MTGLQ Investors, L.P. v. Cutaj

202 A.D.3d 778

162 N.Y.S.3d 431

MTGLQ INVESTORS, L.P., respondent,

v.Augustin CUTAJ, et al., appellants, et al., defendant.

2019–10389

Index No. 63677/15

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

Argued—November 22, 2021

February 9, 2022

Michael Kennedy Karlson, New York, NY, for appellants.

Knuckles, Komosinski & Manfro, LLP, Elmsford, NY (Max T. Saglimbeni of counsel), for respondent.

BETSY BARROS, J.P., ANGELA G. IANNACCI, CHERYL E. CHAMBERS, LINDA CHRISTOPHER, JJ.

DECISION & ORDER

In an action to foreclose a mortgage, the defendants Augustin Cutaj and Lillian Cutaj appeal from an order and judgment of foreclosure and sale (one paper) of the Supreme Court, Westchester County (Mary H. Smith, J.), dated April 18, 2019. The order and judgment of foreclosure and sale, upon an order of the same court dated May 8, 2018, inter alia, granting those branches of the motion of HSBC Bank USA, N.A., the plaintiff's predecessor in interest, which were for summary judgment on the complaint insofar as asserted against those defendants, to strike their answer and dismiss their affirmative defenses, for an order of reference, and to amend the caption to substitute MTGLQ Investors, L.P., as the plaintiff, and an order of the same court dated April 18, 2019, among other things, granting those branches of the plaintiff's motion which were to confirm the referee's report and for a judgment of foreclosure and sale, inter alia, confirmed the referee's report and directed the sale of the subject property.

ORDERED that the order and judgment of foreclosure and sale is reversed, on the law, with costs, those branches of the motion of HSBC Bank USA, N.A., which were for summary judgment on the complaint insofar as asserted against the defendants Augustin Cutaj and Lillian Cutaj, to strike their answer and dismiss their affirmative defenses, and for an order of reference are denied, those branches of the plaintiff's motion which were to confirm the referee's report and for a judgment of foreclosure and sale are denied, and the orders dated May 8, 2018, and April 18, 2019, are modified accordingly.

On or about August 21, 2015, HSBC Bank USA, N.A. (hereinafter HSBC), commenced this action against the defendants Augustin Cutaj and Lillian Cutaj (hereinafter together the defendants), among others, to foreclose a mortgage on residential property in Mamaroneck. The defendants interposed an answer in which they asserted various affirmative defenses. By assignment of mortgage dated July 9, 2017, HSBC assigned the mortgage to MTGLQ Investors, L.P. (hereinafter MTGLQ). Thereafter, HSBC moved, inter alia, for summary judgment on the complaint insofar as asserted against the defendants, to strike their answer and dismiss their affirmative defenses, for an order of reference, and to amend the caption to substitute MTGLQ as the plaintiff. The defendants opposed the motion. In an order dated May 8, 2018, the Supreme Court granted the motion, amended the caption to substitute MTGLQ as the plaintiff, and appointed a referee.

In December 2018, MTGLQ moved, inter alia, to confirm the referee's report and for a judgment of foreclosure and sale. The defendants opposed the motion. In an order dated April 18, 2019, the Supreme Court granted MTGLQ's motion. In an order and judgment of foreclosure and sale, also dated April 18, 2019, the court, inter alia, confirmed the referee's report and directed the sale of the premises. The defendants appeal.

The defendants argue that the Supreme Court erred in granting HSBC's motion, inter alia, for summary judgment because HSBC failed to establish its strict compliance with RPAPL 1304, failed to establish that it sent them a notice of default as required under the terms of the mortgage, and failed to demonstrate that MTGLQ had standing to continue the action in HSBC's place. Contrary to MTGLQ's contention, these contentions are not barred by the doctrines of res judicata and law of the case but are properly brought up for review on this appeal from the order and judgment of foreclosure and sale (see CPLR 5501[a][1] ; Matter of Aho, 39 N.Y.2d 241, 248, 383 N.Y.S.2d 285, 347 N.E.2d 647 ).

As the defendants correctly contend, HSBC failed to establish, prima facie, its strict compliance with RPAPL 1304. In support of its motion, HSBC submitted, among other things, a copy of a 90–day notice dated November 12, 2014, addressed to the defendants at the address of the mortgaged premises, and a certified mail receipt. However, the copy of the notice contains no indication that it was sent by registered or certified mail, or by first class mail (see Bank of Am., N.A. v. Bittle, 168 A.D.3d 656, 658, 91 N.Y.S.3d 234 ), and the certified mail receipt is not postmarked (see U.S. Bank N.A. v. Ahmed, 174 A.D.3d 661, 663, 106 N.Y.S.3d 78 ). HSBC also submitted the affidavit of Michael...