Upon e-filed documents 114-135 read and considered on plaintiff’s motion to confirm the referee’s report (motion sequence 005) and defendant’s motion to dismiss the action (motion sequence 006) it is hereby ORDERED that plaintiff’s motion to confirm the referee’s report and for a judgment of foreclosure and sale and ancillary relief be, and it hereby is, denied as academic; and it is further ORDERED that defendants’ motion to dismiss this action based on noncompliance with RPAPL 1304 be, and it hereby is, granted; and it is further ORDERED that the complaint herein be, and hereby is, DISMISSED; and it is further ORDERED that plaintiff be, and hereby is, directed to serve on or before February 28, 2023 upon the Suffolk County Clerk a copy of this order with CPLR 8019 (c) notice and payment of any required fees to cause any notice of pendency that plaintiff filed in relation to this action to be cancelled as of record; and it is further ORDERED that upon receipt as set forth in the immediately preceding decretal paragraph, the Suffolk County Clerk be, and hereby is, directed to cancel all such notices of pendency. This is a residential mortgage foreclosure action in which plaintiff was granted summary judgment against Sheila Dunne and James Dunne (mortgagors). This Court issued an order of reference. The referee had completed the reference, and plaintiff’s motion seeks an order confirming the referee’s report and seeks to have this Court issue a judgment of foreclosure and sale. Mortgagors move to dismiss the action because the notice required under real property actions and proceedings law section 1304 violated the separate envelope requirement by containing notices beyond those set forth in the statute (Bank of Am., N.A. v. Kessler 202 AD3d 10, 160 NYS3d 277 [2d Dept 2021] lv to app granted 2022 NY Slip Op 66274 [U] [2d Dept 2022]). Mortgagors also seek an order dismissing the action because the plaintiff sent only one first class and one certified mailing both of which were jointly addressed to the two mortgagors, plaintiff failed to comply with 1304′s separate envelope requirement by mailing a separate notice to each of the borrowers; in other words, in this case, mortgagors argue that plaintiff should have sent a total of four, not just two, separate envelopes. Thus, dismissal of the complaint should occur (Wells Fargo Bank, N.A. v. Yapkowitz, 199 AD3d 126, 155 NYS3d 163 [2d Dept 2021]). Plaintiff opposes defendant motion because defendant could have, but did not, raise these issues to oppose plaintiff’s motion for summary judgment. Thus, plaintiff reasons that both law of the case and abandonment apply, so defendant’s motion should be denied. As to defendant’s motion, the RPAPL 1304 notice violates both the Kessler and the Yapkowitz rule. In its opposition to defendant’s motion, Plaintiff ethically and professionally makes no effort to suggest otherwise. The question, then, is whether mortgagors have a right to raise 1304 noncompliance after mortgagors answered and included in their answer an affirmative defense based on nonreceipt of any 1304 notice. Mortgagors moved to dismiss the complaint on grounds not including section 1304 noncompliance. Mortgagors also opposed plaintiff’s summary judgment motion on grounds not including section 1304 noncompliance. Mortgagors assert that because an application to dismiss based on a section 1304 violation may be raised at any time, mortgagors are now making this motion to dismiss. Because plaintiff has not established the untimeliness of mortgagors’ motion and cannot successfully defend that motion on the merits, the motion must be granted. Untimeliness or a doctrinal bar like law of the case is an affirmative defense to the motion on which “[t]he party asserting an affirmative defense generally bears the burden of proof” (Manion v. Pan Am. World Airways, Inc., 55 NY2d 398, 405, 449 NYS2d 693, 695 [1982]). Plaintiff briefly argues that CPLR 3211 (a)(7) time bars defendant’s motion. Section 1304 noncompliance is a defense to a mortgage foreclosure action involving a home loan (RPAPL §§1302 [2]; 1304 [6]). “The Legislature would not have denominated this as a defense if a violation of the notice provisions deprived the court of subject matter jurisdiction.” (Pritchard v. Curtis, 101 AD3d 1502, 1505, 957 NYS2d 440, 444 [3d Dept 2012] cited by Flagstar Bank, FSB v. Jambelli, 140 AD3d 829, 32 NYS3d 625 [2d Dept 2106]). Thus, while 1304 noncompliance seems to be a matter that if raised by motion must be raised within the time limits of CPLR 3211, many cases, including Jambelli say that the defense may be raised “at any time.” That language shows that CPLR 3211′s time limits do not apply (cf. Aurora