Opinion
21800/13
02-27-2018
JP MORGAN CHASE BANK, National Association, Plaintiff, v. Michael E. CONDELLO a/k/a Michael Condello, Ellen M. Condello a/k/a Ellen Condello, and "John Doe" and "Jane Doe", #1 through #7, the last being fictitious and unknown to the plaintiff, the persons or parties intended being the tenants, occupants, persons or parties, if any, having or claiming an interest in or lien upon the mortgaged premises described in the complaint, Defendants.
MORGAN, LEWIS & BOCKIUS, Attys. For Plaintiff, 101 Park Ave. New York, NY 10178 LAW OFFICES OF CHARLES WALLSHEIN, LLC, Atty. For Defendants Condello, 35 Pinelawn Rd.—Ste. 106E, Melville, NY 11747
MORGAN, LEWIS & BOCKIUS, Attys. For Plaintiff, 101 Park Ave. New York, NY 10178
LAW OFFICES OF CHARLES WALLSHEIN, LLC, Atty. For Defendants Condello, 35 Pinelawn Rd.—Ste. 106E, Melville, NY 11747
Thomas F. Whelan, J. 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 defendants, Michael and Ellen Condello, for dismissal, is denied in its entirety; 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)(3).
This foreclosure action was commenced by filing on August 14, 2013. In essence, on March 16, 2006, defendant, Michael Condello, borrowed $432,000.00 from plaintiff's predecessor-in-interest and executed a promissory note and, together with Ellen Condello, a mortgage. The terms of the loan were thereafter modified effective December 1, 2012 to provide for a new unpaid principal balance of $338,808.82 and a decreased interest rate. Two months later, on February 1, 2013, Michael Condello defaulted by failing to pay the monthly installments due and owing. Michael and Ellen Condello appeared through counsel by filing an answer on September 5, 2013. An amended answer alleging seventeen affirmative defenses and five counterclaims was later filed on August 26, 2014.
The plaintiff addressed its burden of proof in the moving papers on this summary judgment motion and refuted 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 A.D.3d 1079, 28 N.Y.S.3d 107 [2d Dept. 2016] ; U.S. Bank Natl. Assn. v. Cox , 148 A.D.3d 962, 49 N.Y.S.3d 527 [2d Dept. 2017] ). The burden then shifts to defendants (see Bank of America, N.A. v. DeNardo , 151 A.D.3d 1008, 58 N.Y.S.3d 469 [2d Dept. 2017] ) and it is incumbent upon the answering defendants to submit proof sufficient to raise a genuine question of fact rebutting plaintiff's prima facie showing or in support of the affirmative defenses and counterclaims asserted in the answer or otherwise available to defendants (see Flagstar Bank v. Bellafiore , 94 A.D.3d 1044, 943 N.Y.S.2d 551 [2d Dept. 2012] ; Grogg Assocs. v. South Rd. Assocs. , 74 A.D.3d 1021, 907 N.Y.S.2d 22 [2d Dept. 2010] ; Wells Fargo Bank v. Karla, 71 A.D.3d 1006, 896 N.Y.S.2d 681 [2d Dept. 2010] ; Washington Mut. Bank v. O'Connor , 63 A.D.3d 832, 880 N.Y.S.2d 696 [2d Dept. 2009] ; J.P. Morgan Chase Bank, NA v. Agnello, 62 A.D.3d 662, 878 N.Y.S.2d 397 [2d Dept. 2009] ; Aames Funding Corp. v. Houston , 44 A.D.3d 692, 843 N.Y.S.2d 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 A.D.3d 768, 991 N.Y.S.2d 346 [2d Dept. 2014] ; Becher v. Feller , 64 A.D.3d 672, 677, 884 N.Y.S.2d 83 [2d Dept. 2009]; Cohen Fashion Opt., Inc. v. V & M Opt., Inc ., 51 A.D.3d 619, 858 N.Y.S.2d 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 N.Y.2d 539, 369 N.Y.S.2d 667, 330 N.E.2d 624 [1975] ; see also Madeline D'Anthony Enter., Inc. v. Sokolowsky , 101 A.D.3d 606, 957 N.Y.S.2d 88 [1st Dept. 2012] ; Argent Mtge. Co., LLC v. Mentesana , 79 A.D.3d 1079, 915 N.Y.S.2d 591 [2d Dept. 2010] ). Additionally, 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 A.D.3d 756, 969 N.Y.S.2d 796 [2d Dept. 2013] ; Starkman v. City of Long Beach , 106 A.D.3d 1076, 965 N.Y.S.2d 609 [2d Dept. 2013] ).
