Decided on March 23, 2015
Supreme Court, Kings County
Chase Home Finance LLC, Plaintiff,
Martin Silver A/K/A MARTIN SILBERSTEIN, ESTER SILBERSTEIN A/K/A ESTHER SILVER, REBECCA STERN, ABRAHAM STERN, MANUFACTURERS & TRADERS TRUST COMPANY, TAUB & SHOWMAN LLP, CITY OF NEW YORK ENVIRONMENTAL CONTROL BOARD AND CITY OF NEW YORK DEPARTMENT OF TRANSPORTATION PARKING VIOLATIONS BUREAU, and “JOHN DOE No.1” through “JOHN DOE #7”, the last seven names being fictitious and unknown to plaintiff, the person or parties intended being the persons or parties, if any, having or claiming an interest in or lien upon the mortgaged premises described in the complaint, Defendants.
Atty for Plaintiff
Marianna Dalton, Esq.
187 East Main Street
Huntington, NY 11743
Atty for Defendants
Stephen C. Silverberg, PLLC
626 RXR Plaza
Uniondale, NY 11556-0626 (516) 522-2575
Francois A. Rivera, J.
Recitation in accordance with CPLR 2219 (a) of the papers considered on the notice of motion of plaintiff Chase Home Finance LLC (hereinafter CHF or plaintiff), filed on September 9, 2013 under motion sequence number two, for an order: (1) striking the joint verified answer of defendants Martin Silver, Esther Silver and Rebecca Stern [FN1] (hereinafter the answering defendants) and then granting summary judgment in favor of CHF as against the answering defendants pursuant to CPLR 3212; (2) granting a default judgment against the remaining defendants pursuant to CPLR 3215; (3) appointing a referee to compute pursuant to RPAPL 1321; (4) substituting Ms. Silver [FN2] in place of “John Doe and Jane Doe # 1 through #7; and (5) substituting JPMorgan Chase Bank National Association (hereinafter JPMC) instead of CHF as plaintiff.
Notice of Motion
Affirmation in support
Affidavit of Merit
Proposed order of reference
Affirmation in compliance with Administrative Order 431/11
– Proposed order of reference
Two stipulations to adjourn the motion
Affirmation in opposition
Notice of rejection of affirmation in opposition
On November 2, 2009, CHF commenced the instant residential mortgage foreclosure action by filing a summons, complaint and a notice of pendency with the Kings County Clerk’s office.
The complaint alleges in pertinent part, that on February 15, 2001, defendant Martin Silver (hereinafter “the mortgagor”) executed and delivered to Flagstar Bank, FSB (hereinafter Flagstar) a note in its favor in the principal sum of $275,000.00 (hereinafter the note). On that same date, he also executed and delivered to Flagstar a mortgage on certain real property known as 1068 East 2nd Street, Brooklyn, New York Block 6514 Lot 36 (hereinafter the subject property) to secure the note. On March 14, 2001, the mortgage was duly recorded in the Kings [*2]County City Register’s office (hereinafter KCR). On November 28, 2001, Flagstar assigned the note and mortgage to Federal National Mortgage Association (hereinafter FNMA). On February 25, 2002, Flagstar’s assignment of the mortgage to FNMA was recorded with the KCR. On August 23, 2003, Chase Manhattan Mortgage Corporation, as attorney in fact for FNMA assigned the mortgage to JPMC. On April 19, 2004, FNMA’s assignment to JPMC was recorded with the KCR.
On November 25, 2003, the mortgagor executed and delivered to JPMorgan Chase a second note (hereinafter the second note) in the principle sum of $7,396.24. On that same date, he also executed and delivered to JPMorgan Chase a second mortgage (hereinafter the second mortgage) to secure the second note. On April 19, 2004, the second mortgage was duly recorded in the KCR.
On November 25, 2003, the note, mortgage, second note and second mortgage were consolidated to from a single lien in the amount of $275,000.00 pursuant to a consolidation, extension and modification agreement (hereinafter CEMA). On April 19, 2004, the CEMA was recorded with the KCR. On November 16, 2006, the CEMA was assigned by JPMC to CHF. On December 1, 2006, this CEMA assignment was recorded with the KCR.