Loan Servs. LLC v. Weisblum, 85 AD3d 95, 923 NYS2d 609 [2d Dept 2011]). With CPLR 3211 being inapplicable, the issue in this case is the oft-cited phrase that a 1304 defense “may be raised at any time.” Our late colleague, Justice Howard Heckman set forth the problems with how the phrase “may be raised at any time” is treated: Although the phrase’s usage has become common-place among “strict compliance” advocates, its application has restrictions limiting its applicability based upon the procedural [status] of the foreclosure action. For example, a foreclosure defendant cannot raise either defense for the first time on appeal (see PHH Mortgage Corp. v. Celestin, 130 AD3d 703, 11 NYS3d 871 (2nd Dept., 2015); Bank of America v. Barton, 149 AD3d 676, 50 NYS3d 546 (2nd Dept., 2017); FNMA v. Cappelli, 120 A.D.3d 621, 990 N.Y.S.2d 856 (2nd Dept., 2014)), nor can a defendant assert such defense in opposition to a motion seeking a judgment of foreclosure and sale, where the defendant has defaulted and has failed to provide a reasonable excuse for his default. (Wells Fargo Bank, N.A. v. Fattizzo, 2017 NY Slip Op 31827 [Suffolk County Supreme Ct, Heckman, J.] affd 183 AD3d 851, 122 NYS3d 520 [2d Dept 2020]). Building on Justice Heckman’s jurisprudence, categorizing the sorts of procedural statuses aids in resolving this set of motions. Default in Answering and Appearing. One line of cases is the default in appearing and answering cases exemplified by Wilmington Sav. Fund Socy., FSB v. Chishty, (179 AD3d 1147, 114 NYS3d 701 [2d Dept 2020]) and HSBC Bank USA, N.A. v. Perry, (178 AD3d 685, 113 NYS3d 247 [2d Dept 2019] [defendant in default in respect of the summons and complaint was not permitted to raise RPAPL 1304 as a jurisdictional ground on which to vacate the default, and such defendant did not seek relief under CPLR 5015 (a) (1)]). Justice Heckman accounts for this line of cases in the “nor” phrase of Fattizzo. Here, the default in answering and appearing cases aid the analysis by establishing one of the categories of treatment of “may be raised at any time.” Obviously, this action is outside the default in appearing and answering case category because mortgagors answered and raised 1304 in the answer as an affirmative defense and as a denial. To be entitled to raise 1304 noncompliance, the defendants in this category of cases must (A) show (1) a reasonable excuse for the default in answering and appearing and (2) a potentially meritorious defense, including 1304 as a defense to vacate the default (CPLR 5015 [a][1]) or show some other 5015 ground for vacatur of the default, (B) obtain permission to file and serve a late answer, and (C) pursue the 1304 defense. No Opposition or Cross-Motion to Summary Judgment Motion. A second line of cases is the default on the summary judgment motion cases exemplified by JPMorgan Chase Bank, N.A. v. Bracco (200 AD3d 765, 155 NYS3d 102 [2d Dept 2021]). There, although the defendant answered the complaint, defendant neither cross-moved in response to the plaintiff’s summary judgment motion nor opposed plaintiff’s summary judgment motion. To be entitled to raise 1304 noncompliance the defendants in this category of cases must vacate the order granting summary judgment and then pursue the 1304 defense. 1304 Not Raised In Opposition to Summary Judgment Motion But Is Raised in a Cross-Motion. A third line of cases is the failure to raise 1304 in opposition cases exemplified by Citimortgage, N.A. v. Dente (200 AD3d 1025, 155 NYS3d 813 [2d Dept 2021]) which was decided three weeks after Bracco. In Dente, rather than oppose the plaintiff’s motion for summary judgment on 1304 grounds (but defendants did defend the motion on other grounds), defendants cross-moved to dismiss based on 1304 noncompliance. These defendants have timely raised 1304. Silence on 1304 at Summary Judgment. A fourth line of cases is the failure to raise 1304 at summary judgment either in the opposition to the plaintiff’s motion or in a cross-motion. In other words, whatever resistance the defendant filed (opposition to plaintiff’s summary judgment motion and/or cross-motion) does not raise 1304. Thus, this category differs from Bracco where the defendant did not oppose summary judgment at all and did not cross-move. This category differs from Dente where defendant raised 1304 in a cross-motion to the summary judgment motion. In this category, exemplified by US Bank, N.A. v. Krakoff, (199 AD3d 859, 862, 157 NYS3d 299, 302 [2d Dept 2021]) defendant actually opposes the summary judgment motion on any grounds or cross-moves to dismiss on any grounds or both. These defendants may raise 1304 in opposition to a motion for a judgment of foreclosure and