Bank of America, National Ass'n v. Brannon

OPINION OF THE COURT

Andrias, J.

On January 18, 2007, defendant Sarah Brannon obtained a $360,000 loan from GE Money Bank (GE), secured by a mortgage on her home in the Bronx. GE indorsed the mortgage note in blank, making it a bearer instrument.

On September 17, 2007, plaintiffs agent, Litton Loan Servicing, LP, sent defendant a “Notice of Default and Intent to Accelerate” stating that defendant was in default for failing to pay amounts due and that the total amount needed to bring the loan current was $5,482.40 as of that date. On November 14, 2007, plaintiff commenced this foreclosure action alleging that defendant defaulted by failing to make the payment due on August 1, 2007. The mortgage was assigned to plaintiff by assignment dated November 29, 2007. In her answer, defendant, pro se, admitted that as of the date of the complaint she owed plaintiff $359,809.63 with interest from July 1, 2007, and did not raise any affirmative defenses.

In March 2008, plaintiff moved for summary judgment, supported, inter alia, by an affidavit of Denise Bailey, assistant secretary of Litton, and an affidavit of merit and amount due of Diane Dixon, assistant vice-president of Litton. In opposition, defendant asserted that she had been in contact with Litton regarding a loan modification and was awaiting a complete review. She did not dispute her default.

By order dated April 24, 2008, plaintiff was granted summary judgment and a referee was appointed to compute the amount due. On November 2, 2009, plaintiff assigned the mortgage to IFS Properties, LLC. On February 16, 2011, a settlement conference was held and the matter was released to the Foreclosure Part.

In April 2014, plaintiff, by new counsel, moved to vacate the April 24, 2008 order because the Bailey and Dixon affidavits may not have been correctly notarized under New York law, and counsel could not comply with the requirements of Administrative Orders AO/548/10 and AO/431/11 of the Chief Administrative Judge of the Courts. Plaintiff also moved for summary judgment anew, based upon an affidavit, sworn to April 18, 2014, of Matthew Mattera, a managing member of IFS, and an affirmation of counsel certifying the accuracy of Mattera’s affidavit. In opposition, defendant asserted that Mat-tera could not affirm the relevant facts because he was an employee of IFS, not plaintiff, and his affidavit did not describe the records upon which he relied. Defendant also asserted that she had no notice of the assignment to IFS.

By order dated September 15, 2014, the court granted plaintiff’s motion to vacate the April 29, 2008 order. However, the court denied summary judgment on the ground that the defects in the affidavits in support of the original summary judgment motion were not mistakes, omissions or mere irregularities that could be cured by a new affidavit.

In November 2014, plaintiff again moved for summary judgment based on an affidavit of Mattera dated November 3, 2014. In opposition, defendant questioned the validity of the assignment of the loan by plaintiff to IFS and complained that IFS had not given her the opportunity to get a loan modification. Defendant no longer alleged that Mattera failed to establish that he could affirm the facts necessary to establish her default. By order dated December 22, 2014, the court denied plaintiff’s motion for the reasons stated in its September 15, 2014 order.

In February 2015, plaintiff moved for summary judgment for a third time. In support, plaintiff submitted the indorsed-in-blank note, the mortgage, and the default notice. Plaintiff also submitted an affidavit of Mattera dated January 31, 2015, and an affirmation of counsel asserting that plaintiff had demonstrated a prima facie case for foreclosure and that defendant had failed to plead any affirmative defenses.

In opposition, defendant alleged that she was not properly notified that the note had been transferred to IFS and that she was improperly served with the motion. Defendant did not challenge the sufficiency of Mattera’s affidavit or refute his allegations concerning her default. Plaintiff’s counsel replied that the mortgage did not require notice of a sale or transfer be given to defendant; that defendant had waived the defense of standing when she failed to raise it in her answer; that, in any case, plaintiff had standing because it was the holder of the indorsed-in-blank note when the action was commenced; and that defendant was properly served.

