Opinion
INDEX 30057-2013
11-27-2019
FEDERAL NATIONAL MORTGAGE ASSOCIATION, Plaintiff, v. JENNIFER HOLLIEN; STEVEN KOSIN and JASON HOLLIEN, Defendants. Motion Sequence No. 005: MotD
SHAPIRO, DICARO & BARAK, LLC Attorneys for Plaintiff ABRAMS FENSTERMAN Attorneys for Defendants JENNIFER HOLLIEN and STEVEN KOSIN JASON HOLLIEN, Defendant Pro Se
Unpublished Opinion
Motion Date: 11-8-2018
Adjourned Date: 12-13-2018
SHAPIRO, DICARO & BARAK, LLC Attorneys for Plaintiff
ABRAMS FENSTERMAN Attorneys for Defendants JENNIFER HOLLIEN and STEVEN KOSIN
JASON HOLLIEN, Defendant Pro Se
PRESENT: HON. C. RANDALL HINRICHS Justice
C. RANDALL HINRICHS, J.S.C.
Upon consideration of the notice of motion by the plaintiff Federal National Mortgage Association ["the plaintiff"], for an order confining and ratifying the report of the referee and for a judgment of foreclosure and sale, the supporting affirmation, affidavit, and exhibits; the affirmation, affidavits, and exhibits in opposition to the motion on behalf of defendants Jennifer Hollien and Steven Kosin [ collectively "the defendants"], and the plaintiff's reply affirmation and supporting exhibits; it is
ORDERED that the plaintiff's motion for a judgment of foreclosure and sale is held in abeyance in accordance herewith; and it is further
ORDERED that the parties shall appear for a conference to schedule a hearing on the issue of the amount due the plaintiff on January 15, 2020 at 9:30 a.m. at IAS Part 49, Arthur M. Cromarty Court Complex, Fourth Floor, Courtroom 16, 210 Center Drive, Riverhead, New York; and it is further
ORDERED that at least twenty days prior to the hearing, the parties shall exchange any documents including but not limited to business records, loan/payment histories, invoices, and/or receipts that the party intends to introduce at the hearing; and it is further
ORDERED that defense counsel shall serve a copy of this order with written notice of its entry upon plaintiffs counsel and any party entitled to notice within twenty days of entry by first class mail.
By order dated March 15, 2017, the plaintiff's motion for summary judgment, an order of reference and related relief was granted to the extent of striking the affirmative defenses in the defendants' answer alleging a lack of standing and the plaintiff's motion was otherwise denied, without prejudice and with leave to renew. There, the Court concluded that the submission of the affidavit of merit failed to demonstrate the admissibility of the records relied on to prove the defendants' default under the terms of the note and mortgage and the plaintiff's strict compliance with statutory and contractual notice requirements. The same order granted the defendants' cross motion to the extent of allowing discovery on the limited issue of the plaintiff's compliance with RPAPL 1304 and 1306 and otherwise denied the defendants' cross motion for summary judgment dismissing the complaint.
By order dated December 5, 2017 ["the December' 17 order"], the Court granted the renewal of the plaintiffs motion for an order granting summary judgment, striking the defendants' answer and dismissing the remaining affirmative defenses and counterclaim, fixing the default of the non-answering defendant, appointing a referee to compute and examine and report whether the subject premises should be sold in one parcel or multiple parcels, and amending the caption. Plaintiffs renewal motion was based on, among others, the affidavit of Nathan Abeln, Document Management Specialist of Seterus, Inc. dated May 25, 2017 ["the Abeln affidavit"], The Abeln affidavit attached a copy of defendants' payment history with Seterus dating back to June of 2010, prior to the defendants* default The same order concluded that a second affidavit from Abeln dated June 28, 2017, detailing the standard business practices and procedures for mailing statutory notices in addition to other documentary evidence of mailing raised the presumption that the 90-day notice was received. On renewal of summary judgment, the plaintiff also proffered an affidavit from Aneetra Harris, foreclosure specialist of Seterus, Inc. dated January 16, 2018 ["the Harris affidavit''], According to the Harris affidavit, the loan was due for the January 1, 2013 installment and all subsequent installments; the amount due as of January 15, 2018 was $290,440.54. The December '2017 order denied the defendants; cross motion to renew their prior motion seeking dismissal as defendants foiled to bring forth any new facts or change in the law that would change the prior determination, In making his report, the referee relied on the Harris affidavit to establish the amount due as of January 15, 2018, Notably, on the motion to confirm and ratify the referee's report, no business records were annexed to the Harris affidavit. Although the parties make reference to "Objections" that were apparently filed by the defendants to the referee's report, a copy of the Objections was not included in the motion papers.
