Opinion
INDEX No. 20823/13
01-10-2019
HSBC BANK USA, NATIONAL ASSOCIATION, as Trustee for Deutsche Alt-B Securities Mortgage Loan Trust, Series 2007-AB1, Plaintiff, v. RONALD RACKOVER as Executor of the Estate of Mary Rackover and JOHN DOE, Defendants.
HOGAN LOVELLS US LLP Attys. For Plaintiff 875 Third Ave. New York, NY 10022 RUSSO & PEDRANGHELU Attys. For Defendant 16 E. Old Country Rd. Hicksville, NY 11801
COPY
MEMO DECISION & ORDER PRESENT: Hon. THOMAS F. WHELAN Justice of the Supreme Court MOTION DATE 2/12/16
CROSS MOTION DATE 5/27/16
SUBMIT DATE 12/21/18
Mot. Seq. # 001 - MG
Mot. Seq. # 002 - XMD
CDISP Y___ N X HOGAN LOVELLS US LLP
Attys. For Plaintiff
875 Third Ave.
New York, NY 10022 RUSSO & PEDRANGHELU
Attys. For Defendant
16 E. Old Country Rd.
Hicksville, NY 11801
Upon the following papers numbered 1 to 18 read on this motion to appoint a referee to compute and cross motion to dismiss complaint; Notice of Motion/Order to Show Cause and supporting papers 1 - 3; Notice of Cross Motion and supporting papers: 4-7; Opposing papers: 8-10; Reply papers 11-12; Other 13-14 (memorandum); 15-16 (memorandum); 17-18 (memorandum); (and after hearing counsel in support and opposed to the motion) it is,
ORDERED that this motion (#001) by the plaintiff for, among other things, summary judgment, amendment of the caption and the appointment of a referee to compute, is granted in its entirety; and it is further
ORDERED that the cross motion (#002) by the defendant, Ronald Rackover, sued herein as John Doe 1, is denied; and it is further
ORDERED that the proposed Order submitted by plaintiff, as modified by the court, is signed simultaneously herewith; and it is further
ORDERED that plaintiff is directed to file a notice of entry within five days of receipt of this Order pursuant to 22 NYCRR § 202.5-b(h)(2).
This is an action for foreclosure on property situate in Melville, NY. In essence, on April 14, 2006, defendant, Mary Rackover, borrowed $578,500.00 from the plaintiff's predecessor-in-interest and executed a promissory note and mortgage. On May 21, 2010, defendant, Mary Rackover, executed a Loan Modification Agreement, with Wells Fargo Bank, N.A., as custodian and servicer of the Trust, which modified the mortgage to form a single lien in the amount of $627,043.47. Since October 1, 2012, the defendant has failed to pay the monthly installments due and owing. This action was commenced by filing on August 5, 2013. On August 20, 2013, in keeping with RPAPL § 1303 a notice on tenant was mailed by regular mail and certified mail to defendant/tenant, Ronald Rackover. The defendant, Mary Rackover, submitted a pro se answer to the complaint, alleging eighteen affirmative defenses and three counterclaims. She also served a voluminous discovery demand. Defendant, Ronald Rackover, sued herein as John Doe 1, defaulted in answering this action. A certificate of merit, dated November 11, 2013, was filed with the Suffolk County Clerk, in keeping with CPLR 3012-b.
Thereafter, this action took a tortuous path.
Settlement conferences were held on April 7 and July 15, 2014. Court records show that the defendant, Mary Rackover, did not appear but her husband, Ronald Rackover did appear on her behalf. At that time, the action was released from the Foreclosure Settlement Part. Thereafter, upon release from the settlement part, which held all motions and discovery in abeyance, plaintiff responded to the discovery demands with the submission of over 170 interrogatory requests and 1100 pages of documents, on October 1, 2015.
Soon thereafter, by notice of motion dated December 23, 2015, plaintiff moved for, among other things, summary judgment against the defendant, Mary Rackover, for substitution of Ronald Rackover for John Doe, the amendment of the caption to reflect same, and for defaults as against all non-appearing parties. After various adjournments granted to the defendant, Mary Rackover, her attorney submitted an affirmation in opposition dated May 18, 2016 and the defendant/tenant, Ronald Rackover, sued herein as John Doe, submitted a cross motion, with a return dated of May 27, 2016. The motions were further adjourned to August 19, 2016, for the submission of reply papers by the plaintiff.
Unfortunately, by letter dated August 15, 2016, counsel for defendant, Mary Rackover, informed the Court of the passing of said defendant and the stay imposed by her death. The passing of said defendant also terminated the representation of the firm, Scalzi & Nofi, PLLC. The motions languished for a year until prodding from the Court, resulted in a June 23, 2017 stipulation between plaintiff and counsel, Russo & Pedranghelu, counsel for defendant/tenant. Ronald Rackover, adjourning the motions until August 25, 2017 "due to ongoing settlement negotiations and because a fiduciary has yet to be set up for the Defendant-decedent's estate." A conference was held on September 22, 2017, at which time, the Court was informed that the Last Will and Testament for the deceased Mary Rackover was being filed with the Surrogate's Court. By Order dated September 27, 2017, this Court directed all counsel to appear for a conference on October 19, 2017 to "discuss the procedure for the substitution of the deceased party and John Doe." At the October 19, 2017 conference, the Court signed an Order providing plaintiff with a copy of the Last Will and Testament. The next conference was scheduled for November 17, 2017.
