Wells Fargo Bank, N.A. v. Jones

• Court: New York Supreme Court — Appellate Division
• Citation: Wells Fargo Bank, N.A. v. Jones, 2016 NY Slip Op 3838, 139 A.D.3d 520, 32 N.Y.S.3d 95 (N.Y. App. Div. 2016)
• Decision Date: 17 May 2016
• Docket Number: 677, 17475/07.
• Parties: WELLS FARGO BANK, N.A., doing business as America's Servicing Company, Plaintiff–Appellant, v. Raymond JONES, Defendant–Respondent, Andrea M. Dewar, et al., Defendants.

139 A.D.3d 520

32 N.Y.S.3d 95

2016 N.Y. Slip Op. 03838

WELLS FARGO BANK, N.A., doing business as America's Servicing Company, Plaintiff–Appellant,

v.Raymond JONES, Defendant–Respondent,Andrea M. Dewar, et al., Defendants.

677, 17475/07.

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

May 17, 2016.

Hogan Lovells U.S. LLP, New York (Heather R. Gushue of counsel), for appellant.

Cabanillas & Associates, P.C., White Plains (Quenten E. Gilliam of counsel), for respondent.

TOM, J.P., SWEENY, MANZANET–DANIELS, GISCHE, GESMER, JJ.

Order, Supreme Court, Bronx County (Wilma Guzman, J.), entered July 28, 2014, which denied plaintiff's motion to substitute, nunc pro tunc, an affidavit of merit and amount due for a prior affidavit, and granted defendant Raymond Jones's cross motion for summary judgment dismissing the complaint, unanimously modified, on the law, to deny plaintiff's motion without prejudice, and to grant defendant's cross motion only to the extent of remanding to the motion court for a traverse hearing, and otherwise affirmed, without costs.

The motion court was correct in denying plaintiff's request to substitute the affidavit of merit by Linda Duncan dated October 24, 2013 (the 2013 Duncan Affidavit), nunc pro tunc, for the affidavit by Steven Patrick dated August 28, 2007 (the 2007 Patrick Affidavit), but for a reason different from that stated. Plaintiff sought to submit the 2013 Duncan Affidavit in order to comply with Administrative Order 548/10 of the Chief Administrative Justice, which was promulgated on October 20, 2010, as amended by Administrative Order 431/11 on March 2, 2011 (the Administrative Order).¹ Duncan states that she bases the statements in the 2013 Duncan Affidavit on “business records maintained by Wells Fargo ... made at or near the time by, or from information provided by, persons with knowledge of the activity and transactions reflected in such records.” Plaintiff claims that it first acquired rights with regard to the mortgage by means of an assignment dated August 10, 2007, which purported to be retroactive to June 14, 2007. Therefore, there would have been no reason for Wells Fargo to make records concerning the mortgage before, at the earliest, June 14, 2007. However, the 2013 Duncan Affidavit alleges that defendant Jones failed to make mortgage payments due on and after March 1, 2007, and that a notice of default dated May 7, 2007 was sent to him. Accordingly, Duncan cannot attest to those facts based on business records made by Wells Fargo “at the time of the act, transaction, occurrence or event, or within a reasonable time thereafter” (CPLR 4518[a] ). Rather, her statements about events before that date must be based on records in plaintiff's possession “made ... from information provided by [ ] persons with knowledge of the activity and transactions reflected in such records.” We recognize that in seeking to enforce a loan, an assignee may use an original loan file prepared by its assignor, when it relies upon those records in the regular course of its business (Landmark Capital Invs., Inc. v. Li–Shan Wang, 94 A.D.3d 418, 941 N.Y.S.2d 144 [1st Dept.2012] ). In this case, however, Duncan does not claim to have relied on the original loan file, nor does she describe those “persons” she relied upon; presumably, Duncan is referring to “persons” employed by plaintiff's predecessor in interest. However, the 2013 Duncan Affidavit contains no factual allegations about those “persons” to provide the court with “sufficient indicia of reliability” as to the documents prepared by plaintiff's predecessor in interest (One Step Up, Ltd. v. Webster Bus. Credit Corp., 87 A.D.3d 1, 11, 925 N.Y.S.2d 61 [1st Dept.2011] [internal quotation marks omitted]; see also People v. Brown, 13 N.Y.3d 332, 341, 890 N.Y.S.2d 415, 918 N.E.2d 927 [2009] ; People v. Cratsley, 86 N.Y.2d 81, 89, 629 N.Y.S.2d 992, 653 N.E.2d 1162 [1995] ). Moreover, Duncan cannot rely on the 2007 Patrick Affidavit as the basis for her claims regarding events occurring before the date on which plaintiff allegedly acquired the note and mortgage, since documents prepared in connection with litigation do not qualify for the business record exception to the rule against hearsay (National States Elec. Corp. v. LFO Constr. Corp., 203 A.D.2d 49, 50, 609 N.Y.S.2d 900 [1st Dept.1994] ). Therefore, the court cannot rely on any statements in the 2013 Duncan Affidavit concerning events before the date of plaintiff's acquisition of the mortgage. Accordingly, the motion court was correct in not permitting plaintiff to substitute and rely on the 2013 Duncan Affidavit.

