Opinion
Index No. 709350/2014
03-24-2023
U.S. BANK NATIONAL ASSOCIATION, AS TRUSTEE FOR CREDIT SUISSE FIRST BOSTON MORTGAGE SECURITIES CORP., CSAB MORTGAGE-BACKED PASS-THROUGH CERTIFICATES, SERIES 2006-2, Plaintiff, v. Elizabeth DIAZ, Ana Diaz, Criminal Court of the City of New York, New York State Department of Taxation and Finance, City of New York Environmental Control Board, City of New York Department of Transportation Parking Violations Bureau, City of New York Transit Adjudication Bureau, Defendants.
Woods Oviatt Gilman LLP, Rochester (Kristin M. Bolduc of counsel), for plaintiff. Deutsch & Schneider, LLP, Glendale (William Fielding and Doris Barkhordar of counsel), for Elizabeth Diaz and another, defendants.
Woods Oviatt Gilman LLP, Rochester (Kristin M. Bolduc of counsel), for plaintiff.
Deutsch & Schneider, LLP, Glendale (William Fielding and Doris Barkhordar of counsel), for Elizabeth Diaz and another, defendants.
Phillip Hom, J. It is ordered that this motion in limine by Plaintiff for an order limiting the issues at trial (Seq. No. 5), and this motion in limine (Seq. No. 6) to dismiss by Defendants Elizabeth Diaz and Ana Diaz, are determined as follows:
On December 8, 2014, Plaintiff, U.S. Bank National Association, as Trustee for Credit Suisse First Boston Mortgage Securities Corp., CSAB Mortgage-Backed Pass-Through Certificates, Series 2006-2 ("Plaintiff"), commenced this action to foreclose a mortgage ("Mortgage"), as modified by a loan modification agreement ("Loan Modification"), which secured a note ("Note"), against real property located at 107-15 76th Street a/k/a 10715 76th Street, Ozone Park, NY 11417, Block 9129, Lot 73 ("Premises").
On April 7, 2006, Defendant Elizabeth Diaz ("Elizabeth") executed and delivered the Note in favor of MortgageIt, Inc. The same day, Defendants Elizabeth and Ana Diaz ("Ana") (collectively "Borrowers") executed and delivered the Mortgage, dated April 7, 2006, and recorded April 24, 2006, in favor of Mortgage Electronic Registration Systems, Inc., as nominee for MortgageIt, Inc. ("MERS"). On March 27, 2010, Borrowers entered the Loan Modification, dated March 11, 2010, and recorded February 10, 2011, with Wells Fargo Bank, N.A. d/b/a America's Servicing Co. ("Wells Fargo"). The Mortgage and Loan Modification were assigned to Plaintiff, by written assignment dated October 9, 2014, and recorded November 6, 2014, which amended the prior written assignment, dated September 6, 2011, and recorded September 15, 2011.
The Note evidenced a $303,750 loan to Elizabeth from MortgageIt Inc.
Plaintiff previously moved (Seq. No. 1) for, among other things, summary judgment, which was denied without prejudice in an order (Gavrin, J.), dated February 7, 2017, and entered February 23, 2017 (EF Doc 43). The court (Gavrin, J.) found that Plaintiff failed to submit a copy of the Pooling and Servicing Agreement.
Plaintiff moved (Seq. No. 2) a second time for, among other things, an order granting summary judgment, which was granted in part and denied in part, in an order (Gavrin, J.), dated January 22, 2018, and entered February 6, 2018 ("2018 Order"). The court (Gavrin, J.) granted Plaintiff's (Seq. No. 2) motion to the extent that Plaintiff was granted leave to amend the caption by removing "JOHN DOE" as a defendant, and the non-appearing and non-answering defendants were deemed to be in default.
