Opinion
15304/2009
03-04-2015
Countrywide Home Loans Servicing, L.P., Plaintiff, v. Meri Crespo, GREIS LOPEZ, COUNTRY WIDE BANK, FSB, PEOPLE OF THE STATE OF NEW YORK, UNITED STATES OF AMERICA, IRS, and JOHN DOE, this name beign fictitious and unknown intended to be occupants and others having a lien claim or interest in the mortgaged premises, Defendants.
FRANKEL - LAMBERT Attys. for Plaintff 53 Gibson Street Bay Shore NY. 11706 CABANILLAS & ASSOCS. Attys. for Defendant Crespo 120 Bloomfield Road Suite 400 White Plains, NY 10605
FRANKEL - LAMBERT
Attys. for Plaintff
53 Gibson Street
Bay Shore NY. 11706
CABANILLAS & ASSOCS.
Attys. for Defendant Crespo
120 Bloomfield Road Suite 400
White Plains, NY 10605
Thomas F. Whelan, J.
Upon the following papers numbered 1 to7read on this motion by defendant Crespo to dismiss; Notice of motion and supporting papers 1 - 3; Notice of Cross Motion & Supporting papers; Opposing papers; 4-5: Reply papers6-7; Other; it is,
ORDERED that this motion (#003) by the defendant, Meri Crespo, for an order dismissing this action as abandoned pursuant to CPLR 3215(c) is considered thereunder and denied.
The plaintiff commenced this action to foreclose the lien of a mortgage given by defendants Crespo and Lopez to secure a mortgage note executed by defendant Crespo in favor of a predecessor-in-interest of the plaintiff in January of 2006. In October of 2009, the plaintiff moved for an order appointing a guardian ad litem and military attorney for defendant Lopez and for leave to extend the time to serve him by publication, as defendant Lopez could not be served under CPLR 308 due to an inability to ascertain his whereabouts. Following service, none of the defendants served with process appeared herein by service of answer.
In March of 2010, this court referred the action to the specialized mortgage foreclosure conference part for purposes of scheduling and holding a settlement conference of the type no codified in CPLR 3408. On April 15, 2010, a conference screening was conducted by staff assigned to the specialized part at which defendant Crespo appeared. The conference was then adjourned to June 14, 2010, at which time defendant Crespo appeared herein by counsel. Over the next fifteen months, seven more settlement conferences were conducted in the specialized part. On September 13, 2011, the matter was marked "conference held" without an agreed to resolution.
Following a substitution of the plaintiff's counsel in January of 2012, the plaintiff moved for an order of reference in August of 2013. That application withdrawn in December of 2013 as reflected in the January 8, 2014 order of this court. Following a substitution of counsel for defendant Crepo, this motion was interposed for dismissal of the complaint pursuant to CPLR 3215(c).
The plaintiff opposes the defendant's motion and asserts that following the action's release from the conference part in September of of 2011, the file was placed on a FEMA hold due to possible damage to the premises from Hurricane Irene. For the next thirteen months, the plaintiff's agents were actively soliciting defendant Crespo's participation in loan modification discussions. In December of 2012, a second FEMA hold was placed on the file due to the effects of Hurricane Sandy which hold extended for 180 days unless earlier lifted. The plaintiff's counsel was notified that this second FEMA hold was lifted for the mortgaged premises in February of 2013.
The plaintiff then proceeded to prepare the papers necessary to obtain an order of reference and in August of 2013, interposed a motion for such relief. That application was withdrawn, however, due to the imposition of new federal regulations issued by the Consumer Financial Protection Bureau. Such regulations precluded participating servicers and/or lenders, such as the plaintiff, from proceeding with the foreclosure action while evaluating mitigation alternatives which the plaintiff ascertained might be available to defendant Crespo. From December 11, 2013 through July of 2014, the plaintiff and defendant Crespo were actively engaged in loan modification discussions and the exchange of documentation necessary to secure either a federal "Hamp" loan modification or a modification or other alternative under "HAFA". These negotiations ended in July of 2014, but were renewed in September of 2014 when defendant Crespo submitted a new loan modification application. These talks ended in October of 2014, after which, the plaintiff began to assemble a new application for an order of reference. Prior to the submission of same, the defendant retained her current counsel who interposed this motion and an application for a resolution via a short sale review by the plaintiff.
