| Bank of N.Y. v Castillo |
| 2014 NY Slip Op 05823 [120 AD3d 598] |
| August 20, 2014 |
| Appellate Division, Second Department |
[*1]
| Bank of New York, Appellant, v William F.Castillo, Respondent, et al., Defendants. |
Bryan Cave LLP, New York, N.Y. (Suzanne M. Berger and Megan Awerdick ofcounsel), for appellant.
Ndukwe Agwu, Newburgh, N.Y., for respondent.
In an action to foreclose a mortgage, the plaintiff appeals from an order of theSupreme Court, Orange County (Bartlett, J.), entered March 30, 2012, which granted themotion of the defendant William F. Castillo to dismiss the complaint insofar as assertedagainst him pursuant to 22 NYCRR 202.27 (b) upon its failure to appear at a scheduledconference and for failure to negotiate in good faith pursuant to CPLR 3408 (f) and, suasponte, directed dismissal of the action in its entirety with prejudice "in the interests ofjustice."
Ordered that on the Court's own motion, the plaintiff's notice of appeal from so muchof the order as, sua sponte, directed dismissal of the action in its entirety with prejudice,is deemed an application for leave to appeal from that portion of the order, and leave toappeal is granted (see CPLR 5701 [c]); and it is further,
Ordered that the order is reversed, on the law, the motion of the defendant William F.Castillo is denied, and the matter is remitted to the Supreme Court, Orange County, forfurther proceedings consistent herewith before a different Justice; and it is further,
Ordered that one bill of costs is awarded to the plaintiff.
In 2009, the plaintiff commenced this action against the defendant William F.Castillo (hereinafter the borrower) and additional defendants to foreclose a mortgage. Nodefendant has answered the complaint. However, the borrower appeared and participatedin settlement conferences pursuant to CPLR 3408.
In November 2009, the borrower moved to dismiss the complaint insofar as assertedagainst him pursuant to 22 NYCRR 202.27 (b), on the grounds that the plaintiff failed toappear at a CPLR 3408 settlement conference on October 29, 2009, and failed tonegotiate with him in good faith, as required by CPLR 3408 (f). The borrower's motionwas not decided at that time, and further CPLR 3408 negotiations ensued.
[*2] On October 3, 2011, the borrower's counsel told theSupreme Court that the plaintiff failed to respond appropriately to the borrower'sapplication for a mortgage modification, and noted that the borrower's motion to dismiss,made almost two years prior, remained pending and undecided. After briefly questioningthe plaintiff's counsel about the plaintiff's negotiations with the borrower, the courtconcluded that dismissal of the complaint with prejudice was warranted "not only on [theborrower's] motion, but on the Court's own motion in the interest of justice." The courtbased this conclusion upon, among other things, its assessment that the plaintiff failed tonegotiate with the borrower in good faith. The court's determination also appeared to restin part on the fact that the plaintiff participated in the federal Troubled Asset ReliefProgram bailout (see 12 USC § 5201 et seq.), and the court'sopinion that the plaintiff should, therefore, have worked harder to provide the borrowerwith an affordable loan modification. Based upon the reasons stated on the record, thecourt granted the borrower's motion and, sua sponte, directed dismissal of the action inits entirety with prejudice. The plaintiff appeals.
22 NYCRR 202.27 (b) gives a court the discretion to dismiss a plaintiff's complaintwhere the plaintiff fails to appear at any scheduled appearance. Under certaincircumstances, a single nonappearance or failure to be ready to proceed may warrantdismissal (see CommunityNetwork Serv., Inc. v Verizon N.Y., Inc., 48 AD3d 249, 250 [2008]). However,to the extent that the Supreme Court's determination here rested upon the plaintiff'ssingle nonappearance at the October 29, 2009, settlement conference, the courtimprovidently exercised its discretion in directing dismissal of the complaint withprejudice, especially since the plaintiff appears to have actively participated insubsequent litigation of this action over the two years following the October 29, 2009,settlement conference (seegenerally Feders v Lamprecht, 43 AD3d 276, 277 [2007]).
