LaSalle Bank Brief-FINAL - nylawyer.nylj.comnylawyer.nylj.com/adgifs/decisions/092612attygeneral.pdf · ate.gov/documents/cop-111610-report.pdf; Robbie Whelan, GMAC Spotlight On 'Robo-Signer',

2011-03219 To be argued by: Laura Etlinger Time requested: 10 minutes

Supreme Court, Suffolk County – Index No. 15822/08

Supreme Court of the State of New York Appellate Division – Second Department

 LASALLE BANK, N.A.,

PLAINTIFF-RESPONDENT,

-AGAINST-

JAMES F. PACE AND LINDA PACE,

DEFENDANTS-APPELLANTS, AND

NATIONAL CITY BANK AND “JOHN DOES” AND “JANE DOES,”

DEFENDANTS,

NEW YORK ATTORNEY GENERAL,

INTERVENOR.

BRIEF OF THE ATTORNEY GENERAL

BARBARA D. UNDERWOOD Solicitor General ANDREW D. BING Deputy Solicitor General LAURA ETLINGER Assistant Solicitor General of Counsel

ERIC T. SCHNEIDERMAN Attorney General of the State of New York Intervenor The Capitol Albany, New York 12224-0341 (518) 474-2256 Dated: March 1, 2012

Reproduced on Recycled Paper

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TABLE OF CONTENTS PAGE

TABLE OF AUTHORITIES ............................................................................... iii PRELIMINARY STATEMENT........................................................................... 1 STATEMENT OF THE CASE ............................................................................ 2 A. Documented Abuses in Mortgage Foreclosure Proceedings Led to State and Federal Investigations ................... 3 B. The Legislature Responded to the Mortgage Foreclosure Crisis With Comprehensive Legislation and a Delegation of Specific Rulemaking Authority to the Chief Administrative Judge .................................................................... 10 C. The Chief Administrative Judge Issued an Administrative Order and a Rule to Protect the Integrity of New York Judicial Proceedings ...................................................................... 13 D. Supreme Court Invalidates Administrative Order 431-11 and Rule 202.12-a(f) .......................................................... 17 1. Proceedings Below ............................................................... 17 2. Decision of Supreme Court Granting LaSalle Bank Summary Judgment and Ordering Appointment of a Receiver ......................................................................... 18 ARGUMENT THE CHIEF ADMINISTRATIVE JUDGE WAS AUTHORIZED TO ISSUE THE ADMINISTRATIVE ORDER AND THE RULE PURSUANT TO HER PLENARY CONSTITUTIONAL POWER OVER ADMINISTRATIVE MATTERS AND PURSUANT TO A VALID DELEGATION OF AUTHORITY BY THE LEGISLATURE... 22 A. The Chief Administrative Judge’s Order Requiring the Attorney Affirmation Was a Valid Exercise of Her Plenary Administrative Powers .................................................... 23

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Table of Contents (cont’d) PAGE

ARGUMENT (cont’d) B. The Chief Administrative Judge’s Order Was Also a Proper Exercise of Authority Delegated by the Legislature ....... 31 1. The Judiciary Law and 2009 foreclosure legislation authorize the order and the rule ...................... 31 2. The order and the rule are consistent with limitations on the Chief Administrative Judge’s authority.................. 34 CONCLUSION ............................................................................................... 38 ADDENDUM AO 431-11 ...............................................................................................A1 AO 548-10 ...............................................................................................A7 Administrative Order 01-2010 of the New Jersey Acting Administrative Director of the Courts..........................................................A10 Revised Residential Mortgage Foreclosure Affidavit Policy of the Cuyahoga County Court of Common Pleas ..................................................A28 Order 2011-05-02-01 of the Chief Justice of South Carolina .......................A30 Maryland Rules of Procedure, Rule 14-207.1.................................................A35

  iii

TABLE OF AUTHORITIES PAGE

CASES A.G. Ship Maintenance Corp., Matter of v. Lezak, 69 N.Y.2d 1 (1986) .............................................................................. 32,34 Corkum v. Bartlett, 46 N.Y.2d 424 (1979) ............................................................................... 25 Levenson v. Lippman, 4 N.Y.3d 280 (2005) ............................................................................ 25,27 McQuigan v. Delaware, Lackawanna & W.R.R. Co., 129 N.Y. 50 (1891).................................................................................... 34 Met Council, Inc., Matter of v. Crosson, 84 N.Y.2d 328 (1994) .......................................................................... 24,25 People v. Correa, 15 N.Y.3d 213 (2010) .......................................................................... 24,25 People v. Ramos, 85 N.Y.2d 678 (1995) ..................................................................... 34,35,37 Scoralick, Matter of v. Milonas, 207 A.D.2d 159 (3d Dep’t), lv. denied, 86 N.Y.2d 707 (1995) ........... 24,25 STATE CONSTITUTION N.Y. Const. Art. 6 § 28 .......................................................................................... 23,24 § 28(a) ............................................................................................. 23n § 28(b) ....................................................................................... 1,23,26 § 30 .................................................................................... 1-2,23,31

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Table of Authorities (cont’d) PAGE

