Supreme Court, Putnam County, December 1, 2022

Knuckles, Komosinski & Manfro, LLP, Elmsford (Mark R. Knuckles of counsel), for plaintiff.

Zerilli & Associates, P.C., New City (Joseph M. Becker of counsel), for Paul Chan, defendant.

{**77 Misc 3d at 870}Specialized Loan Servicing, LLC (hereinafter the plaintiff) commenced this mortgage foreclosure action against, among others, the defendant Paul Chan to foreclose upon property located at 30 Kings Ridge Road, Mahopac, New York (hereinafter the subject premises) on or [*2]about May 20, 2019. The defendant Paul Chan interposed an answer in which he asserted various affirmative defenses, including, inter alia, that the plaintiff failed to comply with the notice requirements of RPAPL 1304.

In February 2020, the plaintiff moved, inter alia, for summary judgment on the complaint and for an order of reference, which was opposed by Mr. Chan, with Mr. Chan asserting that summary judgment should be denied because, inter alia, the plaintiff failed to strictly comply with RPAPL 1304. By a decision and order dated March 30, 2022,^[FN*] the court granted the plaintiff's motion and appointed a referee to compute the amount due and owing.{**77 Misc 3d at 871}

The Plaintiff's Motion for a Judgment of Foreclosure and Sale

By notice of motion filed August 17, 2022, the plaintiff moved to confirm the referee's report and for a judgment of foreclosure and sale (mot seq 2).

The Defendant's Motion to Renew

By notice of cross motion, filed October 7, 2022, Mr. Chan moved for leave to renew his opposition to the plaintiff's motion for summary judgment and an order of reference in light of the Second Department's decision of Bank of Am., N.A. v Kessler (202 AD3d 10 [2d Dept 2021]), which was handed down December 15, 2021, and also opposed plaintiff's motion for judgment of foreclosure and sale. Counsel for Mr. Chan argues that, in light of the holding of Kessler, the notices in this case were not compliant with RPAPL 1304 (2), in that the notices contained additional language and notices extraneous to the required statutory language. Accordingly, [*3]pursuant to Kessler, as well as subsequent decisional law from the Second Department interpreting and applying Kessler, renewal should be granted and, upon renewal, the plaintiff's motion for summary judgment should be denied and the complaint dismissed.

In opposition, counsel for the plaintiff contends that Kessler is not new law and, therefore, Mr. Chan cannot rely upon Kessler as a basis for renewal. Plaintiff further argues that Mr. Chan cannot move to renew because he failed to cross-move for relief in opposition to the plaintiff's motion for summary judgment and an order of reference. Finally, plaintiff contends that, even if this court were to consider Mr. Chan's argument regarding Kessler, the court previously considered Mr. Chan's RPAPL 1304 arguments and rejected same, constituting a ruling that is now law of the case. Accordingly, any arguments with respect to RPAPL 1304 not raised before were waived. Counsel further contends that Kessler may run afoul of the Supremacy Clause and should not be applied retroactively.

The court will first consider Mr. Chan's cross motion, as determination thereof may render determination of the plaintiff's motion academic.

As is relevant to this motion, a motion for leave to renew "shall demonstrate that there has been a change in the law that would change the prior determination" (CPLR 2221 [e] [2]). "A clarification of the decisional law is a sufficient change in the law to support renewal" (Dinallo v DAL Elec., 60 AD3d{**77 Misc 3d at 872} 620, 621 [2d Dept 2009]; Roundabout Theatre Co. v Tishman Realty & Constr. Co., 302 AD2d 272 [1st Dept 2003]). "[A] motion for leave to renew based upon a change in the law must be made prior to the entry of a final judgment or before the time to appeal has expired" (Dinallo v DAL Elec., 60 AD3d at 621).

Here, there is no dispute that the motion for leave to renew has been timely made, as final judgment has not been issued in this matter. Moreover, the law is well settled that a defendant can raise the argument that the plaintiff did not strictly comply with RPAPL 1304 at any time during the action (see HSBC Bank USA, N.A. v Cardona, 193 AD3d 696, 698 [2d Dept 2021]).

