Opinion
INDEX NO.: 33762/2013
04-09-2019
U.S. BANK N.A., Plaintiff, v. MICHAEL J. SOURY, et al., Defendants.
PLAINTIFF'S ATTORNEY: FEIN SUCH & CRANE, LLP 1400 OLD COUNTRY RD, STE C103 WESTBURY, NY 11590 DEFENDANT'S ATTORNEY: ROY J. LESTER, ESQ. 600 OLD COUNTRY ROAD, STE 229 GARDEN CITY, NY 11530
Short Form Order PRESENT: HON. HOWARD H. HECKMAN JR., J.S.C. MOTION DATE: 2/5/2019
MOTION SEQ. NO.: #001 MG PLAINTIFF'S ATTORNEY:
FEIN SUCH & CRANE, LLP
1400 OLD COUNTRY RD, STE C103
WESTBURY, NY 11590 DEFENDANT'S ATTORNEY:
ROY J. LESTER, ESQ.
600 OLD COUNTRY ROAD, STE 229
GARDEN CITY, NY 11530
Upon the following papers numbered 1 to 22 read on this motion 1-14; Notice of Motion/ Order to Show Cause and supporting papers___; Notice of Cross Motion and supporting papers___ ; Answering Affidavits and supporting papers 15-20; Replying Affidavits and supporting papers 21-22; Other___ ; (and after hearing counsel in support and opposed to the motion) it is,
ORDERED that this motion by plaintiff U.S. Bank, N.A. seeking an order: 1) granting summary judgment striking the answer asserted by defendants Michael J. Soury and Mirna Soury ; 2) substituting Michael Farfaw as a named party defendant in place and stead of a defendant designated as "John Doe #1" and discontinuing the action against defendants designated as "John Doe #2" through "John Doe #7" and "Jane Doe #1" through "Jane Doe #7"; 3) deeming all appearing and non-appearing defendants in default; 4) amending the caption; and 5) 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 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 $610,000.00 executed by defendants Michael J. Soury and Mirna Soury on March 29, 2006 in favor of JPMorgan Chase Bank, N.A. On the same date both mortgagors executed a promissory note promising to re-pay the entire amount of the indebtedness to the mortgage lender. By assignment dated February 29, 2013 the mortgage and were assigned to the plaintiff. Plaintiff claims that the mortgagors defaulted under the terms of the mortgage and note by failing to make timely monthly mortgage payments beginning June 1, 2013 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 December 23, 2013 Defendants/mortgagors served an answer dated March 18, 2014 asserting seven (7) affirmative defenses.
Plaintiff's motion seeks an order granting summary judgment striking defendants' answer and for the appointment of a referee. Defendants' opposition claims that plaintiff's motion must be denied since plaintiff has failed to prove standing and service of pre-foreclosure notices required by the mortgage and RPAPL 1304.
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 has been held to constitute due proof of the plaintiff's possession of the note prior to the commencement of the action and thus its standing to prosecute its claim for foreclosure and sale (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, 726, 46 NYS3d 185 (2nd Dept., 2017); U.S. Bank , N.A. v. Saravanan, 146 AD3d 1010, 1011, 45 NYS3d 547 (2nd Dept., 2017); 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)).
At issue is whether the evidence submitted by the plaintiff is sufficient to establish its right to foreclose. The defendants do not contest their failure to make timely payments due under the terms of the promissory note and mortgage agreement since June 1, 2013. Rather, the issues raised by the defendants concern whether the proof submitted by the mortgage lender provides sufficient admissible evidence to prove its entitlement to summary judgment based upon the mortgagors' continuing default, plaintiff's compliance with mortgage and RPAPL 1304 notice requirements, and plaintiff's standing to maintain this action
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)). In this regard, with respect to mortgage foreclosures, a loan servicer's employee may testify on behalf of the mortgage lender and a representative of an assignee of the original lender can rely upon business records of the original lender to establish its claims for recovery of amounts due from the borrowers provided the assignee/plaintiff establishes that it incorporated the original records into its own records and relied upon those records in the regular course of business (Landmark Capital Inv. Inc. v. Li-Shan Wang, 94 AD3d 418, 941 NYS2d 144 (1st Dept., 2012); Portfolio Recovery Associates, LLC. v. Lall, 127 AD3d 576, 8 NYS3d 101 (1st Dept., 2015); Merrill Lynch Business Financial Services, Inc. v. Trataros Construction, Inc., 30 AD3d 336, 819 NYS2d 223 (1st Dept., 2006)).
The statute (CPLR 4518) clearly does not require a person to have personal knowledge of each and every entry contained in a business record, particularly in this case, where there is a business relationship between mortgage servicing entities responsible for entering and maintaining accurate records, and where the current servicer has incorporated and relied upon the business records it maintains in its regular course of business (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 recently 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 arc satisfied the evidence shall be admissible.