STATE STATUTES CPLR 1012(b)(1) ............................................................................................ 1,21 3212 ............................................................................................... 18 3401 .......................................................................................... 12,33 3408(a) ............................................................................................... 12 3408(b) ............................................................................................... 12 3408(d) ............................................................................................... 11 3408(e) ............................................................................................... 12 Executive Law § 71 ............................................................................................ 1,21 Judiciary Law § 210(2) ............................................................................................. 23n § 211 ............................................................................................... 32 § 211(1)(b) ....................................................................................... 2,23,32 § 212 ............................................................................................... 32 § 212(2)(d) ....................................................................................... 2,23,32 RPAPL § 1302 ............................................................................................... 11 § 1303 ............................................................................................... 11 § 1304 ............................................................................................... 11 § 1321 ............................................................................................... 18 L. 2008, ch. 472 .......................................................................................... 10,26 § 1 ............................................................................................... 10 § 2 ............................................................................................... 10 § 3 ............................................................................................... 10 § 3-a ............................................................................................... 10 L. 2009, ch. 507 .......................................................................................... 10,26 § 1 ........................................................................................ 10,11n § 1-a ........................................................................................ 10,11n § 4 ........................................................................................ 10,11n §§ 5-10 ........................................................................................ 10,11n § 10-a(1) .................................................................................. 2,12,23,33

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Table of Authorities (cont’d) PAGE

STATE RULES AND REGULATIONS 22 N.Y.C.R.R. 80.1(a) ............................................................................................... 24 80.1(b)(6) .......................................................................................... 24,26 130-1.1(c)(3)......................................................................................... 28,36 130-1.1a(b) .............................................................................................. 28 202.7 ............................................................................................... 28 202.12 ............................................................................................... 28 202.12-a ............................................................................................... 13 202.12-a(b) ............................................................................................... 14 202.12-a(c) ............................................................................................... 14 202.12-a(f) .................................................................................. 1,13,15,18 205.17 ............................................................................................... 28 205.49 ............................................................................................... 28 205.52 ............................................................................................... 28 Part 1200, rule 4.1 .............................................................................. 28,36 MISCELLANEOUS Administrative Order 431-11 ........................................................................................passim 548-10 ........................................................................................passim Administrative Order 01-2010 of the New Jersey Acting Administrative Director of the Courts (Dec. 10, 2010) .................................................... 17 Congressional Oversight Panel, Examining the Consequences of Mortgage Irregularities for Financial Stability and Loss Mitigation (Nov. 16, 2010), available at: http://cybercemetery.unt.edu/archive/cop/20110402010313/http://cop.senate.gov/documents/cop-111610-report.pdf .................................................................. 3 David Streitfeld, Backlog of Cases Gives a Reprieve on Foreclosures, N.Y. Times (June 19, 2011), available at: http://www.nytimes.com/2011/06/19/business/19foreclosure.html ................. 16

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Table of Authorities (cont’d)

MISCELLANEOUS PAGE Federal Reserve System, Office of the Comptroller of the Currency & Office of Thrift Supervision, Interagency Review of Foreclosure Policies and Practices (April 20111), available at: http://www.occ.gov/news-issuances/news-releases/2011/nr-occ-2011-47a.pdf.. 9 Gretchen Morgensen, New York Subpoenas 2 Foreclosure-Related Firms, N.Y. Times (Apr. 8, 2011), available at: http://www.nytimes.com/2011/04/09/business/09foreclose.html .................... 4-5 Hon. Ann Pfau, Chief Administrative Judge, New York Courts First in Country to Institute Filing Requirement to Preserve Integrity of Foreclosure Process (Oct. 20, 2010), available at: http://www.nycourts.gov/press/pr2010_12.html............................................... 15 Hon. Ann Pfau, 2010 Report of the Chief Administrator of the Courts Pursuant to Chapter 507 of the Laws of 2009 (State of New York Unified Court System 2010), available at: http://www.nycourts.gov/publications/pdfs/foreclosurereportnov2010.pdf 3n,10 Hon. Ann Pfau, 2011 Report of the Chief Administrator of the Courts Pursuant to Chapter 507 of the Laws of 2009 (State of New York Unified Court System 2011), available at: http://www.nycourts.gov/publications/pdfs/ForeclosureReportNov2011.pdf.. 16 Maryland Rules of Procedure, Rule 14-207.1 (2011) ....................................... 17 Memorandum in Support of Governor’s Program Bill #46R, reprinted in Bill Jacket to Chapter 507 of the Laws of 2009 ................................... 11n Office of the New York Attorney General, Attorney General Cuomo Expands Probe of New York Foreclosure Actions, Press Release (Oct. 12, 2010), available at: http://www.ag.ny.gov/media_center/2010/oct/oct12b_10.html .......................... 4

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Table of Authorities (cont’d) PAGE

MISCELLANEOUS Office of the New York Attorney General, AG Schneiderman and Federal Officials Detail Joint Investigation Into Mortgage Crisis, Press Release (Jan. 27, 2012), available at: http://www.ag.ny.gov/media_center/2012/jan/jan27a_12.html ...................... 7-8 Office of the New York Attorney General, AG Schneiderman Announces Major Lawsuit Against Nation’s Largest Banks for Deceptive and Fraudulent Use of Electronic Mortgage Registry, Press Release (Feb. 3, 2012), available at: http://www.ag.ny.gov/media_center/2012/feb/feb03a_12.html.......................... 6 Office of the New York Attorney General, A.G. Schneiderman Secures $136 Million for Struggling New York Homeowners in Mortgage Servicing Agreement, Press Release (Feb. 9, 2012) available at: http://www.ag.ny.gov/media_center/2012/feb/feb09a_12.html .... 7 Office of the White House Press Secretary, Remarks by the President on the Housing Settlement (Feb. 9, 2012), available at: http://www.whitehouse.gov/the-press-office/2012/02/09/remarks-president-housing-settlement .............................................................................................. 7 Order 2011-05-02-01 of the Chief Justice of South Carolina (May 2, 2011)............................................................................................ 17 Philip A. Lehman, Assistant Attorney General, North Carolina Dept. of Justice, Executive Summary of Multistate/Federal Settlement of Foreclosure Misconduct Claims, available at: http://www.nationalmortgagesettlement.com/................................................... 7 Revised Residential Mortgage Foreclosure Affidavit Policy of the Cuyahoga County Court of Common Pleas (Dec. 22, 2010) www.nationalmortgagesettlement.com............................................................ 17 Robbie Whelan, GMAC Spotlight On ‘Robo-Signer’, Wall St. J. (Sept. 22, 2010), available at: http://online.wsj.com/articles/SB10001424052748703399404575506303831235126.html .............................................................................................. 3-4

