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WELLS FARGO BANK, N.A., as Trustee FOR the CERTIFICATE HOLDERS OF the MERRILL LYNCH MORTGAGE LOAN ASSET–BACKED CERTIFICATES, SERIES 2005–HE3, Plaintiff, v. Fred J. YAPKOWITZ a/k/a Fred Yapkowitz; Elaine M. Yapkowitz a/k/a Elaine Yapkowitz; Argent Mortgage Company, LLC; Metro Portfolios, Inc.; LVNV Funding, LLC a/p/o Citibank; Citibank (South Dakota), N.A.; American Express Centurion Bank; American Express Centurion Bank; Midland Funding, LLC; Target National Bank; Discover Bank; “John Doe No.1–#5” and “Jane Doe #1–#5” said names being fictitious, it being the intention of Plaintiff to designate any and all occupants, tenants, persons or corporations, if any, having or claiming an interest in or lien upon the premises being foreclosed herein, Defendants.
This matter arises from a residential mortgage foreclosure brought by Plaintiff against Defendant borrowers Fred J. Yapkowitz a/k/a Fred Yapkowitz and Elaine M. Yapkowitz a/k/a Elaine Yapkowitz (the “Yapkowitzes”), Argent Mortgage Company (“Argent”), the subordinate mortgagee, and several subordinate lien holders.
On February 7, 2018, the case was assigned to this Court for trial from the Trial Assignment Part. The parties appeared before the undersigned on that date.
By Stipulation made in open Court on the record, the parties waived their right to offer live testimony, agreeing to submission of an affidavit from a representative of the relevant loan servicer and to trial on papers. The parties agreed that this Court will decide the only open issue, which pertains to Plaintiff's compliance with the 30–day and 90–day default notice conditions precedent to suit. Transcript of February 7, 2018 Proceeding at 2:21–24. The parties agreed that the following specific issues are presented: (1) whether the 30–day notice of default required under the terms of the subject mortgage, which Defendants concede they received in connection with the prior discontinued foreclosure action, was valid as to the instant action; and (2) “whether or not it was proper under RPAPL 1304 for the plaintiff or the plaintiff's predecessors in interest to serve one 30 and/or 90–day notice as required where the one notice include[ed] both [borrowers'] names.” Id. at 3. The parties further agreed “[t]hat any other affirmative defenses and any counterclaim[s] that [were alleged] are resolved or withdrawn by virtue of th[e] stipulation”. Id. at 7. In addition, Plaintiff withdrew its motion in limine, as “essentially resolved by the stipulation”. Id. This Court set a briefing schedule with which the parties have complied. The matter is now before the Court for disposition on papers.
In accordance with the Stipulation, counsel submitted the following materials for consideration:
Trial Brief on Behalf of Plaintiff with Exhibits 1–4/Affidavit of Jamie Turner, Assistant Vice President, Bank of America, N.A. with Exhibits A–I 1–2
Defendants' Trial Brief/Affidavit of Defendants Fred J. Yapkowitz and Elaine M. Yapkowitz/Exhibits 1–9 3–4
Reply Brief for Trial on Behalf of Plaintiff 5
Based upon the materials submitted and after due deliberation, the Court renders its Decision After Bench Trial Submitted on Paper.
On May 6, 2005, the Yapkowitzes borrowed $532,000 from Defendant Argent, secured by a mortgage on their property located at 10 Ducey Court, Pomona, New York (the “Property”). The Note was subsequently assigned to Plaintiff Wells Fargo Bank, N.A. as Trustee for the MLMI Trust Series 2005–HE3, by an undated specific special endorsement. On April 24, 2013, the Mortgage was assigned to Plaintiff.
The Yapkowitzes defaulted on their loan payment due January 1, 2009. The then loan servicer, Wilshire Credit Corporation (“Wilshire”), mailed separate 30–day notices of default (“30–Day Notices”) to Fred and Elaine Yapkowitz. The Mortgage provides that “[n]otice to any one Borrower will be notice to all Borrowers unless Applicable Law expressly requires otherwise.” Plaintiff's Trial Brief, Exhibit 3, Mortgage at ¶ 15. Nonetheless, Wilshire sent separate notices.
