Opinion
16940/12
02-16-2018
ONEWEST BANK, FSB, Plaintiff, v. Haluk DINCSALMAN, Astoria Federal Savings and Loan Association, New York State Commissioner of Taxation and Finance, United States of America—Internal Revenue Service, TNT Petroleum, Inc. and "John Doe #1" to "John Doe #10", the last 10 names being fictitious and unknown to plaintiff, the person or parties intended being the persons or parties, if any, having or claiming an interest in or lien upon the mortgaged premises described in the complaint, Defendants.
RAS BORISKIN, LLC, Attys. For Plaintiff, 900 Merchants Concourse—Ste. 106, Westbury, NY 11590 RONALD D. WEISS, PC, Atty. For Defendant Dincsalman, 734 Walt Whitman Rd.—Ste. 203, Melville, NY 11747
RAS BORISKIN, LLC, Attys. For Plaintiff, 900 Merchants Concourse—Ste. 106, Westbury, NY 11590
RONALD D. WEISS, PC, Atty. For Defendant Dincsalman, 734 Walt Whitman Rd.—Ste. 203, Melville, NY 11747
Thomas F. Whelan, J.
ORDERED that the branch of this motion (# 001) by the plaintiff for, among other things, default judgment and the appointment of a referee to compute, is granted; and it is further
ORDERED that the branch of this motion (# 001) by the plaintiff for amendment of the caption is denied in part and granted in part; and it is further
ORDERED that the cross motion (# 002) by the defendants, Candan Dincsalman and Ayhan Dincsalman, to dismiss the action or, in the alternative, for leave to file and serve a late answer, reschedule the settlement conferences, and permit discovery, is denied in its entirety; and it is further
ORDERED that plaintiff is directed to file a notice of entry within five days of receipt of this Order pursuant to 22 NYCRR § 202.5–b(h)(3).
This is an action for foreclosure. In essence, on May 2, 2003, defendant, Haluk Dincsalman, borrowed $157,000.00 from plaintiff's predecessor in interest and executed a promissory note and mortgage. Since November 1, 2010, the defendant has failed to pay the monthly installments due and owing. This action was commenced by filing on June 2, 2012. According to the record before the Court, the moving defendants, Candan Dincsalman and Ayhan Dincsalman, were each served in their individual capacities pursuant to CPLR 308(2) on June 9, 2012 as occupants of the premises. Neither interposed an answer or otherwise responded to the complaint. The defendant, Haluk Dincsalman, through counsel, filed an untimely answer dated April 5, 2013, which the plaintiff promptly rejected on April 10, 2013. The record reflects that the parties participated in CPLR 3408 settlement conferences on July 11, 2013 and September 24, 2013 after which, the action was marked "not settled" by a presiding quasi judicial employee assigned to the specialized mortgage foreclosure conference part. The matter was thereafter referred to the civil case inventory of this court.
On March 27, 2014, defendant, Haluk Dincsalman, died. Thereafter, on January 7, 2015, service was again effected upon defendant, Candan Dincsalman, this time in her capacity as administrator and heir to the estate of the decedent. Ayhan Dincsalman was also again served in the action, in his capacity as heir to the estate of the decedent. Once again, the moving defendants did not answer or otherwise respond to the complaint.
On November 22, 2017, plaintiff submitted the instant motion (# 001) for default judgment and the appointment of a referee to compute. The defendants oppose the motion and cross move (# 002) for dismissal or, in the alternative, for leave to file a late answer, reschedule the settlement conferences, and permit discovery. The Court will first consider the cross motion as determination thereof may render determination of the plaintiff's motion, academic.
Defendants contend that because the plaintiff did not move for the relief sought herein within one year of the defendants' defaults, the complaint should be dismissed pursuant to CPLR 3216, 3215(c), and 3404. These contentions are rejected. First, dismissal pursuant to CPLR 3216 requires that three pre-conditions: issue is joined, at least one year must have elapsed since joinder of issue, and written demand to resume prosecution has been served on plaintiff requesting that a note of issue be filed within 90 days (see CPLR 3216 ). Here, the defendants have not demonstrated that any of these conditions have been met. Where at least one pre-condition set forth in CPLR 3216 has not been met, the court is "without power to dismiss the action pursuant to CPLR 3216" ( Downey Sav. and Loan Assn, FA v. Aribisala , 147 AD3d 911, 912, 47 NYS3d 413 [2d Dept 2017], citing US Bank NA v. Bassett , 137 AD3d 1109, 1110, 28 NYS3d 109 [2d Dept 2016] ; CPLR 3216[b][1] ; Chase v. Scavuzzo , 87 NY2d 228, 233, 638 NYS2d 587 [1995] ; Maspeth Fed. Sav. & Loan Assn. v. Simon—Erdan , 67 AD3d 750, 751, 888 NYS2d 599 [2d Dept 2009] ). Accordingly, there can be no pre-note of issue dismissal of an action for lack of prosecution, general delay or "laches" absent the entry of a judicial order of dismissal issued pursuant to 22 NYCRR § 202.27 or service of a CPLR 3126(b) 90 day demand or its equivalent (see Arroyo v. Board of Educ. of City of New York , 110 AD3d 17, 970 NYS2d 229 [2d Dept 2013] ; see also Montalvo v. Mumpus Restorations, Inc ., 110 AD3d 1045, 1046, 974 NYS2d 87 [2d Dept 2013] ). Therefore, the Court rejects defendants' reliance on CPLR 3216.
