Opinion
INDEX NO.: 12737/2010
01-09-2019
THE BANK OF NEW YORK MELLON, Plaintiff, v. WENDY JILL WACHTEL, Defendants.
PLAINTIFF'S ATTORNEY: ECKERT SEAMANS CHERIN & MELLOT 10 BANK STREET, STE 700 WHITE PLAINS, NY 10601 DEFENDANT'S ATTORNEY: CONFORTI & WALLER, LLP 250 NORTH SEA ROAD SOUTHAMPTON, NY 11968
Short Form Order PRESENT: HON. HOWARD H. HECKMAN JR., J.S.C. MOTION DATE: 12/3/2018
MOTION SEQ. NO.: #004 MG #005 MD PLAINTIFF'S ATTORNEY:
ECKERT SEAMANS CHERIN & MELLOT
10 BANK STREET, STE 700
WHITE PLAINS, NY 10601 DEFENDANT'S ATTORNEY:
CONFORTI & WALLER, LLP
250 NORTH SEA ROAD
SOUTHAMPTON, NY 11968
Upon the following papers numbered 1-41 read on this motion: Notice of Motion/ Order to Show Cause and supporting papers 1-10 (#004); Notice of Cross Motion and supporting papers 11-25 (#005); Answering Affidavits and supporting papers 35-36; Replying Affidavits and supporting papers 37-41; Other 26-34; (and after hearing counsel in support and opposed to the motion) it is,
ORDERED that this motion by plaintiff the Bank of New York Mellon, seeking an order: 1) granting summary judgment striking the answer of defendant Wendy Jill Wachtel; 2) deeming all appearing and non-appearing defendants in default; 3) discontinuing the action against defendants designated as "John Doe #1" through "John Doe #10"; 4) amending and correcting the description of the mortgaged premises to conform with the correct description set forth in the notice of pendency; 5) amending the caption; and 6) appointing a referee to compute the sums due and owing to the plaintiff in this mortgage foreclosure action is granted; and it is further
ORDERED that the cross motion by defendant Wendy Jill Wachtel seeking an order pursuant to CPLR 3025, 3124, 3212 & 3408, & RPAPL 1304 denying plaintiff's motion and dismissing plaintiff's complaint or, in the alternative, granting defendant leave to serve an amended answer is denied; and it is further
ORDERED that plaintiff is directed to serve a copy of this order amending the caption upon the Calendar Clerk of the Court; and it is further
ORDERED that plaintiff is directed to serve a copy of this order with notice of entry upon all parties who have appeared and not waived further notice pursuant to CPLR 2103(b)(1)(2) or (3) within thirty days of the date of this order and to promptly file the affidavits of service with the Clerk of the Court.
Plaintiff's action seeks to foreclose a mortgage in the original sum of $1,337,226.00 executed by defendant Wendy Jill Wachtel on January 10, 2007 in favor of Countrywide Bank, N.A. On the same date defendant executed a promissory note promising to re-pay the entire amount of the indebtedness to the mortgage lender. By assignment dated March 30, 2010 the mortgage and note were assigned to plaintiff. Plaintiff claims that Wachtel defaulted under the terms of the mortgage and note by failing to make timely monthly mortgage payments beginning January 1, 2009 and continuing to date. Plaintiff commenced this action by filing a summons, complaint and notice of pendency in the Suffolk County Clerk's Office on April 1, 2010. Defendant Wachtel served an amended verified answer dated April 22, 2010 asserting two (2) affirmative defenses.
Plaintiff's motion seeks an order granting summary judgment striking defendant's answer and for the appointment of a referee. Defendant's cross motion and opposition seeks an order denying plaintiff's motion and dismissing plaintiff's complaint or, in the alternative, granting leave to serve an amended answer. Defendant claims that: 1) plaintiff's motion is time barred; 2) plaintiff failed to provide court ordered discovery; 3) plaintiff failed to offer defendant a loan modification and acted in bad faith; 4) plaintiff failed to prove it has ownership of the underlying note and mortgage; 5) plaintiff failed to prove compliance with RPAPL 1304; 6) plaintiff failed to submit adequate proof to warrant correction of the mortgaged premises property description; and 7) defendant should be permitted to amend her answer.
