21st Mortg. Corp. v. Raghu

• Decision Date: 22 September 2021
• Docket Number: Index No. 2737/07,2019–07805
• Parties: 21ST MORTGAGE CORPORATION, etc., respondent, v. Anil RAGHU, et al., defendants; Courchevel 1850, LLC, nonparty-appellant.
• Court: New York Supreme Court — Appellate Division

197 A.D.3d 1212

154 N.Y.S.3d 84

21ST MORTGAGE CORPORATION, etc., respondent,

v. Anil RAGHU, et al., defendants;Courchevel 1850, LLC, nonparty-appellant.

2019–07805

Index No. 2737/07

Supreme Court, Appellate Division, Second Department, New York.

Argued—March 15, 2021

September 22, 2021

Hasbani & Light, P.C., New York, N.Y. (Seth D. Weinberg of counsel), for nonparty—appellant.

Taroff & Taitz LLP, Bohemia, N.Y. (Steven C. Taitz of counsel), for respondent.

CHERYL E. CHAMBERS, J.P., ROBERT J. MILLER, BETSY BARROS, LINDA CHRISTOPHER, JJ.

DECISION & ORDER

In an action to foreclose a mortgage, nonparty Courchevel 1850, LLC, appeals from an order of the Supreme Court, Queens County (Marguerite A. Grays, J.), entered May 23, 2019. The order denied the motion of nonparty Courchevel 1850, LLC, inter alia, to vacate an order and judgment of foreclosure and sale (one paper) of the same court entered May 22, 2018.

ORDERED that the order is affirmed, with costs.

This action to foreclose a mortgage was commenced in 2007 against, among others, Anil Raghu (hereinafter the borrower) and Mortgage Electronic Registration Systems, Inc., as nominee for Fremont Investment and Loan (hereinafter Fremont). The amended complaint alleged that in 2006, the borrower had executed a note in the amount of $580,000, which was secured by a mortgage on real property located in Queens. The amended complaint further alleged that the borrower defaulted under the terms of the note and mortgage, and asserted a cause of action to foreclose the mortgage. The amended complaint alleged that Fremont had, or claimed to have, an interest in the subject property, or a lien upon it.

As relevant here, Fremont failed to interpose an answer or otherwise appear in the action. An order was entered on July 11, 2007, inter alia, appointing a referee to compute the amount due to the plaintiff. Sometime in 2016, after adding additional defendants to the action, and serving a supplemental summons and amended complaint, the plaintiff moved, among other things, for leave to enter a default judgment and for an order of reference. The plaintiff's motion was granted in an order entered July 19, 2016. In an order entered April 27, 2017, the Supreme Court, inter alia, appointed a referee to ascertain and compute the amount due to the plaintiff.

The referee issued a report dated June 6, 2017. By notice of motion dated June 14, 2017, the plaintiff moved to confirm the referee's report and for a judgment of foreclosure and sale. The Supreme Court granted the plaintiff's motion, and an order and judgment of foreclosure and sale was entered on May 22, 2018. Based upon, among other things, the referee's report, the court determined that the sum of $1,191,777.18 was due as of June 1, 2017, and directed the sale of the subject property.

By order to show cause signed on September 28, 2018, Courchevel 1850, LLC (hereinafter Courchevel), as successor in interest to Fremont, moved pursuant to CPLR 5015 to vacate the order and judgment of foreclosure and sale, and for other relief. As relevant here, Courchevel asserted that the plaintiff failed to comply with the notice requirements of CPLR 3215(g)(1) when it moved to confirm the referee's report and for a judgment of foreclosure and sale, and that this failure deprived the Supreme Court of jurisdiction to enter the order and judgment of foreclosure and sale.

The plaintiff opposed Courchevel's motion. The plaintiff argued that Courchevel's predecessor in interest (Fremont) had been served with the order entered April 27, 2017, granting the plaintiff leave to enter the default judgment against Fremont. The plaintiff asserted that Fremont had also been served with the notice of sale regarding the auction sale of the property, which was scheduled after the order and judgment of foreclosure and sale had been entered.

In an order entered May 23, 2019, the Supreme Court denied Courchevel's motion, among other things, to vacate the order and judgment of foreclosure and sale. As relevant here, the court concluded that the notice required by CPLR 3215(g)(1) was not applicable to the plaintiff's motion to confirm the referee's report and for a judgment of foreclosure and sale. The court determined that, under the statute, Fremont was only entitled to receive notice of the plaintiff's application for leave to enter a default judgment and for the appointment of a referee, and that Fremont was not entitled to notice of the later application to, inter alia, confirm the referee's report. The court concluded that Courchevel had not demonstrated sufficient grounds to warrant vacatur of the order and judgment of foreclosure and sale pursuant to CPLR 5015. Accordingly, the court denied Courchevel's motion, among other things, to vacate the order and judgment of foreclosure and sale.

Courchevel appeals from the order entered May 23, 2019. On appeal, Courchevel contends, inter alia, that the Supreme Court should have granted that branch of its motion which was to vacate the order and judgment of foreclosure and sale. Courchevel asserts that pursuant to CPLR 3215(g)(1), Fremont was entitled to notice of the plaintiff's motion to confirm the referee's report and for a judgment of foreclosure and sale, and that the court's determination to the contrary was error as a matter of law.

