| Washington Mut. Bank v Murphy |
| 2015 NY Slip Op 03520 [127 AD3d 1167] |
| April 29, 2015 |
| Appellate Division, Second Department |
[*1]
| Washington Mutual Bank, Formerly Known asWashington Mutual Bank, FA, Respondent, v Edward Murphy, Appellant, andPaul Luciano, Respondent, et al., Defendants. |
Shlansky Law Group, LLP, New York, N.Y. (David J. Shlansky and Travis Tatko ofcounsel), for appellant.
Parker Ibrahim & Berg LLC, New York, N.Y. (Anthony W. Vaughn, Jr., andScott W. Parker of counsel), for plaintiff-respondent.
Donald G. Davis, New York, N.Y., for defendant-respondent.
In an action to foreclose a mortgage, the defendant Edward Murphy appeals from somuch of an order of the Supreme Court, Suffolk County (Cohalan, J.), dated January 18,2012, as, upon a decision of the same court dated November 16, 2011, made after ahearing, denied that branch of his motion which was pursuant to CPLR 5015 (a) (4) tovacate a judgment of foreclosure and sale of the same court entered August 19, 2008,upon his failure to appear or answer the complaint, and thereupon to dismiss thecomplaint.
Ordered that the order is reversed insofar as appealed from, on the law and the facts,with costs, and that branch of the motion of the defendant Edward Murphy which waspursuant to CPLR 5015 (a) (4) to vacate the judgment of foreclosure and sale, andthereupon to dismiss the complaint insofar as asserted against him, is granted.
In 2002, the defendant Edward Murphy purchased real property situated in thehamlet of Noyack, in the County of Suffolk (hereinafter the Noyack property). Tofacilitate this purchase, he obtained, from the plaintiff, a loan secured by a mortgage onthe Noyack property.
Paragraph 15 of the mortgage provided that any notice to Murphy would be sent tothe address of the Noyack property unless Murphy gave notice to the plaintiff of adifferent address. Further, paragraph 15 required Murphy to give the plaintiff promptnotice of any change of address, and specified that "[t]here may be only one designatednotice address under [the mortgage] at any one time."
It is undisputed that, in March 2003, pursuant to paragraph 15 of the mortgage,Murphy duly informed the plaintiff that all correspondence and monthly statementspertaining to the Noyack property were to be addressed to him at his primary residence,which was located on Reade Street in Manhattan. Accordingly, the plaintiff thereaftersent all correspondence, including monthly [*2]statements pertaining to the Noyack property, to Murphy atthe Reade Street address.
Murphy did not make the monthly installment payment that was due on February 1,2007, or any payment due thereafter. The plaintiff sent a letter, dated February 17, 2007,to Murphy at his Reade Street address with respect to Murphy's failure to make paymentson the mortgage for the Noyack property, and offered assistance with loanmodification.
On May 25, 2007, the plaintiff commenced this action to foreclose the subjectmortgage by filing the summons and complaint with the Suffolk County Clerk.
According to the affidavit of service, a copy of the summons and complaint wasserved at the Noyack property upon " 'JOHN DOE' (NAME REFUSED),CO-TENANT" on May 26, 2007, which was the Saturday of Memorial Day weekend. Aseparate copy of the summons and complaint was thereafter mailed to Murphy at theNoyack property on May 30, 2007. Upon Murphy's failure to appear or answer thecomplaint in this action, the plaintiff moved for, and was granted, leave to enter a defaultjudgment against him.
Prior to the entry of the judgment of foreclosure and sale, the plaintiff sent a letter,dated September 13, 2007, to Murphy at the Reade Street address, stating that Murphyhad been "identified as a potential candidate" for the plaintiff's "Loss MitigationProgram." In the letter, the plaintiff explained that the program was designed, in part, tohelp Murphy prevent the possible loss of his vacation home by giving him "theopportunity to explore available alternatives to foreclosure to help resolve [his]delinquency situation," and provided him with a loan workout package. The letter did notrefer to the fact that copies of the summons and complaint commencing this action toforeclose the subject mortgage had been purportedly served upon Murphy solely at theaddress of the Noyack property.
The plaintiff sent a subsequent letter, dated June 15, 2008, also prior to the entry ofthe judgment of foreclosure and sale, in which it acknowledged that it had beencontacted by Murphy, and continued to offer help to Murphy. This letter was sent to theReade Street address. Similar to the preceding letters sent by the plaintiff to Murphy, thisletter was silent as to the purported service of copies of the summons and complaint uponMurphy and the pendency of this action.
Another letter, dated August 14, 2008, was sent by the plaintiff to Murphy at theReade Street address, reiterating that he was a potential candidate for the plaintiff's LossMitigation Program. This correspondence did not refer to the ongoing foreclosurelitigation.
