Opinion
3655/2010
05-06-2016
Household Finance Realty Corporation of New York, Plaintiff, v. Mathelyn Claudio-Santiago A/K/A MATHELYN CLAUDIO, ANGEL R. SANTIAGO, JOSE SANTIAGO, Defendants.
Loretta Carty, Esq. McCabe, Weisberg and Conway, P.C. Attorneys for Plaintiff 145 Huguenot Street, Suite 210 New Rochelle, New York 10801 Ira S. Clair, Esq. Clair & Gjertsen Attorneys for Defendants 720 White Plains Road Scarsdale, New York 10583 Margaret A. Nicholson, Esq. Referee Mill Pond Offices 293 Route 100, Suite 205 Somers, NY 10589
Loretta Carty, Esq. McCabe, Weisberg and Conway, P.C. Attorneys for Plaintiff 145 Huguenot Street, Suite 210 New Rochelle, New York 10801 Ira S. Clair, Esq. Clair & Gjertsen Attorneys for Defendants 720 White Plains Road Scarsdale, New York 10583 Margaret A. Nicholson, Esq. Referee Mill Pond Offices 293 Route 100, Suite 205 Somers, NY 10589 Paul I. Marx, J.
The following papers, numbered 1 to 6, were considered in connection with Defendants' motion, brought by Order to Show Cause signed by the Hon. Lewis J. Lubell, JSC on October 8, 2015, seeking an Order "vacating the within judgment, dismissing this action and for such other relief which may be appropriate":
Justice Lubell signed the Order to Show Cause in the absence of Hon. Victor G. Grossman, JSC, to whom the case was then assigned. On January 1, 2016, Justice Grossman was reassigned to another county and the undersigned assumed his caseload, along with all pending motions.
Order to Show Cause/Affidavit of Angel R. Santiago/Affidavit of Mathelyn
Claudio-Santiago a/k/a Mathelyn Caludio [sic]/Affirmation of Ira S. Clair, Esq. and
Exhibits A-M 1-4
Affirmation in Opposition of Loretta Carty, Esq./Exhibits A-T 5
Affirmation in Reply of Ira S. Clair, Esq. 6
Upon the foregoing papers, it is ORDERED that Defendant's motion is disposed as follows: BACKGROUND
On August 27, 2007, Defendants Mathelyn Claudio Santiago and Angel R. Santiago entered into a loan agreement with Plaintiff Household Finance Realty Corporation of New York in the amount of $501,230.37. As security for the loan, Defendants simultaneously executed a mortgage on premises known as 9 Brant Terrace, Garrison, New York. Defendants defaulted on the loan by failing to make monthly payments beginning with their July 1, 2010 payment. In August and September, 2010, Plaintiff sent Defendants notices of default. Defendants failed to cure. Plaintiff elected to accelerate the debt and declared all sums due and owing.
Pursuant to the terms of the promissory note, Plaintiff commenced the instant foreclosure action on December 8, 2010. Defendants were served with the summons and complaint. Proceeding as self-represented, Defendants interposed an answer, asserting a general denial and affirmative defenses claiming that Plaintiff failed to state a cause of action and failed to serve them with two copies of the pre-foreclosure notices required under the RPAPL. Defendants' Verified Answer was signed and verified only by Defendant Mathelyn Claudio-Santiago for herself and Defendant Angel R. Santiago, her husband. Both Defendants participated in proceedings held before the Foreclosure Settlement Conference Part, including submitting an incomplete application for loan modification. Defendants admitted to the referee that they could not satisfy the requirements for modification and the matter was released from the Part.
The records of the Foreclosure Settlement Conference Part indicate that in October 2012, the action was stayed due to bankruptcy. The bankruptcy stay was lifted and Defendants appeared on June 12, 2013.
Plaintiff subsequently moved for summary judgment and appointment of a referee to compute the amount owed. Defendants failed to respond to the motion.
By Order dated September 16, 2013, the Court (Hon. Francis A. Nicolai, JSC) granted Plaintiff's motion for summary judgment, struck Defendants' answer, appointed a referee, substituted Jose Santiago in place of "John Doe" and amended the caption accordingly.
On November 14, 2013, Plaintiff served Defendants with a Notice for Referee's Oath and Report.
