DEUTSCHE BANK NATIONAL TRUST COMPANY v. AA LLC (2026)

DECISION & ORDER

In an action to foreclose a mortgage, nonparty AA Kodosh Holding, LLC, appeals from an order and judgment of foreclosure and sale (one paper) of the Supreme Court, Kings County (Derefim B. Neckles, J.), dated May 8, 2024.  The order and judgment of foreclosure and sale, insofar as appealed from, granted those branches of the plaintiff's motion which were to confirm a referee's report and for a judgment of foreclosure and sale, confirmed the referee's report, and directed the sale of the subject property.

ORDERED that the order and judgment of foreclosure and sale is reversed insofar as appealed from, on the law, with costs, and those branches of the plaintiff's motion which were to confirm a referee's report and for a judgment of foreclosure and sale are denied.

In December 2015, the plaintiff commenced this action against, among others, Valerie Samuels, to foreclose a mortgage on certain real property located in Brooklyn (hereinafter the property).  Samuels failed to timely appear or answer the complaint.  Thereafter, the plaintiff moved, inter alia, for leave to enter a default judgment against Samuels and for an order of reference.  In July 2017, while the plaintiff's motion was pending, Samuels transferred title to the property to nonparty AA Kodosh Holding, LLC (hereinafter Kodosh), and the deed was recorded on July 20, 2017.  In an order dated February 28, 2018, the Supreme Court, among other things, granted those branches of the plaintiff's motion.

In August 2023, the plaintiff moved, inter alia, to confirm a referee's report and for a judgment of foreclosure and sale.  Kodosh opposed the motion.  In an order and judgment of foreclosure and sale dated May 8, 2024, the Supreme Court, among other things, granted those branches of the plaintiff's motion, confirmed the referee's report, and directed the sale of the property.  Kodosh appeals.

“The report of a referee should be confirmed whenever the findings are substantially supported by the record, and the referee has clearly defined the issues and resolved matters of credibility” (Citimortgage, Inc. v. Hassanin, 242 A.D.3d 1169, 1171, 244 N.Y.S.3d 235 [internal quotation marks omitted] ).  “ ‘However, computations based on the review of unidentified and unproduced business records ․ constitute[ ] inadmissible hearsay and lack ․ probative value’ ” (id., quoting Bank of N.Y. Mellon v. Conforti, 209 A.D.3d 942, 946, 176 N.Y.S.3d 682).

Here, the referee's findings with respect to the amount due to the plaintiff were based on an affidavit of an employee of the plaintiff's loan servicer.  However, the plaintiff did not submit the business records upon which that employee relied in computing the amount due, and therefore, the employee's assertions regarding the amount due constituted inadmissible hearsay (see TLOA Mtge., LLC v. 109–08 N. Blvd, LLC, 241 A.D.3d 963, 964–965, 238 N.Y.S.3d 722;  Deutsche Bank Natl. Trust Co. v. Geslani, 222 A.D.3d 835, 838, 202 N.Y.S.3d 243).  Thus, the referee's findings as to the amount due were not substantially supported by the record (see Deutsche Bank Natl. Trust Co. v. Geslani, 222 A.D.3d at 838, 202 N.Y.S.3d 243;  Bank of N.Y. Mellon v. Conforti, 209 A.D.3d at 946, 176 N.Y.S.3d 682).

The plaintiff's remaining contentions are either not properly before this Court or without merit.

Accordingly, the Supreme Court should have denied those branches of the plaintiff's motion which were to confirm the referee's report and for a judgment of foreclosure and sale.

DUFFY, J.P., WOOTEN, LOVE and QUIRK, JJ., concur.