Opinion
13218/15
02-26-2020
Atef MEKAWY, Plaintiff, v. SELECT PORTFOLIO SERVICING, INC., and Wells Fargo Bank, N.A., as Trustee on Behalf of the Holders of the Harborview Mortgage Loan Trust Mortgage Loan Pass-Through Certificates, Series 2006-12, Defendants.
The following papers read on this motion by plaintiff to vacate the order dated May 17, 2018, and entered on May 23, 2018, and upon vacatur, for leave to interpose responsive papers to the motion by defendant Wells Fargo Bank, N.A., as Trustee, on behalf of the Holders of the Harborview Mortgage Loan Trust Mortgage Loan Pass-Through Certificates, Series 2006-12 (Wells Fargo) for summary judgment dismissing so much of the amended complaint insofar as asserted against it (mot. Seq. No. 5); and this motion by plaintiff to vacate the order dated August 8, 2018 and entered on August 23, 2018, and for leave to interpose responsive papers to the motion by intervenor-defendant Amalgamated Bank for summary judgment dismissing the amended complaint insofar as asserted against it (mot. Seq. No. 6).
Papers
Numbered
Notice of Motion - Affidavits - Exhibits 1-4
Order to Show Cause - Affidavits - Exhibits 5-8
Answering Affidavits - Exhibits 9-14
Reply Affidavits 15-21
Letter dated November 27, 2019 of Matthew J. Gordon, Esq. 22
Upon the foregoing papers it is ordered that the motion Seq. No. 7 on the motion calendar for August 7, 2019 and motion Seq. No. 8 on the motion calendar for November 20, 2019 are determined together as follows:
Plaintiff commenced this action, pursuant to RPAPL article 15, seeking to cancel and discharge certain notes and mortgages encumbering his real property known as 75-15 188th Street, Fresh Meadows, New York. Plaintiff alleges in his amended complaint that the notes and mortgages are the product of fraud, insofar as such notes and mortgages were executed by his brother-in-law, third-party defendant Omer Damlahi, based upon general durable statutory short-form powers of attorney purportedly granted by plaintiff, appointing Damlahi to act as his attorney-in-fact for certain matters, including "real estate transactions," "banking transactions" and "all other matters." The signatures of "Atef Mekawy" on the powers of attorney were acknowledged by third-party defendant Ashraf A. Hanno, a notary public, in Queens, New York. Plaintiff alleges that the signatures on the powers of attorney are not his signatures, but rather are forgeries, thereby vitiating the notes and mortgages. Plaintiff further alleges that the purported powers of attorney were executed, and the fraudulent mortgage loan transactions occurred, during a ten-year period of time (June 17, 2001- December 4, 2011), when he was outside of the country, primarily in Egypt, and ineligible for reentry to the United States. He additionally alleges that he never appeared before Hanno, on the occasions when plaintiff's signature was notarized. It is alleged that after he returned to the United States in 2011, plaintiff learned that the mortgage loans had been made pursuant to the purported fraudulent powers of attorney. He also allegedly learned he was the victim of "identity theft," whereby his identity had been used fraudulently to incur additional financial obligations in his name. In the amended complaint, plaintiff named Select Portfolio Servicing, Inc. and Wells Fargo as party defendants, claiming that SPS was the servicer of one or more of the fraudulent mortgage loans, and Wells Fargo was the holder of the consolidated mortgage.
The notes and mortgages sought to be canceled and discharged are:
1) a note and mortgage dated July 29, 2005 and recorded on September 29, 2005 in the principal amount of $500,000.00 (the IndyMac First mortgage) and a note and gap mortgage dated September 28, 2006, and recorded on March 9, 2007 in the principal amount of $105,652.64, thereafter having been consolidated pursuant to a Consolidation, Extension and Modification Agreement (the CEMA) dated September 28, 2006 and recorded on March 9, 2007, creating a consolidated mortgage lien in the principal amount of $600,000.00, as evidenced by a consolidated note and mortgage (the consolidated mortgage), and thereafter modified by a Home Affordable Modification Agreement executed on November 2, 2012 (the HAMA); and
2) a credit line mortgage executed on September 28, 2006 and recorded on March 9, 2007 providing for advances up to the principal amount of $75,000.00 (the credit line mortgage).
Defendant Select Portfolio Servicing, Inc. (SPS) moved pursuant to CPLR 3211(a)(7) and (10) to dismiss the amended complaint insofar as asserted it (mot. Seq. No. 2). The motion by defendant SPS was granted without opposition by order dated April 21, 2016, and entered April 27, 2016.
