| LaSalle Bank, N.A. v Dono |
| 2016 NY Slip Op 00340 [135 AD3d 827] |
| January 20, 2016 |
| Appellate Division, Second Department |
[*1]
| LaSalle Bank, N.A., as Trustee for Merrill Lynch FirstFranklin Mortgage Loan Trust 2007-4 Mortgage Loan Asset-Backed Certificates Series2007-4, Appellant, v Brian Dono, Respondent, et al.,Defendants. |
Davidson Fink LLP, Rochester, NY (Larry T. Powell of counsel), for appellant.
Stim & Warmuth, P.C., Farmingville, NY (Glenn P. Warmuth of counsel), forrespondent.
In an action to foreclose a mortgage, the plaintiff appeals from an order of theSupreme Court, Suffolk County (Spinner, J.), dated August 12, 2014, which, aftersettlement conferences pursuant to CPLR 3408, granted the motion of the defendantBrian Dono to impose a sanction upon it for its failure to negotiate in good faith pursuantto CPLR 3408 (f), abated all interest, disbursements, costs, and attorney's fees that hadaccrued during the period between October 1, 2010, and the date of the order, andpermanently barred the plaintiff from collecting any interest, disbursements, costs, orattorney's fees absent further court order.
Ordered that the order is modified, on the facts and in the exercise of discretion, bydeleting the provision thereof permanently barring the plaintiff from collecting anyinterest, disbursements, costs, or attorney's fees absent further court order; as somodified, the order is affirmed, with costs to the defendant Brian Dono.
The plaintiff (hereinafter the Bank) commenced this action to foreclose a residentialmortgage after the defendant Brian Dono (hereinafter the homeowner) defaulted. Thehomeowner subsequently submitted an application for a loan modification in October2010. Over the next 40 months, the Bank made numerous requests for various additionaldocumentation, including requests for documentation that had already been provided,and required the homeowner to complete numerous additional loan modificationapplications to two different loan servicers. At least 24 separate court appearances wereheld during this period, and the Bank repeatedly failed to comply with court directivesrequiring it to turn over certain documentation to the homeowner.
In February 2014, the Bank transmitted a loan modification offer to the homeowner.The homeowner did not accept the offer on the ground that it was unconscionable on itsface and failed to comply with certain federal guidelines. The homeowner made acounteroffer, but the Bank refused to consider it, responding that it would not negotiatethe terms of the loan modification.
The homeowner thereafter moved to impose a sanction upon the Bank for its failureto negotiate in good faith as required by CPLR 3408 (f). The Supreme Court concludedthat the [*2]homeowner demonstrated that the Bankfailed to negotiate in good faith and imposed a sanction. The court abated all interest,disbursements, costs, and attorney's fees that had accrued during the period betweenOctober 1, 2010, and August 12, 2014, the date of the order. The court further directedthat the Bank was permanently barred from collecting any interest, disbursements, costs,or attorney's fees in the future absent a further court order. We modify.
Pursuant to CPLR 3408 (f), the parties at a mandatory foreclosure settlementconference are required to negotiate in good faith to reach a mutually agreeableresolution (see CPLR 3408 [f]; U.S. Bank N.A. v Smith, 123 AD3d 914, 916 [2014])." 'The purpose of the good faith requirement [in CPLR 3408] is to ensure thatboth plaintiff and defendant are prepared to participate in a meaningful effort at thesettlement conference to reach resolution' " (US Bank N.A. v Sarmiento, 121 AD3d 187, 200 [2014],quoting Governor's Program Bill Mem No. 46R, Bill Jacket, L 2009, ch 507 at 11). Toconclude that a party failed to negotiate in good faith pursuant to CPLR 3408 (f), a courtmust determine that "the totality of the circumstances demonstrates that the party'sconduct did not constitute a meaningful effort at reaching a resolution" (US BankN.A. v Sarmiento, 121 AD3d at 203; see U.S. Bank N.A. v Smith, 123 AD3dat 916).
Here, contrary to the Bank's contention, the totality of the circumstances support theSupreme Court's conclusion that it failed to negotiate in good faith. The homeowner'ssubmissions demonstrated that the Bank, among other things, engaged in dilatoryconduct by "making piecemeal document requests, providing contradictory information,and repeatedly requesting documents which had already been provided" (Onewest Bank, FSB v Colace,130 AD3d 994, 996 [2015]; see US Bank N.A. v Sarmiento, 121 AD3d at204). The Bank failed to offer any evidence in opposition to the homeowner's motion anddid not controvert the homeowner's account of the mandatory settlement negotiations.Accordingly, under the circumstances, the Supreme Court properly concluded that theBank violated CPLR 3408 (f) by failing to negotiate in good faith (see U.S. BankN.A. v Smith, 123 AD3d at 916; US Bank N.A. v Williams, 121 AD3d 1098, 1102 [2014];US Bank N.A. v Sarmiento, 121 AD3d at 204-205; see also Onewest Bank, FSB vColace, 130 AD3d 994, 996 [2015]).
The Bank further contends that the Supreme Court erred in imposing the sanction."Courts are authorized to impose sanctions for violations of CPLR 3408 (f)" (U.S.Bank N.A. v Smith, 123 AD3d at 917; see Bank of Am., N.A. v Lucido, 114 AD3d 714, 715[2014]). However, "CPLR 3408 (f) does not set forth any specific remedy for a party'sfailure to negotiate in good faith" (Wells Fargo Bank, N.A. v Meyers, 108 AD3d 9, 19[2013]). "In the absence of specific guidance . . . as to the appropriatesanctions or remedies to be employed where a party is found to have violated itsobligation to negotiate in good faith pursuant to CPLR 3408 (f), the courts have resortedto a variety of alternatives in an effort to enforce the statutory mandate to negotiate ingood faith" (Wells Fargo Bank,N.A. v Meyers, 108 AD3d 9, 20 [2013]; see U.S. Bank N.A. v Smith,123 AD3d at 917).
Here, the Supreme Court providently exercised its discretion in imposing a sanctionthat abated all interest, disbursements, costs, and attorney's fees that had accrued duringthe period between October 1, 2010, and August 12, 2014, the date of the order, sincethat period corresponds to the period during which the Supreme Court concluded that theBank had failed to negotiate in good faith (see U.S. Bank N.A. v Smith, 123AD3d at 917; US Bank N.A. v Williams, 121 AD3d at 1102). However, theSupreme Court improvidently exercised its discretion to the extent that it imposed asanction permanently barring the Bank from collecting any interest, disbursements, costs,or attorney's fees in the future absent further court order (see US Bank N.A. vWilliams, 121 AD3d at 1102-1103). Accordingly, we modify the order appealedfrom by deleting the provision permanently barring the Bank from collecting any interest,disbursements, costs, or attorney's fees in the future absent further court order. Eng, P.J.,Mastro, Cohen and Miller, JJ., concur. [Prior Case History: 45 Misc 3d537.]