Various conferences were held until the parties agreed to an Order, dated August 24, 2018, amending the caption to add Ronald Rackover, as Executor of the Estate of Mary Rackover. Based upon conferences and contact with the respective attorneys, the motions were adjourned by stipulation dated August 29, 2018 "in order for the defendant to complete a Short Sale of the subject residence." A Notice of Appearance, dated August 30, 2018, was filed on behalf of Ronald Rackover, as Executor of the Estate of Mary Rackover. Then, by letter from plaintiff, dated November 14, 2018, the Court was informed that the defendant "has been approved for a Standard Short Sale Program." The Court was requested to hold the motions in abeyance in order to prevent violation of dual tracking under Regulation X. Thereafter, by stipulation dated November 20, 2018, the motions were again adjourned to December 18, 2018 "for the defendant has been approved for a short sale on or before December 12, 2018." However, the Court was informed by letter dated December 17, 2018, that "that loss mitigation efforts have since concluded without resolution." At the conference held on December 18, 2018, the Court was informed that defendant refused to meet the conditions of the short sale and that the motions had to be submitted, which they were on December 21, 2018.
With the filing of the notice of appearance, defendant/tenant, Ronald Rackover's counsel became counsel to the Estate of Mary Rackover. However, said counsel had been acting in that capacity soon after the passing of Mary Rackover. Unlike Mark Rackover, Ronald Rackover as a defendant/tenant, was not an indispensable party to this foreclosure action, since he did not sign the note or mortgage and his name was not on the deed for the property. The Court will first address the summary judgment motion (#001), since it concerns the rights of an indispensable party.
By this summary judgment motion, the plaintiff addressed its burden of proof in the moving papers, and refutes the affirmative defenses of the answer. Therefore, plaintiff has satisfied its prima facie burden on this summary judgment motion (see HSBC Bank USA , Natl. Assn. v Espinal , 137 AD3d 1079, 28 NYS3d 107 [2d Dept 2016]; U.S. Bank Natl. Assn. v Cox , 148 AD3d 692, 49 NYS3d 527 [2d Dept 2017]).
The burden then shifted to the answering defendant (see Bank of America , N.A. v DeNardo , 151 AD3d 1008, 58 NYS3d 469 [2d Dept 2017]) and it was incumbent upon the answering defendant to submit proof sufficient to raise a genuine question of fact rebutting plaintiff's prima facie showing or in support of the affirmative defenses asserted in the answer or otherwise available to him (see Flagstar Bank v Bellafiore , 94 AD3d 1044, 943 NYS2d 551 [2d Dept 2012]; Grogg Assocs. v South Rd. Assocs., 74 AD3d 1021, 907 NYS2d 22 [2d Dept 2010]; Wells Fargo Bank v Karla , 71 AD3d 1006, 896 NYS2d 681 [2d Dept 2010]; Washington Mut. Bank v O'Connor , 63 AD3d 832,880 NYS2d 696 [2d Dept 2009]; J.P. Morgan Chase Bank , NA v Agnello , 62 AD3d 662, 878 NYS2d 397 [2d Dept 2009]; Aames Funding Corp. v Houston , 44 AD3d 692, 843 NYS2d 660 [2d Dept 2007]).
Notably, affirmative defenses predicated upon legal conclusions that are not substantiated with allegations of fact are subject to dismissal (see CPLR 3013, 3018[b]; Katz v Miller , 120 AD3d 768, 991 NYS2d 346 [2d Dept 2014]; Becher v Feller , 64 AD3 672, 677, 884 NYS2d 83 [2d Dept 2009]; Cohen Fashion Opt., Inc. v V & M Opt., Inc., 51 AD3d 619, 858 NYS2d 260 [2d Dept 2008]). Where a defendant fails to oppose some or all matters advanced on a motion for summary judgment, the facts as alleged in the movant's papers may be deemed admitted as there is, in effect, a concession that no question of fact exists (see Kuehne & Nagel , Inc. v Baiden , 36 NY2d 539, 369 NYS2d 667 [1975]; see also Madeline D'Anthony Enter ., Inc. v Sokolowsky , 101 AD3d 606, 957 NYS2d 88 [1st Dept 2012]; Argent Mtge. Co., LLC v Mentesana , 79 AD3d 1079, 915 NYS2d 591 [2d Dept 2010]). In addition, the failure to raise pleaded affirmative defenses in opposition to a motion for summary judgment renders those defenses abandoned and thus without any efficacy (see New York Commercial Bank v J . Realty F Rockaway , Ltd., 108 AD3d 756, 969 NYS2d 796 [2d Dept 2013]; Starkman v City of Long Beach , 106 AD3d 1076, 965 NYS2d 609 [2d Dept 2013]).