Additionally, the court (Gavrin, J.) dismissed Borrowers’ following affirmative defenses: (1) first affirmative defense based upon lack of personal jurisdiction—the court deemed it waived; (2) second affirmative defense based upon lack of standing—the court found that Plaintiff established standing and that Borrowers failed to raise a triable issue of fact; (3) fourth affirmative defense based upon failure to provide RPAPL 1303 notice—the court found that Plaintiff complied with the RPAPL 1303 notice requirements and Borrowers failed to rebut such; (4) fifth affirmative defense based upon Plaintiff's failure to plead compliance with the contractual condition precedent relative to the provision of notice of default and demand for a cure—the court held that the performance or occurrence of conditions precedent in a contract need not be pleaded; (5) seventh affirmative defense based upon Plaintiff's failure to mitigate damages and/or unclean hands—the court held that mitigation of damages is not an affirmative defense to foreclose a mortgage. Additionally, the court held that Borrowers failed to allege or demonstrate that Plaintiff engaged in immoral or unconscionable conduct which was directly related to the subject Note and Mortgage or caused the default in payments thereunder; (6) ninth affirmative defense based upon Plaintiff's failure to provide a Truth-in-Lending statement, good faith estimate, and notice of the right to rescind, pursuant to the federal Truth in Lending Act ( 15 USC § 1601 et seq. ) ("TILA"), its implementing regulations ( 12 CFR 226.1et sec. ) ("Regulation Z"), and the Home Ownership and Equity Protection Act of 1994 ( 15 USC § 1639 ) ("HOEPA")—the court dismissed such defense entirely as asserted by Ana; however, said defense as asserted by Elizabeth, was only dismissed with regard to the notice of the Truth-in-Lending statement and good faith estimate; (7) tenth affirmative defense based upon usury; (8) eleventh affirmative defense based upon failure to join a necessary party; (9) twelfth affirmative defense based upon statute of limitations; (10) thirteenth, fourteenth and fifteenth affirmative defenses based upon the doctrines of estoppel, waiver, release, laches and claims of unconscionable conduct; (11) sixteenth, seventeenth and nineteenth affirmative defenses based upon culpable conduct by Plaintiff or others; (12) eighteenth affirmative defense based upon Borrowers’ assertion that they did not cause damages; (13) twentieth affirmative defense based upon Plaintiff's failure to negotiate in good faith; (14) twenty-first affirmative defense based upon Plaintiff's failure to interpose a verified complaint; and (15) twenty-second affirmative defense —based upon Borrowers’ purported right to assert further affirmative defenses.
The court (Gavrin, J.) denied the dismissal of Borrowers’ following affirmative defenses: (1) third affirmative defense based upon Plaintiff's failure to comply with RPAPL 1304 —the court found that "the Brooks affidavit" failed to indicate familiarity with Wells Fargo's mailing practices and procedures. The court, based upon Aurora Loan Servs., LLC v. Weisblum , 85 A.D.3d 95, 923 N.Y.S.2d 609 [2d Dept. 2011], which has since been abrogated by Citibank, N.A. v. Conti-Scheurer , 172 A.D.3d 17, 98 N.Y.S.3d 273 [2d Dept. 2019] ), further found that the evidence indicates that Plaintiff's servicer "purportedly mailed only one notice, addressed to both [Borrowers]"; (2) sixth affirmative defense based upon Plaintiff's failure to provide, prior to the commencement of this action, proper notice of default in compliance with the contractual condition precedent—the court held that "the Hernandez affidavit" was conclusory and unsubstantiated, as it does not show that the notice of default was mailed by first class mail or that it was actually delivered. Additionally, it does not indicate familiarity with Wells Fargo's mailing practices and procedures; (3) eighth affirmative defense based upon Plaintiff's failure to state a cause of action—the court held that such defense is not subject to motion (see Butler v. Catinella , 58 A.D.3d 145, 150, 868 N.Y.S.2d 101 [2d Dept. 2008] ); and (4) ninth affirmative defense based upon Plaintiff's failure to provide Elizabeth with notice of the right to rescind, pursuant to TILA, Regulation Z, and HOEPA. Therefore, the court denied the branches of Plaintiff's motion for an order (i) dismissing these affirmative defenses, (ii) granting summary judgment; (iii) appointing a Referee, and (iv) granting a default judgment against the defaulting defendants.
Thereafter, Plaintiff made another motion (Seq. No. 3) seeking the relief that was denied in its previous motion (Seq. No. 2). In an order, dated February 22, 2019, and entered March 5, 2019, the court (Gavrin, J.) declined to entertain Plaintiff's successive summary judgment motion and it was denied.
Now, having been assigned to this Part for a bench trial, Plaintiff moves (Seq. No. 5) for an order, (1) limiting the issues at trial to Plaintiff's compliance with RPAPL 1304 and compliance with the Mortgage in sending the notice of default; and (2) barring Borrowers from raising any additional affirmative defense. Borrowers also move (Seq. No. 6) to dismiss Plaintiff's complaint for failure to strictly comply with RPAPL 1304. The Court will first consider Borrowers’ motion in limine, as it may render Plaintiff's motion in limine moot. Borrowers’ motion in limine (Seq. No. 6) to dismiss—failure to strictly comply with RPAPL 1304
Borrowers argue that Plaintiff's complaint must be dismissed because the RPAPL 1304 notices were each sent in a single envelope containing a single notice addressed to both Borrowers. Borrowers argue that the litigation of the issue regarding compliance with RPAPL 1304 is barred by law of the case, because in the 2018 Order, the court (Gavrin, J.) found that Plaintiff's submissions did not comply with RPAPL 1304. Borrowers contend that this defense may be raised at any time.