Each of the 30–Day Notices, dated January 22, 2009, stated that Wilshire had “previously notified you that you are in default under [the Mortgage Loan].” Defendants' Trial Brief, Exhibit 5, Four Separate 30–Day Notices on Wilshire letterhead to Fred Yapkowitz and Elaine Yapkowitz dated January 22, 2009 and April 22, 2009.1 The notices further advised that the default “include[d] non-payment of the default amount [of] $6,189.30” and provided the date by which to cure the default as “February 26, 2009 (‘Expiration Date’).” Id. Each of the notices separately demanded Fred and Elaine Yapkowitz to cure the default by paying the amount stated in the notice by the Expiration Date. The notices advised the Yapkowitzes that their “regular payment may become due by the Expiration Date [and that the] delinquent amount of principal continues to accrue interest.” Id. The notices advised that failure to pay the full default amount by the Expiration Date would subject the loan to acceleration of the entire indebtedness. The notices warned that failure to timely cure the default could lead to Plaintiff commencing a foreclosure action. Id. The notices advised each of the Yapkowitzes of their “right to reinstate [the] loan after acceleration” and their rights to file a court action or assert their defenses in a foreclosure action brought against them. Id.
In January 2009, BANA acquired Merrill Lynch & Co., Inc. (“Merrill Lynch”), which owned Wilshire.2 Pursuant to the acquisition, Wilshire became a unit of BANA. Plaintiff's Trial Brief, Turner Affidavit at ¶ 3.
On July 30, 2009, Plaintiff commenced a mortgage foreclosure action against the Yapkowitzes. Wells Fargo Bank, N.A., as Trustee for the MLMI Trust Series 2005–HE3 v. Fred J. Yapkowitz, etc., et al., Rockland County Index No. 8159/2009.
In February 2010, Bank of America Home Loans informed the Yapkowitzes by letter jointly addressed to them both that the servicing of their mortgage loan was being transferred from Wilshire to BAC Home Loans Servicing, LP (“BAC”), a subsidiary of BANA, effective March 1, 2010. Plaintiff's Trial Brief, Turner Affidavit, Exhibit A, February 26, 2010 Notice. Subsequently, the Yapkowitzes were again jointly notified that the servicing of their mortgage loan was being transferred from BAC to BANA, effective July 1, 2011. Turner Affidavit, Exhibit B. By letter dated June 11, 2013, the Yapkowitzes were jointly notified that the servicing of their mortgage loan was being transferred from BANA to Nationstar Mortgage LLC, effective July 1, 2013. Turner Affidavit, Exhibit C.
On March 26, 2013, Plaintiff discontinued the foreclosure action and cancelled the lis pendens by stipulation.3 Defendants' Trial Brief, Exhibit 6, Stipulation to Discontinue Action (Index No. 8159/2009). The affirmation of Plaintiff's counsel in support of discontinuance stated that “[a]fter attorney review of the transfer file on or about 12/05/12, Plaintiff requested the file be closed due to various issues with the default notification.” Id., Affirmation of Mehmet Basoglu, Esq. to Accompany Stipulation to Discontinue Action at ¶ 4.
Thereafter, BANA sent a 90–day pre-foreclosure notice pursuant to RPAPL § 1304, dated December 12, 2012, to the Yapkowitzes via certified and first class mail at the Property address (“1304 Notice”). Plaintiff's Trial Brief, Turner Affidavit at ¶ 11; Turner Affidavit, Exhibit I, 1304 Notice. The 1304 Notice was jointly addressed to both Fred J. Yapkowitz and Elaine M. Yaplowitz but only one 1304 Notice was sent via each required mailing method. Id. The certified mail receipt was signed for only by “F. Yapkowitz”. Plaintiff's Trial Brief, Turner Affidavit, Exhibit I.
On June 20, 2013, Plaintiff commenced the instant foreclosure action against the Yapkowitzes, Argent, various lien holders and “John Doe” and “Jane Doe” Defendants. The Yapkowitzes answered the complaint, asserting various affirmative defenses including failure to properly serve the notices precedent to suit (Affirmative Defenses Nos. Five and Six), and counterclaims.
