LNV Corporation v Almberg
Attorneys and Parties
Brief Summary
Mortgage foreclosure; proof of standing, compliance with RPAPL 1304 [pre-foreclosure 90‑day notice requirement; notice must be sent by the lender, assignee, or mortgage loan servicer], and evidentiary foundations for business records and referee computations.
The Supreme Court, Suffolk County granted plaintiff LNV Corporation summary judgment and an order of reference, later confirmed the referee’s report, and entered an order and judgment of foreclosure and sale.
The order and judgment of foreclosure and sale, and the underlying grants of summary judgment, order of reference, and motion to confirm the referee’s report and for judgment of foreclosure and sale.
Plaintiff failed to prove RPAPL 1304 compliance because the RPAPL 1304 notices were purportedly sent by a subservicer (Dovenmuehle Mortgage, Inc.) whose authority was not established; and the referee’s report lacked admissible evidentiary support, relying on an affidavit submitted for the first time on reply that also lacked a proper business-records foundation. Although LNV showed standing via possession of the note with firmly affixed allonges and defendants waived the contractual notice-of-default defense under CPLR 3015(a) [defenses based on conditions precedent must be pleaded specifically or are waived], those showings did not cure the RPAPL 1304 and evidentiary defects.
Background
LNV Corporation commenced a mortgage foreclosure in June 2014 against Winston and Tara Almberg concerning property in Mount Sinai. After the Supreme Court granted LNV’s first summary judgment motion in 2017, the Appellate Division reversed in 2021, holding LNV had not made a prima facie showing of standing or compliance with RPAPL 1304. In June 2022, the court directed LNV to move again for summary judgment and an order of reference within 45 days. LNV renewed its motion in July 2022; defendants cross-moved for dismissal. On January 10, 2023, the Supreme Court granted LNV summary judgment and an order of reference and denied defendants’ cross-motion. In November 2023, the court confirmed the referee’s report and entered an order and judgment of foreclosure and sale. Defendants appealed.
Lower Court Decision
The Supreme Court granted LNV summary judgment on liability, issued an order of reference, later confirmed the referee’s report, and entered a judgment of foreclosure and sale. The court accepted LNV’s proof of standing and compliance, denied defendants’ challenges, and authorized sale of the property.
Appellate Division Reversal
The Appellate Division dismissed the separate appeal from the November 6, 2023 order as subsumed, then reversed the order and judgment of foreclosure and sale. It denied LNV’s motions for summary judgment and an order of reference and to confirm the referee’s report and for judgment of foreclosure and sale, and modified the January 10, 2023 and November 6, 2023 orders accordingly, awarding costs to the Almbregs. The court held: (1) LNV established standing via possession of the original note with allonges firmly affixed (consistent with UCC 3-202 [a valid transfer must be endorsed by or on behalf of the holder on the instrument or on a paper so firmly affixed thereto as to become part of it]); (2) defendants waived any contractual notice-of-default defense by not pleading it with specificity in their answer under CPLR 3015(a) [defenses based on conditions precedent must be pleaded specifically or are waived]; but (3) LNV failed to prove compliance with RPAPL 1304 [pre-foreclosure 90‑day notice requirement; notice must be sent by the lender, assignee, or mortgage loan servicer] because the mailing was done by Dovenmuehle Mortgage, Inc. and its authority as subservicer was not established—the board resolution referenced a subservicing agreement not in the record; and (4) the referee’s report was unsupported, relying on an affidavit submitted for the first time on reply and lacking a proper business-records foundation, as it referenced records created by other entities without demonstrating incorporation and reliance in LNV’s regular course of business.
Legal Significance
The decision underscores that, even where a foreclosing plaintiff proves standing by possession of the note endorsed in blank with firmly affixed allonges, it must independently prove strict compliance with RPAPL 1304 [pre-foreclosure 90‑day notice requirement; notice must be sent by the lender, assignee, or mortgage loan servicer]. Authority of any servicer or subservicer that sends the notice must be established with competent evidence (e.g., the operative servicing agreement). Affidavits must lay a proper business-records foundation when relying on records created by other entities, including proof of incorporation into and reliance upon those records in the plaintiff’s regular course of business. Contractual notice-of-default defenses are waived if not specifically pleaded under CPLR 3015(a) [defenses based on conditions precedent must be pleaded specifically or are waived].
Foreclosure plaintiffs must strictly prove RPAPL 1304 compliance through competent evidence of the sender’s authority and admissible business records; failure to do so will defeat summary judgment and undo a foreclosure judgment, even if standing is otherwise established.