Miss Jones LLC v. Shahid et al
Filing
96
MEMORANDUM DECISION AND ORDER. The plaintiff's motion for summary judgment is granted, the defendant's cross-motion for summary judgment is denied and the plaintiff's motion to strike the defendants amended answer is denied as moot. Ordered by Judge Ann M. Donnelly on 9/30/2022. (Greene, Donna)
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF NEW YORK
--------------------------------------------------------------- X
:
MISS JONES LLC,
:
Plaintiff,
: MEMORANDUM DECISION AND
ORDER
– against –
:
17-CV-716 (AMD) (LB)
:
ABDUL SHAHID and NEW YORK CITY
:
ENVIROMENTAL CONTROL BOARD,
:
Defendants.
--------------------------------------------------------------- X
ANN M. DONNELLY, United States District Judge:
On February 8, 2017, Miss Jones LLC (“Miss: Jones”) brought this action against Abdul
:
Shahid and the New York City Environmental Control Board1 seeking to foreclose a mortgage
:
encumbering property located at Block 9950, Lot 44, on the Tax Map of the County of Queens,
:
also known as 87-06 Dalny Road, Jamaica Estates, New
: York (the “Property”). (ECF No. 10 ¶
1.) Before the Court are the parties’ cross motions for: summary judgment. (ECF Nos. 90, 93.)
:
For the reasons explained below, the plaintiff’s motion is granted, and the defendant’s motion is
denied.
BACKGROUND2
On March 2, 2005, the defendant executed a note evincing a loan made to him by
JPMorgan Chase Bank N.A. (“Chase”) in the principal amount of $100,000 (“Original Note”).
1
The New York City Environmental Control Board has not appeared in this action and has failed to
answer or otherwise respond to the complaint.
2
On a motion for summary judgment, the Court’s consideration is limited to factual material that would
be admissible evidence at trial. Local Unions 20 v. United Bhd. of Carpenters and Joiners of Am., 223
F. Supp. 2d 491, 496 (S.D.N.Y. 2002). Factual allegations that are disputed without a citation to
admissible evidence are deemed admitted, as long as they are also supported by the record. Local Civ.
R. 56.1; Giannullo v. City of New York, 322 F.3d 139, 140 (2d Cir. 2003). Factual allegations that are
not disputed are also deemed admitted, as long as they are supported by the record. Id. I disregard any
(Defendant’s 56.1 Counterstatement (ECF No. 93-21) (“Def.’s 56.1 Counterstatement”) ¶¶ 1-2;
Plaintiff’s 56.1 Statement (ECF No. 92) (“Pl.’s 56.1 Statement”) ¶ 3.) Chase extended another
loan to the defendant on November 2, 2005, for $100,000, and the defendant executed a note to
Chase for a principal, consolidated, sum of $200,000 (the “Consolidated Note”), secured by a
mortgage on the Property (the Consolidated Note and the mortgage are the “Loan”). (Def.’s 56.1
Counterstatement ¶¶ 2-3; Pl.’s 56.1 Statement ¶¶ 2-3; ECF Nos. 90-2, 90-3.) The plaintiff came
into possession of the Consolidated Note and the mortgage, although the parties disagree over
when the possession took place. (Pl.’s 56.1 Statement ¶ 10; Defendant’s 56.1 Statement (ECF
No. 93-20) ¶¶ 8.) The plaintiff argues that it became the holder of the Consolidated Note and the
mortgage on April 2, 2016 (ECF No. 90-18 at 11), while the defendant argues that the plaintiff
did not become the holder of the Consolidated Note and the mortgage until September 29, 2016.
(ECF No. 93-23 at 14.) The defendant defaulted on the Loan, although the parties disagree about
when the default occurred. (Def.’s 56.1 Counterstatement ¶ 4.) According to the amended
complaint, as of August 12, 2016, the unpaid principal on the Loan was $199,277.60, plus
interest and late charges. (ECF No. 10 ¶ 33.)
The plaintiff commenced this action to foreclose on February 8, 2017, and filed an
amended complaint on February 17, 2017. (ECF No. 10.) The defendant filed his final amended
answer on January 3, 2022 (ECF No. 89), asserting the following affirmative defenses: that the
plaintiff’s suit is barred by the statute of limitations, that the plaintiff did not comply with §§
1303 or 1304 of the New York Real Property Actions and Proceedings Law (“RPAPL”), and that
the Loan is predatory. (ECF No. 8 at 2-10.) The plaintiff moves for summary judgment, seeking
arguments in the Rule 56.1 statements. Pape v. Dircksen & Talleyrand Inc., No. 16-CV-5377, 2019 WL
1435882, at *2 (E.D.N.Y. Feb. 1, 2019), report and recommendation adopted, 2019 WL 1441125
(E.D.N.Y. Mar. 31, 2019).
2
a judgment of foreclosure and to strike the defendant’s second amended answer. (ECF No. 90 at
1.) The defendant opposes the plaintiff’s summary judgment motion, cross-moves for summary
judgment and to strike the affidavit of Joni Yorks. (ECF No. 93.)