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Table of Authorities (cont’d) PAGE

MISCELLANEOUS Senate Memorandum in Support of S8143A, reprinted in Bill Jacket to Chapter 472 of the Laws of 2008 ........................................................ 10 United States Government Accountability Office (GAO), Mortgage Foreclosures: Documentation Problems Reveal Need for Ongoing Regulatory Oversight, GAO 11-433 (May 2011), available at: http://www.gao.gov/new.items/d11433.pdf ...................................................... 8,9

PRELIMINARY STATEMENT

The Attorney General submits this brief in intervention pursuant

to Executive Law § 71 and Civil Practice Law and Rules (“CPLR”)

1012(b)(1) in this mortgage foreclosure appeal to defend the

constitutionality of Administrative Order 431-11 (originally issued as

Administrative Order 548-10) and Rule 202.12-a(f), 22 N.Y.C.R.R.

§ 202.12-a(f). The administrative order and the rule require attorney

certification of the accuracy of the plaintiffs’ filings in mortgage

foreclosure actions. The Chief Administrative Judge of the State of

New York adopted the administrative order and rule to curb

documented widespread abuses in mortgage foreclosure proceedings

that threatened the integrity of the judicial process.

Supreme Court, Suffolk County (Whelan, J.), mistakenly

concluded that the Chief Administrative Judge lacked the authority to

issue the order and the rule. In fact, the Chief Administrative Judge

was authorized to adopt the order and rule under (1) her constitutional

authority to regulate the administration of the courts, see N.Y. Const.

Art. 6, § 28(b), (2) the Legislature’s valid delegation of its authority to

regulate practice and procedure in the courts, see N.Y. Const. Art. 6,

  2

§ 30; Judiciary Law §§ 211(1)(b), 212(2)(d), and (3) a specific legislative

delegation of rule-making authority in 2009 legislation providing for

a foreclosure settlement process, see New York Laws of 2009, ch. 507,

§10-a(1). Each of these sources of authority alone would be sufficient to

sustain the validity of the administrative order and rule. Together they

overwhelmingly support the Chief Administrative Judge’s authority to

adopt the administrative order and the rule. Accordingly, the

administrative order and rule are authorized and thus constitutional.

STATEMENT OF THE CASE

This section of the brief first documents the abuses that led the

Legislature and the Chief Administrative Judge to take action to ensure

that mortgage foreclosure actions are fairly and properly conducted.

The brief next describes the Legislature’s 2008 and 2009 enactments

and the Chief Administrative Judge’s order and rule. Finally, the

Supreme Court proceedings in this case and the decision below are

summarized. This background information demonstrates that the

administrative order and the rule respond to the crisis in mortgage

foreclosure proceedings and are constitutional because they are within

the Chief Administrative Judge’s constitutional and statutory authority.

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A. Documented Abuses in Mortgage Foreclosure Proceedings Led to State and Federal Investigations.

The abuses committed in recent years by mortgage servicers in

mortgage foreclosure proceedings are well documented. Multiple

employees of the major servicers have admitted in sworn testimony that

they perpetrated systematic fraud on the courts in foreclosure

proceedings by "robo-signing" affidavits -- i.e., attesting to personal

knowledge about mortgages and properties despite having no such

knowledge. These abuses occurred in hundreds of thousands of

proceedings nationwide. 1 See, e.g., Congressional Oversight Panel,

Examining the Consequences of Mortgage Irregularities for Financial

Stability and Loss Mitigation (Nov. 16, 2010), at 7, available at

http://cybercemetery.unt.edu/archive/cop/20110402010313/http://cop.sen

ate.gov/documents/cop-111610-report.pdf; Robbie Whelan, GMAC

Spotlight On 'Robo-Signer', Wall St. J. (Sept. 22, 2010), available at

                                                         1 The dramatic increase in the number of foreclosure proceedings being commenced compounded the problem. In 2005, 22,601 foreclosure actions were filed in New York, and by 2010 the number of annual filings had increased to 42,356. Hon. Ann Pfau, 2010 Report of the Chief Administrator of the Courts Pursuant to Chapter 507 of the Laws of 2009, at Appendix 3 and 4 (State of New York Unified Court System 2010),available at http://www.nycourts.gov/publications/pdfs/ foreclosure reportnov2010.pdf. During 2009, there were approximately 54,500 mortgage foreclosure proceedings pending in New York courts and during 2010, the number of pending actions increased to over 77,800. Id. at 4.

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http://online.wsj.com/article/SB1000142405274870339940457550630383

1235126.html.

The wide-spread practice of robo-signing has prompted a number

of investigations by governmental authorities, including several by the

New York Attorney General to determine the scope of the fraud

committed against the courts of this State. In October 2010, the

Attorney General sought documentation from four major servicers and

demanded that they suspend foreclosure actions until they could ensure

the legality and integrity of their procedures. See Office of the New

York Attorney General, Attorney General Cuomo Expands Probe of New

York Foreclosure Actions, Press Release (Oct. 12, 2010), available at

htpp://www.ag.ny.gov/media_center/2010/oct/oct12b_10.html. In April

2011, Attorney General Schneiderman issued subpoenas to Steven J.