In opposing the motion to confirm and ratify the referee's report, the defendants make a number of arguments. First, the defendants argue that since the referee who issued his report dated September 22, 2018, has been discharged, the referee's sworn report is invalid. Second, the defendants argue that the plaintiff failed to demonstrate the admissibility of the records relied upon by Harris under the business records exception to the hearsay rule (see CPLR 4518 [a]), and, thus, failed to establish the defendants' default in payment under the note, citing HSBC Mortg. Servs., Inc. v. Royal, 142 A.D.3d 952, 954, 37 N.Y.S.3d 321, 323 [2d Dept 2016]). According to the defendants, Harris, an employee of the plaintiffs loan servicer, didn't allege that she was personally familiar with the plaintiffs record keeping practices and procedures, The defendants also maintain that the Harris affidavit was insufficient to demonstrate compliance with statutory and contractual notice requirements including RPAPL1304, Third, the defendants argue that the claims for tax and insurance advances are disputed and that the defendants were entitled to a hearing pursuant to CPLR 4313. Finally, the defendants argue that the Court should exercise its equitable discretion and toll interest on the debt due to the plaintiffs undue delay in prosecuting this foreclosure action which was commenced on November 12, 2013.
The original referee was released and discharged from all further obligations due to his election as a Judge of the Second District Court-Town of Babylon.
At the heart of the motion is the sufficiency of the Harris affidavit upon which the referee relied in making his report. The defendants are correct that the Harris affidavit, standing alone, was not a sufficient basis for the referee's calculation- but not for the reason proffered by the defendants. The defendants argue that the Harris affidavit, offered by an employee of the loan servicer, did not allege that the affiant was personally familiar with the plaintiffs record keeping practices and procedures, relying on HSBC Mortg. Servs., Inc. v. Royal {HSBC Mortg. Servs., Inc. v. Royal, 142 A.D.3d 952, 954, 37 N.Y.S.3d 321, 323 [2d Dept 2016]), This argument misconstrues the import of Royal which requires that a proper foundation for the admission of a business record must be provided by someone with personal knowledge of the maker's business practices and procedures. There is no requirement that a plaintiff in a foreclosure action rely on any particular set of business records to establish a prima facie case, so long as the plaintiff satisfies the admissibility requirements of CPLR 4518(a), and the records themselves actually evince the facts for which they are relied upon (Citigroup v. Kopelowitz, 147 A.D.3d 1014, 1015, 48 N.Y.S.3d 223, 224-25 [2d Dept 2017], citing North Am Sav. Bank, FSB v. Esposito-Como, 141 A.D.3d 706, 35 N.Y.S.3d 491 [2d Dept 2016]). Thus, if the loan servicer's business records establish the mortgagor's default, as distinguished from the plaintiffs business records, and the affiant is familiar with the creation and maintenance of the loan servicer's records, then the loan servicer can lay the foundation for the admission of the loan service's records to establish the underlying loan default (see e.g.s Wells Fargo Bank Nat'l Ass'n v. Johnson, 172 A.D.3d 1278, 1280, 98 N.Y.S.3d 903, 904 [2d Dept 2019]; Wells Fargo Bank, NA v. Thomas, 150 A.D.3d 1312, 1313, 52 N.Y.S.3d 894, 895 [2d Dept 2017]; Pennymac Holdings, LLC v. Tomanelli, 139 A.D.3d 688, 32 N.Y.S.3d 181 [2d Dept 2016]).
That said, while Harris's affidavit was sufficient to establish a proper foundation for the admission of the loan servicer's business records pursuant to CPLR 4518(a) (see People v. Kennedy, 68 N.Y.2d 569, 579, 510 N.Y.S.2d 853, 503 N.E.2d 501 [1986]), the plaintiff failed to submit copies of the business records themselves. ''[T]he business record exception to the hearsay rule applies to a 'writing or record' (CPLR 4518[a]), [and] it is the business record itself; not the foundational affidavit, that serves as proof of the matter asserted" (Bank of N. E Mellon k Gordon, 171 A.D.3d 197, 205, 97N.Y.S.3d 286 [2d Dept 2019] [citation omitted]; JPMorgan Chase Bank, Nat;l Ass'n v. Grennan 175 A.D.3d 1513, 1516, 109 N.Y.S.3d 436, 440-41 [2d Dept 2019]).
"The report of a referee should be confirmed whenever the findings are substantially supported by the record, and the referee has clearly defined the issues and resolved matters of credibility" (Flagstar Bank, F.S.B. V Konig, 153 A.D.3d 790, 790-791, 60 N.Y.S.3d 360 [2d Dept 2017]), The referee's findings and recommendations are advisory only and have no binding effect on the court, which remains the ultimate arbiter of the dispute (see Shultis v Woodstock Land Dev, Assoc, 195 A.D.2d 677, 678, 599 N.Y.S.3d 340 [3d Dept 1993]).