By order dated March 10, 2015, the court denied the motion, stating that it did not believe that plaintiff understood that an action initiated on the basis of a false affidavit suffers from a fatal defect, which cannot be overcome with a subsequent affidavit. The court also stated that even if the error could be corrected in a new affidavit, the January 31, 2015 affidavit of Mattera was defective because it failed to indicate the state or county where the notarization took place.

We now reverse to grant plaintiff’s third motion for summary judgment. The failings in the supporting affidavits to the original motion for summary judgment only affected the ability of the court to grant that motion, not the viability of the action as a whole. The substitution, nunc pro tunc, of newly-signed affidavits of merit in a mortgage foreclosure action, provided in an effort to bring a plaintiff in compliance with Administrative Order AO/431/11, is permitted (see U.S. Bank N.A. v Eaddy, 109 AD3d 908 [2d Dept 2013]).

Furthermore, under the circumstances before us, the flaws in the notarization of Mattera’s affidavit are not fatal to plaintiff’s summary judgment motion (see Matter of Cubisino v Cohen, 47 NYS2d 952, 953-954 [Sup Ct, NY County 1944], affd 267 App Div 891 [1st Dept 1944]; Fisher v Bloomberg, 74 App Div 368, 369 [1st Dept 1902]; see also Sirico v F.G.G. Prods., Inc., 71 AD3d 429, 434 [1st Dept 2010]; Todd v Green, 122 AD3d 831, 832 [2d Dept 2014]). Pursuant to CPLR 2101 (f) the court can disregard a defect in the uniform certificate of acknowledgment unless a defendant has demonstrated that a substantial right of hers has been prejudiced. As no prejudice has been shown by defendant, the alleged defect should have been disregarded (see Bank of N.Y. Mellon v Vytalingam, 144 AD3d 1070 [2d Dept 2016]; see also Executive Law § 142-a [2] [f] [official certificate of notary public shall not be deemed invalid due to “the fact that the action was taken outside the jurisdiction where the notary public or commissioner of deeds was authorized to act”]).

Plaintiff established standing by virtue of its possession of the indorsed-in-blank note at the commencement of this action (see Aurora Loan Servs., LLC v Taylor, 25 NY3d 355, 361-362 [2015]). It demonstrated its prima facie entitlement to judgment as a matter of law by providing evidence of the note and mortgage, and proof of defendant’s default (see Horizons Invs. Corp. v Brecevich, 104 AD3d 475 [1st Dept 2013]). This included Mattera’s affidavit of facts and defendant’s answer in which she admitted that as of the date of the complaint she owed plaintiff $359,809.63 with interest from July 1, 2007, and denied knowledge or information sufficient to form a belief as to plaintiff’s allegations that she “has/have failed to comply with the conditions of the mortgage and note by failing to pay principal and interest and/or taxes, assessments, water rates, insurance premiums, escrow and/or other charges that came due and payable on the 1st day of August 2007.”

In opposition, defendant failed to provide evidence sufficient to raise an issue of fact as to an available defense. “Facts appearing in the movant’s papers which the opposing party does not controvert, may be deemed to be admitted” (Kuehne & Nagel v Baiden, 36 NY2d 539, 544 [1975]). Defendant did not deny receiving the notice of default or that she had defaulted in her obligations under the note and mortgage. Defendant also waived any standing defense, or defense based on plaintiff’s alleged failure to comply with a condition precedent, since she did not raise those defenses in her answer, and did not bring a motion to dismiss the complaint on those grounds (see Security Pac. Natl. Bank v Evans, 31 AD3d 278, 280-281 [1st Dept 2006], appeal dismissed 8 NY3d 837 [2007]; 1199 Hous. Corp. v International Fid. Ins. Co., 14 AD3d 383, 384 [1st Dept 2005]). Defendant’s mere denial of receipt of service of the motion is insufficient to rebut the presumption of service (Kihl v Pfeffer, 94 NY2d 118, 122 [1999]).

The dissent agrees that the motion court should have granted plaintiff summary judgment on its foreclosure claim based on defendant’s answer, in which she admitted the amount she owed plain tiff and waived any challenge to plaintiff’s standing. However, the dissent would hold, sua sponte, that plaintiff is not entitled to an order of reference because its counsel could not affirm the facts necessary to satisfy his obligations under Administrative Order AO/431/11.