Plaintiff moved for summary judgment and Defendants opposed. The Court denied Plaintiff's motion for summary judgment, finding that Plaintiff did not establish that the notices precedent to suit were properly served by offering an affidavit from Nationstar Mortgage, LLC, its current servicer, which had not sent the notices. Decision and Order dated September 26, 2017 (Hon. Gerald E. Loehr, J.S.C.). The Court held that “[a]s the condition precedent notices were served, if they were served, by entities other than the current servicer who apparently has no basis of knowledge that these notices were served—except for the senders' records which are inadmissible hearsay when offered by the current servicer, Plaintiff has failed to establish its prima facie entitlement to summary judgment.” Id. at 2 (citations omitted). The Court referred the matter to the Trial Assignment Part to be scheduled for trial. Id.
This Court now decides the following issues which were stipulated to by the parties: (1) whether Plaintiff was required to send Defendants another notice of default under the terms of the Mortgage (30–Day Notice), prior to commencing the instant foreclosure action on June 20, 2013; and (2) whether Plaintiff, acting through its loan servicer, was required to serve separate 1304 Notices to each of the Yapkowitzes.
Plaintiff contends that it established its compliance with the 30–Day Notice requirement through the Turner Affidavit and accompanying exhibits. Plaintiff asserts that Ms. Turner has properly verified that the 30–Day Notices were sent to Defendants by Wilshire in January 2009. Plaintiff relies upon the fact that Wilshire became a unit of BANA in 2009 when BANA acquired Merrill Lynch, which owned Wilshire, and that Wilshire's servicing records were transferred, included and incorporated into BANA's records at that time without change or alteration. Plaintiff's Trial Brief at 8 (citing Turner Affidavit at ¶¶ 2–4). Plaintiff asserts that Defendants do not dispute that they received the 30–Day Notices mailed to them in January 2009. Plaintiff argues that the 30–Day Notices satisfy the condition precedent for this action because there is no requirement in either the Mortgage or case law which obligated Plaintiff to send another 30–day default notice prior to commencing this action. Plaintiff contends further that even if it was required to send another 30–day notice before filing this action, the 1304 Notice it sent in December 2012 fulfilled the requirement.
Defendants take the position that the 30–Day Notices, which they concede were sent to them and received by them in January 2009, were not valid for commencement of this foreclosure action on June 20, 2013. Defendants contend that the information contained in the 30–Day Notices is outdated as to the amounts and the date by which to cure the default. Defendants contend that “[n]ew timely 30–day notices of default were required to be served before another action could be commenced in 2013.” Defendants' Trial Brief at 5 (emphasis in original). Defendants offer no legal authority and do not cite to any provision in the Mortgage to support their argument. They merely assert that the Mortgage does not state that a default notice survives from action to action, particularly given the passage of several years.
Defendants also allude to possible defects in the notice, pointing to the statement in the affirmation of Plaintiff's counsel which accompanied the Stipulation to Discontinue the prior action. Specifically, that the action was being discontinued at Plaintiff's behest “due to various issues with the default notification.” Defendants' Trial Brief, Exhibit 6, Affirmation of Mehmet Basoglu, Esq. to Accompany Stipulation to Discontinue Action (Index No. 8159/2009) at ¶ 4.
Defendants contend further that, if the Court determines that the 30–Day Notices satisfy a condition precedent to the commencement of this action, the Turner affidavit submitted by Plaintiff does not establish that the notice was properly sent, because it fails to meet the business records exception to the hearsay rule. Defendants assert that Ms. Turner cannot attest to Wilshire's mailing of the 30–Day Notice because she “never alleged [in her affidavit] that she is personally familiar with Wilshire's record keeping practices and procedures regarding notices of default.” Defendants' Trial Brief at 6.
