Supreme Court, Suffolk County, September 12, 2017

Frenkel Lambert Weiss Weisman & Gordon, LLP, Bay Shore, for plaintiff.

Henry Law Group, Lindenhurst, for Thomas J. Bunger and another, defendants.

Ordered that plaintiff Citimortgage, Inc. Sbm ABN Amro Mortgage Group, Inc.'s motion for summary judgment (motion sequence No. 006) against defendants Thomas J. Bunger and Agnes C. Bunger, having been granted in part by this court's decision placed on the record after oral argument on May 8, 2017, dismissing all of defendants' affirmative defenses and counterclaims, except their ninth affirmative defense, and which denied defendants' cross motion to dismiss (motion sequence No. 007), and the court having reserved decision as to dismissing the ninth affirmative defense as well as claims of plaintiff's failure to comply with requirements of RPAPL 1304 and 1306 raised for the first time at oral argument pending the parties' submission of supplemental memorandums of law, and the court having considered those [*2]supplemental memorandums of law, it is ordered that defendants' ninth affirmative defense is dismissed, and plaintiff is granted summary judgment dismissing and striking defendants' answer (motion sequence No. 006); and it is further ordered that plaintiff's application to amend the caption pursuant to CPLR 3025 (b) to remove the "JOHN DOE #1 to JOHN DOE #10" defendants and to substitute Jason Antin as a party defendant in place and instead of "JOHN DOE #1," and to fix and set the default of the non-appearing, non-answering defendants, having been granted in the court's oral decision of May 8, 2017, the caption is amended as appearing below and shall be used in all further proceedings in this action:

——————————————————————————————————X

CITIMORTGAGE, INC. Sbm ABN AMRO

MORTGAGE GROUP, INC.,

Plaintiff,

- against -

THOMAS J. BUNGER, AGNES C. BUNGER,

JASON ANTIN,

Defendant(s).

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{**58 Misc 3d at 335}and it is further ordered that plaintiff is directed to serve an executed copy of this order amending the caption of this action upon the Calendar Clerk of this court within 30 days of the date of this order and all further proceedings are to proceed under that caption; and it is further ordered that plaintiff's application for the appointment of a referee to compute and determine pursuant to RPAPL 1321 is granted; and it is further ordered that plaintiff's proposed order submitted with this motion, as modified by the court, is to be signed contemporaneously with this order; and it is further ordered that plaintiff is to include in any proposed order of judgment of foreclosure and sale language complying with the Suffolk County Supreme Court local rule for filing of the Suffolk County Foreclosure Surplus Monies form contained in Administrative Order of the Administrative Judge of Suffolk County No. 41-13; and it is further ordered that, if a prior notice of pendency is outdated, plaintiff is directed to file a successive notice of pendency at least 20 days prior to the submission of any proposed judgment of foreclosure and sale, submitting a copy thereof with proof of filing with any proposed judgment of foreclosure and sale; and it is further ordered that within 30 days of the date of this order, plaintiff is to serve a copy of the order of reference upon all parties who have appeared in this action, as well as upon the referee and thereafter file the affidavits of service with the Clerk of the Court; and it is further ordered that within 60 days of the date of this order, plaintiff is to provide the referee all papers and documents necessary for him/her to perform the determinations required by this order, and prepare his/her report, which referee's report is to be submitted to plaintiff within 30 [*3]days of receipt of the papers and documents aforementioned; and it is further ordered that the referee is to serve notice upon defendant mortgagors, and their counsel, of the hearing before the referee to compute the amount due to plaintiff (CPLR 4313); and it is further ordered that plaintiff is to file an application for a judgment of foreclosure and sale within 120 days of the date of this order; and it is further ordered that this action shall be calendared for a status conference on Wednesday, January 24, 2018 at 9:30 a.m. in Part 27 for the court to monitor the progress of this action (if a judgment of foreclosure and sale is filed with the court before that date, no appearance will be necessary); and it is further ordered that failure to comply with any term of this order will not form the basis for a motion to dismiss the action, but will be the subject of the status conference at which future compliance will be determined.{**58 Misc 3d at 336}

In reaching this decision, in addition to the original submissions considered at the oral argument held on May 8, 2017, and the oral arguments made by the attorneys for the parties at that time, the court has considered the memorandums of law submitted by the parties, as well as a letter from plaintiff's counsel dated August 1, 2017 objecting to new arguments made by defendants' counsel in his memorandum of law for the first time.

