Citimortgage, Inc. v Hassanin
Attorneys and Parties
Brief Summary
Residential mortgage foreclosure—whether a referee’s damages/amount-due report may be confirmed when based on unproduced business records and a servicer affidavit lacking a proper business-records foundation; and whether a duplicative-action defense under Real Property Actions and Proceedings Law (RPAPL) 1301(3) applies.
Supreme Court, Queens County granted plaintiff summary judgment, denied defendant leave to amend to assert an RPAPL 1301(3) defense, and later confirmed the referee’s report and entered an order and judgment of foreclosure and sale.
The order and judgment of foreclosure and sale was reversed; the motion to confirm the referee’s report was denied; the referee’s report was rejected; the matter was remitted for a new computation and further proceedings.
The referee’s findings on the total amount due were not substantially supported because the plaintiff relied on an affidavit from a loan servicer employee referencing unproduced business records and failed to lay a proper business-records foundation, particularly for records predating the servicer’s engagement; thus the submission constituted inadmissible hearsay. The court otherwise found no prejudice under RPAPL 1301(3) [prohibits commencing or maintaining another action to recover the mortgage debt while a foreclosure is pending without leave; intended to protect mortgagors from defending multiple simultaneous actions] and no reversible error in not holding a referee hearing because the defendant had an opportunity to submit evidence to the court.
Background
A prior foreclosure action against Hoda Hassanin was commenced in April 2008 and, although a judgment of foreclosure and sale had been entered in October 2008, the action was voluntarily discontinued and the judgment vacated by order entered June 4, 2014. In July 2013, Citimortgage commenced the present foreclosure action. Plaintiff moved for summary judgment and an order of reference; defendant cross-moved for leave to amend to assert an RPAPL 1301(3) defense, arguing the new action was filed while the prior action was pending.
Lower Court Decision
By order dated May 2, 2017, the Supreme Court granted plaintiff summary judgment and an order of reference and denied defendant’s cross-motion to amend. In August 2022, plaintiff moved to confirm the referee’s report and for a judgment of foreclosure and sale. On May 16, 2023, the court confirmed the report and entered an order and judgment of foreclosure and sale.
Appellate Division Reversal
The appellate court held it could review the May 2, 2017 order on the appeal from the final judgment (see CPLR 5501[a][1] [permits review of nonfinal orders that necessarily affect the final judgment]). It affirmed the denial of leave to amend to add an RPAPL 1301(3) defense because the prior action had been effectively abandoned since October 2008 and defendant suffered no prejudice. It also rejected the argument that a referee hearing was required because defendant had an opportunity to submit evidence directly to the court (see CPLR 4403 [governs confirmation of referee’s reports]). However, it reversed the confirmation of the referee’s report and the judgment of foreclosure and sale because plaintiff’s proof of the amount due relied on an affidavit from a JPMorgan Chase Bank, N.A. employee without producing the underlying business records; the limited power of attorney showed Chase did not service the loan at the time of the 2008 default; and the affiant failed to establish a proper foundation for admitting prior servicer or plaintiff records as Chase’s own. The court rejected the referee’s report, denied confirmation, and remitted for a new computation and further proceedings.
Legal Significance
The decision reinforces strict evidentiary requirements for confirming a referee’s report in foreclosure matters: affidavits summarizing amounts due must be supported by produced business records, and if a current servicer relies on prior servicer or creditor records, it must establish incorporation and reliance in the ordinary course to lay a proper business-records foundation. It also clarifies that RPAPL 1301(3) is strictly construed but nonprejudicial violations—such as where a prior action has been effectively abandoned—will be disregarded as a mere irregularity.
To confirm a referee’s report, produce the business records and lay a proper foundation—especially where a later-engaged servicer attests to earlier defaults; and attempts to add an RPAPL 1301(3) defense fail absent prejudice from concurrent actions.