Addressing first the issue of whether the Turner Affidavit established the mailing by Wilshire of the 30–Day Notice in January 2009,4 that issue is mooted by Defendants' acknowledgment of receipt of the notices. Defendants expressly stated in their Affidavit dated July 10, 2017 in Opposition to Plaintiff's Motion for Summary Judgment 5 that “We believe that each of us received a copy of Wilshire Credit Corporation's 30–day notice, dated January 22, 2009, and a copy of Wilshire Credit Corporation's 30–day notice, dated April 22, 2009, as required pursuant to paragraph 22 of the mortgage that we had given to Argent Mortgage Company, LLC, on May 6, 2005. We believe that we received these 30–day notices in 2009 a few days after they were dated.” Trial Brief at 8, Exhibit 4, Affidavit of Defendants dated July 10, 2017. Paragraph 15 and 22 of the Mortgage require that the notice “be in writing mailed by first class mail or when actually delivered to [the] notice address if sent by other means [to] the address of the Property [or] a different address” given to the Lender. Plaintiff's Trial Brief, Exhibit 3, Mortgage at ¶ 15. Defendants' acknowledgment of receipt of the 30–Day Notices establishes that they were sent.
Plaintiff contends that the 30–Day Notices are valid for the instant action because January 1, 2009 remains the date that Defendants defaulted on the subject Note and Mortgage. Defendants do not point to any defect in the 30–Day Notices they received in 2009, other than their claim that they are entitled to a new 30–day notice for this action.6
There is no requirement in the Mortgage which obligated Plaintiff to send another 30–day notice of default prior to commencing this action.7 While the amount owed to Plaintiff has changed due to the accrual of interest, unpaid taxes, insurance and other expenses which Defendants have not paid, the fact of their default and the date when it occurred has not changed. There has been no other change in circumstances beyond those occasioned by the passage of time and the delay attendant to mortgage foreclosure actions. Defendants did not enter into a loan modification after the 2009 default notice was sent. Defendants have not paid off their mortgage loan or taken any other action that effected a change in their default date. Therefore, the default date having stayed the same, a new notice prior to commencement of this action was not warranted.
Even if a requirement for an updated 30–day notice could be read into the Mortgage, the 1304 Notice which preceded commencement of this action satisfied the 30–day notice requirement as to both Fred and Elaine Yapkowitz.8 Wachovia Bank, Nat'lAss'n v. Carcano, 106 AD3d 724, 725 [2nd Dept 2013]. A 30 day notice of default is intended to inform the borrower of the date when the lender is entitled to request “Immediate Payment in Full”. Such notice also is intended to inform the borrower that the lender “may bring a lawsuit to take away all of [borrower's] remaining rights in the Property and have the Property sold.” Plaintiff's Trial Brief, Exhibit 3, Mortgage at ¶ 22. Both the initial 30–Day Notice and the 1304 Notice sent in December, 2012 satisfied the requirements of the Mortgage regarding notice of default.
Accordingly, Plaintiff satisfied the 30–day notice condition precedent to commencing this action.
RPAPL § 1304 Notice
Plaintiff contends that the Turner Affidavit and accompanying proof of mailings establish that the statutory 90–day notice required under RPAPL § 1304 was properly sent to the Yapkowitzes by BANA, Ms. Turner's employer, in December, 2012. Plaintiff asserts that the Turner Affidavit is competent proof of the required mailings based upon her knowledge and description of the particular process that was uniformly and diligently followed by BANA in sending such notices. Plaintiff provides further proof of mailing by submission of the tracking and confirmation of delivery documents, including the certified mail delivery receipt signed by Fred Yapkowitz at the Property address on December 20, 2012.
Plaintiff contends that their mailing of a joint notice to the Yapkowitzes complied with paragraph 15 of the Mortgage and with RPAPL § 1304. Plaintiff asserts that it fully complied with all the statutory requirements of § 1304, including sending the notice without any other mailing or notice contained in the envelope. Plaintiff argues that § 1304 does not require separate notices to be sent to each borrower when both borrowers live at the same address. Plaintiff references the provision in the Mortgage that allows notices to be sent to only one borrower unless “Applicable Law expressly requires otherwise.” Plaintiff's Trial Brief, Exhibit 3, Mortgage at ¶ 15. Plaintiff argues that RPAPL § 1304 does not expressly require separate notices to each borrower.
Defendants contend that Plaintiff has not established that the 1304 Notice was properly sent to them.9 They argue that the Turner Affidavit does not meet the requirements of the business records exception to the hearsay rule because Ms. Turner did not attest that she was personally familiar with BANA's recordkeeping practices and procedures. Specifically, Defendants assert that Plaintiff has not submitted an affidavit from someone “with personal first-hand knowledge of the content of the mailings”. Defendants' Trial Brief at 9 (emphasis in original) (citing T.D. Bank, N.A. v. Leroy, 121 AD2d 1256 [3rd Dept 2014] ).
