Opinion
100867/08.
Decided October 11, 2011.
The following papers numbered 1-3 were marked fully submitted on the 18th day of August, 2011:
Pages Numbered Notice of Motion for Execution of Judgment of Foreclosure and Sale by Plaintiff, with Supporting Papers and Exhibits (dated December 16, 2009)..................................................................1*While this motion was subsequently withdrawn, the supporting papers and affidavits were necessary for consideration of the disposition of the cross motion.
Notice of Cross Motion to Dismiss by Defendants Malak Ghobrial and Stephanie Naveja-Ghavrial, with Supporting Papers and Exhibits (dated March 11, 2010).....................................................................2 Reply and Affirmation in Opposition to Cross Motion by Plaintiff with Supporting Papers and Exhibits (dated May 19, 2010).......................................................................3Upon the foregoing papers, the motion to dismiss the complaint is granted.
This is an action to foreclose a mortgage in which plaintiff Wells Fargo Bank, NA (hereinafter "Wells Fargo" or "plaintiff") claims that defendants Malak Ghobrial and Stephanie Naveja-Ghavrial (hereinafter "defendants") are in default as a result of their having failed to make the required payments since November 1, 2007. To the extent relevant, the plaintiff lender commenced the instant foreclosure action on or about February 29, 2008 and an Order of Reference was granted thereafter. Defendants' pro se answer is dated April 29, 2008.
In an attempt at loss mitigation with the defendants, plaintiff withdrew its motion for a judgment of foreclosure and sale, and a settlement conference was subsequently scheduled for June 12, 2009. When the defendants failed to appear, plaintiff resubmitted its prior motion. However, that motion was again withdrawn on February 3, 2011.
A plaintiff in an action to foreclose a mortgage establishes its case as a matter of law through the production of the mortgage, the unpaid note and evidence of default ( see Wells Fargo Bank v. Cohen , 80 AD3d 753 , 755 [2nd Dept 2011]). Nevertheless, in the instant case, while plaintiff has produced a copy of the mortgage, the unpaid note and an affirmation by the bank's vice president of loan documentation attesting to the alleged default, it has failed to produce the required attorney affirmation as mandated by the Chief Administrative Judge of the State of New York. Therefore, had plaintiff's motion not been withdrawn, it would have been denied with leave to renew ( see HSBC Bank USA, Inc. v. Sardegna, Richmond County Index No. 102790/07 [Sup Ct 2011]).
Defendants have since retained counsel and now move to dismiss the complaint pursuant to CPLR 3211(a) on the grounds, inter alia, that plaintiff (1) failed to elect its remedies in conformity with Real Property Actions and Proceedings Law (RPAPL) § 1301; (2) failed to properly verify the Complaint; (3) lacks the capacity to stand in the shoes of Wells Fargo as a named defendant and subordinate mortgagee; (4) failed to provide the requisite acceleration notice as a condition precedent to foreclosure as provided in the mortgage contract; and (5) as a foreign corporation, is not authorized to do business in the State of New York. In addition, defendants now maintain that plaintiff lacks standing to sue.
Having failed to interpose an answer asserting plaintiff's alleged lack of standing, or to file a timely pre-answer motion to dismiss on this basis, defendants have waived their right to object thereto ( see CPLR 3211[e]; US Bank Natl Assn v. Eaddy, 79 AD3d 1022 [2nd Dept 2010]; cf. Countrywide Home Loans Servicing, LP v. Albert , 78 AD3d 983 [2nd Dept 2010]). Nevertheless, it appears that the objection is without merit, as plaintiff has proved its standing as both the holder of the subject mortgage and note at the time the action was commenced ( see US Bank NA v. Madero , 80 AD3d 751 [2nd Dept 2011]).
In support of dismissal, defendants also assert that the complaint impermissibly seeks foreclosure, while simultaneously demanding judgment on the underlying note. This is alleged to violate RPAPL 1301(3). That statute provides, in relevant part, that while a foreclosure action is pending, no other action shall be commenced or maintained to recover any part of the mortgage debt without leave of the court in which the former action was brought ( see Aurora Loan Servs, LLC v. Spearman , 68 AD3d 796 [2nd Dept 2009]). No such permission has been sought or obtained. In addition, RPAPL 1301(1) provides that where a final judgment for the plaintiff has been rendered in an action to recover any part of the mortgage debt, an action shall not be commenced or maintained to foreclose the mortgage, unless an execution against the property of the defendant has been issued upon the judgment to the sheriff of the county where he or she resides and has been returned wholly or partly unsatisfied ( see Valley Sav Bank v. Rose, 228 AD2d 666, 667 [2nd Dept 1996]).