The plaintiff contends that the Supreme Court's determination was correct, and that "[o]nce [Fremont] was properly served with a motion for default in accordance with the requirements of CPLR 3215(g)(1), there was no necessity to serve Courchevel's predecessor with any further motions or pleadings." The plaintiff argues that CPLR 3215(g)(1) "only applies to notice regarding a defendant's [initial] default."

For the reasons that follow, we affirm the order entered May 23, 2019. CPLR 3215(g)(1) did not require the plaintiff to give Fremont notice of its motion to confirm the referee's report and for a judgment of foreclosure and sale. Since Courchevel failed to demonstrate sufficient grounds for vacating the order and judgment of foreclosure and sale, the Supreme Court properly denied its motion, inter alia, pursuant to CPLR 5015(a) to vacate the order and judgment of foreclosure and sale.

"After having been served with process, the defendant who wants to avoid a default must respond in a proper and timely manner" ( Deutsche Bank Natl. Trust Co. v. Hall, 185 A.D.3d 1006, 1008, 129 N.Y.S.3d 146 [internal quotation marks omitted]; see generally Vincent C. Alexander, Practice Commentaries, McKinney's Cons Laws of NY, CPLR C320:1). A defendant must appear within 20 days of service of a summons, or within 30 days of service where service was made by delivering the summons "to an official of the state authorized to receive service in his [or her] behalf" ( CPLR 320[a] ; see Duncan v. Emerald Expositions, LLC, 186 A.D.3d 1321, 1323, 130 N.Y.S.3d 96 ).

The CPLR sets forth three ways that a defendant may appear in the action: "[t]he defendant appears [1] by serving an answer or [2] [by serving] a notice of appearance, or [3] by making a motion which has the effect of extending the time to answer" ( CPLR 320[a] ; see U.S. Bank N.A. v. Gilchrist, 172 A.D.3d 1425, 1426, 102 N.Y.S.3d 625 ). "A defendant's failure to respond to a summons and complaint [in one of the three ways specified in CPLR 320(a) ] ‘amounts to what CPLR 3215 ... calls a failure to appear’ " ( Deutsche Bank Natl. Trust Co. v. Hall, 185 A.D.3d at 1008, 129 N.Y.S.3d 146, quoting Siegel & Connors, N.Y. Prac § 293 [6th ed]; see U.S. Bank N.A. v. Gilchrist, 172 A.D.3d at 1427, 102 N.Y.S.3d 625 ).

The first way for a defendant to appear within the meaning of the statute is by serving an answer (see CPLR 320[a] ). An answer "is [the] defendant's pleading in response to a complaint" ( Deutsche Bank Natl. Trust Co. v. Hall, 185 A.D.3d at 1008, 129 N.Y.S.3d 146 [internal quotation marks omitted]; see CPLR 3011 ; 3018). The failure to interpose a timely answer constitutes a default in pleading, an independent default basis that is analytically "distinct from a failure to appear" (Siegel & Connors, N.Y. Prac § 293 [6th ed]). "A defendant who has defaulted in answering admits all traversable allegations in the complaint, including the basic allegation of liability" ( Glenwood Mason Supply Co., Inc. v. Frantellizzi, 138 A.D.3d 925, 926, 31 N.Y.S.3d 107 ; see Rokina Opt. Co. v. Camera King, Inc., 63 N.Y.2d 728, 730, 480 N.Y.S.2d 197, 469 N.E.2d 518 ; Cole–Hatchard v. Eggers, 132 A.D.3d 718, 720, 18 N.Y.S.3d 100 ).

A notice of motion pursuant to CPLR 3211(a) is the second way that a defendant may appear in the action (see CPLR 320[a] ). Service of a notice of motion to dismiss a complaint pursuant to CPLR 3211(a) extends a defendant's time to answer the complaint (see id. § 3211[f] ). Such a motion must be made "before service of the responsive pleading is required" ( id. § 3211[e] ), or it is untimely (see Bennett v. Hucke, 64 A.D.3d 529, 530, 881 N.Y.S.2d 335 ).

Service of "a notice of appearance" is the third way in which a defendant may appear in an action pursuant to CPLR 320(a). The recursive nature of the terminology used in CPLR 320(a) provides an obvious opportunity for confusion. However, in this context, a notice of appearance is "a simple document that notifies the plaintiff that defendant is appearing in the action" ( Deutsche Bank Natl. Trust Co. v. Hall, 185 A.D.3d at 1008, 129 N.Y.S.3d 146 [internal quotation marks omitted]; see Vincent C. Alexander, Practice Commentaries, McKinney's Cons Laws of NY, CPLR C320:1).

A notice of appearance "is the response generally reserved for the situation in which the plaintiff's process consisted of a summons with notice as authorized by CPLR 305(b)" ( Deutsche Bank Natl. Trust Co. v. Hall, 185 A.D.3d at 1008, 129 N.Y.S.3d 146 [internal quotation marks omitted]; see Vincent C. Alexander, Practice Commentaries, McKinney's Cons Laws of NY, CPLR C320:1). Although a defendant "appears" within the meaning of CPLR...