Does it matter? Yes it does, because if there can be separate discovery for the stage of the referee’s hearing, it is fertile ground for an obfuscating borrower to further slow the case – and create more expense for the foreclosing party.
A recent case seems to tacitly accept discovery as a possibility for the computation plateau, although it should be underscored that the question of whether discovery was even otherwise available was not addressed. Indeed, in that instance, the court ruled that discovery (for the information sought) was not available to the borrower. [Grand Pacific Finance Corp. v. 97-111 Hale LLC, 90 A.D.3d 534 (1st Dept. 2011).]
Before very briefly looking at that case (which makes a good point in rejecting a borrower’s discovery onslaught) note that there is no provision in the relevant statute (RPAPL Article 13) for discovery related to a referee’s computation. Of course if demanded, discovery exists in litigation and applies in a foreclosure action as in any other.
But discovery is something which typically precedes disposition of issues; it is an aid in that disposition. In a foreclosure, a referee cannot be appointed unless any answer raising issues has already been stricken. It means, therefore, that discovery, if any, had to be an earlier aspect of the action and has no separate place at the referee’s hearing plateau.
That then leads to the recent case where the borrower apparently argued that it had made more payments upon the mortgage than the foreclosing plaintiff had calculated. But the court ruled that the borrowers were not entitled to discovery before the hearing because any payment documentation would have been in their own possession or could have been obtained from their financial institutions. So, no discovery here.
Does this case mean, though, that discovery might be available for the referee’s hearing, but just not for what the borrower was there pursuing? We think not. We opine that whether or not as a principle discovery was or was not available for the hearing was not raised by either party. The borrower wanted certain discovery and there was good reason to deny it, apart from any question about whether discovery was otherwise available.
Mr. Bergman, author of the four-volume treatise, Bergman on New York Mortgage Foreclosures, LexisNexis Matthew Bender (rev. 2017), is a partner with Berkman, Henoch, Peterson, Peddy & Fenchel, P.C. in Garden City, New York. He is also a member of the USFN, The American College of Real Estate Lawyers, The American College of Mortgage Attorneys, an adviser to the New York Times on foreclosure issues and writes a regular servicing column for the New York Law Journal. He is AV rated by Martindale-Hubbell, his biography appears in Who’s Who In American Law and he has been for years listed in Best Lawyers In America and New York Super Lawyers.