CHF alleges that the mortgagor failed to make payments when due and defaulted on the CEMA. Thereafter, CHF accelerated the note and commenced the instant action based on the mortgagor’s default. CHF further alleges that the answering defendants are the only parties who answered the complaint and who have opposed the instant motion.
By a joint verified answer dated January 21, 2010, the answering defendants have joined issue. Their answer pleads thirteen affirmative defenses, including a claim that the plaintiffs lacks standing.
LAW AND APPLICATION
Application to Reject Opposition Papers
As a preliminary matter, CHF returned the answering defendants opposition papers with a cover letter denominated as a Notice of Rejection. The cover letter stated that the time to submit opposition papers was January 10, 2014, and that CHF was rejecting the papers as untimely. At oral argument of the instant motion, CHF requested that the court reject the answering defendants’ opposition papers on that basis.
Contrary to the requirements of CPLR 2214, CHF did not set forth the legal or factual basis for its conclusion that the opposition papers were untimely served. It is noted that the complete set of submitted motion papers included two stipulations between CHF and the answering defendants adjourning the return date of the motion from November 1, 2013 to December 6, 2013 and from December 6, 2013 to January 10, 2014.Assuming, for the sake of argument, that CHF correctly determined that January 10, 2014 was the deadline for the answering defendants to serve it with opposition papers, the answering defendants’ affidavit of service of its opposition papers establishes that the papers were indeed served on CHF’s counsel on that date. CPLR 2103 governs the service of papers in a pending action including the service of motion papers and provides in pertinent part that service is deemed complete upon mailing (see CPLR 2103 (b) (2); see also Unigard Ins. Group v State, 286 AD2d 58 [2nd Dept 2001]). Therefore, CHF has not shown that the opposition papers were served late.
Furthermore, the court has the discretion to consider late opposition papers, provided it [*3]affords the movant time to submit reply papers (Kavakis v Total care Systems, 209 AD2d 480 [2nd Dept 1994]). CHF did not ask for time to submit a reply and certainly did not and could not show that it would suffer any prejudice by the court’s acceptance of allegedly late opposition papers (Prato v Arzt, 79 AD3d 622 [1st Dept 2010] citing Dinnocenzo v Jordache Enters., 213 AD2d 219 [1st Dept 1995]). Accordingly, the Court will consider the answering defendant’s opposition papers.
Motion to Substitute John Doe and Jane Doe defendants
CHF seeks an order substituting Ms. Silver for John Doe and Jane Doe #1 through #7. This application is supported by an affirmation of CHF’s counsel attesting to the fact that Ms. Silver was served with process and no other John Doe or Jane Doe defendants are necessary to the action. Inasmuch, as there is no opposition to this branch, CHF’s motion, and there is no prejudice to any party, the request is granted.
Motion for accelerated judgments and appointment of a referee
CHF also seeks an order: granting summary judgment as against the answering defendants; striking their answer; granting a default judgment against all other defendants and appointing a referee. In residential mortgage foreclosure actions, a plaintiff seeking summary judgment establishes its prima facie entitlement to judgment as a matter of law by producing the mortgage and the unpaid note, and evidence of the default (Midfirst Bank v Agho, 121 AD3d 343 [2nd Dept 2014]).
RPAPL 1321 provides in pertinent part as follows:
If the defendant fails to answer within the time allowed or the right of the plaintiff is admitted by the answer, upon motion of the plaintiff, the court shall ascertain and determine the amount due, or direct a referee to compute the amount due to the plaintiff and to such of the defendants as are prior incumbrancers of the mortgaged premises, and to examine and report whether the mortgaged premises can be sold in parcels and, if the whole amount secured by the mortgage has not become due, to report the amount thereafter to become due.
When seeking an order of reference to determine the amount that is due on an encumbered property, a plaintiff must show its entitlement to a judgment. That entitlement may be shown by demonstrating defendant’s default in answering the complaint, or by the plaintiff showing entitlement to summary judgment or by showing that the defendant’s answer admits plaintiff’s right to a judgment (see RPAPL 1321; 1—2 Bruce J. Bergman, Bergman on New York Mortgage Foreclosures, § 2.01[k] [note: online edition]).