Defendants also contend that the 1304 Notice sent by Plaintiff does not comply with RPAPL § 1304, because it was a single notice addressed to both of them and only signed for by Mr. Yapkowitz. Defendants contend that the joint notice does not comply with the language of RPAPL § 1304, which states that the notice must be sent to the singular “borrower” and must be “in a separate envelope from any other mailing or notice”. That language, Defendants argue, required each borrower to receive separate notices in separate envelopes.
Plaintiff may demonstrate proper mailing of the RPAPL § 1304 notices by submitting proof of mailing by the post office or an affidavit of service as to actual mailing or as to a standard office practice and procedure designed to ensure that items are properly addressed and mailed. CitiMortgage, Inc. v. Pappas, 147 AD3d 900 [2nd Dept 2017] see also Aurora Loan Services, LLC v. Weisblum, 85 AD3d 95 [2nd Dept 2011] (holding that plaintiff failed to meet its prima facie burden as the notice did not contain the statutorily-required list of counseling agencies and plaintiff did not submit an affidavit of service to establish proper service of the notice on the borrowers).Here, Plaintiff submitted the Affidavit of Ms. Turner, who states that: she has “personal knowledge of the facts” to which she attests in her affidavit “by virtue of [her] position at BANA, [her] familiarity with BANA's processes and based upon [her] review and analysis of the relevant business records and other documents of BANA referenced and attached”. Turner Affidavit at ¶ 1. Ms. Turner also pointedly asserts that she has “personal knowledge of BANA's practices and procedures for creating such records[, which were] made and/or entered by BANA's employees based upon personal knowledge of the information therein or from information transmitted by a person with personal knowledge, and are entered into the [sic] BANA's systems of record at or near the time the knowledge was acquired.” Id.
Ms. Turner attests that “[a]t all relevant times described herein beginning on July 1, 2010 and while it was the servicer of the Mortgage Loan, BANA had authority to act as Attorney-in-Fact for plaintiff by virtue of a Limited Power of Attorney (the “LPOA”) dated July 1, 2010.” Id. at ¶ 6. While acting in that capacity, “BANA sent 90–day pre-foreclosure notices (the “90–Day Notices”) via certified and first class mail to Defendants at the Property address, which notices were dated December 12, 2012.” Id. at ¶ 11. Ms. Turner avers that “each 90–Day Notice was sent by BANA to Defendants in accordance with BANA's established and routinely followed business practices and procedures designed to ensure that documents are properly addressed and mailed and were mailed consistent with and in furtherance of its business practice to send defaulting borrowers the 90–Day Notices as required by Real Property Actions and Proceedings Law (“RPAPL”) § 1304.” Id. Ms. Turner substantiates the mailings with a copy of BANA's Walz TrackRight Transaction Detail for both the first class and certified mailings. Id. at ¶ 13; Exhibit H. Ms. Turner provides a detailed description of the information contained on the Transaction Detail and what it signifies. Id. at ¶ 13–14. As further evidence of the certified mailing, Ms. Turner attached a copy of the certified mail return receipt for the 90–Day Notice, which reflects that Mr. Yapkowitz signed for and accepted delivery of the mailing. Id. at ¶ 15; Exhibit I.
Ms. Turner possesses the requisite knowledge of BANA's standard office practices and procedures to attest that BANA properly sent the 1304 Notice and she substantiates the mailing with documentary proof. Citimortgage, Inc. v. Espinal, 134 AD3d 876, 878–879 [2nd Dept 2015] (Appellate Division found “Duddey's affidavit was sufficient to establish proper service Duddey produced the United States Postal Service tracking number for the notice and a copy of Citimortgage's correspondence log, and stated that Citimortgage's ‘standard business procedure regarding all notices to the borrower(s)’ is to enter mailing information in the correspondence log.”); see also CitiMortgage, Inc. v. Pappas, supra at 901—02.
