MORTGAGE FORECLOSURE - TOLLING OF INTEREST

BAC HOME LOANS SERVICING, LP v. Jackson, 2018 NY Slip Op 1896 - NY: Appellate Div., 2nd Dept. 2018:

"On August 25, 2010, the plaintiff commenced this action to foreclose a mortgage against, among others, the defendant Brian Jackson. Jackson, acting pro se, served his answer on September 20, 2010. A request for judicial intervention (hereinafter RJI) was not filed in this action until November 10, 2014. Thereafter, Jackson moved, inter alia, to dismiss the complaint insofar as asserted against him for failure to comply with 22 NYCRR 202.12-a(b)(1) based on the plaintiff's failure to timely file an RJI requesting a settlement conference or, in the alternative, in effect, to toll the accrual of interest on the mortgage loan following the filing of the summons and complaint. Jackson also sought leave to amend his answer to assert several affirmative defenses, including lack of standing. The Supreme Court, inter alia, denied those branches of his motion.

While 22 NYCRR 202.12-a(b)(1) states that at the time that proof of service of a summons and complaint is filed with the clerk, a plaintiff in a mortgage foreclosure action shall file a specialized RJI applicable to such actions, it does not provide that the failure to do so will result in the dismissal of the action. Accordingly, the Supreme Court properly denied that branch of Jackson's motion which was to dismiss the complaint for failure to comply insofar as asserted against him with 22 NYCRR 202.12-a(b)(1).

"In an action of an equitable nature, the recovery of interest is within the court's discretion. The exercise of that discretion will be governed by the particular facts in each case, including any wrongful conduct by either party" (Prompt Mtge. Providers of N. Am., LLC v Zarour, 155 AD3d 912, 915 [internal quotation marks omitted]; see CPLR 5001[a]; LaSalle Bank, N.A. v Dono, 135 AD3d 827, 829; US Bank N.A. v Williams, 121 AD3d 1098, 1101-1102; Dayan v York, 51 AD3d 964, 965; Preferred Group of Manhattan, Inc. v Fabius Maximus, Inc., 51 AD3d 889, 890). Here, the plaintiff contends that it initially attempted to file an RJI on October 22, 2010, but that the RJI was rejected by the Supreme Court for failure to comply with Administrative Order 548/10. Administrative Order 548/10, which was promulgated on October 20, 2010, by the Chief Administrative Judge of the Courts, required that, "effective immediately,' . . . a plaintiff's attorney in certain mortgage foreclosure actions [had] to submit an affirmation confirming the factual accuracy and the accuracy of notarizations of all filings in support of foreclosure" (Bank of N.Y. Mellon v Izmirligil, 144 AD3d 1063, 1064 quoting Administrative Order 548/10). This Administrative Order provided that, in new cases, the affirmation had to accompany the RJI. However, where a residential mortgage foreclosure action was pending on the effective date of Administrative Order 548/10, and no judgment of foreclosure had been entered, such as in the instant case, Administrative Order 548/10 provided that the affirmation must be filed at the time of filing either the proposed order of reference or the proposed judgment of foreclosure. Since this was a pending case, the RJI should not have been rejected by the court for failure to file an attorney affirmation with the RJI. The attorney affirmation did not have to be filed until the plaintiff submitted either the proposed order of reference or the proposed judgment of foreclosure (see Bank of N.Y. Mellon v Izmirligil, 144 AD3d at 1064; U.S. Bank, N.A. v Ramjit, 125 AD3d 641, 642).

Although the initial October 2010 RJI may have been rejected erroneously, the plaintiff fails to explain the ensuing four-year delay between the initial October 2010 filing and the subsequent filing on November 6, 2014. Under the unusual circumstances of this case, since Jackson was prejudiced by this unexplained delay, during which time interest had been accruing, the interest on the loan should have been tolled from December 22, 2010 (that is, 60 days after the alleged initial October 2010 RJI was filed, the time period during which a settlement conference would be scheduled), through the date that the plaintiff filed the subsequent RJI on November 6, 2014 (see Greenpoint Mtge. Corp. v Lamberti, 155 AD3d 1004; Citicorp Trust Bank, FSB v Vidaurre, 155 AD3d 934, 935; Dayan v York, 51 AD3d 964, 956; Danielowich v PBL Dev., 292 AD2d 414; Dollar Fed. Sav. & Loan Assn. v Herbert Kallen, Inc., 91 AD2d 601; South Shore Fed. Sav. & Loan Assn. v Shore Club Holding Corp., 54 AD2d 978; Wells Fargo Bank, N.A. v Lindo, 2013 NY Slip Op 30375[U], *12-13 [Sup Ct, NY County]; cf. U.S. Bank Nat. Ass'n v Williams, 121 AD3d 1098, 1102)."