On February 14, 2014, Plaintiff filed a motion for Judgment of Foreclosure and Sale on notice to Defendants. Defendants did not respond to the motion.
On March 7, 2014, the Court was advised by counsel for Defendants that he was retained by Mrs. Santiago to file a bankruptcy petition. On May 20, 2015, the Court was advised that Defendants did not file for bankruptcy.
On June 17, 2015, the Court (Hon. Victor G. Grossman, JSC) granted Judgment of Foreclosure and Sale, confirmed the Referee's Report of the amount due to Plaintiff and ordered, inter alia, that Plaintiff recover that amount. The Court ordered the premises to be sold in one parcel and directed the "Referee [to] give public notice of the time and place of sale according to law and the rules and practice of this Court by publishing the notice of sale in the Putnam County Press". Judgement of Foreclosure and Sale dated June 17, 2015 at 3. Plaintiff served Defendants with a copy of the Judgment of Foreclosure and Sale with Notice of Entry on September 14, 2015.
Notice of the Sale was published in The Putnam County Press, as directed in the Judgment of Foreclosure and Sale, on September 9, 16, 23, and 30, 2015. Moreover, Plaintiff served Defendants with Notice of Sale on September 28, 2015, indicating that the sale would occur on October 26, 2015.
On October 8, 2015, Defendants moved, through counsel, for an order (1) vacating the Judgment of Foreclosure and Sale, (2) dismissing the foreclosure action and (3) staying the foreclosure and sale proceedings. Defendants contended that the Court lacked personal jurisdiction over Mr. Santiago because he was not properly served with the summons and complaint. They also contended that the action must be dismissed because Plaintiff failed to satisfy the requirements of RPAPL § 1304. Defendants contended further that "equity requires a recalculation of the sums due" because Plaintiff took so long to move the case along and did not credit them with their post default payments. Defendants claimed that a gap in the successive notices of pendency requires vacatur of the Judgment. Defendants also argued that the Notice of Sale was improperly published in the Putnam County Press. DISCUSSION
Personal Jurisdiction
Defendants asserted as an initial attack that the Court lacked jurisdiction over Defendant Angel R. Santiago, because he was never properly served with process. Defendants stated that Mr. Santiago never appeared in the action and had no knowledge of the pendency of the action. Specifically, they claimed that the process server falsely attested in the affidavit of service that on December 22, 2010, she served Mr. Santiago by serving his brother, "Jose Santiago", at the mortgaged premises and completed service by mailing a copy of the summons and complaint to Mr. Santiago on the same day. Mr. Santiago averred that he has no brother named Jose and that no one fitting the description of the person described on the affidavit of service would have been at the premises on that day.
On April 1, 2016, the Court held a traverse hearing to determine whether service on Mr. Santiago was properly made. At the conclusion of the hearing, the Court found that service of process was properly effectuated.
As a result, the Court now addresses the remaining arguments set forth in Defendants' motion to set aside and vacate the Judgment of Foreclosure and Sale.
RPAPL § 1304 Notice
Defendants contend that the action must be dismissed because Plaintiff failed to strictly comply with the requirements of RPAPL § 1304, which they assert "are jurisdictional in nature". Order to Show Cause, Affirmation of Ira S. Clair, Esq. dated October 7, 2015 at 8. The specific defect cited by Defendants was Plaintiff's failure to properly calculate the number of days of their default and include the correct number of days in the 90-day notice required under RPAPL § 1304. Defendants rely on Hudson City Savings Bank v DePasquale, 113 AD3d 595 [2nd Dept 2014] to support their contention that the factual inaccuracy contained in the 90-day notice requires dismissal of the action because the law requires strict compliance with RPAPL § 1304.
Plaintiff did not address Defendants' contention in their opposition. Instead, Plaintiff argued that it properly served the 90-day notice by certified mail return receipt requested and by regular mail. As Defendants assert in their reply papers, the issue concerns a defect in the notice that was sent.