It is the opinion of this Court that the complaint at bar is not subject to dismissal on either of these bases, since plaintiff's request for a post-sale deficiency judgment clearly constitutes a prayer for relief in the foreclosure action rather than a separate cause of action on the note ( see Jamaica Sav Bank v. MS Investing Co, 274 NY 215, 219 [1937]; Frank v. Davis, 135 NY 275, 277-278 [1892]). Based on the foregoing, the complaint is not violative of RPAPL 1301.
Turning to defendants' assertion that the complaint was improperly verified, CPLR 3022 indicates that a defectively verified pleading shall be treated as a nullity provided that the recipient gives notice to the adverse party's attorney with due diligence. Here, since the defendants failed to give such notice, the objection must also be deemed waived ( see Pantaleon v. Ogilivie , 23 AD3d 360 [2nd Dept 2005]).
It is incontrovertable that Wells Fargo commenced this action in its capacity as the senior mortgagee and that it is also named as a party defendant, with separate counsel, in its capacity as a subordinate mortgagee. However, RPAPL 1351(3) provides, in relevant part, that the holder of the sole subordinate mortgage may, as here, request the surplus monies, if any, at the closing or by motion made within four months after the filing of the referee's report ( see Washington Mut Home Loans, Inc. v. Jones , 27 AD3d 728 [2nd Dept 2006]). Nevertheless, since the language of the statute is permissive rather than mandatory, the dismissal of plaintiff's claim for surplus monies at this stage of the proceedings would be premature ( see generally Sautter v. Frick, 229 App Div 345 [4th Dept 1930], affd 256 NY 535).
Defendants are correct, however, in arguing that Wells Fargo has failed to establish the proper mailing of the requisite acceleration notice, a sine qua non under the subject foreclosure contract. Here, although plaintiff has submitted a copy of a letter directed to defendants under date of January 7, 2008 stating that the "failure to pay this deliquency, plus additional payments and fees that may become due, will result in the acceleration of your Mortgage Note" ( see Plaintiff's Exhibit G"), it has failed to produce any evidence that said notice was properly posted. In response, plaintiff correctly states that "under the terms of the mortgage, there is no requirement that proof of mailing be retained, nor is there a requirement for any special mailing other than by regular mail" (Affirmation of Joseph F. Gogan, Esq., para 35). Nevertheless, in the absence of any proof of proper mailing, plaintiff can not rely on the rebuttable presumption of receipt generated thereby ( see NYU-Hospital for Joint Diseases v. Esurance Ins Co , 84 AD3d 1190 , 1191 [2nd Dept 2011]; Grogg v. South Rd Assoc, LP , 74 AD3d 1021 [2nd Dept 2010]). Thus, there is neither any proof to rebut defendants' claim that no notice was received nor any other evidence that an acceleration notice was properly posted before the action was commenced.
In this regard, although the affidavits of service submitted by plaintiff suffice to prove that RPAPL 1303 notice was served, it has not been proved that the statutory notice required by RPAPL 1304 was given. As to the latter, plaintiffs can only rely on the somewhat confusing assertion, based on unstated sources of "information and belief", that "proper notice has been sent to the mortgagors [sic] by the OCA" (Affirmation of Ryan P. Hanna, Esq., para 4). However, RPAPL 1304(2) requires that such notice be sent by the lender, assignee or mortgage loan servicer to the borrower by registered or certified mail and also by first-class mail ( see Aurora Loan Servs LLC v. Weisblum , 85 AD3d 95 , 103-104 [2nd Dept 2011]). The absence of proof that plaintiff's RPAPL 1304 notice was served in accordance with the statutory requirements is itself sufficient to warrant dismissal of the complaint ( id. at 108).
Although the action was commenced prior to September 1, 2008, the parties here do not dispute that the subject loan falls within the definition of "subprime" ( see Aurora Loan Servs LLC v. Weisblum, 85 AD3d at 105 n1).
In view of the foregoing, so much of defendants' cross motion as seeks an order demanding that plaintiff be required to post security as an unauthorized foreign corporation ( see CPLR 8501[a]); is denied as academic ( cf. Horizon Bancorp v. Pompee , 82 AD3d 935 [2nd Dept 2011]). So, too, is defendants' alternative request for leave to serve an amended answer pursuant to CPLR 3025(b).
Accordingly, it is
ORDERED that the cross motion of defendants Malak Ghobrial and Stephanie Naveja-Ghavrial is granted to the extent that the complaint is dismissed, without prejudice; and it is further
ORDERED that the balance of the cross motion is denied; and it is further
ORDERED that the Clerk enter judgment and mark his records accordingly.