CIT Bank, N.A. v. Donnatin

UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF NEW YORK

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CIT BANK, N.A.,

Plaintiff, MEMORANDUM OF

DECISION & ORDER

-against- 2:17-cv-02167 (ADS)(AKT)

FRANCIS L. DONNATIN A/K/A FRANCES L.

DONNATIN, ROSE MARIE DONNATIN,

FRANCIS L. DONNATIN JR. A/K/A,

FRANCES L. DONNATIN JR., JULIE

DONNATIN, A/K/A JULIE A. DONNATIN,

Defendants.

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APPEARANCES:

Windels Marx Lane & Mittendorf, LLP

Co-Counsel for the Plaintiff

156 West 56th Street

New York, NY 10019

By: Andrew Lawrence Jacobson, Esq.,

Sean Kevin Monahan, Esq., Of Counsel.

Knuckles Komolinski & Elliot LLP

Co-Counsel for the Plaintiff

50 Tice Boulevard Suite 183

Woodcliff Lake, NJ 07677

By: John E. Brigandi, Esq., Of Counsel.

The Young Law Group., PLLC

Attorneys for the Defendants

80 Orville Drive, Suite 100

Bohemia, NY 11716

By: Ivan E. Young, Esq., Of Counsel.

SPATT, District Judge:

On April 10, 2017, CIT Bank, N.A. (the “Plaintiff”) commenced this action to foreclose a

mortgage encumbering property located at 3 Aspen Circle, St. James, New York 11780 (the

“Mortgaged Property”).

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Presently before the Court are the parties’ cross-motions for summary judgment pursuant

to Federal Rule of Civil Procedure (“Fed. R. Civ. P” or “Rule”) 56. For the following reasons, the

Court denies the Plaintiff’s motion for summary judgment and grants the Defendants’ motion for

summary judgment.

I. BACKGROUND.

On May 18, 2007, to meet certain financial obligations with the Mortgaged Property, the

Defendants entered into a mortgage transaction with IndyMac Bank, F.S.B. (“IndyMac”), wherein

Francis L. Donnatin, Jr. (the “Borrower”), executed and delivered a promissory note (the “Note”)

evidencing a loan made to the Borrower in the amount of $450,000, secured by a mortgage

executed by all Defendants and recorded against the Mortgaged Property by Mortgage Electronic

Registration Systems, Inc. (“MERS”), as nominee for IndyMac (the “Mortgage”). The Plaintiff,

under its predecessor name OneWest Bank, FSB, acquired the Mortgage from IndyMac pursuant

to a Loan Sale Agreement executed on March 19, 2009.

After occupying the Mortgaged Property as their primary residence for at least a year,

Francis L. Donnatin and Rose Marie Donnatin thereafter moved into their current home and

residence located in Nassau County at 15 Oak Place, Albertson, New York 11507 (the “Nassau

Property”).

On June 1, 2016, the Defendants defaulted under the terms of the Note and the Mortgage

by failing to tender the monthly installment payment due on that date, and have failed to make a

single monthly payment since that date.

On August 10, 2016, the Plaintiff sent 30-day notices of default to the address of the

Mortgaged Property via first class mail and by certified mail.

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On August 12, 2016, the Plaintiff sent 90-day foreclosure notices to the address of the

Mortgaged Property via certified mail and first class mail.

On April 10, 2017, the Plaintiff commenced the present action by filing the Complaint. It

is undisputed that the Plaintiff failed to serve notices upon Francis L. Donnatin and Rose Marie

Donnatin at the Nassau Property before filing the Complaint. It is also undisputed that the notices

failed to contain at least five housing counseling agencies serving Suffolk County, where the

Mortgaged Property is located. Instead, the notices listed six housing counseling agencies serving

the “Long Island Region,” only three of which serve Suffolk County.

II. DISCUSSION

A. THE STANDARD OF REVIEW.

Fed. R. Civ. P. 56(a) provides that a court may grant summary judgment when the “movant

shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment

as a matter of law.”

“A genuine issue of fact means that ‘the evidence is such that a reasonable jury could return

a verdict for the nonmoving party.’” Wright v. Goord, 554 F.3d 255, 266 (2d Cir. 2009) (quoting

Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986)).