Administrative Order AO/431/11, which amends Administrative Order AO/548/10, requires the plaintiff’s counsel in a residential mortgage foreclosure action to file an affirmation confirming that he or she communicated with a representative of the plaintiff who confirmed the factual accuracy of the plaintiff’s pleadings, supporting documentation and submissions to the court (see Wells Fargo Bank, N.A. v Pabon, 138 AD3d 1217, 1217-1218 [3d Dept 2016]). “The order incorporated two forms for this purpose—an affirmation to be filed by the plaintiff’s counsel (‘shall file’), and an affidavit to be filed by the plaintiff’s representative (‘may file’)” (Bank of N.Y. Mellon v Izmirligil, 144 AD3d 1063, 1065 [2d Dept 2016]).

To fulfill his obligations under Administrative Order AO/ 431/11, plaintiff’s counsel submitted an affidavit that comported with the form provided in Administrative Order AO/431/11. Counsel stated that on April 21, 2014, he had communicated with Mattera,

“who informed me that he/she/they (a) personally reviewed Plaintiff’s documents and records relating to this case for factual accuracy; and (b) confirmed the factual accuracy of the allegations set forth in the Complaint and any supporting affidavits or affirmations filed with the Court, as well as the accuracy of the notarization contained in the supporting documents filed therewith.”

Counsel further stated:

“Based upon my communication with Matthew Mattera as well as upon my own inspection and other reasonable inquiry under the circumstances, I affirm that, to the best of my knowledge, information, and belief, the Summons, Complaint, and other papers filed or submitted to this Court in this matter contain no false statements of fact or law. I understand my continuing obligation to amend this [a]ffirmation in light of newly discovered material facts following its filing.”

The dissent finds this affidavit deficient, stating that “because Mattera’s affidavits do not establish a complete review of, or the indicia of reliability necessary to lay a business records foundation for, the records predating IFS’s acquisition of defendant’s mortgage, counsel may not rely upon alleged communications with Mattera to comply with the requirements of the Administrative Order.” However, defendant, who has continued to reside on the premises for the last 10 years without paying her mortgage, did not dispute her default or challenge the accuracy or sufficiency of Mattera’s affidavit on the third summary judgment motion.

Furthermore, CPLR 4518 (a) does not require a person to have personal knowledge of each of the facts asserted in the affidavit of merit put before the court as evidence of a defendant’s default in payment (see Citigroup v Kopelowitz, 147 AD3d 1014, 1015 [2d Dept 2017] [“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”]; Citibank, NA v Abrams, 144 AD3d 1212 [3d Dept 2016]). Thus, in seeking to enforce a loan, an as-signee of an original lender or intermediary predecessor may use an original loan file prepared by its assignor, when it relies upon those records in the regular course of its business (see Landmark Capital Invs., Inc. v Li-Shan Wang, 94 AD3d 418 [1st Dept 2012]; see also State of New York v 158th St. & Riverside Dr. Hous. Co., Inc., 100 AD3d 1293, 1296 [3d Dept 2012], lv denied 20 NY3d 858 [2013] [records admissible “if the recipient can establish personal knowledge of the maker’s business practices and procedures, or that the records provided by the maker were incorporated into the recipient’s own records or routinely relied upon by the recipient in its business”]).

Here, Mattera, a representative of IFS, which has held the note and mortgage since November 2009, satisfied these standards, stating that

“I make this affidavit with personal knowledge of the facts and circumstances herein which are derived from personal knowledge and/or an independent examination of the financial books and business records made in the ordinary course of business maintained by or on behalf of Plaintiff to be an accurate and fair representation of the occurrences with which the record purports to represent as well as business records relative to the within litigation. I am familiar with the record keeping systems that Plaintiff and/or its loan servicer uses to record and create information related to the residential mortgage loans that it services, including the processes by which Plaintiff and/or its loan ser-vicer obtains the loan information in those systems. While many of those processes are automated, where the employees of the Plaintiff and/or its ser-vicer manually enter data relating to loans on those systems, they have personal knowledge of that information and enter it into the system at or near the time they acquired that knowledge. The records relied upon are made in the regular course of business made at or about the time the event is being recorded, systematically made for the conduct of business and are relied upon as the accurate routine reflections of the day-to-day regularly conducted business activity and so they may be relied upon as being truthful and accurate. In connection with making this affidavit, I have personally examined these business records reflecting data and information as of January 31, 2015. . . .