In reply papers, defense counsel claims that the plaintiff's opposition papers are insufficient to establish that for good cause, this action was not abandoned by the plaintiff. For the reasons set forth below, the court finds otherwise and thus denies this motion for dismissal of the complaint pursuant to CPLR 3215(c).
CPLR 3215(c) requires that a plaintiff commence proceedings for the entry of a default judgment within one year after the default or demonstrate sufficient cause why the complaint should not be dismissed. Where the plaintiff has made an application to the court for the entry of a default judgment within one year of the defendant's default, even if unsuccessful, the court may not later dismiss the complaint as abandoned pursuant to CPLR 3215(c) (see Jones v Fuentes , 103 AD3d 853, 962 NYS2d 263 [2d Dept 2013]; see also Mortgage Elec. Registration Sys ., Inc. v Smith , 111 AD3d 804, 975 NYS2d 121 [ 2d Dept 2013]; Norwest Bank Minnesota , N.A. v Sabloff , 297 AD2d 722, 747 NYS2d 559 [2d Dept 2002]; Brown v Rosedale Nurseries , Inc ., 259 AD2d 256, 686 NYS2d 22 [1st Dept 1999]; Home Sav. of Am ., F.A. v Gkanios , 230 AD2d 770, 646 NYS2d 530 [2d Dept 1996]).
The Appellate Division, Second Department has instructed that in cases where no motion was interposed within the one year time limitation period, avoidance of a dismissal of the complaint as abandoned requires the plaintiff to offer a reasonable excuse for the delay in moving for leave to enter a default judgment and must demonstrate a potentially meritorious cause of action (see Giglio v NTIMP , Inc ., 86 AD3d 301, 308, 926 NYS2d 546 [2d Dept 2011]; see also Kohn v Tri-State Hardwoods , Ltd., 92 AD3d 642, 937 NYS2d 865, 866 [2d Dept 2012]; 115-41 St. Albans Holding Corp. v Estate of Harrison , 71 AD3d 653, 894 NYS2d 896 [2d Dept 2010]; Cynan Sheetmetal Prods ., Inc. v B.R. Fries & Assoc ., Inc ., 83 AD3d 645, 919 NYS2d 873 [2d Dept 2011]; First Nationwide Bank v Pretel , 240 AD3d 629, 659 NYS2d 291 [2d Dept 1997]). In addition, appellate cases authorities have established that a moving defendants' failure to show prejudice by the plaintiff's delay in moving for the default may tip the balance in favor of a finding of sufficient cause to excuse the delay provided an explanation of the delay is advanced which evinces no intent to abandon the action and a meritorious cause of action is shown to exist (see LNV Corporation v Forbes , 122 AD3d 805, 996 N.Y.S.2d 696, [2d Dept 2014]; Brooks v Somerset Surgical Assocs ., 106 AD3d 624, 966 NYS2d 65 [2d Dept 2013]; Laourdakis v Torres , 98 AD3d 892, 950 NYS2d 703 [1st Dept. 2012]; LaValle v Astoria Const. & Paving Corp., 266 AD2d 28, 697 NYS2d 605 [1st Dept 1999]; Hinds v 2461 Realty Corp ., 169 AD2d 629, 632, 564 NYS2d 763 [1st Dept 1991]).
In the mortgage foreclosure arena, delays in the prosecution of cases may fairly be attributable to various legislative enactments and administratively rules which are aimed at resolving foreclosure actions in a manner favorable to mortgagors. These legislative enactments and rules have dramatically slowed the pace of residential mortgage foreclosure actions pending at the time of such enactments or rule were adopted and have caused serious delays in the institution of new actions (see Laws of 2008, Ch. 472 § 3—a as amended by the Laws of 2009 Ch. 507 § 10; CPLR 3408; 22 NYCRR 202.12-a). The seemingly endless imposition of new procedural mandates include the scheduling of a mandatory settlement conference pursuant to CPLR 3408, which was extended by administrative rule to include multiple conferences (see 22 NYCRR 202.12-a[c][6]); the holding of all motions "in abeyance" during the conference process (22 NYCRR 202-12-a(7)); and the merit based vouching requirements that were imposed upon counsel for foreclosing plaintiff in all pending cases by court administrators (see A.O. 548/10, amended by A.O. 431/11; and A.O. 208/13), which are now the subject of CPLR 3012-a for cases commenced after August 30 2013. In addition, many servicers and/or lenders are subject to a host of federal regulations adopted on a temporary basis in 2013 and formally in January of 2014 which prohibit the commencement and/or continued prosecution of claims for foreclosure and sale in cases wherein the borrower may be eligible for a loan modifications of other loss mitigation alternatives under federal programs.
