The Second Department Addresses the Necessary Proof on a Motion for a Default Judgment Pursuant to CPLR 3215(f) in a Mortgage Foreclosure Action

• Posted on: Jul 30 2021

This Blog has frequently addressed evidentiary issues faced by foreclosing lenders.  See, e.g., [here], [here], [here], [here],[here].

On July 21, 2021, the Appellate Division, Second Department, decided Deutsche Bank National Trust Co. v. Hossain, in which the Court addressed the sufficiency of a foreclosing lender’s evidence submitted in support of an application for a default judgment.  The lender in Deutsche Bank commenced an action to foreclose a mortgage.  The defendant borrowers answered the complaint; however, their answer was subsequently stricken because they failed to comply with discovery demands.  Lender moved for a default judgment and for an order of reference.  Borrowers’ opposition was based on “the plaintiff[‘s] fail[ure] to submit an ‘affidavit made by the party’ or ‘proof of the facts constituting the claim’” as required by CPLR 3215(f).  Supreme court granted lender’s motion.  Thereafter, lender moved for a judgment of foreclosure and sale, which motion supreme court granted without opposition.  The borrowers appealed from both the default order and the judgment of foreclosure of sale.

The Second Department dismissed the appeal from the default order “because the right of a direct appeal therefrom terminated with the entry of the judgment of foreclosure and sale in the action.”  (Citation omitted.)  However, while “no appeal lies from a judgment entered upon the default of an appealing party, an appeal from such a judgment brings up for review those matters which were the subject of the contest before the Supreme Court.”  (Citations and internal quotation marks omitted.)  Thus, the Court reversed the judgment of foreclosure and sale after finding that the sufficiency of the evidence submitted by lender on its motion for a default judgment failed to satisfy the requirements of CPLR 3215(f), which provides, in pertinent part:

Proof. On any application for judgment by default, the applicant shall file proof of service of the summons and the complaint, or a summons and notice served pursuant to subdivision (b) of rule 305 or subdivision (a) of rule 316 of this chapter, and proof of the facts constituting the claim, the default and the amount due by affidavit made by the party…. Where a verified complaint has been served, it may be used as the affidavit of the facts constituting the claim and the amount due; in such case, an affidavit as to the default shall be made by the party or the party’s attorney….

Thus, the Court held:

Where, as here, a foreclosure complaint is not verified, CPLR 3215(f) states, among other things, that upon any application for a judgment by default, proof of the facts constituting the claim, the default, and the amount due are to be set forth in an affidavit made by the party.  Here, in support of its motion, the plaintiff submitted an affidavit of merit executed by a “Document Execution Specialist” who was employed by the plaintiff’s servicing agent. The affiant asserted that she had personal knowledge of the merits of the plaintiff’s cause of action based upon her review of various business records. However, as the defendants correctly contend, since the plaintiff failed to attach the business records upon which the affiant relied in her affidavit, her factual assertions based upon those records constituted inadmissible hearsay, and her affidavit was insufficient to demonstrate “proof of the facts constituting the claim.”  Accordingly, the Supreme Court should have denied those branches of the plaintiff’s motion which were for leave to enter a default judgment against the defendants and for an order of reference.

(Citations and internal quotation marks omitted.)

It should be noted that, consistent with CPLR 3215(f), CPLR 105(u) provides that “[a] ‘verified pleading’ may be utilized as an affidavit whenever the latter is required.”