RPAPL 1304 (1) provides that "at least ninety days before a lender, an assignee or a mortgage loan servicer commences legal action against the borrower, . . . including mortgage foreclosure, such lender, assignee or mortgage loan servicer shall give notice to the borrower." "The statute further provides the required content for the notice and provides that the notice must be sent by registered or certified mail and also by first-class mail to the last known address of the borrower" (Citibank, N.A. v Conti-Scheurer, 172 AD3d 17, 20 [2d Dept 2019]) and "in a separate envelope from any other mailing or notice" (RPAPL 1304 [2] [emphasis added]). Strict compliance with RPAPL 1304 notice to the borrower is a condition precedent to the commencement of a foreclosure action (see Citibank, N.A. v Conti-Scheurer, 172 AD3d at 20).

On December 15, 2021, in Bank of Am., N.A. v Kessler (202 AD3d 10 [2d Dept 2021]), the Appellate Division, Second Department held that the "inclusion of any material in the separate envelope sent to the borrower under RPAPL 1304 that is not expressly delineated in [the statute] constitutes a violation of the separate envelope requirement of RPAPL 1304 (2)" (Bank of Am., N.A. v Kessler, 202 AD3d at 14 [emphasis added]).

In the nearly one year since Kessler was handed down, the Second Department has had more than a dozen opportunities to apply the strict compliance standard announced in Kessler across a number of cases and has consistently adhered to the bright-line standard articulated in Kessler without exception (see Bank of N.Y. Mellon v Greene, 210 AD3d 1042 [2d Dept, Nov. 30, 2022] [plaintiff failed to strictly comply with RPAPL 1304 [*4]by including information concerning the rights of a debtor in bankruptcy and in military service]; HSBC Bank USA, N.A. v Schneps, 210 AD3d 748 [2d Dept, Nov. 9, 2022] [plaintiff{**77 Misc 3d at 873} failed to comply with RPAPL 1304 by including additional notices sent in the same envelope with 90-day notice]; Deutsche Bank Natl. Trust Co. v Ghosh, 208 AD3d 851 [2d Dept 2022] [copies of 90-day notices showed additional notices not contemplated by RPAPL 1304, warranting denial of motion for summary judgment]; JPMorgan Chase Bank, N.A. v Dedvukaj, 207 AD3d 532 [2d Dept 2022] [inclusion of additional notices not contemplated by RPAPL 1304 established that plaintiff had failed to comply strictly with RPAPL 1304]; US Bank N.A. v Lanzetta, 207 AD3d 501 [2d Dept 2022] [inclusion of additional material warranted denial of plaintiff's summary judgment motion and grant of cross motion to dismiss the complaint for failure to comply with RPAPL 1304]; Wells Fargo Bank N.A. v Bedell, 205 AD3d 1064 [2d Dept 2022] [inclusion of separate notice language pertaining to the rights of a debtor in military service and a debtor in bankruptcy violated separate envelope statutory requirement]; Deutsche Bank Natl. Trust Co. v Bonal, 205 AD3d 884 [2d Dept 2022] [failure to establish mailing of notices in separate envelope warranted denial of plaintiff's motion for summary judgment]; Prof-2014-S2 Legal Tit. Trust II v DeMarco, 205 AD3d 943 [2d Dept 2022] [content of notices did not comply with RPAPL 1304 warranting denial of motion for summary judgment and grant of cross motion for dismissal of complaint]; HSBC Bank USA, N.A. v Hibbert, 205 AD3d 783 [2d Dept 2022] [same]; US Bank N.A. v Drakakis, 205 AD3d 756, 757 [2d Dept 2022] [inclusion of document titled "Consumer Notice Pursuant to 15 USC Section (1692g)" violated the "separate envelope" mandate of RPAPL 1304 (2)]; HSBC Bank USA, N.A. v DiBenedetti, 205 AD3d 687 [2d Dept 2022] [plaintiff could not establish that it strictly complied with RPAPL 1304 where additional material was sent in the same envelope as the 90-day notice]; Bank of N.Y. Mellon v Govan, 204 AD3d 878 [2d Dept 2022] [inclusion of separate notice concerning the rights of a debtor in bankruptcy and military service violates the separate envelope mandate of RPAPL 1304 (2)]; HSBC Bank USA, N.A. v Jahaly, 204 AD3d 648 [2d Dept 2022] [inclusion of additional notices not contemplated by RPAPL 1304 constitutes failure to strictly comply with RPAPL 1304]; U.S. Bank N.A. v Hinds, 203 AD3d 1210 [2d Dept 2022] [same]; Deutsche Bank Natl. Trust Co. v Bancic, 203 AD3d 1130 [2d Dept 2022] [additional notices and verbiage referencing bankruptcy and the rights of military servicemembers]; Deutsche Bank Natl. Trust Co. v Salva, 203 AD3d 700, 702 [2d{**77 Misc 3d at 874} Dept 2022] [inclusion of "Important Disclosures" regarding bankruptcy and rights for military personnel]; Ocwen Loan Servicing, LLC v Sirianni, 202 AD3d 702 [2d Dept 2022] [inclusion of two notices pertaining to the Federal Fair Debt Collection Practices Act and bankruptcy violated "separate envelope" mandate]; Wells Fargo Bank, N.A. v DeFeo, 200 AD3d 1105 [2d Dept 2021] [inclusion of notice concerning Home Affordable Modification Program and bankruptcy issues violated the "separate envelope" mandate]; Citimortgage, Inc. v Dente, 200 AD3d 1025 [2d Dept 2021] [inclusion of notice regarding bankruptcy violated "separate envelope" mandate]).

