Opinion
27776/06.
Decided January 29, 2009.
Plaintiff was represented by Jonathan M. Cohen, Esq. of Berkman, Peterson Peddy, P.C.
In this mortgage foreclosure action filed on September 14, 2006, plaintiff HSBC Mortgage Corporation (USA) makes ex parte application for, among other things, a default judgment and an order of reference. The property is located at 711 Liberty Avenue, Brooklyn; the mortgagor is Glenda Erneste.
In a Decision and Order dated March 12, 2007, the Court denied Plaintiff's first application for the same relief, because service on the defendant/mortgagor Glenda Erneste was defective.
In a Decision and Order dated December 20, 2007, the Court granted Plaintiff's application to renew its prior application, and, on renewal, denied the application in substantial part, with leave to renew.
Plaintiff again applies to renew. The Court grants the application to renew, based upon the leave granted in the prior order, and an Affidavit in Support of Motion to Renew and for an Order of Reference and an Affirmation of Non-Military Service submitted with this application. On renewal, the Court again denies the application for a default judgment and order of reference, again with leave to renew.
The December 20, 2007 Decision and Order specified deficiencies on the prior application that have not been cured by this application. Specifically, the Note is not acknowledged or otherwise rendered admissible as evidence; there is no proof of service of the notice of default required by Section 6 (C) of the Note and Section 22 of the Mortgage; and the non-military affidavits as to alleged tenants, Jose Torres, Jeri Kaufman, and Rasheeva Young, which were made on September 18, 2006 as part of the respective affidavits of service of the summons and complaint, are stale.
The Note dated January 23, 2006 is not acknowledged nor otherwise authenticated or rendered admissible as evidence. ( See Prince, Richardson on Evidence § 9-101 et seq [Farrell 11th Ed]; Paciello v Graffeo , 32 AD3d 461 , 462 [2d Dept 2006]; NYCTL 1998-2 Trust v Santiago , 30 AD3d 572 , 573 [2d Dept 2006].) On an application for a default judgment, the plaintiff must submit "proof by affidavit made by the party of the facts constituting the claim, the default and the amount due." (CPLR 3215 [f].) The proof must establish a prima facie case. ( See State of New York v Williams , 44 AD3d 1149 , 1151-52 [3d Dept 2007]; Green v Dolphy Construction Co., Inc., 187 AD2d 635, 637 [2d Dept 1992]; Silberstein v Presbyterian Hosp. in the City of NY, 96 AD2d 1096, 1096 [2d Dept 1983]; see also Litvinskiy v May Entertainment Group, Inc. , 44 AD3d 627 , 627 [2d Dept 2007] ["viable cause of action"].) In an action to foreclose on a mortgage, proof of the unpaid note is part of the plaintiff's prima facie showing. ( See Aames Funding Corp. v Houston , 44 AD3d 692, 693 [2d Dept 2007]; RCR Services, Inc. v Herbil Holding Co., 229 AD2d 379, 378-80 [2d Dept 1996].)
In an Affidavit in Support of Motion to Renew and for Order of Reference, Plaintiff's Vice President, Kimberly M. Graves, asserts:
"A copy of the original note, which is part of the books and records maintained, in the ordinary course of business, by [Plaintiff] that are in my possession, control and under my supervision is annexed . . . It is my understanding, based on conversations with our counsel, that notes are not legally required to be acknowledged or recorded and, in the common practice of the real estate industry, not acknowledged or recorded [,] only executed by the obligor of the note in favor of the Lender." (Affidavit, ¶ 3.)
Plaintiff's counsel's alleged opinion that "notes are not legally required to be acknowledged" is not found in counsel's Affirmation in Support of Motion to Renew and for Order of Reference, and is not, therefore, supported by any citation to authority. Of course, the "common practice" of any industry cannot supplant the rules of evidence.
As to the contention that the Note "is part of the books and records maintained . . . in the ordinary course of business," and putting aside the absence of appropriate foundation for application of the "business records" exception to the hearsay rule ( see CPLR 5418 [a]), the authentication requirement is not simply an alternative exception to the hearsay rule. ( See Malloy v V.W. Credit Leasing, Ltd., 21 Misc 3d 1110 [A], 2008 NY Slip Op 52035 [U], * 3 [Sup Ct, Bronx County]; but see PRA III LLC v Gonzalez , 54 AD3d 917 , 918]2d Dept 2008].)