To the extent that the Supreme Court also determined that the borrower established,prima facie, that dismissal was warranted on the ground that the plaintiff acted in badfaith, that determination was also erroneous. Although CPLR 3408 provides that "[b]oththe plaintiff and defendant" in a foreclosure action "shall negotiate in good faith to reacha mutually agreeable resolution, including a loan modification, if possible," and requiresthe plaintiff to appear at all conferences in person or by counsel with full authority todispose of the case (CPLR 3408 [f]; see CPLR 3408 [c]), the CPLR does notspecify a remedy for a party's failure to comply with these requirements (see Wells Fargo Bank, N.A. vMeyers, 108 AD3d 9, 19 [2013], citing Hon. Mark C. Dillon, TheNewly-Enacted CPLR 3408 for Easing the Mortgage Foreclosure Crisis: Very GoodSteps, But Not Legislatively Perfect, 30 Pace L Rev 855, 875 [2010]; see also USBank N.A. v Sarmiento, 121 AD3d 187 [2d Dept2014]). In any event, other than his attorney's affirmation, which has no evidentiary value(see Winter v Black, 95AD3d 1208 [2012]; Bahlkow v Greenberg, 185 AD2d 829, 831 [1992]), theborrower only submitted the complaint in the action, a letter from a Supreme Court lawclerk directing the plaintiff to provide the borrower's counsel with certain documentation,and the plaintiff's loan modification offer. These documents failed to demonstrate thatthe plaintiff did not evaluate the borrower's loan modification application in good faith orwork with him toward a mutually agreeable settlement, as required by CPLR 3408 (f).Accordingly, to the extent that the Supreme Court determined that dismissal waswarranted on the basis that the borrower had demonstrated that the plaintiff acted in badfaith, such determination was error. Thus, the Supreme Court should have denied theborrower's motion to dismiss the complaint insofar as asserted against him.
The Supreme Court also erred in, sua sponte, directing dismissal of the action in itsentirety with prejudice (seeBank of Am., N.A. v Bah, 95 AD3d 1150, 1151-1152 [2012]; Aurora Loan Servs., LLC vShahmela Shah Sookoo, 92 AD3d 705, 707 [2012]; U.S. Bank, N.A. v Guichardo,90 AD3d 1032, 1033 [2011]; U.S. Bank, N.A. v Emmanuel, 83 AD3d 1047, 1048[2011]; HSBC Bank USA, N.A.v Valentin, 72 AD3d 1027 [2010]; see also IndyMac Bank, F.S.B. v Yano-Horoski, 78 AD3d895, 896 [2010]). "A court's power to dismiss a complaint, sua sponte, is to be usedsparingly and only when extraordinary circumstances exist to warrant dismissal"(U.S. Bank, N.A. v Emmanuel, 83 AD3d at 1048; see HSBC Bank USA, N.A. vTaher, 104 AD3d 815, 817 [2013]; Aurora Loan Servs., LLC v Sobanke, 101 AD3d 1065,1066 [2012]; Bank of Am., N.A. v Bah, 95 AD3d at 1151-1152; U.S. Bank,N.A. v Guichardo, 90 AD3d at 1033). Furthermore, when a court exercises its powerto impose a sanction sua sponte, it must afford the party to be sanctioned a reasonableopportunity to be heard (see Matter of Griffin [*3]vPanzarin, 305 AD2d 601, 603 [2003]; see also Tirado v Miller, 75 AD3d 153, 158-160[2010]).
Here, the Supreme Court was not presented with any extraordinary circumstanceswarranting sua sponte dismissal of the complaint. Moreover, the plaintiff was not "givenfair warning that such a sanction was even under consideration," as there is no indicationthat it was advised that the borrower's motion was being revived or that the court wasindependently considering dismissal based, apparently, on the plaintiff's conduct in theintervening two years (IndyMac Bank, F.S.B. v Yano-Horoski, 78 AD3d at 896;see Matter of Griffin v Panzarin, 305 AD2d at 603; see also Tirado vMiller, 75 AD3d at 158-160).
In addition, the Supreme Court's "consideration of facts outside of the record, absentthe parties' consent, constituted error" (Silberman v Antar, 236 AD2d 385, 385[1997]).
In light of the Supreme Court's intemperate remarks, which exhibited bias against theplaintiff, and its improper reliance on its personal opinion of the federal bailout ofmortgage lenders rather than on the evidence before it, we remit the matter to theSupreme Court, Orange County, for further proceedings before a different Justice(see HSBC Bank USA, N.A. v Taher, 104 AD3d at 817-818; Aurora LoanServs., LLC v Shahmela Shah Sookoo, 92 AD3d at 707; DeCrescenzo v Gonzalez, 46AD3d 607, 608 [2007]).
In light of the foregoing, we need not address the parties' remaining contentions.Mastro, J.P., Leventhal, Lott and Roman, JJ., concur.