Baum P.C., one of the major mortgage foreclosure legal firms in New

York State, and a related service provider, Pillar Processing, LLP,

requesting information about its foreclosure-related practices, including

the documentation that its employees filed with the courts. See

Gretchen Morgenson, New York Subpoenas 2 Foreclosure-Related Firms,

N.Y. Times (Apr. 8, 2011), at B1, available at http://www.nytimes.

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com/2011/04/09/business/09foreclose.html. The Attorney General

recently entered an assurance of discontinuance of its investigation

with the principals of these firms that includes prospective relief and a

significant payment to the State. Based on its investigation, the

Attorney General found that the law firm engaged in improper

verification of pleadings in foreclosure cases, failed to conduct due

diligence to ensure that plaintiffs had standing to bring foreclosure

proceedings, and failed to timely file the attorney affirmation required

by AO 431-11, which had the effect of delaying formal settlement

conferences. Matter of Investigation of Attorney General of N.Y. of

Steven J. Baum, P.C., Assurance of Discontinuance (Feb. 16, 2012). The

Attorney General also challenged a settlement between Bank of New

York Mellon and Bank of America based, in part, on the allegation that

Bank of New York Mellon -- the trustee for various pools of residential

mortgage-backed securities -- had failed to respond appropriately to

robo-signing and other foreclosure abuses. See Verified Pleading in

Intervention ¶ 27, Doc. # 104, Matter of Bank of New York Mellon,

Index No. 651786/2011 (Sup. Ct., N.Y. County Aug. 5, 2011). Most

recently, the Attorney General initiated litigation against a number of

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the nation’s largest banks and MERSCORP, Inc. alleging that the

creation and use of a private national mortgage electronic registry

known as "MERS" has resulted in a wide range of deceptive and

fraudulent foreclosure filings in New York state and federal bankruptcy

courts. The lawsuit specifically asserts that the defendants repeatedly

submitted to courts documents containing false and misleading

information that made it appear that the foreclosing party had standing

to foreclose when in fact it may not have. See Office of the New York

Attorney General, AG Schneiderman Announces Major Lawsuit Against

Nation’s Largest Banks for Deceptive and Fraudulent Use of Electronic

Mortgage Registry, Press Release (Feb. 3, 2012), available at

http://www.ag.ny.gov/media_center/2012/feb/feb03a_12.html; Complaint,

People v. JPMorgan Chase Bank, Index No. 2768/2012 (Sup. Ct., Kings

County Feb. 3, 2012).

New York’s efforts have been part of a nation-wide focus on

mortgage foreclosure abuses. Federal officials and the Attorneys

General from 49 states, including New York, recently reached a

landmark joint federal-state settlement with the nation’s largest banks

regarding abusive mortgage servicing and foreclosure practices,

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including robo-signing. The investigation that resulted in this

settlement began in October 2010 with a primary focus on the use of

robo-signed affidavits in foreclosure proceedings. See Philip A. Lehman,

Assistant Attorney General, North Carolina Dept. of Justice, Executive

Summary of Multistate/Federal Settlement of Foreclosure Misconduct

Claims, available at www.nationalmortgagesettlement.com; Office of

the New York Attorney General, A.G. Schneiderman Secures $136

Million for Struggling New York Homeowners in Mortgage Servicing

Agreement, Press Release (Feb. 9, 2012), available at

http://www.ag.ny.gov/media_center/2012/feb/feb09a_12.html; Office of

the White House Press Secretary, Remarks by the President on the

Housing Settlement (Feb. 9, 2012), available at http://www.whitehouse.

gov/the-press-office/2012/02/09/remarks-president-housing-settlement.

And President Obama recently established a federal-state Residential

Mortgage-Backed Securities Working Group, co-chaired by Attorney

General Schneiderman, which is charged with investigating those

individuals and entities that were responsible for the misconduct that

contributed to the financial crisis through the pooling and sale of

residential mortgage-backed securities. See Office of the New York

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Attorney General, A.G. Schneiderman and Federal Officials Detail

Joint Investigation Into Mortgage Crisis, Press Release (Jan. 27, 2012),

available at http:// www.ag.ny.gov/ media_center/2012/jan/ jan27a_12.

html.

Robo-signing and related abuses had also prompted a coordinated

review by federal regulators—including the Office of the Comptroller of

the Currency, the Federal Reserve, the Office of Thrift Supervision and

the FDIC—into the policies, procedures, and internal controls of

fourteen major mortgage servicers. United States Government

Accountability Office (GAO), Mortgage Foreclosures: Documentation

Problems Reveal Need for Ongoing Regulatory Oversight, GAO 11-433

(May 2011), at 30, available at http://www.gao.gov/new.items/d114433.

pdf. This review revealed not only problems in the preparation of

foreclosure documents, but also inadequate policies, staffing and

oversight of internal foreclosure processes. Id. at 26, 30-31. In their

report, the federal regulators concluded that “most servers had affidavit

signing protocols that expedited the processes for signing foreclosure

affidavits without ensuring that the individuals who signed the

affidavits personally conducted the review or possessed the level of

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knowledge of the information that they attested to in those

affidavits. . . . Examiners also found the majority of servicers had

improper notary practices that failed to conform to state legal

requirements.” Federal Reserve System, Office of the Comptroller of

the Currency & Office of Thrift Supervision, Interagency Review of

Foreclosure Policies and Practices (April 2011), at 8, available at

http://www.occ.gov/news-issuances/news-releases/2011/nr-occ-2011-

47a.pdf. Insufficient staff and the lack of guidance to staff and external

law firms regarding affidavit requirements contributed to the

preparation and filing of inaccurate affidavits. Id. Regulators also

found that the amounts of indebtedness were often inaccurate, most

times adversely to the borrower. Id. Finally, the federal regulators

found inadequacies in the servicers’ management and oversight of

outside law firms involved in mortgage foreclosure document

preparation. Id. at 9. The regulators took formal action against all

fourteen major servicers. GAO, Mortgage Foreclosures: Documentation

Problems Reveal Need for Ongoing Regulatory Oversight, GAO 11-433

(May 2011), at 30-31.

