Nationstar Mortgage, LLC v. Arthur Klamm
Categories
Attorneys and Parties
Brief Summary
Mortgage foreclosure and service-of-process jurisdiction in a residential foreclosure action.
The Supreme Court, Suffolk County, denied the defendant's challenge to personal jurisdiction under CPLR 3211(a)(8) [allows dismissal of a complaint for lack of personal jurisdiction], later granted the plaintiff summary judgment and an order of reference, and ultimately confirmed the referee's report and issued a judgment of foreclosure and sale.
The Appellate Division reversed the order and judgment of foreclosure and sale, denied the plaintiff's motion to confirm the referee's report and for a foreclosure judgment, vacated the two April 12, 2021 orders under CPLR 5015(a)(4) [permits vacatur where the court lacked jurisdiction], and dismissed the complaint for lack of personal jurisdiction.
The plaintiff served the summons and complaint on the defendant's former attorney, who had no authority to accept service for him. Because service did not comply with CPLR 308 [statutory methods for effecting personal service upon a natural person], the court never obtained personal jurisdiction. The defendant also did not waive that defense because his answer asserting lack of personal jurisdiction was accepted by court order and he timely moved on that ground within the period allowed by the court.
Background
In October 2015, Nationstar Mortgage, LLC commenced a foreclosure action concerning property in Islip. The plaintiff purported to serve Arthur Klamm with the summons, complaint, and a Real Property Actions and Proceedings Law (RPAPL) 1303 notice by delivering them to his former attorney at that attorney's office. Klamm filed a verified answer asserting lack of personal jurisdiction, but the plaintiff rejected it. In March 2016, the plaintiff moved for leave to enter a default judgment and for an order of reference. Klamm opposed, arguing his answer was timely. In a June 25, 2018 order, the Supreme Court directed the plaintiff to accept the answer and gave Klamm 60 days to raise objections to service. The plaintiff later moved for summary judgment and an order of reference, and Klamm cross-moved pursuant to CPLR 3211(a)(8). The Supreme Court denied that cross-motion in December 2019 and later, in two orders dated April 12, 2021, granted the plaintiff summary judgment and appointed a referee to compute. After the referee's report, the plaintiff moved to confirm it and for a judgment of foreclosure and sale. Klamm then cross-moved, in effect, under CPLR 5015(a)(4) and CPLR 3211(a)(8), to vacate the April 2021 orders and dismiss for lack of personal jurisdiction.
Lower Court Decision
The Supreme Court held against the defendant on the jurisdictional issue, granted the plaintiff foreclosure-related relief, confirmed the referee's report, and directed sale of the property.
Appellate Division Reversal
The Appellate Division held that although a defendant can waive personal-jurisdiction objections by appearing without raising them, Klamm did not waive the issue here because the Supreme Court had ordered the plaintiff to accept his answer containing that defense and expressly allowed him 60 days to challenge service, which he did. The court further held that service was defective because CPLR 308(3) [permits service by delivering the summons within the state to the agent for service of the person to be served designated under rule 318] did not authorize service on the defendant's former attorney absent authority to accept process. Since the former attorney lacked such authority, personal jurisdiction was never obtained.
Legal Significance
The decision reinforces two important foreclosure principles in New York: first, strict compliance with service requirements is mandatory before a court may exercise personal jurisdiction; second, participation in the action does not necessarily waive a jurisdictional objection where the defense is preserved in an accepted answer and timely pursued as directed by the court. It also confirms that an attorney, including a former attorney, is not automatically an agent for service of process.
A foreclosure plaintiff cannot obtain a valid judgment if service was made on a defendant's attorney without proof that the attorney was authorized to accept service. When lack of personal jurisdiction is properly preserved and timely raised, all subsequent foreclosure orders may be vacated and the complaint dismissed.