LEGAL STANDARD
Summary judgment is appropriate only if the parties’ submissions show that there is “no
genuine dispute as to any material fact,” and that the movant is therefore “entitled to judgment as
matter of law.” Fed. R. Civ. P. 56(a); see also Anderson v. Liberty Lobby, Inc., 477 U.S. 242,
247-48 (1986). The movant has the “burden of showing the absence of any genuine dispute as to
a material fact.” McLee v. Chrysler Corp., 109 F.3d 130, 134 (2d Cir. 1997). “Once the moving
party has met this burden, the party opposing summary judgment must identify specific facts and
affirmative evidence that contradict those offered by the moving party to demonstrate that there
is a genuine issue for trial.” Ethelberth v. Choice Sec. Co., 91 F. Supp. 3d 339, 349 (E.D.N.Y.
2015) (citing Celotex Corp. v. Calrett, 477 U.S. 317, 324 (1986)). “The non-moving party ‘may
not rely on mere conclusory allegations nor speculation, but instead must offer some hard
evidence showing that [its] version of the events is not wholly fanciful.’” Id. (quoting D’Amico
v. City of N.Y., 132 F.3d 145, 149 (2d Cir. 1998)). Nevertheless, the court is to resolve all
ambiguities and draw all reasonable inferences in favor of the non-moving party. Kaytor v. Elec.
Boat Corp., 609 F.3d 537, 545 (2d Cir. 2010); Salomon v. Our Lady of Victory Hosp., 514 F.3d
217, 226 (2d Cir. 2008).
DISCUSSION
The Plaintiff’s Motion for Summary Judgment
“Under New York law, a plaintiff seeking to foreclose upon a mortgage must
demonstrate the existence of the mortgage and mortgage note, ownership of the mortgage, and
the defendant’s default in payment on the loan secured by the mortgage.” Windward Bora LLC
3
v. Baez, No. 19-CV-5698, 2020 WL 4261130, at *3 (E.D.N.Y. July 24, 2020) (internal quotation
marks and citation omitted); see also Builders Bank v. Charm Devs. II, LLC, Nos. 09-CV-3935
& 09-CV-4410, 2010 WL 3463142, at *2 (E.D.N.Y. Aug. 30, 2010) (“[S]ummary judgment in a
mortgage foreclosure action is appropriate where the Note and Mortgage are produced to the
Court along with proof that the Mortgagor has failed to make payments due under the Note.”
(citation omitted)). “Once the plaintiff submits the mortgage, the unpaid note, and evidence of
the default, it has demonstrated its prima facie case of entitlement to judgment. The burden then
shifts to the defendant to raise a triable issue of fact, including with respect to any alleged
defenses or counterclaims.” Gustavia Home, LLC v. Bent, 321 F. Supp. 3d 409, 414-15
(E.D.N.Y. 2018) (citations omitted).
There does not appear to be a dispute that the plaintiff has established a prima facie case
entitling it to judgment. The plaintiff provided proof of the note and the mortgage at issue, both
dated November 2, 2005, in the amount of $200,000, executed by Abdul Shahid. (ECF Nos. 902, 90-3.) The defendant admits that he executed the note to Chase. (ECF No. 93-21 at 2.) The
plaintiff also attaches records of the mortgage assignment, indicating that Miss Jones LLC is the
current holder of the note and mortgage. (ECF No. 90-4.) Finally, the plaintiff has demonstrated
that the defendant defaulted on the loan (ECF No. 90-5); the defendant admits to the default.
(ECF No. 93-21 at 3.) Therefore, the plaintiff has made out a prima facie case that it is entitled
to summary judgment on the foreclosure action.
The Defendant’s Affirmative Defenses
a.
Statute of Limitations
Under New York law, the statute of limitations for a mortgage-foreclosure action is six
years. N.Y. C.P.L.R. § 213 (“‘[A]n action upon a bond or note, the payment of which is secured
4
by a mortgage upon real property, or upon a bond or note and mortgage so secured, or upon a
mortgage of real property, or any interest therein’ shall ‘be commenced within six years.’”).
“The law is well settled that, even if a mortgage is payable in installments, once a mortgage debt
is accelerated, the entire amount is due and the Statute of Limitations begins to run on the entire
debt.” 53rd St., LLC v. U.S. Bank Nat’l Ass’n, 8 F.4th 74, 78 (2d Cir. 2021) (citation omitted).
If the mortgage and note make acceleration an option, “some affirmative action must be taken
evidencing the holder’s election to take advantage of the accelerating provision . . . the borrower
must be provided with notice of the holder’s decision to exercise the option to accelerate the
maturity of a loan” and such notice must be “clear and unequivocal.” Wells Fargo Bank,
N.A. v. Burke, 94 A.D.3d 980, 982-83 (2d Dep’t 2012) (citations omitted).
