| HSBC Bank USA v Lugo |
| 2015 NY Slip Op 03070 [127 AD3d 502] |
| April 14, 2015 |
| Appellate Division, First Department |
[*1]
| HSBC Bank USA, Respondent, v Betty Lugo,Appellant, et al., Defendants. |
Law Offices of Robert M. Brill, LLC, New York (Robert M. Brill and Anita Jaskotof counsel), for appellant.
Eckert Seamans Cherin & Mellott, LLC, White Plains (Geraldine A. Cheverkoof counsel), for respondent.
Amended order, Supreme Court, Bronx County (Kenneth L. Thompson, Jr., J.),entered July 17, 2012, which, in this mortgage foreclosure action, denied defendantmortgagor's motion to dismiss the complaint, or, in the alternative, to compel plaintiff toaccept her untimely answer, modified, on the law and the facts, to grant the motion tocompel plaintiff to accept defendant's untimely answer, and otherwise affirmed, withoutcosts.
This action seeks foreclosure on a $271,360 mortgage made on May 9, 2006,between New Century Corporation, as lender, and defendant Betty Lugo, as borrower,which was secured by real property located in the Bronx and a note. New Centurypurportedly assigned the mortgage to plaintiff HSBC Bank USA.
The motion court properly denied defendant's motion to dismiss the complaint.Defendant waived her right to seek dismissal of the complaint as abandoned pursuant toCPLR 3215 (c), because she did not object to plaintiff's treatment of her untimely answeras a notice of appearance and because she thereafter sought documents from plaintiff(see Myers v Slutsky, 139 AD2d 709 [2d Dept 1988]). Nor is defendant entitledto dismissal of the complaint based on plaintiff's alleged failure to comply with RPAPL1304, given the lack of probative evidence concerning the applicability of thatsection.
However, in light of the strong public policy of this state to dispose of cases on theirmerits (see Berardo vGuillet, 86 AD3d 459, 459 [1st Dept 2011]; Yu v Vantage Mgt. Servs., LLC, 85 AD3d 564, 564 [1stDept 2011]; Billingy vBlagrove, 84 AD3d 848, 849 [2d Dept 2011]), the motion court improvidentlyexercised its discretion in denying defendant's motion to compel acceptance of theuntimely answer. The circumstances herein demonstrate that the delay was not willful (see DaimlerChrysler Ins. Co. vSeck, 82 AD3d 581 [1st Dept 2011]). Nor has plaintiff pointed to any evidencethat the relatively short delay involved here, which was undisputedly mostly attributableto ongoing settlement negotiations, caused it to change its [*2]position or to suffer any similar prejudice (see Mutual Mar. Off., Inc. v JoyConstr. Corp., 39 AD3d 417, 419 [1st Dept 2007]; Forastieri v Hasset,167 AD2d 125 [1st Dept 1990]). In fact, plaintiff has acknowledged that from September2009 to June 22, 2011, it placed the foreclosure file on hold while the parties attemptedto negotiate a settlement, including defendant's attempt to negotiate for a "short sale." Afurther hold was placed on the case by FEMA from September 11 through November 22,2011. The Court accepted plaintiff's argument that its delay in prosecuting this casebetween 2009 and 2011 was attributable to ongoing settlement negotiations. These samenegotiations likewise justify defendant's late answer. Moreover, a review of the recordindicates that defendant also has an arguably meritorious affirmative defense of plaintiff'slack of standing to commence this foreclosure action (see id.). Serious issuesexist regarding plaintiff's ownership of the mortgage and note given the absence of suchdocuments in the record and the fact that the assignment is undated. These issues are bestresolved on the merits, as opposed to on default. Concur—Renwick, Gische andClark, JJ.
Tom, J.P., and DeGrasse, J., dissent in part in a memorandum by Tom, J.P., asfollows: This Court is in agreement that defendant waived her right to seek dismissal ofthe complaint as abandoned pursuant to CPLR 3215 (c) and that she has not establishedthe applicability of RPAPL 1304 so as to afford a basis for dismissal (RPAPL 1304 [5][a] [iii]). However, I find that the motion court properly denied defendant's motion tocompel acceptance of the answer, given the absence of any excuse for the almostfive-month delay in answering the complaint or the nearly two-year delay in making thismotion (CPLR 3012 [d]; seeNouveau El. Indus., Inc. v Tracey Towers Hous. Co., 95 AD3d 616, 618 [1stDept 2012] [no reasonable excuse for default provided]; Mannino Dev., Inc. v Linares,117 AD3d 995 [2d Dept 2014] [absent a reasonable excuse for delay, extension oftime to answer properly denied despite defendants' participation in required settlementconferences]; HSBC BankUSA, N.A. v Lafazan, 115 AD3d 647 [2d Dept 2014] [same]; compareSackman Mtge. Corp. v 111 W. 95th St. Realty Corp., 152 AD2d 463, 464 [1st Dept1989] [prompt answer upon learning that summons and complaint had been mailed todeceased attorney]).
