HSBC Bank United States, Nat'l Ass'n v. Cherestal

178 A.D.3d 680

113 N.Y.S.3d 206

HSBC BANK USA, NATIONAL ASSOCIATION, etc., Respondent,

v.Antoine Y. CHERESTAL, Appellant, et al., Defendants.

2016–11838

2018–07536

Index No. 511359/14

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

Argued—September 19, 2019

December 4, 2019

Berg & David, PLLC, Brooklyn, N.Y. (Abraham David, Madeline Greenblatt, and Sholom Wohlgelernter of counsel), for appellant.

Hogan Lovells U.S. LLP, New York, N.Y. (David Dunn, Chava Brandriss, Leah Rabinowitz Lenz, Lisa J. Fried, and Leah Edmunds of counsel), for respondent.

ALAN D. SCHEINKMAN, P.J., REINALDO E. RIVERA, CHERYL E. CHAMBERS, VALERIE BRATHWAITE NELSON, JJ.

DECISION & ORDER

In an action to foreclose a mortgage, the defendant Antoine Y. Cherestal appeals from (1) an order of the Supreme Court, Kings County (Noach Dear, J.), dated September 6, 2016, and (2) an order and judgment of foreclosure and sale (one paper) of the same court dated March 27, 2018. The order denied the motion of the defendant Antoine Y. Cherestal pursuant to CPLR 317 to vacate his default and to compel the plaintiff to accept his late answer. The order and judgment of foreclosure and sale, upon an order of the same court dated March 27, 2018, inter alia, denying that branch of the cross motion of the defendant Antoine Y. Cherestal which was to reject the referee's report, inter alia, granted the plaintiff's motion for a judgment of foreclosure and sale, confirmed the referee's report, and directed the sale of the subject property.

ORDERED that the appeal from the order dated September 6, 2016, is dismissed; and it is further,

ORDERED that the order and judgment of foreclosure and sale is reversed, on the law, the plaintiff's motion to confirm the referee's report and for a judgment of foreclosure and sale is denied, that branch of the cross motion of the defendant Antoine Y. Cherestal which was to reject the referee's report is granted, the referee's report is rejected, the order dated March 27, 2018, is modified accordingly, and the matter is remitted to the Supreme Court, Kings County, for further proceedings consistent herewith; and it is further,

ORDERED that one bill of costs is awarded to the defendant Antoine Y. Cherestal.

The appeal from the order dated September 6, 2016, must be dismissed as the right of direct appeal therefrom terminated with the entry of the order and judgment of foreclosure and sale (see Matter of Aho, 39 N.Y.2d 241, 248, 383 N.Y.S.2d 285, 347 N.E.2d 647 ). The issues raised on the appeal from that order are brought up for review and have been considered on the appeal from the order and judgment of foreclosure and sale (see CPLR 5501[a][1] ).

In December 2014, the plaintiff commenced this action against the defendant Antoine Y. Cherestal (hereinafter the defendant), among others, to foreclose a mortgage on real property located in Brooklyn. The defendant failed to timely appear or answer the complaint. In May 2016, the defendant moved to vacate his default and to compel the plaintiff to accept his late answer. By order dated September 6, 2016, the Supreme Court denied the defendant's motion. The court subsequently referred the matter to a referee to ascertain and compute the amount due to the plaintiff.

In April 2017, the plaintiff moved to confirm the referee's report and for a judgment of foreclosure and sale. The defendant cross-moved, inter alia, to reject the referee's report. By order dated March 27, 2018, the Supreme Court denied that branch of the defendant's cross motion and, on the same day, issued an order and judgment of foreclosure and sale, inter alia, confirming the referee's report and directing the sale of the subject property.

We agree with the Supreme Court's denial of the defendant's motion pursuant to CPLR 317 to vacate his default and to compel the plaintiff to accept his late answer. CPLR 317 permits a defendant who has been served with a summons and complaint other than by personal delivery to defend the action upon a finding by the court that the defendant did not personally receive notice of the summons and complaint in time to defend and has a potentially meritorious defense (see Eugene Di Lorenzo, Inc. v. A.C. Dutton Lbr. Co., 67 N.Y.2d 138, 141, 501 N.Y.S.2d 8, 492 N.E.2d 116 ; Taron Partners, LLC v. McCormick, 173 A.D.3d 927, 929, 103 N.Y.S.3d 485 ; Wassertheil v. Elburg, LLC, 94 A.D.3d 753, 754, 941 N.Y.S.2d 679 ). Although it is not necessary for a defendant moving pursuant to CPLR 317 to show a reasonable excuse for his or her delay (see Eugene Di Lorenzo, Inc. v. A.C. Dutton Lbr. Co., 67 N.Y.2d at 141, 501 N.Y.S.2d 8, 492 N.E.2d 116 ), "to support a determination granting relief under CPLR 317, a party must still demonstrate, and the Court must find, that the party did not receive actual notice of the summons and complaint in time to defend the action" ( Taron Partners, LLC, 173 A.D.3d at 929, 103 N.Y.S.3d 485 [internal quotation marks omitted]; Wassertheil v. Elburg, LLC, 94 A.D.3d at 754, 941 N.Y.S.2d 679 [internal quotation marks omitted] ).

Here, the defendant was not entitled to relief pursuant to CPLR 317, as he failed to show that he did not receive notice of the action in time to defend himself against it (see Citimortgage, Inc. v. Kowalski, 130 A.D.3d 558, 558, 13 N.Y.S.3d 468 ). The mere denial of receipt of the summons and complaint is insufficient to establish a lack of actual notice for the purpose of CPLR 317 (see Citimortgage, Inc. v. Kowalski, 130 A.D.3d at 558, 13 N.Y.S.3d 468 ; U.S. Bank N.A. v. Hasan, 126 A.D.3d 683, 684–685, 5 N.Y.S.3d 460 ). Moreover, the defendant failed to establish a potentially meritorious defense based on lack of standing, since the plaintiff annexed the note, indorsed in blank, to the complaint at the time the action was commenced (see U.S. Bank, N.A. v. Nathan, 173 A.D.3d 1112, 1114, 104 N.Y.S.3d 144 ; Wells Fargo Bank, N.A. v. Ballard, 172 A.D.3d 1440, 1441–1442, 102 N.Y.S.3d 229 ; U.S. Bank, N.A. v. Fisher, 169 A.D.3d 1089, 1090, 95 N.Y.S.3d 114 ).

However, the Supreme Court should have granted that...