| Wells Fargo Bank, N.A. v Pabon |
| 2016 NY Slip Op 02700 [138 AD3d 1217] |
| April 7, 2016 |
| Appellate Division, Third Department |
[*1]
| Wells Fargo Bank, N.A., Appellant, v LeviPabon, Defendant. |
Hogan Lovells US LLP, New York City (David Dunn of counsel), for appellant.
Egan Jr., J. Appeal from an order of the Supreme Court (Gilpatric, J.), entered June2, 2014 in Ulster County, which, among other things, sua sponte dismissed thecomplaint.
On or about May 25, 2006, defendant granted plaintiff a mortgage interest in certainreal property located in the Village of Ellenville, Ulster County, as security for a loan inthe principal amount of $128,000. Defendant defaulted within the first year, promptingplaintiff to commence this foreclosure action in November 2007. Following joinder ofissue, plaintiff moved for summary judgment and for an order of reference. In support ofthat motion, plaintiff tendered an affidavit of merit and amount due from its thenvice-president of loan documentation (hereinafter the 2007 affidavit). Defendant did notoppose plaintiff's motion and, in June 2008, Supreme Court (Zwack, J.) awarded plaintiffsummary judgment and appointed a referee. In October 2008, Supreme Court, amongother things, confirmed the referee's report, granted plaintiff a judgment of foreclosureand sale and awarded plaintiff $2,000 in counsel fees.[FN1] Although plaintiff assigned themortgage to a third party in April 2009, plaintiff continued to service the loan.
In March 2011, the Chief Administrative Judge of the Courts issued AdministrativeOrder AO/431/11 (retroactively effective Nov. 18, 2010), which imposed certainrequirements upon a plaintiff's attorney in a residential mortgage foreclosure action (see U.S. Bank N.A. v Polanco,126 AD3d 883, 884-885 [2015]; see generally U.S. Bank N.A. v Eaddy, 109 AD3d 908, 909[2013]). Specifically, the order required that counsel for the plaintiff affirm that one ofthe [*2]plaintiff's representatives had personally reviewedthe plaintiff's records for factual accuracy and "confirmed the factual accuracy of theallegations set forth in the [c]omplaint and any supporting affidavits or affirmations filedwith the [c]ourt, as well as the accuracy of the notarizations contained in the supportingdocuments filed therewith."[FN2] The order incorporated two formaffidavits for this purpose—one to be filed by the plaintiff's counsel and the otherto be filed by the plaintiff's representative.[FN3]
In an effort to comply with this order, plaintiff's counsel—in March2014—obtained an affidavit of merit and amounts due and owing from LindaDuncan, plaintiff's then vice-president of loan documentation. Following a review ofplaintiff's records, Duncan confirmed the accuracy of the principal amount due, theinterest rate and the interest accrual date as set forth in the summons and complaint andthe 2007 affidavit and averred that defendant indeed was in default.[FN4] Due to the length of timethat had elapsed, however, Duncan was unable to confirm that the 2007 affidavit hadbeen executed with the required formalities. Accordingly, plaintiff moved pursuant toCPLR 2001 and 5019 (a) seeking, among other things, to substitute—nunc protunc—a new affidavit of merit and amounts due and owing for the 2007 affidavitand to amend the caption to reflect that the mortgage had been assigned. Supreme Court(Gilpatric, J.), concluding that plaintiff had committed fraud and perjury in submittingthe 2007 affidavit, denied plaintiff's motion. Supreme Court also, sua sponte, vacated thejudgment of foreclosure and sale and the order of reference, dismissed the foreclosureaction in its entirety and vacated the prior award of counsel fees. This appeal by plaintiffensued.[FN5]
Although a court is permitted to relieve a party from an order or judgment "uponsuch terms as may be just," such relief must be sought "on motion of an[ ] interestedperson with such notice as the court may direct" (CPLR 5015 [a]). Similarly, while acourt indeed is vested with the discretion to cure "any mistake, defect or irregularity inthe papers or procedures in [an] action not affecting a substantial right of a party" (CPLR5019 [a]), "a trial court has no revisory or appellate jurisdiction, sua sponte, to vacate itsown order or judgment" (Carterv Johnson, 110 AD3d 656, 658 [2013] [internal quotation marks and citationsomitted]; see HSBC Bank USA,[*3]N.A. v Simmons, 125 AD3d 930, 931[2015]). Here, defendant did not make a motion on notice seeking relief from either thejudgment of foreclosure and sale or the order of reference (see Armstrong Trading, Ltd. vMBM Enters., 29 AD3d 835, 836 [2006]). As a result, plaintiff—havingbeen afforded no notice in this regard—was entirely unaware that, in attempting tocomply with the requirements of Administrative Order AO/431/11, it was facing vacaturof the prior judgment of foreclosure and sale and the order of reference, as well asdismissal of the foreclosure action itself.
