Eva Mallek, Appellant, v. CENLAR (2026)

ORDERED that the order, insofar as appealed from, is reversed, without costs, the motion by Cenlar, FSB for summary judgment dismissing the complaint is denied, and the complaint is reinstated.

At the outset, we note that, in its brief, defendant Cenlar, FSB, sued herein as Central Loan Admin. & Reporting (CENLAR), asserts that plaintiff's appeal was untimely taken, as a copy of the order with notice of entry was served on plaintiff on October 8, 2024 and the notice of appeal was not served until December 16, 2024. However, as this assertion is dehors the record, we do not consider it. To the extent that defendant contends that the record is improper, we note that plaintiff, as a pro se litigant who sued in the Civil Court, was permitted to prosecute the appeal on the original record (see Rules of the App Term, 2d Dept [22 NYCRR] § 731.9]).

In 2013, plaintiff obtained a mortgage through CitiMortgage (Citi) on property she owned in Queens, New York. In 2015, the single-family house on the property was severely damaged in a fire. As of the date of the order being appealed, the damage to the house had not been mitigated.

In 2018, Citi appointed defendant to service plaintiff's mortgage. The mortgage note permitted the mortgagee, and thus, by extension, defendant, to force-place hazard insurance on the property in the event that plaintiff had not purchased such insurance. Although, in 2019, based on the degree of damage to the house on the property, defendant waived the mortgage requirement that plaintiff carry hazard insurance on the property, in 2022 defendant retracted its waiver and, thereafter, over plaintiff's objection, force-placed hazard insurance on the property for which it charged plaintiff. Plaintiff objected to various charges on her mortgage statements and expressed the belief that her mortgage escrow account was being mismanaged by defendant and that funds in her account were being misapplied. On that basis, plaintiff decided to stop including real property taxes in her mortgage payments, informed defendant of her decision, began paying the taxes on the property directly, and sent proof of her tax payments to defendant. Defendant did not accede to plaintiff's decision and assessed charges against plaintiff for late fees, property maintenance, hazard insurance premiums, and attorney's fees, among other things.

In this action, plaintiff seeks to recover damages, based on allegations that defendant violated her contract rights under the mortgage note by using her mortgage payments to pay for expenses other than interest and principal, wrongfully charging her late fees despite her timely payments, charging unjustified legal fees, and mishandling her escrow account. Plaintiff also alleges an entitlement to damages, asserting that, after defendant or Citi waived the requirement that she carry hazard insurance on the property based upon the damage to the house in the 2015 fire, defendant wrongfully reimposed a hazard insurance requirement and charged her for the inappropriate and unnecessary insurance. While, to protect its rights in the property, the mortgage note permits the mortgagee, and thus defendant, as the mortgage servicer, to incur various property preservation costs, plaintiff claims that she sustained monetary damages because defendant, without justification, categorized her property as "abandoned," and, citing such alleged "abandonment," wrongfully hired property preservation firms to change the door and the locks on the burned house and charged her for those and other expenses. Besides her allegations of breach of contract, plaintiff also seeks damages based on her assertion that defendant engaged in a pattern of predatory and fraudulent conduct and conspired with the property preservation firms it hired at plaintiff's expense, in violation of the Racketeering and Corrupt Organizations Act (RICO) (18 USC § 1961 et seq.).

Defendant moved for summary judgment dismissing the complaint. Defendant submitted records which its "VP Document Execution," Lauren Benning, authenticated. In her moving affidavit, Benning asserted that, under the 2013 mortgage note, plaintiff was obligated to pay all taxes to defendant, that defendant had not waived that requirement, and that defendant was thus justified in concluding that plaintiff's payments, which only covered principal and interest, were insufficient and in rejecting the payments. Benning also asserted that, under the mortgage note, defendant had been entitled to reimplement the requirement for hazard insurance on the property and, after plaintiff failed to obtain hazard insurance, had been justified in obtaining such insurance and charging plaintiff for its cost. In addition, Benning claimed that defendant had been entitled to hire entities to engage in property preservation activities and to assess those charges against plaintiff's account. In response to plaintiff's assertion that she had been effectively locked out of the house, Benning provided a copy of a May 14, 2019 letter in which James Bauer, an "executive resolution analyst" in defendant's employ, stated that plaintiff had been given access codes to a lockbox defendant had placed at the premises and that defendant had subsequently given plaintiff replacement keys to the premises. In that letter, Bauer also stated, "Our records have now been updated to reflect that the home structure damages suffered were a total loss, and the requirement for hazard insurance coverage has been withdrawn."

Defense counsel argued, among other things, that the preservation activities on plaintiff's property had been permitted under RPAPL 1308, and that, "following another appraisal/property preservation report on the Property," defendant had "reinstated" the hazard insurance requirement for the property. Defendant did not provide a copy of that report or any explanation as to the change of circumstances that justified a change in the insurance requirement. Plaintiff opposed defendant's motion.

In an order dated October 3, 2024, the Civil Court (Lisa Lewis, J.) granted defendant's motion upon a finding that defendant had established, prima facie, that it had "acted within the contract agreement," and that plaintiff had failed to rebut defendant's prima facie case or to raise any issues of fact for trial.

In her affidavit, Benning failed to explain the entries on the transaction history and loan servicing records she submitted in support of defendant's motion. Furthermore, a mortgage loan servicer such as defendant has an implied duty of good faith and fair dealing in performing mortgage contract services on behalf of the mortgagee (see e.g. Leonardo v Wells Fargo Bank, N.A., 2024 WL 4485608, *21 [ED NY 2024]). This duty is inherent in the mortgage contract (see O'Sullivan v PHH Mtge. Corp., 2025 WL 1835926, *2 [ED NY 2025]; Kilgore v Ocwen Loan Servicing, LLC, 89 F Supp 3d 526, 534 [ED NY 2015]; Kapsis v American Home Mortg. Servicing Inc., 923 F Supp 2d 430, 452 [ED NY 2013]). In its motion papers, defendant failed to explain why it was appropriate to reimpose a hazard insurance requirement that it had previously waived when it had not shown that the condition of the property had changed in the intervening time.

Defendant contended that it had been entitled to take certain actions to preserve the property and to charge plaintiff for such actions pursuant to RPAPL 1308, and that it was exempt from liability under RPAPL 1308 (9). However, RPAPL 1308 only applies to vacant and abandoned properties as defined under RPAPL 1309. It was uncontested that, during the time when defendant took the actions and incurred the charges in issue, plaintiff was actively engaged in litigation seeking to procure insurance proceeds on the property. Plaintiff also paid property taxes directly to New York City during that time. In its motion papers, defendant failed to explain why it was entitled, in that circumstance, to act under RPAPL 1308 and also failed to address plaintiff's claims of fraud and of RICO violations. In this circumstance, we conclude that defendant failed to establish, prima facie, its entitlement to summary judgment dismissing the complaint.

We reach no other issue.

Accordingly, the order, insofar as appealed from, is reversed, the motion by defendant CENLAR, FSB for summary judgment dismissing the complaint is denied, and the complaint is reinstated.

BUGGS, J.P., TOUSSAINT and LIN, JJ., concur.

ENTER:

Jennifer Chan

Chief Clerk

Decision Date: June 17, 2026