The following papers numbered 1 to 12 were read on this motion by defendant Wenny Wenny for an order pursuant to CPLR 5015(a) vacating and setting aside her default; for an order pursuant to CPLR 3012(d) granting defendant Wenny leave to file a late answer; and for an order denying plaintiff's application for an Order of Reference:

Papers

Numbered

Notice of Motion-Affirmation-Affidavits-Exhibits ....1 - 5

Affirmation in Opposition-Affidavits-Exhibits........6 - 9

Reply affirmation...................................10 - 12[*2]_______________________________________________ ________________

Defendant Wenny moves for an order, pursuant to CPLR 5015(a), vacating her default in this foreclosure action, for an order granting leave to file a late answer and for an order denying or vacating the plaintiff's application for an order of reference.

This foreclosure action pertains to the property located at 89-14 91st Street, Woodhaven, New York, 11421-2624. On April 26, 2006, defendant Wenny executed and delivered a note and mortgage in the principal sum of $380,000 to Wells Fargo Bank, N.A. Based upon the record before this court, the defendant defaulted on January 1, 2011 when she failed to make her monthly mortgage payment as well as the following payments.

Plaintiff subsequently accelerated the defendant's mortgage and brought an action to foreclose by filing a summons and complaint and lis pendens on July 19, 2011. The defendant was served on July 26, 2011, pursuant to CPLR 308(2), by service upon her husband at the subject residence. The complaint alleges that there is presently due and owing to the plaintiff the principal sum of $357,688.19 with interest from December 1, 2010. Defendant failed to answer the complaint or otherwise appear in the foreclosure action.

Plaintiff filed an RJI and the matter was scheduled for a mandatory settlement conference pursuant to CPLR 3408 in the Residential Foreclosure Settlement Part. After holding several conferences, Referee Lance Evans found that the defendant failed to demonstrate sufficient financial viability in order to qualify for plaintiff's loan modification offer. As a result, the Referee signed an order dated July 10, 2013, directing the plaintiff to file an application seeking an Order of Reference within 90 days of the date of the order.

On October 18, 2013, pursuant to RPAPL § 1321, the plaintiff moved for an Order of Reference which was granted by this Court by order dated October 24, 2013, appointing Ned Kassman, Esq., as referee to compute the sums owed.

By notice of motion served on November 1, 2013, defendant's counsel, Evelyn Abiola, Esq. moves to vacate defendant's default pursuant to CPLR 5015(a)(1) and to compel plaintiff to accept defendant's late answer pursuant to CPLR 312(d) on the ground that the defendant has a reasonable excuse for failing to answer and a meritorious defense. Counsel claims in her affirmation [*3]dated November 1, 2013, that the defendant failed to serve an answer because she was engaged in ongoing settlement negotiations with the plaintiff from December 5, 2011 through July 10, 2013 (citing HSBC Bank USA, N.A. v Cayo, 934 NYS2d 792 {Sup Ct. Kings Co. 2011][a good faith belief in settlement, supported by substantial evidence, constitutes a reasonable excuse for default. The time frame of negotiations in the Settlement Conference Part of the court, should not be calculated into the consideration when faced with a motion for leave to file a late answer]).

Here, defendant's counsel asserts that although the defendant was represented by counsel during the course of the settlement negotiations, defendant believed counsel was representing her interests and unbeknownst to her, the attorney failed to submit an answer to the foreclosure complaint. She states that it was defendant's reliance on the attorney that resulted in her default. Counsel submits that Wenny should be permitted to interpose a late answer due to her reasonable excuse that she was actively engaged in foreclosure settlement conferences and believed this to be a sufficient response in defending her foreclosure action. Counsel also submits a proposed answer, not verified by the defendant, in which she asserts several affirmative defenses based upon standing, incorrect statement of sums due and owing, right to equitable redemption, failure to name necessary parties, lack of capacity to sue, failure of the plaintiff to send a notice of default and notice to cure, unclean hands, fraud, lack of personal service, statute of limitations and laches. The proposed answer also contains a counterclaim asserting unjust enrichment based upon the failure of the plaintiff to evaluate the defendant for a HAMP or other loan modification. Counsel asserts that the affirmative defenses and the counterclaim set forth in the unverified answer constitute a meritorious defense.

Defendant's counsel also requests that the Court vacate the Order of Reference signed on October 24, 2013 based upon the contention that the plaintiff failed to support the application for an Order of Reference with an affidavit from the plaintiff or its authorized agent with personal knowledge regarding the facts constituting the claim and the amounts due.

In opposition, plaintiff's counsel, Gerald Roth, Esq. contends that the defendant's motion to vacate her default must be denied as she has failed to provide a reasonable excuse for failing to serve a timely answer and failed to provide a meritorious defense. Counsel also points out that the defendant has not submitted an affidavit in support of the motion and that [*4]the motion is supported only by counsel's affirmation. Further plaintiff asserts that the fact that the defendant was participating in settlement conferences is not a sufficient basis to excuse the failure to serve an answer. Citing Deutsche Bank Natl. Trust Co. v Gutierrez, 102 AD3d 825 [2d Dept. 2013], counsel states that the defendant's reliance upon loan modification negotiations is unsubstantiated and does not constitute a reasonable excuse for the default. Counsel also states that without an affidavit from the defendant or a verified proposed answer the defendant's purported defenses are conclusory only and without any factual support. Counsel also asserts that where a motion seeking to vacate a default judgment is supported only by the affirmation of counsel without first hand knowledge of the facts alleged, no showing of a meritorious defense is supported (citing Karalis v. New Dimensions HR, Inc., 105 AD3d 707 [2d Dept. 2013][defendants submitted only an answer verified by, and the affirmation of, their attorney, and since the attorney had no personal knowledge of the facts, those documents were insufficient to demonstrate the existence of a potentially meritorious defense}. Therefore, counsel contends that as the defendant has failed to set forth a reasonable excuse for the default, and a meritorious defense, she is not entitled to vacate her default two years after the summons and complaint were served.

