Opinion
60743/2016
06-17-2019
U.S. BANK TRUST, N.A., AS TRUSTEE FOR LSF9 MASTER PARTICIPATION TRUST, Plaintiff, v. NIBTZ, LLC, Mary LaFrance, John Doe and Jane Doe, Defendants.
Ras Boriskin, LLC, Westbury (Ryan D. Mitola of counsel), for plaintiff. Pattison, Sampson, Ginsberg & Griffin, PLLC, Troy (Michael E. Ginsberg and Richard A. Burger of counsel), for defendants.
Ras Boriskin, LLC, Westbury (Ryan D. Mitola of counsel), for plaintiff.
Pattison, Sampson, Ginsberg & Griffin, PLLC, Troy (Michael E. Ginsberg and Richard A. Burger of counsel), for defendants.
Robert J. Muller, J.
On August 12, 2008, defendant Mary LaFrance executed a promissory note in favor of Metrocities Mortgage, LLC (hereinafter Metrocities) in the amount of $184,000.00. The note was secured by a mortgage on certain real property located at 15 Herald Drive in the Town of Queensbury, Warren County, which mortgage was in favor of Mortgage Electronic Registration Systems, Inc. (hereinafter MERS) as nominee for Metrocities and recorded on November 13, 2008. Metrocities assigned the mortgage to GMAC Mortgage, LLC (hereinafter GMAC) by assignment recorded on July 7, 2011. GMAC then assigned the mortgage to Ally Bank by assignment recorded on February 15, 2013, and Ally Bank assigned the mortgage to Ocwen Loan Servicing, LLC (hereinafter Ocwen) by assignment recorded on July 8, 2013. In November 2013, LaFrance defaulted on her payments under the loan documents. She then conveyed the mortgaged premises to defendant Nibtz LLC by quitclaim deed recorded on June 9, 2014.
LaFrance entered into a Loan Modification Agreement with GMAC on August 1, 2011, which Agreement increased the principal amount of the loan to $190,608.96.
Ocwen commenced this foreclosure action on October 22, 2014. Nibtz and LaFrance were served on October 24, 2014 and October 29, 2014, respectively. Ocwen assigned the mortgage to Federal National Mortgage Association (hereinafter Fannie Mae) by assignment recorded on July 27, 2015. Ocwen thereafter filed a motion for a default judgment and the appointment of a referee in July 2016, simultaneously seeking to substitute Fannie Mae as plaintiff. This motion was granted in its entirety by Order entered on July 6, 2017.
LaFrance served counsel for plaintiff with a pro se answer on June 14, 2017, which was returned by notice of rejection dated June 28, 2017. Meanwhile, Fannie Mae assigned the mortgage to U.S. Bank Trust, N.A., as Trustee for LSF9 Master Participation Trust (hereinafter U.S. Bank Trust) by assignment recorded on July 27, 2017. Fannie Mae then filed a motion for a Judgment of Foreclosure and Sale in March 2018, simultaneously seeking to substitute U.S. Bank Trust as plaintiff. This motion was granted in its entirety by Order and Judgment entered on June 25, 2018. A foreclosure sale was held on October 15, 2018 and the property was purchased by U.S. Bank Trust, with a referee's deed then recorded on October 29, 2018. Presently before the Court is defendants' motion for an Order (1) vacating the default judgment entered against them; and (2) setting aside the sale. Each aspect of the motion will be addressed ad seriatim .
The Court notes that it too received a copy of this pro se answer and sent correspondence to LaFrance on August 1, 2017 stating as follows:
"Please be advised that [your] Answer is untimely and cannot be considered (see CPLR 320 [a] ).
"On June 30, 2017, the Court issued an Order granting plaintiff's motion for a default judgment and appointing a referee to determine the amount due and owing. You may file a motion to vacate this default judgment if you wish (see CPLR 5015 )."
The motion papers erroneously list Fannie Mae as the plaintiff in the caption.
