| U.S. Bank N.A. v Ahmed |
| 2016 NY Slip Op 02073 [137 AD3d 1106] |
| March 23, 2016 |
| Appellate Division, Second Department |
[*1]
| U.S. Bank National Association,Appellant, v Khodadad A. Ahmed, Respondent, et al.,Defendants. |
Frenkel Lambert Weiss Weisman & Gordon, LLP, Bay Shore, NY (Joseph F.Battista of counsel), for appellant.
Diaz & Associates, P.A., Long Island City, NY (Eric Malinowski of counsel),for respondent.
In an action to foreclose a mortgage, the plaintiff appeals from an order of theSupreme Court, Kings County (Martin, J.), dated December 19, 2014, which (a) deniedits motion to vacate an order of reference of the same court dated July 10, 2009, and for anew order of reference, (b), sua sponte, directed dismissal of the complaint pursuant toKings County Supreme Court Uniform Civil Term Rules part F, rule 8, and (c) deniedthe cross motion of the defendant Khodadad A. Ahmed to vacate his default inanswering, for leave to serve a late answer, and to dismiss the complaint for lack ofstanding, as academic rather than on the merits.
Ordered that on the Court's own motion, the notice of appeal from so much of theorder as, sua sponte, directed dismissal of the complaint is deemed an application forleave to appeal from that portion of the order, and leave to appeal is granted (seeCPLR 5701 [c]); and it is further,
Ordered that the order is reversed, on the law, the plaintiff's motion to vacate theorder of reference dated July 10, 2009 and for a new order of reference is granted, andthe cross motion of the defendant Khodadad A. Ahmed is denied on the merits; and it isfurther,
Ordered that one bill of costs is awarded to the plaintiff.
The plaintiff commenced this foreclosure action in 2008. The defendant KhodadadA. Ahmed (hereinafter the defendant) did not serve an answer. The Supreme Courtgranted an order of reference on July 10, 2009 upon the defendant's default. Althoughthe plaintiff moved for a judgment of foreclosure and sale on or about May 21, 2010, itwas forced to withdraw that still-pending motion on or about January 12, 2011 in orderto comply with the requirements of the newly implemented Administrative Orders548/10 and 431/11 of the Chief Administrative Judge of the State of New York.Following a series of court-ordered settlement conferences which took place over anextended period of time and which ultimately proved unsuccessful, the plaintiff's newcounsel investigated and verified the underlying business records and moved on or aboutOctober 10, 2013 to vacate the July 10, 2009 order of reference and for a new order ofreference based on [*2]its updated and verified review ofthe records. The defendant cross-moved to vacate his default, for leave to serve a lateanswer asserting, inter alia, the affirmative defense of lack of standing, and to dismiss thecomplaint based on lack of standing.
The Supreme Court denied the plaintiff's motion and, sua sponte, directed dismissalof the complaint pursuant to Kings County Supreme Court Uniform Civil Term Rulespart F, rule 8, on the ground that the plaintiff had failed to move for a judgment offoreclosure and sale within one year of the issuance of the order of reference dated July10, 2009. The court further denied the defendant's cross motion as academic in light ofits sua sponte determination. We reverse.
The Supreme Court erred in denying the plaintiff's motion to vacate the July 10,2009 order of reference and for a new order of reference. The plaintiff demonstrated itsentitlement to this relief by establishing that it was unable to confirm, inter alia, that aproper review of the records had been undertaken by its previous counsel when previouscounsel made the motion for the initial order of reference, as required by AdministrativeOrders 548/10 and 431/11 of the Chief Administrative Judge of the State of New York(see Deutsche Bank Natl. TrustCo. v Meah, 120 AD3d 465, 466 [2014]; U.S. Bank N.A. v Eaddy, 109 AD3d 908, 909 [2013]).Moreover, the plaintiff submitted new documentary proof demonstrating that thedefendant failed to answer the complaint, that an investigation of the relevant recordsestablished that the plaintiff was the holder of the note and mortgage and that thedefendant had defaulted thereon, and that the appointment of a referee to compute theamount owed in a new order of reference would be proper (see HSBC Bank USA, N.A. vAlexander, 124 AD3d 838, 839 [2015]; Bank of N.Y. v Cepeda, 120 AD3d 451, 452 [2014]; HSBC Bank USA, N.A. vTaher, 104 AD3d 815, 816 [2013]).
The Supreme Court further erred in, sua sponte, directing the dismissal of thecomplaint. "A court's power to dismiss a complaint, sua sponte, is to be used sparinglyand only when extraordinary circumstances exist to warrant dismissal" (Onewest Bank, FSB vFernandez, 112 AD3d 681, 682 [2013] [internal quotation marks omitted];see HSBC Bank USA, N.A. v Alexander, 124 AD3d at 839; Deutsche BankNatl. Trust Co. v Meah, 120 AD3d at 466; Bank of N.Y. v Cepeda, 120AD3d at 452-453). No such extraordinary circumstances were present in this case, andthe sua sponte dismissal pursuant to Kings County Supreme Court Uniform Civil TermRule part F, rule 8, without affording the plaintiff any notice and opportunity to be heard,was particularly improper given the evidence that the delay in seeking a judgment offoreclosure and sale had been occasioned by the parties' attendance at a series ofsettlement conferences, the additional investigative work which had to be performed bythe new law firm representing the plaintiff following its acquisition of the case, and theefforts that had to be undertaken to comply with the Administrative Orders of the ChiefAdministrative Judge of the State of New York (see generally Aurora Loan Servs., LLC v Sobanke, 101 AD3d1065, 1066 [2012]).
With regard to the defendant's cross motion, a defendant seeking to vacate a defaultmust establish both a reasonable excuse for the default and the existence of a potentiallymeritorious defense to the action (see Wells Fargo Bank, NA v Besemer, 131 AD3d 1047,1049 [2015]; Wells Fargo Bank,N.A. v Mazzara, 124 AD3d 875, 875 [2015]). The defendant's participation insettlement conferences and loan modification negotiations did not constitute a reasonableexcuse for his default (seeHSBC Bank USA, N.A. v Lafazan, 115 AD3d 647, 648 [2014]; U.S. Bank N.A. v Slavinski, 78AD3d 1167, 1167 [2010]), nor did his claim that, despite the warning languagecontained in the summons, he was unaware of his obligation to serve an answer (see Morgan Stanley Mtge. LoanTrust 2006-17XS v Waldman, 131 AD3d 1140, 1141 [2015]; HSBC BankUSA, N.A. v Lafazan, 115 AD3d at 648; Chase Home Fin., LLC v Minott, 115 AD3d 634, 634-635[2014]). Inasmuch as the defendant failed to demonstrate a reasonable excuse for thedefault, we need not consider whether he offered a potentially meritorious defense to theaction (see Matter of Crai vCrai, 134 AD3d 705, 706 [2015]; Deutsche Bank Natl. Trust Co. v Conway, 99 AD3d 755,755-756 [2012]). Accordingly, the cross motion should be denied on the merits. Mastro,J.P., Chambers, Miller and Hinds-Radix, JJ., concur.