“Where the moving party demonstrates ‘the absence of a genuine issue of material fact,’ the

opposing party must come forward with specific evidence demonstrating the existence of a genuine

dispute of material fact.” Brown v. Eli Lilly & Co., 654 F.3d 347, 358 (2d Cir. 2011) (quoting

Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986)). “The

evidence of the party opposing summary judgment is ‘to be believed, and all justifiable inferences

are to be drawn in [that party's] favor.’” Wright, 554 F.3d at 266 (parenthetically quoting Graham

v. Henderson, 89 F.3d 75, 79 (2d Cir. 1996)). However, to defeat a motion for summary judgment,

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the opposing party “must do more than simply show that there is some metaphysical doubt as to

the material facts, and may not rely on conclusory allegations or unsubstantiated speculation.”

F.D.I.C. v. Great Am. Ins. Co., 607 F.3d 288, 292 (2d Cir. 2010).

“When no rational jury could find in favor of the nonmoving party because the evidence to

support its case is so slight, there is no genuine issue of material fact and a grant of summary

judgment is proper.” Gallo v. Prudential Residential Servs., Ltd. P'ship, 22 F.3d 1219, 1224 (2d

Cir. 1994).

B. AS TO THE PROCEDURAL PROPRIETY OF THE DEFENDANTS’ MOTION.

The Plaintiff argues the Court should disregard the Defendants’ summary judgment motion

for failure to comply with the Court’s individual rules, hereinafter the “Individual Rules.” Relevant

here, the Individual Rules set forth a procedure parties must follow before filing motions for

summary judgment. The movant must first serve a Statement of Material Facts pursuant to Rule

56.1 (a “Rule 56.1 Statement”) on the opponent, who must serve a counter-statement within seven

days, or by another date specified by the Court. Individual Rule IV.D.(i). After the parties exchange

Rule 56.1 Statements, the movant requests a pre-motion conference with the Court. Individual

Rule IV.D.(ii). If the Court authorizes summary judgment motion practice, the Court adopts a

briefing schedule agreed to by the parties. Individual Rule IV.D.(iii).

The Plaintiff argues that the Defendants’ cross-motion is improper because the Defendants

never requested a pre-motion conference to make a cross-motion for summary judgment, and

failed to obtain leave to file a cross-motion at the pre-motion conference for the Plaintiff’s motion.

The Court has “has broad discretion to determine whether to overlook a party's failure to comply

with” its individual rules. Holtz v. Rockefeller & Co., 258 F.3d 62, 73 (2d Cir. 2001). Considering

that the Defendants served their cross-motion concurrently with their opposition to the Plaintiff’s

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motion, and the legal issues raised by both motions are identical, the Court finds no surprise or

prejudice warranting the extremely punitive remedy of striking the Defendants’ motion. See Spira

v. Ashwood Fin., Inc., 358 F. Supp. 2d 150, 155 (E.D.N.Y. 2005) (deciding motion for summary

judgment where cross-movant neglected to submit a Rule 56.1 statement). The Court holds pre-

motion conferences to facilitate the potential settlement of actions prior to the resort to time-

intensive motion practice. It would be inefficient to force the Defendants to go through that whole

process again for failure to comply with the technicalities of the Court’s Individual Rules, when it

could just decide the motions based on the parties already-finished briefs.

C. AS TO THE MERITS OF THE PARTIES’ MOTIONS.

In general, a mortgagee has a “presumptive right to collect” on a mortgage upon proving

the two critical elements of a foreclosure action: (1) the existence of an obligation secured by a

mortgage and (2) the mortgagor's default on that obligation. United States v. Freidus, 769 F. Supp.

1266, 1277 (S.D.N.Y. 1991). When a plaintiff makes a prima face case for foreclosure, the

defendant must submit evidence that raises a triable issue of fact rebutting plaintiff’s showing or

as to the merit of any of her affirmative defenses. Rossrock Fund IL L.P. v. Osborne, 82 A.D.3d

737, 918 N.Y.S.2d 514, 515 (2nd Dept. 2011 ).

The Defendants concede that the Plaintiff made a prima facie case for foreclosure, but

assert an affirmative defense based on the Plaintiff’s alleged failure to comply with New York’s

Real Property Actions and Proceedings Law (“RPAPL”). “RPAPL § 1304 requires a lender,

assignee, or mortgage loan servicer to transmit” to the borrower, at least 90 days prior to

commencing a legal action for a mortgage foreclosure, a notice that contains: “(1) text in fourteen-

point type; (2) text stating ‘YOU COULD LOSE YOUR HOME. PLEASE READ THE

FOLLOWING NOTICE CAREFULLY’; [and] (3) information regarding government-approved

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housing counseling agencies available to assist borrowers in seeking home loan modifications....”