CPLR 3404 is likewise inapplicable to the facts of this case, as this case has not been marked off the Court's calendar (see US Bank Natl. Assn. v. Madero , 154 AD3d 795, 61 NYS3d 504 [2d Dept 2017] ; Bank of New York v. Arden , 140 AD3d 1099, 35 NYS3d 388 [2d Dept 2016] ; WM Specialty Mtge., LLC v. Palazzollo , 145 AD3d 714, 41 NYS3d 899 [2d Dept 2016] ).
The defendants next contend that CPLR 3215(c) warrants dismissal of the complaint. CPLR 3215(c) provides that "[i]f the plaintiff fails to take proceedings for the entry of judgment within one year after the default, the court shall not enter judgment but shall dismiss the complaint as abandoned ... unless sufficient cause is shown why the complaint should not be dismissed" ( CPLR 3215[c] ; HSBC Bank USA, N.A. v. Hasis , 154 AD3d 832, 833, 62 NYS3d 467 [2d Dept 2017], citing Wells Fargo Bank, NA v. Bonanno , 146 AD3d 844, 45 NYS3d 173 [2d Dept 2017] ). To avoid dismissal, the plaintiff need not actually obtain nor specifically seek the default judgment within one year (see HSBC Bank USA, NA v. Hasis , 154 AD3d at 833, supra; see also Wells Fargo Bank, N.A. v. Daskal , 142 AD3d 1071, 1072, 37 NYS3d 353 [2d Dept 2016] ). As long as "proceedings" are being taken that manifest "an intent not to abandon the case but to seek a judgment, the case should not be subject to dismissal" ( Wells Fargo Bank, NA v. Daskal , 142 AD3d 1071, 1073, 37 NYS3d 353 [2d Dept 2016], citing Brown v. Rosedale Nurseries , 259 AD2d 256, 257, 686 NYS2d 22 [1st Dept 1999], US Bank NA v. Dorestant , 131 AD3d 467, 469, 15 NYS3d 142 [2d Dept 2015] ; Wells Fargo Bank, N.A. v. Combs , 128 AD3d 813,813, 10 NYS3d 257 [2d Dept 2015] ; Klein v. St. Cyprian Props., Inc. , 100 AD3d 711, 712, 954 NYS2d 170 [2012] ; Pisciotta v. Lifestyle Designs, Inc. , 62 AD3d 850, 852, 879 NYS2d 179 [2d Dept 2009] ; Icon Equip. Distribs. v. Gordon Envtl. & Mech. Corp. , 272 AD2d 579, 579 709 NYS2d 426 [2d Dept 2000] ).
A plaintiff's "failure to timely seek a default on an unanswered complaint ... may be excused if ‘sufficient cause is shown why the complaint should not be dismissed’ " ( Bank of NY Mellon v. Adago , 155 AD3d 594, 595, 63 NYS3d 495 [2d Dept 2017], citing Giglio v. NTIMP, Inc. , 86 AD3d 301, 308, 926 NYS2d 546 [2d Dept 2011], quoting CPLR 3215[c] ). Courts have interpreted this language to require "both a reasonable excuse for the delay in timely moving for a default judgment, plus a demonstration that the cause of action is potentially meritorious" ( Bank of NY Mellon v. Adago , 155 AD3d at 595, supra , citing Giglio v. NTIMP, Inc. , 86 AD3d at 308, supra , Wells Fargo Bank, NA v. Kahana , 153 AD3d 1300, 59 NYS3d 705 [2d Dept 2017] ; Pipinias v. J. Sackaris & Sons, Inc. , 116 AD3d 749, 751, 983 NYS2d 587 [2d Dept 2014] ). The determination of whether a reasonable excuse exists is at the sound discretion of the Court (see Park Lane N. Owners, Inc. v. Gengo , 151 AD3d 874, 876, 58 NYS3d 81 [2d Dept 2017] ).
