Nat'l Loan Investors, L.P. v. New Zion Church of the Apostolic Faith, Inc.

213 A.D.3d 860

184 N.Y.S.3d 771

NATIONAL LOAN INVESTORS, L.P., appellant,

v.NEW ZION CHURCH OF THE APOSTOLIC FAITH, INC., etc., respondent, et al., defendants.

2019–14303

Index No. 709206/17

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

Submitted—November 10, 2022

February 15, 2023

Law Office of Frank J. Haupel, PLLC, Rye Brook, NY, for appellant.

Salta & Associates, P.C., New York, NY (Romeo Salta of counsel), for respondent.

COLLEEN D. DUFFY, J.P., REINALDO E. RIVERA, LARA J. GENOVESI, JANICE A. TAYLOR, JJ.

DECISION & ORDER

In an action to foreclose a mortgage, the plaintiff appeals from an order of the Supreme Court, Queens County (Denis J. Butler, J.), entered November 14, 2019. The order, insofar as appealed from, denied those branches of the plaintiff's motion which were for summary judgment on the complaint insofar as asserted against the defendant New Zion Church of the Apostolic Faith, Inc., for an order of reference, and pursuant to CPLR 3025(c) for leave to amend the complaint to conform to the evidence.

ORDERED that the order is modified, on the law and in the exercise of discretion, by deleting the provision thereof denying that branch of the plaintiff's motion which was pursuant to CPLR 3025(c) for leave to amend the complaint to conform to the evidence, and substituting therefor a provision granting that branch of the motion; as so modified, the order is affirmed insofar as appealed from, with costs to the defendant New Zion Church of the Apostolic Faith, Inc.

In July 2017, the plaintiff commenced this action against, among others, the defendant New Zion Church of the Apostolic Faith, Inc. (hereinafter New Zion), to foreclose a consolidated commercial mortgage encumbering certain real property located in Queens. Thereafter, the plaintiff moved, inter alia, for summary judgment on the complaint insofar as asserted against New Zion and dismissing New Zion's affirmative defenses, for an order of reference, and pursuant to CPLR 3025(c) for leave to amend the complaint to conform to the evidence. In an order entered November 14, 2019, the Supreme Court, inter alia, denied those branches of the plaintiff's motion which were for summary judgment on the complaint insofar as asserted against New Zion, for an order of reference, and for leave to amend the complaint to conform to the evidence. The plaintiff appeals.

The Supreme Court properly denied that branch of the plaintiff's motion which was for summary judgment on the complaint insofar as asserted against New Zion. The plaintiff failed to sustain its initial burden of demonstrating that New Zion defaulted in its obligation. To establish the default, the plaintiff relied on an affidavit from its employee, whose averments regarding New Zion's default were based upon his review of unidentified business records. Inasmuch as no business records were attached to, or otherwise incorporated into, the affidavit, these averments constituted inadmissible hearsay lacking in probative value (see Citibank, N.A. v. Yanling Wu, 199 A.D.3d 48, 58, 154 N.Y.S.3d 327 ; Bank of Am., N.A. v. Huertas, 195 A.D.3d 891, 893, 150 N.Y.S.3d 301 ).

Further, although certain records, which may be business records on which the employee's affidavit was based, were submitted by the plaintiff with its reply papers, it is axiomatic that in order to establish its prima facie entitlement to judgment as a matter of law in a foreclosure action, a plaintiff must submit evidence of default (see e.g. HSBC Bank USA, N.A. v. Bhatti, 186 A.D.3d 817, 819, 130 N.Y.S.3d 474 ). The moving party "cannot meet its prima facie burden by submitting evidence for the first time in reply" ( U.S. Bank N.A. v. Hammer, 192 A.D.3d 846, 849, 143 N.Y.S.3d 695 ; see Arriola v. City of New York, 128 A.D.3d 747, 749, 9 N.Y.S.3d 344 ). Accordingly, those branches of the plaintiff's motion which were for summary judgment on the complaint insofar as asserted against New Zion and for an order of reference were properly denied without regard to the sufficiency of New Zion's opposition papers (see Winegrad v. New York Univ. Med. Ctr., 64 N.Y.2d 851, 853, 487 N.Y.S.2d 316, 476 N.E.2d 642 ). In any event, New Zion's opposing papers raised triable issues of fact concerning its alleged default (see Alvarez v. Prospect Hosp., 68 N.Y.2d 320, 324, 508 N.Y.S.2d 923, 501 N.E.2d 572 ; Zuckerman v. City of New York, 49 N.Y.2d 557, 562, 427 N.Y.S.2d 595, 404 N.E.2d 718 ).

However, the Supreme Court improvidently exercised its discretion in denying that branch of the plaintiff's motion which was for leave to amend the complaint to conform to the evidence. Pursuant to CPLR 3025(c), "[t]he court may permit pleadings to...