This is the second summary judgment motion submitted by the plaintiff. By short form Order (Molia, J.) dated May 14, 2014 plaintiff's original motion was denied without prejudice to renewal within one hundred twenty days (120) days. This motion was served on September 6, 2017 and marked submitted on the original return date of September 22, 2017. The motion and defendant's cross motion (marked submitted on the same date of September 22, 2017) remained sub judice until the action and the underlying motions were reassigned to this Part by Administrative Order (Hinrichs, J.) dated November 29, 2018. Both motions were marked submitted on December 3, 2018.
The proponent of a summary judgment motion must make a prima facie showing of entitlement to judgment as a matter of law, tendering sufficient evidence to eliminate any material question of fact from the case. The grant of summary judgment is appropriate only when it is clear that no material and triable issues of fact have been presented (Sillman v. Twentieth Century-Fox Film Corp., 3 NY2d 395 (1957)). The moving party bears the initial burden of proving entitlement to summary judgment (Winegrad v. NYU Medical Center, 64 NY2d 851 (1985)). Once such proof has been proffered, the burden shifts to the opposing party who, to defeat the motion, must offer evidence in admissible form, and must set forth facts sufficient to require a trial of any issue of fact (CPLR 3212(b); Zuckerman v. City of New York, 49 NY2d 557 (1980)). Summary judgment shall only be granted when there are no issues of material fact and the evidence requires the court to direct a judgment in favor of the movant as a matter of law (Friends of Animals v. Associated Fur Manufacturers, 46 NY2d 1065 (1979)).
Entitlement to summary judgment in favor of the foreclosing plaintiff is established, prima facie by the plaintiff's production of the mortgage and the unpaid note, and evidence of default in payment (see Wells Fargo Bank N.A. v. Erobobo, 127 AD3d 1176, 9 NYS3d 312 (2nd Dept., 2015); Wells Fargo Bank, N.A. v. Ali, 122 AD3d 726, 995 NYS2d 735 (2nd Dept., 2014)). Where the plaintiff's standing is placed in issue by the defendant's answer, the plaintiff must also establish its standing as part of its prima facie showing (Aurora Loan Services v. Taylor, 25 NY3d 355, 12 NYS3d 612 (2015); Loancare v. Firshing, 130 AD3d 787, 14 NYS3d 410 (2nd Dept., 2015); HSBC Bank USA, N.A. v. Baptiste, 128 AD3d 77, 10 NYS3d 255 (2nd Dept., 2015)). In a foreclosure action, a plaintiff has standing if it is either the holder of, or the assignee of, the underlying note at the time that the action is commenced (Aurora Loan Services v. Taylor, supra.; Emigrant Bank v. Larizza, 129 AD3d 94, 13 NYS3d 129 (2nd Dept., 2015)). Either a written assignment of the note or the physical transfer of the note to the plaintiff prior to commencement of the action is sufficient to transfer the obligation and to provide standing (Wells Fargo Bank, N.A. v. Parker, 125 AD3d 848, 5 NYS3d 130 (2nd Dept., 2015); U.S. Bank v. Guy, 125 AD3d 845, 5 NYS3d 116 (2nd Dept., 2015)). A plaintiff's attachment of a duly indorsed note to its complaint or to the certificate of merit required pursuant to CPLR 3012(b), coupled with an affidavit in which it alleges that it had possession of the note prior to the commencement of the action, has been held to constitute due proof of the plaintiff's standing to prosecute its claims for foreclosure and sale (JPMorgan Chase Bank, N.A. v. Weinberger, 142 AD3d 643, 37 NYS3d 286 (2nd Dept., 2016); FNMA v. Yakaputz II, Inc., 141 AD3d 506, 35 NYS3d 236 (2nd Dept., 2016); Deutsche Bank National Trust Co. v. Leigh, 137 AD3d 841, 28 NYS3d 86 (2nd Dept., 2016); Nationstar Mortgage LLC v. Catizone, 127 AD3d 1151, 9 NYS3d 315 (2nd Dept., 2015)).