Here, the defendants' opposition and cross motion (# 002) rest solely on allegations regarding plaintiff's compliance with RPAPL § 1304. It is noted that defendants raise this contention for the first time in opposition, as it was not raised as a defense in the amended answer. The Court also notes that although both defendants filed an answer, only Michael Condello has submitted an affidavit in support of the opposition and cross motion. The Court addresses the allegations raised herein. However, in accordance with the above, all affirmative defenses and claims raised in the amended answer and not addressed in the opposition and cross motion are dismissed as abandoned.
This Court is faced, once again, with the unique situation wherein all defenses in an answer have been dismissed, yet defendant insists upon a raising a RPAPL § 1304 defense, which was not raised in the answer. The Court notes that such a claim is an affirmative defense that must be asserted by a defendant in a timely pre-answer motion to dismiss or answer (see CPLR 3018 ; see also Emigrant Bank v. Marando , 143 A.D.3d 856, 39 N.Y.S.3d 83 [2d Dept. 2016] ; Karel v. Clark , 129 A.D.2d 773, 514 N.Y.S.2d 766 [2d Dept. 1987] ("it is the defendant's obligation to plead [conditions precedent] nonoccurrence"] ). The failure to do so transforms the defense into an admission of plaintiff's satisfaction of the condition thereby resulting in a waiver of the defense by the defendant (see CPLR 3015 [a] ). The Court recognizes that the claim of non-compliance with RPAPL § 1304 or § 1306 is a "defense," which is the manner in which it is characterized in RPAPL § 1302 (see Pritchard v. Curtis , 101 A.D.3d 1502, 957 N.Y.S.2d 440 [3d Dept. 2012], which is not one that is jurisdictional in nature (see Flagstar Bank, FSB v. Jambelli , 140 A.D.3d 829, 32 N.Y.S.3d 625 [2d Dept. 2016] ; U.S. Bank N.A. v. Carey , 137 A.D.3d 894, 896, 28 N.Y.S.3d 68 [2d Dept. 2016] ; Citimortgage v. Espinal , 134 A.D.3d 876, 23 N.Y.S.3d 251 [2d Dept. 2015] ; cf., PHH Mortg. Corp. v. Muricy , 135 A.D.3d 725, 24 N.Y.S.3d 137 [2d Dept. 2016] ). The court believes that if a defendant fails to move to amend the answer to add the claim as a new affirmative defense, it may be subject to waiver (see generally , Flagstar Bank, FSB v. Jambelli , 140 A.D.3d 829, 32 N.Y.S.3d 625, supra ; U.S. Bank N .A. v. Carey , 137 A.D.3d 894, 28 N.Y.S.3d 68, supra; Deutsche Bank Trust Co. Americas v. Cox , 110 A.D.3d 760, 973 N.Y.S.2d 662 [2d Dept. 2013];cf., Citimortgage v. Espinal , 134 A.D.3d 876, 23 N.Y.S.3d 251, supra ).
The defendants pose two challenges to the plaintiff's compliance with RPAPL § 1304. First, they allege that plaintiff violated the "strict compliance" requirements of RPAPL § 1304 by including an additional informational page in the same envelope as the notice. The defendants' second contention challenges plaintiff's compliance with the mailing requirements of RPAPL § 1304. For the reasons that follow, the defendants' allegations are rejected and the cross motion denied.
