ONE WEST BANK FSB v. PHH (2026)

DECISION & ORDER

In an action, inter alia, to foreclose a mortgage, the defendant Salochini Persaud appeals from (1) a decision of the Supreme Court, Queens County (Anna Culley, J.), dated July 3, 2024, and (2) an order of the same court dated October 3, 2024.  The order, insofar as appealed from, upon the decision, granted those branches of the plaintiff's motion which were for summary judgment on the complaint insofar as asserted against that defendant, to strike that defendant's answer, and for an order of reference, appointed a referee to compute the amount due on the note, and denied that defendant's cross-motion pursuant to CPLR 3025(b) for leave to amend her answer.

ORDERED that the appeal from the decision is dismissed, as no appeal lies from a decision (see Schicchi v. J.A. Green Constr. Corp., 100 A.D.2d 509, 472 N.Y.S.2d 718);  and it is further,

ORDERED that the order is reversed insofar as appealed from, on the law, and those branches of the plaintiff's motion which were for summary judgment on the complaint insofar as asserted against the defendant Salochini Persaud, to strike her answer, and for an order of reference are denied, and the cross-motion of the defendant Salochini Persaud pursuant to CPLR 3025(b) for leave to amend her answer is granted;  and it is further,

ORDERED that one bill of costs is awarded to the defendant Salochini Persaud.

In August 2009, One West Bank FSB (hereinafter One West), predecessor in interest to PHH Mortgage Corporation (hereinafter PHH), commenced this action, inter alia, to foreclose a mortgage encumbering real property located in Queens against, among others, the defendant Salochini Persaud (hereinafter the defendant).  The defendant interposed an answer but did not assert lack of standing or failure to comply with a contractual condition precedent as affirmative defenses.  Thereafter, One West moved, among other things, for summary judgment on the complaint insofar as asserted against the defendant, to strike her answer, and for an order of reference.  The defendant opposed the motion and cross-moved pursuant to CPLR 3025(b) for leave to amend her answer to assert the affirmative defenses of lack of standing and failure to comply with a contractual condition precedent.  By order dated October 3, 2024, the Supreme Court, inter alia, granted those branches of One West's motion, appointed a referee to compute the amount due on the note, and denied the defendant's cross-motion.  The defendant appeals.

Contrary to PHH's contention, the defendant's failure to assert the affirmative defense of lack of standing in her answer does not bar her from asserting it in the action.  “RPAPL 1302–a (as added by L 2019, ch 739, § 1 [eff Dec. 23, 2019] ) provides that, notwithstanding the provisions of CPLR 3211(e), ‘any objection or defense based on the plaintiff's lack of standing in a foreclosure proceeding related to a home loan, as defined in [RPAPL 1304(6)(a) ], shall not be waived if a defendant fails to raise the objection or defense in a responsive pleading or pre-answer motion to dismiss’ ” (Deutsche Bank Natl. Trust Co. v. Groder, 218 A.D.3d 542, 544, 192 N.Y.S.3d 563, quoting RPAPL 1302–a).  Under the circumstances of this case, that branch of the defendant's cross-motion which was pursuant to CPLR 3025(b) for leave to amend her answer to assert the affirmative defense of lack of standing (see Deutsche Bank Natl. Trust Co. v. Groder, 218 A.D.3d at 544, 192 N.Y.S.3d 563;  US Bank N.A. v. Blake–Hovanec, 191 A.D.3d 821, 825, 142 N.Y.S.3d 556;  GMAC Mtge., LLC v. Coombs, 191 A.D.3d 37, 47–50, 136 N.Y.S.3d 439) should have been granted.