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B. The Legislature Responded to the Mortgage Foreclosure Crisis With Comprehensive Legislation and a Delegation of Specific Rulemaking Authority to the Chief Administrative Judge.

The New York State Legislature responded to the residential

mortgage crisis with comprehensive legislation. See New York Laws of

2009, ch. 507; New York Laws of 2008, ch. 472. This legislation

enhanced consumer protection laws and imposed new regulatory

requirements and enforcement measures on mortgage brokers and

servicers. The legislation also specifically addressed the procedures

applicable to mortgage foreclosure proceedings. See New York Laws of

2009, ch. 507, §§ 1, 1-a, 4, 5-10; New York Laws of 2008, ch. 472, §§ 1, 2,

3, 3-a; Senate Memorandum in Support of S8143A, reprinted in Bill

Jacket to Chapter 472 of the Laws of 2008, at 7-9. The provisions

governing the mortgage foreclosure judicial process were intended to

address the high number of defaults by unrepresented defendants in

these proceedings. See Hon. Ann Pfau, 2010 Report of the Chief

Administrator of the Courts Pursuant to Chapter 507 of the Laws of

2009 (State of New York Unified Court System 2010).

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The new legislation provides several layers of protection for

homeowners involved in foreclosure proceedings. 2 Complaints in

proceedings relating to high-cost and subprime home loans must

contain specific allegations relating to the plaintiff’s ability to institute

the action and its compliance with specific Banking Law requirements

applicable to such loans. See Real Property Actions and Proceedings

Law (“RPAPL”) § 1302. At least 90 days before commencing foreclosure

proceedings, mortgage lenders, assignees and loan servicers must

provide homeowners with specific notices describing the availability of

housing counseling, foreclosure prevention services, and other

information about their legal rights. See RPAPL §§ 1303, 1304. When

the plaintiff files its request for judicial intervention (RJI), the court

must notify the appropriate local housing counseling agencies

designated by the Division of Housing and Community Renewal so that

those agencies can provide advice and counsel to the defendant

homeowner. See CPLR 3408(d). Additionally, the legislation

established a mandatory settlement conference procedure. Within 60                                                           2  While the 2008 legislation focused primarily on the subprime and nontraditional loan market, the 2009 legislation extended these protections to foreclosure proceedings involving traditional residential mortgages. See New York Laws of 2009, ch. 507, §§ 1, 1-a, 4, 5-10; Memorandum in Support of Governor’s Program Bill #46R, reprinted in Bill Jacket to Chapter 507 of the Laws of 2009. 

  12

days of the filing of proof of service, the court must hold a mandatory

settlement conference, to which the plaintiff must bring specified key

documents, including: the mortgage and note, or the name, address, and

phone number of the legal holder of the mortgage if it is not the

plaintiff; payment history; and an itemization of the amounts needed to

cure and pay off the loan. See CPLR 3408(a),(e). Defendants who

appear at the initial settlement conferences pro se are deemed to have

moved for poor person’s relief, including assignment of counsel. Id.

§ 3408(b). The purpose of the settlement conference is to evaluate

alternatives to foreclosure, including modified payment schedules,

payment plans, or other workout options. See CPLR 3408(a).

The 2009 legislation authorized the Chief Administrator of the

Courts to adopt “such additional rules as may be necessary to ensure

the just and expeditious processing of all settlement conferences

hereunder.” New York Laws of 2009, ch. 507, § 10-a(1); see also CPLR

3401 (directing the Chief Administrative Judge to adopt rules

“regulating the hearing of causes”); CPLR 3408(e) (providing that the

notice of the settlement conference “shall be in a form prescribed by the

office of court administration”). To fulfill the mandate of the legislation,

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and consistent with this delegation, the Chief Administrative Judge

adopted Rule 202.12-a of the Uniform Civil Rules for Supreme Court

and County Court. See 22 N.Y.C.R.R. § 202.12-a. As described below,

in December 2010, the Chief Administrative Judge amended Rule

202.12-a by adding new subsection (f), which requires counsel to comply

with affirmation requirements concerning the accuracy of residential

foreclosure filings. This brief addresses the Chief Administrative

Judge’s authority to enact that amendment, and a related

administrative order.

C. The Chief Administrative Judge Issued an Administrative Order and a Rule to Protect the Integrity of New York Judicial Proceedings.

In response to the documented abuses in mortgage foreclosure

proceedings, the Chief Administrative Judge issued an administrative

order on October 20, 2010, to address the effect of these abuses on the

courts. See Administrative Order (AO) 548-10 (see A1-A9). 3 The order

                                                         3 The Administrative Order (AO 548-10) was reissued on March 2011, as Administrative Order 431-11 (effective Nov. 18, 2010). In response to feedback from the plaintiffs’ bar, the form affirmation was revised and a companion form affidavit for use by a representative of the plaintiff was made available. The language of the rule is otherwise the same. See AO 431-11. Copies of the Administrative Orders and accompanying forms are included in an addendum to the Attorney General’s brief (see A1-A9).

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was issued at the direction of the Chief Judge and in consultation with

the Administrative Board of the Courts.

