Appellate Court Upholds “Nail and Mail” Service of Process based on Plaintiff’s Due Diligence
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In Chondrite Asset Trust v. 34 Drive Corp., Index No. 607423/2021, the Appellate Division, Second Department, affirmed the Supreme Court, Nassau County’s judgment of foreclosure and sale, in which the court also denied the Defendant borrower’s cross-motion to vacate its default in answering the complaint. The court also awarded appeal-related costs to the prevailing Plaintiff.
The underlying action arose from a $344,000 mortgage loan originated in 2016, which was ultimately assigned to the Plaintiff. When the borrower, 34 Drive Corp., failed to answer the complaint after being served through the New York Secretary of State, the Plaintiff sought a default judgment and an order of reference. The borrower through counsel appeared in the action by virtue of two stipulations to adjourn the Plaintiff’s default judgment motion but never opposed the motion nor took any action to cure the default in answering the complaint at such time. The trial court granted the motion and entered an order of reference in 2022.
Thereafter, the Plaintiff moved for a final judgment directing the foreclosure and sale of the property. The Defendant cross-moved to vacate its default under CPLR 317 and CPLR 5015(a)(1) and compel the Plaintiff to accept an untimely answer under CPLR 3012(d). In opposition to the cross-motion, the Plaintiff asserted that CPLR 317 did not apply because the Defendant appeared in the action through the two stipulations and otherwise failed to meet its burden to show that it did not receive actual notice of the action in time to defend. The Plaintiff also rebutted the Defendant’s claim that it had a reasonable excuse for its default.
On appeal, the Appellate Division concurred with the Plaintiff’s arguments that the Defendant’s default was inexcusable and uncurable. The Second Department also found that the Plaintiff demonstrated its entitlement to a judgment in the amount due under the mortgage loan documents by producing admissible loan servicing business records.
The Plaintiff was represented by Friedman Vartolo LLP, with senior associate Ronald P. Labeck Esq. as lead appellate counsel.
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