The defendant's submission challenges the plaintiff's standing as well as plaintiff's general compliance with RPAPL § 1304. To the extent that former counsel's submission, which is now submitted on behalf of Ronald Rackover, as Executor of the Estate of Mary Rackover, consists solely of an affirmation of an attorney having no personal knowledge of the facts, such is without evidentiary value and, thus, is insufficient to raise a triable issue of fact (see Zuckerman v City of New York , 49 NY2d 557, 427 NYS2d 595 [1980]; see also Bank of New York Mellon v Aiello , 164 AD3d 632, 83 NYS3d 135 [2d Dept 2018]) ).
In any event, the Court will address each of defendant's allegations, but in accordance with the above, and all other affirmative defenses and claims raised in the answer and not addressed in the opposition are dismissed as abandoned (see JPMorgan Chase Bank , Natl. Assn. v Cao , 160 AD3d 821, 76 NYS3d 82 [2d Dept 2018]).
The Court first addresses the defendant's contentions regarding plaintiff's standing and notes that the standing defense has lost its significance and vitality with the advent of CPLR 3012-b. One of the various methods that standing may be established is by due proof that the plaintiff or its custodial agent was in possession of the note prior to the commencement of the action. The production of such proof is sufficient to establish, prima facie, the plaintiff's possession of the requisite standing to prosecute its claims for foreclosure and sale (see Aurora Loan Servs ., LLC v Taylor , 25 NY3d 355, 12 NYS3d 612 [2015]; Wells Fargo Bank , NA v Frankson , 157 AD3d 844, 66 NYS3d 529 [2d Dept 2018]; U.S. Bank v Ehrenfeld , 144 AD3d 893, 41 NYS3d 269 [2d Dept 2016]; JPMorgan Chase Bank , Natl. Assn. v Weinberger , 142 AD3d 643, 37 NYS3d 286 [2d Dept 2016]; Citimortgage , Inc. v Klein , 140 AD3d 913, 33 NYS3d 432 [2d Dept 2016]; U.S. Bank Natl. Assn. v Godwin , 137 AD3d 1260, 28 NYS3d 450 [2d Dept 2016]; Wells Fargo Bank , N.A. v Joseph , 137 AD3d 896, 26 NYS3d 583 [2d Dept 2016]; Emigrant Bank v Larizza , 129 AD3d 904, 13 NYS3d 129 [2d Dept 2015]; Deutsche Bank Natl. Trust Co. v Whalen , 107 AD3d 931, 969 NYS2d 82 [2d Dept 2013]).
Here, plaintiff established its holder status (see Deutsche Bank Nat . Trust Co. v Cole , ___ AD3d ___, 2019 WL 138564 [2d Dept 2019]; Wells Fargo Bank , N.A. v Leonard , ___ AD3d ___, 2018 WL 6518932 [2d Dept 2018]; U.S. Bank Natl. Assn. v Rose , 165 AD3d 1310, 87 NYS3d 646 [2d Dept 2018]) and that it possessed the note (see Wells Fargo Bank , NA v Mandrin , 160 AD3d 1014, 76 NYS3d 182 [2d Dept 2018]; Tribeca Lending Corp. v Lawson , 159 AD3d 936, 73 NYS3d 575 [2d Dept 2018]; Deutsche Bank Natl. Trust Co. v Iarrobino , 159 AD3d 670, 69 NYS3d 503 [2d Dept 2018]).
Plaintiff also established standing by the attorney having possession of the note prior to commencement of the action (see U .S. Bank , Natl. Assn. v Cardenas , 160 AD3d 784, 71 NYS3d 368 [2d Dept 2018]; U.S. Bank Trust , N.A. v Varian , 156 AD3d 1255, 68 NYS3d 556 [3d Dept 2017]; Bank of New York Mellon v Cronin , 151 AD3d 1504, 57 NYS3d 733 [3d Dept 2017]; Bank of America , N.A. v Barton , 149 AD3d 676, 50 NYS3d 546 [2d Dept 2017]; Wilmington Trust Co. v Walker , 149 AD3d 409, 51 NYS3d 64 [1st Dept 2017]; Bank of New York Mellon v Rutkowski , 148 AD3d 1341, 48 NYS3d 851 [3d Dept 2017]; U.S. Bank Natl. Assn. v Cruz , 147 AD3d 1103, 47 NYS3d 459 [2d Dept 2017]; PennyMac Corp. v Chavez , 144 AD3d 1006, 42 NYS3d 239 [2d Dept 2016]). Standing has been established by proof of the servicer as custodian of the note (see U .S. Bank v Ehrenfeld , 144 AD3d 893, 41 NYS3d 269 (2d Dept 2016]; U.S. Bank Natl. Assn. v Carnivale , 138 AD3d 1220, 29 NYS3d 643 (3d Dept 2016]). Additionally, standing was established by the Pooling and Servicing Agreement (PSA) (see US Bank Natl . Assn. v Ezugwu , 162 AD3d 613, 80 NYS3d 35 [1st Dept 2018]) and more importantly, standing was established by the above described loan modification with Wells Fargo, N.A. (see Wells Fargo Bank , N.A. v Graffioli , ___ AD3d ___, 2018 WL 6626490 [2d Dept 2018] - citing Wilmington Trust Co . v Hurtado , 48 Misc3d 1201[A] [Sup Ct, Suffolk County 2015]).