"A court's power to dismiss a complaint, sua sponte, is to be used sparingly and onlywhen extraordinary circumstances exist to warrant dismissal" (Onewest Bank, FSB v Prince,130 AD3d 700, 701 [2015] [internal quotation marks and citation omitted]; accord Deutsche Bank Natl. TrustCo. v Martin, 134 AD3d 665, 665 [2015]; HSBC Bank USA, N.A. v Forde, 124 AD3d 840, 841[2015]). To our analysis, the record does not support a finding that the 2007 affidavit ofmerit was "perjured," nor does the record otherwise "show fraud in the very means bywhich the judgment [of foreclosure and sale and order of reference were] procured" (Rossrock Fund II, L.P. v NorlinCorp., 128 AD3d 1046, 1047 [2015] [internal quotation marks and citationsomitted]). Rather, the record reflects only that counsel made a good-faith attempt tocomply with the terms of an administrative order that was not in effect at the time that theunderlying judgment of foreclosure and sale and the order of reference were rendered.Such conduct "does not qualify as . . . an extraordinary circumstance"warranting dismissal of the underlying complaint (Deutsche Bank Natl. Trust Co. v Meah, 120 AD3d 465,466 [2014] [internal quotation marks omitted]; see Wells Fargo Bank, N.A. v Watanabe, 136 AD3d 1413,1414 [2016]). Notably, "[n]othing in the Administrative Order[ ] requires the dismissalof an action merely because the plaintiff's attorney discovers that there was someirregularity or defect in a prior submission, nor is the plaintiff effectively required tocommence an entirely new action" (Deutsche Bank Natl. Trust Co. v Meah, 120AD3d at 466; see Wells Fargo Bank, N.A. v Watanabe, 136 AD3d at 1414).Under these circumstances, Supreme Court should not have denied plaintiff's motion tosubstitute—nunc pro tunc—a new affidavit of merit and amounts due andowing, vacated the prior judgment of foreclosure and sale, together with the order ofreference, or dismissed the foreclosure action in its entirety (see Deutsche Bank Natl. Trust Co.v Lawson, 134 AD3d 760, 760 [2015]; Deutsche Bank Natl. Trust Co. vMeah, 120 AD3d at 466; see also Deutsche Bank Natl. Trust Co. v Otano, 129 AD3d770, 770-771 [2015]).[FN6]
McCarthy, J.P., Lynch, Devine and Clark, JJ., concur. Ordered that the order isreversed, on the law, without costs, plaintiff's motion granted and matter remitted to theSupreme Court for further proceedings not inconsistent with this Court's decision.
Footnote 1:The record is silent as towhether the referee subsequently set a date for the sale of the property.
Footnote 2:Although theadministrative order also set forth the various time periods within which counsel'saffidavit must be filed, the timeliness of counsel's affidavit in this action is not at issue.
Footnote 3:With respect toresidential mortgage foreclosure actions commenced on or after August 30, 2013,Administrative Order AO/208/13 now applies, which requires a plaintiff's counsel toeither comply with the requirements of Administrative Order AO/431/11 or file acertificate of merit in the form required by CPLR 3012-b.
Footnote 4:The only difference inthe amount due and owing was that Duncan's 2014 affidavit omitted plaintiff's claim forthe $19.68 in late charges initially assessed against defendant.
Footnote 5:To the extent thatplaintiff could not appeal Supreme Court's order as of right (see CPLR 5701 [a][2]), we will treat plaintiff's notice of appeal as an application for leave to appeal, whichwe now grant (see CPLR 5701 [c]; HSBC Bank USA, N.A. v Simmons, 125 AD3d 930, 931[2015]).
Footnote 6:The mortgage is notincluded in the record on appeal and, hence, we are unable to ascertainwhether—as plaintiff contends—it was contractually entitled to counselfees. Assuming that plaintiff is correct on this point, we also would discern no basis uponwhich to vacate the prior award of counsel fees.