Opinion
2018–06128 Index No. 6931/13
09-25-2019
JPMORGAN CHASE BANK, NATIONAL ASSOCIATION, Respondent, v. Doreen T. GRENNAN, etc., et al., Appellants, et al., Defendants.
Harold A. Steuerwald, LLC, Bellport, NY, for appellants. Shapiro, DiCaro & Barak, LLC, Rochester, N.Y. (Austin T. Shufelt of counsel), for respondent.
Harold A. Steuerwald, LLC, Bellport, NY, for appellants.
Shapiro, DiCaro & Barak, LLC, Rochester, N.Y. (Austin T. Shufelt of counsel), for respondent.
RUTH C. BALKIN, J.P., SYLVIA O. HINDS–RADIX, JOSEPH J. MALTESE, VALERIE BRATHWAITE NELSON, JJ.
DECISION & ORDER In an action to foreclose a mortgage, the defendants Doreen T. Grennan, Shannon Grennan, Christine Grennan, and Casey Grennan appeal from a judgment of foreclosure and sale of the Supreme Court, Suffolk County (Robert F. Quinlan, J.), entered February 27, 2018. The judgment of foreclosure and sale, insofar as appealed from, upon an order of the same court (Carol MacKenzie, J.) dated March 15, 2016, granting those branches of the plaintiff's motion which were for summary judgment on the complaint insofar as asserted against the defendants Doreen T. Grennan, Shannon Grennan, Christine Grennan, and Casey Grennan, and for an order of reference, and upon an order of the same court (Robert F. Quinlan, J.) dated February 2, 2018, granting the plaintiff's motion to confirm the referee's report and for a judgment of foreclosure and sale, confirmed the referee's report and directed the foreclosure and sale of the subject property.
ORDERED that the judgment of foreclosure and sale is reversed insofar as appealed from, on the law, with costs, those branches of the plaintiff's motion which were for summary judgment on the complaint insofar as asserted against the defendants Doreen T. Grennan, Shannon Grennan, Christine Grennan, and Casey Grennan, and for an order of reference are denied, the plaintiff's motion to confirm the referee's report and for a judgment of foreclosure and sale is denied as academic, and the orders dated March 15, 2016, and February 2, 2018, are modified accordingly.
On December 1, 2006, the defendant Doreen T. Grennan (hereinafter Doreen) executed a note promising to repay a loan from CTX Mortgage Company, LLC (hereinafter CTX), in the amount of $280,000, secured by a mortgage encumbering her home in Bay Shore (hereinafter the property). Doreen defaulted in making the mortgage payment due March 1, 2009, and all payments due thereafter.
The plaintiff commenced this action by summons and verified complaint dated March 8, 2013, with a copy of the note attached thereto. Doreen interposed a verified answer, along with Shannon Grennan, Christine Grennan, and Casey Grennan, who at that time were denominated as "John Doe" in the caption, raising, inter alia, lack of standing and failure to comply with RPAPL 1304 as affirmative defenses. The plaintiff moved, inter alia, for summary judgment on the complaint, to substitute Shannon Grennan, Christine Grennan, and Casey Grennan in place of "John Doe," and to appoint a referee to calculate amounts due. Doreen, Shannon Grennan, Christine Grennan, and Casey Grennan (hereinafter collectively the defendants) opposed the motion.
By order dated March 15, 2016, the Supreme Court granted the motion, directed that the answer be stricken and the affirmative defenses dismissed, and appointed a referee. Upon completion of the referee's report, the plaintiff moved to confirm the report and for a judgment of foreclosure and sale. The defendants opposed the motion.
By order dated February 2, 2018, the Supreme Court granted the plaintiff's motion. A judgment of foreclosure and sale was entered February 27, 2018, confirming the referee's report and directing the sale of the subject property. The defendants appeal.