Law of the Case Doctrine
Under the law of the case doctrine, once an issue is adjudicated, "that should be the end of the matter as far as Judges and courts of co-ordinate jurisdiction are concerned" ( HSBC Bank USA, N.A. v. Blair-Walker , 202 A.D.3d 1065, 1068, 163 N.Y.S.3d 582 [2d Dept. 2022], quoting Matter of Koegel , 184 A.D.3d 764, 765, 126 N.Y.S.3d 153 [2d Dept. 2020] [internal quotation marks omitted]). Said doctrine only applies "to legal determinations that were necessarily resolved on the merits in [a] prior decision" ( HSBC Bank USA, N.A. , 202 A.D.3d at 1068, 163 N.Y.S.3d 582, quoting Flatbush Two, LLC v. Morales , 190 A.D.3d 826, 827, 140 N.Y.S.3d 556 [2d Dept. 2021] [internal quotation marks omitted]).
The law of the case doctrine is intended to prevent re-litigation of issues of law that have already been decided in the same action (see People v. Evans , 94 N.Y.2d 499, 502-04, 706 N.Y.S.2d 678, 727 N.E.2d 1232 [2000] ). The Court of Appeals has likened the law of the case doctrine to "a kind of intra-action res judicata" ( id. , quoting Siegel, New York Practice § 448, at 723 [3d ed.] ). Nevertheless, where there is a showing of subsequent evidence or a change in the law, issues of law that have already been decided may be reexamined (see Wells Fargo Bank Minn., N.A. v. Perez , 70 A.D.3d 817, 817, 894 N.Y.S.2d 509 [2d Dept. 2010] ).
The Court finds that the issue of Plaintiff's compliance with RPAPL 1304 is not barred by the law of the case doctrine, as it was not previously determined in the 2018 Order. The court (Gavrin, J.) merely determined that Plaintiff's submissions in support of its motion (Seq. No. 2) were insufficient to show compliance with RPAPL 1304. Notably, the court granted other branches of Plaintiff's motion (Seq. No. 2) and held that Plaintiff established its standing.
Furthermore, even if such issue was decided, the Court may reexamine such issue, given the recent Court of Appeals decision, Bank of America, N.A. v. Kessler , which discusses the "separate envelope" requirement under RPAPL 1304 and the legislative intent ( 39 N.Y.3d 317, 186 N.Y.S.3d 85, 206 N.E.3d 1228 [2023] ).
RPAPL 1304A plaintiff must demonstrate that it strictly complied with RPAPL 1304, which is a condition precedent to the commencement of a foreclosure action (see U.S. Bank National Association v. Krakoff , 199 A.D.3d 859, 863, 157 N.Y.S.3d 299 [2d Dept. 2021] ; Wells Fargo Bank, N.A. v. Yapkowitz , 199 A.D.3d 126, 131-32, 155 N.Y.S.3d 163 [2d Dept. 2021] ; Citibank, N.A. v. Conti-Scheurer , 172 A.D.3d 17, 20, 98 N.Y.S.3d 273 [2d Dept. 2019] ; Fifth Third Mortgage Company v. Seminario , 168 A.D.3d 1041, 1042, 93 N.Y.S.3d 347 [2d Dept. 2019] ). RPAPL 1304 (1) provides that a lender, an assignee or a mortgage loan servicer must give notice to the borrower or borrowers at least ninety (90) days prior to commencing a legal action against the borrower or borrowers ("90-Day Notice"). The statute further specifies the required content for the 90-Day Notice and requires that such notice must be sent by registered or certified mail and by first-class mail to the last known address of the borrower or borrowers, as well as to the premises that is subject to the underlying mortgage (see RPAPL 1304 [1], [2] ; Nationstar Mortgage, LLC v. Jean-Baptiste , 178 A.D.3d 883, 885, 114 N.Y.S.3d 402 [2d Dept. 2019] ).