A judgment of foreclosure and sale was entered on August 19, 2008, and the Noyackproperty was sold at auction on November 12, 2008. A copy of the judgment offoreclosure and sale and, thereafter, a notice to vacate the Noyack property, was mailedto Murphy at the Noyack property. No notice was sent to the Reade Street address.
Thereafter, Murphy received a letter, dated December 31, 2008, at the Reade Streetaddress, from JPMorgan Chase Bank, National Association (hereinafter JPMorgan),doing business as Washington Mutual Bank, advising him that Washington MutualBank, the servicer of the loan, had gone out of business, and that some of its assets hadbeen acquired by JPMorgan, including the right to service Murphy's loan. The letter alsostated that JPMorgan might be able to help Murphy "bring [his] loan current and avoidforeclosure even if [he could not] pay [his] outstanding balance in full." The letteradvised Murphy to call "right away" to learn how JPMorgan could assist him, and that hecould also be eligible for home ownership counseling through the United StatesDepartment of Housing and Urban Development network of nonprofit counselingorganizations. The letter informed Murphy of the total debt outstanding on his loan as ofthe date of the letter. The letter contained no notice of the entry of the judgment offoreclosure and sale that the plaintiff had previously obtained.
In February 2009, JPMorgan commenced a separate proceeding in the Justice Courtof the Town of Southampton against Murphy, seeking to obtain possession of theNoyack property. [*3]The petition alleged that JPMorganhad acquired title to the Noyack property via foreclosure, and that a 10-day notice toterminate occupancy and a referee's deed had been served upon Murphy via "affix andmail" service, without specifying where or when Murphy was purportedly served withthose documents. That petition was granted on default on March 11, 2009. Pursuantthereto, a dispossession notice was posted at the Noyack property by the Sheriff ofSuffolk County on April 16, 2009. JPMorgan conveyed the property to the defendantPaul Luciano on October 13, 2009, pursuant to a bargain and sale deed.
In October 2009, Murphy moved, by order to show cause, inter alia, pursuant toCPLR 5015 (a) (4) to vacate the judgment of foreclosure and sale on the ground that hewas never served with process in this action, and thereupon to dismiss the complaint. Insupport of his motion, Murphy submitted an affidavit, in which he stated that his primaryresidence since 1994 had been at the Reade Street address, except for a brief period in2002. He explained that, since 2003, the Noyack property had only been used as asummer house. He also stated that, on May 26, 2007, the date that service of process wasallegedly effectuated, the Noyack property was not his actual place of business, place ofresidence, dwelling place, or place of abode.
According to Murphy, since March 2003, the plaintiff had always sent himcorrespondence regarding the Noyack property to the Reade Street address, and all otherbills related to the Noyack property, including those for electric power, cable television,homeowner's insurance, and maintenance of the tennis court, were likewise sent to theReade Street address. In addition, Murphy established that his driver's license listed theReade Street address as his residence, and that he was registered to vote in Manhattan onthe basis of the Reade Street address.
Further, Murphy contended that he was out of the country from May 18, 2007,through May 29, 2007, which was the time when copies of the summons and complaintwere allegedly served at the Noyack property. He claimed that, contrary to therepresentation made in the affidavit of service of the plaintiff's process server, he hadnever had any cotenants residing at the Noyack property.
Both the plaintiff and Luciano opposed the motion. The plaintiff argued that serviceupon Murphy was effectuated by delivering a copy of the summons and complaint to aperson of suitable age and discretion at Murphy's dwelling place or usual place of abode,and then mailing a copy to Murphy at his last known residence. Luciano contended thatMurphy's claim that the plaintiff failed to properly serve him with process was onlyrelevant to potential money damages, and not any cause of action to foreclose a mortgageasserted against him in his capacity as a bona fide purchaser of the Noyack property.
In an order dated December 30, 2010, the Supreme Court, inter alia, held Murphy'smotion in abeyance, pending a hearing to determine the validity of service ofprocess.
At the hearing to determine the validity of service of process, the plaintiff called theprocess server as its only witness. The process server testified that he served a copy ofthe summons and complaint and a brochure entitled "Help for Homeowners inForeclosure" upon Murphy at the Noyack property. The process server testified that, onSaturday, May 26, 2007, when he appeared at the Noyack property to serve process, aman answered the door and told him that Murphy was in Monaco that weekend, andwould not be back until Tuesday, May 29, 2007. The process server further testified thathe advised the man who opened the door that he had papers pertaining to the foreclosureon the Noyack property, and asked if the man would accept them. The process serverrecalled that the man did accept two sets of the papers, but refused to give his name. Hestated that he assumed that the man was Murphy's cotenant, since the man indicated thathe was staying at the property.
The process server testified that, on Wednesday, May 30, 2007, he mailed a copy ofthe summons, complaint, and the brochure to Murphy at the Noyack property. Herecalled that the envelope containing those documents was never returned to him asundeliverable.