Defendants' attack on the Judgment based on Hudson City Savings Bank v DePasquale, supra, is incorrect. DePasquale, which Defendants contend requires dismissal of this action because of the factual error in the RPAPL § 1304 notice, is distinguishable, because that case concerned a motion for summary judgment that defendant borrowers responded to by filing a cross motion for summary judgment. To obtain summary judgment, Plaintiff bank was required to prove its prima facie entitlement to the relief by showing it met the strict notice requirements of the RPAPL. The Appellate Division upheld the trial court's finding that the plaintiff failed to show that there were no material issues of fact regarding its strict compliance with RPAPL § 1304, because the RPAPL § 1304 notice sent to the borrowers contained a factual inaccuracy. The court held that for that reason, the defendants were entitled to summary judgment and dismissal of the action.
The Appellate Division did not identify the factual inaccuracy contained in the notice. However, upon this Court's review of the underlying papers in that case, the defect at issue concerned the lender's statement in the 1304 notice that the borrowers were in default for a fewer number of days than the 30 days required to find a default. Arguably, the borrowers in that case were not in default at the time the notice of default was sent to them. In this case, the time period for the default is sufficient to find Defendants in default; Plaintiff merely miscounted the number of days and stated that Defendants were in default 41 days instead of 44 days. The lender's error here does not affect Defendants' default status.
Although Defendants in this case claim the same type of defect in their RPAPL § 1304 notice that was at issue in DePasquale, unlike DePasquale, these Defendants did not respond to Plaintiff's motion for summary judgment. Nor did Defendants appeal from the Court's order granting summary judgment in favor of Plaintiff. Rather, Defendants now seek to vacate the Judgment of Foreclosure and Sale. As such, they must meet the applicable standard for obtaining that relief.
"A judgment of foreclosure and sale entered against a defendant is final as to all questions at issue between the parties, and concludes all matters of defense which were or might have been litigated in the foreclosure action." Signature Bank v Epstein, 95 AD3d 1199, 1200 [2nd Dept 2012], quoting Long Is. Sav. Bank v Mihalios, 269 AD2d 502, 503 [2nd Dept 2000]. Defendants did not raise the issue of Plaintiff's failure to comply with RPAPL § 1304 in the foreclosure proceeding before the Judgment of Foreclosure and Sale was rendered. Defendants asserted only two affirmative defenses in their Verified Answer: that (1) Plaintiff failed to state a cause of action and (2) Defendants were "not served with two copies of the Pre-Foreclosure Notices, pursuant to [RPAPL] Section 1302." Defendants' Order to Show Cause, Exhibit E. Defendants did not respond to either Plaintiff's motion for summary judgment or its motion for judgment of foreclosure and sale, despite being given notice by Plaintiff. Nonetheless, Defendants now raise the defense as a basis for vacatur, claiming that it is "jurisdictional in nature".
"A party can seek to vacate a judgment or order on several grounds, including newly-discovered evidence that probably would have produced a different result, fraud or misconduct by an adverse party and lack of jurisdiction (see CPLR 5015 [a]). A motion to vacate a prior judgment or order is addressed to the court's sound discretion, subject to reversal only where there has been a clear abuse of that discretion'." Pritchard v Curtis, 101 AD3d 1502, 1503 [2nd Dept 2012] (citing Maddux v Schur, 53 AD3d 738, 739 [3rd Dept 2008] and Solomon v Solomon, 27 AD3d 988, 989 [3rd Dept 2006]).
Apart from their claimed lack of personal jurisdiction over Defendant Angel Santiago, which has already been addressed and found to be without merit, Defendants have not raised any other grounds warranting vacatur of the Judgment of Foreclosure and Sale in this case. Their contention that Plaintiff's failure to strictly comply with RPAPL § 1304 is jurisdictional in nature was squarely rejected by the Appellate Division in Pritchard, supra. While compliance with the notice requirements of RPAPL §§ 1303 and 1304 is a condition precedent to bringing a mortgage foreclosure action, "the absence of these conditions precedent did not deprive the court of jurisdiction to preside over this mortgage foreclosure action ...". Pritchard, supra at 1505. "Statutorily, violation of the provisions of RPAPL 1304 constitutes a defense to a home loan mortgage foreclosure action." Id. at 1504. As the Appellate Division further stated, "[t]he Legislature would not have denominated this as a defense if a violation of the notice provisions deprived the court of subject matter jurisdiction." Id. at 1505. Notably, Defendants did not raise RPAPL § 1304 as a defense in the action. They cannot raise it now as "[a] judgment of foreclosure and sale ... concludes all matters of defense which were or might have been litigated in the foreclosure action." Signature Bank, supra at 1200.