The history of this case and the balance of the court's decision on plaintiff's motion for summary judgment and defendants' cross motion to dismiss are contained in the court's decision set forth on the record after oral argument on May 8, 2017. That decision dismissed defendants' cross motion, all of defendants' counterclaims and all their affirmative defenses, except their ninth affirmative defense which, in a very general way, raised a claim that plaintiff failed to comply with the requirements of RPAPL 1304 and 1306. Defendants' written arguments in opposition to plaintiff's motion and in support of their cross motion only raised the issue of plaintiff's failure to establish the mailing of the notices required by RPAPL 1304 (the notices), no arguments were raised contesting the sufficiency of those notices, nor challenging the requirements of RPAPL 1306. In denying defendants' cross motion, the court found that plaintiff's submissions had adequately established the mailing of the notices.

For the first time, at oral argument, defendants' counsel raised three claims concerning RPAPL 1304 and 1306 not argued in defendants' written submission. The first, that the envelope containing the RPAPL 1304 notices also included a separate notice in violation of RPAPL 1304 (2). The second, that the notices failed to strictly comply with the statute because they included incorrect information concerning the curing of defendants' default. The third, that plaintiff failed to provide proof of filing the RPAPL notices with the State Banking Department/Department of Financial Services as to defendant Agnes C. Bunger as required by RPAPL 1306.

Defendants' counsel, a member of the same firm as the attorney who had submitted the written cross motion and opposition, argued that defendants could raise these issues at oral argument because defendants were allowed to raise objections pursuant to RPAPL 1304 and [*4]1306 "at any time," as long as {**58 Misc 3d at 337}they had filed an answer (see Aurora Loan Servs., LLC v Weisblum, 85 AD3d 95 [2d Dept 2011]; Citimortgage, Inc. v Espinal, 134 AD3d 876 [2d Dept 2015]; HSBC Bank USA, N.A. v Clayton, 146 AD3d 942 [2d Dept 2017]). Plaintiff objected, on among other grounds, that defendants had waived these new issues by not raising them in their written submissions, and that plaintiff was prejudiced, since had they been raised in written opposition, plaintiff would have been able to address them in its opposition/reply (see Arriola v City of New York, 128 AD3d 747 [2d Dept 2015]; Citimortgage v Espinal). Recognizing the concern with issues surrounding RPAPL article 13 compliance in recent appellate decisions, the legitimacy of plaintiff's argument of surprise, and desiring to give the parties fair opportunity to address these issues, the court directed both counsel to submit supplemental memorandums of law addressing these new issues, as well as the issue of whether defendants had waived these issues by not raising them in their written submission. These memorandums were to be submitted by August 7, 2017, with no response to each other's submissions, after which the court would issue a written decision. Each counsel submitted a memorandum.

Although reserving decision on dismissing defendants' ninth affirmative defense on May 8, 2017, the court denied defendants' cross motion to dismiss, including these new oral arguments raised by defendants' counsel. As explained in the oral decision, the court reasoned that although RPAPL 1304 and 1306 may be raised at any time in opposition, these new arguments had not been properly raised in the cross motion to dismiss and therefore they would not be considered in determining defendants' cross motion.

Neither party has provided the court with any case law addressing the procedural situation here before the court. In this case both defendants were represented by competent counsel at all stages of the litigation. Paragraph "5" of defendants' 35-page answer denied plaintiff's allegations of compliance with the requirements of RPAPL 1304 and 1306. Defendants' ninth affirmative defense claimed plaintiff "has not complied with all and/or some of the provisions of RPAPL §§ 1304 and 1306," without the specificity required by CPLR 3013 and 3015, and also attempted to reserve the right to make more specific objections. Defendants never amended or supplemented their affirmative defense, nor raised the "new claims of lack of compliance" in their cross motion and opposition. Plaintiff never{**58 Misc 3d at 338} demanded more specificity from defendants, nor moved to dismiss that affirmative defense based upon that lack of particularity and specificity.

