Background
Banc of California brought a 2021 mortgage-foreclosure action against Plumbing Supply Distribution and related borrowers and guarantors concerning Brooklyn real estate. Supreme Court granted the bank summary judgment and an order of reference, later confirmed the referee’s report, and entered a judgment directing sale of the property.
The defendants challenged the bank’s proof that a payment default had occurred. The bank relied on an affidavit from vice president Eric Hernandez, who described the alleged default. But Hernandez did not say that he personally observed the payment history, and his affidavit did not identify or attach the servicing records from which he drew his assertions. The appeal therefore turned on a familiar but consequential distinction under CPLR 4518: a witness may establish the foundation for business records, but the affidavit describing absent records is not itself the record.
The Court’s Holding
The Second Department reversed the judgment of foreclosure and sale and denied the portions of the bank’s earlier motion seeking summary judgment and an order of reference. A foreclosure plaintiff must produce the mortgage, the unpaid note, and admissible proof of the borrower’s default. Personal knowledge can supply that proof, as can properly admitted business records.
The bank established neither route. Hernandez did not claim firsthand knowledge, and although he apparently reviewed company records, he failed to identify the records or include them with the motion. The court reiterated that the business-record exception makes the qualifying writing or record admissible; it does not turn a foundational affidavit’s description of an unseen record into substantive proof. His account of those contents was therefore hearsay.
Because the bank did not make its initial prima facie showing, the adequacy of the defendants’ opposition did not matter. That failure also defeated the order of reference, confirmation of the referee’s report, and sale judgment built on the deficient summary-judgment ruling. The decision does not dismiss the foreclosure complaint, but it removes the bank’s dispositive relief and requires any further effort to rest on admissible evidence.
Key Takeaways
- A foreclosure affiant who lacks personal knowledge must identify the specific records reviewed and place the operative records before the court.
- A business-record foundation authenticates the records; it cannot substitute for them as proof of default.
- Failure to meet the movant’s initial burden requires denial regardless of weaknesses in the borrower’s opposition.
Why It Matters
For New York lenders and servicing counsel, the ruling is a document-control warning. Payment histories, default ledgers, and relevant transfer or servicing records should be selected, authenticated, and attached before a dispositive motion is filed. Generic job-title assertions or statements that an employee reviewed unspecified records create avoidable hearsay problems.
Borrower counsel should audit the evidentiary chain at every foreclosure stage, including whether a referee’s report rests on an earlier order unsupported by competent proof. Commercial foreclosures do not receive a relaxed evidentiary standard. Even where nonpayment seems undisputed as a practical matter, the plaintiff must prove the event through admissible evidence before obtaining a forced sale.
Motion teams should build the evidentiary package backward from each required element. An affiant should explain the employee’s responsibilities, familiarity with recordkeeping practices, how records from any prior servicer were incorporated and relied upon, and which attached entries show the missed payments. Counsel should also reconcile claimed default dates with notices, payoff figures, and referee calculations. Defendants, meanwhile, can focus an opposition on whether the actual records support the affidavit rather than merely disputing conclusions. The reversal shows why proof defects should be raised before the order of reference: later steps cannot cure an initial failure to establish entitlement to judgment.
The opinion also affects how foreclosure teams use standardized declarations. A reusable form can organize the foundation, but it must be completed with transaction-specific facts and exhibits. The affiant should be able to explain the data source, the time and manner of entry, and reliance in the ordinary course. If records migrated between platforms, the submission should address integration. Quality control before filing should compare the affidavit, ledger, note, mortgage, notices, and requested judgment. That discipline protects both the integrity of the court record and the lender’s ability to obtain relief without a costly reversal after a referee has completed additional work.