Harris's assertions as to the amounts due constituted inadmissible hearsay (see Hypo Holdings, Inc. v. Feuer, 68 A.D.3d 722, 722, 888 N.Y.S.2d 904 [2d Dept 2009]), since the records themselves were not provided to the referee (see Nationstar Mortg' LLC v. Durane-Botivard, 175 A.D.3d 1308, 109 N.Y.S.3d 99 [2d Dtept 2019]; Bank of N.Y. Mellon v. Gordon, 171 A.D.3d 197, 208-209, 97 N.Y.S.3d 286 [2d Dept 2019]; CM mortgage, Inc. v. Kidd, 148 A.D.3d 767, 768-769, 49 N.Y.S.3d 482 [2d Dept 2017]). The omission was not cured by the inclusion of loan records annexed to plaintiff attorney's affirmation submitted in reply for several reasons. First, a moving party can not meet its burden by submitting evidence for the first time in reply (Wells Fargo Bank, NJL v. Lefkowitz, 171 A.D.3d 843, 844, 97 N.Y.S.3d 696, 698 [2d Dept 2019]). Second, the plaintiffs attorney does not allege personal knowledge of the record-keeping practices and procedures of the entity that created these payment records (Bank of New York Mellon v. Gordon, 171 A.D.3d at 210). Finally, although the plaintiff submits these records at the eleventh hour, the referee never had the benefit of the records, Because the referee's report was based on the Harris affidavit, and the Harris affidavit was not accompanied by the business records relied upon by the affiant, so much of the plaintiffs motion for an order confirming and ratifying the report of the referee is denied. A Court-Attorney Referee will be selected by the Court who will hear and report on the issue of the amount due the plaintiff (see CPLR 4311). On the day of the conference, a date will be selected for the hearing. At least twenty days prior to the hearing, the parties shall exchange any documents including but not limited to business records, loan/payment histories, invoices, checks, bank statements, and/or receipts that the party intends to introduce at the hearing. Each party shall also submit a proposed calculation of amount due under the terms of the note and mortgage, clearly showing each of the steps in arriving at the calculation. At the hearing, the Court Attorney Referee may accept documentary proof in the way of affidavits and business records in lieu of live witness testimony so long as there is a proper foundation laid for the introduction of the affidavit/evidence sought to be introduced (see Bank of K K Mellon v. Gordon, supra; see also Nathnstar Mortg', LLC v. Durane-Bolivard, 175 A.D.3d at 1311). The parties may consent to the hearing being conducted by the Court-Attorney Referee on papers without a personal appearance. A Report of Amount Due will be submitted by the Court Attorney-Referee to the Court for confirmation or rejection. A copy of the Court-Attorney-Referee's report will be provided to counsel prior to the entry of a final judgment. At the hearing the parties shall address the issue of whether the subject premises should be sold in one parcel or multiple parcels.
Regarding the defendants' argument that the plaintiff's motion should be denied because the plaintiff failed to comply with statutory and contractual notice requirements, those arguments are either without merit or have already been determined and constitute the law of the case. On the issue of the sufficiency of the proof of mailing of the notices, the defendants argue that the Harris affidavit is insufficient and conclusory. The Court's review of the December '17 order indicates that on summary judgment the mailing proof was introduced through the affidavit of Nathan Abeln dated June 28, 2017, detailing the standard business practices and procedures for mailing statutory notices in addition to other documentary evidence of mailing, not through the Harris affidavit. Although a defense based on noncompliance with RPAPL1304 may be raised at any time during the action (JPMorgan Chase Bank, Nat'l Ass'n v. Akanda, __ AB3d __, 2019 WL 5950777, at *2 [2d Dept, decided Nov. 13, 2019]), the 1304 mailing issue was already raised and decided in the December 17 order. Plaintiff may not raise it again in opposition to plaintiffs application for a judgment of foreclosure.
The defendants• argument that the Court should exercise its equitable discretion and toll interest on the debt due to the plaintiff's undue delay in prosecuting this foreclosure action is not supported by the record. Most of the delay can be attributed to the delay in processing the parties' motions at the height of the foreclosure crisis in Suffolk County, not any particular delay by the plaintiff (compare Bank of New York Mellon v. Graffi, 172 A.D.3d 1148, 1149, 102 N.Y.S.3d 61 [2d Dept 2019]; BAC Home Loans Servicing, L.P. V Jackson, 159A.D.3d 861, 863, 74 N.Y.S.3d 59 [2d Dept 2018]; Greenpoint Mtge. Corp. v Lamberti, 155 A.D.3d 1004, 1005, 66 N.Y.S.3d 32 [2d Dept 2017]; Deutsche Bank Trust Co., Ams. v Stathakis, 90 A.D.3d 983, 984-985, 935 N.Y.S.2d 631[2d Dept 2011]; Dayan v York, 51 A.D.3d 964, 965, 859 N.Y.S.3d 673 [2d Dept 2008]).
The plaintiffs motion for a judgment of foreclosure and sale is held in abeyance pending the hearing and service of the Report of Amount Due.
[ ] Final Disposition [X] Non-Final Disposition