Generally, in a mortgage foreclosure action, a plaintiff demonstrates its prima facie entitlement to judgment as a matter of law by producing the mortgage, the unpaid note, and evidence of default (see Deutsche Bank Natl. Trust Co. v Kingsbury , 171 A.D.3d 871, 95 N.Y.S.3d 893 ; Bank of N.Y. Mellon v. Gordon , 171 A.D.3d 197, 97 N.Y.S.3d 286 ; JPMorgan Chase Bank, N.A. v. Rosa , 169 A.D.3d 887, 889, 94 N.Y.S.3d 602 ; U.S. Bank N.A. v. Greenberg , 168 A.D.3d 893, 894, 91 N.Y.S.3d 459 ). In addition, where, as here, the plaintiff's standing has been placed in issue by the defendant's answer, the plaintiff must prove its standing as part of its prima facie showing on a motion for summary judgment (see JPMorgan Chase Bank, N.A. v. Rosa , 169 A.D.3d at 889, 94 N.Y.S.3d 602 ; U.S. Bank N.A. v. Greenberg , 168 A.D.3d at 894, 91 N.Y.S.3d 459 ; HSBC Bank USA, N.A. v. Oscar , 161 A.D.3d 1055, 1056, 78 N.Y.S.3d 428 ). A plaintiff establishes its standing in a mortgage foreclosure action by demonstrating that, when the action was commenced, it was either the holder or assignee of the underlying note (see Aurora Loan Servs., LLC v. Taylor , 25 N.Y.3d 355, 361–362, 12 N.Y.S.3d 612, 34 N.E.3d 363 ; Nationstar Mtge., LLC v. Rodriguez , 166 A.D.3d 990, 992, 89 N.Y.S.3d 205 ; Central Mtge. Co. v. Jahnsen , 150 A.D.3d 661, 663, 56 N.Y.S.3d 107 ). "Either a written assignment of the underlying note or the physical delivery of the note prior to the commencement of the foreclosure action is sufficient to transfer the obligation, and the mortgage passes with the debt as an inseparable incident" ( Nationstar Mtge., LLC v. Rodriguez , 166 A.D.3d at 992, 89 N.Y.S.3d 205 [internal quotation marks omitted]; see Central Mtge. Co. v. Jahnsen , 150 A.D.3d at 663, 56 N.Y.S.3d 107 ; Deutsche Bank Trust Co. Ams. v. Garrison , 147 A.D.3d 725, 726, 46 N.Y.S.3d 185 ; U.S. Bank, N.A. v. Collymore , 68 A.D.3d 752, 753–754, 890 N.Y.S.2d 578 ). A plaintiff may establish, prima facie, its standing as the holder of the note by demonstrating that a copy of the note, including an endorsement in blank, was among the exhibits annexed to the complaint at the time the action was commenced (see U.S. Bank N.A. v. Fisher , 169 A.D.3d 1089, 95 N.Y.S.3d 114 ; Nationstar Mtge., LLC v. Rodriguez , 166 A.D.3d at 992, 89 N.Y.S.3d 205 ; U.S. Bank N.A. v. Duthie , 161 A.D.3d 809, 811, 76 N.Y.S.3d 226 ; Deutsche Bank Natl. Trust Co. v. Carlin , 152 A.D.3d 491, 492–493, 61 N.Y.S.3d 16 ; JPMorgan Chase Bank, N.A. v. Weinberger , 142 A.D.3d 643, 645, 37 N.Y.S.3d 286 ). A "promissory note [is] a negotiable instrument within the meaning of the Uniform Commercial Code" ( Mortgage Elec. Registration Sys., Inc. v. Coakley , 41 A.D.3d 674, 838 N.Y.S.2d 622 ; see UCC 3–104 [2][d] ; Bayview Loan Servicing, LLC v. Kelly , 166 A.D.3d 843, 845, 87 N.Y.S.3d 569 ; US Bank, N.A. v. Zwisler , 147 A.D.3d 804, 806, 46 N.Y.S.3d 213 ). A "holder" is "the person in possession of a negotiable instrument that is payable either to bearer or to an identified person that is the person in possession" ( UCC 1–201 [b][21][A] ; see UCC 3–301 ; Bayview Loan Servicing, LLC v. Kelly , 166 A.D.3d at 845–846, 87 N.Y.S.3d 569 ; US Bank, N.A. v. Zwisler , 147 A.D.3d at 806, 46 N.Y.S.3d 213 ). Where an instrument is endorsed in blank, it may be negotiated by delivery (see UCC 3–202 [1] ; 3–204[2]; Bayview Loan Servicing, LLC v. Kelly , 166 A.D.3d at 845–846, 87 N.Y.S.3d 569 ; US Bank, N.A. v. Zwisler , 147 A.D.3d at 806, 46 N.Y.S.3d 213 ). "An indorsement must be ... on the instrument or on a paper so firmly affixed thereto as to become a part thereof" ( UCC 3–202 [2] ).
Here, it is undisputed that a copy of the underlying note was annexed to the complaint. However, notwithstanding the plaintiff's assertion in its appellate brief that "[t]he note, as attached to the complaint, was indorsed in blank on the reverse side of the signature page (and not a separate allonge)," it cannot be ascertained from the copy of the note annexed to the complaint whether the separate page that bears the endorsement in blank was stamped on the back of the note, as alleged by the plaintiff, or on an allonge, in which case the plaintiff would have to prove that the endorsement was "so firmly affixed thereto as to become a part thereof," as required under UCC 3–202(2). Accordingly, the plaintiff failed to eliminate all triable issues of fact as to standing, despite having attached a copy of the note to the complaint at the time the action was commenced.
