139 A.D.3d 520
N.Y. App. Div.2016Background
- Wells Fargo (plaintiff) commenced a mortgage foreclosure in July 2007; default judgment was entered and later challenged by defendant Raymond Jones.
- Plaintiff sought to substitute a 2013 affidavit of merit (Duncan) for a 2007 affidavit (Patrick) nunc pro tunc to comply with Administrative Order 548/10 (and later CPLR 3012-b requirements for counsel certifications).
- The 2013 Duncan Affidavit asserted Wells Fargo had possession/standing and contained statements about missed payments and a May 7, 2007 notice of default.
- Jones moved to vacate the default judgment under CPLR 5015(a)(1) (excusable default) and CPLR 5015(a)(4) (lack of personal jurisdiction), and also contested service (substitute service on his daughter at a Bronx address).
- The motion court denied substitution of the Duncan affidavit and granted Jones’s cross motion, dismissing the complaint; the Appellate Division affirmed in part, reversed in part, and remanded for a traverse hearing on service.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Substitution of 2013 Duncan affidavit (nunc pro tunc) | Duncan’s statements are based on Wells Fargo business records and comply with Administrative Order; substitution should be allowed to meet verification requirements | Duncan cannot reliably attest to events before Wells Fargo allegedly acquired the mortgage (June 14, 2007); lacks indicia of reliability about predecessor’s records | Denied (without prejudice). Court cannot rely on Duncan for events before plaintiff’s acquisition because declarations lack sufficient basis and litigation-prepared affidavits (Patrick) are not business records. |
| Personal jurisdiction / service (CPLR 308(2)) | Service on daughter at Bronx address was proper substitute service | Jones swore he lived in Texas; daughter swore summons/complaint not served on her—creating factual dispute | Remanded for traverse hearing. Jones’ submissions rebut plaintiff’s affidavit of service and require evidentiary hearing; if service fails, action must be dismissed. |
| Vacatur of default (CPLR 5015(a)(1)) — interplay with jurisdictional challenge | Plaintiff contends Jones waived jurisdictional challenge by appearing; therefore court may decide excusable default first | Court must decide jurisdictional challenge (5015(a)(4)) first because lack of jurisdiction renders subsequent proceedings void | Court held jurisdictional issue must be decided first; Jones did not waive the service objection. If service proven, court then must consider excusable default and meritorious defense. |
| Standing to foreclose | Duncan affidavit and undated endorsement establish Wells Fargo was holder/assignee and had standing before suit | Jones disputes standing, noting foreclosure was commenced before the assignment’s execution and retroactive assignment cannot confer standing | Standing not established on record; Duncan’s bare assertion and undated endorsement insufficient. Court found Jones may have meritorious standing defense. |
Key Cases Cited
- Cipriano v. Hank, 197 A.D.2d 295 (1st Dep't 1994) (court must decide paragraph 4 jurisdictional challenges before discretionary paragraph 1 relief)
- Bank of N.Y. Mellon Trust Co. v. Sachar, 95 A.D.3d 695 (1st Dep't 2012) (plaintiff must be holder/assignee of note and mortgage at commencement to prove standing)
- Wells Fargo Bank, N.A. v. Marchione, 69 A.D.3d 204 (2d Dep't 2009) (retroactive assignment cannot confer standing for an action commenced prior to assignment execution)
- Johnson v. Deas, 32 A.D.3d 253 (1st Dep't 2006) (defendant's factual affidavit can rebut plaintiff's affidavit of service and entitle defendant to a traverse hearing)
- Landmark Capital Invs., Inc. v. Li-Shan Wang, 94 A.D.3d 418 (1st Dep't 2012) (assignee may rely on original loan file prepared by assignor if used in regular course of business)