The administrative order directs plaintiff’s counsel in residential

foreclosure actions to affirm that they have communicated with

plaintiff’s employees who have reviewed the accuracy of the relevant

records and confirmed the accuracy of the court filings, including the

summons and complaint. The order also requires counsel to affirm that

the documents filed with the court contain no false statements. See AO

431-11. Consistent with the legislation and court rule governing

mandatory settlement conferences, the affirmation must be filed with

the court when the RJI is filed. 4 See AO 431-11; 22 N.Y.C.R.R.

§ 202.12-a(b),(c).

The administrative order was issued “to protect the integrity of

the foreclosure process and prevent wrongful foreclosures” and to help

“ensur[e] that the documents judges rely on will be thoroughly

examined, accurate, and error-free before any judge is asked to take the

                                                          4 In cases where the proceeding was commenced before the November 18, 2010 effective date of the administrative order, but no judgment of foreclosure has been entered as of the effective date, the affirmation is to be filed with the proposed order of reference or with the proposed judgment of foreclosure. In cases where a judgment of foreclosure has been entered but the property has not yet been sold as of the administrative order’s effective date, the affirmation is to be filed five days before the scheduled auction, with a copy to be served on the referee. AO 431-11.

  15

drastic step of foreclosure.” Hon. Ann Pfau, Chief Administrative Judge,

New York Courts First in Country to Institute Filing Requirement to

Preserve Integrity of Foreclosure Process (Oct. 20, 2010), available at

http://www.nycourts.gov/press/pr2010_12.shtml. The filing of the

affirmation furthers the Legislature’s policy objective by ensuring that

the mandatory settlement conference is grounded in accurate and

proper documentation that has been made available to the defendant

and the court.

The new affirmation requirement was subsequently incorporated

in the courts’ rules. In December 2010, the Chief Administrative Judge,

with the advice and consent of the Administrative Board of the Courts,

amended Rule 202.12-a of the Uniform Civil Rules for Supreme Court

and County Court by adding new subsection (f). This provision

authorizes the Chief Administrator of the Courts to “continue to require

counsel to file affidavits or affirmations confirming the scope of inquiry

and the accuracy of papers filed in residential mortgage foreclosure

actions.” 22 N.Y.C.R.R. § 202.12-a(f).

The administrative order and rule had an immediate and

dramatic effect on residential foreclosure actions when plaintiffs’

  16

counsel discovered that they could not verify the accuracy of foreclosure

information with plaintiff’s employees, as the administrative order

and rule now require. See David Streitfeld, Backlog of Cases Gives a

Reprieve on Foreclosures, N.Y. Times (June 19, 2011), available

at http:// www.nytimes.com/ 2011/ 06/ 19/ business/ 19foreclosure .html.

According to the Office of Court Administration, an average of over

3,500 RJIs were filed per month in foreclosure proceedings in 2010

before the administrative order was issued, while the average number

of such filings during the 12-month period after the order was issued

was 775 per month. See Hon. Ann Pfau, 2011 Report of the Chief

Administrator of the Courts Pursuant to Chapter 507 of the Laws of

2009, at 2 (State of New York Unified Court System 2011), available at

http://www.nycourts.gov/publications/pdfs/ForeclosuresReportNov2011.

pdf.

New York was not the only state to respond to the residential

mortgage foreclosure crisis with new administrative orders and court

rules designed to protect the integrity of the judicial process and the

accuracy of filed documents. For example, the New Jersey court system

has issued an administrative order that is substantively identical to

  17

New York’s. Administrative Order 01-2010 of the New Jersey Acting

Administrative Director of the Courts (Dec. 10, 2010) (A10-A27).5 Local

courts in a number of states have also issued similar directives, see, e.g.,

Revised Residential Mortgage Foreclosure Affidavit Policy of the

Cuyahoga County Court of Common Pleas (Dec. 22, 2010) (A28-A29),

and other state judicial systems approached the same problem from

different perspectives, see, e.g., Order 2011-05-02-01 of the Chief Justice

of South Carolina (May 2, 2011) (A30-A34) (requiring notice of loan

modification/loss mitigation procedures in residential foreclosure

proceedings); Maryland Rules of Procedure, Rule 14-207.1 (2011) (A40-

A41) (authorizing courts in foreclosure proceedings to screen petition

and review accuracy of affidavits).

D. Supreme Court Invalidates Administrative Order 431-11 and Rule 202.12-a(f).

1. Proceedings Below

Plaintiff LaSalle Bank commenced this mortgage foreclosure

proceeding in April 2008 against defendants James F. Pace and Linda

Pace seeking to recover more than $1,330,000 secured by a mortgage on

                                                         5 Copies of the administrative orders and court rules from other jurisdictions are included in an Addendum to this brief.

  18

residential property located in Hampton Bays, New York (R. 35-43).

After the defendants filed an answer with counter-claims, in May 2010

LaSalle Bank moved for summary judgment pursuant to CPLR 3212

and RPAPL § 1321, and for appointment of a receiver to compute the

amount due if summary judgment was awarded (R. 21-22, 25-30). The

defendants argued that summary judgment was improper for a number

of procedural and substantive reasons, including that plaintiff’s counsel

had not filed the attorney affirmation required by Administrative Order

548-10 and Rule 202.12-a(f) (R. 207). The sur-reply papers submitted

on behalf of the plaintiff bank included an attorney affirmation of the

type required by AO 548-10 (R. 159-60).