The defendant argues that he received an “Acceleration Warning (Notice of Intent to
Foreclose)” letter from Chase on March 12, 2009 (the “Chase Letter”), which included a 30-day
demand to cure and informed him that Chase would accelerate the loan and the balance would be
due it its entirety if he did not pay the balance. (ECF No. 93-11.) In particular, the letter advises
the defendant: “If you fail to cure the default within 30 days from the date of this notice, [Chase]
intends to accelerate the maturity of the loan . . . declare all sums secured by the Mortgage
immediately due and payable, and commence foreclosure proceeding which could lead to
[Chase] or someone else acquiring ownership of the Property.” (ECF No. 93-11 at 1.) The
defendant says that by sending this letter, Chase accelerated the mortgage debt and triggered the
statute of limitations. The plaintiff argues that the Chase Letter is merely a “warning of future
acceleration rather than a clear and unequivocal demand for payment of the entire mortgage
debt,” and thus, did not accelerate the entire mortgage or trigger the statute of limitations. (ECF
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No. 90-18 at 9.) Additionally, the plaintiff argues that the Chase Letter constitutes inadmissible
hearsay that the Court cannot consider. (Id. at 10.)
Hearsay is an out of court statement offered as evidence to prove the truth of the matter
asserted and is typically inadmissible. Fed. R. Evid. 801(c), 802. However, there is an exception
for business records that are properly authenticated through the certification of a custodian or
another witness. Fed. R. Evid. 803(6). Here, the defendant submitted the Chase Letter without
any certification. The plaintiff argues—without contesting the Chase Letter’s authenticity—that
without the certification, the Chase Letter is inadmissible. However, “proof of authentication
may be direct or circumstantial.” United States v. Vayner, 769 F.3d 125, 130 (2d Cir. 2014)
(quoting United States v. Al-Moayad, 545 F.3d 139, 172 (2d Cir. 2008)). While the simplest
form of “authentication is through the testimony of a witness with knowledge that a matter is
what it is claimed to be . . . This is by no means exclusive, however: Rule 901 provides several
examples of proper authentication techniques in different contexts.” Id. (internal quotation
marks and citations omitted). A document can be authenticated through its “appearance,
contents, substance, internal patterns, or other distinctive characteristics of the item.” Fed. R.
Evid. 901(b)(4). The relevant circumstances support the authenticity of the Chase Letter, which
bears sufficient characteristics that it is what the defendant says it is. The parties do not dispute
that the defendant had a loan with Chase, the Chase Letter lists the address of the Property, it
lists the account number as “100001415740201439,” which matches the account number on the
loan documents: “415740201439” (ECF Nos. 93-12, 93-13, 93-14), and the Chase Letter—and
the envelope accompanying it—bear the Chase logo. (ECF No. 93-11.) Therefore, the Chase
Letter is admissible.
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The Chase letter does not establish that the action is time barred. The Consolidated Note
provided that the noteholder had the option to accelerate the loan if the defendant did not meet
the repayment terms of the agreement. (ECF No. 93-13 at 3 (“We can terminate your Credit
Line Account and subject to any notice requirement or other limitation of applicable law require
you to pay us the entire outstanding balance in one payment.”).) A fair reading of the letter is
that Chase was advising the defendant that it would accelerate the loan if the plaintiff did not pay
the past due amount, $3,833.00.
New York courts consistently hold that an acceleration must be ‘clear’ and ‘unequivocal’
to take effect. Language that the noteholder “will” take action does not communicate a clear and
unequivocal notice of acceleration. Freedom Mortg. Corp. v. Engel, 37 N.Y.3d 1, 26-27 (2021)
(finding a default letter that “did not seek immediate payment of [an] entire, outstanding loan,”
“referred to acceleration only as a future event, indicating the debt was not accelerated at the
time the letter was written,” and stated that the debt “will be accelerated” for failure to cure but
also indicated such failure “may” result in the foreclosure of the property, did not accelerate the
debt); see also HSBC Bank USA, N.A. v. King, 193 A.D.3d 694, 695 (2d Dep’t 2021) (“A ‘letter
discussing acceleration as a possible future event . . . does not constitute an exercise of the
mortgage’s optional acceleration clause.’” (quoting 21st Mtge. Corp. v. Adames, 153 A.D.3d
474, 475 (2d Dep’t 2017)).
Chase warned the defendant of a “possible future event,” and did not seek immediate
payment of the entire outstanding loan. Rather, it advised the defendant that it intended to
“accelerate the maturity of the loan . . . declare all sums secured by the Mortgage immediately
due and payable, and commence foreclosure proceeding which could lead to [Chase] or someone
else acquiring ownership of the Property” if he did not “cure the default within 30 days from the
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date of this notice.” (ECF No. 93-11 at 1.) See U.S. Bank N.A. v. Singer, 192 A.D.3d 1182,
1187 (2d Dep’t 2021) (finding a letter that informed a mortgagor that “if funds are not received
by the above stated date, we will proceed to automatically accelerate your loan,” was merely an
expression of future intent that fell short of an actual acceleration); JPMorgan Chase Bank, N.A.
v. Garcete, 203 A.D.3d 1149, 1149-51 (2d Dep’t 2022) (“[An] Acceleration Warning (Notice of
Intent to Foreclose) . . . which stated that the loan was in default and if the defendant failed to
cure the default within 30 days, the plaintiff intend[ed] to accelerate the maturity of the Loan . . .
merely discussed acceleration as a possible future event.” (quotation marks omitted)).