Recalculation of Amount Due
Defendants also contend that the Judgment of Foreclosure and Sale should be vacated and the amount set forth therein should be recalculated, because Plaintiff took so long to move the case along, claiming that it did so in order to benefit from the accrual of interest at a high rate. Defendants claim that interest continued to accrue due to Plaintiff's inaction.
Defendants also assert that they made payments to Plaintiff after the date of their default, ranging between $25,000 and $35,000, which Plaintiff accepted. Defendants contend that they were not given credit for these payments in the Referee's calculation of the amount owed to Plaintiff. Defendants contend that Plaintiff (or its predecessor in interest) engaged in misconduct by retaining the payments Defendants remitted and failing to disavow the default or to give them credit for the payments.
Plaintiff opposes Defendants' request for a recalculation of the amount due, contending that it is untimely and not supported by facts or documentary evidence. Plaintiff argues that Defendants were given more than one opportunity to object to the amount. Plaintiff served Defendants with a Notice for Referee's Oath and Report in November 2013. Plaintiff contends that Defendants did not respond and failed to move under CPLR §4403 to reject the Referee's Report. Plaintiff's subsequently served a notice of motion for judgment of foreclosure and sale in January 2014, which included a request to confirm the Referee's report. Defendants failed to respond to either notice and to make their objections known prior to confirmation of the Referee's report of the amount owed and issuance of the Judgment of Foreclosure and Sale. Plaintiff argues that "courts will not disturb the findings of a referee to the extent that the record substantiates his findings and they may reject findings not supported by the record." Mondello v Mondello, 253 AD2d 861 [2nd Dept 1998] (internal quote and citations omitted). Plaintiff asserts that Defendants did not provide evidence of their payments or other documentation showing that the Referee's calculation was inaccurate.
Defendants could have argued prior to the Judgment that Plaintiff's delay in prosecuting the action required a tolling of interest, but they failed to do so. In any event, the record shows that some of the considerable delay in bringing the action to conclusion resulted from Defendants' filing for loan modification and failing to complete their application. Delay also resulted from Defendants' filing, or asserting an intent to file, for bankruptcy, which led to two occasions where the action was stayed. Plaintiff cannot be faulted with all of the delay. Under the circumstances, the delay would not constitute a proper basis for vacating the Judgment of Foreclosure and Sale.
Some of the delay is also attributable to the tremendous backlog in these cases moving through the courts.
As to Defendants' claim that Plaintiff accepted post-default payments, Defendants present a copy of some sort of statement of "HSBC, the assumed servicer of the loan", which appears to show that a payment was received on 8/10/10. Immediately following the notation indicating "payment" is a notation for a portion of the amount indicating "unapplied" and another for that portion indicating "misc receipt". The Court is unable to discern the meaning of the entries. Indeed, Defendants themselves admit that "the statement is hard to understand". Order to Show Cause, Affirmation of Ira S. Clair, Esq. at 13. Defendants' submission is inconclusive and certainly does not establish "misconduct by an adverse party", which Defendants would have to show to warrant vacatur of the Judgment of Foreclosure and Sale under CPLR §5015 [a].
Gap in Notices of Pendency
Defendants argue that the gap in Plaintiff's filing of successive notices of pendency warrants vacatur of the action. Pursuant to CPLR §6516(a), "[i]n a foreclosure action, a successive notice of pendency may be filed to comply with section thirteen hundred thirty-one of the real property actions and proceedings law, notwithstanding that a previously filed notice of pendency in such action or in a previous foreclosure action has expired pursuant to section 6513 of this article or has become ineffective ... whether or not such expiration or such ineffectiveness has been determined by the court. ..." Thus, there is no basis for Defendants' contention that the gap requires vacatur of the Judgment.