Summary judgment requires the movant to provide affirmative evidence in evidentiary form to establish as a matter of law entitlement to that relief (see Winegrad v New York Univ. Med. Ctr., 64 NY2d 851 [1985]; Gilbert Frank Corp. v Federal Ins. Co., 70 NY2d 966 [1988]; Torres v Industrial Container, 305 AD2d 136 [1st Dept 2003]). Failure to do so requires the denial of the motion regardless of the sufficiency of the opposition (see Jacobsen v New York City Health & Hosps. Corp., 22 NY3d 824 [2014]; William J. Jenack Estate Appraisers & Auctioneers, Inc. v Rabizadeh, 22 NY3d 470 [2013]). It has long been recognized as a general principle of summary judgment that a moving party, as well as an opponent, is required to assemble and lay bare all its proof in support, or opposition, of the motion (see O'Meara Co. v National Park Bank of N.Y., 239 NY 386 [1925]; Dowdell & Co., Ltd. v Silverman, 234 App Div 362 [1st Dept 1932]; M & S Mercury A.C. Corp. v Rodolitz, 24 AD2d 873 [2d Dept 1965]). Failure to do so is done at the party's risk, as movant bears the [*5]heavy burden of establishing a prima facie showing of entitlement to judgment as a matter of law, providing sufficient proof to demonstrate the absence of any material issue of fact (see Deleon v New York City Sanitation Dept., 25 NY3d 1102 [2015]), and opponent has to produce evidentiary proof in admissible form sufficient to demonstrate the existence of a triable issue of fact as to a bona fide defense to the action (see Washington Mut. Bank v Valencia, 92 AD3d 774 [2d Dept 2012]; Winegrad v New York Univ. Med. Ctr., 64 NY2d 851 [1985]; Zuckerman v City of New York, 49 NY2d 557 [1980]). Neither counsel has provided the court with any contrary authority.

[1] Clearly in their written submissions defendants failed to set forth and lay bare all their claims and proof. They now ask the court to consider these "new" arguments based on facts which were present and apparent when the action was commenced in 2013 and certainly apparent when the motions were made in 2016. In essence, they are asking for a "do-over" to include arguments that should have been properly raised in the written submissions. They present no new law or facts, merely making arguments that could have been made initially. If these arguments had been raised by defendants' counsel for the first time in a motion to renew or reargue after the decision{**58 Misc 3d at 339} of May 8, 2017, the court would have denied such an application, as these facts and issues were all available when the written submissions were made, they should have been addressed in the original submissions, and in failing to do so, had been waived by defendants. When does defendants' counsel's failure to argue issues that were present become waiver of those issues, or an issue of "law office failure" between defendants and their counsel, and not an issue for plaintiff and the court?

Although no analysis has been provided by either counsel, the court believes that by allowing oral argument and not having closed the record, the court left the record open for defendants to raise the claim that RPAPL 1304 and 1306 compliance "could be raised at any time." It is comparable to a hearing or trial where an objection to evidence is not timely made, but is made before the close of a party's proof. The court could deny it as waived, or consider it, if appropriate, grant it and, if necessary, fashion a curative instruction. Much depends upon the particular circumstances for the court to exercise such discretion.

Under many other circumstances, the court's inclination would be to deem defendants' "new found" objections waived, but the emphasis placed upon strict compliance with the requirements of RPAPL 1304 and 1306 by appellate decisions over the last few years compels the court to hold otherwise. It has been held that these issues can be raised for the first time as late as opposition to a motion for a judgment of foreclosure, in the discretion of the trial court (see Emigrant Mtge. Co., Inc. v Lifshitz, 143 AD3d 755 [2d Dept 2016]) and that a clear waiver of these issues has been only held to have occurred when the first attempt to raise them is on appeal (see 40 BP, LLC v Katatikarn, 147 AD3d 710 [2d Dept 2017]; Bank of Am., N.A. v Barton, 149 AD3d 676 [2d Dept 2017]). Therefore, the court believes it is compelled to consider defendants' new arguments in opposition to plaintiff's motion raised for the first time at oral argument. Once pleaded by plaintiff in its complaint and denied by defendants in their answer and affirmative defenses, it is plaintiff's responsibility to establish compliance with RPAPL 1304 and 1306 as part of its prima facie case (see Bank of N.Y. Mellon v Aquino, 131 AD3d 1186 [2d Dept 2015]; Zarabi v Movahedian, 136 AD3d 895 [2d Dept 2016]; Cenlar, FSB v Weisz, 136 AD3d 855 [2d Dept 2016]; JPMorgan Chase Bank, N.A. v Kutch, 142 AD3d 536 [2d Dept{**58 Misc 3d at 340} [*6]2016]; Aurora Loan Servs., LLC v Baritz, 144 AD3d 618 [2d Dept 2016]).