sale. These may not be the only categories, but, for purposes of deciding this motion and discerning a defining principle for what “may be raised at any time means,” these categories are sufficient. Each of the categories and their outcome aligns with the general principal that so long as a borrower for RPAPL 1304 purposes is actively litigating the action, that borrower may raise 1304 at any time prior to the judgment of foreclosure and sale being entered. Nonborrower defendants may not raise 1304 (Wells Fargo Bank, N.A. v. Stephen, 205 AD3d 1066, 166 NYS3d 914 [2d Dept 2022]) so a borrower, as opposed to a nonborrower, must be actively litigating. This “actively litigating” principle captures Bracco where the borrower stopped actively litigating by not opposing and by not cross-moving when plaintiff moved for summary judgment. In addition, this “actively litigating” principle captures Krakoff where plaintiff could raise a fair argument that the borrower abandoned or waived 1304 by not actively litigating 1304 at the summary judgment phase of the action. The principle is “actively litigating the action,” not “actively litigating 1304.” Whether this principle is a good or desirable policy makes no difference — it is the principle set forth in binding appellate precedent. Obviously, this principle undercuts rules of abandonment1 and waiver and permits a borrower to lay in wait until the last possible moment before springing a 1304 motion on plaintiff. Perhaps mortgagors acted strategically here and waited until the last possible moment to move to dismiss on 1304 grounds. Generally, the failure to comply with the time limits in CPLR 3211 (e) causes a position to be waived; generally, the failure to raise a defense at an early, if not at the earliest possible, stage of litigation causes a position to be abandoned or waived. The rules for 1304 are different. This “actively litigating” principle, in effect, requires plaintiffs in foreclosure actions to self-regulate or police, lest an action that has moved through the courts be dismissed on a late-in-litigation 1304 noncompliance motion. Compliance with RPAPL section 1304 is a condition precedent to plaintiff commencing certain actions, so the “actively litigating” principle puts responsibility on the parties most able to achieve compliance and to prevent error — plaintiffs. They, and only they, control the content and mailing of the 1304 notice. Putting and leaving the onus there throughout borrowers’ active litigation of the action gives effect to 1304′s “manifest purpose [which] is to aid the homeowner in an attempt to avoid litigation” (Weisblum, 85 AD3d at 107, 923 NYS2d at 617). In other words, this “actively litigating” principle combined with the concomitant ability for borrowers to lay in wait and with the recently enacted Foreclosure Abuse Prevention Act (L 2022 ch 821) where plaintiff face the risk that a 1304-based dismissal on motion2 simultaneously time bars an action is a judicial and legislative risk allocation of 1304 compliance squarely on plaintiffs (lenders/assignees). This principle disincentivizes litigation which aligns with the statutory purpose of 1304. On this analysis, mortgagor’s motion to dismiss based on 1304 noncompliance is timely. Plaintiff’s 1304 notice violated both Kessler and Yapkowitz, so mortgagors’ motion to dismiss must be granted because mortgagors’ conduct here is identical to or equivalent to that in Krakoff. To overcome the “at any time” language, plaintiff relies on Fattizzo, supra, where a trial court struck that defendant’s answer when that defendant failed to oppose plaintiff’s motion for summary judgment which, according to the trial court, is the equivalent of being in default. Thus, plaintiff reasons that mortgagors must cure the default before being permitted to assert noncompliance with RPAPL 1304. In other words, plaintiff argues that this is a default in answering and appearing action like Perry. However, plaintiff’s position fails for two reasons. First, this action’s order granting summary judgment dismissed the answer’s counterclaims and struck the affirmative defenses but did not strike the entire answer. Second, the merits of 1304 compliance have never been addressed until now, so applying law of the case or abandonment doctrines would be an abuse of discretion (cf. e.g., Emigrant Mtge. Co., Inc. v. Lifshitz, 143 AD3d 755, 38 NYS3d 822 [2d Dept 2016]; see also, Wells Fargo Bank, N.A. v. Merino, 173 AD3d 491, 99 NYS3d 877 [1st Dept 2019]). Therefore, plaintiff’s motion to confirm the referee’s report and for ancillary relief is denied as academic. Mortgagors’ motion is granted, and the action is dismissed. Dated: January 23, 2023
