Deutsche Bank Nat'l Trust Co. v. Pietranico

• Decision Date: 27 July 2011
• Citation: 33 Misc.3d 528,2011 N.Y. Slip Op. 21261,928 N.Y.S.2d 818
• Parties: DEUTSCHE BANK NATIONAL TRUST COMPANY, as Trustee, Plaintiff,v.Khouloud PIETRANICO, et al., Defendants.
• Court: New York Supreme Court

33 Misc.3d 528

928 N.Y.S.2d 818

2011 N.Y. Slip Op. 21261

DEUTSCHE BANK NATIONAL TRUST COMPANY, as Trustee, Plaintiff,

v.Khouloud PIETRANICO, et al., Defendants.

Supreme Court, Suffolk County, New York.

July 27, 2011.

Frenkel, Lambert, Weiss et al., Bay Shore, attorneys for plaintiff.Jeffrey L. Solomon, PLLC, Woodbury, attorney for defendant.THOMAS F. WHELAN, J.

It is, ORDERED that this order to show cause (# 002) wherein the defendant, Khouloud Pietranico, seeks an order “staying all proceedings in this matter until such time as the accompanying motion is fully and finally heard and determined,” is denied, in its entirety.

In response to the increase in residential foreclosures, the state legislature has affirmatively obligated the Judiciary to resolve the increasing conflict between two countervailing public policies: “(1) the interest in protecting families and communities by not allowing financial institutions to foreclosure on homes without the legal authority to do so, and (2) preventing further harm to an economy dependent on the mortgage industry's ability to recoup debt.” ¹ The issues presented here, concerning ownership of the mortgage note and the effectiveness of an assignment of a mortgage executed by Mortgage Electronic Registration Systems, Inc. (MERS), have been the subject of ever-growing and often confusing litigation throughout the State. Therefore, the Court will take the opportunity to carefully address the complex issues presented.

Background

The defendant, Khouloud Pietranico, borrowed $652,000.00 and with that money bought a house in Dix Hills, New York. In order to obtain the money, the defendant signed two pieces of paper, that is, a promissory note and a mortgage, and agreed that the holder of the mortgage has the right to foreclose in the event of a default in the repayment of the monies borrowed. The defendant stopped paying on June 1, 2009 and has not made a single payment since that date.

Plaintiff commenced this action to foreclose the mortgage on February 4, 2010. The complaint alleges that the defendant, Khouloud Pietranico, on November 16, 2006, executed an adjustable rate note to American Brokers Conduit for the principal sum of $652,000.00 and a mortgage to secure payment to MERS, as nominee for American Brokers Conduit. Additionally, the complaint alleges that the plaintiff was assigned the note and mortgage and that the “plaintiff is also in possession of the original note with proper endorsement and/or allonge and is therefore, the holder of both the note and mortgage, which passes as incident to the note.” An affidavit of service alleges that the defendant was personally served with the pleadings and the RPAPL § 1303 notice on February 11, 2010.

The defendant defaulted in answering and additionally defaulted in appearing at the scheduled in-court foreclosure conference required pursuant to CPLR 3408 on March 24, 2010. By order dated May 24, 2010, this Court noted the time to answer or appear had expired and that the defendant failed to answer or make a motion and was in default. The Court also noted the nonappearance at the in-court foreclosure conference and appointed a referee to compute the sums due and owing under the complaint. Now, one year after the order appointing the referee, defendant submits the instant application.

The motion is advanced by an affidavit from a purported “expert in the areas of mortgage loans, mortgage loan documentation, and mortgage securitization.” While the papers do contain a non-conforming attorney certification pursuant to 22 NYCRR 130–1.1, and an attorney argued for the signing of the order to show cause, no attorney affirmation is offered. The relief sought is not set forth in the order to show cause. The supporting affidavits request various reliefs, such as, “vacate the referee's report and order of sale,” “dismiss the present proceedings,” “compel the acceptance of a later (sic) answer,” “that plaintiffs' motion for summary judgment in all respects be hereby be vacated,” “that Plaintiff (sic) be given leave to serve and file an answer and/or response to Plaintiff's motion for summary judgment,” and “vacate the referees report, immediately schedule a traverse hearing on the issue of service of process, and permit defendant to file on and timely answer this matter.”

As noted above, this matter never progressed to a summary judgment motion due to defendant's default and no referee's report or order of sale has been submitted to the Court. The Court will deem the application as one to vacate the default in answering and a request to dismiss on the grounds that the court lacks in personam jurisdiction over the defendant due to a lack of service.