Likewise, the Supreme Court should have granted that branch of the defendant's cross-motion which was pursuant to CPLR 3025(b) for leave to amend her answer to assert the affirmative defense of failure to comply with a contractual condition precedent.  Although a defendant waives a defense of failure to comply with a contractual condition precedent by failing to assert it in his or her answer (see CPLR 3015[a];  Deutsche Bank Natl. Trust Co. v. Finger, 195 A.D.3d 789, 792, 145 N.Y.S.3d 820), such a defense can nevertheless be interposed in an answer amended by leave of court pursuant to CPLR 3025(b) (see Wilmington Sav. Fund Socy., FSB v. Sotomayor, 222 A.D.3d 702, 703, 202 N.Y.S.3d 193;  Wall St. Mtge. Bankers, Ltd. v. Berquin, 213 A.D.3d 972, 975–976, 185 N.Y.S.3d 194).  “In the absence of prejudice or surprise resulting directly from the delay in seeking leave, applications to amend or supplement a pleading are to be freely granted unless the proposed amendment is palpably insufficient or patently devoid of merit” (U.S. Bank N.A. v. Singer, 192 A.D.3d 1182, 1185, 145 N.Y.S.3d 537 [internal quotation marks omitted];  see CPLR 3025[b];  Citimortgage, Inc. v. Rogers, 203 A.D.3d 1125, 1126, 163 N.Y.S.3d 452).  “The burden of demonstrating prejudice or surprise, or that a proposed amendment is palpably insufficient or patently devoid of merit, falls upon the party opposing the motion” (Citimortgage, Inc. v. Rogers, 203 A.D.3d at 1126, 163 N.Y.S.3d 452).  Despite PHH's contention that it was prejudiced by the lateness of the defendant's cross-motion, “ ‘[m]ere lateness is not a barrier to the amendment.  It must be lateness coupled with significant prejudice to the other side, the very elements of the laches doctrine’ ” (Deutsche Bank Natl. Trust Co. v. Kreitzer, 203 A.D.3d 800, 803, 165 N.Y.S.3d 96, quoting U.S. Bank, N.A. v. Sharif, 89 A.D.3d 723, 724, 933 N.Y.S.2d 293;  see Cirillo v. Lang, 206 A.D.3d 611, 612, 169 N.Y.S.3d 651).  Here, PHH failed to show that granting that branch of the defendant's cross-motion seeking to add the affirmative defense of failure to comply with a contractual condition precedent would cause it to be hindered in the preparation of its case or to be prevented from taking some measure in support of its position (see Cirillo v. Lang, 206 A.D.3d at 612, 169 N.Y.S.3d 651).  Additionally, PHH failed to meet its burden of demonstrating that the proposed amendment was palpably insufficient or patently devoid of merit (see Wilmington Sav. Fund Socy., FSB v. Sotomayor, 222 A.D.3d at 703, 202 N.Y.S.3d 193;  Wall St. Mtge. Bankers, Ltd. v. Berquin, 213 A.D.3d at 976, 185 N.Y.S.3d 194).

Further, “ ‘CPLR 3212(b) requires the proponent of a motion for summary judgment to demonstrate the absence of genuine issues of material fact on every relevant issue raised by the pleadings, including any affirmative defenses’ ” (GMAC Mtge., LLC v. Coombs, 191 A.D.3d at 50, 136 N.Y.S.3d 439, quoting Stone v. Continental Ins. Co., 234 A.D.2d 282, 284, 650 N.Y.S.2d 772).  “Accordingly, where, as here, a court deems the defendant's answer amended to include the affirmative defense of lack of standing in opposition to a plaintiff's motion for summary judgment, a plaintiff must establish its standing in order to be entitled to summary judgment on the complaint” (id.;  see CPLR 3212[b];  US Bank N.A. v. Blake–Hovanec, 191 A.D.3d at 825, 142 N.Y.S.3d 556).  Since there are triable issues of fact as to One West's standing to commence this action, those branches of One West's motion which were for summary judgment on the complaint insofar as asserted against the defendant, to strike her answer, and for an order of reference should have been denied (see U.S. Bank N.A. v. Blake–Hovanec, 191 A.D.3d at 825, 142 N.Y.S.3d 556).

CHAMBERS, J.P., DOWLING, WAN and MCCORMACK, JJ., concur.