Proper service of RPAPL 1304 notices on borrower(s) are conditions precedent to the commencement of a foreclosure action, and the plaintiff has the burden of establishing compliance with this condition (Aurora Loan Services, LLC v. Weisblum, 85 AD3d 95, 923 NYS2d 609 (2nd Dept., 2011); First National Bank of Chicago v. Silver, 73 AD3d 162, 899 NYS2d 256 (2nd Dept., 2010)). RPAPL 1304(2) provides that notice be sent by registered or certified mail and by first-class mail to the last known address of the borrower(s), and if different, to the residence that is the subject of the mortgage. The notice is considered given as of the date it is mailed and must be sent in a separate envelope from any other mailing or notice and the notice must be in 14-point type.
At issue is whether the evidence submitted by the plaintiff is sufficient to establish its right to foreclose. The defendant does not contest her failure to make timely payments due under the terms of the promissory note and mortgage agreement for the past decade. Rather, the issues raised by the defendant concerns whether the proof submitted by the mortgage lender provides sufficient admissible evidence to prove its entitlement to summary judgment based upon defendant's continuing default, plaintiff's compliance with statutory pre-foreclosure notice requirements, the untimeliness of plaintiff's summary judgment motion, plaintiff's failure to negotiate a "good faith" loan modification, plaintiff's failure to provide court ordered discovery, plaintiff's standing to maintain this action, and plaintiff's failure to provide sufficient proof to correct the description of the mortgaged premises.
CPLR 4518 provides:
Business records.
(a) Generally. Any writing or record, whether in the form of an entry in a book or otherwise, made as a memorandum or record of any act, transaction, occurrence or event, shall be admissible in evidence in proof of that act, transaction, occurrence or event, if the judge finds that it was made in the regular course of any business and that it was the regular course of such business to make it, at the time of the act, transaction, occurrence or event, or within a reasonable time thereafter.
The Court of Appeals in People v. Guidice, 83 NY2d 630, 635, 612 NYS2d 350 (1994) explained that "the essence of the business records exception to the hearsay rule is that records systematically made for the conduct of business... are inherently highly trustworthy because they are routine reflections of day-to-day operations and because the entrant's obligation is to have them truthful and accurate for purposes of the conduct of the enterprise." (quoting People v. Kennedy, 68 NY2d 569, 579, 510 NYS2d 853 (1986)). It is a unique hearsay exception since it represents hearsay deliberately created and differs from all other hearsay exceptions which assume that declarations which come within them were not made deliberately with litigation in mind. Since a business record keeping system may be designed to meet the hearsay exception, it is important to provide predictability in this area and discretion should not normally be exercised to exclude such evidence on grounds not foreseeable at the time the record was made (see Trotti v. Estate of Buchanan, 272 AD2d 660, 706 NYS2d 534 (3rd Dept., 2000)).
The three foundational requirements of CPLR 4518(a) are: 1) the record must be made in the regular course of business- reflecting a routine, regularly conducted business activity, needed and relied upon in the performance of business functions; 2) it must be the regular course of business to make the records- (i.e. the record is made in accordance with established procedures for the routine, systematic making of the record); and 3) the record must have been made at the time of the act, transaction, occurrence or event, or within a reasonable time thereafter, assuring that the recollection is fairly accurate and the entries routinely made (see People v. Kennedy, supra @ pp. 579-580)). The "mere filing of papers received from other entities, even if such papers are retained in the regular course of business, is insufficient to qualify the documents as business records." (People v. Cratsley, 86 NY2d 81, 90, 629 NYS2d 992 (1995)). The records will be admissible "if the recipient can establish personal knowledge of the maker's business practices and procedures, or that the records provided by the maker were incorporated into the recipient's own records or routinely relied upon by the recipient in its business." (State of New York v. 158th Street & Riverside Drive Housing Company, Inc., 100AD3d 1293, 1296, 956 NYS2d 196 (2012); leave denied, 20 NY3d 858 (2013); see also Viviane Etienne Medical Care, P.C. v. Country-Wide Insurance Company, 25 NY3d 498, 14 NYS3d 283 (2015); Deutsche Bank National Trust Co. v. Monica, 131 AD3d 737, 15 NYS3d (3rd Dept., 2015); People v. DiSalvo, 284 AD2d 547, 727 NYS2d 146 (2nd Dept., 2001); Matter of Carothers v. GEICO, 79 AD3d 864, 914 NYS2d 199 (2nd Dept., 2010) ).