Finally, the plaintiff's filing of a duly indorsed mortgage note to the certificate of merit required by CPLR 3012-b has been held to constitute due proof of the plaintiff's possession of the note prior to the commencement of the action and thus its standing to prosecute its claim for foreclosure and sale (see Nationstar Mtge . LLC v Balducci , 165 AD3d 959, 86 NYS3d 172 [2d Dept 2018]; HSBC Bank USA , NA v Oscar , 161 AD3d 1055, 78 NYS3d 428 [2d Dept 2018], citing US Bank NA v Cohen , 156 AD3d 844, 846, 67 NYS3d 643 [2d Dept 2017]; US Bank NA v Saravanan , 146 AD3d 1010, 1011, 45 NYS3d 547 [2d Dept 2017]; JPMorgan Chase Bank , NA v Weinberger , 142 AD3d 643, 645, 37 N YS3d 286 [2d Dept 2017]; Deutsche Bank Natl. Trust Co. v Leigh , 137 AD3d 841, 842, 28 NYS3d 86 [2d Dept 2016]; Emigrant Bank v Larizza , 129 AD3d 904, supra; Nationstar Mtge ., LLC v Catizone , 127 AD3d 1151, 1152, 9 NYS3d 315 [2015]; see also HSBC Bank USA v Ozcan , 154 AD2d 822, 64 NYS3d 38 [2d Dept 2017]).
Defendant's challenge to the transfer date ("cut-off date") of the PSA is without merit (see US Bank Natl . Assn. v Coppola , 156 AD3d 934, 68 NYS3d 120 [2d Dept 2017]; Wells Fargo Bank , N.A. v Archibald , 150 AD3d 935, 55 NYS3d 116 [2d Dept 2017]; Wells Fargo Bank , N.A. v Charlaff , 134 AD3d 1099, 24 N YS3d 317 [2d Dept 2015]; Bank of America Natl. Assn. v Patino , 128 AD3d 994, 9 NYS3d 656 [2d Dept 2015]).
The plaintiff, through its submissions, has thus demonstrated the requisite possession of the note prior to the commencement of the action (see Nationstar Mtge . LLC v Balducci , 165 AD3d 959, supra; HSBC Bank USA , NA v Oscar , 161 AD3d 1055, supra; Wells Fargo Bank , NA v Frankson , 157 AD3d 844, supra; US Bank Natl . Assn. v Richards , 151 AD3d 1001, 57 NYS3d 509 [2d Dept 2017]; Silvergate Bank v Calkula Prop., Inc., 150 AD3d 1295, 56 NYS3d 189 [2d Dept 2017]; Central Mtge. Co. v Jahnsen , 150 AD3d 661, 56 NYS3d 107 [2d Dept 2017]; Bank of America , N.A. v Barton , 149 AD3d 676, 50 NYS3d 546 [2d Dept 2017]). The defendant has tailed to establish plaintiff's lack of standing, and further failed to raise an issue of fact in this regard. The Court thus hereby declares that the issue of the plaintiff's standing is resolved in favor of the plaintiff for all purposes of this action (see Bank of New York Mellon vAiello , 164 AD3d 632, 83 NYS3d 135 [2d Dept 2018][servicer attests that plaintiff was holder]; see also Wells Fargo Bank , N.A. v Burke , 166 AD3d 1054, NYS3d [2d Dept 2018]; Tribeca Lending Corp. v Lawson , 159 AD3d 936, 73 NYS3d 575 [2d Dept 2018]).