“I have also reviewed Plaintiffs books and records, and the payments of principal and interest made by Defendant(s) to Plaintiff. Any allegation of either full or timely payment after default is simply not substantiated by these records. All notices of default as required in the Note have been sent as prescribed in the Mortgage . . . All time frames set forth in the notice and /or notices, as required by the Mortgage have elapsed and the Defendant(s) have not taken the necessary action to correct the default and or defaults as specified herein and in the Complaint. . . .

“The simple uncontroverted fact is that Defendant, SARAH BRANNON, was loaned and did receive $360,000.00, as is confirmed by the Mortgage and Note. Defendant did not uphold this obligation, to the detriment of Plaintiff. Defendant breached his/ her obligations under the Mortgage by failing to successfully tender funds for the August 1, 2007 payment and all successive payments thereafter.”

These allegations sufficed to establish defendant’s default and the basis of Mattera’s knowledge. Mattera indicated that he was personally familiar with the recordkeeping systems of IFS and plaintiff and the loan servicer it used, that the records he relied on were made in the regular course of business and that he personally reviewed them on January 31, 2015 (see JP Morgan Chase Bank, N.A. v Shapiro, 104 AD3d 411, 412 [1st Dept 2013] [“Plaintiff submitted the affidavit of an employee who identified herself as having personal knowledge of, inter alia, plaintiff’s status as successor-in-interest to WAMU and defendant Saadia Shapiro’s default. . . based upon her review of plaintiff’s books and records and its account records regarding Shapiro’s delinquent account”]; Deutsche Bank Natl. Trust Co. v Naughton, 137 AD3d 1199, 1200 [2d Dept 2016]). While the dissent finds the affidavit deficient because Mattera did not state that he was familiar with the records of GE, the default notice was sent by Litton, plaintiff’s agent, and Mattera stated that he was familiar with the recordkeeping systems that plaintiff and/or its loan servicer used. He also stated that he personally reviewed plaintiff’s books and records, and the payments made by defendant.^*

Accordingly, the order of the Supreme Court, Bronx County (Mark Friedlander, J.), entered March 17, 2015, which, to the extent appealed from as limited by the briefs, denied plaintiffs motion for summary judgment and an order of reference, should be reversed, on the law, without costs, plaintiff’s motion granted, and the matter remanded for appointment of a referee, to compute and ascertain the amount due plaintiff on the subject mortgage. The appeals from the orders of the same court and Justice, entered September 18, 2014, and December 24, 2014, which denied plaintiff’s motions for summary judgment and related relief, should be dismissed, without costs, as academic.

* In any event, where an action was pending on the effective date of Administrative Order AO/431/11, and no judgment of foreclosure has been entered, the order provides that the affirmation must be filed “at the time of filing either the proposed order of reference or the proposed judgment of foreclosure” (U.S. Bank N.A. v Polanco, 126 AD3d 883, 884-885 [2d Dept 2015] [internal quotation marks omitted]). Accordingly, even if Mattera’s affidavit did not sufficiently set forth the basis for his knowledge, under the circumstances of this case, where defendant’s default is not disputed and plaintiff has established its entitlement to summary judgment, the appropriate remedy would be to dix’ect counsel to file a revised affirmation and affidavit pursuant to Administrative Order AO/431/11 with the proposed order of reference (see Wilmington Trust Co. v Walker, 149 AD3d 409 [1st Dept 2017]). This would address the dissent’s concerns that the referee have all necessary information relevant to the computations that he or she will have to undertake.