One West Bank FSB v Salochini Persaud
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Attorneys and Parties
Brief Summary
Residential mortgage foreclosure procedure, specifically whether a borrower may amend an answer to add defenses of lack of standing and failure to satisfy a contractual condition precedent, and whether the lender can still obtain summary judgment when standing remains disputed.
The Supreme Court, Queens County, granted the lender's motion for summary judgment against Persaud, struck her answer, issued an order of reference, and denied her cross-motion for leave to amend her answer.
The Appellate Division reversed the order insofar as appealed from, denied summary judgment, denied the request to strike the answer and for an order of reference, and granted Persaud leave to amend her answer.
Under RPAPL 1302-a [provides that in a foreclosure proceeding related to a home loan, a defense based on the plaintiff's lack of standing is not waived by failure to raise it in a responsive pleading or pre-answer motion], Persaud was not barred from asserting lack of standing. The proposed condition-precedent defense also should have been allowed under CPLR 3025(b) [leave to amend pleadings should be freely granted absent prejudice, surprise, or a plainly meritless amendment], because PHH Mortgage Corporation (PHH) failed to show prejudice or that the amendment lacked merit. Once those defenses were allowed, triable issues of fact remained as to One West Bank FSB's standing, so summary judgment was improper under CPLR 3212(b) [the summary judgment movant must show the absence of triable issues on every issue raised by the pleadings].
Background
In August 2009, One West Bank FSB, predecessor in interest to PHH, began an action to foreclose a mortgage on Queens property against Salochini Persaud and others. Persaud answered but did not initially plead lack of standing or failure to comply with a contractual condition precedent. When One West later moved for summary judgment, to strike her answer, and for an order of reference, Persaud opposed and cross-moved for leave to amend her answer to add those two affirmative defenses.
Lower Court Decision
The Supreme Court, Queens County, in an order dated October 3, 2024, granted the branches of the plaintiff's motion seeking summary judgment against Persaud, striking her answer, and an order of reference, appointed a referee to compute the amount due, and denied Persaud's CPLR 3025(b) cross-motion to amend her answer. The appeal from the separate July 3, 2024 decision was dismissed because no appeal lies from a decision alone.
Appellate Division Reversal
The Appellate Division held that Persaud could assert lack of standing despite not pleading it earlier because RPAPL 1302-a preserved that defense in home-loan foreclosure cases. It also held that the contractual-condition-precedent defense could be added by amendment, since lateness alone was insufficient and PHH did not show prejudice, surprise, or that the defense was patently meritless. Because the answer should have been deemed amended and there were triable issues of fact regarding One West's standing to commence the action, the lender was not entitled to summary judgment, striking the answer, or an order of reference.
Legal Significance
This decision reinforces that in New York home-loan foreclosure actions, standing defenses are not waived by omission from the original answer under RPAPL 1302-a, and defendants may also seek leave to add other foreclosure defenses such as failure to satisfy contractual conditions precedent. It further underscores that once such defenses are in play, a foreclosure plaintiff must affirmatively establish standing to obtain summary judgment.
A mortgage foreclosure plaintiff cannot obtain summary judgment where the borrower is permitted to amend the answer to raise standing and condition-precedent defenses and the record leaves factual questions about the plaintiff's standing at the time the action was commenced.