But as stated in its oral decision, the court did not consider these issues on defendants' cross motion, as they were never affirmatively raised therein. It was defendants' obligation to raise them as grounds for dismissal when laying bare their proof, and establish them in admissible form. Even if plaintiff's proof is insufficient to establish its prima facie case, this failure alone does not entitle defendants to dismissal, as indicated above, defendants must affirmatively established that by evidentiary proof in admissible form. Where defendants fail to present sufficient evidence to make a prima facie demonstration that a condition precedent was not fulfilled, defendants are not entitled to summary judgment and dismissal (see U.S. Bank, N.A. v Sabloff, 153 AD3d 879 [2d Dept 2017]).

Defendants' memorandum attempts to raise yet another "new" issue, not mentioned in its submissions or at oral argument, the applicability of the 2016 amendments to RPAPL 1304 (4) concerning "re-service" of the notices after an unsuccessful loan modification. Plaintiff, by letter, objected to this additional new argument. To the extent the court considers this new argument, it does so to the detriment of defendants' positions.

Defendants' arguments first made in their memorandum are without merit. The provisions of RPAPL 1304 (4) that existed at the time the action was commenced required that plaintiff only need send the notice once in a 12 month period. The court ruled on May 8, 2017 that the mailing of the notices on August 10, 2012 was established. The lawsuit was filed through e-courts on August 9, 2013, within one year. Plaintiff was in compliance with the statute. The argument that the 2016 amendment was to cure "confusion" with the prior version is baseless. The analogy to the 2016 changes made to RPAPL 1304 (3), enacted at the same time, is imperfect, as the prior language in that section was unclear and caused confusion as to whether it applied to only a bankruptcy or also to a loan modification application. There was no such confusion with RPAPL 1304 (4). The fact that the legislature has seen fit to change the requirements going forward from 2016 cannot affect the application of the law as it existed in 2012.{**58 Misc 3d at 341}

Defendants' argument that the notice was defective because it failed to strictly comply with the "language" of RPAPL 1304, as it gave 112 days for defendants to cure their default (although the court calculates it as 95 days), stating that plaintiff could start a lawsuit within 90 days of the notice if "this matter is not resolved" is without merit. The language "strictly" complied with the statutory language at the time. The amount of money and time required to pay or cure the default is left "blank" in the statute. There is no requirement that 90 days or any specific day be placed in that blank. If the legislature had intended a specific day to be placed in that portion of the notice, it would have done so. Therefore there is no failure to "strictly comply" with the language of the statute as defendants' counsel argues.

Further, the argument that the period longer than 90 days confused the defendants is belied by the fact that plaintiff's records, relied upon in the argument of defendants' counsel, show defendants paid the "cure amount," and more, within 90 days. They acted to make [*7]payment and cure within the time. Plaintiff also recognized that fact, and did not start the lawsuit until a later default prior to August 10, 2013. At that time there was no existing requirement that if a "re-default" occurred during the same 12 month period, the lender must provide a new notice pursuant to the former version of RPAPL 1304 (4).

Defendants' counsel's argument that plaintiff included a "separate notice" in the same envelope as the notices is without merit. Clearly the first page of the notice (as it is referred to even by defendants' counsel in his submissions) is an addressing format chosen by plaintiff. There is no name and address on the second page which contains the body of the notice required by the statute. The fact that the bottom portion of the first page makes reference to quality controls on the phone calls, advisement to give the letter to your attorney, and protective language relating to a potential bankruptcy filing, does not make this a separate notice. The statute did not, and still does not require "only" the language contained therein to be in the notice; it states that plaintiff or servicer "shall give notice to the borrower in at least fourteen-point type which shall include the following" (emphasis added). This clearly indicates the notices may include more language than that which is set forth in the statute.{**58 Misc 3d at 342}

The issue of the notices containing a reference to the New York State Banking Department rather than the Department of Financial Services (DFS) was brought up not by defendants' counsel on May 8, 2017, but by the court. The court was aware that the name change of the entity had been made in October 2011, but did not recall the effective date of the statute at the time. The form of RPAPL 1304 (1) effective from October 3, 2011 to July 17, 2012 required the following language in all notices: "If you need further information, please call the New York State Department of Financial Services' toll-free helpline at 1-877-BANK-NYS (1-877-226-5697) or visit the Department's website at http://www.banking.state.ny.us." The form of the statute applicable to this case, and in effect from July 18, 2012 to December 19, 2016 required the following language in all notices: "If you need further information, please call the New York State Department of Financial Services' toll-free helpline at (show number) or visit the Department's website at (show web address)." (Emphasis added.) The notices here were mailed August 10, 2012, approximately a month after the new statutory language went into effect.

