| Citimortgage, Inc. v Espinal |
| 2015 NY Slip Op 09242 [134 AD3d 876] |
| December 16, 2015 |
| Appellate Division, Second Department |
[*1]
| Citimortgage, Inc., Successor by Merger to ABNAMRO Mortgage Group, Inc., Respondent, v Betty M. Espinal, Appellant, et al.,Defendants. |
Petroff Law Firm, P.C., Brooklyn, NY (Serge F. Petroff and James Tierney ofcounsel), for appellant.
Akerman LLP, New York, NY (Jordan M. Smith of counsel), for respondent.
In an action to foreclose a mortgage, the defendant Betty M. Espinal appeals from anorder of the Supreme Court, Kings County (Dear, J.), dated July 1, 2014, which grantedthe plaintiff's motion for summary judgment on the complaint insofar as asserted againsther and for an order of reference against her.
Ordered that the order is affirmed, with costs.
This is an action to foreclose a mortgage on the residence of the defendant Betty M.Espinal (hereinafter the appellant). The mortgage and note were issued on September 20,2007. The original mortgage creditor was ABN AMRO Mortgage Group, Inc.(hereinafter ABN), which had merged with the plaintiff, Citimortgage, Inc. (hereinafterCitimortgage), on September 1, 2007.
The action was commenced in July 2010. In her answer, the appellant alleged theaffirmative defenses of lack of standing and partial payment of past-due balances.Citimortgage moved for summary judgment, submitting the affidavit of its employeeHeather Polly, a "Vice President - Document Control," and copies of the note, mortgage,and notices of default dated October 9, 2009, and February 9, 2010, respectively. Pollystated that she had reviewed the loan records maintained by Citimortage in the course ofits regularly conducted business activities and that she had personal knowledge as to howthose records were maintained. She asserted that Citimortgage was the successor bymerger of ABN, the original mortgage creditor. She further asserted that the appellantdefaulted by failing to make the monthly installment payment due December 1, 2009,leaving an unpaid principal balance of $495,026.76. With respect to the notice of thedefault, she stated that "[a] demand for payment of the mortgage arrears was made bycorrespondence dated February 9, 2010," which complied "with the default proceduresboth as to form and timing as set forth in Paragraph 22 (b) of the Mortgage" and wasmailed to the appellant by first class mail at her last known address. Further, Pollyaverred that "a ninety (90) day pre-foreclosure notice ('90 Day Notice')" (seeRPAPL 1304) "was sent to [the appellant] on October 9, 2009 . . . to theaddress of the property . . . and to [the appellant's] last known address. . . by registered or certified and first class mail."
In opposition, the appellant's attorney contended that the default date of December[*2]1, 2009, was in "direct contradiction" to the noticesof default, which set forth earlier default dates. The appellant's attorney further stated thatPolly's affidavit failed to prove that the notices of default, including the notice pursuantto RPAPL 1304, were mailed to the appellant. With respect to standing, the appellant'sattorney contended that the mortgage and note were "ostensibly invalid" because themerger between ABN and Citimortgage occurred before the mortgage and note to ABNwas executed. The appellant's attorney further noted that, on November 26, 2007,Citimortgage sold the mortgage to Hudson City Savings Bank in an agreement wherebyCitimortgage kept possession of the note and acted as servicer of the mortgage loan. Theappellant's attorney argued that Citimortgage did not have standing in this action sincethe mortgage and note were held by two different entities.
In reply, Citimortgage submitted an affidavit from Lesa Duddey, another "VicePresident - Document Control," explaining that the appellant made some paymentsthroughout 2009 and early 2010, which were applied to sums due September 1, October1, and November 1, 2009, but no further payments were made. Therefore, the appellantwas in default of the payment due December 1, 2009. Citimortgage noted that theappellant did not deny receipt of the RPAPL 1304 notice in her opposition papers.Duddey produced the United States Postal Service tracking number for the notice and acopy of Citimortgage's correspondence log, and stated that Citimortgage's "standardbusiness procedure regarding all notices to the borrower(s)" is to enter mailinginformation in the correspondence log.
The Supreme Court, in the order appealed from, granted Citimortgage's motion forsummary judgment. The court found that Polly's affidavit did not provide sufficientevidence of mailing of the notices of default dated October 9, 2009, and February 9,2010, to the appellant. The court relied on HSBC Mtge. Corp. (USA) v Gerber (100 AD3d 966, 967[2012]), which stated that the "unsubstantiated and conclusory statements in theaffidavits of the plaintiff's employees" that a required notice was "sent" to the borrowerwere insufficient to prove that the notice was mailed by first-class mail, even ifaccompanied by a copy of the notice. However, the Supreme Court found that Duddey'saffidavit was sufficient to prove mailing. The court further found that it was authorizedto consider evidence submitted for the first time in reply papers because the issue ofwhether Citimortgage had given notice pursuant to RPAPL 1304 was raised for the firsttime in the appellant's opposition papers and the court gave the appellant an opportunityto submit a surreply, which the appellant declined to do. Finally, the court found thatCitimortgage had standing to foreclose the mortgage as holder of the note, and servicerof the mortgage loan.