The defendant's allegations regarding the admissibility of plaintiff's affidavits are unavailing. A business record will be admissible if that record "was made in the regular course of any business and ... it was the regular course of such business to make it, at the time of the act, transaction, occurrence or event, or within a reasonable time thereafter" ( One Step Up , Ltd. v Webster Bus . Credit Corp., 87 AD3d 1, 925 NYS2d 61 [1st Dept 2011]; CPLR 4518[a]). Appellate case authorities have thus held that a loan servicer may testify as to payment, defaults and other matters relevant to a foreclosing plaintiff's prima facie case on records it maintains in the regular course of its business as servicer of the subject mortgage loan (see U .S. Bank Natl. Assn. v Saravanan , 146 AD3d 1010, 45 NYS3d 547 [2d Dept 2017]; Pennymac Holdings , LLC v Tomanelli , 139 AD3d 688, 32 NYS3d 181 [2d Dept 2016]; Deutsche Bank Natl. Trust Co. v Naughton , 137AD3d 1199, 28 NYS3d 444 [2d Dept 2016]; Deutsche Bank Natl. Trust Co. v Abdan , 131 AD3d 1001, 16 NYS2d 459 [2d Dept 2015]; Wells Fargo Bank , N.A. v Arias , 121 AD3d 973, 995 NYS2d 118 [2d Dept 2014]; see also Deutsche Bank Natl . Trust Co. v Monica , 131 AD3d 737, 5 NYS3d 863 [3d Dept 2015]; HSBC Bank USA , Natl. Assn. v Sage , 112 AD3d 1126, 977 NYS2d 446 [3d Dept 2013]; Aames Capital Corp . v Ford , 294 AD2d 134, 740 NYS2d 880 [1st Dept 2002]).
Plaintiff submits the affidavit of Alissa Doepp, a Vice President of Loan Documentation of Wells Fargo Bank, N.A. ("Wells Fargo"), plaintiff's custodian and servicing agent, sworn to on May 27, 2015, which satisfies these conditions. Her affidavit states that she reviewed Wells Fargo's records in connection with the defendant's loan, and that she has personal knowledge of how Wells Fargo's business records are kept and maintained. She further avers that the records are maintained by Wells Fargo in the course of its regularly conducted business activities, created at or near the time of the event by a person with knowledge of the activity reflected, and that it is the regular practice of Wells Fargo to keep the records in the ordinary course of its business.
Contrary to defendants' assertions, Ms. Doepp's affidavit adequately sets forth the basis of her knowledge and establishes the admissibility of the documents appended to the affidavit as business records, and comports with the dictates of both Nationstar Mtge., LLC v LaPorte , 162 AD3d 784, 79 NYS3d 70 (2d Dept 2018) and HSBC Bank USA v Ozcan , 154 AD2d 822, 64 NYS3d 38 (2d Dept 2017) (see Olympus America , Inc. v Beverly Hills Surgical Inst., 110 AD3d 1048, 974 NYS2d 89 [2d Dept 2013]; DeLeon v Port Auth. of N.Y. & N.J., 306 AD2d 146, 761 NYS2d 54 [2d Dept 2003]), and satisfies the admissibility requirements of CPLR 4518(a) (see City Natl . Bank v Foundry Dev. Group , LLC , 160 AD3d 920, 72 NYS3d 491 [2d Dept 2018], Stewart Title Ins. Co. v Bank of New York Mellon , 154 AD3d 656, 61 NYS3d 634 [2d Dept 2017]; Citigroup v Kopelowitz , 147 AD3d 1014, 1015, 48 NYS3d 223 [2d Dept 2017]; see generally Citimortgage , Inc. v Espinal , 134 AD3d 876, 23 NYS3d 251 [2d Dept 2015]). The Court thus finds that defendant's overall challenge to the affidavit of merit to be without basis.
The Court agrees with plaintiff's claim that since the RPAPL §1304 challenge was not raised in the answer as an affirmative defense, it should not be addressed by the Court, In any event, defendant's contentions regarding plaintiff's compliance with the 90-day notice requirement pursuant to RPAPL §1304 are also without merit. Aside from Ms. Doepp's affidavit, the affidavit of Michael Warren Dickhaut, a Vice President of Loan Documentation for Wells Fargo, describes Wells Fargo's regular mailing practices, and attests that the mailing of the 90-day notices to the defendants by regular and certified mail on or about October 4, 2012 were completed in accordance with such regular practices. Attached to his affidavit are copies of the 90-day notices, the "Mailbook" of Wells Fargo, the "Transaction Detail - Trackright" documentation, the USPS certified mail tracking results detailing delivery, and the 10-digit and the 20-digit numbers for the regular and the certified mailings. Previously, plaintiff offered the Proof of Filing Statement to the New York State Banking Department, pursuant to RPAPL § 1306. The last item is offered as proof to the state agency that the mailing occurred on October 4, 2012, pursuant to the Step One Filing requirement.
Since this is a newly raised claim, not set forth in the answer, the affidavit of Michael Warren Dickhaut, which further details the standard business practices and procedure used to create, mail and maintain the 90-day notices in reply, is appropriate (see Rolling Acres Dev ., LLC v Montinat , 166 AD3d 696, 88 NYS3d 46 [2d Dept 2018]; 21st Mtge. Corp. v Palazzotto , 164 AD3d 1293, 81 NYS3d 752 [2d Dept 2018][in opposition to defendant's contention in opposition]; Bank of New York Mellon v Hoshmand , 158 AD3d 600, 71 NYS3d 527 [2d Dept 2018]; Central Mtge. Co. v Jahnsen , 150 AD3d 661, 664-5, 56 NYS3d 107 [2d Dept 2017]; One West Bank , FSB v Simpson , 148 AD3d 920, 922-3, 49 NYS3d 523 [2d Dept 2017]). The records demonstrate the necessary indicia of reliability and trustworthiness.