Defendants first contend that they are entitled to an Order vacating the default judgment under CPLR 5015 (a) (4), which provides that "[t]he court which rendered a judgment may relieve a party from it upon such terms as may be just, on motion of any interested person with such notice as the court may direct, upon the ground of lack of jurisdiction to render the judgment or order." Specifically, defendants contend that the Court is without jurisdiction because they were never served with the summons and complaint. In support of this contention, Kevin Gordon — the managing member of Nibtz — has submitted an affidavit stating simply that "neither Nibtz nor LaFrance received a copy of the [s]ummons and [c]omplaint."
An affidavit of service "constitute[s] prima facie evidence that [a] defendant was properly served with process" ( TD Banknorth, N.A. v. Olsen , 112 AD3d 1169, 1170 [2013] ; see Essex Credit Corp. v. Tarantini Assoc. , 179 AD2d 973, 973 [1992] ). "Although a defendant's sworn denial of receipt of service generally rebuts the presumption of proper service established by the process server's affidavit and necessitates an evidentiary hearing, no hearing is required where the defendant fails to swear to specific facts to rebut the statements in the process server's affidavits" ( Bank of NY v. Samuels , 107 AD3d 653, 653 [2013] [citations and internal quotation marks omitted]; see Citimortgage, Inc. v. Bustamante , 107 AD3d 752, 753 [2013] ; Kurlander v. Willie , 45 AD3d 1006, 1007 [2007] ).
Here, plaintiff has submitted copies of the affidavits of service filed relative to Nibtz and LaFrance on October 30, 2014 and December 2, 2014, respectively. In the affidavit of service for Nibtz, the process server states that the company was served on October 24, 2014 "[b]y delivering to and leaving with Candace Watson-Cottle, authorized agent in the office of the Secretary of State, of the State of New York, two (2) true copies" of the summons and complaint. In the affidavit of service for LaFrance, the process server states that on October 29, 2014 he "deliver[ed] a copy of [the summons and complaint, among other documents] to Paul Davies, Co-Resident/Fiancé, a person of suitable age and discretion [at LaFrance's] dwelling place/usual place of abode" in Frederick, Maryland and, further, that on November 12, 2014, he "enclosed a copy of [the summons and complaint, among other documents], in a prepaid sealed, first class wrapper marked personal and confidential, properly addressed to [LaFrance] and mailed to [her] at" her dwelling place/usual place of abode.
The Court finds that Gordon's "bare and unsubstantiated denial of receipt [is] insufficient to rebut the presumption of proper service" created by the process servers' sworn affidavits ( Citimortgage, Inc. v. Bustamante , 107 AD3d at 753 ; see Bank of NY v. Samuels , 107 AD3d at 653 ; Christiana Bank & Trust Co. v. Eichler , 94 AD3d 1170, 1171 [2012] ; Kurlander v. Willie , 45 AD3d at 1007 ). Indeed, the affidavits of service amply demonstrate that Nibtz was properly served through the Secretary of State (see CPLR 311-a [a] ; Limited Liability Company Law § 303 [a] ) and, further, that LaFrance was properly served by substitute service on her fiancé at her usual place of abode (see CPLR 308 [2], 313 ). Gordon's affidavit, on the other hand, offers nothing more than a single conclusory statement. Moreover, there is no affidavit whatsoever from LaFrance.
Defendants next contend that the Court is without jurisdiction because plaintiff failed to comply with CPLR 3215. Specifically, defendants contend that plaintiff failed to serve Nibtz with an additional copy of the summons as required under CPLR 3215 (g) (4) (i).
The Court finds this contention to be without merit. The failure to comply with CPLR 3215 — which sets forth the requirements for obtaining a default judgment — is not a jurisdictional defect. Further, CPLR 3215 (g) (4) (i) requires additional service of the summons where "a default judgment based upon non-appearance is sought against a domestic or authorized foreign corporation which has been served pursuant to [ Business Corporation Law § 306 [b] ). Nibtz is a domestic limited liability company served pursuant Limited Liability Company Law § 303 (a). As such, CPLR 3215 (g) (4) (i) is not applicable (see Jian Hua Tan v. AB Capstone Dev., LLC , 163 AD3d 937, 939 [2018] ).
