Bank of Am., N.A. v. Kessler

• Decision Date: 15 December 2021
• Docket Number: 2018–00886,Index No. 54780/14
• Citation: 202 A.D.3d 10,160 N.Y.S.3d 277
• Parties: BANK OF AMERICA, N.A., appellant, v. Andrew KESSLER, respondent, et al., defendants.
• Court: New York Supreme Court — Appellate Division

202 A.D.3d 10

160 N.Y.S.3d 277

BANK OF AMERICA, N.A., appellant,

v.Andrew KESSLER, respondent, et al., defendants.

2018–00886

Index No. 54780/14

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

Submitted—November 13, 2019

December 15, 2021

Bryan Cave Leighton Paisner LLP, New York, NY (Jonathan E. Ginsberg and Suzanne M. Berger of counsel), for appellant.

Charles Wallshein Esq. PLLC, Melville, NY, for respondent.

HECTOR D. LASALLE, P.J., WILLIAM F. MASTRO, ROBERT J. MILLER, COLLEEN D. DUFFY, JJ.

OPINION & ORDER

DUFFY, J.

This appeal requires this Court to address the issue of how exacting the requirement of strict compliance is with respect to the "separate envelope" mandate of RPAPL 1304 ; to wit, in a mortgage foreclosure action, how should the "separate envelope" requirement of RPAPL 1304(2), which provides that "notices required by this section shall be sent ... in a separate envelope from any other mailing or notice," be construed?

For the reasons that follow, we find that the Supreme Court properly determined that the plaintiff failed to comply with the strict requirements of RPAPL 1304, and thus, a condition precedent to this foreclosure action was not met. As such, the court properly denied those branches of the plaintiff's motion which were for summary judgment on the complaint insofar as asserted against the defendants Andrew Kessler and Reiko Kessler (hereinafter together the defendants), for summary judgment dismissing the defendants’ second, third, and fourth affirmative defenses, and for an order of reference, and granted Andrew Kessler's cross motion for summary judgment dismissing the complaint insofar as asserted against him.

Background of the Action

As is relevant to this appeal, in March 2014, the plaintiff commenced this action against, among others, the defendants to foreclose a mortgage on real property located in Croton–on–Hudson, Westchester County. The plaintiff alleged, among other things, that it was the owner and holder of the note and the mortgage at issue and that Andrew Kessler defaulted in payment of the mortgage as of September 2013. Thereafter, the plaintiff moved, inter alia, for summary judgment on the complaint insofar as asserted against the defendants, for summary judgment dismissing the defendants’ second, third, and fourth affirmative defenses, and for an order of reference. Andrew Kessler opposed the plaintiff's motion and cross-moved for summary judgment dismissing the complaint insofar as asserted against him on the ground that the plaintiff failed to comply with RPAPL 1304. In an order dated November 30, 2017 (hereinafter the November 2017 order), the Supreme Court denied the plaintiff's motion and granted Andrew Kessler's cross motion. The plaintiff appeals from so much of the November 2017 order as denied those branches of the plaintiff's motion which were for summary judgment on the complaint insofar as asserted against the defendants, for summary judgment dismissing the defendants’ second, third, and fourth affirmative defenses, and for an order of reference, and granted Andrew Kessler's cross motion. We affirm.

Statutory Interpretation

In matters of statutory interpretation, the primary consideration is to discern and give effect to the Legislature's intention (see Yatauro v. Mangano, 17 N.Y.3d 420, 426, 931 N.Y.S.2d 36, 955 N.E.2d 343 ). "[T]he text of a provision ‘is the clearest indicator of legislative intent and courts should construe unambiguous language to give effect to its plain meaning’ " ( Matter of Albany Law School v. New York State Off. of Mental Retardation & Dev. Disabilities, 19 N.Y.3d 106, 120, 945 N.Y.S.2d 613, 968 N.E.2d 967, quoting Matter of DaimlerChrysler Corp. v. Spitzer, 7 N.Y.3d 653, 660, 827 N.Y.S.2d 88, 860 N.E.2d 705 ; see Majewski v. Broadalbin–Perth Cent. School Dist., 91 N.Y.2d 577, 583, 673 N.Y.S.2d 966, 696 N.E.2d 978 ). "When the plain language of the statute is precise and unambiguous, it is determinative" ( Matter of Washington Post Co. v. New York State Ins. Dept., 61 N.Y.2d 557, 565, 475 N.Y.S.2d 263, 463 N.E.2d 604 ; see Loehr v. New York State Unified Ct. Sys., 150 A.D.3d 716, 720, 57 N.Y.S.3d 40 ). Here, the language of the statute is clear, precise, and unambiguous.

Specifically, RPAPL 1304, in effect at the time this action was commenced, provides as follows:

"Required prior notices.

"1. Notwithstanding any other provision of law, 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 in at least fourteen-point type which shall include the following:

...