On a motion for leave to enter a default judgment pursuant to CPLR 3215, the movant is required to submit proof of service of the summons and complaint, proof of the facts constituting the claim, and proof of the defaulting party’s default in answering or appearing (U.S. Bank Nat. Ass’n v Poku, 118 AD3d 980 [2nd Dept 2014] citing CPLR 3215[f]; U.S. Bank, N.A. v Razon, 115 AD3d 739 [2nd Dept 2014]).
Mandatory Pre-Commencement Notices in Foreclosure Actions
As a preliminary matter the Court reviews plaintiff’s compliance with the mandatory pre-commencement notices prior to reviewing the requirements for an accelerated judgment or for the appointment of a referee. In this matter, CHF’s motion papers reveals deficiencies in the [*4]pre-commencement notice requirements of RPAPL 1303 and 1304 as set forth below.
RPAPL 1303 was enacted in July 2006, as part of the Home Equity Theft Prevention Act (hereinafter HETPA) (see First Natl. Bank of Chicago v Silver, 73 AD3d 162 [2nd Dept 2010]; Senate Introducer Mem. in Support, Bill Jacket, L. 2006, ch. 308, at 7—8; Board of Directors of House Beautiful at Woodbury Homeowners Ass’n, Inc. v Godt, 96 AD3d 983 [2nd Dept 2012]). As relevant here, that section provides that “[t]he foreclosing party in a mortgage foreclosure action, involving residential real property shall provide notice to … any mortgagor if the action relates to an owner-occupied one-to-four family dwelling” (RPAPL 1303  [a]) (Id.). The statute “requires the foreclosing party in a residential mortgage foreclosure action to deliver statutory-specific notice to the homeowner, together with the summons and complaint” (First Natl. Bank of Chicago v Silver, 73 AD3d at 165). “[T]he foreclosing party has the burden of showing compliance therewith and, if it fails to demonstrate such compliance, the foreclosure action will be dismissed” (Id. at 166).
The statutorily required language of the notice is set forth in RPAPL 1303 (3), which became effective February 1, 2007. The appearance and procedural details of the notice are set forth in RPAPL 1303 (2), which also became effective February 1, 2007 and which states:
The notice required by this section shall be delivered with the summons and complaint to commence a foreclosure action. The notice required by this section shall be in bold, fourteen-point type and shall be printed on colored paper that is other than the color of the summons and complaint, and the title of the notice shall be in bold, twenty-point type. The notice shall be on its own page.
CHF’s summons and complaint and notice of pendency were filed with the Kings County Clerk’s office on November 2, 2009, after the effective date of RPAPL 1303, thereby requiring compliance with the notice provisions set forth in the statute (WMC Mortg. Corp. v Thompson, 24 Misc 3d 738 [NY Sup Ct Kings Co. 2009]). Given the explicit statutory requirements regarding the content, type size and paper color of the notice, the plaintiff must submit proper evidentiary proof to establish full compliance with the substantive and procedural requirements of RPAPL 1303.
CPLR 2214 (c) requires the moving party to furnish to the court all other papers not already in the possession of the court necessary to the consideration of the questions involved. Here the plaintiff has annexed affidavits of service attesting to service of the summons, complaint and RPAPL 1303 notice on the defendants. However, plaintiff did not annex a copy of the RPAPL 1303 notice that was purportedly sent to the defendants. Accordingly, the plaintiff did not provide a sufficient basis upon which the court may conclude as a matter of law that the plaintiff has complied with the statute (Countrywide Loans v Taylor, 17 Misc 3d 595 [NY Sup. Ct. Suffolk Co. 2007]).
RPAPL 1304 provides that, “at least ninety days before a lender, an assignee or a mortgage loan servicer commences legal action against the borrower, including mortgage foreclosure, such lender, assignee or mortgage loan servicer shall give notice to the borrower in at least fourteen-point type” (RPAPL 1304 ; Deutsche Bank Nat. Trust Co. v Spanos, 102 AD3d 909, 910 [2nd Dept 2013]). RPAPL 1304 sets forth the requirements for the content of such notice (see RPAPL 1304 ), and further provides that such notice must be sent by [*5]registered or certified mail, and also by first-class mail, to the last known address of the borrower (RPAPL 1304 ; Deutsche Bank Nat. Trust Co. v Spanos, 102 AD3d 909, 910 [2nd Dept 2013]).