2. Decision of Supreme Court Granting LaSalle Bank Summary Judgment and Ordering Appointment of a Receiver. In a memorandum decision dated February 22, 2011, and an

accompanying order, Supreme Court, Suffolk County (Whelan, J.)

granted the motion of plaintiff LaSalle Bank (“LaSalle”) for summary

judgment and referred the matter to a referee to compute the amount

owed (R. 9-16, 17-20). For two reasons, the court rejected the Pace

defendants’ argument that the motion should be denied based on

  19

LaSalle’s failure to provide the attorney affirmation with its motion for

summary judgment and proposed order of reference. First, the court

held that the administrative order did not require LaSalle to file the

attorney affirmation with the proposed order of reference. In this case,

which was pending when the administrative order was issued, the court

reasoned that the order “does not require the filing of the affirmation on

motions for accelerated judgments that are submitted in conjunction

with orders of reference, as the affirmation may be supplied on the

motion for the judgment of foreclosure of sale” (R. 11).

Second, the court determined that the administrative order was

not “a permissible exercise of the rulemaking authority vested in the

Chief Administrative Judge” (R. 11). On this point, the court held that

the administrative order and rule were not administrative in nature,

and therefore not authorized by the Chief Administrative Judge’s

constitutional authority to adopt rules relating to the efficient and

orderly transaction of business in the trial courts (R. 13). In reaching

this conclusion, the court viewed the affirmation requirement as

imposing additional, substantive requirements on plaintiffs seeking

foreclosure.

  20

Accordingly, Supreme Court determined that the affirmation

requirement regulated the practice and procedure of the courts and,

because the court found the Legislature had not delegated authority to

the Chief Administrative Judge to adopt this requirement, it was not

authorized under the Chief Administrative Judge’s delegated authority

(R. 13-14). The court also concluded that the rule and order are

unauthorized based on the court’s conclusion that the attorney

affirmation requirement affects the legal relationship between the

parties to a foreclosure proceeding. Here, the court relied not only on

its view that the administrative order required the plaintiff to submit

additional proof of its entitlement to foreclosure, but also on evidence

that there had been a dramatic decrease in the successful prosecution of

foreclosure proceedings since the order was adopted (R. 14). For these

same reasons, the court found the affirmation requirement improperly

diminished the court’s constitutional jurisdiction to adjudicate

foreclosure disputes (R. 15). Accordingly, the court held that the

administrative order and rule “exceed the rulemaking authority of the

Chief Administrative Judge” (R. 15).

  21

Following the Paces’ appeal of the order granting plaintiff

summary judgment and referring the matter to a referee, the Attorney

General was notified of the constitutional challenge presented by this

appeal. The Attorney General intervenes in this proceeding pursuant to

Executive Law § 71 and CPLR 1012(b)(1) to defend the constitutionality

of the administrative order and rule.

In its brief, LaSalle asserts that Supreme Court’s conclusion

regarding the constitutionality of the order was not necessary to the

court’s holding that LaSalle was entitled to summary judgment.

LaSalle argues that the court held that the order did not require

LaSalle to submit an attorney affirmation until later in the proceeding,

and thus the court’s further conclusion that the order was not

authorized was dicta. LaSalle Br. at 6-7. In this brief, we express no

view whether Supreme Court’s conclusion that the order and the rule

were not authorized should be characterized as holding or dicta. We

submit this brief to explain that, however characterized, Supreme

  22

Court’s constitutional conclusion was wrong, and should not be adopted

by this Court.6

ARGUMENT

THE CHIEF ADMINISTRATIVE JUDGE WAS AUTHORIZED TO ISSUE THE ADMINISTRATIVE ORDER AND THE RULE PURSUANT TO HER PLENARY CONSTITUTIONAL POWER OVER ADMINISTRATIVE MATTERS AND PURSUANT TO A VALID DELEGATION OF AUTHORITY BY THE LEGISLATURE

The Chief Administrative Judge, who is appointed by the Chief

Judge of the State with the advice and consent of the Administrative

                                                          6 Although this brief does not express a concluded judgment whether Supreme Court erred in finding that the administrative order did not require the filing of the affirmation in this case until a later stage of the proceeding, we observe that this finding is contrary to the overall purpose and intent of the provisions of the administrative order that address when the affirmation is to be filed, see footnote 4 supra. When read as a whole, these provisions evince an intention that the affirmation should be filed at an early point in the litigation. Thus, in cases brought after the order became effective, the affirmation is to be filed with the RJI so that the accuracy of the documents may be affirmed before judicial oversight commences. In cases such as this case, which were pending on the effective date of the administrative order and in which no judgment of foreclosure had yet been entered, the affirmation shall be filed "at the time of filing either the proposed order of reference or the proposed judgment of foreclosure." Where there is contemplated both a proposed order of reference and a subsequent proposed judgment of foreclosure, the purpose of the administrative order is better served by having the affirmation filed with the proposed order of reference before the court determines whether the final steps toward foreclosure should be taken. Under this view, a plaintiff bank seeking summary judgment and an order of reference should file the attorney affirmation when it submits its proposed order of reference with its motion for summary judgment.  

  23

Board of the Courts, 7 has two sources of authority relevant here:

plenary constitutional authority to “supervise the administration and

operation of the unified court system,” N.Y. Const. Art. 6, § 28(b), and

authority delegated by the Legislature pursuant to its constitutional

powers with respect to regulation of “the jurisdiction and proceedings”

of the courts, N.Y. Const. Art. 6, § 30; Judiciary Law §§ 211(1)(b),

212(2)(d); New York Laws of 2009, ch. 507, § 10-a(1). Each of these

sources of authority independently supports the Chief Administrative

Judge’s power to issue the administrative order and rule at issue on this

appeal.

A. The Chief Administrative Judge’s Order Requiring the Attorney Affirmation Was a Valid Exercise of Her Plenary Administrative Powers.