With regard to the cross motion, the motion court should have addressed Jones's claim of lack of personal jurisdiction over him before reaching any of the other relief he sought. Where, as here, a defendant seeks vacatur of a default under both CPLR 5015(a)(1) (excusable default) and CPLR 5015(a)(4) (lack of jurisdiction), the court should determine whether or not it has personal jurisdiction over the defendant before reaching the 5015(a)(1) ground, since the defendant's “lack of a reasonable excuse ... is obviated if the court is without personal jurisdiction over defendant, and all subsequent proceedings would be rendered and void” (Cipriano v. Hank, 197 A.D.2d 295, 297, 610 N.Y.S.2d 523 [1st Dept.1994] ; see also David D. Siegel, Practice Commentaries, McKinney's Cons. Laws of N.Y., Book 7B, CPLR C5015:9 [“[T]he court must always rule first on the paragraph 4 jurisdictional point, which involves no discretion. Only if jurisdiction is sustained need the court go on to the paragraph 1 discretionary ground”] ).

Plaintiff argues that Jones waived any challenge to personal jurisdiction by appearing in this action “without objection.” We disagree. Jones first appeared by filing a pro se order to show cause dated February 25, 2010, in which he sought, inter alia, an interim stay of the foreclosure sale,² but did not address his default. When Jones obtained counsel soon thereafter, the motion court permitted his counsel to file a supplemental affidavit and attorney's affirmation, on or about April 10, 2010, which raised the issue of improper service. The motion court appears to have treated counsel's affirmation as an amended order to show cause raising the issue of service.³ Accordingly, Jones objected to personal jurisdiction over him in the motion that constituted his first appearance in this action. He also raised it in the cross motion that is the subject of the instant appeal. The fact that the motion court did not address that argument does not constitute a waiver by Jones.

Plaintiff alleges that it effectuated substitute service upon Jones by serving a copy of the summons and complaint upon his daughter, Samantha Jones, at a specified address in the Bronx. However, CPLR 308(2) requires that substitute service be performed “at the actual place of business, dwelling place or usual place of abode of the person to be served.” In his affidavit, Jones denied that he lived at that address and stated that he resided in Texas at the time of the alleged service. In further support of his motion, he submitted an affidavit by his daughter, who swore that her father did not live there and that the summons and complaint were not served on her. Accordingly, contrary to plaintiff's characterization of these factual submissions as “bare-bones,” Jones submitted sufficient facts to rebut plaintiff's affidavit of service, entitling him to a traverse hearing on this issue (Johnson v. Deas, 32 A.D.3d 253, 819 N.Y.S.2d 751 [1st Dept.2006] ; see also Ortiz v. Santiago, 303 A.D.2d 1, 4, 757 N.Y.S.2d 521 [1st Dept.2003] ).

Should Jones prevail at the traverse hearing, the action must be dismissed. Where there is “a defense of lack of personal jurisdiction, a defendant need not show a reasonable excuse and meritorious defense” (Johnson v. Deas, 32 A.D.3d at 254, 819 N.Y.S.2d 751 ).

On the other hand, if the motion court finds that service was properly effectuated on Jones, then it will have to address whether Jones has demonstrated a reasonable excuse and a meritorious defense under CPLR 5015(a)(1) (see 60 E. 9th St. Owners Corp. v. Zihenni, 111 A.D.3d 511, 975 N.Y.S.2d 32 [1st Dept.2013] ).

A plaintiff proves it has standing to commence a mortgage foreclosure action by showing that it was “both the holder or assignee of the subject mortgage and the holder or assignee of the...