Although not raised by Plaintiff, the Court notes that handwriting comparison may provide evidence of authentication ( see CPLR 4536), and that the Mortgage dated January 23, 2006 does contain an acknowledgment as to Glenda Erneste's signature, which "raises a presumption of due execution" ( see Paciello v Graffeo, 32 AD3d at 462; see also Dart Associates v Rosal Meat Market, Inc., 39 AD2d 564, 564 [2d Dept 1972].) Although "a handwriting comparison under CPLR 4536 is not appropriate on a motion for summary judgment" ( see Dyckman v Barrett, 187 AD2d 553, 555 [2d Dept 1992]; see also Seoulbank NY Agency v D J Export Import Corp., 270 AD2d 193, 194 [1st Dept 2000]), it may be appropriate on a motion for a default judgment, where there is no denial of authenticity. Such a showing should be supported by admissible evidence sufficient to allow an inference that the two documents were likely signed at the same time, if that is alleged to be so.
Section 6 (C) of the Note provides, "If I am in default, the Note Holder may send me a written notice telling me that if I do not pay the overdue amount by a certain date, the Note Holder may require me to pay immediately the full amount of Principal which has not been paid and all the interest that I owe on that amount." Section 22 of the Mortgage provides that "Lender may require Immediate Payment in Full," i.e. "the entire amount then remaining unpaid under the note," "only if all of the following conditions are met," including a notice that states, among other things, "[t]hat if I do not correct the default by the date stated in the notice, Lender may require Immediate Payment in Full."
Proof that the notice required by Section 6 (C) of the Note and Section 22 of the Mortgage was given to the mortgagor is a condition to acceleration of the loan. ( See Manufacturers Traders Trust Co. v Korngold, 162 Misc 2d 669 [Sup Ct, Rockland County 1994]; see also Chan v Barry , 36 AD3d 579 , 580 [2d Dept 2007].) Here, there is no proof of service of the July 10, 2006 notice letter ( see St. Vincent's Hosp. of Richmond v Government Employees insurance Co. , 50 AD3d 1123 , 1124 [2d Dept 2008]; Westchester Med. Ctr. v Countrywide Ins. Co. , 45 AD3d 676 , 676-77 [2d Dept 2007]; Residential Holding Corp. v Scottsdale Ins. Co., 286 AD2d 679, 680 [2d Dept 2006].)
In her Affidavit, Plaintiff's Vice President states only that "a default letter/Notice of Default, dated July 10, 2006 was mailed to Glenda Erneste," and "[t]hat the default letter/Notice of Default is kept as part of the computerized records of sent default letters/Notice of Default is ( sic) proof of its sending." (Affidavit, ¶¶ 9 and 11.) Counsel cite no authority for this proposition, and the Court disagrees. As the authorities cited by the Court demonstrate, appropriate evidentiary support of mailing is not difficult to prepare, and, given that notice is essential to acceleration of the loan as the basis for foreclosure, does not appear to this Court as either burdensome or unnecessary.
What is required is "an affidavit of an employee with knowledge of the [lender's] standard office practices or procedures designed to ensure that items were properly addressed and mailed." ( See St. Vincent's Hosp. of Richmond v Government Employees Insurance Co., 50 AD3d at 1124.) In the case of a notice required by Section 6 (C) of the Note and Section 22 of the Mortgage, common provisions in residential mortgage transactions, the notice must be given by the Note Holder and Lender, as identified or defined by the respective documents, or by a sender identified to the mortgagor by the Note Holder and Lender as authorized to act for those parties. ( See Manufactures and Traders Trust Co. v Korngold, 162 Misc 2d 669; see also QMB Holdings, LLC v Escava Brothers, 11 Misc 3d 1060 [A], 2006 NY Slip Op 50322 [U], * 3 [Sup Ct, Bronx County].)
The non-military affidavits as to the alleged tenants, now more than two years old, are stale. ( See Sunset 3 Realty v Booth, 12 Misc 3d 1184 [A], 2006 NY Slip Op 51441 [U], * 3 [Sup Ct, Suffolk County]; New York Housing Authority v Smithson, 119 Misc 2d 721, 723-24 [Civ Ct, New York County 1983].) Although counsel's Affirmation states that a current non-military affidavit for all individual defendants is annexed, in fact there is only a current affidavit for Glenda Erneste. During wartime, the non-military affidavit should not be deemed a mere technicality. ( See Cassano v Gutkowski, 15 Misc 3d 1118 [A], 2007 NY Slip Op 50755 [U], * 2 [Dist Ct, Nassau County].)
Plaintiff's application is, therefore, denied, with leave to renew with papers that cure the identified deficiencies. Upon renewal, Plaintiff should also note that the proposed Order of Reference does not follow the court's suggested form. A proposed order that follows the suggested form would, at the least, speed review by the clerk.