Opinion
17216/08.
Decided December 23, 2009.
Plaintiff Deutsche Bank National Trust Company, as Trustee under the Pooling and Servicing Agreement relating to Impac Secured Assets Corp., Mortgage Pass-Through Certificates, Series 2007-1 moves for an order granting summary judgment, striking the answer of defendant Lorraine Campbell, appointing a referee to compute the sums due under the subject mortgage and amending the caption to delete defendants "John Doe No. 3" through "John Doe # 10."
Plaintiff commenced this action to foreclose a mortgage encumbering the subject premises at 371 Elton Street in Brooklyn. The mortgage was executed by Campbell on February 23, 2007 to secure a loan from Impac Funding Corporation d/b/a Impac Lending Group (Impac) in the amount of $561,000.00. The mortgage was executed in favor of and delivered to Mortgage Electronic Registration Systems (MERS) as nominee for Impac. By assignment dated June 12, 2008, the mortgage and note were assigned to plaintiff.
Under the terms of the mortgage and adjustable rate note, Campbell was obligated to make monthly payments in the amount of $3,417.77 from April 1, 2007 until the "Change Date" of March 1, 2012, at which time the rate of interest may be adjusted under the London Interbank Offered Rate (LIBOR) index. According to the complaint and the affidavit of Kimberly Dawson, who avers to be plaintiff's servicer and attorney in fact, Campbell defaulted under the mortgage and note by failing to make the payment due on January 1, 2008, resulting in the acceleration of the loan with an unpaid balance of $560,991.61 plus interest thereon from December 1, 2007. In her verified answer, Campbell sets forth affirmative defenses of lack of personal jurisdiction and lack of standing and interposes combined affirmative defenses and counterclaims alleging predatory lending (under Real Property Actions and Proceedings Law [RPAPL] § 1302 [2] and Banking Law § 6-l), violation of the truth in Lending Act (TILA), fraud, and rescission.
"It is settled that in moving for summary judgment in an action to foreclose a mortgage, a plaintiff establishes its case as a matter of law through the production of the mortgage, the unpaid note, and evidence of default . . . When a plaintiff does so, it is incumbent upon the defendant to assert any defenses which could properly raise a viable question of fact as to his [or her] default" ( Village Bank v Wild Oaks Holding, 196 AD2d 812, 812). Plaintiff's submission of copies of the mortgage and note, each bearing Campbell's signature, along with the affidavit of Ms. Dawson, establishes prima facie entitlement to foreclosure as a matter of law ( see Wasserman v Harriman, 234 AD2d 596, 597; FGH Rlty. Credit Corp. v VRD Rlty. Corp., 231 AD2d 489, 490). Further, Campbell does not dispute that she defaulted in payment. The burden now shifts to Campbell to come forward with evidence to support her defenses and counterclaims ( see Chemical Bank v Bowers, 228 AD2d 407).
Personal Jurisdiction
"It is axiomatic that the failure to serve process in an action leaves the court without personal jurisdiction over the defendant, and all subsequent proceedings are thereby rendered null and void" ( Krisilas v Mount Sinai Hosp. , 63 AD3d 887 , 889 quoting McMullen v Arnone, 79 AD2d 496, 499; see Khanal v Sheldon , 55 AD3d 684 ). Such a defect is not cured by the defendant's subsequent receipt of actual notice of the action, "since notice received by means other than those authorized by statute cannot serve to bring a defendant within the jurisdiction of the court" ( Feinstein v Bergner, 48 NY2d 234, 241).
According to the affidavit of service executed by plaintiff's process server, dated June 24, 2008, Campbell was served by delivery of the summons and complaint to a person of suitable age and discretion at the subject property, to wit, "AKEILAH CAMPBELL, CO-RESIDENT," at 5:55 AM on June 21, 2008, and by mailing copies of the summons and complaint to the subject address on June 24, 2008.
In her affidavit in opposition, dated February 2, 2007, Campbell averred that she only learned of the instant action when she found the summons and complaint "stuffed between the bars of the gate in front of [her] house" on the afternoon of June 21, 2008. In a separate affidavit, Akeilah Campbell (Akeilah), the individual alleged by the process server to have received process, avers that she never received the summons and complaint as she was still asleep at 5:55 AM on June 21, 2008. Akeilah further states that the individual described in the affidavit of service does not match her description.
Ordinarily, a process server's affidavit of service establishes a prima facie case as to the method of service and, therefore, gives rise to a presumption of proper service ( see Household Fin. Realty Corp. of NY v Brown , 13 AD3d 340 ; Bankers Trust Co. of Cal. v Tsoukas, 303 AD2d 343; Frankel v Schilling, 149 AD2d 657, 659; see also New Is. Invs. v Wynne, 251 AD2d 560). Where there is a sworn denial that a defendant was served with process, the affidavit of service is rebutted, and the plaintiff must establish jurisdiction at a hearing by a preponderance of the evidence ( see Bankers Trust Co. of Cal., 303 AD2d at 344; Kingsland Group v Pose, 296 AD2d 440; Balancio v Santorelli, 267 AD2d 189; New Is. Invs. v Wynne, 251 AD2d 560). However, to raise an issue of fact with respect to service, the defendant must set forth specific probative facts; unsubstantiated and conclusory denials of receipt are insufficient ( see Rosario v Beverly Rd. Realty Co. , 38 AD3d 875 ; American Savings Loan Association v Twin Eagles Bruce, Inc., 208 AD2d 446).