Accordingly, the Chase Letter did not accelerate the debt and trigger the statute of limitations.
The defendant’s claim that the action is barred by the statute of limitations is dismissed.
b.
Failure to Provide Notice Pursuant to RPAPL § 1304
“Pursuant to RPAPL [§] 1304(1), at least ninety days before a lender, an assignee or a
mortgage loan servicer commences legal action against the borrower, or borrowers at the
property address and any other address of record, including mortgage foreclosure, such lender,
assignee or mortgage loan servicer shall give notice to the borrower. The statute requires that
such notice be sent by registered or certified mail, and also by first-class mail, to the last known
address of the borrower. Strict compliance with RPAPL [§] 1304 notice to the borrower or
borrowers is a condition precedent to the commencement of a foreclosure action.” U.S. Bank
Trust, N.A. v. Mehl, 195 A.D.3d 1054, 1055 (2d Dep’t 2021) (internal quotation marks and
citations omitted). “A plaintiff in a foreclosure action can demonstrate compliance with RPAPL
§ 1304 with proof of the actual mailings, such as affidavits of mailing or domestic return receipts
with attendant signatures, or proof of a standard office mailing procedure designed to ensure that
items are properly addressed and mailed, sworn to by someone with personal knowledge of the
procedure.” Miss Jones, LLC v. Viera, No. 18-CV-1398, 2020 WL 1527141, at *1 (E.D.N.Y.
8
Mar. 31, 2020) (internal quotation marks and citation omitted). “[P]roof of a standard office
mailing procedure gives rise to a presumption that a notice was received, although that
presumption may be rebutted by ‘a showing that [the] routine office practice was not followed or
was so careless that it would be unreasonable to assume that the notice was mailed.’” CIT Bank
N.A. v. Schiffman, 948 F.3d 529, 533 (2d Cir. 2020) (quoting Nassau Ins. Co. v. Murray, 46
N.Y.2d 828, 830 (1978)).
According to the plaintiff, proof of the mailing can be demonstrated by “standard office
practice.” (ECF No. 90-18 at 12.) The plaintiff submits the affidavit of Joni Yorks, an asset
manager for SN Servicing Corp. (“SN”), the plaintiff’s loan servicer for the Loan, (ECF No. 9015 ¶ 1), in which Ms. Yorks asserts that “[SN’s] standard mailing procedure for mailing notices
required pursuant to RPAPL § 1304 is to create the RPAPL § 1304 notices utilizing the address
and borrower information contained in the computer system. [SN’s] standard practice is to
generate separate § 1304 notices to be sent by registered or certified mail and also by first-class
mail to the last known address of each borrower, and to the residence which is the subject of the
mortgage.” (Id. ¶ 4.) The “information contained on each notice is then entered into a mailing
log” and the notices are then hand delivered to the United States Postal Service, who executes
SN’s mailing log and stamps the date that the notices are received. (Id. ¶ 5.) In this case, the
RPAPL § 1304 notice was generated and mailed by SN employee Angela (“Angie”) Christie on
August 12, 2016. (Id. ¶ 6.)
The New York Court of Appeals has addressed the “showing a borrower must make to
rebut the presumption created through proof of a standard office mailing procedure in the context
of RPAPL 1304 notices,” CIT Bank N.A. v. Schiffman, 36 N.Y.3d 550, 556 (2021) (emphasis in
original), holding that “to rebut the presumption, there must be proof of a material deviation
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from an aspect of the office procedure that would call into doubt whether the notice was properly
mailed, impacting the likelihood of delivery to the intended recipient. Put another way, the crux
of the inquiry is whether the evidence of a defect casts doubt on the reliability of a key aspect of
the process such that the inference that the notice was properly prepared and mailed is
significantly undermined. Minor deviations of little consequence are insufficient.” Id. at 557.
The plaintiff established a standard office practice and procedure, which supports the
presumption of receipt. The defendant speculates about potential “deviations,” but his objections
do not undermine the presumption that the notice was properly prepared and mailed. For
example, the defendant cites the fact that the mailing log describes the notice as an “attorney
demand” rather than a notice. (See ECF No. 90-15 at 21-22.) The defendant argues that the
RPAPL § 1304 notice provided by the plaintiff (ECF No. 90-15, Exhibit A), was not issued by
an attorney, and is therefore not the “Attorney Demand” referenced in SN’s mailing log. (ECF
No. 93-23 at 7-8.) According to the defendant, this demonstrates that SN mailed him an
“Attorney Demand” instead of a RPAPL § 1304 notice. (Id.) However, Ms. Yorks did not say
that the notices are titled “RPAPL § 1304 notices” in the mailing log; rather, she said that the
information on each notice is entered into a mailing log. (ECF No. 90-15 ¶ 5.) While the
mailing log does not appear to include everything on the § 1304 notice, it refers the reader to the
“Quote History for unofficial breakdown detail,” and the entry containing that statement appears
to be cut off. (ECF No. 90-15 at 21.) This does not constitute a “material deviation.”
