The following papers numbered E75-E87, E89 read on this motion by Defendants Delories Thomas and James Thomas (Defendants) for an order granting said Defendants leave to renew from the April 28, 2020 Decision and Order and/or order of reference, and upon renewal, deny Plaintiff’s motion for summary judgment. PAPERS NUMBERED Notice of Motion-Affirmation-Exhibits E75-E82 Stipulation E83 Affirmation in Opposition-Exhibits E84-E87 Reply Affirmation E89 Upon the foregoing papers, it is ordered that Defendants’ motion is granted for the following reasons: In a memorandum decision, dated April 28, 2020, this Court granted Plaintiff’s motion seeking, among other things, striking Defendants’ Answer, summary judgment and appointing a Referee. Thereafter, this Court issued an order, dated January 25, 2022, granting, among other things, summary judgment in favor of Plaintiff, striking Defendants’ Answer, and appointing a Referee (hereinafter “order of reference”). Defendants now move for leave to renew their opposition to the prior motion, and upon renewal deny Plaintiff’s prior motion. Defendants argue they are entitled to renewal based upon a change in the law regarding the service of an RPAPL 1304 Notice as set forth in the decision entitled Bank of Am., N.A. v. Kessler, 202 A.D.3d 10 (2d Dept. 2021) (hereinafter “Kessler”). In opposition, Plaintiff argues that Kessler did not change the law, but merely clarified the application of “strict compliance” requirement with respect to the “separate envelope” mandate set forth in RPAPL 1304. A motion for leave to renew “shall demonstrate that there has been a change in the law that would change the prior determination” (CPLR 2221[e][1]). It is well settled that “a clarification of the decisional law is a sufficient change in the law to support renewal” (Dinallo v. DAL Elec., 60 AD3d 620 [2d Dept 2009], cf. Opalinski v. City of New York, 164 AD3d 1354, 1355 [2d Dept 2018], lv dismissed 33 NY3d 1008 [2019]; see also Siegel & Connors, NY Prac, §449 [6th ed. 2018]). In Kessler, the Second Department articulated a “bright line rule” finding that the ” ‘separate envelope’ requirement of RPAPL 1304 mandates that no material other than the notices specifically described in RPAPL 1304 be contained in that envelope” (Bank of Am., N.A. v. Kessler, supra). In interpreting this “ bright-line rule”, the Kessler court determined that including any material, other than the Mandated Language in Section 1304(1), “constitutes a violation of the separate envelope requirement” (id.). The Second Department has repeated this “bright-line” interpretation of the separate envelope rule in several subsequent cases (See, e.g., Deutsche Bank Nat’l Tr. Co. v. Salva, 203 A.D.3d 700 [2d Dept. 2022); U.S. Bank N.A. v. Hinds, 203 AD3d 1210 [2d Dept. 2022]; HSBC Bank USA, N.A. v. Jahaly, 204 AD3d 648 [2d Dept. 2022]). As such, the Court finds that the “bright-line rule” articulated by the Kessler court constituted a clarification of the application of RPAPL 1304. Accordingly, the Court grants the branch of Defendants’ motion seeking renewal, and upon renewal, the Court makes the following determination: Plaintiff concedes that the RPAPL 1304 notice mailed to Defendants included a statement pursuant to the Fair Debt Collection Practices Act (“FDCPA”) and the Bankruptcy Code. However, Plaintiff argues that this additional notice conveying federally required materials inside the RPAPL 1304 envelope did not violate Kessler and its progeny. In support thereof, Plaintiff cited the following recent decision sounding in federal preemption: CIT Bank, N.A. v. Neris, __ FSupp3d __ (SDNY 2022) (hereinafter “Neris”), as well as several trial court decisions. In reply, Defendant argues that the cases Plaintiff cited should not be followed by this Court because this Court is bound to adhere to the laws promulgated by the Second Department, and that a decision from the Southern District of New York is not binding on this Court. The focus of the Neris Court was that a residential foreclosure Plaintiff is a debt collector under the FDCPA, and therefore must issue a specific warning on its initial communication to the debtor to collect that debt. The Neris court concluded that it was not bound to follow Kessler, finding that “[i]n light of the conflict between the bright-line rule in Kessler and the obligations imposed by the FDCPA, the Court concludes that, in connection with the separate envelope rule, the New York Court of Appeals would reach a different conclusion than the Kessler court”. In so doing the Neris court stated the following: …Section 1692e(11) of the FDCPA requires that an “initial written communication with the consumer,” and any “subsequent communications,” must state that the “debt collector is attempting to collect a debt and that any information obtained will be used for that purpose.” 