By way of background, the "strict compliance" component of RPAPL § 1304 originated with the appellate court's decision in Aurora Loan Services, LLC v. Weisblum , where it was held that the plaintiff must demonstrate strict compliance with the statute or face dismissal ( Aurora Loan Services, LLC v. Weisblum , 85 A.D.3d 95, 103, 923 N.Y.S.2d 609 [2d Dept. 2011]. The Court noted that the legislative intent behind the Home Equity Theft Prevention Act ( Real Property Law § 265—a, or "HETPA"), through which RPAPL § 1304 was enacted, was to provide greater protections to borrowers facing foreclosure (see First Natl. Bank of Chicago v. Silver , 73 A.D.3d 162, 165, 899 N.Y.S.2d 256 [2d Dept. 2010], citing Senate Introducer Mem. in Support, Bill Jacket, L. 2006, ch. 308, at 7—9). RPAPL § 1304 was thereafter enacted "to aid the homeowner in an attempt to avoid litigation, and to facilitate communication between distressed homeowners and lenders and/or servicers" ( HSBC Bank USA, Nat. Assn. v. Ozcan, 154 A.D.3d 822, 825, 64 N.Y.S.3d 38 [2d Dept. 2017], citing Senate Introducer Mem. in Support, Bill Jacket L. 2008, ch. 472, § 2, Aurora Loan Services, LLC v. Weisblum , 85 A.D.3d 95, 923 N.Y.S.2d 609, supra ). Specifically, "[t]he bill sponsor sought ‘to bridge that communication gap in order to facilitate a resolution that avoids foreclosure’ by providing a pre-foreclosure notice advising the borrower of ‘housing counseling services available in the borrower's area’ and an ‘additional period of time ... to work on a resolution’ ( Aurora Loan Services, LLC v. Weisblum , 85 A.D.3d at 107–08, 923 N.Y.S.2d 609, supra, citing Senate Introducer Mem. in Support, Bill Jacket, L. 2008, ch. 472, at 10).
To achieve this end, the statute requires that the lender/service mail a notice containing "specific, mandatory language" to the borrower at least 90 days prior to commencement of an anticipated foreclosure filing ( RPAPL § 1304[1] ). The content requirements of the notice support the "underlying purpose of HETPA to afford greater protections to homeowners confronted with foreclosure" ( Aurora Loan Services, LLC v. Weisblum , 85 A.D.3d 95, 103, 923 N.Y.S.2d 609, supra ,citing First Natl. Bank of Chicago v. Silver , 73 A.D.3d 162, 165, 899 N.Y.S.2d 256 [2d Dept. 2010] ). Further, the statute provides that the mailing should take place "in a separate envelope from any other mailing or notice" ( RPAPL § 1304[2] ).
Here, an additional notice containing three sections was included in the envelope with the 90–day notice. The first section of the additional page was directed to service-members and their dependents, and provided information regarding benefits and protections that this class of borrowers are entitled to under the federal Service-members Civil Relief Act (SCRA). The second section was directed to all customers and advised them to be wary of organizations that may charge a fee in connection with housing counseling services or loan modifications, and provided telephone numbers to which the borrower can report what they believe to be suspicious activity. This section also provided the servicer's phone number and urged the borrower to contact that number to discuss available loss mitigation options. The last section included information regarding the purpose of the 90–day notice if the borrowers were protected under a bankruptcy stay.
The defendants contend that the inclusion of this notice renders the "mailing defective on its face," and "frustrate[s] the legislative intent of the statute" as it discourages borrowers from contacting the housing counselors on the list provided in the mailing. They allege that the additional notice was an attempt to "discredit and dissuade" the borrowers from contacting the housing counseling agencies, and surmise that the inclusion demonstrates that plaintiff did not strictly comply with RPAPL § 1304. The Court disagrees. At the outset, the Court notes that the defendants do not claim to have attempted to utilize any of the information provided anywhere in the mailing, therefore, there was no opportunity for any breakdown in communication. Under such circumstances, it is hard to see how the legislative policy of seeking "to bridge that communication gap in order to facilitate a resolution that avoids foreclosure" has been violated.
Nevertheless, the information provided in the additional mailing does not alter any of the protections provided by the statute. The purpose of and intent behind RPAPL § 1304 was to facilitate communication between the plaintiff and the defendant. Here, the content of the additional page furthers that intent "to provide a homeowner with information necessary ... to preserve and protect home equity" ( Real Property Law § 265—a[1][d] ) by providing both service-members and non-service-members with more resources to enable them to do so and a warning to keep in mind while utilizing that information.