The defendant also objects that the mailing log does not reflect that the notice was sent by
first-class mail. However, this is not a material deviation. The mailing log does not make any
reference to the method used to mail the notice, nor did Ms. Yorks say that SN’s practice was to
list the mailing methods. Next, the defendant argues that the two postal receipt cards do not have
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a post office stamp or the defendant’s signature. This is not significant, because the certified
mailing receipts are stamped with the tracking numbers for the mailings, and bear the August 12,
2016 date. (ECF No. 90-15 at 16-17.) Moreover, Ms. Yorks did not say that SN’s standard
procedure was to get the addressee’s signature.
Finally, the defendant argues that the tracking number associated with at least one of
those postal receipts shows that the notice was not delivered because the United States Postal
Service’s (“USPS”) tracking information associated with the certified mailing lists it as “intransit.” (ECF No. 93-19.) The defendant does not cite any cases in which a court found that the
RPAPL § 1304 notice was not sufficient because it was marked “in transit,” and the Court is not
aware of any. Cf. Empire Cmty. Dev., LLC v. Giambalvo-West, 19-CV-5341, 2020 WL
9813022, at *4-5 (E.D.N.Y. Mar. 6, 2020) (finding § 1304 compliance properly demonstrated
through proof of the actual mailings even though one of the mailings was “returned as
unclaimed” according to the USPS tracking number associated with it). Indeed, the rule provides
that “[n]otice is considered given as of the date it is mailed.” N.Y. R.P.A.P.L. § 1304(2).
Moreover, the Court takes judicial notice of the USPS’s “frequently asked questions” page about
its tracking procedures. See, e.g., Wells Fargo Bank, N.A. v. Wrights Mill Holdings, LLC, 127 F.
Supp. 3d 156, 166 (S.D.N.Y. 2015) (finding it “clearly proper to take judicial notice” of
“documents retrieved from official government websites”); see also Cangemi v. United States,
13 F.4th 115, 124 n.4 (2d Cir. 2021). As explained on the USPS’s website “[t]he absence of a
delivery scan on a mailpiece does not necessarily indicate that the item was not delivered. It is
possible the piece was delivered but the scan was not captured.” See U.S. Postal Serv., “What If
My Item Was Received, But Not Scanned As Delivered?,” available at
https://faq.usps.com/s/article/USPS-Tracking-The-Basics#How_can_I_use_USPS_Tracking (last
11
visited September 28, 2022). Accordingly, the defendant has failed to rebut the presumption that
the notice was received, and his motion for summary judgment on RPAPL § 1304 notice ground
is denied.
Motion to Strike
The defendant also argues that the Court should strike Ms. Yorks’s affidavit because the
plaintiffs did not identify Ms. Yorks or Angela Christie, 3 as required by Rule 26, before it filed
its first summary judgment motion. (ECF No. 93-23 at 9.) The plaintiff responds that the
defendant was aware of “Angie’s” identity because she signed the certified mailing receipts. The
plaintiff also maintains that the defendant knew that SN was the plaintiff’s loan servicer and
could have sought the deposition of the “person most knowledgeable” at SN. (ECF No. 90-18 at
14-15.) The Court addressed this subject at a December 2021 status conference. After some
discussion, the Court advised counsel for the defendant that it would consider the evidence
because it “sound[s] to me like it does not matter one way or the other to you.” Counsel
responded, “It doesn’t. It doesn’t.”
“A party that without substantial justification fails to disclose information required by
Rule 26(a) . . . is not, unless such failure is harmless, permitted to use as evidence at a trial, at a
hearing, or on a motion any witness or information not so disclosed.” Fed. R. Civ. P. 37(c)(1).
“When considering whether to exclude evidence pursuant to Rule 37, courts in this Circuit must
consider (1) a party’s explanation for the failure to comply with the Federal Rules, (2) the
importance of the evidence, (3) the prejudice suffered by the opposing party of having to prepare
to meet the new evidence, and (4) the possibility of a continuance.” Richmond v. Gen. Nutrition
3
The defendant also takes issue with the plaintiff’s failure to identify Angela Christie as a potential
witness (ECF No. 93-23 at 8-11), but the plaintiff does not submit any testimony by Ms. Christie.
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Centers Inc., No. 08-CV-3577, 2012 WL 762307, at *6 (S.D.N.Y. Mar. 9, 2012) (internal
quotation marks omitted). The purpose of the rule is to prevent “sandbagging” an opposing party
with new evidence. Ventra v. United States, 121 F. Supp. 2d 326, 332 (S.D.N.Y. 2000). Courts
in this Circuit recognize that preclusion of evidence pursuant to Rule 37(c)(1) is a drastic remedy
and should be exercised with caution. Ventra, 121 F. Supp. 2d at 332.
