| LNV Corp. v Sofer |
| 2019 NY Slip Op 02860 [171 AD3d 1033] |
| April 17, 2019 |
| Appellate Division, Second Department |
[*1]
| LNV Corporation, Respondent, v Agnetta Sofer,Appellant, et al., Defendants. |
Harvey Sorid, Uniondale, NY, for appellant.
Stein Wiener & Roth, LLP, Carle Place, NY (Mojdeh Malekan of counsel), forrespondent.
In an action to foreclose a consolidated mortgage, the defendant Agnetta Sofer appeals from(1) an order of Supreme Court, Kings County (Noach Dear, J.), dated July 19, 2016, (2) an orderof the same court, also dated July 19, 2016, (3) an order of the same court dated April 28, 2017,and (4) a judgment of foreclosure and sale of the same court, also dated April 28, 2017. The firstorder dated July 19, 2016, inter alia, granted those branches of the plaintiff's motion which werefor summary judgment on the complaint insofar as asserted against the defendant Agnetta Sofer,to strike that defendant's answer and affirmative defenses, and to appoint a referee, and deniedthat branch of the cross motion of the defendant Agnetta Sofer which was for summary judgmentdismissing the complaint insofar as asserted against her. The second order dated July 19, 2016,among other things, directed the appointment of a referee. The order dated April 28, 2017, interalia, granted the plaintiff's motion for a judgment of foreclosure and sale. The judgment offoreclosure and sale is in favor of the plaintiff and against the defendant Agnetta Sofer directingthe sale of the subject premises.
Ordered that the appeals from the two orders dated July 19, 2016, and the order dated April28, 2017, are dismissed, without costs or disbursements; and it is further,
Ordered that the judgment of foreclosure and sale is reversed, on the law, without costs ordisbursements, the plaintiff's motion for a judgment of foreclosure and sale is denied, thosebranches of the plaintiff's motion which were for summary judgment on the complaint insofar asasserted against the defendant Agnetta Sofer, to appoint a referee, and to strike that defendant'sanswer and affirmative defenses, except for the first, fifth, and sixth affirmative defenses, aredenied, the two orders dated July 19, 2016, and the order dated April 28, 2017, are modifiedaccordingly, and the answer of the defendant Agnetta Sofer is reinstated except for the first, fifth,and sixth affirmative defenses.
The appeals from the two orders dated July 19, 2016, and the order dated April 28, 2017,must be dismissed because the right of direct appeal therefrom terminated with the entry of thejudgment of foreclosure and sale in the action (see Matter of Aho, 39 NY2d 241, 248[1976]). The issues raised on the appeals from the orders are brought up for review and havebeen considered on the appeal from the judgment of foreclosure and sale (see CPLR 5501[a] [1]).
On July 7, 2006, the defendant Agnetta Sofer (hereinafter the defendant) executed apromissory note (hereinafter the first note) in the amount of $641,250 in favor of AmericanHome Mortgage (hereinafter American). The first note was secured by a mortgage (hereinafterthe first mortgage) in favor of American encumbering real property located in Brooklyn. OnApril 13, 2007, the defendant executed a second promissory note (hereinafter the second note) inthe amount of $215,767.88 in favor of American. As security for the second note, the defendantexecuted a second mortgage (hereinafter the second mortgage) in favor of Americanencumbering the same property. On April 13, 2007, the defendant also executed a consolidation,extension, and modification agreement (hereinafter CEMA) which consolidated the first andsecond notes and mortgages into a single consolidated note in the amount of $857,000 in favor ofAmerican secured by a consolidated mortgage in favor of American, encumbering the sameproperty. The defendant and the plaintiff subsequently executed a loan modification agreementdated March 25, 2011, consolidating the CEMA, the consolidated note, and the consolidatedmortgage, and adding an "additional principal amount" of $171,194.09 to the existing amount,creating a "new principal balance" of $1,026,947.44. The defendant thereafter allegedly defaultedby failing to make the monthly installment payments due August 1, 2012, and thereafter.
In August 2014, the plaintiff commenced this action to foreclose the consolidated mortgage.The defendant interposed an answer in which she asserted, inter alia, several affirmativedefenses, including that the plaintiff lacked standing, and that the plaintiff failed to comply withRPAPL 1303 and 1304, and with the notice of default provision in paragraph 22 of theconsolidated mortgage.