Amalgamated Bank moved to intervene as a party defendant in the action as the holder of the credit line mortgage (mot. Seq. No. 3). The motion (mot. Seq. No. 3) was granted by order dated October 6, 2016, and entered on November 3, 2016.
Defendant Wells Fargo served an answer to the amended complaint, asserting various affirmative defenses, including a defense based upon ratification, and interposed a counterclaim for equitable subrogation. Defendant Amalgamated Bank served an answer to the amended complaint, with various affirmative defenses, including a defense founded on documentary evidence. Defendants Wells Fargo and Amalgamated Bank commenced a third-party action for indemnification against third-party defendants Damlahi and Hanno.
Defendant/third-party plaintiff Wells Fargo Bank, N.A., as Trustee, on behalf of the Holders of the Harborview Mortgage Loan Trust Mortgage Loan Pass-Through Certificates, Series 2006-12 (Wells Fargo), moved (mot. Seq. No. 5) for summary judgment dismissing the amended complaint insofar as asserted against it. In support of its motion, defendant Wells Fargo asserted that plaintiff executed the powers of attorney, and therefore the consolidated note and mortgage are valid, and plaintiff ratified the CEMA insofar as he executed the HAMA, modifying the CEMA. The notice of motion specified a return date of May 16, 2018. Plaintiff failed to oppose the motion, and by order dated May 17, 2018 and entered on May 23, 2018, the motion by defendant/third-party plaintiff Wells Fargo (mot. Seq. No. 5) was granted, without opposition.
Intervenor-defendant/third-party plaintiff Amalgamated Bank moved (mot. Seq. No. 6) for summary judgment dismissing the amended complaint asserted against it insofar as plaintiff seeks to discharge a credit line mortgage dated September 29, 2006 in the principal amount of $75,000.00, executed by third-party defendant Damlahi, as attorney-in-fact for plaintiff. The notice of motion specified an original return date of August 2, 2018, but administratively was adjourned to August 8, 2018. Defendant Amalgamated asserted in support of its motion that the credit line mortgage was executed by Damlahi pursuant to the August 15, 2006 power of attorney, bearing the certificate of acknowledgment, and plaintiff's signature on such power of attorney is presumptively valid and not a forgery, and hence the credit line mortgage is valid. Plaintiff failed to serve timely opposition to the motion and by order dated August 8, 2018, and entered on August 23, 2018, the motion by intervenor-defendant/third-party plaintiff Amalgamated Bank (mot. Seq. No. 6) was granted without opposition, and the amended complaint was dismissed in its entirety.
Plaintiff moves to vacate the orders entered on May 23, 2018 and August 23, 2018, and thereupon, for leave to submit opposition papers to the respective motions by defendant Wells Fargo and Amalgamated Bank for summary judgment dismissing the complaint insofar as asserted against them.
Defendants Wells Fargo and Amalgamated Bank oppose plaintiff's motions.
At the outset, to the extent defendant Wells Fargo objects to consideration of the motion to vacate the order entered on May 23, 2018 (mot. Seq. No. 5) on the ground plaintiff improperly moved by notice of motion rather than by order to show cause (see CPLR 5015[a][1] ), defendant Wells Fargo received notice of the motion, and has failed to demonstrate any prejudice by this procedural defect (see CPLR 2001 ; David D. Siegel, Practice Commentaries, McKinney's Cons Laws of NY, Book 7B, CPLR C5015:2).
To the extent defendant Amalgamated Bank objects to consideration of the motion to vacate the order entered on August 23, 2018 (mot. Seq. No. 6) on the ground it was not made until September 6, 2019, the motion is timely, having been made within one year after service of a copy of that order with notice of entry upon plaintiff (see CPLR 5015[a][1] ). As a consequence, the court shall entertain both of plaintiff's motions.
A party seeking to vacate an order entered upon his or her default in opposing a motion must demonstrate both a reasonable excuse for the default and a potentially meritorious opposition to the motion (see CPLR 5015[a][1] ; Wells Fargo Bank, N.A. v. Syed , 160 AD3d 914 [2d Dept 2018] ; Paul v. Weatherwax , 146 AD3d 792 [2d Dept 2017] ; Santos v. Penske Truck Leasing Co. , 105 AD3d 1029 [2d Dept 2013] ). "A motion to vacate a default is addressed to the sound discretion of the court" ( Vujanic v. Petrovic , 103 AD3d 791, 792 [2d Dept 2013] ). Whether an excuse is reasonable is also within the discretion of the court (see Stewart v. Berger , 137 AD3d 1103, 1105 [2d Dept 2016] ). Law office failure may qualify as a reasonable excuse for a party's default provided the claim of such failure is supported by a detailed and credible explanation of the default (see Madonna Mgt. Servs., Inc. v. R.S. Naghavi M.D. PLLC , 123 AD3d 986, 987 [2d Dept 2014] ; Bhuiyan v. New York City Health & Hosps. Corp. , 120 AD3d 1284, 1284 [2d Dept 2014] ).