Finally, defendants contend that the Court is without jurisdiction because plaintiff lacks standing.
The Court finds that this contention is also without merit. " ‘[A] party's lack of standing does not constitute a jurisdictional defect" ( HSBC Bank USA, N.A. v. Szoffer , 149 AD3d 1400, 1401 [2017], quoting Onewest Bank, FSB v. Prince , 130 AD3d 700, 701 [2015] ; accord Consumer Solutions, LLC v. Charles , 137 AD3d 952, 953 [2016] ; Nationstar Mtge., LLC v. Wong , 132 AD3d 825, 825-826 [2015] ; see Marcon Affiliates, Inc. v. Ventra , 112 AD3d 1095, 1095-1096 [2013] ). Further, this affirmative defense has been waived as a result of defendants' failure to raise it in a timely answer (see HSBC Bank USA, N.A. v. Szoffer , 149 AD3d at 1401 ; HSBC Mtge. Corp. [USA] v. Johnston , 145 AD3d 1240, 1241 [2016] ; Nationstar Mtge., LLC v. Alling , 141 AD3d 916, 917 [2016] ).
Under the circumstances, defendants have failed to demonstrate their entitlement to an Order vacating the default judgment under CPLR 5015 (a) (4).
Defendants next contend that they are entitled to an Order vacating the default judgment under CPLR 317, which provides as follows:
"A person served with a summons other than by personal delivery to him or to his agent for service designated under [CPLR] 318, within or without the state, who does not appear may be allowed to defend the action within one year after he obtains knowledge of entry of the judgment, but in no event more than five years after such entry, upon a finding of the court that he did not personally receive notice of the summons in time to defend and has a meritorious defense."
According to defendants, they did not personally receive notice of the summons in time to defend the action. In support of this contention, Gordon states that defendants did not "receive[ ] a copy of the [s]ummons and [c]omplaint]" and did not "learn[ ] of the foreclosure proceedings [until] on or about June 14, 2017."
The Court finds Gordon's conclusory statements insufficient to demonstrate that defendants did not personally receive the summons in time to defend the action (see Christiana Bank & Trust Co. v. Eichler , 94 AD3d at 1171 ; Brightly v. Florida N., Inc. , 54 AD3d 1127, 1128 [2008] ; compare McCord v. Larsen , 132 AD3d at 1117 ). Indeed, he provides no details whatsoever in support of his claim that defendants did not discover the action until June 2017, a claim that is not supported by LaFrance who — again — did not submit an affidavit in support of the motion. It must also be noted that the motion was not filed until November 2018, more than one year after defendants claim to have discovered the action.
While defendants also contend that they have a meritorious defense — namely, that plaintiff lacks standing — such contention need not be addressed in view of defendants' failure to demonstrate that they did not receive the summons in time to defend the action (see Brightly v. Florida N., Inc. , 54 AD3d at 1128 ).
Defendants have therefore failed to demonstrate their entitlement to an Order vacating the default judgment under CPLR 317.
Lastly, defendants contend that they are entitled to an Order vacating the default judgment under CPLR 5014 (a) (1), which requires a party to "show a reasonable excuse for the default and the existence of a meritorious defense" ( Abel v. Estate of Collins , 73 AD3d 1423, 1425 [2010] ; see Wade v. Village of Whitehall , 46 AD3d 1302, 1303 [2007] ; Nilt, Inc. v. New York State Dept. of Motor Vehicles , 35 AD3d 937, 938 [2006] ).