To demonstrate its compliance with RPAPL 1304, a plaintiff must submit proof of the requisite mailing, which can be established with evidence of the mailings, such as domestic return receipts with attendant signatures or affidavits of mailing or an affidavit regarding a standard office mailing procedure designed to ensure that mail is properly addressed and mailed, sworn to by someone who has personal knowledge of such procedure (see U.S. Bank National Association , 199 A.D.3d at 859, 157 N.Y.S.3d 299 ; Yapkowitz , 199 A.D.3d at 129-30, 155 N.Y.S.3d 163 ; Nationstar Mortgage, LLC , 178 A.D.3d at 886, 114 N.Y.S.3d 402 ; Citibank, N.A. , 172 A.D.3d at 19-21, 98 N.Y.S.3d 273 ; Fifth Third Mortgage Company , 168 A.D.3d at 1043, 93 N.Y.S.3d 347 ).
It is undisputed that the Appellate Division, Second Department has held that where there are two or more borrowers, the plaintiff must separately mail the 90-Day Notice to each borrower (see HSBC Bank USA, National Association v. DiBenedetti , 205 A.D.3d 687, 690, 168 N.Y.S.3d 502 [2d Dept. 2022] ; Yapkowitz , 199 A.D.3d at 134, 155 N.Y.S.3d 163 ). In Yapkowitz , the Appellate Division held that, "[s]ince the legislature imposed strict mailing requirements aimed at ensuring notice and documenting the delivery of the 90-day notice, it would be difficult to imagine why the legislature would not also require the simple measure of separately addressing a 90-day notice to each of the borrowers" ( 199 A.D.3d at 135, 155 N.Y.S.3d 163 ). The Court further held that, "the obligation to send all required notices ‘in a separate envelope from any other mailing or notice’ cannot be satisfied by including the required notice for each borrower in the same envelope ( RPAPL 1304 [2] ). To permit a single notice jointly addressed to two or more borrowers and mailed in a single envelope to serve in lieu of a separately mailed notice to each borrower would transform the requisite standard of compliance from ‘strict compliance’ to ‘substantial compliance’ " ( id. at 136, 155 N.Y.S.3d 163 ).
Prior precedent has found deficient 90-Day Notices that were jointly addressed to co-borrowers (see HSBC Bank USA, National Association v. Schneps , 210 A.D.3d 748, 750, 178 N.Y.S.3d 166 [2d Dept. 2022] ; DiBenedetti , 205 A.D.3d at 690, 168 N.Y.S.3d 502 ; Deutsche Bank National Trust Company v. Loayza , 204 A.D.3d 753, 755, 166 N.Y.S.3d 654 [2d Dept. 2022] ; Krakoff , 199 A.D.3d at 859, 157 N.Y.S.3d 299 [2d Dept. 2021] ; Yapkowitz , 199 A.D.3d at 134, 155 N.Y.S.3d 163 ); however, in each case, the court noted additional deficiencies in the RPAPL 1304 notice. For example, in Schneps and Yapkowitz , the jointly addressed notices were sent in the same envelope. In DiBenedetti , additional material was included with the RPAPL 1304 notice. In Loayza , only a single notice, jointly addressed to both borrowers, was mailed. In Krakoff , the affiants failed to state whether they were familiar with the mailing practices of the entity that mailed the RPAPL 1304 notice.
While not binding law, the Court notes the dissent in Yapkowitz (Dillon, J., concurring in part), held that jointly addressed notices that otherwise comport with statutory requirements should be found to comply with RPAPL 1304. The concurrence in Loayza (Maltese, J.) expressed his agreement with the Yapkowitz dissent. This Court agrees. The intent of RPAPL 1304 is to provide notice to borrowers of their default, not to impose undefined hoops for lenders to jump through. There is no argument to be made that addressing a notice to both co-borrowers and sending same to each co-borrower in any way diminishes such notice. Indeed subdivision 1 of RPAPL 1304 specifically states: "[A]t least ninety days before a lender, an assignee or a mortgage loan servicer commences legal action against the borrower, or borrowers at the property address [ ] such lender, assignee or mortgage loan servicer shall give notice to the borrower" ( RPAPL 1304 [1] [emphasis added]). While the singular "borrower" is used throughout the statute, subdivision 1 expressly includes the plural "borrowers at the property address" in its definition of the borrower entitled to notice. Furthermore, nowhere in the statute does the legislature state that such notice must be individually addressed.
Significantly, in Kessler , the Court of Appeals recently held that the term "other mailing or notice" used in RPAPL 1304 (2), "more aptly refers to other kinds of notices, such as pre-acceleration default notices, notices disclosing interest rate changes to borrowers with adjustable-rate mortgages ( 12 CFR 1026.20 [c]), monthly mortgage statements ( 12 CFR 1026.41 ), or notices disclosing to the borrower a transfer of the loan servicer ( 12 CFR 1024.33 [b])" ( 2023 WL 1972994 at 3 ). "More importantly, to the extent there is any ambiguity about how to interpret the statute, application of a bright-line rule would contravene the legislative purpose" ( id. ).
