HSBC Bank USA, N.A. v. Ehrenthal

Summary

The New York Supreme Court, Appellate Division, Second Department, modified an order and judgment of foreclosure and sale by tolling the accrual of interest from August 20, 2015, through August 19, 2019. The court otherwise affirmed the judgment, concluding that the referee's finding that the plaintiff had standing was supported by the record and that the defendants had not established frivolous conduct warranting sanctions.

Holdings

1. The Supreme Court properly confirmed the referee's report because the referee's finding that HSBC/MHL and HSBC/MortgageIT were the same entity, and that the plaintiff had standing, was substantially supported by the trial record and the referee's credibility determination.
2. The court exercised its discretion to toll the accrual of interest from August 20, 2015, through August 19, 2019, because the plaintiff's changing theory concerning the identity of the relevant HSBC entities caused substantial delay.
3. Defendants were not entitled to attorneys' fees and costs as sanctions because they failed to establish that the plaintiff engaged in frivolous conduct within the meaning of 22 NYCRR 130-1.1(c).
4. Defendants' cross-motion to reject the referee's report was timely, and the Supreme Court did not improvidently exercise its discretion by effectively extending the time to file the cross-motion concerning interest and sanctions.

Questions Presented

1. Whether the Supreme Court properly confirmed the referee's post-trial report finding that HSBC/MHL and HSBC/MortgageIT were the same entity and that the plaintiff had standing when the foreclosure action commenced.
2. Whether the court should toll the accrual of interest because the plaintiff's changing theory of entity identity contributed to delay.
3. Whether defendants were entitled to attorneys' fees and costs as sanctions for frivolous conduct under 22 NYCRR 130-1.1.
4. Whether defendants' cross-motion to reject the referee's report was timely and whether the Supreme Court properly extended the time to file their cross-motion concerning interest and sanctions.

Disposition

affirmed