“[P]roper service of RPAPL 1304 notice on the borrower or borrowers is a condition precedent to the commencement of a foreclosure action, and the plaintiff has the burden of establishing satisfaction of this condition” (Deutsche Bank Nat. Trust Co. v Spanos, 102 AD3d 909, 910 [2nd Dept 2013] citing, Aurora Loan Servs., LLC, 85 AD3d at 106). If the foreclosing party fails to establish that the statutory notices were satisfied the foreclosure action will be dismissed (First Nat. Bank of Chicago, 73 AD3d 162 [2nd Dept. 2010]). Furthermore, failure to comply with the notice requirements are not required to be plead as affirmative defenses in an answer (Id).
“Such notice shall be sent by the lender, assignee or mortgage loan servicer in a separate envelope from any other mailing or notice. Notice is considered given as of the date it is mailed. RPAPL 1304 (2) specifically requires that the notice shall contain a list of at least five housing counseling agencies as designated by the division of housing and community renewal, that serve the region where the borrower resides.
The only document which addressed service of the RPAPL 1304 notice was the affirmation of CHF’s counsel. CHF’s counsel stated in paragraph fifteen of her affirmation that the requisite RPAPL 1304 pre-foreclosure notice was sent to the mortgagor on September 25, 2008 and that a copy of the notice is annexed as exhibit G to the motion. Exhibit G contained a cover letter addressed to Martin Silver at the subject property followed by a document containing some of the language required by RPAPL 1304. The exhibit, however. does not include a list of housing counseling agencies.
Consequently, the notices sent by the plaintiff were not in compliance with the strict statutory requirements of RPAPL 1304.
Since the plaintiff has failed to establish compliance with the notice requirements of RPAPL 1303 and 1304, its application for summary judgment, a default judgment and an order of reference must be denied (First Nat. Bank of Chicago, 73 AD3d 162 [2nd Dept 2010]; see also Countrywide Loans v Taylor, 17 Misc 3d 595 [NY Sup. Ct. Suffolk Co. 2007]).
Motion to substitute the plaintiff
CPLR 1018 provides that upon any transfer of interest, the action may be continued by or against the original parties unless the court directs the person to whom the interest is transferred to be substituted or joined in the action.
“CPLR 1018 addresses the situation in which a party transfers its interest in the subject matter of the action to another person while the action is pending, as, for example, by assignment of the claim (see NY Gen. Oblig. Law § 13—101) or conveyance of the relevant property. CPLR 1018 authorizes continuation of the action by or against the original party—the assignor/transferor—without the need for substitution of the assignee/transferee” (Alexander, Practice Commentaries, McKinney’s Cons Laws of NY, Book 7B, CPLR 1018).
CHF seeks an order substituting JPMC as plaintiff and had submitted numerous annexed assignments and an affidavit of Kristina Mitkvski (hereinafter Mitkviski) in support of this branch of the motion. Mitkviski, described herself as the Vice-president of JPMC and the servicer of CHF. The motion papers, however, do not contain any documents demonstrating that [*6]JPMC has authority to speak or act on behalf of CHF.
In the interest of judicial economy, the Court did not continue to review CHF’s motion papers for problems after discovering the above mentioned issues. In the event that CHF seeks the same relief in a subsequent motion, it is directed to annex the instant decision and order with its motion papers.
That branch of CHF’s motion which seeks an order striking the answer of the answering defendants and granting summary judgment in its favor as against them is denied without prejudice.
That branch of CHF’s motion which seeks an order granting a default judgment against all other defendants is denied without prejudice.
That branch of CHF’s motion which seeks an order appointing a referee to compute is denied without prejudice.
That branch of CHF’s motion which seeks to amend the caption by substituting Ms. Silver as defendant instead of John Doe and Jane Doe defendants #1 through #7 is granted.
That branch of CHF’s motion seeking an order substituting JPMC as plaintiff is denied without prejudice.
The foregoing constitutes the decision and order of the court.
Footnote 1:The court has arbitrarily chosen to use one name when referring to defendants Martin Silver, Esther Silver and Rebecca Stern, although each of them is known by other names.
Footnote 2:The affidavits of service of the commencement papers annexed as exhibit J to CHF’s motion papers makes clear that Ms. Silver and answering defendant Esther Silver are different individuals.