Claim of Lack of Service

It is well established that a process server's sworn affidavit of service constitutes prima facie evidence of proper service ( see Wells Fargo Bank, NA v. McGloster, 48 A.D.3d 457, 849 N.Y.S.2d 784 [2d Dept. 2008]; Household Fin. Realty Corp. of N.Y. v. Brown, 13 A.D.3d 340, 785 N.Y.S.2d 742 [2d Dept. 2004] ). A defendant can rebut the process server's affidavit by a sworn denial of service in an affidavit containing specific and detailed contradictions of the allegations in the process server's affidavit ( see Bankers Trust Co. of California, NA v. Tsoukas, 303 A.D.2d 343, 756 N.Y.S.2d 92 [2d Dept. 2003] ). Bare conclusory and unsubstantiated denials of receipt of process are thus insufficient to rebut the presumption of proper service created by the affidavit of the plaintiff's process server and to require a traverse hearing ( see Irwin Mtg. Corp. v. Devis, 72 A.D.3d 743, 898 N.Y.S.2d 854 [2d Dept. 2010]; Beneficial Homeowner Serv. Corp. v. Girault, 60 A.D.3d 984, 875 N.Y.S.2d 815 [2d Dept. 2009]; Hamlet of Olde Oyster Bay Homeowners Assoc. v. Ellner, 57 A.D.3d 732, 869 N.Y.S.2d 591 [2d Dept. 2008]; Mortgage Elec. Sys. v. Schotter, 50 A.D.3d 983, 857 N.Y.S.2d 592 [2d Dept. 2008]; 425 East 26th St. Owners Corp. v. Beaton, 50 A.D.3d 845, 858 N.Y.S.2d 188 [2d Dept. 2008]; Jefferson v. Netusil, 44 A.D.3d 621, 843 N.Y.S.2d 158 [2d Dept. 2007]; Simmons First Nat. Bank v. Mandracchia, 248 A.D.2d 375, 669 N.Y.S.2d 646 [2d Dept. 1998] ).

Here, the moving defendant's papers were insufficient to rebut the process server's affidavit of service of the summons and complaint pursuant to CPLR 308(1). The bald, conclusory, and unsubstantiated denial of service set forth in the moving defendant's supporting affidavit failed to rebut the presumption of service that arose from the affidavit of plaintiff's process server ( see Beneficial Homeowner Serv. Corp. v. Girault, 60 A.D.3d 984, 875 N.Y.S.2d 815, supra; Hamlet of Olde Oyster Bay Homeowners' Assoc. v. Ellner, 57 A.D.3d 732, 869 N.Y.S.2d 591, supra ). The defendant's affidavit does not specifically dispute the physical description set forth in the process server's affidavit and only states that “it does not accurately describe me.” Defendant does admit to living at the property where service was effectuated and the dates listed for hospital visits do not include the date of service. All that is offered is a general denial of service ( cf. US Bank, NA v. Arias, 85 A.D.3d 1014, 927 N.Y.S.2d 362 [2d Dept. 2011] ).

The “mortgage expert,” without any claim of personal knowledge, seeks to apprise the Court as to the description of the defendant. The Court rejects the attempt to raise an issue of fact based upon such hearsay allegations ( see Lynch v. New York City Tr. Auth., 12 A.D.3d 644, 784 N.Y.S.2d 900 [2d Dept. 2004]; Olesniewicz v. Khan, 8 A.D.3d 354, 777 N.Y.S.2d 705 [2d Dept. 2004]; Simonds v. Grobman, 277 A.D.2d 369, 716 N.Y.S.2d 692 [2d Dept. 2000] ). Those portions of the instant application wherein the moving defendant seeks a vacatur of the order of reference and dismissal of the plaintiff's complaint for lack of personal jurisdiction is thus denied ( see Pezolano v. Incorporated City of Glen Cove, 71 A.D.3d 970, 896 N.Y.S.2d 685 [2d Dept. 2010] ).

Application to Vacate Default

The moving defendant's alternative claims for vacatur of the order of reference and her request for leave to serve and file a late answer are equally unavailing. To be entitled to such relief pursuant to CPLR 5105 and CPLR 3012, the moving defendant was required to set forth a justifiable excuse for her default and a meritorious defense ( see Development Strategies Co., LLC v. Astoria Equities, Inc., 71 A.D.3d 628, 896 N.Y.S.2d 396 [2d Dept. 2010]; Mora v. Scarpitta, 52 A.D.3d 663, 861 N.Y.S.2d 110 [2d Dept. 2008]; Grinage v. City of New York, 45 A.D.3d 729, 846 N.Y.S.2d 300 [2d Dept. 2007]; Yellow Book of New York, Inc. v. Weiss, 44 A.D.3d 755, 843 N.Y.S.2d 190 [2d Dept. 2007] ). The only excuse offered by the defendant was improper service which has been found to be unmeritorious. Since the defendant offered no other excuse for her default, she is not entitled to the relief demanded pursuant to CPLR 5015(a)(1) ( see Tadco Constr. Corp. v. Allstate Ins. Co., 73 A.D.3d 1022, 900 N.Y.S.2d 687 [2d Dept. 2010]; Pezolano v. Incorporated City of Glen Cove, 71 A.D.3d 970, 896 N.Y.S.2d 685, supra ). The moving defendant's claims to one or more meritorious defenses are thus inconsequential and the Court need not determine whether defendant demonstrated a meritorious defense ( see Development Strategies Co., LLC v. Astoria Equities, Inc., 71 A.D.3d 628, 896 N.Y.S.2d 396, supra ).

Waiver of Lack of Standing Claim

In any event, such claims, which are predicated upon a purported lack of standing on the part of the plaintiff were waived by the defendant's failure to answer or to assert a pre-answer motion to dismiss the complaint.

Recent case authorities emanating from the Appellate Division, Second Department have held that the issue of the plaintiff's standing is not a matter of subject matter jurisdiction but rather, is more akin to the issue of the plaintiff's capacity to sue. In Wells Fargo Bank Minnesota Natl. Assn. v. Mastropaolo,...