Gustavia Home, LLC v. Hoyer, 362 F. Supp. 3d 71, 83 (E.D.N.Y. 2019). The notice must be

transmitted “via registered or certified mail and also by first-class mail to the last known address

of the borrower, and if different, the residence subject to the mortgage.” Id.

“‘[P]roper service of RPAPL [§] 1304 notice on the borrower or borrowers is a condition

precedent to the commencement of a foreclosure action....’” OneWest Bank, N.A. v. Guerrero, No.

14-cv-3754, 2018 WL 2727891, at *7 (S.D.N.Y. June 6, 2018). “Plaintiff has the affirmative

obligation to establish strict compliance with RPAPL § 1304 regardless of the adequacy of

Defendants' briefing.” Hoyer, 362 F. Supp. 3d at 83 (citing United States v. Parks, No. 17-cv-

01262, 2018 WL 5793569, at *3 (W.D.N.Y. Oct. 4, 2018)) (“The plaintiff is required to prove its

allegation by tendering sufficient evidence demonstrating the absence of material issues as to its

strict compliance with RPAPL 1304, and failure to make this showing requires denial of the

motion, regardless of the opposing papers.” (internal quotation marks omitted)).

The Defendants argue that the notices provided by the Plaintiff were defective in two ways.

First, the Plaintiff allegedly failed to submit notices to the Nassau Property. Second, the notices

contained a list of housing counseling agencies that failed to comply with RPAPL § 1304(2). For

the following reasons, the Court elects not to decide whether the RPAPL required the Plaintiff to

submit notices to the Nassau Property, because the notices sent are clearly deficient under RPAPL

§ 1304(2).

In relevant part, RPAPL § 1304 provides that:

1. [W]ith regard to a home loan, at least ninety days before a lender, an assignee or

a mortgage loan servicer commences legal action against the borrower, or

borrowers at the property address and any other address of record, including

mortgage foreclosure, such lender, assignee or mortgage loan servicer shall give

notice to the borrower . . . .

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2. The notices required by this section shall be sent by such lender, assignee . . . or

mortgage loan servicer to the borrower, by registered or certified mail and also by

first-class mail to the last known address of the borrower, and to the residence

that is the subject of the mortgage. . . . The notices required by this section shall

contain a current list of at least five housing counseling agencies serving the

county where the property is located from the most recent listing available from

department of financial services. . . The department of financial services shall make

available on its websites a listing, by county, of such agencies. The lender, assignee

or mortgage loan servicer shall use such lists to meet the requirements of this

section.

3. The ninety day period specified in the notices contained in subdivisions one and

one-a of this section shall not apply, or shall cease to apply, if the borrower has

filed for bankruptcy protection under federal law, or if the borrower no longer

occupies the residence as the borrower’s principal dwelling. Nothing herein shall

relieve the lender, assignee or mortgage loan servicer of the obligation to send

such notices, which notices shall be a condition precedent to commencing a

foreclosure proceeding.

RPAPL § 1304 (emphasis added).

Starting with the Defendants’ first argument, they contend that the Plaintiff violated its

obligation to send notices to the “last known address” or “any other address of record” of Francis

L. Donnatin and Rose Marie Donnatin – i.e., the Nassau Property. As support, the Defendants cite

affidavits documenting the service of a summons and complaint in another case, a foreclosure

action in New York Supreme Court for the County of Suffolk captioned OneWest Bank FSB v.

Donnatin Francis (Ind. No. 0011319/2013) (hereinafter the “Suffolk County Action”). The

affidavits purport to serve the Defendants at the Nassau Property. ECF 32-8, ECF 32-9, and ECF

32-10. The Plaintiff agrees that it never sent the notices for this case to the Nassau Property, but

argues that it had no obligation to do so because it had no reason to believe that the Defendants no

longer resided at the Mortgaged Property. In particular, the Plaintiff points to Paragraph 15 of the

Mortgage, which specifies that the mortgagors must provide the Plaintiff prompt notice of any

change of address. ECF 35-3 ¶ 15.