Thereafter, the plaintiff moved, inter alia, for summary judgment on the complaint insofar asasserted against the defendant, to strike her answer and affirmative defenses, and to appoint areferee. The defendant cross-moved, inter alia, for summary judgment dismissing the complaintinsofar as asserted against her. In two orders, both dated July 19, 2016, the Supreme Courtgranted the plaintiff's motion, denied the defendant's cross motion, and appointed a referee tocompute the amount due and owing the plaintiff. In an order dated April 28, 2017, the court, interalia, granted the plaintiff's motion for a judgment of foreclosure and sale, and on the same day, ajudgment of foreclosure and sale directed the sale of the subject premises. The defendant appealsfrom the orders and the judgment of foreclosure and sale.
"Generally, in moving for summary judgment in an action to foreclose a mortgage, a plaintiffestablishes its prima facie case through the production of the mortgage, the unpaid note, andevidence of default" (U.S. Bank N.A. vSabloff, 153 AD3d 879, 880 [2017] [internal quotation marks omitted]). However,where, as here, the plaintiff's standing has been placed in issue by a defendant, "the plaintiff mustprove its standing as part of its prima facie showing" (U.S. Bank N.A. v Henry, 157 AD3d 839, 840 [2018]; see Bank of N.Y. Mellon v Lopes, 158AD3d 662, 663 [2018]). "In a mortgage foreclosure action, a plaintiff has standing where itis the holder or assignee of the underlying note at the time the action is commenced" (Arch Bay Holdings, LLC v Albanese,146 AD3d 849, 851-852 [2017]). "Either a written assignment of the underlying note or thephysical delivery of the note . . . is sufficient to transfer the obligation, and themortgage passes with the debt as an inseparable incident" (U.S. Bank N.A. v Henry, 157AD3d at 840-841 [internal quotation marks omitted]; see Bank of N.Y. Mellon v Alli, 156 AD3d 597, 598 [2017]).
Here, the plaintiff established through the affidavit of Julia E. Green, vice-president ofCLMG Corp., the document custodian for the plaintiff, that it had standing by demonstrating thatit obtained physical possession of the original consolidated note on February 27, 2009, and wasin possession of the consolidated note at the time of the commencement of the action (see Wells Fargo Bank, N.A. v Inigo,164 AD3d 545, 546 [2018]). In opposition, the defendant failed to raise a triable issue offact. Moreover, on her cross motion, the defendant failed to establish her prima facie entitlementto judgment as a matter of law dismissing the complaint insofar as asserted against her based onthe plaintiff's lack of standing, as the defendant failed to provide evidence that the plaintiff wasnot in possession of the consolidated note at the time of the commencement of the action (see generally Deutsche Bank Natl. TrustCo. v Homar, 163 AD3d 522, 523 [2018]).
Contrary to the defendant's contention, the Supreme Court providently exercised itsdiscretion in considering Green's affidavit, which was submitted with the plaintiff's papers inopposition to the defendant's cross motion and in further support of its motion (see Central Mtge. Co. v Jahnsen, 150AD3d 661, 664 [2017]). While "[a] party moving for summary judgment generally cannotmeet its prima facie burden by submitting evidence for the first time in reply . . . ,there are exceptions to the general rule, including . . . when the other party is givenan opportunity to respond to the reply papers" (id. at 664). Here, the defendant had anopportunity to respond to Green's affidavit in her reply papers in further support of her crossmotion.
Further, contrary to the defendant's contention, the plaintiff established, prima facie, that itprovided notice in compliance with RPAPL 1303 by submitting the process server's affidavit ofservice on the defendant, in which the process server stated that he served the summons andcomplaint, together with a "1303 NOTICE-Help for Homeowners in Foreclosure in boldfourteen-point type and printed on colored paper, and the title to the notice printed intwenty-point type in compliance with RPAPL Sect 1303" (see RPAPL 1303; HSBC Bank USA, N.A. v Ozcan, 154AD3d 822, 827-828 [2017]). The statement in the affidavit of service that the notice was oncolored paper was sufficient to comply with the language in the statute stating that the noticeshall "be printed on colored paper that is other than the color of the summons and complaint"(RPAPL 1303 [2]; see HSBC Bank USA, N.A. v Ozcan, 154 AD3d at 827-828).Moreover, the defendant's bare and unsubstantiated denial of receipt of the RPAPL 1303 notice,without more, was insufficient to rebut the presumption of service created by the process server'saffidavit (see Onewest Bank, N.A. vMahoney, 154 AD3d 770, 772 [2017]). For the same reasons, the defendant failed toestablish her prima facie entitlement to judgment as a matter of law dismissing the complaintinsofar as asserted against her based on the plaintiff's alleged failure to comply with therequirements of RPAPL 1303.