Plaintiff asserts his failure to oppose the motions (mot. Seq. Nos. 5 and 6) was due to excusable default, and that he has potentially meritorious opposition to the motions based upon his claim his signatures on the powers of attorney are forged and hence the consolidated note and mortgage, and the credit line note and mortgage, are the products of fraud.
Plaintiff contends the failure to submit opposition papers in response to the motion by defendant Wells Fargo (mot. Seq. No. 5) was as a consequence of his counsel's mistaken assumption that Wells Fargo would stipulate to extend his time to respond to the motion, and that the stipulation would be filed with the court. His attorney indicates plaintiff had not previously sought an extension of time to file responsive papers, so plaintiff's attorney took the liberty of preparing an executed stipulation for such purpose and sent it to defense counsel by e-mail dated May 15, 2018, the day before the return date of the motion, at 6:54 PM. The proposed stipulation provided to extend plaintiff's time to respond through May 30, 2018, and to extend defendants time to reply until June 13, 2018. In the e-mail, plaintiff's attorney advised defendant Wells Fargo that it was free to revise the dates therein, and requested that a signed copy of the stipulation be returned to him for filing with the court. According to plaintiff's attorney, when he did not hear back from defense counsel, he assumed the stipulation had been executed as proposed, and would be filed with the court by defense counsel. Plaintiff's attorney indicates that in reliance upon such assumption, he did not appear on the May 16, 2018 return date and subsequently learned the motion had been submitted on that date without opposition, resulting in the order entered on May 23, 2018.
Plaintiff asserts his failure to appear on August 8, 2018 in opposition to the motion by defendant Amalgamated Bank (mot. Seq. No. 6) was as a consequence of his counsel's belief that defendant Amalgamated Bank had agreed to extend his time to respond to the motion to August 16, 2018, and that based upon such belief, his counsel served opposition papers on defendant Amalgamated Bank on August 15, 2018. Plaintiff had requested, on August 1, 2018, an extension of time to respond to the motion by defendant Amalgamated Bank (mot. Seq. No. 6) to August 16, 2018, and the same day, defendant Amalgamated Bank consented to such extension upon condition that it be given two weeks to submit a reply. Plaintiff's attorney prepared a proposed stipulation, but the stipulation lacked an adjourned return date. On August 3, 2018, defendant Amalgamated Bank therefore requested that plaintiff revise the stipulation to include one. Plaintiff's counsel, however, failed to respond with a revised proposed stipulation for execution until 3:45pm on August 8, 2018, hours after the motion had been marked fully submitted without opposition.
Plaintiff has demonstrated a reasonable excuse for his default (see CPLR 5015[a][1] ) in respect to both motions (mot. Seq. Nos. 5 and 6) by showing that the default resulted from the law office failure of his attorney to verify that defendants Wells Fargo and Amalgamated Bank had agreed, in writing, to extend his time to respond to the respective summary judgment motions, and adjourn the return dates. Defendants Wells Fargo and Amalgamated Bank do not show that these two failures of plaintiff's counsel constitute such a pattern of neglect that the defaults should be considered intentional, and therefore may not be excused.
Furthermore, to the extent plaintiff delayed in making the instant motions, he attributes such delay to a delay in receipt of the report of its handwriting expert. Plaintiff asserts that the preparation of the report was hampered by his inability to provide the expert with samples of his signatures made during the period 2001-2011, because while in Egypt, he signed his name using "Arabic," rather than "English" (Roman), characters.
However, with respect to the issue of whether plaintiff has potentially meritorious opposition to the motion by defendant Wells Fargo for summary judgment dismissing the complaint insofar as asserted against it (mot. Seq. No. 5), he has failed to show that he has potential meritorious opposition. Although ratification generally is a question of fact, when the evidence is undisputed and different inferences cannot reasonably be drawn from it, it may be decided as a matter of law (see Robinson v. Day , 103 AD3d 584, 586 [1st Dept 2013] [internal quotation marks and citation omitted]; see also Cashel v. Cashel , 15 NY3d 794 [2010] ; Montes v. Manufacturers Hanover Trust Co. , 82 AD2d 751 [1st Dept 1981] ).
Here, even assuming plaintiff could establish the CEMA had been fraudulently executed, plaintiff ratified it as a matter of law insofar as he admittedly executed the HAMA, modifying the CEMA, and testified that he made between 20 and 22 monthly payments pursuant to the HAMA.