The affidavit submitted from the mortgage servicer/attorney-in-fact's (JPMorgan Chase Bank, N.A.'s) vice president dated June 24, 2015 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/attorney-in-fact; the fact that the books and records are made in the regular course of Chase's business; that it was Chase's regular course of business to maintain such records; and that the records were contemporaneously created at the time the underlying transactions occurred. Based upon the submission of this affidavit, 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 standing, plaintiff's mortgage servicer/attorney-in-fact's vice president's affidavit, together with documentary evidence in the form of a copy of the original promissory note with the attached allonge indorsed to the plaintiff by an authorized officer/assistant vice president of the original lender- JPMorgan Chase Bank, N.A., which plaintiff has attached to the complaint, together with the certificate of merit (CPLR 3012-b), provides sufficient proof of possession of the underlying note to establish plaintiff's standing to prosecute this foreclosure action (Bank of New York Mellon v. Theobalds, supra.; Bank of New York Mellon v. Burke, supra.; U.S. Bank, N.A. v. Saravanan, supra.; HSBC Bank USA, N.A. v. Oscar, 161 AD3d 1055, 78 NYS3d 428 (2nd Dept., 2018); CitiMortgage, Inc. v. McKenzie, 161 AD3d 1040, 78 NYS3d 200 (2nd Dept., 2018); U.S. Bank N.A. v. Duthie, 161 AD3d 809, 76 NYS3d 226 (2nd Dept., 2018); Bank of New York Mellon v. Genova, 159 AD3d 1009, 74 NYS3d 64 (2nd Dept., 2018); Mariners Atl. Portfolio, LLC v. Hector, 159 AD3d 686, 69 NYS3d 502 (2nd Dept., 2018)). In addition plaintiff has proven standing by submission of an affidavit from the Chase vice president attesting to plaintiff's possession of the original note, directly or through its agent, at the time the complaint was filed (Aurora Loan Services v. Taylor, supra.; Wells Fargo Bank, N.A. v. Parker, supra.; U.S. Bank, N.A. v. Ehrenfeld, 144 AD3de 893, 41 NYS3d 269 (2nd Dept., 2016); GMAC v. Sidberry, 144 AD3d 863, 40 NYS3d 783 (2nd Dept., 2016); U.S. Bank, N.A. v. Carnivale, 138 AD3d 1220 (3rd Dept., 2016)). Any alleged issues surrounding the mortgage assignment are irrelevant in this case concerning the issue of standing since the plaintiff has established possession of a duly indorsed promissory note prior to commencing this action (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)).
With respect to the issue of the mortgagors' 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 attesting to the mortgagors' undisputed default in making timely mortgage payments sufficient to sustain its burden to prove defendants have defaulted under the terms of the parties agreement by failing to make timely payments since June 1, 2013 (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 mortgagors continuing default, plaintiff's application for summary judgment against the defendants based upon their breach of the mortgage agreement and promissory note must be granted.
With respect to the issue of plaintiff's service of pre-foreclosure default notices, a review of the affirmative defenses asserted in defendants' answer reveals that the mortgagors/defendants never asserted plaintiff's failure to serve either a mortgage default notice as required under the terms of the mortgage or an RPAPL 1304 notice, as affirmative defenses in their answer. The only reference to failure to serve a notice is set forth in defendants' third affirmative defense wherein it states:
28. Upon information and belief, Plaintiff has failed to satisfy conditions precedent to this action, including lack of proper notice of default.This "defense" nowhere mentions the default notice requirement set forth in paragraphs fifteen (15) & twenty-two (22) of the mortgage, nor is there any specific reference to a statutory violation citing RPAPL 1304. Equally vague is plaintiff's alleged failure to meet "conditions precedent to this action" and without an explanation of what "conditions precedent" defendant refers to, no legal basis exists to interpret defendant's answer as having raised the affirmative defense of failure to serve a mortgage default notice as required under the terms of the mortgage agreement (CPLR 3015(a)). Based upon defendants' failure to assert such claim as an affirmative defense, the defendants have waived their right to assert it in opposition to plaintiff's motion (CPLR 3015 & 3018(b); see Emigrant Bank v. Marando, 143 AD3d 856, 39 NYS3d 83 (2nd Dept., 2016);; Signature Bank v. Epstein, 95 AD3d 1199, 945 NYS2d 347 (2nd Dept., 2012); First N. Mortgage Corporation v. Yatrakis, 154 AD2d 433, 546 NYS2d (2nd Dept., 1989); see also Wilmington Trust v. Sukhu, 155 AD3d 591, 63 NYS3d 853 (1st Dept., 2017); Karel v. Clark, 129 AD2d 773, 514 NYS2d 766 (2nd Dept., 1987)).