The affidavit of Akelilah constitutes nothing more than a bare denial of service. Akeilah does not deny that she was present at the property the morning service was alleged. Moreover, while Akeilah states that the individual described in the affidavit of service does not match her physically, she offers no proof or even a written description of her own physical characteristics for comparison.
Accordingly, this court finds no issue of fact with respect to Campbell's defense of personal jurisdiction.
Standing
Plaintiff has established ownership of the mortgage and note through its submission of the written assignment dated June 12, 2008. Since this action was commenced subsequent to the assignment, plaintiff has proper standing ( see Federal Natl. Mtge. Assn. v Youkelsone, 303 AD2d 546, 546-547). Although the complaint caption incorrectly identified plaintiff's servicer, Countrywide Home Loans, Inc., as the named plaintiff, the caption on the summons is correct, and Campbell does not allege that she was prejudiced by this mistake. As a result, this irregularity may be disregarded (CPLR 2001).
RPAPL § 1302 Banking Law § 6-l
Campbell is not entitled to the protection of RPAPL 1302(2) and Banking Law 6-l. RPAPL § 1302 (2) provides a defense to an action to foreclose a mortgage for a high-cost home loan or subprime home loan where the terms of the home loan or the actions of the lender violate any provision Banking Law § 6-l. However, in order for a mortgage to fall within the threshold limits of Banking Law § 6-l, the mortgage must be considered a "high-cost home loan" which under the law in effect at the time of this transaction required that "[t]he principal amount of the loan does not exceed the lesser of: (A) conforming loan size limit for a comparable dwelling as established from time to time by the federal national mortgage association; or (B) three hundred thousand dollars" (Banking Law § 6-l former [1][e]). The principal amount of the mortgage being foreclosed in this matter, $561,000.00, clearly exceeds the statutory maximum. Accordingly, Campbell's third affirmative defense/first counterclaim and sixth affirmative defense/fourth counterclaim, which rely on the provisions of the aforesaid statutes, are without merit. TILA
Campbell alleges that plaintiff violated TILA by failing to provide her with a copy of the mortgage application (which she states falsely inflated her sources of income) or a copy of the Good Faith Estimate. Under the Truth in Lending Act (TILA) and Regulation Z, the required "material disclosures" are defined specifically as "the disclosure . . . of the annual percentage rate, the method of determining the finance charge and the balance upon which a finance charge will be imposed, the amount of the finance charge, the amount to be financed, the total of payments, the number and amount of payments, [and] the due dates or periods of payments scheduled to repay the indebtedness" ( 15 USC § 1602[u]; see 12 CFR § 226.23[a][3] n 48). Campbell has not identified a provision in TILA which requires that a copy of the mortgage loan application be provided to the borrower prior to closing. To the extent Campbell claims that she did not receive a copy of the Good Faith Estimate, which Campbell alleges contains a forgery of her signature, the requirement that lenders provide a Good Faith Estimate is codified not under TILA but rather under the Real Estate Settlement Procedures Act (RESPA) at 12 USC § 2604. A RESPA violation does not adversely affect the validity or enforceability of a federally related mortgage loan ( see 12 USC § 2615) and thus, a disclosure violation of RESPA does not constitute a valid defense to mortgage foreclosure ( see Fremont Inv. and Loan v Haley, 23 Misc 3d 1138 [A], 2009 NY Slip Op 51186[U] [2009]; Fremont Inv. Loan v Laroc, 21 Misc 3d 1124 [A], 2008 NY Slip Op 52166[U] [2008]).
Fraud
Finally, the "elements of common-law fraud are a representation of a material fact, falsity, scienter, reliance, and injury" ( Kline v Taukpoint Realty Corp., 302 AD2d 433, 434; see also Lama Holding Co. v Smith Barney, 88 NY2d 413; Channel Master Corp. v Aluminium Ltd. Sales, 4 NY2d 403). Moreover, the party claiming fraud must show not only that he or she actually relied on the misrepresentation, but also that such reliance was reasonable ( see Stuart Silver Assoc. v Baco Dev. Corp., 245 AD2d 96, 98). A party cannot claim reliance on a misrepresentation when he or she could have discovered the truth with due diligence ( see East 15360 Corp. v Provident Loan Socy. of NY, 177 AD2d 280).
With respect to her fraud claim, Campbell argues that false information concerning her income and assets were entered on her loan application by the mortgage broker without her knowledge, and that at the closing it was falsely represented to her that the settlement agent, Marco Materassi, Esq., would act as her attorney even though he "was actually the attorney for the Plaintiff." However, even if false information was provided by the mortgage broker to plaintiff's predecessor, there is no allegation that Campbell herself relied on these misrepresentations to her detriment. Further, assuming Materassi did misrepresent himself as Campbell's attorney at the closing, Campbell has not demonstrated a nexus between this misrepresentation and her alleged injury. There is no allegation that Materassi was aware of any prevarications concerning the mortgage loan application or Campbell's inability to afford the loan, that Materassi made any misrepresentations about the terms of the loan or that Materassi otherwise prevented or dissuaded Campbell from examining the mortgage documents or asking questions. Accordingly, Campbell has not raised an issue of fact with respect to her fraud defense.
As a result, plaintiff's motion is granted in its entirety.
Settle Order.