Notice of Sale
Finally, Defendants' counsel assails the Court's direction that notice of the foreclosure sale be made in the Putnam County Press. Defendants argue that the Putnam County Press is not a proper newspaper for publishing notice of a foreclosure sale, because "it is so inadequately read in comparison to other papers that are available that it does not satisfy RPAPL 231, and ... it cannot be considered a newspaper within the applicable definition of General Construction Law section 60." Order to Show Cause, Affirmation of Ira S. Clair, Esq. at 15.
Defense counsel contends, transforming himself into a witness, that prior justices had ceased using that publication because of alleged political ties. In making that assertion, he attacks and impugns the integrity of a former law clerk to one of the justices knowing full well that the law clerk would not be given the opportunity to respond to the scurrilous assertions. He contends further that the publication is not, in fact, a newspaper. None of these arguments has any merit and the manner in which they have been presented is troubling to the Court. Counsel is advised to restrict his arguments to those which are properly made, based on the law and facts.
RPAPL § 231(2)(a) provides in relevant part that: "Notice of such sale shall be given by the officer making it by publishing a notice of the time and place of the sale, containing a description of the property to be sold, in a newspaper published in the county in which the property is located ...". (Emphasis added).
General Construction Law § 60 defines "newspaper" as "a paper of general circulation which is printed and distributed ordinarily not less frequently than once a week, and has been so for at least one year immediately preceding such publication or advertisement, and which contains news, articles of opinion (as editorials), features, advertising, or other matter regarded as of current interest, has a paid circulation ...". Section 60 further states that a "publication which was designated and publishing notice as an official newspaper prior to [1940] and continued to be so designated and publishing for at least thirty years after such year shall be deemed to be a newspaper ...". Section 60, as amended effective June 1, 2006, further states that "[t]he term newspaper of a county, city, town or village' when used in a statute shall mean a newspaper published, circulated, printed or distributed in the county, city, town or village." NY Gen. Constr. Law § 60(c).
The Appellate Division held in Guardian Federal Savings and Loan Association v Horse-Hawk Holding Corp., 72 AD2d 737, 737 [2nd Dept 1979], that "[n]o requirement as to size or circulation of the newspaper is stated [in RPAPL § 231(2)(a)], and therefore ... publication ... was sufficient since the newspaper was in fact published in the county where the property is located."The Putnam County Press meets all of the requirements of RPAPL § 231 and General Construction Law § 60. It is a weekly publication published as an official newspaper since 1858, which "covers local news, events and legal notices for the county and surrounding communities" and is circulated in Putnam County. In any event, "a defect concerning publication is an irregularity and not jurisdictional." CME Group Ltd. v Cellini, 173 Misc 2d 404, 408 [Sup Ct, Westchester County 1997]. Therefore, it cannot furnish a basis for vacating the Judgment of Foreclosure and Sale.
Accordingly, Defendants have failed to raise any grounds which warrant vacatur of the Judgment of Foreclosure and Sale.
It is therefore ORDERED that Defendants' motion to vacate the Judgment of Foreclosure and Sale is denied in its entirety; and it further
ORDERED that Plaintiff shall re-notice the property for sale in accordance with the Judgment of Foreclosure and Sale within 60 days from the date of this Decision and Order; and it is further
ORDERED that within thirty (30) days of the foreclosure sale, the Referee shall complete the Foreclosure Action Surplus Monies Form, file the completed Form with the Putnam County Clerk's office and send a copy of the completed Form directly to the Chambers of the undersigned. A fillable version of this Form can be found on the court's website at: http://www.nycourts.gov/forms/SurplusMoniesFormFillable.pdf and it is further
ORDERED that this matter is scheduled for a conference at 2:00 p.m. on October 11, 2016. The purpose of this conference is to determine whether the foreclosure sale has occurred as ordered, the outcome of such sale and to make such further orders as the Court deems necessary. Appearances by the parties and appointed Referee are required unless: (1) a Report of Sale and a completed Foreclosure Action Surplus Monies Form has been filed and received by the undersigned one week prior to this date or (2) the Referee notifies the Court in writing one week prior to this date that the sale is not going to occur prior to this date and requests a new date based upon when he/she believes the sale will occur.
The foregoing constitutes the Decision and Order of the Court. Dated: May 6, 2016 Carmel, New York E N T E R _______________________________ HON. PAUL I. MARX, J.S.C.