Moreover, although the plaintiff submitted copies of the note and the mortgage, it failed to establish Doreen's default as a matter of law. The plaintiff relies upon the affidavit of Remar T. Panganiban, a vice president of the plaintiff, to establish, among other things, Doreen's default. "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 ; see HSBC Bank USA, N.A. v. Ozcan , 154 A.D.3d 822, 826, 64 N.Y.S.3d 38 ). Here, while Panganiban's affidavit was sufficient to establish a proper foundation for the admission of a business record 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 ), 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.Y. Mellon v. Gordon , 171 A.D.3d 197, 205, 97 N.Y.S.3d 286 [citation omitted]; cf. 9 Weinstein–Korn–Miller, N.Y. Civ. Prac. CPLR 4518.20; see generally Great Am. Ins. Co. v. Auto Mkt. of Jamaica, N.Y. , 133 A.D.3d 631, 632–633, 19 N.Y.S.3d 329 ; 35 Carmody–Wait 2d § 194:94 ). "While a witness may read into the record from the contents of a document which has been admitted into evidence (see HSBC Bank USA, N.A. v. Ozcan , 154 A.D.3d 822, 826–827, 64 N.Y.S.3d 38 ), a witness's description of a document not admitted into evidence is hearsay" ( U.S. Bank N.A. v. 22 S. Madison, LLC , 170 A.D.3d 772, 774, 95 N.Y.S.3d 264 ; see Bank of N.Y. Mellon v. Gordon , 171 A.D.3d 197, 97 N.Y.S.3d 286 ; Great Am. Ins. Co. v. Auto Mkt. of Jamaica, N.Y. , 133 A.D.3d at 632–633, 19 N.Y.S.3d 329 ; People v. Barnes , 177 A.D.2d 989, 578 N.Y.S.2d 9 ). Thus, Panganiban's assertions as to the contents of the records were "inadmissible hearsay to the extent that the records [he] purport[ed] to describe were not submitted with [his] affidavit" ( U.S. Bank N.A. v. 22 S. Madison, LLC , 170 A.D.3d at 774, 95 N.Y.S.3d 264 ). While "a witness may always testify as to matters which are within his or her personal knowledge through personal observation" ( Bank of N.Y. Mellon v. Gordon , 171 A.D.3d 197, 97 N.Y.S.3d 286, citing Jerome Prince, Richardson on Evidence §§ 4–301, 6–210 [Farrell 11th ed. 1995] ), Panganiban did not attest to such personal knowledge. Contrary to the plaintiff's assertion, a review of records maintained in the normal course of business does not vest an affiant with personal knowledge. Since Panganiban's affidavit was the only evidence of default proffered in support of the motion, the plaintiff failed to establish its prima facie entitlement to summary judgment on the complaint on this additional ground.
The plaintiff relied upon the same affidavit to establish its compliance with the notice requirements of RPAPL 1304(1) and of the mortgage agreement. RPAPL 1304 provides that at least 90 days before a lender, an assignee, or a mortgage loan servicer commences an action to foreclose the mortgage on a home loan as defined in the statute, such lender, assignee, or mortgage loan servicer must give notice to the borrower. RPAPL 1304(1) sets forth the requirements for the content of such notice, and RPAPL 1304(2) further provides that such notice must be sent "by registered or certified mail and also by first-class mail" to the last known address of the borrower. "[P]roper service of RPAPL 1304 notice on the borrower or borrowers is a condition precedent to the commencement of a foreclosure action, and the plaintiff has the burden of establishing satisfaction of this condition" ( U.S. Bank N.A. v. Henderson , 163 A.D.3d 601, 602, 81 N.Y.S.3d 80 [internal quotation marks omitted]; see LNV Corp. v. Sofer , 171 A.D.3d 1033, 98 N.Y.S.3d 302 ; Wells Fargo Bank, N.A. v. Lewczuk , 153 A.D.3d 890, 892, 61 N.Y.S.3d 244 ; Flagstar Bank, FSB v. Jambelli , 140 A.D.3d 829, 830, 32 N.Y.S.3d 625 ). "By requiring the lender or mortgage loan servicer to send the RPAPL 1304 notice by registered or certified mail and also by first-class mail, the Legislature implicitly provided the means for the plaintiff to demonstrate its compliance with the statute, i.e., by proof of the requisite mailing, which can be established by proof of the actual mailings, such as affidavits of mailing or domestic return receipts with attendant signatures, or proof of a standard office mailing procedure designed to ensure that items are properly addressed and mailed, sworn to by someone with personal knowledge of the procedure" ( Citibank, N.A. v. Conti–Scheurer , 172 A.D.3d 17, 20–21, 98 N.Y.S.3d 273 [internal quotation marks omitted]; see Bank of Am., N.A. v. Bittle , 168 A.D.3d 656, 658, 91 N.Y.S.3d 234 ; Wells Fargo Bank, NA v. Mandrin , 160 A.D.3d 1014, 1016, 76 N.Y.S.3d 182 ).