According to defendants, they have a reasonable excuse for their default because representatives from Caliber Home Loans, Inc. (hereinafter Caliber) — the current mortgage servicer — led them to believe that the foreclosure could not proceed. In support of this contention, Gordon states that "the mortgage was ... transferred to Caliber ... in the 2016 calendar year[, f]ollowing which Caliber began forwarding offers to modify the terms of the loan to LaFrance." Gordon then contacted Caliber and "demand[ed] that the original [n]ote be produced." Gordon further states as follows:
"Caliber did produce copies of the [n]ote, however, the quality of these reproductions was lacking.
"In one call, which took place in or around January 2018, [I] became acquainted with a Caliber employee [who] identified himself as ‘Chris,’ who I recall being a manager in Caliber's loss mitigation department. I spoke with Chris on numerous occasions.
"In one such conversation, he admitted that Caliber was not [in] possession of the [n]ote. Chris further indicated that due to the fact that Caliber was not in possession of the original [n]ote, that the bank would not be able to foreclose on the [p]roperty."
According to Gordon, "[b]ased on the number of communications that [they] received from Caliber regarding modifying the loan and the representations of Caliber's employee, Chris, that the bank could not foreclose without the original [n]ote, [they] errantly believed that the foreclosure could not proceed."
While defendants' communications with Caliber perhaps led them to believe that the foreclosure could not proceed, these communications did not begin until some time in 2016 — at the earliest. Indeed, the majority of communications referenced by Gordon took place in 2018. Defendants' default, on the other hand, occurred in November 2014. Under the circumstances, defendants' confusion as a result of these communications simply cannot constitute a reasonable excuse for their default (see LaSalle Bank N.A. v. Oberstein , 146 AD3d 945, 945-946 [2017] ).
It must also be noted that the record contains affidavits of service demonstrating that defendants were served with both the July 2016 motion for a default judgment and appointment of a referee and the March 2018 motion for a Judgment of Foreclosure and Sale. Such service certainly raises questions as to the credibility of defendants' claim that they believed the foreclosure could not proceed.
While defendants also contend that they have a meritorious defense — again, plaintiff's alleged lack of standing — such contention need not be addressed in view of defendants' failure to demonstrate a reasonable excuse for their default (see Historic Pastures Homeowners Assn., Inc. v. Ace Holding, LLC , 167 D3d 1389, 1391 [2018]; Snyder v. Singh , 146 AD3d 1141, 1143 [2017] ).
Based upon the foregoing, the first aspect of the motion is denied.
The second aspect of the motion is likewise denied. Defendants seek to set aside the sale of the subject premises under CPLR 5015 (a) (5), which provides that "[t]he court [that] rendered a judgment or order may relieve a party from it upon such terms as may be just, on motion of any interested person with such notice as the court may direct, upon the ground of reversal, modification or vacatur of a prior judgment or order upon which it is based." To the extent that the Court has denied the first aspect of the motion seeking to vacate the default judgment, there is no basis upon which to vacate the sale.
Therefore, having considered the Affirmation of Richard A. Burger, Esq. with exhibits attached thereto, dated November 19, 2018, submitted in support of the motion; Affidavit of Kevin Gordon with exhibits attached thereto, sworn to October 11, 2018, submitted in support of the motion; Memorandum of Law of Richard A. Burger, Esq., dated November 19, 2018, submitted in support of the motion; Affirmation of Ryan D. Mitola, Esq. with exhibits attached thereto, dated December 18, 2018, submitted in opposition to the motion; and Affirmation of Michael E. Ginsberg, Esq., dated December 27, 2018, submitted in further support of the motion, and oral argument having been heard on June 6, 2019 with Max Smelyansky, Esq. appearing on behalf of plaintiff and Rhiannon I. Spencer appearing on behalf of defendants, it is hereby
ORDERED that defendants' motion is denied in its entirety.
The original of this Decision and Order has been filed by the Court together with the Notice of Motion dated November 19, 2018 and the submissions enumerated above. Counsel for plaintiff is hereby directed to promptly obtain a filed copy of the Decision and Order for service with notice of entry upon defendants in accordance with CPLR 5513.