Moreover, even were the court to consider defendants' answer as having asserted such defense related to the failure to serve a mortgage default notice required under the terms of the mortgage, the plaintiff has submitted sufficient proof to show that default notices were mailed to both mortgagor defendants in compliance with mortgage requirements. Plaintiff's proof consists of an affidavit submitted by the mortgage servicer/attorney-in-fact's representative confirming that the mailings were done by first class mail on October 10, 2013, together with two copies of the actual notices of default dated October 10, 2013 and addressed to both defaulting mortgagors individually at the mortgaged premises. Such proof provides sufficient evidence of substantial compliance with the mortgage default notice requirements (see Hudson City Savings Bank v. Friedman, 146 AD3d 757, 43 NYS3d 912 (2nd Dept., 2017); PennyMac Holdings, LLC v. Tomanelli, 139 AD3d 688, 32 NYS3d 181 (2nd Dept., 2016); Wachovia Bank, N.A. v. Carcano, 106 AD3d 724, 965 NYS2d 516 (2nd Dept., 2013); IndyMac Bank, FSB v. Kamen, 68 AD3d 931, 890 NYS2d 649 (2nd Dept., 2009)) Defendant's affidavits, together with defense counsel's conclusory denial of service, fails to raise a genuine issue of fact concerning service of the default notice (see PHH Mortgage Corp. v. Muricy, supra.; HSBC Bank v. Espinal, supra.). In addition, even were the court to deem the proof submitted by the plaintiff with respect to service of the mortgage default notice insufficient, plaintiff's proof submitted in support of service of the RPAPL 1304 90-day notices, satisfies the mortgage lender's obligations under the terms of the mortgage concerning the notice of default requirements (see Wachovia Bank, N.A. v. Carcano, 106 AD3d 724, 965 NYS2d 516 (2nd Dept., 2013)).
With respect to service of pre-foreclosure RPAPL 1304 90-day notices, despite defendants' failure to assert this defense as an affirmative defense in their answer, the law provides that this statutory defense is a special one which may be asserted in opposition to a summary judgment motion even where it is not set forth in a defendants' answer. The proof required to prove service of the 90-day notices can be satisfied by submission of an affidavit of service of the notices (CitiMortgage, Inc. v. Pappas, 147 AD3d 900, 47 NYS3d 415 (2nd Dept., 2017); Deutsche Bank National Trust Company v. Spanos, 102 AD3d 909, 961 NYS2d 200 (2nd Dept., 2013)); or by plaintiff's submission of sufficient proof to establish proof of mailing of the notices (see Nationstar Mortgage LLC v. LaPorte, 162 AD3d 784, 79 NYS3d 70 (2nd Dept., 2018); HSBC Bank USA, N.A. v. Ozcan, 154 AD3d 822, 64 NYS3d 38 (2nd Dept., 2017); Wells Fargo Bank, N.A. v. Trupia, 150 AD3d 1049, 55 NYS3d 134 (2nd Dept., 2017)). Once either method is established a presumption of receipt arises (Viviane Ettienne Medical Care, P.C. v. Country-Wide Insurance Company, supra.; Flagstar Bank v. Mendoza, 139 AD3d 898, 32 NYS3d 278 (2nd Dept., 2016)).
In this case the record shows that there is sufficient evidence to prove that mailing by certified and first class mail was done proving strict compliance pursuant to RPAPL 1304 mailing requirements. Plaintiff's proof consists of the affidavit submitted by the Chase vice president confirming and attesting to the certified and first class mailing of the 90-day notices individually addressed to both mortgagors at the mortgaged premises on June 28, 2013 which was more than ninety (90) days prior to commencement of this action on December 23, 2013. In addition to the affidavit, plaintiff submits four copies of the actual notices mailed to the mortgagors; two addressed individually to each mortgagor individually containing twenty digit article tracking numbers (7190 1075 4460 2456 6764 & 7190 1075 4460 2456 6757) for certified mailing; and two addressed individually to each mortgagor for first class mailing. In addition plaintiff has submitted a copy of the RPAPL 1306 filing statement with the State Banking Department further confirming the mailing of the 90-day notices. Such proof provides sufficient evidence to prove strict compliance with RPAPL 1304 requirements (Nationstar Mortgage LLC v. LaPorte, supra.; HSBC Bank USA, N.A. v. Ozcan, supra.)). Defendants' self-serving "emphatic" denials of service are not supported by any relevant, admissible evidence to contradict the plaintiff's proof and fail to raise a genuine issue of fact which would defeat plaintiff's summary judgment motion (see PHH Mortgage Corp. v. Muricy, 135 AD3d 725, 24 NYS3d 137 (2nd Dept., 2016); HSBC Bank USA, N.A. v. Espinal, 137 AD3d 1079, 28 NYS3d 107 (2nd Dept., 2016)).
Finally, defendants have failed to raise any admissible evidence to support their remaining affirmative defenses asserted in their answer 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 plaintiff's motion seeking summary judgment is granted. The proposed order of reference has been signed simultaneously with execution of this order. Dated: April 9, 2019
/s/_________
J.S.C.