The statute (CPLR 4518) clearly does not require a person to have personal knowledge of each and every entry contained in a business record (see Citibank N.A. v. Abrams, 144 AD3d 1212, 40 NYS3d 653 (3rd Dept., 2016); HSBC Bank USA, N.A. v. Sage, 112 AD3d 1126, 977 NYS2d 446 (3rd Dept., 2013); Landmark Capital Inv. Inc. v. LI-Shan Wang, supra.)). As the Appellate Division, Second Department stated in Citigroup v. Kopelowitz, 147 AD3d 1014, 48 NYS3d 223 (2nd Dept., 2017): "There is no requirement that a plaintiff in a foreclosure action rely on a particular set of business records to establish a prima facie case, so long as the plaintiff satisfies the admissibility requirements of CPLR 4518(a) and the records themselves actually evince the facts for which they are relied upon." Decisions interpreting CPLR 4518 are consistent to the extent that the three foundational requirements: 1) that the record be made in the regular course of business; 2) that it is in the regular course of business to make the record; and 3) that the record must be made at or near the time the transaction occurred. - if demonstrated, make the records admissible since such records are considered trustworthy and reliable. Moreover, the language contained in the statute specifically authorizes the court discretion to determine admissibility by stating "if the judge finds" that the three foundational requirements are satisfied the evidence shall be admissible.
The affidavit submitted from the mortgage servicer's (Bayview Loan Servicing, LLC's) foreclosure document supervisor provides the evidentiary foundation for establishing the mortgage lender's right to foreclose. The affidavit sets forth the employee's review of the business records maintained by the mortgage servicer; the fact that the books and records are made in the regular course of Bayview's business; that it was Bayview's regular course of business to maintain such records; that the records were made at or near the time the underlying transactions took place; that the records were created by an individual with personal knowledge of the underlying transactions; that the records incorporate business records maintained by prior servicers which servicers make such records in the regular course of business and that such records are made in the regular course of the prior servicers' business. Based upon the submission of this affidavit, the plaintiff has provided an admissible evidentiary foundation which satisfies the business records exception to the hearsay rule with respect to the issues raised in this summary judgment application.
With respect to the issue of the timeliness of plaintiff's summary judgment motion, plaintiff's prior summary judgment motion was denied by short form Order (Molia, J.) dated May 14, 2014 "without prejudice to renew within One Hundred and Twenty (120) Days of the date of (this) Order." Court records indicate that a total of nineteen (19) settlement conferences were held in this action and that seventeen (17) of those conferences were held between September 12, 2013 and May 21, 2015. On May 21, 2015 Acting Justice Molia's clerk marked the action "not settled". On December 12, 2015 defendant served a motion to compel discovery which was granted by short form Order (Molia, J.) dated January 11, 2016. Plaintiff served its response to defendant's Combined Demands dated April 7, 2016. This motion was thereafter served on September 6, 2017.
While there has been a significant time period between the first summary judgment motion and this second summary judgment motion, CPLR 2004 provides for extensions of time of orders upon such terms as may be just and upon good cause shown. In this case there were clearly extensive efforts made by the parties to settle this action well after the one hundred twenty day "deadline" which effectively extended the original time frame. Thereafter the parties clearly went into an additional litigation phase exemplified by defendant's motion to compel discovery and plaintiff's subsequent service of its response. Given these circumstances and in view of the fact that defendant has now reached a ten year default anniversary in making timely mortgage payments and clearly suffered no prejudice as a result plaintiff's delay, there is no legal or equitable justification to deny plaintiff the ability to submit this summary judgment motion. Similarly, defendant's claim that the complaint must be dismissed for issues concerning discovery is not meritorious since if, in fact, plaintiff failed to provide a sufficient response to defendant's discovery demands, it was defendant's obligation to submit a subsequent motion seeking an order of preclusion or an order dismissing the complaint.