[1] The plaintiff contends that Kessler does not constitute "a change in the law" and, therefore, its handing down by the Appellate Division does not provide a basis for the defendant to move for leave to renew. Rather, according to the plaintiff, "Kessler 'merely clarifies existing law' " (NY St Cts Elec Filing [NYSCEF] Doc No. 114 ¶ 6). This court disagrees with plaintiff's contention and notes, in any event, at least in the Second Department, "[a] clarification of the decisional law is a sufficient change in the law to support renewal" (Dinallo v DAL Elec., 60 AD3d 620, 621 [2d Dept 2009]; see Opalinski v City of New York, 164 AD3d 1354, 1355 [2d Dept 2018]; Roundabout Theatre Co. v Tishman [*5]Realty & Constr. Co., 302 AD2d 272 [1st Dept 2003]). Moreover, for the reasons articulated by our sister court in Deutsche Bank Natl. Trust Co. v Aber (76 Misc 3d 1223[A], 2022 NY Slip Op 51036[U] [Sup Ct, Rockland County, Sept. 28, 2022]), this court finds that Kessler constituted a sufficient change in law or clarification of decisional law to support an application for renewal and, further, that permitting renewal in these circumstances is sound policy. Indeed, even anecdotally, it cannot be disputed that, since Kessler was handed down, the Supreme Court has received many applications and motions citing to Kessler as a watershed pronouncement of a bright-line rule regarding the content and form of RPAPL 1304 notices previously not expressly stated by any appellate authority from both bank and borrowers' counsel. Accordingly, this court finds that the Appellate Division's decision in Kessler constitutes a sufficient "change in the law" to support Mr. Chan's cross motion for renewal (see Deutsche Bank Natl. Trust Co. v Aber, 76 Misc 3d 1223[A], 2022 NY Slip Op 51036[U] [Sup Ct, Rockland County, Sept. 28, 2022]; U.S. Bank N.A. v DeJesus, 75 Misc 3d 1211[A], 2022 NY Slip Op 50461[U] [Sup Ct, Putnam County, June 1, 2022]). This court{**77 Misc 3d at 875} is mindful that not all sister courts in this state have come to the same conclusion (see U.S. Bank NA v Wahl, 75 Misc 3d 1238[A], 2022 NY Slip Op 50762[U] [Sup Ct, Suffolk County, Aug. 1, 2022]; Wilmington Sav. Fund Socy., FSB v Sotomayor, 2022 NY Slip Op 31298[U] [Sup Ct, Westchester County, May 12, 2022]; Bank of N.Y. Mellon v Abraham, 75 Misc 3d 876 [Sup Ct, Suffolk County, May 2, 2022]). However, unless and until the Appellate Division weighs in directly on whether Kessler constitutes a sufficient change or clarification of law to support a motion for renewal pursuant to CPLR 2221 (e), this court is free to render its own determination on the matter.