In addition, with respect to the Order of Reference, plaintiff asserts that the application for an order of reference was sufficiently supported by the affidavit of Ms. Angela Bribiesca-Mory, Vice President of Loan Documentation for Wells Fargo Bank, N.A., dated September 24, 2013. In her affidavit, Ms. Bribiesca-Mory states that Wells Fargo is in possession of the promissory note signed by the defendant, that the defendant defaulted under the terms of the note and mortgage, that a 90 day pre-foreclsure notice was sent to the defendant, that the default was not cured, and plaintiff elected to accelerate the entire unpaid balance of the mortgage. The amount due according to the affidavit, including interest, costs, and fees as of September 20, 2013, was $435,465.25.

Upon review and consideration of the defendant's motion, the plaintiff's affirmation in opposition, and the defendant's reply thereto, this court finds that the defendant' s motion to vacate the default judgment, for leave to serve a late answer and for an order vacating the Order of Reference is denied.

Pursuant to CPLR 3012(d): "Upon the application of a party, the court may extend the time to appear or plead, or compel the acceptance of a pleading untimely served, upon such terms as may [*5]be just and upon a showing of reasonable excuse for delay or default."

As a general rule, a defendant seeking to vacate a default judgment entered upon his or her failure to answer or appear, must demonstrate both a reasonable excuse for the default and a potentially meritorious defense to the action (see CPLR 5015[a][1] U.S. Bank Nat. Assn. v Slavinski, 78 AD3d 1167 [2d Dept. 2010] Ryan v. Breezy Point Coop. Inc., 76 AD3d 523 (2d Dept. 2010] Taddeo-Amendola v 970 Assets, LLC, 72 AD3d 677 [2d Dept. 2010] Moriano v Provident NY Bancorp, 71 AD3d 747 [2d Dept. 2011] Perfect Care, Inc. v Ultracare Supplies, Inc., 71 AD3d 752 [2d Dept. 2010] Zarzuela v Castanos, 71 AD3d 880 [2d Dept. 2010] Bank of NY v Segui, 42 AD3d 555 [2d Dept. 2007]).

The courts have held that a good faith belief in settlement negotiations supported by substantial evidence, with a justifiable reliance thereon constitutes a reasonable excuse for default (see Performance Constr. Corp. v Huntington Bldg., LLC, 68 AD3d 737 [2d Dept 2009] Armstrong Trading, Ltd. v MBM Enters., 29 AD3d 835 [2d Dept. 2006] Scarlett v McCarthy, 2 AD3d 623 [2d Dept. 2003] Lehrman v Lake Katonah Club, 295 AD2d 322 [2d Dept. 2002]). However, the only support for the argument that the defendant had a good faith belief that settlement negotiations precluded her default were the conclusory and uncorroborated assertions provided in her attorney's affirmation. Thus, as the defendant failed to provide any factual evidence other than the attorney's affirmation that her failure to serve a timely answer was due to the prolonged settlement conferences taking place in the Residential Foreclosure Conference Part, the defendant has failed to provide substantiated proof of a reasonable excuse for defendant mortgagor's lengthy default (see Mellon v Izmirligil, 88 AD3d 930 [2d Dept. 2011] Kouzios v Dery, 57 AD3d 949 [2d Dept. 2008] Majestic Clothing Inc. v East Coast Storage, LLC, 18 AD3d 516 [2d Dept. 2005]).

In addition, the defendant failed to establish any defense to the plaintiff's claims for foreclosure and sale of the mortgaged premises. Although the proposed answer contains certain affirmative defenses, as well as a counterclaim for unjust enrichment as set forth above, the defendant failed to submit an affidavit of facts or a verification of the proposed answer (see Ryan v Breezy Point Coop., Inc., 76 AD3d 523 [2d Dept. 2010] Juseinoski v Bd. of Educ., 15 AD3d 353 [2d Dept. 2005]). Where the motion is supported only by an affirmation of counsel and a proposed answer that is verified only by counsel who is without first hand knowledge of the facts alleged therein, no showing of a meritorious defense has been made (see Karalis v New Dimensions [*6]HR, Inc, 105 AD3d 707 [2d Dept. 2013]). The conclusory allegations contained in the unverified proposed answer are insufficient to demonstrate that the defendant has a potentially meritorious defense (see Mooney v City of New York, 78 AD3d 795, 797 [2d Dept. 2010] Koehler v Sei Young Choi, 49 AD3d 504[2d Dept. 2008] Lugauer v Forest City Ratner Co., 44 AD3d 829 [2d Dept. 2007]).

Lastly, this Court finds that the affidavits and exhibits submitted by the plaintiff were sufficient to support its application for an Order of Reference.

Based upon the foregoing, the motion by the defendant mortgagor for an order vacating her default, extending her time to appear and answer and vacating the Order of Reference dated October 28, 2013 is denied.

Dated: January 7, 2014

Long Island City, NY

______________________________

ROBERT J. MCDONALD

J.S.C.