However, we agree with the defendant that the plaintiff failed to establish, prima facie, that itstrictly complied with RPAPL 1304. RPAPL 1304 (1) provides that at least 90 days before alender, an assignee, or a mortgage loan servicer commences an action to foreclose the mortgageon a home loan as defined in RPAPL 1304, such lender, assignee, or mortgage loan servicer mustgive notice to the borrower. RPAPL 1304 (1) sets forth the requirements for the content of suchnotice and RPAPL 1304 (2) further provides that such notice must be sent "by registered orcertified mail and also by first-class mail" to the last known address of the borrower. "[P]roperservice of RPAPL 1304 notice on the borrower or borrowers is a condition precedent to thecommencement of a foreclosure action, and the plaintiff has the burden of establishingsatisfaction of this condition" (U.S.Bank N.A. v Henderson, 163 AD3d 601, 602 [2018] [internal quotation marks omitted];see Wells Fargo Bank, N.A. vLewczuk, 153 AD3d 890, 892 [2017]; Flagstar Bank, FSB v Jambelli, 140 AD3d 829, 830 [2016]).
Here, even considering the affidavit of Victoria Bressner submitted by the plaintiff for thefirst time in opposition to the defendant's cross motion, the plaintiff failed to establish strictcompliance with RPAPL 1304. Bressner did not have personal knowledge of the purportedmailing and did not make the requisite showing that she was familiar with the plaintiff's mailingpractices and procedures to establish "proof of a standard office practice and procedure designedto ensure that items are properly addressed and mailed" (U.S. Bank N.A. v Henderson,163 AD3d at 603 [internal quotation marks omitted]; see Wells Fargo Bank, N.A. vLewczuk, 153 AD3d at 892). Moreover, the record indicates that the notices were not mailedby the plaintiff. The record indicates that the notices were mailed by an entity known as MGCMortgage, Inc. (hereinafter MGC). Bressner does not address this fact at all, let alonedemonstrate that she was familiar with MGC's mailing practices and procedures.
Furthermore, we agree with the defendant that the plaintiff failed to establish that it compliedwith the condition precedent contained in the consolidated mortgage regarding the notice ofdefault. The plaintiff's reliance on the same affidavit that was submitted in connection with theRPAPL 1304 notice, for the reasons previously set forth, failed to establish that the requirednotice was mailed to the defendant by first-class mail or actually delivered to her "notice address"if sent by other means, as required by the consolidated mortgage (see Emigrant Bank v Myers, 147 AD3d1027, 1028 [2017]; GMAC Mtge.,LLC v Bell, 128 AD3d 772, 773 [2015]).
Accordingly, we disagree with the Supreme Court's determination granting those branches ofthe plaintiff's motion which were for summary judgment on the complaint insofar as assertedagainst the defendant, to strike the defendant's answer and affirmative defenses, except for thefirst affirmative defense (failure to comply with RPAPL 1303), and the fifth and sixth affirmativedefenses (lack of standing), and to appoint a referee.
The defendant also failed to establish her prima facie entitlement to judgment as a matter oflaw dismissing the complaint insofar as asserted against her based on the plaintiff's allegedfailure to comply with the requirements of RPAPL 1304, and with the condition precedentcontained in the consolidated mortgage regarding the notice of default. The bare denial of receipt,without more, as set forth in defendant's affidavit attesting that she had not received the RPAPL1304 notice or the notice of default is insufficient to establish prima facie entitlement tojudgment as a matter of law (see Citibank, N.A. v Conti-Scheurer, 172 AD3d17 [2019] [decided herewith]; HSBC Bank USA, N.A. vOzcan, 154 AD3d at 828).
Accordingly, we agree with the Supreme Court's determination to deny that branch of thedefendant's cross motion which was for summary judgment dismissing the complaint insofar asasserted against her. Dillon, J.P., Duffy, Connolly and Christopher, JJ., concur.