Snellinger v. Federal National Mortgage Association

Background

John Snellinger alleged that he was injured on August 3, 2017, when he tried to enter a property in Wallkill, New York, through a broken window while performing official police duties. He claimed that Federal National Mortgage Association, doing business as Fannie Mae, and Bayview Loan Servicing failed to maintain the property. He asserted claims under sections 1307 and 1308 of New York’s Real Property Actions and Proceedings Law and common-law negligence.

The opinion states that Fannie Mae had obtained a foreclosure judgment and that the property was sold before Snellinger’s accident, with the deed transferred and recorded afterward. Snellinger alleged that Fannie Mae controlled or was responsible for the property and had retained Bayview to manage or service it.

Statutory maintenance claims

The court granted Fannie Mae’s motion for judgment on the pleadings as to the section 1307 claim. Section 1307 requires certain foreclosure plaintiffs to maintain vacant or abandoned residential property until ownership is transferred and the deed is recorded. But the court held that the statute gives enforcement rights only to specified parties, including the municipality, a tenant lawfully in possession, a condominium board, or a homeowners association. Snellinger did not allege facts placing him in any of those categories. The court therefore held that he had no private right to sue Fannie Mae under section 1307. The court also noted that Snellinger had not provided the seven days’ notice required by the statute.

The court granted Bayview’s motion to dismiss the section 1308 claim. Section 1308 imposes certain inspection, security, and maintenance duties on mortgage servicers when a delinquent property appears vacant and abandoned. The court held that the statute limits enforcement to the state superintendent of financial services and the municipality, so Snellinger could not bring a private action under that section. The court also explained that Bayview could not be liable under section 1307 because it was not the foreclosure plaintiff, and Fannie Mae could not be liable under section 1308 because it was not the servicer.

Negligence claims

The court denied Fannie Mae’s motion for judgment on the pleadings as to negligence and denied Bayview’s motion to dismiss as to negligence. Under New York law, a negligence claim requires a duty, a breach, and injury proximately caused by the breach.

Fannie Mae argued that it was an out-of-possession mortgage holder with no duty to maintain the property. The court concluded that the pleadings and evidence presented a dispute about the level of control Fannie Mae maintained over the property. Because the allegations and the possible obligations under section 1307 did not establish as a matter of law that Fannie Mae had no duty, the negligence claim could proceed.

Bayview similarly argued that it never owned, maintained, or controlled the property. The court found that Snellinger’s allegation that Bayview controlled or was responsible for the property, together with Bayview’s possible duties under section 1308, suggested that Bayview may have maintained, controlled, or reserved a right to reenter the property. The court therefore declined to dismiss the negligence claim at this stage.

Motion to amend

The court granted Snellinger’s cross-motion to amend in part and denied it in part. It allowed him to add the Deokis as defendants because the proposed amended complaint plausibly alleged that they were legal title owners and responsible for the property’s condition. The court also allowed him to add factual allegations that the property was vacant and abandoned, provided those allegations were made in good faith.

The court denied permission to add the allegation that Snellinger was a member of the class of people protected by sections 1307 and 1308, finding that proposed allegation conclusory. Because the court’s rulings made parts of the proposed amendment moot, it directed Snellinger to file a revised amended complaint consistent with the opinion.

Disposition

Judge Nelson S. Roman ordered the following: Fannie Mae’s motion for judgment on the pleadings was granted as to the section 1307 claim and denied as to negligence; Bayview’s motion to dismiss was granted as to the section 1308 claim and denied as to negligence; and Snellinger’s cross-motion to amend was granted to the extent of adding the proposed defendants and pleading facts about the property’s condition, but denied as to pleading protected-class status. Snellinger was directed to file the amended complaint by April 16, 2021. If he did not do so, the original complaint would remain operative.