"2. The notices required by this section shall be sent by such lender, assignee (including purchasing investor) or mortgage loan servicer to the borrower, 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. The notices required by this section shall be sent by the lender, assignee or mortgage loan servicer in a separate envelope from any other mailing or notice. Notice is considered given as of the date it is mailed. The notices required by this section shall contain a current list of at least five housing counseling agencies serving the county where the property is located from the most recent listing available from department of financial services. The list shall include the counseling agencies’ last known addresses and telephone numbers. The department of financial services shall make available on its websites a listing, by county, of such agencies. The lender, assignee or mortgage loan servicer shall use such lists to meet the requirements of this section" (emphasis added).

RPAPL 1304 "contains specific, mandatory language in keeping with the underlying purpose of [the Home Equity Theft Prevention Act] to afford greater protections to homeowners confronted with foreclosure" ( Aurora Loan Servs., LLC v. Weisblum, 85 A.D.3d 95, 103, 923 N.Y.S.2d 609 ), and the language in RPAPL 1304(2) with regard to the manner of service of the required notices "in a separate envelope from any other mailing or notice" "is equally precise" ( Aurora Loan Servs., LLC v. Weisblum, 85 A.D.3d at 104, 923 N.Y.S.2d 609 [internal quotation marks omitted]). Strict compliance with the requisite RPAPL 1304 notices to the borrower or borrowers is a condition precedent to the commencement of a foreclosure action (see CV XXVIII, LLC v. Trippiedi, 187 A.D.3d 847, 850, 134 N.Y.S.3d 49 ; USBank N.A. v. Haliotis, 185 A.D.3d 756, 758, 128 N.Y.S.3d 17 ). The plaintiff has the burden of establishing its strict compliance with this condition (see USBank N.A. v. Haliotis, 185 A.D.3d at 758, 128 N.Y.S.3d 17 ; Aurora Loan Servs., LLC v. Weisblum, 85 A.D.3d at 106, 923 N.Y.S.2d 609 ). Since, among other requirements, such notice must be sent "in a separate envelope from any other mailing or notice" ( RPAPL 1304[2] ), we hold that inclusion of any material in the separate envelope sent to the borrower under RPAPL 1304 that is not expressly delineated in these provisions constitutes a violation of the separate envelope requirement of RPAPL 1304(2).

This strict approach precluding any additional material in the same envelope as the requisite RPAPL 1304 notices not only comports with the statutory language, it also provides clarity as a bright-line rule to plaintiff lenders and "promotes stability and predictability" ( Freedom Mtge. Corp. v. Engel, 37 N.Y.3d 1, 20, 146 N.Y.S.3d 542, 169 N.E.3d 912 ) in foreclosure proceedings.

Legislative History of RPAPL 1304

We note that this strict interpretation of the "separate envelope" requirement is consistent with the Legislature's intent. RPAPL 1304 was first enacted by the New York Legislature and signed by the Governor of New York in 2008, along with a series of additional amendments to laws governing mortgage foreclosure proceedings (see L 2008, ch 472, § 2 [eff Sept. 1, 2008]). The statute requires that, at least 90 days prior to the commencement of a foreclosure action, a lender must give a borrower certain written notice (see RPAPL 1304[1] ). Subdivision (1) of the statute sets forth the specific language that the 90–day notice "shall include" (id. ), and subdivision (2) specifies how the requisite RPAPL 1304 notices must be sent (see id. § 1304[2] ). In 2009, several amendments to RPAPL 1304 were enacted, effective in January 2010, which added a new sentence to RPAPL 1304(2) to include the requirement that the requisite RPAPL 1304 notice shall be sent in "a separate envelope from any other mailing or notice" ( id. § 1304[2] ; see L 2009, ch 507, § 1–a [eff Jan. 14, 2010]). Notably, the "separate envelope" requirement of RPAPL 1304 appears to be exclusive to this section and is not found in other notice provisions applicable to mortgage foreclosure proceedings (see e.g. RPAPL 1303, 1305 ; see also UCC 9–611 ). Although RPAPL 1304 has been amended since its adoption in 2008, the "separate envelope" provision which was added to RPAPL 1304 in 2009 has consistently remained (see e.g. L 2009, ch 507, § 1–a [eff Jan. 14, 2010]; L 2011, ch 62, part A, § 104 [eff Oct. 3, 2011]; L 2012, ch 155, § 84 [eff July 18, 2012]; L 2012, ch 155, § 85; L 2016, ch 73, part Q, §§ 6, 7 [eff Dec. 20, 2016]; L 2017, ch 58, part FF, § 1 [eff Dec. 20, 2016]; L 2018, ch 58, part HH, §§ 1, 5 [eff Apr. 12, 2018, deemed eff Apr. 20, 2017]; L 2018, ch 58, part HH, §§ 3, 4 [eff May 12, 2018]). Moreover, we note that, since its enactment, RPAPL 1304 has expressly set forth in detail the content and the nature of how the notices are required to be sent pursuant to its terms (see e.g. L 2008, ch 472, § 2 [eff Sept. 1, 2008], as amended by L 2009, ch 507, § 1–a [eff Jan. 14, 2010]; L 2011, ch 62, part A, § 104 ...