Here, based upon Borrowers’ submissions, including, the affidavit of Matthew Joseph Julian, the 90-Day Notices, and proof of mailing, the Court finds that Plaintiff strictly complied with RPAPL 1304, as they were mailed, more than 90 days before commencement, by first class mail and certified mail to the last known address of Borrowers, which was also the Premises, and they contained all the mandated language. The evidence shows that, while jointly addressed, two separate 90-Day Notices were mailed to Borrowers in two separate envelopes. Most importantly, the Court finds that the 90-day notices, serve "the express statutory purpose of providing borrowers with information that may help them avoid foreclosure during a 90-day window established by the statute" ( Kessler , 2023 WL 1972994, at 4 ). Thus, the Court finds that Plaintiff strictly complied with RPAPL 1304. Hence, Borrowers’ motion in limine to dismiss Plaintiff's complaint based upon failure to strictly comply with RPAPL 1304 is denied.
Plaintiff's motion in limine (Seq. No. 5) to limit issues at trial
As previously stated, Plaintiff moves for an order, limiting the issues at trial to Plaintiff's compliance with RPAPL 1304 and compliance with the Mortgage in sending the notice of default, and barring Borrowers from raising any addition affirmative defense. As per the 2018 Order, the only affirmative defenses remaining are Borrowers’ third, sixth, and eighth affirmative defenses, and the ninth affirmative defense to the extent that Elizabeth claims that she did not receive the notice of the right to rescind pursuant to TILA, Regulation Z, and HOEPA.
For the same reasons discussed above, Borrowers’ third affirmative defense based upon Plaintiff's strict compliance with RPAPL 1304 is dismissed. Thus, Plaintiff's request regarding its strict compliance with RPAPL 1304 is granted to the extent that the Court finds that Plaintiff strictly complied with RPAPL 1304.
Plaintiff's request regarding the issue of Borrowers’ eighth affirmative defense for failure to state a cause of action is granted to the extent that it is not before the Court (see Butler , 58 A.D.3d at 151, 868 N.Y.S.2d 101 ).
Plaintiff's request to preclude Borrowers from raising their ninth affirmative defense based upon Plaintiff's failure to provide Elizabeth with notice of the right to rescind, pursuant to TILA, Regulation Z, and HOEPA, is granted. "TILA gives the consumer an unconditional right to rescind the transaction within three days of (1) the consummation of the transaction, or (2) the delivery of certain required disclosures and rescission forms to the consumer, whichever occurs later (see 15 USC § 1635 [a]). However, where the required information and forms have never been delivered to the borrower, the right to rescind is extended to three years after the date of the consummation of the transaction (see 15 USC § 1635 [f])" ( WM Specialty Mortg., LLC v. Sparano , 68 A.D.3d 987, 989, 892 N.Y.S.2d 408 [2d Dept. 2009] ). Here, Elizabeth claims that Plaintiff failed to provide her with the notice of the right to rescind under TILA; however, Elizabeth has never claimed that she exercised such right. Furthermore, the Court finds that she is barred from raising such issue, as her time to rescind expired three years after the Note was consummated, which was almost 14 years ago (see Washington Mut. Bank v. Valencia , 92 A.D.3d 774, 775, 939 N.Y.S.2d 73 [2d Dept. 2012] ).
Furthermore, Plaintiff's request regarding its compliance with the terms of the Mortgage in sending the notice of default is denied as moot. In the interests of justice and judicial economy, this Court, as the trial Judge of the bench trial scheduled for Monday, March 27, 2023, finds that, based upon Borrowers’ own submissions, Plaintiff complied with such terms. In accordance with the foregoing, it is hereby ORDERED that Borrowers’ motion in limine (Seq. No. 6) to dismiss is denied; and it is further
ORDERED that Plaintiff's motion in limine (Seq. No. 5) is granted to the extent that the Court finds that Plaintiff has strictly complied with RPAPL 1304, as well as with the terms of the Mortgage in sending the notice of default, and that Borrowers’ remaining affirmative defenses are either barred and/or not before the Court; and it is further
ORDERED that Plaintiff is granted leave to enter default judgment against the defaulting defendants; and it is further
ORDERED that Plaintiff is granted judgment as a matter of law; and it is further
ORDERED that Plaintiff is granted an order of reference.
This constitutes the Decision and Order of the Court.