HSBC Bank USA v. Lugo

127 A.D.3d 502, 9 N.Y.S.3d 6

• Court: Appellate Division of the Supreme Court of the State of New York
• Decided: April 14, 2015
• Docket: 13454 381904/09
• Status: Published

Opinions

Amended order, Supreme Court, Bronx County (Kenneth L. Thompson, Jr., J.), entered July 17, 2012, which, in this mortgage foreclosure action, denied defendant mortgagor’s motion to dismiss the complaint, or, in the alternative, to compel plaintiff to accept her untimely answer, modified, on the law and the facts, to grant the motion to compel plaintiff to accept defendant’s untimely answer, and otherwise affirmed, without costs.

This action seeks foreclosure on a $271,360 mortgage made on May 9, 2006, between New Century Corporation, as lender, and defendant Betty Lugo, as borrower, which was secured by real property located in the Bronx and a note. New Century purportedly assigned the mortgage to plaintiff HSBC Bank USA.

The motion court properly denied defendant’s motion to dismiss the complaint. Defendant waived her right to seek dismissal of the complaint as abandoned pursuant to CPLR 3215 (c), because she did not object to plaintiffs treatment of her untimely answer as a notice of appearance and because she thereafter sought documents from plaintiff (see Myers v Slutsky, 139 AD2d 709 [2d Dept 1988]). Nor is defendant entitled to dismissal of the complaint based on plaintiffs alleged failure to comply with RPAPL 1304, given the lack of probative evidence concerning the applicability of that section.

However, in light of the strong public policy of this state to dispose of cases on their merits (see Berardo v Guillet, 86 AD3d 459, 459 [1st Dept 2011]; Yu v Vantage Mgt. Servs., LLC, 85 AD3d 564, 564 [1st Dept 2011]; Billingy v Blagrove, 84 AD3d 848, 849 [2d Dept 2011]), the motion court improvidently exercised its discretion in denying defendant’s motion to compel acceptance of the untimely answer. The circumstances herein demonstrate that the delay was not willful (see DaimlerChrysler Ins. Co. v Seck, 82 AD3d 581 [1st Dept 2011]). Nor has plaintiff pointed to any evidence that the relatively short delay involved here, which was undisputedly mostly attributable to ongoing settlement negotiations, caused it to change its position or to suffer any similar prejudice (see Mutual Mar. Off., Inc. v Joy Constr. Corp., 39 AD3d 417, 419 [1st Dept 2007]; Forastieri v Hasset, 167 AD2d 125 [1st Dept 1990]). In fact, plaintiff has acknowledged that from September 2009 to June 22, 2011, it placed the foreclosure file on hold while the parties attempted to negotiate a settlement, including defendant’s attempt to negotiate for a “short sale.” A further hold was placed on the case by FEMAfrom September 11 through November 22, 2011. The Court accepted plaintiffs argument that its delay in prosecuting this case between 2009 and 2011 was attributable to ongoing settlement negotiations. These same negotiations likewise justify defendant’s late answer. Moreover, a review of the record indicates that defendant also has an arguably meritorious affirmative defense of plaintiffs lack of standing to commence this foreclosure action (see id.). Serious issues exist regarding plaintiffs ownership of the mortgage and note given the absence of such documents in the record and the fact that the assignment is undated. These issues are best resolved on the merits, as opposed to on default.

Concur — Renwick, Gische and Clark, JJ.