FEDERAL NATIONAL MORTGAGE ASSOCIATION v. Habiba Allanah, appellant. (2021)

Supreme Court, Appellate Division, Second Department, New York.2021-12-22No. 2020–00096

Summary · law.co

Holding. The appellate court reversed the order and judgment of foreclosure and sale, denying the plaintiff's motion for summary judgment, striking of the defendant's answer, and appointment of a referee, and denying the motion to confirm the referee's report and enter judgment of foreclosure.

Federal National Mortgage Association initiated a foreclosure action against Habiba Allanah on a consolidated mortgage. Allanah filed an answer raising affirmative defenses including lack of standing and noncompliance with statutory procedures. The trial court granted the plaintiff's motion for summary judgment, struck the defendant's answer, and appointed a referee to calculate the amount owed. After the referee's report was issued, the court entered a final judgment of foreclosure and sale. Allanah appealed.

The appellate court reversed the foreclosure judgment, finding that the plaintiff failed to establish its right to summary judgment. The plaintiff's supporting affidavit came from a document management specialist who relied on business records created by entities other than his employer. The specialist did not establish that he had personal knowledge of those other entities' record-keeping practices, nor did he demonstrate that their records had been incorporated into his employer's files and were routinely used in business operations. As a result, the affidavit constituted inadmissible hearsay lacking evidentiary value. Because the plaintiff did not meet its burden of proof at the summary judgment stage, the entire chain of proceedings based on that defective motion—including the referee appointment and final foreclosure judgment—could not stand.

Summary generated by law.co from the public-domain opinion. The opinion text itself is public domain.

Key issues

Sufficiency of an affidavit to establish prima facie case in mortgage foreclosure
Proper foundation for business records from third-party entities
Admissibility of hearsay in summary judgment proceedings
Defendant's right to maintain affirmative defenses including lack of standing

Procedural posture

The defendant appealed from a final judgment of foreclosure and sale entered by the trial court, which had granted the plaintiff's motion for summary judgment and struck the defendant's answer.

Authorities cited

No cited authorities resolved to law.co cases yet.

Opinion · public domain

DECISION & ORDER

In an action to foreclose a mortgage, the defendant Habiba Allanah appeals from an order and judgment of foreclosure and sale (one paper) of the Supreme Court, Nassau County (Thomas A. Adams, J.), entered October 28, 2019. The order and judgment of foreclosure and sale, insofar as appealed from, upon (1) an order of the same court entered November 30, 2017, inter alia, granting those branches of the motion of JPMorgan Chase Bank, National Association, the plaintiffs predecessor in interest, which were for summary judgment on the complaint insofar as asserted against the defendant Habiba Allanah, to strike her answer, and for an order of reference, and (2) an order of the same court, also entered November 30, 2017, inter alia, granting the same relief and appointing a referee to ascertain and compute the amount due on the note, granted those branches of the plaintiffs motion which were to confirm the referees report and for a judgment of foreclosure and sale, and directed the sale of the subject property.

ORDERED that the order and judgment of foreclosure and sale is reversed insofar as appealed from, on the law, with costs, those branches of the motion of JPMorgan Chase Bank, National Association, which were for summary judgment on the complaint insofar as asserted against the defendant Habiba Allanah, to strike her answer, and for an order of reference are denied, those branches of the plaintiffs motion which were to confirm the referees report and for a judgment of foreclosure and sale are denied, and the orders entered November 30, 2017, are modified accordingly.

JPMorgan Chase Bank, National Association (hereinafter JPMorgan), commenced this action against the defendant Habiba Allanah (hereinafter the defendant), among others, to foreclose a consolidated mortgage on real property located in Elmont. In her answer, the defendant asserted various affirmative defenses, including lack of standing and failure to comply with RPAPL 1304. Thereafter, JPMorgan moved, inter alia, for summary judgment on the complaint insofar as asserted against the defendant, to strike her answer, and for an order of reference. In an order entered November 30, 2017, the Supreme Court, among other things, granted those branches of JPMorgans motion. On the same date, the court issued an order, inter alia, granting the same relief and appointing a referee to ascertain and compute the amount due on the note. The court additionally substituted Federal National Mortgage Association (hereinafter FNMA) as the plaintiff.

After the referee issued a report, FNMA moved, inter alia, to confirm the report and for a judgment of foreclosure and sale. By order and judgment of foreclosure and sale entered October 28, 2019, the Supreme Court, among other things, granted those branches of FNMAs motion, and directed the sale of the subject property. The defendant appeals.

The Supreme Court erred in granting those branches of JPMorgans motion which were for summary judgment on the complaint insofar as asserted against the defendant, to strike her answer, and for an order of reference, as JPMorgan failed to satisfy its prima facie burden on the motion. In support of its motion, JPMorgan submitted, among other things, the affidavit of Nathan Abelin, a document management specialist for FNMAs loan servicer, Seturus, Inc. (hereinafter Seturus), who, based upon his review of business records, attested to the defendants default in payment, JPMorgans standing to commence the action, and JPMorgans compliance with RPAPL 1304. Although Abelin averred that he was personally familiar with Seturuss record-keeping practices and procedures, the business records he relied upon and attached to the affidavit were created by JPMorgan and another entity. Abelin failed to lay a proper foundation for these records because he did not aver either that he had personal knowledge of those entities’ business practices and procedures, or that the records “were incorporated into [Seturuss] own records and routinely relied upon by [Seturus] in its own business” (Bank of N.Y. Mellon v. Gordon, 171 A.D.3d 197, 209, 97 N.Y.S.3d 286; see Bank of N.Y. Mellon v. DeLoney, 197 A.D.3d 548, 153 N.Y.S.3d 64). Accordingly, Abelins affidavit constituted inadmissible hearsay and lacked probative value (see Bank of N.Y. Mellon v. DeLoney, 197 A.D.3d 548, 153 N.Y.S.3d 64).

Since JPMorgan failed to meet its prima facie burden, those branches of its motion which were for summary judgment on the complaint insofar as asserted against the defendant, to strike her answer, and for an order of reference should have been denied without regard to the sufficiency of the defendants opposition papers (see Winegrad v. New York Univ. Med. Ctr., 64 N.Y.2d 851, 853, 487 N.Y.S.2d 316, 476 N.E.2d 642).

The parties’ remaining contentions need not be reached in light of our determination.

RIVERA, J.P., IANNACCI, FORD and DOWLING, JJ., concur.