During cross-examination, the process server testified that the plaintiff's lawyers[*4]provided him with the address to which he was tomail a copy of the summons and complaint. When asked if the plaintiff's law firm hadinformed him that the Noyack property was Murphy's "residence," the process serverresponded "[t]hat is correct" and "[y]es, they did." In response to a question aboutwhether he undertook any inquiry into whether the Noyack property was Murphy's"address," the process server answered that, when he served the papers upon the man atthe Noyack property, that person had stated that the Noyack property was owned byMurphy, and that it was Murphy's property.
Murphy testified on his own behalf at the hearing. He stated that he was a resident ofManhattan, having lived at the Reade Street address as his primary residence since 1994.He explained that he had purchased the Noyack property in 2002 to spend summersthere, and as an investment. He stated that, at one point, he thought about making theNoyack property his primary residence, but realized that it was not a feasible option tocommute on a daily basis from Noyack to Manhattan, where he worked. Murphy assertedthat he never claimed the Noyack property as his primary residence for tax purposes. Hetestified that his driver license designated the Reade Street address as his residence, andthat his voter registration was also based on that address.
Murphy explained that he used the Noyack property "on weekends in the summerprimarily," meaning virtually every weekend between Memorial Day and Labor Day. Heoccasionally let people stay at the property even when he was not present. He assertedthat he very rarely went to the Noyack property outside of that time period.
Murphy also testified that he received monthly statements for the Noyack propertyfrom the plaintiff at his Reade Street address. He explained that he had directed theplaintiff to send the monthly mortgage statements to his Reade Street address since that"is where [he] lived." He stated that he did not receive any bills at the Noyack property,and that the telephone and cable television bills for the Noyack property were sent to hisReade Street address. He also stated that, when he stopped making mortgage paymentsupon losing his job, he received multiple notices from the plaintiff about his delinquentpayments at his Reade Street address.
Murphy stated that he was not aware in 2007 that a foreclosure action was imminent,since he kept receiving correspondence from the plaintiff offering different programs thatwould assist him in working out his difficulties in keeping current on his mortgage. Heexplained that these notices did not mention that an action for foreclosure had beencommenced, which led him to believe, as late as December 2008, that he could stillbecome current on his mortgage obligation.
Murphy testified that he was not present at the Noyack property during MemorialDay weekend in 2007. He believed that there were people staying at the house duringthat weekend. He also testified that he was not served with a copy of the summons andcomplaint on May 26, 2007, and never received a copy at his Reade Street address.
On cross-examination, Murphy testified that cable television service and electricitywere kept on at the Noyack property throughout the year, and that the post officedelivered mail there. Murphy testified that he did not receive important mail at theNoyack property, but only received junk mail at that address, so that he "almost never"checked the mailbox. However, he did acknowledge that if mail were addressed to him atthat address, he would receive it. Murphy stated that, despite the fact that the Noyackproperty was kept open throughout the year, he would very rarely go out there during thewinter, fall, or spring. He explained that it was only during the period from MemorialDay to Labor Day that he would travel to the Noyack property virtually every weekend.He also acknowledged that he had in the past taken a week off in the summer and spent itat the Noyack property, although that occurred on an average of less than once ayear.
In an order dated January 18, 2012, the Supreme Court, inter alia, denied that branchof Murphy's motion which was pursuant to CPLR 5015 (a) (4) to vacate the judgment offoreclosure and sale, and thereupon to dismiss the complaint. Murphy appeals, as limitedby his brief, from so much of the order dated January 18, 2012, as denied that branch ofhis motion which was to vacate the judgment of foreclosure and sale, and thereupon todismiss the complaint in this action. We [*5]reverse theorder insofar as appealed from.
Pursuant to CPLR 5015 (a) (4), "[t]he court which rendered a judgment or order mayrelieve a party from it upon such terms as may be just, on motion of any interested person. . . upon the ground of . . . lack of jurisdiction to render thejudgment or order." The court does not have personal jurisdiction over a defendant whena plaintiff fails to properly effectuate service of process (see Emigrant Mtge. Co., Inc. vWestervelt, 105 AD3d 896, 896-897 [2013]; Krisilas v Mount Sinai Hosp., 63 AD3d 887, 889 [2009]).In those instances in which process has not been served upon a defendant, all subsequentproceedings will be rendered null and void (see Emigrant Mtge. Co., Inc. vWestervelt, 105 AD3d at 897; Krisilas v Mount Sinai Hosp., 63 AD3d at889; see also Prudence vWright, 94 AD3d 1073, 1074 [2012]).
