Summary
The New York Appellate Division, Second Department, reviewed a mortgage foreclosure action involving a $12 million home equity line of credit. The court affirmed the grant of summary judgment, dismissal of the defendants’ counterclaims, confirmation of the referee’s report, and judgment of foreclosure and sale. It modified the judgment to increase the plaintiff’s attorneys’ fee award from $5,000 to $40,000.
Topics
Practice areas
Questions Presented
- Whether the plaintiff established its prima facie entitlement to summary judgment in the mortgage foreclosure action through the credit agreement, mortgage, business records, and evidence of default.
- Whether the defendants raised a triable issue of fact in opposition to summary judgment.
- Whether the defendants' counterclaims were time-barred or preempted by the Fair Credit Reporting Act.
- Whether summary judgment was premature because additional discovery was outstanding.
- Whether the referee's report should be confirmed and a judgment of foreclosure and sale entered.
- Whether the Supreme Court awarded an inadequate amount of attorneys' fees under the mortgage and credit agreement.
Holdings
- A foreclosure plaintiff establishes a prima facie entitlement to summary judgment by producing the mortgage, the unpaid note or credit agreement, and evidence of default; here, JPMorgan made that showing through the home equity line of credit agreement, mortgage, business records, and an affidavit establishing the defendants' advances and failure to pay at maturity.
- A payment default may be established by an admission in response to a notice to admit, an affidavit from a person with personal knowledge, or other evidence in admissible form; the plaintiff satisfied that requirement here.
- The defendants' first two counterclaims for intentional and negligent misrepresentation were time-barred, and the third counterclaim concerning false credit reporting was preempted by the Fair Credit Reporting Act.
- The plaintiff's summary judgment motion was not premature because the defendants did not identify an evidentiary basis showing that further discovery could lead to relevant evidence or that facts essential to opposing the motion were exclusively within the plaintiff's control.
- The referee's report should be confirmed because its calculation of the amount due was substantially supported by the record.
- The Supreme Court improvidently exercised its discretion by awarding only $5,000 in attorneys' fees; the plaintiff's mortgage and credit agreement authorized recovery of fees actually incurred, and the record supported a reasonable award of $40,000.
Key quotations
“Generally, in moving for summary judgment in an action to foreclose a mortgage, a plaintiff establishes its prima facie case through the production of the mortgage, the unpaid note, and evidence of default” ([*1])
“The report of a referee should be confirmed whenever the findings are substantially supported by the record, and the referee has clearly defined the issues and resolved matters of credibility” ([*1])
“An award of a reasonable attorney's fee is within the sound discretion of the Supreme Court based upon such factors as the time and labor required, the difficulty of the issues involved, the skill required to handle the matter, and the effectiveness of the legal work performed” ([*1])
Factual background
In November 2007, Bernard and Joan Carl obtained a $12 million home equity line of credit from JPMorgan Chase Bank, secured in part by a mortgage on real property in Southampton. The defendants defaulted on their payment obligations, including failing to pay the credit line in full at maturity. They asserted counterclaims for intentional and negligent misrepresentation and false reporting to credit agencies.
Procedural history
The Supreme Court, Suffolk County, granted the plaintiff summary judgment, struck the defendants' answer, affirmative defenses, and counterclaims, denied the defendants' requests for discovery and leave to amend, and appointed a referee. The court later confirmed the referee's report, entered a judgment of foreclosure and sale, and awarded the plaintiff $5,000 in attorneys' fees. The Appellate Division affirmed the judgment as to the defendants' appeal and modified it to increase the attorneys' fee award to $40,000.