Avail 1 LLC v. Kanwaldeep S. Kalsi

Background

This was a mortgage-foreclosure action. Kanwaldeep S. Kalsi signed a promissory note for $1,069,500 on August 20, 2013, and gave a mortgage on a condominium at 57 Liberty Street, Unit 5, New York, New York. The mortgage allowed foreclosure and sale if the borrower defaulted, but required specified notices before foreclosure.

The note and mortgage were transferred several times. The court found that Avail 1 LLC held the note and mortgage when it filed the action on February 27, 2023. Kalsi had stopped making payments beginning in August 2019 and remained in default. The plaintiff sent Kalsi a notice of default and a 90-day notice on October 13, 2022.

Kalsi was the only borrower named on the note and mortgage. Namrita Purewal, who had been married to Kalsi, lived at the property and later became its owner after a bankruptcy court ruled that Kalsi had abandoned it to her. Kalsi and New Chapter Capital, Inc. did not answer or appear. 67 Liberty Condominium did not actively participate but maintained a claim for unpaid common charges. Purewal answered, initially without an attorney, and later opposed the plaintiff’s summary-judgment motion through counsel.

Summary-judgment standard

Summary judgment is appropriate when the evidence shows no genuine dispute about a fact that could affect the result and the moving party is entitled to judgment under the law. After the moving party makes that showing, the opposing party must provide concrete evidence that could allow a reasonable juror to rule in its favor.

Plaintiff’s foreclosure showing

Applying New York law, the court stated that a foreclosure plaintiff must prove: (1) an obligation secured by a mortgage, (2) the debtor’s default, and (3) notice of the default. A plaintiff also must show that it had the right to foreclose when the action began, generally by proving that it held or had been assigned the note.

The court held that Avail 1 LLC met these requirements. It submitted the note and mortgage, evidence that Kalsi had failed to make payments, and a declaration stating that it possessed the original note before the action began and continued to possess it. The court also found that the plaintiff held the mortgage when the action commenced.

The court found that the October 13, 2022 notice complied with the mortgage. It identified the default, stated the amount in default, explained what Kalsi needed to do to cure the default, gave him until November 13, 2022, and explained that failure to cure could lead to acceleration of the debt and foreclosure. It also explained that curing the default could stop the enforcement action and that Kalsi could raise defenses in court.

The court further found that the notice complied with New York Real Property Actions and Proceedings Law § 1304. It included the required standardized notice, and the plaintiff waited more than 90 days after sending it before filing the foreclosure action.

Purewal’s arguments and defenses

Purewal argued that Avail 1 LLC lacked standing because the note and mortgage had allegedly been separated before the plaintiff received them. The court rejected that argument, holding that the plaintiff’s possession of both the note and mortgage when it commenced the action was sufficient. The court stated that the plaintiff did not have to acquire them at the same time.

Purewal also argued that the notice did not identify the broken promise, explain how to cure the default, or state that curing the default could stop enforcement. The court rejected those arguments because the notice identified the default, directed Kalsi to pay the amounts owed, and stated that payment could result in discontinuation of the lawsuit.

The court also rejected Purewal’s other affirmative defenses. It found that the record contradicted her claims that required documents had not been served or filed. It held that venue was proper, declined to dismiss under the doctrine allowing dismissal for an inconvenient forum, and concluded that a state-law settlement-conference requirement did not give Purewal a right to such a hearing in this federal proceeding.

Finally, the court rejected Purewal’s argument based on the federal Real Estate Settlement Procedures Act and its implementing regulation. The court stated that an alleged violation would provide a possible damages claim rather than prevent foreclosure, and that Purewal had not alleged that the mortgage was federally related.

Ruling

Judge Margaret M. Garnett granted Avail 1 LLC’s motion for summary judgment in full. The court directed the plaintiff to submit a proposed judgment of foreclosure providing for a sale of the property and proposing a referee to conduct the sale and distribute funds. The Clerk was directed to terminate the summary-judgment motion.