In this case, the plaintiff failed to submit documentary evidence that the 90–day notice was sent by first-class mail. With respect to first-class mail, "[t]he mere assertion that notice was mailed, supported by someone with no personal knowledge of the mailing, in the absence of proof of office practices to ensure that the item was properly mailed, does not give rise to the presumption of receipt" ( Lindsay v. Pasternack Tilker Ziegler Walsh Stanton & Romano LLP , 129 A.D.3d 790, 793, 12 N.Y.S.3d 124 [internal quotation marks omitted]; see Nassau Ins. Co. v. Murray , 46 N.Y.2d 828, 829, 414 N.Y.S.2d 117, 386 N.E.2d 1085 ; TD Bank, N.A. v. Leroy , 121 A.D.3d 1256, 1258, 995 N.Y.S.2d 625 ; Long Is. Sports Dome v. Chubb Custom Ins. Co. , 23 A.D.3d 441, 442, 807 N.Y.S.2d 594 ). Here, Panganiban did not have personal knowledge of the purported mailing by first-class mail, and failed to attest that he was familiar with the plaintiff's mailing practices and procedures.
Since the plaintiff failed to provide evidence of the actual mailing by first-class mail, "or proof of a standard office mailing procedure designed to ensure that items are properly addressed and mailed, sworn to by someone with personal knowledge of the procedure ... the plaintiff failed to establish, prima facie, that it complied with RPAPL 1304" ( Citibank, N.A. v. Conti–Scheurer , 172 A.D.3d at 21, 98 N.Y.S.3d 273 [citations and internal quotation marks omitted]; see U.S. Bank N.A. v. Cope , 175 A.D.3d 527, 527–30, 107 N.Y.S.3d 104, 2019 N.Y. Slip Op. 06111, *1–2 ; Nationstar Mtge., LLC v. LaPorte , 162 A.D.3d 784, 785, 79 N.Y.S.3d 70 ; U.S. Bank N.A. v. Henry , 157 A.D.3d 839, 841–842, 69 N.Y.S.3d 656 ; Investors Sav. Bank v. Salas , 152 A.D.3d 752, 753–754, 58 N.Y.S.3d 600 ; Citibank, N.A. v. Wood , 150 A.D.3d 813, 814, 55 N.Y.S.3d 109 ). Additionally, since Panganiban failed to attest that he was familiar with the plaintiff's mailing practices and procedures, the plaintiff "failed to establish that the required notice was mailed to the defendant by first-class mail or actually delivered to her ‘notice address’ if sent by other means, as required by the consolidated mortgage" ( LNV Corp. v. Sofer , 171 A.D.3d at 1037, 98 N.Y.S.3d 302 ; see Emigrant Bank v. Myers , 147 A.D.3d 1027, 1028, 47 N.Y.S.3d 446 ; GMAC Mtge., LLC v. Bell , 128 A.D.3d 772, 773, 11 N.Y.S.3d 73 ).
In light of the plaintiff's failure to make a prima facie showing of its entitlement to judgment as a matter of law (see Alvarez v. Prospect Hosp. , 68 N.Y.2d 320, 324, 508 N.Y.S.2d 923, 501 N.E.2d 572 ; Zuckerman v. City of New York , 49 N.Y.2d 557, 562, 427 N.Y.S.2d 595, 404 N.E.2d 718 ), the Supreme Court should have denied those branches of the plaintiff's motion which were for summary judgment on the complaint insofar as asserted against the defendants and for an order of reference, regardless of the sufficiency of the opposing papers (see Alvarez v. Prospect Hosp. , 68 N.Y.2d at 324, 508 N.Y.S.2d 923, 501 N.E.2d 572 ; Winegrad v. New York Univ. Med. Ctr. , 64 N.Y.2d 851, 853, 487 N.Y.S.2d 316, 476 N.E.2d 642 ).
BALKIN, J.P., HINDS–RADIX, MALTESE and BRATHWAITE NELSON, JJ., concur.