The Court turns now to the issue raised by Defendants whether Plaintiff had a statutory obligation to send a separate 1304 Notice to each of them. Looking to the language used in RPAPL § 1304(2), the provision states, in relevant part:
The notices required by this section shall be sent by such lender, assignee (including purchasing investor) or mortgage loan servicer to the borrower, by registered or certified mail and also by first-class mail to the last known address of the borrower, and to the residence that is the subject of the mortgage. The notices required by this section shall be sent by the lender, assignee or mortgage loan servicer in a separate envelope from any other mailing or notice. Notice is considered given as of the date it is mailed. The notices required by this section shall contain a current list of at least five housing counseling agencies serving the county where the property is located from the most recent listing available from department of financial services. The list shall include the counseling agencies' last known addresses and telephone numbers.
RPAPL § 1304(6)(b)(1)(ii) defines “borrower” as “a natural person”.
Plaintiff gives short shrift to Defendants' contention that the language of RPAPL § 1304 requires a separate notice to each borrower. In fact, the statute uses the singular “borrower” in the subsection which describes how the notice is to be sent. That subsection reads, in relevant part: “[t]he notices required by this section shall be sent by such lender, assignee (including purchasing investor) or mortgage loan servicer to the borrower, by registered or certified mail and also by first-class mail to the last known address of the borrower, and to the residence that is the subject of the mortgage.” RPAPL § 1304(2). Furthermore, “[t]he notices required by this section shall be sent by the lender, assignee or mortgage loan servicer in a separate envelope from any other mailing or notice.” Id. (emphasis added).
Defendants argue that “plaintiff has produced a certified mail receipt signed by “F. Yapkowitz”, [however] plaintiff has failed to submit an affidavit of service by certified mail on Elaine Yapkowitz, and has failed to submit affidavits of service by first-class mail on each of the defendants.” Defendants' Trial Brief at 9. Defendants rely on Aurora Loan Services, LLC v. Weisblum, 85 AD3d 95, 106 [2nd Dept 2011] to support their contention that Plaintiff was required to serve the 1304 Notice on each of them.10
In Weisblum, supra, the borrowers “contended that service upon Steven Weisblum was insufficient because Patti Weisblum was also identified as a “borrower” in the CEMA but no notice was sent to her. Moreover, the Weisblums noted that Aurora failed to submit affidavits of service establishing compliance with the statutory requirement that the RPAPL 1304 notice be sent to both borrowers, Steven Weisblum and Patti Weisblum, by registered or certified mail and also by first-class mail. 85 AD3d at 101. The Appellate Division reversed the trial court's determination that “although Patti Weisblum was a ‘borrower’ under the CEMA and entitled to RPAPL 1304 notice, Aurora's failure to serve her with the notice was ‘not fatal’ since the Weisblums both participated in ‘the mandatory settlement conference’ (see CPLR 3408), and no prejudice to the Weisblums had been identified.” Id. at 101–02. The Appellate Division rejected the Supreme Court's determination that Patti Weisblum had received either actual or constructive notice by virtue of notice upon her husband, finding that she was a “ ‘borrower’ within the meaning of the statute, entitled to receive notice 90 days prior to commencement of the action”. Id. at 105.
In this case, Plaintiff argues that the joint notice complied fully with paragraph 15 of the Mortgage and with RPAPL § 1304. Plaintiff asserts that it is “illogical” that “a husband [would] not [inform] his wife of a notice sent to both of them indicating that their home was going into foreclosure” and that “whether Mrs. Yapkowitz ultimately ‘saw’ the notice is irrelevant to the standard of proof under RPAPL § 1304.”
To the contrary, the Appellate Division rejected the same argument in Weisblum, wherein Aurora claimed that their failure to serve Patti Weisblum “was inconsequential because she likely became aware of the notice allegedly sent to her husband”. Id. at 106. The Appellate Division held that as a “borrower”,11 Patti Weisblum was entitled to 1304 notice and to the statutory protections it affords to homeowners: “the RPAPL 1304 notice furthers the legislative declaration in HETPA of ‘the express policy of the state to preserve and guard the precious asset of home equity’ (Real Property Law § 265–a  [b] ), and the legislative intent ‘to provide a homeowner with information necessary ․ to preserve and protect home equity’ (Real Property Law § 265–a  [d] ).” Id. at 106. The Appellate Division held that Patti Weisblum was entitled to notice even though Steven Weisblum was her spouse and they lived at the same address.