The plaintiff concedes that the motion was not made within the year following the defendants' default, and attributes the delay to two separate loan service transfers of the mortgage and note, and the review of related documentation, all of which takes a great deal of time due to the complexity of the process. The Court finds this to be a reasonable excuse for the delay in seeking to enter a default judgment (see generally NYCTL 2009–A Trust v. Kings Highway Realty Co. , 147 AD3d 866, 47 NYS3d 111 [2d Dept 2017] ). Additionally, plaintiff has demonstrated the existence of a potentially meritorious cause of action, as well as its entitlement to an order of reference and default judgment on this motion (see CPLR 3212, 3215, 1003 and RPAPL § 1321 ; Wells Fargo Bank, N.A. v. Ali , 122 AD3d 726, 995 NYS2d 735 [2d Dept 2014] ; Central Mtge. Co. v. McClelland , 119 AD3d 885, 991 NYS2d 87 [2d Dept 2014] ; Peak Fin. Partners, Inc. v. Brook , 119 AD3d 916, 987 NYS2d 916 [2d Dept 2014]; Plaza Equities, LLC v. Lamberti , 118 AD3d 688, 986 NYS2d 843 [2d Dept 2014] ; Flagstar Bank v. Bellafiore , 94 AD3d 1044, 943 NYS2d 551 [2d Dept 2012] ). The Court, therefore, denies the defendants' application to dismiss the complaint as abandoned pursuant to CPLR 3215(c).
The Court further rejects the defendants' claim that their cross motion should be granted in light of the failure of the plaintiff to file a Request for Judicial Intervention upon the filing of the proofs of service as required by 22 NYCRR 202.12–a(b). The rule does not require that the plaintiff file the RJI upon the filing of proof of service upon the borrower, who is likely one of several proper party defendants to be joined in the action. Additionally, there is no time requirement imposed upon the filing of proof of service effected by personal delivery (see CPLR 308[1] ). Since a plaintiff has as long as 120 days to effect service, and even longer if it be extended by the court, the rule does not mandate the immediate filing of the RJI. In any event, dismissal of any claim due to a default in the observance of procedural statutes is considered a drastic remedy available only upon a clear a showing of wilful and contumacious conduct (see CPLR 3126 ; Orgel v. Stewart Title Ins. Co. , 91 AD3d 922, 938 NYS2d [2d Dept 2012]; see also Atterberry v. Serlin & Serlin , 85 AD3d 949, 925 NYS2d 860 [2d Dept 2011] ). Here, the defendants have failed to demonstrate a violation of 22 NYCRR § 212–a(b) or that any such violation warrants the dismissal of this action and/or the granting of the other relief demanded.
The branch of the cross motion wherein the defendants seek a vacatur of their respective defaults in answering and leave to appear herein by service of an answer pursuant to CPLR 3012(d) is also denied. To be entitled to this relief, it was incumbent upon the defendant to demonstrate "excusable default grounds" which require a showing of a reasonable excuse for the default and a demonstration of a potentially meritorious defense (see Mellon v. Izmirligil , 88 AD3d 930, 931 NYS2d 667 [2d Dept 2011], quoting Wells Fargo Bank, N.A. v. Cervini , 84 AD3d 789, 921 NYS2d 643 [2d Dept 2011] ; Wells Fargo Bank, N.A. v. Mazzara , 124 AD3d 875, 2 NYS3d 553 [2d Dept 2015] ; HSBC Bank USA, Natl. Assn. v. Rotimi , 121 AD3d 855, 995 NYS3d 81[2d Dept 2014] ; Mannino Dev., Inc. v. Linares , 117 AD3d 995, 986 NYS2d 578 [2d Dept 2014] ; Diederich v. Wetzel , 112 AD3d 883, 979 NYS2d 605 [2d Dept 2013] ; Community Preserv. Corp. v. Bridgewater Condominiums, LLC , 89 AD3d 784, 785, 932 NYS2d 378 [2d Dept 2011] ). The material facts of the asserted meritorious defense must be advanced in an affidavit of the defendant or a proposed verified answer attached to the moving papers (see Gershman v. Ahmad , 131 AD3d 1104, 16 NYS3d 836 [2d Dept 2015] ; Karalis v. New Dimensions HR, Inc .,105 AD3d 707, 962 NYS2d 647 [2d Dept 2013] ).
