Flagstar Bank, FSB v Poliseno
Categories
Attorneys and Parties
Brief Summary
Residential mortgage foreclosure procedure, particularly the proof required to obtain a default judgment and order of reference, and whether a borrower waived a personal-jurisdiction defense by appearing in the action.
The Supreme Court, Kings County, granted the plaintiff's motion to substitute AJX Mortgage Trust I as plaintiff, to enter a default judgment against Loretta Poliseno, and for an order of reference, and denied Poliseno's cross-motion to vacate her default, dismiss for lack of personal jurisdiction under CPLR 3211(a)(8) [rule permitting dismissal for lack of personal jurisdiction], dismiss based on RPAPL 1302(1)(a) [statutory foreclosure defenses] and RPAPL 1303 [required foreclosure notice], or obtain leave to serve a late answer under CPLR 3012(d) [rule permitting extension of time to appear or plead].
The Appellate Division reversed only the portions of the orders granting a default judgment and an order of reference against Poliseno. It otherwise affirmed, including substitution of AJX Mortgage Trust I as plaintiff and denial of Poliseno's cross-motion.
The plaintiff failed to satisfy CPLR 3215(f) [on a default application, proof of the facts constituting the claim, the default, and the amount due must be set forth in an affidavit made by the party]. Its affidavit came from a Gregory Funding, LLC employee, but the plaintiff did not prove Gregory Funding was authorized to act for AJX Mortgage Trust I because the limited power of attorney depended on related servicing agreements that were not submitted. The affiant also failed to lay a proper business-record foundation. Poliseno still lost her jurisdictional and late-answer arguments because she waived personal jurisdiction by appearing without objecting under CPLR 320(b) [an appearance is equivalent to personal service unless jurisdiction is timely challenged], and she did not show a reasonable excuse for her default.
Background
In June 2007, Loretta Poliseno executed a note to Globe Mortgage America, LLC, secured by a mortgage on Brooklyn property. Mortgage Electronic Registration Systems, Inc., as nominee for Globe, assigned the mortgage to Flagstar Bank, FSB in August 2008. Flagstar commenced this foreclosure action in March 2011. Poliseno did not timely answer. Mandatory settlement conferences were held from November 2011 through March 2013, after which the plaintiff was allowed to proceed. Poliseno's counsel filed a notice of appearance on May 28, 2013. After later assignments, the mortgage was assigned to AJX Mortgage Trust I. Earlier plaintiff motions for a default judgment and order of reference were denied with leave to renew. In February 2018, the plaintiff renewed its request and sought substitution of AJX Mortgage Trust I; Poliseno cross-moved to vacate her default, dismiss, or serve a late answer.
Lower Court Decision
The Supreme Court granted the plaintiff leave to amend the caption to substitute AJX Mortgage Trust I as plaintiff, granted leave to enter a default judgment against Poliseno, and granted an order of reference. It denied Poliseno's requests for relief under CPLR 5015(a)(4) [rule permitting vacatur based on lack of jurisdiction], CPLR 3211(a)(8) [rule permitting dismissal for lack of personal jurisdiction], RPAPL 1302(1)(a) [statutory foreclosure defenses], RPAPL 1303 [required foreclosure notice], and CPLR 3012(d) [rule permitting extension of time to appear or plead]. A second order referred the matter to a referee to compute the amount due.
Appellate Division Reversal
The Appellate Division modified the orders by deleting the provisions that granted a default judgment and an order of reference, and substituting provisions denying that relief. The court held that the plaintiff's proof was insufficient under CPLR 3215(f) because the affidavit was not adequately shown to be made by an authorized party representative and lacked a proper business-record foundation. The court otherwise affirmed, holding that Poliseno waived any personal-jurisdiction objection by filing a notice of appearance and litigating without raising it, that her unvacated default barred her RPAPL defenses, and that she was not entitled to serve a late answer because she offered no reasonable excuse for the default.
Legal Significance
This decision reinforces that, in New York foreclosure actions, a plaintiff seeking a default judgment must strictly comply with CPLR 3215(f), especially when relying on a loan servicer or attorney-in-fact affidavit. The plaintiff must prove the affiant's authority and lay a proper foundation for business records. The decision also underscores that a borrower can waive lack-of-personal-jurisdiction objections by appearing and actively litigating without timely asserting them.
A foreclosure plaintiff cannot obtain a default judgment or order of reference with a defective servicer affidavit, even if the borrower defaulted. But a borrower who appears in the action without timely objecting to jurisdiction waives that defense and cannot revive it later.