Based on the above, plaintiff has satisfied its prima facie burden on this summary judgment motion (see Bank of New York Mellon v Aiello , 164 AD3d 632, supra [servicer and USPS tracking information]; Citimortgage , Inc. v Wallach , 163 AD3d 520, 81 NYS3d 210 [2d Dept 2018]; HSBC Bank USA v Ozcan , 154 AD2d 822, 64 NYS3d 38 [2d Dept 2017]; HSBC Bank USA , Natl. Assn. v Espinal , 137 AD3d 1079, 28 NYS3d 107 [2d Dept 2016]), and the defendant has failed to raise any issue of fact.
As stated by the Court of Appeals in Forrest v Jewish Guild for the Blind , 3 NY3d 295, 312, 786 NYS2d 382 (2004), to defeat a summary judgment motion, the issues raised "must relate to material issues." Here, a material issue of fact have not been raised.
The Court thus grants plaintiff's motion (#001) for an order appointing a referee to compute, granting it default judgments as against all non-appearing defendants, and to amend the caption (see CPLR 3212, 3215, 1003 and RPAPL §1321; Wells Fargo Bank , N.A. v Ali , 122 AD3d 726, 995 NYS2d 735 [2d Dept 2014]; Central Mtge. Co. v McClelland , 119 AD3d 885, 991 NYS2d NYS2d 87 [2d Dept 2014]; Peak Fin. Partners , Inc. v Brook , 119 AD3d 916, 987 NYS2d 916 [2d Dept 2014]; Plaza Equities , LLC v Lamberti , 118 AD3d 688, 986 NYS2d 843 [2d Dept 2014].
Finally, the Court denies the cross-motion. As detailed above, plaintiff showed no intention to abandon this action and in any event, that sufficient cause is shown why the complaint should not be dismissed. At the time of the making of the cross motion, defendant. Ronald Rackover was not an indispensable party and was sued only in his capacity as a tenant. The then-tenant complained that since the date of the last foreclosure settlement conference, July 15, 2014, plaintiff did not move for a default judgment until the mailing of the motion for summary judgment on December 23, 2015. The then tenant complained that this short delay should lead to the dismissal of the complaint against him, pursuant to CPLR 3215(c). The Court must disagree.
Counsel for said John Doe defendant did acknowledge that a loan modification application had been submitted by the defendant wife, Mary Rackover (affirmation, par. 7). Counsel also acknowledges that plaintiff's counsel did recognize the delay in making the motion, in Part V of the Memorandum of Law, addressing the "sufficient cause" exception to CPLR 3215(c). The affidavit of Michelle L. Moshe details the service of the voluminous discovery demands as evidence of not abandoning the action. In Part IV of the Reply Memorandum, plaintiff's counsel stresses the reasonable excuse for the delay and the meritorious cause of action against the defendants.
Here, the indispensable party, the defendant-wife, filed an answer with affirmative defenses and counterclaims while the tenant husband failed to answer. As noted by the late David D. Siegal, in his Practice Commentaries to CPLR 3215, at C3215:13A, it was recognized by the State Legislature in 1992 the problem a plaintiff faces when there are multiple defendants, with some who have defaulted and plaintiff can not resolve the action within one year. The enactment of CPLR 1305(d), permitting an ex parte application, was adopted. Professor Siegal noted:
The default concedes liability but not damages, so the defaulter has the right to contest at the damages trial. ...
The plaintiff should apply for the order within the one-year period after the default. While the year is not a statute of limitations, and the court therefore has the power to extend time in its discretion under CPLR 2004 , the new provision intends to have the plaintiff's obligations against defaulting defendants clarified within the year, and plaintiffs should take the point at face value. (emphasis added)
In his Supplementary Practice Commentaries in 2006, (see C3215.11), Professor Siegal states:
Why must there be a trial against A, who has, after all, defaulted? The answer is that in New York practice a default concedes only liability, not damages; damages remain to be tried, and the defendant is entitled to be heard at the inquest notwithstanding his default on liability. (emphasis added)
As noted by the Practice Commentaries, the default only concedes liability, not damages and that CPLR § 2004 is available to the plaintiff. Here, the defendant brought this motion in his capacity as a tenant, but there are no damages sought against the tenant. In a foreclosure action there is a two-stage procedure; the fixing of defaults and the ascertainment of damages, by either a referral to a court-appointed referee or damage determination by the Court (see RPAPL §1321). Here, as a practical matter, the Court cannot see the harm to the defendant tenant by the short delay in seeking the fixing of the default, where no damages are sought against the tenant. Although the plaintiff did not make a separate ex-parte application fixing the defendant-tenant's default, as suggested by Professor Siegal, this appears to be the appropriate case for the discretionary use of CPLR 2004. In any event, as a practical matter, with the passing of the indispensable party, Mary Rackover, the defendant, Ronald Rackover will have the right to address the issue of damages before the referee appointed to ascertain the amount due and owing.