With respect to plaintiff's contention that Mr. Chan cannot move to renew the plaintiff's motion for summary judgment and an order of reference because Mr. Chan did not formally cross-move for relief, the plaintiff has not cited to, and this court cannot find, any legal authority that says a party who has opposed a motion may not seek, inter alia, renewal of that motion if they did not seek affirmative relief above and beyond, presumably, denial of the motion. It is true that Mr. Chan would not be permitted to seek renewal if he had defaulted in opposing the motion. However, here, it is not disputed that Mr. Chan opposed the motion and, in fact, requested in opposing the plaintiff's motion for summary judgment that the court, in reviewing the evidence, find that "a party other than the moving party is entitled to summary judgment" and grant such judgment without need for a cross motion, citing CPLR 3212 (b) (NYSCEF Doc No. 62 ¶ 42). As such, contrary to the plaintiff's contention otherwise, Mr. Chan did seek affirmative relief from the court on the prior motion.

Finally, with respect to the plaintiff's contention that Mr. Chan has waived any arguments related to the plaintiff's compliance with RPAPL 1304 not previously raised by Mr. Chan in opposition to the plaintiff's motion for summary judgment and that this court's prior rejection of Mr. Chan's arguments with respect to compliance with RPAPL 1304 constitute law of the case, this court notes, again, that a defendant can raise the argument that the plaintiff did not strictly comply with RPAPL 1304 at any time during the action (see HSBC Bank USA, N.A. v Cardona, 193 AD3d 696, 698 [2d Dept 2021]). Importantly, Mr. Chan has not raised this "new" argument with respect to RPAPL 1304 (2) simply in opposition to the plaintiff's motion to confirm the referee's report and for a judgment of foreclosure and sale (see Wells Fargo Bank, N.A. v{**77 Misc 3d at 876} Morales, 178 AD3d 881 [2d Dept 2019]), but rather has raised the plaintiff's strict compliance with RPAPL 1304 (2) in the context of a cross motion for leave to renew the prior motion upon the change of law announced in the Second Department's Kessler decision. Mr. Chan could not have raised his arguments based upon the Kessler decision in his prior opposition [*6]as Kessler had not yet been handed down. As such, this court finds that the court is not precluded from considering Mr. Chan's contention raised in his motion for leave to renew pursuant to the doctrine of law of the case. Accordingly, the court grants renewal of the plaintiff's motion for summary judgment and an order of reference pursuant to CPLR 2221 (e).

[2] Turning to the merits of Mr. Chan's cross motion and upon review of the RPAPL 1304 notices sent in this matter (NYSCEF Doc No. 110), the plaintiff failed to strictly comply with the provisions of RPAPL 1304. Specifically, while pages 1 and 2 of the notices reproduce verbatim the required language articulated in RPAPL 1304 (1), following the conclusion of the statutorily prescribed language, there is additional language advising that the plaintiff is a debt collector and a "Bankruptcy Notice." The inclusion of these additional "notices" violates the separate envelope mandate of RPAPL 1304 (2) and, accordingly, the plaintiff, by its submission of these notices in support of its motion for summary judgment (NYSCEF Doc Nos. 4, 33, 51), cannot establish that it strictly complied with RPAPL 1304 (see Bank of N.Y. Mellon v Greene, 210 AD3d 1042 [2d Dept, Nov. 30, 2022]; JPMorgan Chase Bank, N.A. v Dedvukaj, 207 AD3d at 534; US Bank N.A. v Lanzetta, 207 AD3d at 502; Wells Fargo Bank N.A. v Bedell, 205 AD3d at 1065-1066; HSBC Bank USA, N.A. v DiBenedetti, 205 AD3d at 690; Bank of N.Y. Mellon v Govan, 204 AD3d at 879; U.S. Bank N.A. v Hinds, 203 AD3d at 1212-1213; Deutsche Bank Natl. Trust Co. v Bancic, 203 AD3d at 1133-1134; Deutsche Bank Natl. Trust Co. v Salva, 203 AD3d at 702; Ocwen Loan Servicing, LLC v Sirianni, 202 AD3d at 705; Wells Fargo Bank, N.A. v DeFeo, 200 AD3d at 1107; Citimortgage, Inc. v Dente, 200 AD3d at 1027). Importantly, the plaintiff does not assert that the RPAPL 1304 notice sent in this matter strictly complies with RPAPL 1304, including the separate envelope mandate contained in RPAPL 1304 (2).

