SECOND DEPARTMENT INVOKES ESTOPPEL TO PREVENT A MORTGAGE FORECLOSURE DEFENDANT FROM ARGUING THAT SHE WAS SERVED WITH PROCESS AT AN IMPROPER ADDRESS

• Posted on: Sep 21 2020

Over the years, this Blog has addressed numerous issues involving mortgage foreclosures in New York. [HERE], [HERE], [HERE], [HERE] [HERE], [HERE], [HERE], [HERE] [HERE], [HERE], [HERE], [HERE], [HERE], [HERE], [HERE], [HERE], [HERE], [HERE], [HERE], [HERE], [HERE], [HERE], [HERE], [HERE], [HERE], [HERE], [HERE], [HERE].  On September 16, 2020, the Appellate Division, Second Department, decided U.S. Bank, N.A. v. Tauber, in which a mortgagor was estopped from arguing that service of process was not made at a proper address – a new mortgage foreclosure issue for this Blog. 

CPLR 308 provides a variety of methods for “personal service upon a natural person.”  According to CPLR 308(2), personal service on a natural person can be made by, among other things, “delivering the summons within the state to a person of suitable age and discretion at the actual place of business, dwelling place or usual place of abode of the person to be served.”  

The defendant in Tauber was served with process at the foreclosure address pursuant to CPLR 308(2) when the summons and complaint were left with someone of suitable age and discretion at that location.  Defendant moved to vacate a judgment of foreclosure and sale pursuant to CPLR 5015(a)(4) (which permits a litigant to obtain relief from a judgment or order) and to dismiss the action pursuant to CPLR 3211(a)(8) (based on lack of personal jurisdiction).  Supreme court, without holding a hearing, denied both motions and defendant appealed.  On appeal, the Second Department reversed and remanded the matter for a hearing on whether service of process was proper and for a new determination of whether to vacate the judgment of foreclosure and sale.

On remand, supreme court held a hearing and, thereafter, issued an order upholding service.  Defendant appealed once again.  In recognizing its broad powers of review, the Second Department stated that in “reviewing a determination made by a hearing court, the power of this Court is as broad as that of the hearing court, and this Court may render its own determination as warranted by the facts, taking into account that, in a close case, the hearing court had the advantage of seeing and hearing the witnesses.”  (Citation and internal quotation marks omitted.)

The Tauber Court found that there was no reason “to disturb the Supreme Court’s conclusions” that service was proper.  Among other things, the Court found that Tauber was estopped from denying that the address at which she was served was not a proper address for service pursuant to CPLR 308(2).  An estoppel:

“is imposed by law in the interest of fairness to prevent the enforcement of rights which would work fraud or injustice upon the person against whom enforcement is sought and who, in justifiable reliance upon the opposing party’s words or conduct, has been misled into acting upon the belief that such enforcement would not be sought” (Nassau Trust Co. v Montrose Concrete Prods. Corp., 56 NY2d at 184; see White v La Due & Fitch, Inc., 303 NY 122, 128 [1951]).

Fundamental v. Tocqueville, 7 N.Y.3d 96, 106 (2006).

Tauber testified that she never lived at the foreclosure address at which she was served.  Moreover, the Court noted that “[w]hile, as a general matter, a defendant has no obligation to inform a party who may wish to sue of his or her whereabouts (see Feinstein v Bergner, 48 NY2d 234, 241-242), “where a defendant willfully misrepresent[s] his [or her] address or violate[s] a statutory notification requirement, or where he [or she] engage[s] in conduct calculated to prevent the plaintiff from learning his [or her] actual place of residence, he [or she] may be estopped from asserting the defense of defective service” (Bank of N.Y. v MacPherson, 301 AD2d 485, 486 [citations and internal quotation marks omitted]).  Tauber, *1 to *2 .

In finding that Tauber’s actions effectuated an estoppel, the Court stated:

Here, despite the defendant’s testimony that she never lived in the subject property, the evidence adduced at the hearing reflects that the defendant repeatedly held herself out as a resident of the subject property throughout the pendency of this litigation, including in applications for mortgage assistance through the federal government’s “Making Home Affordable Program” and in a power of attorney she executed for the purpose of permitting a family member to participate on her behalf in court conferences pursuant to CPLR 3408(a). Moreover, the evidence reflects that the defendant never gave the plaintiff the address of her purported true place of residence, despite having ample opportunity to do so. Under these circumstances, the defendant is estopped from contending that the subject property was not her “dwelling place” or her “usual place of abode” (CPLR 308[2]; see U.S. Bank Natl. Assn. v Vanvliet, 24 AD3d 906, 908; Bank of N.Y. v MacPherson, 301 AD2d at 486).

Tauber, at 2.