Plaintiff knew third-party defendant Damlahi had failed to make mortgage payments on his behalf, with respect to a mortgage loan plaintiff had obtained from "Chase" while in the United States. Plaintiff testified he sought a loan modification "to save" his house with the assistance of someone named "Cathy," who advertised her services as a negotiator of loan modifications. Plaintiff asserts he was unaware of the fraudulent mortgage transactions which had taken place in his absence and hence, failed to understand the HAMA was related to those transactions. He also asserts he assumed that SPS was acting as the servicer for Chase, and his payments to SPS were being applied to the Chase mortgage loan, as modified by the HAMA.
The HAMA, however, makes specific reference to the "first lien mortgage" and note dated "September 28, 2006 ," (emphasis supplied) along with a loan number. Although plaintiff testified at his deposition, through an Arabic language interpreter, that "my English was really bad when I came back," "I'm not good in English," and "my English is not very good," he does not assert he had a limited ability to read and comprehend the English language at the time of the HAMA, or that he made a reasonable effort to have the HAMA translated into Arabic prior to his signing it. At the least, the reference to the year "2006" should have prompted an inquiry on his part regarding the reason for its inclusion in the HAMA.
With respect to the issue of whether plaintiff has potentially meritorious opposition to the motion by defendant Amalgamated Bank for summary judgment dismissing the complaint insofar as asserted against it (mot. Seq. No. 5), plaintiff claims that his signature on the powers of attorney, appointing third-party defendant Damlahi to act as his attorney-in-fact for certain matters, is forged, thereby rendering the credit line mortgage and note, and powers of attorney invalid (see First Nat. Bank of Nevada v. Williams , 74 AD3d 740 [2d Dept 2010] ; Hoffman v. Kraus , 260 AD2d 435, 436 [2d Dept 1999] ; see generally Davis v. Dunnet , 239 NY 338, 339—340 [1925] ). The certificates of acknowledgment on the powers of attorney, however, constitute prima facie proof of the authenticity of plaintiff's signature (see CPLR 4538 ; Hoffman v. Kraus , 260 AD2d at 436 ; Langford v. Cameron , 73 AD2d 1001, 1002 [3d Dept 1980] ; see Son Fung Lum v. Antonelli , 102 AD2d 258, 260 [2d Dept 1984], affd 64 NY2d 1158 [1985] ). Although this presumption is rebuttable, it may only be overcome on "proof so clear and convincing as to amount to a moral certainty" (see Albany County Sav. Bank v. McCarty , 149 NY 71, 80 [1896] ) (see Song Fung Lum v. Antonelli , 102 AD2d at 261 ; Langford v. Cameron , 73 AD2d at 1002 ). Plaintiff has failed to offer evidentiary proof in admissible form which would be sufficient to raise a triable issue of fact in opposition to defendant Amalgamated Bank's motion. Plaintiff is an interested witness (see Albany County Sav. Bank v. McCarty , 149 NY 71, 80 ; Albin v. First Nationwide Network Mtge. Co. , 248 AD2d 417 [2d Dept 1998] ; Son Fong Lum v. Antonelli , 102 AD2d 258 ), and his affidavit and deposition testimony, even when considered with the computer printouts from the U.S. Customs and Border website, the copies of a document denominated "Certificate ( 350 )" and dated "9/11/2015" from the Consulate General of the Arab Republic of Egypt in New York, and a translation of a document from the Arab Republic of Egypt, Ministry of Interior, Department of Passports, Immigration and Naturalization, "Dated :04-12-2012," do not constitute clear and convincing evidence as to raise a triable issue of fact to rebut the presumption of the validity of the certificates of acknowledgment. Furthermore, the report of plaintiff's handwriting expert is unsworn. Where an expert is used to counter a moving party's prima facie proof, the expert opinion must be in admissible form (see Banco Popular N. Am. v. Victory Taxi Mgt. , 1 NY3d 381, 384 [2004] ).
Lastly, to the extent plaintiff asserts that defendant Amalgamated Bank has agreed to issue a release of lien for the credit line mortgage (see Exhibit annexed to Reply Affirmation dated November 18, 2019 of plaintiff's counsel [letter dated August 23, 2019 of the Federal Deposit Insurance Corporation to plaintiff] ), counsel for Amalgamated Bank has informed the court by letter dated November 27, 2019 that the bank has reversed its decision, having become aware of the deposition testimony of third-party defendant Hanno.
Accordingly, the motions by plaintiff (mot. Seq. Nos. 7 and 8) to vacate the orders entered on May 23, 2018 and August 23, 2018 are denied.