It is within the exercise of a motion court's discretion to assess the sufficiency of amovant's submissions in support of relief pursuant to CPLR 3012 (d) (e.g. ProvidentLife & Cas. Ins. Co. v Hersko, 246 AD2d 365 [1st Dept 1998]), and on thisrecord the finding that defendant failed to advance any excuse whatsoever for her failureto serve a timely answer can hardly be said to have been an abuse of discretion (seeFidelity & Deposit Co. of Md. v Andersen & Co., 60 NY2d 693, 695[1983]; Mufalli v Ford Motor Co., 105 AD2d 642, 643 [1st Dept 1984]). Evenon appeal, defendant supplies no excuse for the delay in answering.
To compel acceptance of defendant's answer, as urged by the majority, on thepreference that cases be decided on the merits, results in the exception swallowing therule. If reaching the merits is the paramount goal, a court need never consider thestatutory prerequisites for the grant of relief from a default—namely, a reasonableexcuse and the demonstration of the merit of the defense. It is a rare appellate case inwhich the rationale embraced by the majority has been applied in the context of a motionto compel acceptance of an answer (see Harcztark v Drive Variety, Inc., 21 AD3d 876 [2d Dept2005] [insurer's three-month delay in answering a [*3]complaint on behalf of its insured]), and no equitableconsideration warrants acceptance of the answer in this matter (cf. Smith v DacaTaxi, 222 AD2d 209, 211 [1st Dept 1995] [attempted bribery of a witness]). To thecontrary, defendant has benefitted from the delay by remaining in possession of theforeclosed vacant premises, which she does not occupy as a principal residence, to thedetriment of plaintiff. Defendant's delay of almost two years after the rejection of heranswer before moving to compel its acceptance in this foreclosure action does notconstitute a "short delay" as urged by the majority. There is no dispute that defendantdefaulted in the mortgage payments. The record reflects that defendant owed a defaultbalance of $268,817.47 as of August 31, 2009. In view of the loss of interest on the debtand the associated carrying costs, it also cannot be said that plaintiff will not continue tosustain prejudice as a result of further delay in recovering the property. Thus, this matterdoes not fulfill the criterion that the grant of relief will not result in prejudice to theopposing party (see Stephenson v Hotel Empls. & Rest. Empls. Union Local 100of AFL-CIO, 293 AD2d 324, 325 [1st Dept 2002]; Elemery Corp. v 773Assoc., 168 AD2d 246, 247 [1st Dept 1990]). The majority's statement thatdefendant's short delay was "undisputedly mostly attributable to ongoing settlementnegotiations" is inaccurate and not supported by the record. Significantly, defendant'sattorney, in his reply affidavit, avers that plaintiff's allegation of negotiation withdefendant from September 2009 to June 22, 2011 is "unsubstantiated in any way byaffidavit of person with knowledge or [by] documentary evidence." Thus, defendantdenies there were negotiations between the parties. Even if there were settlementdiscussions between the parties, such negotiations cannot extend the time to serve ananswer to the foreclosure complaint (HSBC Bank USA, N.A., 115 AD3d at648).
Finally, some of the defenses proffered border on the frivolous. It should not requireelaboration that Supreme Court has subject matter jurisdiction of mortgage foreclosureactions, that a plaintiff's participation in settlement negotiations constitutes good causefor its forbearance in entering judgment on default or that the failure to assert lack ofstanding in the answer or by way of a pre-answer motion operates as a waiver of suchaffirmative defense (CPLR 3211 [e]). Therefore, a defendant's failure to assert thestanding defense in a timely manner should not be excused merely because its answer,failing to assert the defense, was rejected as untimely (cf. Wells Fargo Bank, N.A. vForde-White, 38 Misc 3d 1209[A], 2013 NY Slip Op 50029[U], *3-4 [Sup Ct, KingsCounty 2013] [the defendant was permitted to assert lack-of-standing defense in motionto dismiss where the defendant never served an answer]). To the contrary, theopportunity to interpose a second answer does not afford occasion to interpose a defensegoverned by CPLR 3211 (e) that was not asserted in the original answer (Addesso vShemtob, 70 NY2d 689 [1987]). Thus, whether defendant's asserted lack of standingdefense, interposed for [*4]the first time in herpost-answer motion to dismiss, might constitute an "arguably meritorious affirmativedefense," as the majority supposes, is immaterial.
Accordingly, the order should be affirmed in all respects.