CIT Bank N.A. v. Schiffman

• Decision Date: 13 January 2020
• Docket Number: August Term, 2019,Docket No. 18-3287
• Citation: 948 F.3d 529
• Parties: CIT BANK N.A., Plaintiff-Counter-Defendant-Appellee, v. Pamela SCHIFFMAN, Jerry Schiffman, Defendants-Counter-Claimants-Appellants, JP Morgan Chase Bank, N.A., New York City Parking Violations Bureau, Defendants.
• Court: U.S. Court of Appeals — Second Circuit

948 F.3d 529

CIT BANK N.A., Plaintiff-Counter-Defendant-Appellee,

v.Pamela SCHIFFMAN, Jerry Schiffman, Defendants-Counter-Claimants-Appellants,JP Morgan Chase Bank, N.A., New York City Parking Violations Bureau, Defendants.

Docket No. 18-3287

August Term, 2019

United States Court of Appeals, Second Circuit.

Submitted: January 13, 2020

Questions Certified: January 28, 2020

Stephen J. Vargas, Gross Polowy, LLC, Westbury, NY, for Plaintiff-Counter-Defendant-Appellee.

Samuel Katz, Law Office of Samuel Katz, PLLC, Brooklyn, NY, for Defendants-Counter-Claimants-Appellants.

Before: Katzmann, Chief Judge, Lynch, Circuit Judge, and Kaplan, District Judge.^*

Katzmann, Chief Judge:

This appeal arises out of a foreclosure action that plaintiff-counter-defendant-appellee CIT Bank N.A. brought against defendants-counter-claimants-appellants Pamela and Jerry Schiffman. CIT moved for summary judgment, and the district court (Dora L. Irizarry, C.J. ) granted the motion after adopting the Report and Recommendation of Magistrate Judge Robert M. Levy. The Schiffmans now challenge the district court’s decision, arguing that CIT failed to prove compliance with the pre-foreclosure notice requirements of New York Real Property Actions and Proceedings Law ("RPAPL") § 1304 and the pre-foreclosure filing requirements of RPAPL § 1306. With respect to § 1304, the Schiffmans argue that CIT failed to show that it followed standard mailing procedures to ensure that pre-foreclosure notices were properly addressed and mailed. And with respect to § 1306, the Schiffmans argue that CIT’s pre-foreclosure filing with the superintendent of financial services was deficient because it did not include information about Jerry Schiffman. Because these arguments both turn on questions of state law for which no controlling decisions of the New York Court of Appeals exist, we certify two questions to the Court of Appeals pursuant to 22 N.Y.C.R.R. § 500.27(a) and 2d Cir. R. 27.2(a).

BACKGROUND

On March 26, 2008, Pamela Schiffman took out a loan and executed a note with IndyMac Bank, F.S.B., for the principal amount of $326,000. The note was secured by a mortgage given by Pamela Schiffman and her husband, Jerry, on their home in Brooklyn. On the same day that Pamela Schiffman executed the note, the Schiffmans both executed a Consolidation, Extension, and Modification Agreement in which they agreed to "combin[e] into one set of rights and obligations all of the promises and agreements stated in the Note[ ] and Mortgage[ ]," and in which they "agree[d] to take over all of the obligations under the Note[ ] and Mortgage[ ] as consolidated and modified by this Agreement as Borrower." J.A. 48. The mortgage was subsequently assigned to OneWest Bank, F.S.B., which later became known as CIT Bank N.A. On October 30, 2014, the Schiffmans executed a Loan Modification Agreement, in which they were both listed as "Borrower," J.A. 87, which increased the balance owed to $406,481.10.

The Schiffmans failed to make mortgage payments on and after December 1, 2014, and CIT initiated a foreclosure action on October 17, 2016.¹ On February 28, 2018, CIT moved for summary judgment, and the case was referred to Magistrate Judge Levy for preparation of a Report and Recommendation. Magistrate Judge Levy issued his R & R on August 24, 2018, and he recommended that the district court grant CIT’s motion, notwithstanding the Schiffmans’ arguments that CIT had failed to prove compliance with the pre-foreclosure notice requirements of RPAPL § 1304 and the pre-foreclosure filing requirements of RPAPL § 1306. The Schiffmans renewed these arguments in their objections to the R & R, but the district court adopted the R & R in its entirety and granted summary judgment in favor of CIT in an order dated September 30, 2018, and filed October 3, 2018. The Schiffmans timely appealed, and they now raise the same arguments they raised below.

