was able to show his familiarity with Walz and its mailing procedures, since Carrington also used Walz to mail its RPAPL § 1304 notices, and that they had been followed here. He testified that the business record admitted into evidence showed proof of proper mailing on the dates indicated (see One West Bank, FSB v. Simpson , 148 A.D.3d 920, 49 N.Y.S.3d 523 [2d Dept. 2017] ; Citimortgage, Inc. v. Wallach , 163 A.D.3d 520, 81 N.Y.S.3d 210 [2d Dept. 2018] ). The court found that this testimony established the mailings, on the dates indicated, as required by the statute. Therefore defendant's third affirmative defense is dismissed.
ERROR IN RPAPL § 1306 FILING DOES NOT REQUIRE DISMISSAL
Although there are only a few cases that deal with errors in RPAPL § 1306 filings, this court has previously dealt with the issue of apparent errors made in RPAPL § 1306 certificates in another case, Castle Peak 2012-1 Loan Trust Mortg. Backed Notes, Series 2012-1 v. Connor , 2018 N.Y. Slip Op. 31131 (U), 2018 WL 2976055 (Sup. Ct., Suffolk Co., 2018), finding that errors in the filing with DFS could be considered an error or irregularity that could be disregarded by the court as a substantial right of defendant has not been prejudiced ( CPLR 2001 ). The discrepancy between the date of mailing set forth in the RPAPL § 1306 certificate and the actual date of mailings a few days later is not a situation that would require dismissal in contrast to the discrepancies found in Hudson City Savings Bank v. Seminario , 149 A.D.3d 706, 51 N.Y.S.3d 159 (2d Dept. 2017) were no DFS filing was ever made, or TD Bank, NA v. Oz Leroy , 121 A.D.3d 1256, 995 N.Y.S.2d 625 (3rd Dept. 2014) were the filing was made over three months later.
In TD Bank, NA v. Oz Leroy , supra, the Third Department noted that a three month delay in making the filing could not be deemed a mere irregularity which could be overlooked applying CPLR 2001. There is not a failure to file, or a delay in filing here, just a three day error entered as to one mailing and a four day error entered as to the other. Defendant's argument that "strict" compliance is mandated and requires dismissal exalts form over compliance with the intent and purpose of the statute. To treat these minor errors, when plaintiff has established the required mailings, which the court notes defendant has never denied receiving, ignores the legislative purpose of the filing requirement of RPAPL § 1306, as set forth in the statute and in the analysis of the legislative intent in enacting the statute given in TD Bank, NA v. Oz Leroy , supra. In Aurora Loan Services, LLC v. Weisblum , 85 A.D.3d 95, 107-108, 923 N.Y.S.2d 609 (2d Dept. 2011), after determining that mailing of the notice to only one defendant-borrower failed to strictly comply with the statutory requirements of RPAPL § 1304, the Second Department addressed an attempt by plaintiff to liken its failure to give the notice to an error which can be disregarded pursuant to CPLR 2001. The Appellate Division said that a substantial failure to comply with a mandatory condition precedent of RPAPL Article 13 could not be disregarded, but it went on to say that it declined to express an opinion when, if ever, a defect or irregularity in the content of a notice might be so minimal as to warrant the exercise of the court's discretion under CPLR 2001 to avoid dismissal of an action. The Court made it clear that there could be possible circumstances under which a defect or irregularity in the strict compliance required by RPAPL Article 13 may be so de minimus as to warrant ignoring it in an exercise of the court's discretion under CPLR 2001.
The facts present here, where mailings have been established but incorrectly reported to DFS by a matter of a few days, is such a circumstance. CPLR 2001 allows a court, at any stage, to disregard a party's mistake, omission, defect or irregularity if a substantial right of a party is not prejudiced, (see U.S. Bank, N.A. v. Eaddy , 109 A.D.3d 908, 971 N.Y.S.2d 336 [2d Dept. 2013] ; Deutsche Bank National Trust Company v. Lawson , 134 A.D.3d 760, 20 N.Y.S.3d 624 [2d Dept. 2015] ). No substantial or real right of defendant has been shown to be affected by this "error or irregularity" in the filing. The mailings were proven by evidence at trial. The fact that they were reported to DFS as being made on different days has not been established, or even claimed by defendant, to have caused her any deprivation of rights or harm. To claim that such an error is a material issue which should preclude the court from applying the principles of CPLR 2001 and grant defendant the benefit of dismissing a foreclosure action which plaintiff has otherwise established its entitlement to and its otherwise full compliance with the requirements of RPAPL Article 13 would be applying "strict compliance" in a way that was not intended by the legislature or the decisions of the appellate courts of this state. Defendant's fourth affirmative defense is dismissed.
Therefore, plaintiff having established at trial its standing to bring the action, the mailing of the notices by both first class mail and certified mail, and that there was compliance with RPAPL § 1306, defendant's answer is stricken and plaintiff is granted judgment on its complaint, and it's application for the appointment of a referee pursuant to RPAPL § 1321 is granted.
ADDITIONS TO ORDER OF REFERENCE TO BE SUBMITTED
As the court previously marked plaintiff's proposed order "Not Signed" on March 2, 2017, plaintiff must submit another order of reference for the court to sign, which should include the following additional provisions which the court normally includes in all such orders:
ORDERED that plaintiff is directed to serve an executed copy of the order of reference amending the caption of this action upon the Calendar Clerk of this Court within 30 days of the date of this order and all further proceedings are to proceed under that caption; and it is further;
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, 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; and it is further
ORDERED that this action shall be calendared for a status conference on Wednesday, (Plaintiff is to leave blank, the court will fill-in a date) 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 decision and order of the Court after trial.
Submit judgment on notice.