With respect to the question of the sufficiency of proof as it relates to the issue of standing, this defendant has waived her right to assert a standing defense by failing to assert it as an affirmative defense in her answer (HSBC Bank USA v. Angeles, 143 AD3d 671, 38 NYS3d 580 (2nd Dept., 2016); Nationstar Mortgage LLC v. Avella, 142 AD3d 594, 36 NYS3d 679 (2nd Dept., 2016); Bank of New York Trust Company v. Chiejina, 142 AD3d 570, 36 NYS3d 679 (2nd Dept., 2016); U.S. Bank, N.A. v. Gulley, 137 AD3d 1008, 27 NYS3d 601 (2nd Dept., 2016); FCDB FF1 2008-1 Trust v. Videjus, 131 AD3d 1004, 17 NYS3d 54 (2nd Dept., 2015); Southstar III, LLC v. Enttienne, 120 AD3d 1332, 992 NyS2d 558 (2nd Dept., 2014); BAC Home Loans Servicing, LP v. Reardon, 132 AD3d 790, 18 NYS3d 664 (2nd Dept., 2015); Wells Fargo Bank, N.A. v. Mastropaolo, 42 AD3d 239, 837 NYS2d 247 (2nd Dept., 2007)). Moreover, even were the Court to consider the merits of the standing issue, plaintiff has submitted sufficient evidence to prove standing by submission of an affidavit from Bayview's foreclosure document supervisor attesting to plaintiff's custodial possession of the promissory note beginning January 17, 2007 and continuing to date, together with documentary evidence in the form of a copy of the twice indorsed in blank promissory note which provides sufficient proof of possession of the underlying promissory note prior to commencement of this action to establish standing (see Aurora Loan Services v. Taylor, supra.; Wells Fargo Bank, N.A. v. Parker, supra.; U.S. Bank, N.A. v. Ehrenfeld, 144 AD3d 893, 41 NYS3d 269 (2nd Dept., 2016); GMAC v. Sidberry, 144 AD3d 863, 40 NYS3d 783 (2nd Dept., 2016); see also Bank of New York Mellon v. Theobalds, 161 AD3d 1137, 79 NYS3d 50 (2nd Dept., 2018); Bank of New York Mellon v. Burke, 155 AD3d 932, 64 NYS3d 114 (2nd Dept., 2017); Wells Fargo Bank, N.A. v. Thomas, 150 AD3d 1312, 52 NYS3d 894 (2nd Dept., 2017); Deutsche Bank National Trust Co. v. Garrison, 147 AD3d 725, 46 NYS3d 185 (2nd Dept., 2017); U.S. Bank, N.A. v. Saravanan, 146 AD3d 1010, 45 NYS3d 547 (2nd Dept., 2017)). Any alleged issues surrounding the mortgage assignments is irrelevant to the issue of standing in this case since the defendant her right to assert a standing defense and since plaintiff has established possession of the duly indorsed promissory note prior to commencing this action (Federal National Mortgage Assoc. v. Yakaputz II, Inc., 141 AD3d 506, 35 NYS3d 236 (2nd Dept., 2016); Deutsche Bank National Trust Co. v. Leigh, 137 AD3d 841, 28 NYS3d 86 (2nd Dept., 2016)).
With respect to the issue of the defendant's default in making payments, in order to establish prima facie entitlement to judgment as a matter of law in a foreclosure action, the plaintiff must submit the mortgage, the unpaid note and admissible evidence to show default (see PennyMac Holdings, Inc. V. Tomanelli, 139 AD3d 688, 32 NYS3d 181 (2nd Dept., 2016); North American Savings Bank v. Esposito-Como, 141 AD3d 706, 35 NYS3d 491 (2nd Dept., 2016); Washington Mutual Bank v. Schenk, 112 AD3d 615, 975 NYS2d 902 (2nd Dept., 2013)). Plaintiff has provided admissible evidence in the form of a copy of the note and mortgage, and an affidavit in support attesting to the defendant's undisputed default in making timely mortgage payments sufficient to sustain its burden to prove defendant has defaulted under the terms of the parties agreement by failing to make timely payments since January 1, 2009 (CPLR 4518; see Wells Fargo Bank, N.A. v. Thomas, supra.; Citigroup v. Kopelowitz, supra.)). Accordingly, and in the absence of any proof to raise an issue of fact concerning the defendant's continuing default, plaintiff's application for summary judgment based upon defendant's breach of the mortgage agreement and promissory note must be granted.