Moreover, the Court is concerned that the defendant-tenant is seeking to engraft the general provision of CPLR 3215(c) into the specific foreclosure default provision of RPAPL §1321, which does not have a time limitation for the making of the motion to ascertain damages. With the making of the motion, "the court shall ascertain and determine the amount due, or direct a referee to compute the amount due to the plaintiff..." In a foreclosure case, such can only be accomplished when the liability of all parties has been fixed. Such is the common practice under the specific provisions of Article 13 of the RPAPL, and under §1321 in particular, which reads "[i]f 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, ..." (emphasis added). The highlighted section has been interpreted, by practice, to include when the answer has been stricken by virtue of a summary judgment motion. The wording of this statute, because of the use of "or," has been interpreted to permit the use of one unified motion, in situations where there are multiple defendants, some who have answered and some who have not.
CPLR 3215(c) should be read in conjunction with RPAPL §1321, particularly where pursuant to CPLR §101, "[t]he civil practice law and rules shall govern the procedure in civil judicial proceedings in all courts of the state and before all judges, except where the procedure is regulated by inconsistent statute" (emphasis added). Statutes "in pari materia" "are to be construed together as though forming part of the same statute" (Statutes, Book 1, §221[b]). Here, the dismissal of the complaint as against this defendant-tenant, under the circumstances as detailed above, would be an "absurd, unjust, or other objectionable result[s]" (Statutes, Book 1, §113).
Even as a matter of law, the Court holds that the defendant's allegations regarding CPLR 3215(c) is without merit. CPLR 3215(c) provides that "[i]f the plaintiff fails to take proceedings for the entry of judgment within one year after the default, the court shall not enter judgment but shall dismiss the complaint as abandoned . . . unless sufficient cause is shown why the complaint should not be dismissed" (CPLR 3215[c]; HSBC Bank USA , N.A. v Hasis , 154 AD3d 832, 833, 62 NYS3d 467 [2d Dept 2017], citing Wells Fargo Bank , NA v Bonanno , 146 AD3d 844, 45 NYS3d 173 [2d Dept 2017]). To avoid dismissal, the plaintiff need not actually obtain nor specifically seek the default judgment within one year (see HSBC Bank USA , NA v Hasis , 154 AD3d at 833, supra; see also Wells Fargo Bank , N.A. v Daskal , 142 AD3d 1071, 1072, 37 NYS3d 353 [2d Dept 2016]). As long as "proceedings" are being taken that manifest "an intent not to abandon the case but to seek a judgment, the case should not be subject to dismissal" ( Wells Fargo Bank , NA v Daskal , 142 AD3d 1071, 1073, 37 NYS3d 353 [2d Dept 2016], citing Brown v Rosedale Nurseries , 259 AD2d 256, 257, 686 NYS2d 22 [1st Dept 1999], US Bank NA v Dorestant , 131 AD3d 467, 469, 15 NYS3d 142 [2d Dept 2015]; Wells Fargo Bank , NA. v Combs , 128 AD3d 813,813, 10 NYS3d 257 [2d Dept 2015]; Klein v St. Cyprian Props., Inc., 100 AD3d 711, 712, 954 NYS2d 170 [2012]; Pisciotta v Lifestyle Designs , Inc., 62 AD3d 850, 852, 879 NYS2d 179 [2d Dept 2009]; Icon Equip. Distribs. v Gordon Envtl. & Mech. Corp., 272 AD2d 579, 579 709 NYS2d 426 [2d Dept 2000]).
Prior to the economic crisis of 2008 and the legislative response thereto, the Second Department took a less constrictive position in determining such motions. In fact, in Myers v Slutsky , 139 AD2d 709, 527 NYS2d 464 (2d Dept 1988), the Court held:
While it is true that the section contains the word "shall", it should be noted that the use of the word "shall" is not a final and conclusive test of the intent of the Legislature. The fact that a statute is framed in mandatory words such as "shall" or "must" is of slight, if any, importance on the question (McKinney's Cons Laws of NY, Book 1, Statutes §177, at 344).
In fact, even in a case where the excuse offered was rejected, the court, in DiMartino v New York State Dept. of Taxation and Finance , 150 AD2d 633, 541 NYS2d 844 (2d Dept 1989), would not dismiss the action and held:
While we agree that the plaintiff's excuse for the delay is not persuasive, the drastic remedy of dismissal of the complaint is inappropriate under the circumstances presented here (citation omitted).