Citimortgage established its prima facie entitlement to summary judgment. Polly'sassertions constituted competent evidence, based upon the business records exception tothe hearsay rule (see CPLR 4518 [a]; Brighton BK, LLC v Kurbatsky, 131 AD3d 1000 [2015]).The fact that the complaint and Polly's affidavit asserted that the default date wasDecember 1, 2009, while notices of the default asserted earlier default dates, wasexplained by the fact, asserted in the appellant's answer, that partial payments were made.Thus, Citimortgage submitted sufficient evidence of default (see HSBC Bank USA, N.A. vSpitzer, 131 AD3d 1206, 1207 [2015]; Emigrant Mtge. Co., Inc. v Beckerman, 105 AD3d 895,895 [2013]).
Since the mortgage is a home loan as defined in RPAPL 1304, that provisionrequired that at least 90 days before the commencement of an action to foreclose themortgage, the borrower must be provided with notice of the default, on a specified form,by registered or certified mail and also by first-class mail (see RPAPL 1304 [2]).However, RPAPL 1302 only requires pleading compliance with RPAPL 1304 where themortgage is a high-cost home loan or subprime home loan, and there is no allegation thatthat was the case here. Therefore, the complaint in this case did not plead compliancewith RPAPL 1304, and the appellant's answer did not mention compliance. Nevertheless,failure to comply with RPAPL 1304 constituted a defense to the mortgage foreclosureaction (see Pritchard vCurtis, 101 AD3d 1502, 1504 [2012]), which could be raised at any time (see Aurora Loan Servs., LLC vWeisblum, 85 AD3d 95, 107 [2011]; First Natl. Bank of Chicago v Silver, 73 AD3d 162, 163[2010]).
The Supreme Court properly concluded that, although Polly's affidavit was too[*3]"conclusory" to establish proper service of notices of thedefault (see HSBC Mtge. Corp.[USA] v Gerber, 100 AD3d 966 [2012]), Duddey's affidavit was sufficient toestablish proper service (see Bossuk v Steinberg, 58 NY2d 916, 919 [1983];Nassau Ins. Co. v Murray, 46 NY2d 828, 829 [1978]; Onewest Bank, NA vRubio, 2015 WL 5037111, 2015 US Dist LEXIS 113306 [SD NY, Aug. 26, 2015,No. 14-CV-3800 (CS)]). Under the circumstances of this case, the Supreme Courtprovidently considered Duddey's affidavit, submitted by Citimortgage in its reply papers.Although a party moving for summary judgement cannot meet its prima facie burden bysubmitting evidence for the first time in reply (see Arriola v City of New York, 128 AD3d 747, 749[2015]; Poole v MCPJF,Inc., 127 AD3d 949, 950 [2015]; Tingling v C.I.N.H.R. Inc., 74 AD3d 954 [2010]), andgenerally, evidence submitted for the first time in reply papers should be disregarded bythe court (see e.g. Adler v Suffolk County Water Auth., 306 AD2d 229, 230[2003]), exceptions to the rule arise when the evidence submitted is in response toallegations raised for the first time in the opposition papers (see David v Chong Sun Lee,106 AD3d 1044, 1045 [2013]; Conte v Frelen Assoc., LLC, 51 AD3d 620, 621 [2008];Ryan Mgt. Corp. v Cataffo, 262 AD2d 628 [1999]), and/or when the other partyis given an opportunity to respond to the reply papers (see Pennachio v Costco WholesaleCorp., 119 AD3d 662 [2014]; Zernitsky v Shurka, 94 AD3d 875, 876 [2012]). Here, theappellant raised the issue of proper service of the RPAPL 1304 notice for the first time inher opposition papers, and the Supreme Court gave the appellant an opportunity torespond to Duddey's affidavit.
Contrary to the appellant's contention, the mortgage was not invalid merely becauseit was issued in the name of a corporation which no longer existed in its own right, sincea dissolved corporation has the authority to discharge all its contracts, and collect all itsassets (see Business Corporation Law § 1005 [a] [2]). Upon themerger, the merged corporation acquired all the assets of the constituent corporations(see Business Corporation Law § 906 [b] [1]). Moreover, thesubsequent sale of the mortgage to Hudson City Savings Bank did not divestCitimortgage of standing, since, pursuant to the sale agreement, Citimortgage acted asservicer of the mortgage loans. As servicer, Citimortgage had standing to foreclose themortgage (see CWCapital AssetMgt., LLC v Great Neck Towers, LLC, 99 AD3d 850 [2012]). In any case,Citimortgage retained possession of the note, and therefore retained standing toforeclose, since the note was the dispositive document (see Aurora Loan Servs., LLC vTaylor, 25 NY3d 355, 361 [2015]).
Accordingly, the plaintiff's motion for summary judgment was properly granted.Dillon, J.P., Chambers, Cohen and Hinds-Radix, JJ., concur.