Defendants' claim raises an additional issue that courts have often faced in such statutory interpretation cases. For instance, in People ex rel. Baez v. Superintendent, Queensboro Corr. Facility , 127 A.D.3d 110, 119, 5 N.Y.S.3d 216 (2d Dept. 2015), the Second Department proclaimed, in examining the Drug Law Reform Act, "[t]his Court will not permit the petitioner to convert a shield into a sword." The same court, in interpreting General Municipal Law § 50–e, in Se Dae Yang v. New York City Health & Hosps. Corp. , 140 A.D.3d 1051, 1052, 35 N.Y.S.3d 350 (2d Dept. 2016), held that the statute "was not meant as a sword to cut down honest claims, but merely as a shield to protect municipalities against spurious ones." Finally, as the Court of Appeals stated in Benjamin v. Koeppel , 85 N.Y.2d 549, 553, 626 N.Y.S.2d 982, 650 N.E.2d 829 (1995), "the courts are especially skeptical of efforts by clients or customers to use public policy ‘as a sword for personal gain rather that a shield for public good,’ " quoting Charlebois v. Weller Assn ., 72 N.Y.2d 587, 595, 535 N.Y.S.2d 356, 531 N.E.2d 1288 (1988).
Here, defendants are similarly seeking to use public policy as a sword and not as the legislatively intended shield. It is, therefore, this Court's position that the additional notice in this case does not violate the strict compliance component of RPAPL § 1304.
The defendants' challenge to the mailing component of RPAPL § 1304 also fails, as any claim that the plaintiff's supporting affidavit is deficient is rejected. The affidavit submitted by the plaintiff satisfies the business record exception to the hearsay rule. 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 A.D.3d 1, 925 N.Y.S.2d 61 [1st Dept. 2011] ; see CPLR 4518[a] ). Here, the affidavit of Mary Owens, a Vice President of the plaintiff, states that her averments in the affidavit are based on her own personal knowledge obtained through her review of the plaintiff's business records, including those of the defendants, which are kept and maintained in the regular course of plaintiff's business. Therefore, the affidavit adequately sets forth the basis of Ms. Owen's knowledge, established the admissibility of the documents appended to the affidavit as business records, and comports with the dictates of HSBC Bank USA v. Ozcan , 154 A.D.3d 822, 64 N.Y.S.3d 38 [2d Dept. 2017] ) (see Bank of America, Natl. Assn. v. Brannon , 156 A.D.3d 1, 63 N.Y.S.3d 352 [1st Dept. 2017] ; see also Olympus America, Inc. v. Beverly Hills Surgical Inst ., 110 A.D.3d 1048, 974 N.Y.S.2d 89 [2d Dept. 2013] ; DeLeon v. Port Auth. of NY & N.J. , 306 A.D.2d 146, 761 N.Y.S.2d 54 [2d Dept. 2003] ).
That the affidavit was submitted in reply to defendants' opposition is of no matter, as compliance with RPAPL § 1304 was first raised in opposition to the motion (see Citimortgage, Inc. v. Espinal , 134 A.D.3d 876, 23 N.Y.S.3d 251 [2d Dept. 2015] ; Bank of New York Mellon v. Hoshmand , 158 A.D.3d 600, 71 N.E.3d 527, 2018 WL 736218 [2d Dept. 2018] ).
Moreover, as in Citigroup v. Kopelowitz , 147 A.D.3d 1014, 1015, 48 N.Y.S.3d 223 (2d Dept. 2017), here, "the records themselves actually evince the facts for which they are relied upon."
In light of the above, the Court finds that the plaintiff has sufficiently demonstrated its entitlement to the relief requested on this motion (see CPLR 3212, 3215, 1003 and RPAPL § 1321 ; Wells Fargo Bank, N.A. v. Ali , 122 A.D.3d 726, 995 N.Y.S.2d 735 [2d Dept. 2014] ; Central Mtge. Co. v. McClelland , 119 A.D.3d 885, 991 N.Y.S.2d 87 [2d Dept. 2014]; Peak Fin. Partners, Inc. v. Brook , 119 A.D.3d 539, 987 N.Y.S.2d 916 [2d Dept. 2014]; Plaza Equiti es, LLC v. Lamberti , 118 A.D.3d 688, 986 N.Y.S.2d 843 [2d Dept. 2014]; Flagstar Bank v. Bellafiore , 94 A.D.3d 1044, 943 N.Y.S.2d 551 [2d Dept. 2012] ). The proposed order of reference, as modified by the court, has been signed simultaneously with this memorandum decision and order.