The instant case bears a slight factual difference from Weisblum, which this Court deems to be without import but must be acknowledged. In Weisblum, the 1304 notice was addressed only to Mr. Weisblum, whereas in this case the 1304 Notice was addressed to both Fred and Elaine Yapkowitz. Nonetheless, in both instances, the lender shifted its responsibility to provide the 1304 Notice to both borrowers from itself and placed it on the borrower who signed for the certified mailing or opened the first-class mailing. After receiving a jointly addressed notice, it then would be incumbent on the borrower who received the notice to transmit the notice to the second borrower. Weisblum clearly holds that such actual or constructive notice is not proper service of RPAPL § 1304 notice. Such a reallocation of the lender's statutory obligation under RPAPL § 1304 would contravene the legislative policy which underlies the statute. Just as in Weisblum where the loan servicer Aurora could not rely on Steven Weisblum to provide 1304 notice to his wife Patti Weisblum, Plaintiff here could not rely on Fred Yapkowitz to provide RPAPL § 1304 notice to his wife Elaine Yapkowitz.12 Although the Mortgage allowed Plaintiff to send one notice to only one of the borrowers, it is clear from Weisblum that one joint notice is not sufficient under RPAPL § 1304.13
As the Appellate Division stated in Weisblum, “[w]here, as here, the condition sought to be disregarded is a mandatory condition precedent, the plaintiff's failure to comply cannot be disregarded.” 85 AD3d at 107. Plaintiff's failure to show strict compliance with proper service of the RPAPL § 1304 notice requires dismissal.14 Id. at 103.
The Court finds for Defendants on the issue of whether RPAPL § 1304 requires a separate notice to each borrower in a separate envelope.
Accordingly, the action is dismissed based upon Plaintiff's failure to comply with the service requirements of RPAPL § 1304.
Judgment shall be entered accordingly.
1. Wilshire sent separate 30–Day Notices to the Yapkowitzes, dated January 22, 2009, and again on April 22, 2009. Both parties refer only to the January 22, 2009 notices as the applicable 30–Day Notice.
2. Plaintiff does not specify the actual date it acquired Merrill Lynch and Wilshire.
3. The Stipulation of Discontinuance does not specify whether the action is discontinued with or without prejudice. Unless specifically stated to be with prejudice, discontinuance is generally construed to be without prejudice. See Lewin v. Yedvarb, 61 AD2d 1025, 1025 [2nd Dept 1978] (“if in dismissing an action for failure to prosecute, the court does not specifically state that the dismissal was with prejudice, or on the merits, it cannot later be construed as a dismissal on the merits (CPLR 3216, subd. (a) )”).
4. Defendants are correct that the Turner Affidavit does not meet the requirements of the business records exception to the hearsay rule as to Wilshire's mailing of the 30–Day Notices. Ms. Turner does not state that she was an employee of Wilshire or that she is personally familiar with Wilshire's practices and procedures regarding the mailing of such notices. Plaintiff cannot rely on the fact that BANA, Ms. Turner's employer, acquired Wilshire and its business records through its acquisition of Merrill Lynch as a basis for Ms. Turner's knowledge. Ownership of the entity or its records alone cannot support the business records exception in the mortgage foreclosure context. It is the affiant's personal knowledge of the notifying entity's practices and procedures for sending such notices that provides the foundation for applying the exception in such cases. Bank of America, Natl. Assn. v. Wheatley, 158 AD3d 736, 738 [2nd Dept 2018] (citations omitted) (“While mailing may be proved by documents meeting the requirements of the ‘business records exception’ to the hearsay rule, [the affiant] did not aver that she was familiar with the plaintiff's mailing practices and procedures, and therefore did not establish proof of a standard office practice and procedure designed to ensure that items are properly addressed and mailed.”); J.P. Morgan Mtge. Acquisition Corp. v. Kagan, 157 AD3d 875 [2nd Dept 2018] Deutsche Bank Natl. Trust Co. v. Carlin, 152 AD3d 491 [2nd Dept 2017]. Because Ms. Turner lacks that knowledge of Wilshire's mailing practices and procedures, her affidavit suffers from the same deficiency as the Nationstar affidavit Plaintiff submitted in support of its summary judgment motion as to the 30–Day Notices.