The plaintiff did not comply with Rule 26, which requires parties to disclose “the name . .
. of each individual likely to have discoverable information that the disclosing party may use to
support its claims or defenses, unless the use would be solely for impeachment.” Fed. R. Civ. P.
26(a)(1)(A)(i). The plaintiff did not submit Ms. Yorks’s affidavit for impeachment purposes and
should have identified her or notified the defendant that it would be calling on a corporate
representative of SN. Additionally, the evidence at issue is not inconsequential, because it
demonstrates that there was compliance with RPAPL § 1304. However, there is little if any
prejudice to the defendant under these circumstances. The defendant was on notice that an SN
employee was a potential witness when he was served with the RPAPL §1304 notice, which was
on SN letterhead and advised the defendant that SN was the plaintiff’s loan servicer. See Blake
v. City of New York, No. 05-CV-6652, 2007 WL 1975570, at *5 (S.D.N.Y. July 6, 2007)
(denying motion to strike filed with summary judgment motion where plaintiffs were on notice
that affiant was a potential witness when his name was produced on documentary evidence
during discovery and the plaintiffs failed to depose him). Accordingly, the defendant could have
asked to depose SN’s corporate representative before the close of discovery. Additionally, in its
January 2019 response to the defendant’s motion for summary judgment, the plaintiff
represented that its “loan servicer mailed the pre-foreclosure notice,” and that it would be using
“sworn statements which attest[] to proper mailing of the notice based on admissible business
13
records.” (ECF No. 45 at 3.) This is not the “sandbagging” scenario that the rule is meant to
prevent. Indeed, the defendant had over three years to prepare for the testimony at issue, or to
request that discovery be re-opened. Moreover, parties have submitted, withdrawn and amended
their motions more than once. In short, the defendant has not suffered any prejudice, so his
motion to strike is denied.
c.
Compliance with RPAPL § 1303
“RPAPL § 1303 requires any party seeking to foreclose on a mortgage encumbering
residential real property to provide notice to any tenant of a dwelling unit.” Plenitude Capital
LLC v. Utica Ventures LLC, No. 18-CV-2702, 2019 WL 4014840, at *4 (E.D.N.Y. June 11,
2019) (citing RPAPL §§ 1303(1), 1303(5)) (internal quotations marks omitted). “The notice
requirement protects not only those with formal lease agreements, but also any person who, at a
specified time, is a party to an oral or implied rental agreement with the mortgagor and obligated
to pay rent to the mortgagor or such mortgagor’s representative, for the use or occupancy of one
or more dwelling units of a residential real property.” Id. (internal quotation marks and citations
omitted).
The defendant does not dispute that he received notice pursuant to § 1303; instead, he
claims that “at the time the within action was commenced, a tenant resided at the Premises,” and
the plaintiff did not demonstrate that § 1303 notice was given to the tenant. (ECF No. 93-23 at
13.) The defendant, however, does not identify this tenant, say how long the tenant lived at the
property, what the tenant paid in rent, whether there was a lease agreement with the tenant or
submit a copy of a lease. The sole support for the tenant claim is a single line: “[i]n fact, a tenant
was living in my lower level.” (ECF No. 93-1 ¶ 57.) The defendant did not say anything about a
tenant at his deposition; on the contrary, he testified that “since I bought this house, I’ve been
living here with my family.” (ECF No. 90-17 at 19.)
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While a court deciding a summary judgment motion “may not make credibility
determinations or weigh the evidence,” “[a] party opposing summary judgment normally does
not show the existence of a genuine issue of fact to be tried merely by making assertions that are
based on speculation or are conclusory.” S. Katzman Produce Inc. v. Yadid, 999 F.3d 867, 877
(2d Cir. 2021). “[S]elf-serving affidavits, sitting alone, are insufficient to create a triable issue of
fact and defeat a motion for summary judgment.” Dowd v. City of New York, No. 11-CV-9333,
2012 WL 5462666, at *1 (S.D.N.Y. Nov. 5, 2012); see also Cont’l Plants Grp., LLC v. Alpha
Int’l, Inc., No. 21-CV-8677, 2022 WL 2118200, at *5 n.3 (S.D.N.Y. June 13, 2022) (finding that
self-serving assertions are not “sufficient to create a genuine dispute of material fact for
summary judgment purposes, when [they are] supported by no other evidence”). The
defendant’s conclusory and unsubstantiated allegation that he had a tenant does not raise a triable
issue of fact about whether the plaintiff violated RPAPL §1303, and that claim is dismissed.
d.
Whether The Plaintiff Served RPAPL Notices Before It Owned the
Consolidated Note
The defendant argues that the plaintiff served the RPAPL notices before it became the
owner of the Loan. The plaintiff responds that it was the holder of the Loan on April 2, 2016 and
received the written assignment of the mortgage on September 29, 2016. (ECF No. 90-18 at 11.)
