Bank of New York Mellon v Prestia
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Attorneys and Parties
Brief Summary
Mortgage foreclosure; proof of standing, default, and the evidentiary basis for a referee's computation of the amount due.
The Supreme Court, Suffolk County, granted the plaintiff summary judgment on the foreclosure complaint against Monica Prestia and John Prestia, dismissed their affirmative defenses, denied their cross-motion for summary judgment, denied renewal under Civil Practice Law and Rules (CPLR) 2221(e) [motion to renew based on new facts or change in law], confirmed the referee's report under CPLR 4403 [court review of a referee's report], and entered a judgment of foreclosure and sale.
The Appellate Division reversed the judgment of foreclosure and sale, denied confirmation of the referee's report and the request for a foreclosure sale judgment, granted the defendants' request under CPLR 4403 to reject the referee's report, and remitted for a new computation of the amount due. It otherwise upheld the prior summary judgment and denial of renewal.
Although the plaintiff proved standing and default and was entitled to summary judgment, the referee's calculations for tax and insurance advances were based on unidentified and unproduced business records, making those computations inadmissible hearsay without probative value.
Background
In November 2012, Bank of New York Mellon commenced an action to foreclose a mortgage on property in Nissequogue against Monica Prestia, John Prestia, and others. The Prestias answered and asserted affirmative defenses, including lack of standing. The plaintiff later moved for summary judgment, dismissal of the affirmative defenses, and an order of reference. The defendants cross-moved for summary judgment dismissing the complaint. After the matter was referred, a referee computed the amount due, and the plaintiff moved to confirm that report and obtain a judgment of foreclosure and sale.
Lower Court Decision
The Supreme Court held that the plaintiff established its entitlement to foreclosure by producing the mortgage, the unpaid note, and proof of default, and by showing standing through physical possession of the note endorsed in blank when the action was commenced. It dismissed the defendants' affirmative defenses, denied their cross-motion, denied their motion for leave to renew, confirmed the referee's report, denied the defendants' request under CPLR 4403 and CPLR 4313 [hearing before a referee], and entered a judgment of foreclosure and sale.
Appellate Division Reversal
The Appellate Division held that the appeal from the final judgment brought up for review the earlier orders under CPLR 5501(a)(1) [review of prior nonfinal orders on appeal from a final judgment]. It agreed that the plaintiff had standing and proved default, and it also agreed that renewal was properly denied because the asserted letter was not a new fact and no change in law was shown. The court further held that the referee's failure to conduct a hearing under CPLR 4313 did not require reversal because the defendants were not prejudiced and could submit objections to the Supreme Court. However, the court ruled that the referee's computation of amounts due for taxes and insurance relied on unidentified and unproduced business records, which constituted inadmissible hearsay. For that reason, it rejected the referee's report, reversed the judgment of foreclosure and sale, and remitted for a new report computing the amount due, followed by further proceedings and an amended judgment.
Legal Significance
The decision underscores that in a New York mortgage foreclosure action, a plaintiff may win summary judgment by proving possession of the note and borrower default, yet still fail to obtain a foreclosure sale judgment if the amount due is not supported by admissible evidence. Referee computations must rest on identified, produced business records rather than conclusory references to loan records. The case also clarifies that lack of a referee hearing is not automatically reversible absent prejudice.
A foreclosure plaintiff can establish liability and still lose its foreclosure judgment if the referee's damages computation is based on hearsay. Proof of the amount due, especially advances for taxes and insurance, must be supported by properly identified and produced business records.