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It is unclear whether the RPAPL actually required the Defendants to submit the notices to

the Nassau Property. It appears that there is no case law defining or otherwise interpreting “last

known address” under the statute. Further, it is disputed that the Plaintiff actually knew that Francis

L. Donnatin and Rose Marie Donnatin resided at the Nassau Property. The Defendants provide no

evidence indicating that they informed the Plaintiff of any changes in address. In addition, the

docket of the Suffolk County Action provides no indication whether the foreclosure proceedings

pertained to the Mortgaged Property. Absent any evidence that the Plaintiff actually knew that

Francis L. Donnatin and Rose Marie Donnatin no longer resided at the Mortgaged Property, it is

difficult to find any reasonable basis for requiring the Plaintiff to send notices elsewhere. At the

same time, it is also undisputed that the Plaintiff had actual knowledge that Francis L. Donnatin

and Rose Marie Donnatin at least maintained a residence at the Nassau Property. The Plaintiff

initiated the Suffolk County Action and served the Defendants at the Nassau Property, which

illustrates the Plaintiff had a record of known addresses beyond the Mortgaged Property.

Nonetheless, the Court need not decide this issue because there is another fatal defect in the notices

warranting dismissal of the action, regardless of whether the Plaintiff submitted the notices to the

Nassau Property.

Specifically, RPAPL § 1304(2) requires that notices “contain a current list of at least five

housing counseling agencies serving the county where the property is located.” Here, the notices

listed six housing counseling agencies serving the “Long Island Region,” only three of which serve

Suffolk County. In other words, the notices failed to provide a sufficient number of housing

counseling agencies serving the county where the Mortgaged Property was located. This defect is

fatal under the statute. See Fed. Nat'l Mortg. Ass'n v. Eason, 62 Misc. 3d 1213(A), at *4 (N.Y.

Sup. Ct. 2019) (“The list here includes three agencies in Suffolk County, one in Nassau County

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and one in Queens County. Clearly this list fails to comply with the statutorily mandated condition

precedent to suit set forth in RPAPL § 1304 (2).”); U.S. Bank Nat’l Assn. v Derissaint, Index No.

19953/2013 [Sup Ct, Kings County 2015] [Sherman, J, Opinion & Order, dated Oct. 22, 2015, at

*14] (“[A] copy of the purported 90-day notice in the record reflects that it did not list five

counseling agencies in Kings county, as strictly required by RPAPL § 1304. Consequently, the

Credit Suisse Loan Trust failed to strictly comply with the statute, and accordingly, dismissal of

the complaint is warranted”); cf. also CIT Bank, N.A. v. Anderson, No. 16-cv-1712, 2019 WL

3842922, at *4 (E.D.N.Y. Aug. 14, 2019) (“In the face of Anderson’s submission of a list of

housing agencies from which two of the agencies identified by CIT Bank in its Section 1304 notice

are absent, CIT Bank cannot prevail on summary judgment.”).

In response, the Plaintiff argues that it complied with the version of RPAPL § 1304 that

existed at the time it sent the notices, which only required a listing of agencies in “the region where

the borrower resides.” RPAPL § 1304(1)-(2) (eff. July 18, 2012 to Dec. 19, 2016). According to

the Plaintiff, it should not be punished because the legislature changed the statute’s requirements

after that date. However, the statute ties the notice obligations to when a mortgagee “commences

legal action against the borrower,” not when it sends the notice. See id. § 1304(1); see also RPAPL

§ 1304(1) (eff. Dec. 20, 2016 to Apr. 19, 2017). Thus, while the notices may have been compliant

at the time they were sent, they no longer sufficed after December 20, 2016, the effective date of

the revised statute. Put another way, the Plaintiff could have commenced this action based on the

notices sent anytime between November 12, 2016 and December 19, 2016. But once December

19, 2016 passed, the Plaintiff bore the obligation to send a revised notice before commencing any

proceedings against the Defendants. See Eason, 62 Misc. 3d at *4 (rejecting argument that notices

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complied with statute because “in 2014 when the notices were mailed, Suffolk County was part of

the Long Island Region along with Nassau County”).

Therefore, the Court finds that the notices here violated RPAPL § 1304(2) and the

Complaint must be dismissed.

III. CONCLUSION.

For the foregoing reasons, the Court denies the Plaintiff’s motion for summary judgment

and grants the Defendants’ motion for summary judgment dismissing the Complaint. The Court

hereby dismisses the Complaint without prejudice for failure to properly serve notices consistent

with RPAPL § 1304(2). The Clerk of the Court is respectfully directed to close the case.

It is SO ORDERED:

Dated: Central Islip, New York

January 16, 2020

__/s/ Arthur D. Spatt____

ARTHUR D. SPATT

United States District Judge

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