"Service of process must be made in strict compliance with statutory 'methods foreffecting personal service upon a natural person' pursuant to CPLR 308" (Estate of Waterman v Jones, 46AD3d 63, 65 [2007], quoting Macchia v Russo, 67 NY2d 592, 594 [1986];see Emigrant Mtge. Co., Inc. v Westervelt, 105 AD3d at 896-897; Gottesman v Friedman, 90AD3d 608, 609 [2011]). A defendant's eventual awareness of pending litigation willnot affect the absence of jurisdiction over him or her where service of process is noteffectuated in compliance with CPLR 308 (see De Zego v Donald F. Bruhn, M. D., P.C., 67 NY2d 875, 877 [1986]; Macchia v Russo, 67 NY2d at 595;Feinstein v Bergner, 48 NY2d 234, 241 [1979]; Krisilas v Mount SinaiHosp., 63 AD3d at 889; Bankers Trust Co. of Cal. v Tsoukas, 303 AD2d343, 344 [2003]). Where a court determines that a defendant rebutted the presumption ofservice, which is ordinarily established through a process server's affidavit of service,and sets the matter down for a hearing, the burden at the hearing is on the plaintiff toestablish by a preponderance of the evidence that personal jurisdiction was acquired overthe defendant (see Aurora LoanServs., LLC v Gaines, 104 AD3d 885, 886 [2013]; Gray v Giannikios, 90 AD3d836, 837 [2011]; Engel vBoymelgreen, 80 AD3d 653, 655 [2011]; Goralski v Nadzan, 89 AD3d 801, 801 [2011]).
CPLR 308 sets forth the different ways in which service of process upon anindividual can be effected in order for the court to obtain jurisdiction over that person.CPLR 308 (2) provides, in pertinent part, that personal service upon a natural person maybe made "by delivering the summons within the state to a person of suitable age anddiscretion at the actual place of business, dwelling place or usual place of abode of theperson to be served and by . . . mailing the summons to the person to beserved at his or her last known residence" (emphasis added). "Jurisdiction is notacquired pursuant to CPLR 308 (2) unless both the delivery and mailing requirementshave been strictly complied with" (Gray-Joseph v Shuhai Liu, 90 AD3d 988, 989 [2011]; see Daguerre, S.A.R.L. vRabizadeh, 112 AD3d 876, 878 [2013]; Munoz v Reyes, 40 AD3d 1059, 1059 [2007]; Ludmer v Hasan, 33 AD3d594, 594 [2006]). It "is a two-step form of service in which a delivery and mailingare both essential" (Vincent C. Alexander, Practice Commentaries, McKinney's ConsLaws of NY, Book 7B, CPLR C308:3).
Since, under the circumstances of this case, the Noyack property, although Murphy'svacation home, could properly be characterized as his dwelling place or usual place ofabode (see Krechmer v Boulakh, 277 AD2d 288, 289 [2000]), we agree with theSupreme Court that the plaintiff satisfied the first prong of CPLR 308 (2) by a fairpreponderance of the evidence by serving process upon a person of suitable age anddiscretion at the Noyack property (see Bank of N.Y. v Espejo, 92 AD3d 707, 708 [2012];Roldan v Thorpe, 117 AD2d 790, 791 [1986]).
However, the plaintiff failed to meet its burden of proof that its mailing of copies ofthe summons and complaint to that same address satisfied the second prong of CPLR 308(2). The undisputed evidence demonstrated that the plaintiff received notice fromMurphy that the Reade Street address was to be used with respect to all noticesconcerning the Noyack property. Thereafter, from 2003 through December 2008, aperiod of time extending beyond the date of the mailing of copies of the summons andcomplaint to the Noyack property, the plaintiff actually utilized the Reade Street addressto send Murphy all correspondence and notices relating to the Noyack property,including those referable to the mortgage statements and Murphy's default thereunder.The only documents that the plaintiff mailed to the Noyack property were the summonsand complaint, despite its knowledge that Murphy had given notice in accordance withthe terms of the mortgage that his [*6]residence was theReade Street address, and that it was at that address that he was to receive all mail.
Further, Murphy demonstrated that his driver's license and his voter registration werebased upon the Reade Street address, and that the Noyack property was not claimed ashis primary residence for tax purposes. Thus, for the purpose of satisfying the objectivesof CPLR 308 (2), Murphy's "last known residence" was not the Noyack property (seeFeinstein v Bergner, 48 NY2d at 241; Mangold v Neuman, 87 AD2d 780[1982], affd 57 NY2d 627 [1982]; cf. Bank of N.Y. v Espejo, 92 AD3d at708; Melton v Brotman Foot Care Group, 198 AD2d 481, 481 [1993];Townsend v Hanks, 140 AD2d 162, 163 [1988]).
Accordingly, the Supreme Court should have granted that branch of Murphy'smotion which was pursuant to CPLR 5015 (a) (4) to vacate the judgment of foreclosureand sale, and thereupon should have dismissed the complaint insofar as asserted againsthim. Dillon, J.P., Dickerson, Hall and Austin, JJ., concur.