As a consequence of these statutory and regulatory frameworks, motions for orders of reference are often first made after the one year time limitation period imposed by CPLR 3215(c), the purpose of which, is to prevent the prosecution of stale claims (see Giglio v NTIMP , Inc ., 86 AD3d 301, supra). Sufficient cause to justify a belated motion for a default judgment has thus been held to have been demonstrated where such delays were engendered by the action remaining in the specialized mortgage foreclosure conference part for multiple conferences over many months, during which time, motions are held in "abeyance" until the action was released from the conference part (see (see 22 NYCRR 202.12-a[c][6]; 202-12-a(7); Aurora Loan Serv ., LLC v Brescia , Cach , LLC , 2013 WL 5823057, *2 [Sup Ct., Suffolk County, 2013]; Onewest Bank , FSB v Navarro , 41 Misc 3d 1238[A], 2013 WL 6500194 [Sup. Ct., Suffolk County, 2013]; BAC Home Loans Serv ., L.P. v Bordes , 36 Misc 3d 1203[A], 957 NYS2d 263 [Sup. Ct., Queens County, 2012]; BAC Home Loans Serv ., L.P. v Maurer , 36 Misc 3d 1210[A], 957 NYS2d 263 [Sup. Ct., Suffolk County, 2012]; see also Wells Fargo Bank , N.A v Pasciuta , [Sup Ct. Suffolk Cty. Index No 22235/12; delay engendered by inability to comply with vouching requirements]). These holdings find support from appellate case authorities issued in other contexts where the delay is attributable to the parties' engagement in litigation communications, discovery matters and/or settlement talks which negates any intention to abandon and is thus excusable under CPLR 3215(c) (see Brooks v Somerset Surgical Assocs ., 106 AD3d 624, supra; Laourdakis v Torres , 98 AD3d 892, supra). These holdings find support from appellate case authorities issued in other contexts where the delay is attributable to the parties' engagement in litigation communications, discovery matters and/or settlement talks which negates any intention to abandon and is thus excusable under CPLR 3215(c) (see Brooks v Somerset Surgical Assocs ., 106 AD3d 624, supra; Laourdakis v Torres , 98 AD3d 892, supra).
Here, the court finds that the plaintiff has advanced sufficient evidence of a meritorious cause of action for foreclosure and sale. In addition, the court finds that the plaintiff demonstrated a reasonable excuse for the delay in moving for the fixation of the defendants' defaults, namely, an ardent, albeit unsuccessful, five year attempt on the part of the plaintiff to modify the moving defendant's loan or to otherwise secure an alternative that began in March of 2010 when the plaintiff initiated the referral of this action to the specialized mortgage foreclosure conference part. Moreover, the absence of prejudice to the moving defendant tips the balance in favor of the plaintiff. The record reflects that the moving defendant has enjoyed the use of the mortgaged premises since January of 2009 when her default, and that of her missing co-defendant mortgagor, occurred, without making payments of amounts due for principal and interest under note and for taxes and other municipal assessments. Although she was aware that the nature of this action was one to remedy such default, as the moving defendant appeared herein by counsel in June of 2010, she never moved to vacate her default. Instead the moving defendant continued to negotiate a myriad of loan modification agreements which the plaintiff offered under the overlay of constantly evolving obligations imposed by both state and federal statutes and rules, all of which are aimed at assisting the defendant obligor reach an agreement while forestalling the remedy of foreclosure and sale while modification discussions were ongoing. These circumstances, coupled with the plaintiff's filing of successive notices of pendency, warrant a finding of the absence of any intent to abandon this action.
In view of the foregoing, the instant motion (#003) by defendant Crepo to dismiss this action as abandoned pursuant to CPLR 325(c) is denied
Dated: March 4, 2015_______________________________
THOMAS F. WHELAN, J.S.C.