The cases generally cited for the principle that strict compliance, not substantial compliance, with the notice requirements of RPAPL 1303 or 1304 is required or plaintiff's motion is to be denied, all contain significant problems of compliance with the notices. In Hudson City Sav. Bank v DePasquale (113 AD3d 595 [2d Dept 2014]) there was a factual inaccuracy in the notice; in Flagstar Bank, FSB v Damaro (145 AD3d 858 [2d Dept 2016]) the cure date for the default was set in the notice two days before the notice was sent, making it impossible to comply; in Aurora Loan Servs., LLC v Weisblum (85 AD3d 95 [2d Dept 2011]) only one of the borrowers was sent the notice; and in First Natl. Bank of Chicago v Silver (73 AD3d 162 [2d Dept 2010]) the notice required by RPAPL 1303 was not served with the complaint.

[2] Here there is nothing as dramatic; at best one could argue that the name of the Banking [*8]Department incorrectly appeared in the notice and that the website for the Banking Department and not the DFS was placed in what the statute had left blank. However, the correct phone number for the DFS helpline appeared in the blank left for that by the statute. Additionally, unlike the October 3, 2011 statutory language, the language in effect as of July 18, 2012 did not specifically list the web address,{**58 Misc 3d at 343} so by failing to list what was not stated in the statute, plaintiff's notices did not fail to strictly comply with the wording of the statute. Further, defendants, who understood the notices and came into compliance with their default by making payment, have shown no prejudice by what may be considered typographical or minor errors.

In Aurora Loan Servs., LLC v Weisblum (85 AD3d at 107-108), in response to an argument by plaintiff that the failure to give the notice to one defendant could be considered to be a defect or irregularity that a court could overlook pursuant to CPLR 2001, the Second Department stated that although CPLR 2001 could not apply to the facts in that case, it declined to express an opinion when, if ever, a defect or irregularity in a notice might be so minimal as to warrant the exercise of the court's discretion to disregard it under CPLR 2001. The irregularity here is so minimal and inconsequential that it calls out for the court to exercise its discretion and ignore this defect pursuant to CPLR 2001. The fact that plaintiff used a version of the notice which contained the wrong department of the State, and web address, although it contained the correct phone number, is of no real consequence in this case. Additionally, the court notes that the receipt for filing pursuant to RPAPL 1306 for the notice mailed to Mr. Bunger was sent by the DFS to plaintiff under the caption entitled "New York State Banking Department." Apparently the State itself, at that time, did not yet recognize the difference. Under these circumstances, the court will apply the discretionary remedy of CPLR 2001 and deems these errors to be minimal and inconsequential "defects" which are to be ignored.

The court recognizes that generally a party cannot submit in reply a document it should have submitted initially; yet here, as it appeared to the court that the RPAPL 1306 proof of filing for Ms. Bunger had been left out of plaintiff's submission due to a clerical error, the court determined that it would be a waste of the court's and the parties' time and resources to require a trial on that issue alone and authorized plaintiff to submit the absent copy. Defendants' counsel neither objected to that at the time, nor in his memorandum, and in fact attempted to obtain a copy himself from DFS, which denied his request on privacy grounds.

Plaintiff has provided a "Proof of Filing Statement" as exhibit "A" to its memorandum of law to establish compliance{**58 Misc 3d at 344} with the filing requirements of RPAPL 1306 for Ms. Bunger. Although the court expected to see a "companion document" to the proof of filing submitted as to Mr. Bunger, instead plaintiff submitted a later copy of proof of compliance for Ms. Bunger. This document not only included proof showing the filing on August 10, 2012 (the same date as Mr. Bunger), but supplied additional information including proof of a "step 2" mailing and filing on August 14, 2013. This document establishes the proof of filing required by RPAPL 1306. Defendants' claim that the statute was not complied with is dismissed.

Accordingly, defendants' ninth affirmative defense is dismissed, plaintiff having established its compliance with RPAPL 1304 and 1306, and plaintiff's motion for summary [*9]judgment is granted and defendants' answer is stricken.

Plaintiff's application to amend the caption was granted at oral argument and the "John Does #1 through #10" are excised from the caption, and Jason Antin is substituted as party defendant in place and instead of "JOHN DOE #1" and the caption shall appear as above indicated and be used in all further submissions.

Plaintiff's application for the appointment of a referee to compute and determine pursuant to RPAPL 1321 is granted, and the court will sign plaintiff's proposed order, as modified by the court simultaneously with this order.