Since renewal of the plaintiff's motion for summary judgment and an order of reference has been granted, and upon renewal, this court has determined that the plaintiff failed to{**77 Misc 3d at 877} strictly comply with the notice requirements of RPAPL 1304 (and specifically the separate envelope mandate contained in RPAPL 1304 [2]), and because strict compliance with RPAPL 1304 notice to the borrower is a condition precedent to the commencement of a foreclosure action (see Citibank, N.A. v Conti-Scheurer, 172 AD3d at 20), this court will grant Mr. Chan's request that this court search the record and award him summary judgment dismissing the complaint insofar as asserted against him (see CPLR 3212 [b]; cf. U.S. Bank N.A. v Zakarin, 208 AD3d 1275, 1278 [2d Dept 2022]; HSBC Bank USA, N.A. v DiBenedetti, 205 AD3d at 690).

The plaintiff has also advanced an argument that this court should not apply the Kessler holding because it violates the Supremacy Clause of the United States Constitution, as the Federal Debt Collection Practices Act (FDCPA) and the Bankruptcy Code supersede RPAPL 1304. Alternatively, counsel contends that Kessler should not be applied retroactively, relying upon the analysis contained in Bank of N.Y. Mellon v Luria (75 Misc 3d 1205[A], 2022 NY Slip Op 50384[U] [Sup Ct, Putnam County, May 11, 2022, Grossman, J.]) and, ironically, quoting that court's finding that it appears to be "indisputable that Kessler enunciated a new rule of law" (2022 NY Slip Op 50384[U], *6), which is exactly the opposite of what counsel argued earlier with respect to Mr. Chan's basis for renewal.

[3] The Court of Appeals has agreed to review the Second Department's Kessler decision and that appeal has been fully perfected and briefed. The Court of Appeals has set an oral argument date of January 4, 2023, for that appeal and will issue a determination at some point thereafter addressing whether the Second Department's ruling was correct. Until that determination is handed down, the law that is binding upon this court is that of the Second Department. The [*7]Court of Appeals will have the opportunity to weigh in on whether the plaintiff's Supremacy Clause and/or federal law preemption arguments have merit. With respect to retroactivity, while the Appellate Division did not explicitly state that Kessler would apply retroactively, all of its decisions applying Kessler involve cases where the RPAPL 1304 notices were sent prior to Kessler being handed down which at least implies that the Second Department intended to apply Kessler retroactively.

Based upon the analysis provided above, this court grants Mr. Chan's cross motion for leave to renew the plaintiff's motion for summary judgment and an order of reference and,{**77 Misc 3d at 878} upon renewal, denies the plaintiff's motion and, upon searching the record pursuant to CPLR 3212 (b), the court grants summary judgment dismissing the complaint on the ground that the plaintiff failed to strictly comply with RPAPL 1304 which is a condition precedent to commencement of a foreclosure action.

In light of the foregoing, this court need not reach the plaintiff's motion to confirm the referee's report and for a judgment of foreclosure and sale. That motion is denied as academic.

In light of the foregoing, it is hereby ordered that the cross motion of the defendant Paul Chan (mot seq 3), which sought leave to renew the plaintiff's motion for summary judgment (mot seq 1), is granted; and it is further ordered that, upon renewal, the plaintiff's prior motion for summary judgment is denied; and it is further ordered that, upon renewal, this court grants defendant Paul Chan's request for summary judgment pursuant to CPLR 3212 (b); and it is further ordered that the complaint is dismissed; and it is further ordered that the plaintiff's motion (mot seq 2) is denied as academic; and it is further ordered that any relief requested and not specifically granted is denied.