ON FORECLOSURES

No. 616 April 2011

"RULE-MAKING POWER OF OFFICE OF COURT ADMINISTRATION IS CONTESTED

OCA’s Recently Adopted “Affirmation” Rule Held Invalid

On October 20, 2010, Chief Judge Lippman announced the promulgation of the “affirmation” rule applicable in actions to foreclose mortgages on residential properties. The rule requires that the plaintiff’s papers include an affirmation by the plaintiff’s lawyer attesting to the papers’ integrity. There have since been several cases on the rule. One of them, Citibank, N.A. v. Murillo, 30 Misc.3d 934, 915 N.Y.S.2d 461 (Sup.Ct., Kings County), shows what many would consider a draconian consequence for violating the rule: a dismissal of the action “with prejudice”. (With prejudice?)

That case came down on January 7, 2011. Even more recently, on Feb. 28, 2011, comes LaSalle Bank v. Pace, 2011 WL 723555 (Whelan, J.), from the supreme court in Suffolk County, not only refusing to apply the affirmation rule, but holding that its very promulgation is beyond the powers of its promulgator: the Office of Court Administration, i.e., the chief judge and his appointee, the chief administrative judge.

In LaSalle, the mortgagee (plaintiff P) moved for summary judgment. The mortgagor (defendant D) resisted it, relying on the ground that the motion did not include the required ­affirmation. The court held the reliance misplaced. It then reviewed D’s defenses and counterclaims on the merits, found them baseless, granted P’s motion for judgment, and appointed a referee to conduct the foreclosure.

After considering at length the constitutional and statutory provisions relating to court administration, the court in LaSalle concluded that

Since [the] rule making authority cannot significantly affect the legal relationship between litigating parties, the imposition of additional matters [like the affirmation requirement involved here] that impair statutory remedies or enlarge or abridge rights conferred by statute are not the proper subjects of rules promulgated by court administrators.

As we see it, the issue boils down to whether this affirmation rule can fairly be considered an “administrative” matter. The court in LaSalle thinks not; the Office of Court Administration obviously thinks otherwise.

The court says the effect of the affirmation rule is to “impair the statutory remedy of foreclosure”, seeing evidence of this “in the recent, vast reduction in case filings and the resounding halt in the prosecution of foreclosure actions pending in this court that immediately followed” adoption of the rule. (Of course the “halt” is only temporary, pending correction in each case through belated submission of a lawyer’s affirmation.)

Incessant complaints by foreclosure defendants and their representatives about the condition of the proof offered in behalf of foreclosing mortgagees is what led to the rule. The mortgage realm has been the scene in recent years of numerous assignments, and with the economic turndown that made it impossible for many homeowners to pay their mortgages, foreclosures piled up and the offices of the foreclosure attorneys, whether independent or in-house, often couldn’t, or in any event didn’t, submit the proper paperwork. There was often evidence of attestations of ownership (of the mortgage) made by those without the requisite knowledge, and sometimes even the suggestion of perjury as those without knowledge swore to things they didn’t know.

The rule was designed to relieve this chaotic scene by securing in each case the affirmation of a lawyer who, before affirming, would have to go through the papers and make sure things were in order, including, especially, checking out the ownership links that connected the foreclosing plaintiff with the original mortgagee.

The immediate question here is whether, considering the circumstances, the requirement of the affirmation is a reasonable exercise of administrative power in the operation of the courts. The LaSalle case says it’s not; that it’s an impermissible exercise of a legislative power. Those on the other side say in response that the power to make rules is itself a species of legislative power, and that if either the constitution or the legislature, or a combination of them, confers the rule-making power on the courts’ administrators, they are in essence directing a sharing of this “legislative” power with those administrators.

That boils the issue down further. Does this particular rule-making exercise cross the line beyond which the sharing stops? The LaSalle court thinks so. The Office of Court Administration does not. We’ll have to await appellate court input on that.

The rule-making power conferred on the court system is no small thing. It accounts, for example, for all the Uniform Rules that fill two McKinney’s soft-covered books, each more than an inch thick and recompiled annually. Playing the devil’s advocate, we might juxtapose the affirmation rule with each of the innumerable subjects addressed in those rules and then ask whether the affirmation rule emerges as all that much of an outlier. The rule seems no more a trespass on legislative prerogative than many parts of (for example) the many-parted Uniform Rule 202.5, which in supreme and county court governs “Papers Filed in Court”.

And what about the “halt in the prosecution of foreclosure actions” that the LaSalle court says the affirmation rule has brought about? Would it be better to leave the issue of the propriety of the papers in each case to individual motion by each individual defendant? Would hundreds or perhaps thousands of motions do better than one rule that clears the decks of all the cases for the brief time it takes each plaintiff’s lawyer to reexamine the papers in each case, fill in what’s missing, and then “affirm” that all is now well? Doesn’t that make for a smoother running of the courts than requiring each judge in each case to go through unaffirmed papers and do the weeding out that the rule just wants the plaintiff’s lawyer to undertake to spare the courts the burden?

An irresistible analogy occurs to us here. Back in the 1960s, the situation commonly referred to as “sewer service” reached epidemic proportions. (Ironically, it has recently reached that level again. See Siegel’s Practice Review 208:1.) It led to the 1973 enactment of a provision – now subdivision (c) of CPLR 5015 – that authorized an en masse vacatur of fraudulently secured default judgments, not on application by each victimized defendant, but with a single proceeding by an administrative judge. (See Siegel, New York Practice 4th Ed. §§ 71, 293.) The practice avoided a huge number of individual motions, essentially an administrative accomplishment, and in fact, before the legislature got around to codifying the practice, it was done without any legislation at all.

The affirmation rule at issue here seems to us even less intrusive into legislative powers. It merely requires plaintiffs’ attorneys to review papers in advance of court submission so as to assure that if a defendant does default, the default will not be undone for paper defects avoidable by requiring an attorney’s affirmation that the papers are in order. The requirement is designed, not to dispose of each case on its merits, but to aid the court in considering its merits – an attainment almost classically categorizable as “administrative” and the kind of effort one would expect from those charged with running the courts."