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Downey Savings and Loan Association, F.A. v. Francis

Sup Ct, New York County

April 2, 2013


Unpublished Opinion


In this mortgage foreclosure action, defendant mortgagor Neamayah Francis moves to dismiss and/or vacate the Judgment of Foreclosure and Sale dated June 17, 2010, dismiss the complaint and discharge the lis pendens. Plaintiff Downey Savings and Loan Association, F.A. (hereinafter "Downey" or "Downey Savings") opposes the motion.

The following facts are not disputed unless otherwise noted. On May 4, 2004, defendant Francis borrowed the sum of $686, 000; the loan was secured with a mortgage against the premises known as 437 West 147th Street, New York, New York, delivered to plaintiff Downey Savings. It is not disputed that defendant Francis defaulted on the mortgage loan by not making the January 1, 2008 payment, and each month thereafter.

On May 21, 2008, Downey Savings commenced the instant action to foreclose on the mortgage. On October 31, 2008, an attorney for defendant Francis served a Verified Answer on plaintiffs counsel, which asserted six affirmative defenses, including improper service of process. On November 26, 2008, Downey's counsel sent defendant's counsel a Notice of Return of Late Verified Answer, stating that Francis' October 28, 2008 answer "is returned to you herewith as a nullity upon the ground that the time within which to serve such pleading as of right has elapsed and no extension of time for such service has been granted." On February 17, 2009, defendant Francis filed the October 28, 2008 Verified Answer and an affidavit of service, in the New York County Clerk's Office.

In or about October 2008, Downey Savings moved ex parte for an Order of Reference appointing a Referee to Compute. On June 12, 2009, this court granted the motion. On July 7, 2009, the Referee issued a Report and Oath finding that as of June 26, 2009, the total sum due was $860, 692.73, and that the mortgaged premises should be sold in one parcel.

On July 20, 2009, Downey Savings moved by notice of motion for a judgment of foreclosure and sale, and for an order confirming the Referee's Report. Defendant Francis appeared by counsel in opposition to the motion, and cross-moved pursuant to CPLR 3211(a)(8) to dismiss the complaint for lack of personal jurisdiction based on improper service. By a decision and order dated June 17, 2010, this court granted Downey's motion and issued a Judgment of Foreclosure and Sale. This court denied defendant Francis's cross-motion to dismiss, concluding that he had waived his improper service defense, by serving an answer with a jurisdictional defense based on improper service and not seeking any relief from the court with respect to that defense for nearly a year after such service.

In November 2010, defendant Francis, by new counsel, secured the instant Order to Show Cause, seeking to dismiss the complaint, discharge the lis pendens, dismiss and/or vacate the Judgment of Foreclosure and Sale, enjoin/restrain plaintiff from taking any steps to enforce the Judgment of Foreclosure and Sale, and stay the foreclosure sale purportedly scheduled for December 1, 2010. Plaintiff opposed the motion.

As a result of the parties' appearance on defendant's motion, this court stayed the enforcement of the judgment, restored the case to active status, held defendant's motion in abeyance and referred the parties to the Mortgage Foreclosure Part for settlement purposes. The court's records indicate that the parties appeared in the Mortgage Foreclosure Part for settlement conferences on March 7, 2011, May 11, 2011, August 18, 2011, November 3, 2011, January 18, 2012 and March 16, 2012. By stipulation, the parties adjourned the conferences scheduled for April 18, 2012 and May 29, 2012. At the conferences scheduled for June 24, 2012 and August 21, 2012, only plaintiffs counsel appeared. By order dated September 6, 2012, the matter was remanded from the Mortgage Foreclosure Part after defendant Francis's failed "to appear for two conferences despite written notice."

Upon remand, defendant's motion was restored to this court's calendar and on January 24, 2013, plaintiffs counsel was directed to submit a written decision denying defendant's request for loan modification. Plaintiffs counsel submitted a letter dated January 29, 2013, from "U.S. Bank Home Mortgage as servicer for the referenced loan" and addressed to defendant Francis, advising that his request for loan modification had been "declined for incompleteness."[1]

In support of its original motion filed in November 2010, defendant argued that plaintiff Downey Savings lacked the legal capacity and standing to maintain this action, because the FDIC had "seized" Downey's assets and "shut down" its operations on November 21, 2008, and Downey's assets were ultimately sold to U.S. Bank National Association. Defendant also argued that in the absence of standing, the court lack subject matter jurisdiction over the action. In opposition to defendant's motion, plaintiff acknowledged that Downey was placed into receivership by the FDIC on November 21, 2008, but asserted that the "actual transfer" of its assets to U.S. Bank took place pursuant to a "Bill of Sale" dated April 20, 2009.[2]

Defendant's motion is denied in its entirety. In denying defendant's prior cross-motion to dismiss for lack of personal jurisdiction, this court held that defendant waived the defense of improper service by serving an answer, albeit late, with the jurisdictional defense, and not moving promptly for appropriate affirmative relief by seeking an extension of time to answer, dismissal, or to compel plaintiffs acceptance of the late answer. Defendant now moves for the second time to dismiss the complaint on new grounds, and also to vacate the Judgment of Foreclosure and Sale. The court concludes that defendant likewise waived the defense of lack of standing, by not seeking leave to serve a late or an amended answer including such defense, and by not raising any issue as to the lack of standing in its prior cross-motion to dismiss. See HSBC Bank USA. N.A. v. Taher.A.D.3d, 2013 WL 113661 (2nd Dept 2013); Downey Savings and Loan Association, F.A. v. 162 Grand Newburgh LLC. 27 Misc.3d 674 (Sup Ct, Kings Co 2010). Furthermore, contrary to defendant's assertion, a party's lack of standing does not constitute a jurisdictional defense warranting dismissal. See HSBC Bank USA. N.A. v. Taher, supra; Downey Savings and Loan Association. F.A. v. 162 Grand Newburgh LLC, supra.

With respect to the additional grounds for vacating the judgment and dismissing the complaint, defendant originally objected that he did have an opportunity to participate in a mortgage foreclosure settlement conference. As explained above, the court responded to that objection by referring this matter to the mortgage foreclosure part. For more than a year, the parties attended settlement conferences and the matter was remanded back to this court when defendant's counsel failed to appear for conferences in June and August 2012. By letter dated January 29, 2013, defendant was notified that his request for loan modification as denied as incomplete.

The court has considered the balance of defendant's arguments in support of the motion, and concludes ...

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