STANDARD OF REVIEW

"We review a grant of summary judgment de novo, construing the evidence in the light most favorable to the non-moving party." Anderson v. Recore , 446 F.3d 324, 328 (2d Cir. 2006).² "If the party moving for summary judgment demonstrates the absence of any genuine issue as to all material facts, the nonmoving party must, to defeat summary judgment, come forward with evidence that would be sufficient to support a jury verdict in its favor." Burt Rigid Box, Inc. v. Travelers Prop. Cas. Corp. , 302 F.3d 83, 91 (2d Cir. 2002). "The nonmoving party may not rely simply on conclusory statements or on contentions that the affidavits supporting the motion are not credible." Id.

DISCUSSION

The Schiffmans argue that the district court erred in concluding that CIT proved compliance with the pre-foreclosure notice requirements of RPAPL § 1304 and the pre-foreclosure filing requirements of RPAPL § 1306. For the reasons below, we conclude that these issues both turn on questions of New York law for which no controlling decisions of the New York Court of Appeals exist.

I. RPAPL § 1304

RPAPL § 1304(1) requires that, "with regard to a home loan, 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." N.Y. Real Prop. Acts. Law § 1304(1). Section 1304(2) specifies that this notice must be sent "by registered or certified mail and also by first-class mail to the last known address of the borrower, and to the residence that is the subject of the mortgage." Id. § 1304(2).

"Proper service of RPAPL 1304 notice on the borrower or borrowers is a condition precedent to the commencement of a foreclosure action, and the plaintiff has the burden of establishing satisfaction of this condition." Deutsche Bank Nat. Tr. Co. v. Spanos , 102 A.D.3d 909, 961 N.Y.S.2d 200, 202 (2d Dep’t 2013). Compliance with § 1304 can be "established 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." Citibank, N.A. v. Conti-Scheurer , 172 A.D.3d 17, 98 N.Y.S.3d 273, 277 (2d Dep’t 2019). As the New York Court of Appeals has explained in an analogous context, proof 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." Nassau Ins. Co. v. Murray , 46 N.Y.2d 828, 414 N.Y.S.2d 117, 386 N.E.2d 1085, 1086 (1978).

In support of its motion for summary judgment, CIT included a sworn affidavit from one of its employees, Assistant Secretary Rachel Hook. As relevant here, Hook stated that:

I have received training and have personal knowledge of CIT’s standard office practice to prepare, address, mail and store letters used in its mortgage servicing business, and how to retrieve such information. ...

I am familiar with CIT’s standard practices and procedures used to create, mail and store data regarding the 90 day pre-foreclosure notice ("90 Day Notice") required by New York law and the notice of default required by the mortgage ("Notice of Default") that are designed to ensure that these letters are properly addressed and mailed and that data reflecting those events are stored in CIT’s business records. ...

As a standard business practice and procedure, the 90 Day Notice, a current list of at least five housing counseling agencies serving the county where the property is located, and envelopes for both certified and first-class mail are created upon default. The envelopes are addressed, from the data stored in CIT’s business records, with the borrower(s)’ last known address and the address of the residence that is subject to the Mortgage. The 90 Day Notices and list of housing counseling agencies are enclosed, separate from any other notice, in both the certified and first-class mail, postage prepaid envelopes. The envelopes are sealed and provided to the United States Post Office for mailing.

l hereby certify and affirm that, in accordance with CIT’s standard business practice and procedures and in compliance with RPAPL § 1304, a 90 Day Notice and a current list of at least five (5) housing counseling agencies serving the county where the property is located from the most recent listing available from the Department of Financial Services were mailed to Pamela Schiffman by certified and first class mail, in an envelope separate from any other notice, to the residence that is the subject of the Mortgage ... and Jerry Schiffman by certified and first class mail, in an envelope separate from any other notice, to the residence that is the subject of the Mortgage .... The 90 Day Notice was mailed on November 18, 2015 .... A copy of the 90 Day Notices are attached to this application.

J.A. 18–19. Along with Hook’s affidavit, CIT submitted copies of § 1304 notices that were addressed to each of the Schiffmans, dated November 18, 2015, and marked as having been sent via first-class and certified mail.

The district court held that Hook’s affidavit was sufficient to demonstrate compliance with § 1304, and the Schiffmans now challenge that holding in several respects. First, the Schiffmans argue, Hook "attested that the envelopes [for mailing § 1304 notices] are purportedly created upon default ..., while the notices in this action were dated and sent a year after the default." Appellants’ Br. 12. Second, the Schiffmans contend that Hook "failed to attest to or describe any procedure regarding when or by what process these envelopes are ever mailed." Id. And third, the Schiffmans assert that Hook failed to attach...