With respect to the issue of service of the pre-foreclosure RPAPL 1304 90-day notices, plaintiff has made a prima facie showing, by submission of an affidavit from the mortgage servicer's representative attesting to service of the 90-day notices as reflected in the business records maintained by the servicer (which testimony is admissible pursuant to CPLR 4518), together with submission of a copy of the actual 90-day notice served upon the defendant dated October 19, 2009, to prove compliance with RPAPL 1304 service requirements. Defendant does not deny having been served with the notice and has not asserted an RPAPL 1304 defense as an affirmative defense in her answer. Rather the defense raised by defense counsel in the cross motion concerns only the issue of whether the notice which was served by plaintiff complied with statutory requirements based upon counsel's claim that the notice failed to list five (5) Suffolk County housing counseling agencies. However the statute in effect in 2009 when the notice was served by the plaintiff provided that the notice was to include: "at least five housing counseling agencies as designated by the division of housing and community renewal, that serve the region where the borrower resides." The statute did not require housing agencies located in Suffolk County. It was not until the statute was amended effective December 20, 2016 when the wording was changed to require listing agencies in the "county" instead of agencies located in the "region". Accordingly in October, 2009 there was no requirement that the housing counseling agencies provided in the notice include five (5) "Suffolk County" agencies and therefore the agencies listed in plaintiff's October 19, 2009 notice complied with statutory requirements by listing agencies in the Long Island/Metropolitan region.
Defendant's remaining arguments claiming that the mortgage lender has failed to negotiate in good faith with the decade-long defaulting borrower; that plaintiff is not entitled to amend the description of the mortgaged premises; and that defendant should be permitted to amend her answer are similarly without merit. There is no relevant, admissible proof submitted to support defendant's claim that the mortgage lender has failed to negotiate in good faith. Court records show that the mortgagor was afforded two (2) CPLR 3408 conferences and an additional seventeen (17) IAS court conferences. There is no notation in any records maintained by the court that plaintiff's representatives failed to negotiate in good faith during the conferences held in the foreclosure settlement part or in the IAS part, and the fact that plaintiff would not agree to reduce the interest on this very large home mortgage loan to two (2%) is no indication that the lender acted in "bad faith". With respect to the premises description plaintiff has submitted a sufficient explanation of the one fool and two foot high water line mistakes in the original mortgage which can be corrected as set forth in the notice of pendency. Defendant's application to amend her answer more than nine (9) years after serving her original answer is also not justified at this stage of this proceeding and the proposed additional defenses are not meritorious.
Finally, defendant has failed to raise any admissible evidence to support her remaining and only affirmative defenses claiming "unclean hands" and predatory lending in opposition to plaintiff's motion. Accordingly, those defenses must be deemed abandoned and are hereby dismissed (see Kronick v. L.P. Therault Co., Inc., 70 AD3d 648, 892 NYS2d 85 (2nd Dept., 2010); Citibank, N.A. v. Van Brunt Properties, LLC, 95 AD3d 1158, 945 NYS2d 330 (2nd Dept., 2012); Flagstar Bank v. Bellafiore, 94 AD3d 0144, 943 NYS2d 551 (2nd Dept., 2012); Wells Fargo Bank Minnesota, N.A. v. Perez, 41 AD3d 590, 837 NYS2d 877 (2nd Dept., 2007)).
Accordingly, defendant's cross motion is denied and plaintiff's motion seeking summary judgment is granted. The proposed order of reference has been signed simultaneously with execution of this order. Dated: January 9, 2019
/s/_________
J.S.C.