5. Plaintiff incorporated by reference the papers submitted on its Motion for Summary Judgment. Plaintiff's Trial Brief at 1 n1. Therefore, this Court will refer to Defendants' opposition papers, which are referenced by Plaintiff in its Trial Brief.
6. Although Plaintiff's counsel cited “various issues with the default notification” as the reason why the prior foreclosure action was discontinued, counsel's affirmation which accompanied the discontinuance does not state whether the issues concerned the 30–day notice or the 90–day notice. As Plaintiff argues, Defendants “offer only the speculative assertion that Plaintiff's prior attorneys may have ‘questioned’ the notice.” Plaintiff's Reply at 2. This Court will not engage in speculation about any perceived issues regarding “the default notification” and whether it may have pertained to the 30–Day Notices.
7. Compare RPAPL § 1304(4), which provides that “[t]he notices required by this section and the ninety day period required by subdivisions one and one-a of this section need only be provided once in a twelve month period to the same borrower in connection with the same loan and same delinquency. Should a borrower cure a delinquency but re-default in the same twelve month period, the lender shall provide a new notice pursuant to this section.”
8. The 1304 Notice which Fred Yapkowitz acknowledged he received would suffice as a proper 30–day notice as to Elaine Yapkowitz because the Mortgage allows notice to one borrower to serve as notice to all borrowers. Plaintiff's Trial Brief, Exhibit 3, Mortgage at ¶ 15.
9. Unlike the 30–Day Notice condition, acknowledgment by Defendants of Fred Yapkowitz's receipt of the 1304 Notice by certified mailing does not moot the issue of proper service of the 1304 Notice, because RPAPL § 1304 has a number of specific requirements, including first-class mailing, that also must be met for the statutory notice to be proper.
10. Defendants also cited Deutsche Bank Natl. Trust Co. v. Spanos, 102 AD3d 909 [2nd Dept 2013] and Wells Fargo Bank, N.A. v. Burke, 125 AD3d 765 [2nd Dept 2015] in support of their argument that each of them were required to receive separate certified and first-class mailings of the 1304 Notice. Defendants' Trial Brief at 9. While both cases support the general proposition that strict compliance with RPAPL § 1304 is required, neither case expressly holds that each borrower spouse residing at the same address must get a separate notice. It is possible that the argument was advanced in in these cases, but it is not apparent from the decisions. This Court declines to parse the underlying briefs in those cases, particularly where the parties who proffered the argument have not done any of the leg work. Therefore, this Court declines to read the cases as expansively as Defendants. In any event, the principle Defendants espouse is clearly established in Weisblum.
11. The Appellate Division noted in Weisblum that “borrower” was not defined in the statute. RPAPL § 1304 now defines “borrower” as “a natural person”. RPAPL § 1304(6)(b)(1)(ii).
12. Plaintiff's reliance on one borrower spouse to provide notice to the other borrower spouse flies in the face of reason. This Court, like many others, is inundated with divorcing parties who are simultaneously facing foreclosure of the marital residence. Needless to say, cooperation between divorcing parties can scarcely be relied on to satisfy the statutory requirements of RPAPL § 1304 and its underlying legislative policies.
13. It is ironic that Plaintiff chose to send two separate 30–Day Notices to the Yapkowitzes where the Mortgage expressly stated that one was sufficient and to send a joint 1304 Notice where RPAPL § 1304 requires separate notices.
14. Given the Appellate Division's holding that constructive notice was insufficient under RPAPL § 1304, this Court does not believe that a jointly addressed notice would constitute “a defect or irregularity in the content of an RPAPL 1304 notice[,which the Appellate Division would view as being] so minimal as to warrant the exercise of the court's discretion under CPLR 2001 to avoid dismissal of the action.” 85 AD3d at 108.
Paul I. Marx, J.
Response sent, thank you
Docket No: 033182/2013
Decided: May 21, 2018
Court: Supreme Court, Rockland County, New York.
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