Here, the defendants do not deny being served with the complaint and, more importantly, do not set forth any excuse, much less a reasonable one, for their failure to appear in the action. Indeed, the defendants were served not once, but twice in the action, and were thus provided with ample opportunity to respond. Because the defendants failed to advance a reasonable excuse in support of their application to vacate their default in answering and for leave to extend their time to answer under CPLR 3012(d), it is unnecessary to address whether defendants demonstrated a potentially meritorious defense (see BAC Home Loans Serv., LP v. Readon , 132 AD3d 790, 18 NYS3d 664 [2d Dept 2015] ; Citimortgage, Inc. v. Kowalski , 130 AD3d 558, 13 NYS3d 468 [2d Dept 2015] ; Emigrant Bank v. Wiseman , 127 AD3d 1013, 6 NYS3d 670 [2d Dept 2015] ). Notably, defendants have also failed to explain the inordinate delay in moving to vacate such default, as they do not deny being served in April of 2015 (see Bank of New York Mellon v. Adago , 155 AD3d 594, 63 NYS3d 495 [2d Dept 2017] ; Bank of New York Mellon v. Izmirligil , 144 AD3d 1067, 44 NYS3d 44 [2d Dept 2016] ; Deutsche Bank Trust Co. Americas v. Marous , 127 AD3d 1012, 5 NYS3d 883 [2d Dept 2015] ; LVN Corp. v. Forbes , 122 AD3d 805, 996 NYS2d 696 [2d Dept 2014] ).
The Court notes with regards to the defendants' opposition that, absent a valid jurisdictional or abandonment defense, a party in default may not appear in the action and contest the plaintiff's right to relief unless the defaulter can establish grounds for the vacatur of his or her default (see Schwartz v. Reisman , 112 AD3d 909, 976 NYS2d 883 [2d Dept 2013] ; U.S. Bank N.A. v. Gonzalez, 99 AD3d 694, 694—695, 952 NYS2d 59 [2d Dept 2012] ; McGee v. Dunn, 75 AD3d 624, 625, 906 NYS2d 74 [2d Dept 2010] ). Because the defendants defaulted in answering and their application to vacate such default has been denied, the allegations set forth in the opposition are stricken.
The defendants' challenge to the affidavit of merit is also unfounded, as the affidavit adequately sets forth the basis of the affiant's knowledge and established the admissibility of the documents appended to the affidavit as business records and comports with the dictates of HSBC Bank USA v. Ozcan , ––– AD3d ––––, 2017 WL 4657992 (see also Olympus America, Inc. v. Beverly Hills Surgical Inst ., 110 AD3d 1048, 974 NYS2d 89 [2d Dept 2013] ; DeLeon v. Port Auth. of NY & N.J. , 306 AD2d 146, 761 NYS2d 54 [2d Dept 2003] ), and satisfies the admissibility requirements of CPLR 4518(a) (see Stewart Title Ins. Co. v. Bank of New York Mellon , ––– AD3d ––––, 2017 WL 4399095 [2d Dept 2017] ; Citigroup v. Kopelowitz , 147 AD3d 1014, 1015, 48 NYS3d 223 [2d Dept 2017] ; see generally Citimortgage, Inc. v. Espinal , 134 AD3d 876, 23 NYS3d 251 [2d Dept 2015] ). The affiant notes that she is personally familiar with the procedure by which the servicer's records are created and maintained. She swears that the business records were relied upon on a regular basis in the course of plaintiff's business activities with respect to this loan in default, and provides in detail the records relied upon. She further avers that the business records created by plaintiff's prior servicer, including the records for the loan at issue, were verified for accuracy and integrated into the current servicer's system. Thus, the affidavit is admissible as it was "made in the regular course of any business and ... 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" (see HSBC Bank USA v. Ozcan , ––– AD3d ––––, supra ; One Step Up, Ltd. v. Webster Bus. Credit Corp ., 87 AD3d 1, 925 NYS2d 61 [1st Dept 2011] ; CPLR 4518[a] ).
Finally, plaintiff's request to substitute the plaintiff is denied. Where a plaintiff in a mortgage foreclosure action transfers the note by written assignment or by physical delivery to a non party during the pendency of such action, the transferee may continue to prosecute the action in the name of the original plaintiff or it may seek leave to have itself formally substituted for the named plaintiff pursuant to CPLR 1018 (see U.S. Bank Natl. Assn. v. Akande , 136 AD3d 887, 26 NYS3d 164 [2d Dept 2016] ; Woori America Bank v. Global Universal Group Ltd. , 134 AD3d 699, 20 NYS3d 597 [2d Dept 2015] ; Brighton BK, LLC v. Kurbatsky , 131 AD3d 1000, 17 NYS3d 137 [2d Dept 2015] ). Here, no proof of the delivery of such note to the named assignee is included in the moving papers (see U.S. Bank Natl. Assn. v. Akande , 136 AD3d 887, supra ; Woori America Bank v. Global Universal Group Ltd. , 134 AD3d 699, supra ; Brighton BK, LLC v. Kurbatsky , 131 AD3d 1000, supra ). Therefore, the plaintiff's request for substitution is denied.
Accordingly, the plaintiff's motion (# 001) is granted in part and denied in part, and defendants' cross motion (#002) is denied in its entirety. The Court simultaneously signs the proposed Order, as modified.