Numerous cases often rejected such applications (see Iorizzo v Mattikow , 25 AD3d 762, 807 NYS2d 663 [2d Dept 2006] [nine year delay]; Countrywide Home Loans , Inc. v Brown , 19 AD3d 638, 797 NYS2d 295 [2d Dept 2005]; State Farm Mut. Auto. Ins. Co. v Rodriguez , 12 AD3d 662, 784 NYS2d 875 [2d Dept 2004]; North Fork Bank v Cantico Intl., Ltd., 284 AD2d 442, 726 NYS2d 570 [2d Dept 2001]; Grajales v Freihofer Baking Co ., 283 AD2d 608, 725 NYS2d 553 [2d Dept 2001]; Icon Equip. Dist. Inc. v Gordon Envtl. & Mech. Corp., 272 AD2d 579, 709 NYS2d 426 [2d Dept 2000]; Magliore v Barber , 283 AD2d 614, 725 NYS2d 870 [2d Dept 2001]; Greenport Bank v Ginyard , 253 AD2d 451, 675 NYS2d 314 [2d Dept 1998]; First Nationwide Bank v Pretel , 240 AD2d 629, 659 NYS2d 291 [2d Dept 1997]; Needleman v Burger King , Inc., 237 AD2d 339, 655 NYS2d 68 [2d Dept 1997]; Umlic-One , Inc. v Cahill Trust , 236 AD2d 390, 654 NYS2d 574 [2d Dept 1997]; Flora Co. v Ingilis , 233 AD2d 418, 650 NYS2d 24 [2d Dept 1996] [delay was de minimus]; Bank of New York v Gray , 228 AD2d 399, 643 NYS2d 422 [2d Dept 1996]; Goldberg v Progressive Credit Union , 213 AD2d 595, 624 NYS2d 927 [2d Dept 1995] [default motion made "shortly after the required time limitation of CPLR 3215(c)"]; Ingenito v Grumman Corp., 192 AD2d 509, 596 NYS2d 83 [2d Dept 1993]).
In this case, the plaintiff moved for an order of summary judgment and the fixing of defaults, four months after the one year statutory time frame, upon release from the foreclosure settlement part. The Court notes that the large discovery demand was being addressed during the relevant time frame. Additionally, a review of the records before the Court demonstrates that the plaintiff's current servicer paid property taxes and insurance, ever since the default.
The determination of whether there is a reasonable excuse is a matter left to the sound discretion of the Supreme Court (see Bank of New York Melton v Adago , 155 AD3d 594, 63 NYS3d 495 [2d Dept 2017]; Wells Fargo Bank , N.A. v Kahana , 153 AD3d 1300, 59 NYS3d 705 [2d Dept 2017]; Park Lane N. Owners , Inc. v Gengo , 151 AD3d 874, 58 NYS3d 81 [2d Dept 2017]).
Here, as set forth above, it is apparent that "proceedings" were being taken which manifested the required "intent not to abandon the case" (see Wells Fargo Bank , NA v Daskal , 142 AD3d at 1073, supra). Moreover, there is a lack of prejudice to defendant caused by the plaintiff's short delay (see LNV Corp . v Forbes , 122 AD3d 805, 996 NYS2d 696 [2d Dept 2014]).
Under the circumstances of this case, the Court exercises its discretion in finding that the plaintiff proffered a reasonable excuse for the de minimus delay of just two months (see Bank of New York Mellon v Adago , 155 AD3d 594, supra, [two month delay]; HSBC Bank USA , N.A. v Hasis , 154 AD3d 832, supra ["a substantial delay"]; JPMorgan Chase Bank , Natl. Assn. v Kaushal , 156 AD3d 772, 65 NYS3d 734 [2d Dept 2017] [delay in court-ordered submission]; Wells Fargo Bank , N.A. v Kahana , 153 AD3d 1300, supra [six year delay]; Bank of New York Mellon v Izmirligil , 144 AD3d 1067, 44 NYS3d 44 [2d Dept 2016]; Golden Eagle Capital Corp. v Paramount Mgt. Corp., 143 AD3d 670, 38 NYS3d 438 [2d Dept 2016]; Maspeth Fed. Sav. and Loan Assn. v Brooklyn Heritage , LLC , 138 AD3d 793, 28 NYS3d 325 [2d Dept 2016]; BAC Home Loans Serv., LP v Reardon , 132 AD3d 790, 18 NYS3d 664 [2d Dept 2015]; Citimortgage , Inc. v Kowalski , 130 AD3d 558, 13 NYS3d 468 [2d Dept 2015]).
No extraordinary circumstances exist to warrant dismissal (see Onewest Bank , FSB v Michel , 143 AD3d 869, supra). As set forth above, this Court has found the action to be meritorious. This is not a case of unreasonable delay of the termination of the action.
In any event, the plaintiff would be able to recommence the action against the defendant-tenant pursuant to CPLR 205(a) (see U .S. Baank Trust , N.AA. v Moomey-Stevens , ___ AD3d ___, 2019 WL 80600 [3d Dept 2019]; Wells Fargo Bank , N.A. v Eitani , 148 AD3d 193, 47 NYS3d 80 [2d Dept 2017]).
As stated plaintiff's motion (#001) is granted in its entirety, the cross-motion (#002) is denied and the Court simultaneously signs the proposed Order, as modified. DATED: 1/10/19
/s/_________
THOMAS F. WHELAN, J.S.C.