Atlantica, LLC v Hunte
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Attorneys and Parties
Brief Summary
Mortgage foreclosure; whether the foreclosure judgment could stand where the borrower challenged personal jurisdiction based on allegedly defective service of process.
The Supreme Court, Suffolk County, granted the lender's motion to confirm the referee's report and for a judgment of foreclosure and sale, and denied Cheryl Hunte's cross-motion under New York Civil Practice Law and Rules (CPLR) 5015(a)(4) [permits a court to relieve a party from a judgment or order for lack of jurisdiction] to vacate the prior default order and dismiss for lack of personal jurisdiction.
The Appellate Division reversed the order and judgment of foreclosure and sale insofar as appealed from, vacated the related portions of the July 27, 2022 order, and remitted for a hearing on the validity of service of process.
Although the process server's affidavit created a presumption of proper service, Hunte submitted a sworn denial of service with specific factual assertions and supporting documents sufficient to rebut that presumption, requiring a hearing before the court could resolve the jurisdictional challenge.
Background
Atlantica, LLC commenced a mortgage foreclosure action in November 2017 against Cheryl Hunte and others concerning residential property in Medford, New York. Hunte did not answer or timely appear, and the Supreme Court entered an order on January 18, 2019 granting, among other relief, leave to enter a default judgment and an order of reference. In 2021, Atlantica moved to confirm the referee's report and for a judgment of foreclosure and sale. Hunte opposed and cross-moved to vacate the 2019 default order and dismiss the complaint against her for lack of personal jurisdiction, arguing that she had not been properly served.
Lower Court Decision
The Supreme Court rejected Hunte's jurisdictional challenge, granted Atlantica's motion to confirm the referee's report and for a judgment of foreclosure and sale, denied Hunte's cross-motion under CPLR 5015(a), and issued an order and judgment of foreclosure and sale directing the property to be sold.
Appellate Division Reversal
The Appellate Division dismissed the separate appeal from the July 27, 2022 order because the right to appeal from that order terminated upon entry of the order and judgment of foreclosure and sale, but it reviewed those issues on the appeal from the foreclosure judgment under CPLR 5501(a)(1). On the merits, it held that the affidavit of service established prima facie proper service, but Hunte's affidavit and attached documentation specifically disputed service and therefore rebutted the presumption. Because the service dispute presented a credibility issue, the court remitted the matter to the Supreme Court, Suffolk County, for a hearing to determine whether service was valid and for a new determination of both the lender's foreclosure-related motion and Hunte's CPLR 5015(a)(4) cross-motion.
Legal Significance
This decision reinforces that in a foreclosure action, a court must resolve a personal-jurisdiction challenge before allowing a default-based foreclosure judgment to stand. Under CPLR 5015(a)(4) [permits relief from a judgment or order for lack of jurisdiction], a defendant who submits a detailed sworn denial of service can overcome the usual presumption created by a process server's affidavit and obtain a hearing. The case also confirms that when a defendant seeks both jurisdictional relief and discretionary vacatur, the jurisdictional question must be decided first.
A lender cannot rely solely on a process server's affidavit where the borrower submits a specific, documented denial of service; in that situation, the court must hold a hearing on service before enforcing a default foreclosure judgment.