| HSBC Bank USA, N.A. v Halls |
| 2012 NY Slip Op 06063 [98 AD3d 718] |
| August 29, 2012 |
| Appellate Division, Second Department |
| HSBC Bank USA, N.A., Respondent, v Joyce Halls et al.,Defendants, and Mortgage Electronic Registration Systems, Inc.,Appellant. |
—[*1] Hogan Lovells US LLP, New York, N.Y. (David Dunn and Renee Garcia, and Jessica L.Ellsworth and Mary Helen Wimberly, Washington, D.C., pro hac vice, of counsel), forrespondent.
In an action to foreclose a mortgage, the defendant Mortgage Electronic RegistrationSystems, Inc., as nominee for American Brokers Conduit, appeals from an order of the SupremeCourt, Kings County (Steinhardt, J.), dated December 17, 2010, which granted the plaintiff'smotion for leave to renew and reargue and, upon renewal and reargument, vacated thedeterminations in an order of the same court dated June 22, 2010, granting its motion forsummary judgment dismissing the complaint insofar as asserted against it and on itscounterclaim, and denying the plaintiff's cross motion, in effect, for leave to interpose a late replyto its counterclaim and a response to a notice to admit it served upon the plaintiff, and thereupondenied its motion for summary judgment dismissing the complaint insofar as asserted against itand on its counterclaim, and granted the plaintiff's cross motion, in effect, for leave to interpose alate reply to its counterclaim and a response to the notice to admit it served upon the plaintiff.
Ordered that the order dated December 17, 2010, is affirmed, with costs.
In this action to foreclose a mortgage, which was commenced in August 2007, the untimelyanswer of the defendant Mortgage Electronic Registration Systems, Inc., as nominee forAmerican Brokers Conduit (hereinafter MERS), raised the defense of payment, and asserted acounterclaim against the plaintiff for a judgment declaring that the subject mortgage had beensatisfied. The plaintiff neither objected to MERS's untimely answer, nor served a reply to thecounterclaim, but instead proceeded to discovery. Thereafter, in November 2008, MERS servedupon the plaintiff, inter alia, a notice to admit, seeking the admission of certain facts that woulddemonstrate that the subject mortgage debt had been fully satisfied in February 2006 by virtue ofthe payment of the total amount due to "L & G Mortgaging Service Corp.," as the plaintiff'sdesignated servicing agent. The plaintiff did not respond to the notice to admit.
In March 2009, MERS moved, inter alia, for summary judgment dismissing the complaintinsofar as asserted against it and on its counterclaim, arguing that, in light of the plaintiff's [*2]failure to respond to the notice to admit, the facts identified thereinmust be deemed admitted by virtue of CPLR 3123. The plaintiff opposed the motion, andthereafter cross-moved, in effect, for leave to interpose a reply to the counterclaim and a responseto the notice to admit.
In an order dated June 22, 2010, the Supreme Court, inter alia, granted MERS's motion forsummary judgment dismissing the complaint insofar as asserted against it and on itscounterclaim, and denied the plaintiff's cross motion, in effect, for leave to interpose a reply tothe counterclaim and a response to the notice to admit. In August 2010, the plaintiff moved forleave to renew and reargue its cross motion and its opposition to MERS's motion. In support ofits motion for leave to renew and reargue, the plaintiff submitted, inter alia, a criminal complaintfiled on June 25, 2008, in the United States District Court for the Eastern District of New York,alleging that Osmond Decoteau and Donna Daniels, using the corporate front "L&G,"orchestrated a mortgage fraud scheme in which they issued "phony payoff letters" thatfraudulently represented that L&G was the loan servicing agent for mortgage loans with respectto at least nine properties in Brooklyn, including the subject property. As set forth in the criminalcomplaint, under this scheme, the borrower's closing attorney received a phony payoff letter fromL&G, and when the borrower sold one of the properties to a third party, the borrower's closingattorney wrote a check to L&G instead of the actual loan servicing agent for the borrower'slender, with such funds ultimately transferred to accounts operated by Decoteau and Daniels.According to the criminal complaint, as a result of this scheme, the mortgage debt owed by theoriginal borrower to the plaintiff remained outstanding, while the subsequent mortgage issued byAmerican Brokers Conduit to the original borrower's successor-in-interest was secondary thereto.
The Supreme Court granted the plaintiff's motion for leave to renew and reargue and, uponrenewal and reargument, vacated the determinations in the order dated June 22, 2010, andthereupon denied MERS's motion for summary judgment dismissing the complaint insofar asasserted against it and on its counterclaim, and granted the plaintiff's cross motion, in effect, forleave to interpose a reply to the counterclaim and a response to the notice to admit. MERSappeals from the order made upon renewal and reargument. We affirm.
A motion for leave to renew or reargue is addressed to the sound discretion of the SupremeCourt (see Matter of Swingearn, 59AD3d 556 [2009]). A motion for renewal "shall be based upon new facts not offered on theprior motion that would change the prior determination" (CPLR 2221 [e] [2]). A motion forreargument must be "based upon matters of fact or law allegedly overlooked or misapprehendedby the court in determining the prior motion, but shall not include any matters of fact not offeredon the prior motion" (CPLR 2221 [d] [2]). Further, even where a motion for reargument istechnically untimely under CPLR 2221 (d) (3), a court has discretion to reconsider its prior ruling(see CPLR 2004; Itzkowitz vKing Kullen Grocery Co., Inc., 22 AD3d 636, 638 [2005]; Garcia v The Jesuits of Fordham, 6AD3d 163, 165 [2004]).
" 'The purpose of a notice to admit is only to eliminate from the issues in litigation matterswhich will not be in dispute at trial. It is not intended to cover ultimate conclusions, which canonly be made after a full and complete trial' " (Sagiv v Gamache, 26 AD3d 368, 369 [2006], quoting DeSilva vRosenberg, 236 AD2d 508, 508 [1997]; see Orellana v City of New York, 203 AD2d542 [1994]). Here, as the Supreme Court correctly noted in granting reargument, MERS's noticeto admit was palpably improper, as it sought the admission of contested ultimate issues regardingthe satisfaction of the mortgage debt owed to the plaintiff.
Under the circumstances of this case, which include the existence of allegations of fraudcontained in the federal criminal complaint, and the palpably improper nature of the notice toadmit, the Supreme Court providently exercised its discretion in granting the plaintiff's motionfor leave to renew and reargue and, upon renewal and reargument, properly denied MERS'smotion for summary judgment dismissing the complaint insofar as asserted against it and on thecounterclaim, and properly granted the plaintiff's cross motion, in effect, for leave to interpose areply to the counterclaim and a response to the notice to admit. Balkin, J.P., Belen, Hall andMiller, JJ., concur.