According to the defendant, the plaintiff became the owner of the Loan only when it received the
written assignment. (ECF No. 93-23 at 14-15.) However, the defendant cites no authority, and
the Court cannot locate any, for the proposition that RPAPL notices are ineffective if served
before an entity becomes the owner of a mortgage and note.
The plaintiff asserts that it served the defendant with the RPAPL §1304 notice on August
12, 2016 (ECF No. 90-18 at 12), and the RPAPL §1303 notice on March 13, 2017. (ECF No.
90-18 at 16.) While a plaintiff in a foreclosure action must be the holder or assignee of the
15
underlying note at the commencement of the action, no such standing requirement exists for the
§§ 1303 and 1304 notices. Moreover, the general purpose of §§ 1303 and 1304 notices is to
ensure that borrowers receive “substantive notice of their rights.” CIT Bank, N.A. v. Anderson,
No. 16-CV-1712, 2019 WL 3842922, at *3 (E.D.N.Y. Aug. 14, 2019); see also Wells Fargo
Bank, N.A. v. Yapkowitz, 199 A.D.3d 126, 131 (2d Dep’t 2021) (The purpose of RPAPL § 1304
“is to aid the homeowner in an attempt to avoid litigation” by providing an “additional period of
time [for distressed homeowners and their lenders] . . . to work on a resolution” (citation
omitted)). The defendant does not object to the content of the notices; he only questions whether
the plaintiff was properly holding the note when the notices were sent. Nor does the defendant
dispute that the plaintiff had standing as the holder of the Consolidated Note and the mortgage
when it commenced the litigation. Accordingly, this defense is stricken.
e.
Whether The Consolidated Note is Predatory
The defendant also argues that the terms of the Loan violated federal predatory lending
laws, Truth in Lending Act (“TILA”)4 and Home Ownership and Equity Protection Act
(“HOEPA”). These arguments are unpersuasive. HOEPA applies when a mortgage loan
satisfies five requirements: (1) the mortgage loan must be a consumer credit transaction, (2) it
must be a consumer credit transaction with a creditor, (3) it must be secured by the consumer’s
principal dwelling, (4) it must be a second or subordinate residential mortgage, not a residential
4
The defendant contends that the “central question . . . is whether plaintiff’s predecessor-in-interest
violated public policy under HOEPA.” (ECF No. 93-23 at 17.) The defendant also cites TILA and
alleges that he “received no disclosure as to the risk of accepting the additional credit and it was
extended without warnings or meaningful inquiry into credit worthiness.” (ECF No. 93-23 at 18). This
is not supported by the record. Chase sent the defendant a notice of his credit score (ECF No. 93-8), and
gave him disclosure statements. (ECF Nos. 93-12, 93-13, 93-14.) Moreover, Chase disclosed that the
“Agreement is secured by a consumer Mortgage . . . on real property located in QUEENS, County,
State of New York.” (ECF No. 93-13 at 2.) To the extent that the defendant makes a TILA claim, that
claim is dismissed.
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mortgage transaction, a reverse mortgage transaction, or a transaction under an open credit plan,
and (5) either the annual percentage rate of interest for the loan transaction exceeds certain levels
or the total points and fees payable by the borrower at or before closing will exceed the greater of
(i) 8 percent of the total loan amount; or (ii) [$510]. Nelson v. JPMorgan Chase Bank, N.A., No.
07-CV-2055, 2010 WL 11626708, at *2 (E.D.N.Y. Mar. 23, 2010) (internal quotation marks and
citation omitted); (ECF No. 93-23 at 21.) The parties agree that the mortgage loan at issue meets
the first three requirements; they disagree about the last two. According to the defendant, the
loan is a “closed end” extension of credit, and the points and fees he had to pay at or before
closing exceeded $510. (ECF No. 93-23 at 19-21.) The plaintiff responds that the loan is a
home equity line of credit which is an open-ended line of credit not subject to HOEPA. (ECF
No. 90-18 at 17-18.)5
i.
The Consolidated Note is an Open-Ended Line of Credit
“A closed-end credit transaction is one where the finance charge is divided into the term
of the loan and incorporated into time payments and includes a completed loan such as a
mortgage or car loan. By contrast, an open-end credit transaction is one in which the creditor
reasonably contemplates repeated transactions, . . . and . . . provides for a finance charge which
may be computed from time to time on the outstanding unpaid balance.” McAnaney v. Astoria
5
The plaintiff’s argument that the defendant’s predatory loan defense is barred by the statute of
limitations is unavailing. The defendant raises HOEPA as an affirmative defense, which is not barred
by the statute of limitations. Gray v. Capstone Fin., No. 20-CV-00896, 2020 WL 6526086, at *7 n.7
(N.D.N.Y. Sept. 22, 2020) (“Section 1640(e) also provides that ‘[t]his subsection does not bar a person
from asserting a violation of this subchapter in an action to collect the debt which was brought more
than one year from the date of the occurrence of the violation as a matter of defense by recoupment or
set-off in such action, except as otherwise provided by State law.’” 15 U.S.C. § 1640(e). As a result,
recoupment may be asserted after the limitations period when used as a defense to a debt collection
action.”). “HOEPA is an amendment to TILA, and therefore governed by the same statute of
limitations.” Maropakis v. Bank of N.Y. Mellon Tr. Co., N.A., No. 13-CV-4744, 2015 WL 13742419, at
*3 (E.D.N.Y. May 4, 2015).
