Friday, July 30, 2010

Judge Maltese Gives Homeowner a Another Chance to Answer

By:       Kate Cavallaro and Nicholas Moccia, Esq.

            In HSBC Mtge. Corp. (USA) v. Enobakhare, 2010 NY Slip Op 31925(U)(Sup. Ct. Richmond County 2010), Plaintiff HSBC seeks summary judgment dismissing the Defendant homeowner’s answer and granting Plaintiffs application for an Order of Reference.  HSBC commenced the instant foreclosure action in January of 2009 and the homeowner entered an answer pro se in February of the same year.  Later in 2009 defendant homeowner retained counsel, and new counsel filed a motion for leave to amend the original answer on behalf of the homeowner. 
            HSBC argues that it is entitled to summary judgment dismissing the Defendant homeowner’s answer in its entirety because HSBC has provided the mortgage, note, proof of assignment of the note and mortgage and evidence of the Defendant’s default.  The Court notes that a ruling on a summary judgment in this matter was not yet “ripe for decision and must be denied with leave to renew,” since a mandatory settlement conference has not been held as required by CPLT 3408.  CPLR § 3408 provides that “in any residential foreclosure action involving a high-cost home loan…, or a subprime or nontraditional home loan, … in which the defendant is a resident of the property subject to foreclosure, the court shall hold a mandatory conference within sixty days after the date when proof of service is filed with the country clerk, … for the purpose of holding settlement discussions pertaining to the relative rights and obligations of the parties under the mortgage loan documents, including, but  not limited to determining whether the parties can reach a mutually agreeable resolution to help the defendant avoid losing his or her home, and evaluating the potential for a resolution in which payment schedules or amount may be modifies or other workout option may be agreed to, and for whatever other purpose the court deems appropriate.” Once a settlement conference has been held pursuant to CPLR 3408, the plaintiff may renew its summary judgment motion if applicable. 
            The Defendant seeks leave to serve an amended answer to the Plaintiff’s complaint which includes several affirmative defense and counterclaims that were previously unasserted.  “Leave to amend pleasing is a discretionary matter that is generally favorably exercised in the absence of prejudice or surprise or unless it appears that the proposed amendment plainly lacks merit.”  In this matter, the Court opined that the homeowner’s proposed affirmative defenses may have merit and the Plaintiff has failed to show surprise or prejudice due to the Defendant’s delay in asserting the affirmative defenses.  Since Plaintiff HSBC has not established that it will be prejudiced by allowing the Defendant to serve an amended answer and the proposed affirmative defenses may have merit, the Court held that it is within the Court’s discretion to permit the Defendant to submit an amended answer. 
            The Plaintiff also argues against the Defendant’s attempt to include certain affirmative defenses that the Plaintiff claims have been waived (pursuant to CPLR 3211) since the Defendant failed to allege them in its original answer.  The Court notes that while the affirmative defenses should have been raised in the original answer, defenses that are ordinarily waived under CPLR 3211 “can nevertheless be interposed in an answer amended by leave of court… so long as the amendment does not cause the other party prejudice or surprise resulting directly from the delay.”  For this reason the Court permitted the Defendant to include the affirmative defenses that were allegedly waived for failure to raise them in the original answer. 
            Accordingly, Judge Maltese denied Plaintiff HSBC’s motions for summary judgment and for the dismissal of Defendant’s Answer is denied with leave to amend upon completion of a mandatory settlement conference; and Judge Maltese further ordered that Defendant’s motion for leave to serve an amended answer was granted.  Lastly, Judge Maltese ordered that all parties appear for a mandatory settlement conference pursuant to CPLR § 3408. 

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