15 U.S.C. §1692e(11). In a mortgage foreclosure, to comply with the bright-line rule announced in Kessler, debt collectors would have to omit from their “initial” and “subsequent communications” (i.e., all communications) to a borrower that the debt collector is attempting to collect a debt. However, this requirement would simultaneously violate the FDCPA. Compare Kessler, 160 N.Y.S.3d at 280, with 15 U.S.C. §1692e(11). Put differently, debt collectors cannot simply mail a separate letter containing the FDCPA disclosure statement, as the Kessler court reasons, because the FDCPA requires the disclosure statement to be in a debt collector’s “initial” and “subsequent” communications. See 15 U.S.C. §1692e(11). Here, the Court finds that Plaintiff’s claims lack merit. While the Southern District of New York may determine that it is not bound to follow a ruling issued by the Second Department, this Court is not so inclined. Notwithstanding this, the Court finds that Plaintiff failed to establish that anything in RPAPL 1304, or any federal or state statute, requires that the 90-day pre-commencement notice of RPAPL 1304(1) must be the first debt-collection notice that a plaintiff in a foreclosure matter sends to a debtor regarding an impending foreclosure action (Bayview Loan Servicing, LLC v. Altomonte, 77 Misc3d 703 [Supreme Court, Rockland County 2022]). Significantly, Plaintiff failed to show why it could not comply with the FDCPA by sending this notice first, in a separate envelope from its RPAPL 1304 notice, and thereby comply with both statutes (id.). In addition, by its terms, the FDCPA only preempts inconsistent state laws to the extent of the inconsistency (see 15 USC §1692n). “FDCPA’s plain language, and its corresponding congressional intent, not to preempt any state law whose protection ‘ affords any consumer…greater than the protection provided by [the FDCPA]” (15 USC§1692n)” (id.). “ Thus, the typical section 1692n preemption analysis turns on which law accords superior protection to the class of consumers who are the respective laws’ intended beneficiaries” (id.). Here, the Plaintiff failed to establish that the FDCPA affords greater consumer protection relative to the class of Defendants in a residential foreclosure matter who are the intended beneficiaries of the New York statutes (id.). The FDCPA disclosure merely requires that an “initial communication” notify an alleged debtor ” ‘that the debt collector is attempting to collect a debt and that any information obtained will be used for that purpose,’ and that future communications specify their origin from a debt collector attempting to collect a debt (15 USC§1692e[11])’ ” (id.). “ By sharp contrast, the RPAPL 1304 notice gives alleged mortgage debtors concrete tools to avoid litigation and thereby retain their homes against foreclosure — including a payoff amount, a 90-day period in which to make workout options, a list of free and trained housing counselors in their area prepared to offer assistance, contact information for the Department of Financial Services and Office of the Attorney General, and a list of specific rights (see RPAPL 1304 [1])” (id.). Consequently, the Court finds that the RPAPL 1304 notice provides greater protections to consumer debtors than the FDCPA warning and, as such, the FDCPA does not preempt the RPAPL 1304 under the FDCPA’s own terms (id.). In the instant matter, Plaintiff concedes that the RPAPL 1304 notice included the FDCPA notice. Consequently, pursuant to the holding by the Kessler court and for the reasons set forth above, the Court finds that Plaintiff failed to comply with the strict requirements of RPAPL 1304. Accordingly, Plaintiff’s motion for summary judgment, striking Defendants’ Answer and an order of reference is denied, and it is ORDERED, that the memorandum decision, dated April 28, 2020 is recalled, and the order, dated January 25, 2022, is vacated. Dated: February 7, 2023