17
Fin. Corp., No. 04-CV-1101, 2008 WL 222524, at *4 (E.D.N.Y. Jan. 25, 2008) (internal
quotation marks omitted). Traditionally, home equity lines of credit are characterized as openended and exempt from HOPEA. Nelson v. JP Morgan Chase Bank, N.A., 707 F. Supp. 2d 309,
313 n.6 (E.D.N.Y. 2009); see also Stein v. JP Morgan Chase Bank, 279 F. Supp. 2d 286, 287,
291 n.3 (S.D.N.Y. 2003) (finding a home equity line of credit to be open-ended); Rendler v.
Corus Bank, N.A., 272 F.3d 992, 994 (7th Cir. 2001) (“The home equity line of credit was a
seven-year open-end loan.”). The loan at issue here is a “Home Equity Line of Credit,” it covers
a “revolving line of credit,”6 has a “credit limit,” a “draw period,” and a periodic “finance
charge.” (ECF No. 93-13 at 1-2.) The loan agreement also accounts for annual fees and
overlimit charges. (ECF No. 93-13 at 3.) Finally, the Disbursement Request and Authorization
for the loan specifies that “this is a variable rate disclosable Open-end Line of Credit Loan.”
(ECF No. 93-10 at 2.)
In Nelson, the Court found that “at least some courts have deemed open-ended home
equity credit lines to be ‘closed-end’ transactions for HOEPA purposes, where . . . the entirety of
the credit line is paid in a lump sum cash payout at closing.” Nelson, 707 F. Supp. 2d at 313 n.6.
This is because of the “intertwined nature” of the mortgage and the home equity line of credit
and the parties’ intent that the funding should be aggregated. Id. at 313-14. Here, however, the
defendant notes that “the first $100,000 amount was not tied to his home purchase although
secured by the real property and the second $100,000 loaned by Chase to Shahid was unrelated
to the purchase of his home secured by real property.” (ECF No. 93-23 at 18 n.14.)
Accordingly, the mortgage and the Consolidated Note were not “intertwined” like the loans in
Nelson.
6
A revolving line of credit is generally deemed an open-end transaction. Nelson, 707 F. Supp. 2d at 313
n.6.
18
In an effort to demonstrate that the Nelson exception applies, the defendant notes that
“the full $200,000 was issued to him” as a lump payment. (ECF No. 93-23 at 20.) That the
defendant chose to withdraw the maximum principal amount as soon as he got the loan does not
mean that the parties did not envision repeat transactions. The Consolidated Note is clear: “You
may borrow against the Credit Lien, repay any portion of the amount borrowed, and re-borrow
up to the amount of the Credit Line.” (ECF No. 93-13 at 1.) Because Chase envisioned repeat
transactions, the Consolidated Note is an open-ended home equity line of credit.7 Since HOEPA
does not apply to the Consolidated Note, there is no need to address the parties’ arguments
regarding the points and fees paid by the defendant.
CONCLUSION
For the foregoing reasons, the plaintiff’s motion for summary judgment is granted, the
defendant’s cross-motion for summary judgment is denied and the plaintiff’s motion to strike the
defendant’s amended answer is denied as moot.
“Pursuant to [RPAPL §1321], the trial court has the authority to compute the amount
owed or appoint a referee to do the same.” U.S. Bank Tr., N.A. v. Dingman, No. 16-CV-1384,
2016 WL 6902480, at *4 (S.D.N.Y. Nov. 22, 2016) (appointing a referee to calculate damages
and sell the property after awarding summary judgment to plaintiff in a foreclosure action); see
also CIT Bank, N.A. v. Langley, No. 17-CV-1548, 2019 WL 6050258, at *6 (E.D.N.Y. Nov. 15,
2019) (“[U]pon awarding summary judgment to a plaintiff in a foreclosure action, the RAPL
allows for the appointment of a referee.”). The plaintiff is therefore directed, within fourteen
days, to file a proposed judgment of foreclosure providing for a sale of the Property and
HOEPA was “later expanded by Dodd-Frank to include purchase-money mortgages and open-end credit plans (i.e.,
home equity lines of credit).” Gustavia Home, LLC v. Rice, No. 16-CV-2353, 2016 WL 6683473, at *4 (E.D.N.Y.
Nov. 14, 2016) (citing 15 U.S.C. §§ 1639, 1602(bb)), which demonstrates that it did not cover those loans when the
plaintiff got the loan at issue here.
7
19
requesting the appointment of a proposed referee to calculate the total amount owed to the
plaintiff, effectuate the sale, and disperse funds from such a sale.
SO ORDERED.
s/Ann M. Donnelly
___________________________
ANN M. DONNELLY
United States District Judge
Dated: Brooklyn, New York
September 30, 2022
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