HSBC Bank USA, National Association v. Bazigos
Categories
Attorneys and Parties
Brief Summary
Residential mortgage foreclosure, including whether the lender strictly complied with Real Property Actions and Proceedings Law (RPAPL) 1304 [pre-foreclosure notice requirement for certain home loans] and whether the borrower could obtain restitution after reversal of a foreclosure judgment under CPLR 5523 [restitution after reversal or modification of a judgment or order].
The Supreme Court denied the defendant's request for restitution of the property and, as premature, denied restitution of the property's value; it later granted the plaintiff summary judgment on the foreclosure complaint against the defendant and an order of reference, while denying the defendant's discovery cross-motion.
The Appellate Division modified the August 30, 2021 order by deleting the grant of summary judgment and the order of reference to the plaintiff, but otherwise affirmed. It also affirmed the May 10, 2021 order denying restitution of the property and denying, as premature, restitution of its value.
The plaintiff failed to make a prima facie showing of strict compliance with RPAPL 1304 because it sent a single joint notice to both borrowers instead of an individual notice to each borrower. Restitution of the property itself was unavailable because the property had been sold to a good-faith purchaser for value, and restitution of the property's value was premature under the circumstances.
Background
The plaintiff alleged that on September 21, 2004, Michael N. Bazigos executed a consolidated note for $528,000 in favor of First National Bank of Arizona, secured by a consolidated mortgage on Westchester County property signed by Michael N. Bazigos and Katerina Bazigos. The plaintiff, claiming to be the bank's successor in interest, commenced this foreclosure action in 2013. In 2016, the Supreme Court granted summary judgment and an order of reference, and in 2017 it issued a judgment of foreclosure and sale. In 2019, the Appellate Division reversed that foreclosure judgment and denied the plaintiff's prior summary judgment and order of reference requests. The property had allegedly already been sold at foreclosure auction, prompting the defendant to seek relief under CPLR 5523 [restitution after reversal or modification of a judgment or order].
Lower Court Decision
In the May 10, 2021 order, the Supreme Court denied restitution of the subject property and denied, as premature, restitution of the property's value. In the August 30, 2021 order, it granted the plaintiff summary judgment on the complaint against Michael N. Bazigos and an order of reference, and denied the defendant's request to compel further discovery, including the deposition of a loan-servicer vice president.
Appellate Division Reversal
The Appellate Division affirmed the denial of restitution of the property because the foreclosure sale purchaser was a good-faith purchaser for value and therefore protected from the effects of the appellate reversal. It also agreed that any claim for the value of the property was premature. However, it modified the August 30, 2021 order by denying the plaintiff's motion for summary judgment and an order of reference, holding that the plaintiff failed to prove strict compliance with RPAPL 1304 because the statutory notice was jointly addressed to both borrowers rather than sent separately to each borrower.
Legal Significance
This decision reinforces that in New York foreclosure actions, strict compliance with RPAPL 1304 [pre-foreclosure notice requirement for certain home loans] is a condition precedent to foreclosure, and a lender must show that each borrower was sent a separate notice. The case also confirms that CPLR 5523 [restitution after reversal or modification of a judgment or order] does not permit recovery of real property from a good-faith foreclosure purchaser after appellate reversal, though a claim for monetary value may be available later if procedurally ripe.
A foreclosure plaintiff cannot obtain summary judgment without proving that each borrower received an individual RPAPL 1304 notice, and a borrower whose foreclosure judgment is later reversed generally cannot recover the property itself once it has been sold to a good-faith purchaser.