The New York Constitution directly authorizes the Chief

Administrative Judge, on behalf of the Chief Judge, to “supervise the

administration and operation of the unified court system.” N.Y. Const.

Art. 6, § 28. In exercising her constitutional administrative functions,

the Chief Administrative Judge has the powers and duties delegated to                                                          7 The Administrative Board of the Courts is comprised of the Chief Judge of the Court of Appeals, who serves as its chair, and the presiding justices of the four appellate divisions. N.Y. Const. Art. 6 § 28(a); Judiciary Law § 210(2). Before the 1978 amendment of the New York Constitution, the Administrative Board of the Courts served in the role of chief administrator of the court system.

  24

her by the Chief Judge and any additional powers and duties provided

by law. Id. The Chief Judge has delegated to the Chief Administrative

Judge full authority to supervise the administration and operation of

the unified court system, including authority to adopt administrative

rules “for the efficient and orderly transaction of business in the trial

courts.” 22 N.Y.C.R.R. § 80.1(a) and (b)(6).

With respect to administrative functions, the Chief

Administrator’s powers are “complete.” Matter of Met Council, Inc. v.

Crosson, 84 N.Y.2d 328, 335 (1994); Matter of Scoralick v. Milonas, 207

A.D.2d 159, 160 (3d Dep’t), lv. denied, 86 N.Y.2d 707 (1995). “When

administrative authority is exercised in conformity with the

consultation and approval requirements, [Unified Court System]

administrators possess broad express and implied powers to take

whatever actions are necessary for the proper discharge of their

responsibilities.” People v. Correa, 15 N.Y.3d 213, 223 (2010). “[T]he

Legislature could not by statute divest the Chief Administrator of [her]

[constitutional] authority . . . to supervise the administration and

operation of the Unified Court System on behalf of the Chief Judge.”

  25

Levenson v. Lippman, 4 N.Y.3d 280, 291 (2005); see Matter of Met

Council, Inc. v. Crosson, 84 N.Y.2d at 335.

As the Court of Appeals has explained, in this context the term

“administrative” is elastic; whether an act is administrative depends on

the context in which it is exercised. Corkum v. Bartlett, 46 N.Y.2d 424,

429 (1979). Courts have considered the following matters

administrative powers vested by the Constitution in the Chief Judge

and Chief Administrative Judge: the establishment of personnel

classification plans for court employees, id., the appointment of judicial

and non-judicial court personnel, Matter of Met Council, Inc. v. Crosson,

84 N.Y.2d at 335; Matter of Scoralick v. Milonas, 207 A.D.2d at 160; the

transfer of cases among courts, People v. Correa, 15 N.Y.3d at 224, and

the establishment of a process for administrative review of assigned

counsel fee awards, Levenson v. Lippman, 4 N.Y.3d at 290-91.

Here, the Chief Administrative Judge was performing an

administrative act in issuing the administrative order requiring an

affirmation from plaintiff’s attorney establishing that he performed due

diligence in determining that a representative of the plaintiff had

reviewed the accuracy of the information in the complaint,

  26

accompanying papers, and any affidavits, and in promulgating a rule

authorizing the affirmation requirement. The administrative order and

rule govern “the administration and operation of the unified court

system,” N.Y. Const. Art. 6 § 28(b), and establish a policy “for the

efficient and orderly transaction of business in the trial courts,” 22

N.Y.C.R.R. § 80.1(b)(6).

In particular, the administrative order and the rule further the

purpose of the legislatively required settlement conference in

residential mortgage foreclosure actions by establishing an

administrative process whereby plaintiff confirms the accuracy of the

foreclosure documents, including the plaintiff’s chain of title to the

mortgage, at an early stage before the settlement conference begins.

The Legislature responded to the residential mortgage foreclosure crisis

by creating a new process to govern foreclosure proceedings, including

the right to a prompt settlement conference and notice of the

availability to foreclosure defendants of counseling assistance, see New

York Laws of 2008, ch. 472; New York Laws of 2009, ch. 507. The

administrative order and rule are designed to administer the process

that the Legislature established. The affirmation requirement helps to

  27

ensure that the courts are overseeing settlement conferences in cases

that in fact warrant judicial intervention, that the documents forming

the basis of the settlement conference are accurate and truthful, and

that the settlement conferences serve the functions that the Legislature

intended.

Additionally, requiring plaintiffs to confirm the accuracy of the

underlying foreclosure facts and documents during the initial stages of

the litigation promotes judicial efficiency. Settlement conferences are

commenced in only those cases where plaintiff has confirmed its factual

and legal basis to seek foreclosure. This also conserves judicial time

and resources that might otherwise be expended in reviewing and

deciding motions to dismiss if factual inaccuracies in the foreclosure

documents are later discovered. Thus, the administrative order and

rule further the legislative purpose and promote the efficiency of the

courts in addressing the identified problem. Cf. Levenson v. Lippman,

4 N.Y.3d at 291 (concluding that rule establishing administrative

review of assigned counsel fee awards filled gap left by legislation

establishing assigned counsel fees).

  28

Moreover, the affirmation requirement is similar to many other

rules promulgated by the Chief Administrative Judge requiring the

filing of an affirmation and governing administration of proceedings in

the trial courts. See, e.g., 22 N.Y.C.R.R. § 202.7 (requiring that an

attorney’s affirmation accompany a motion relating to disclosure or a

bill of particular); id. § 202.12 (requiring that an affirmation or affidavit

accompany the note of issue and certificate of readiness in certain

cases); id. § 205.17 (requiring the filing of a sworn permanency report in

family court permanency hearings); id. § 205.49 (requiring the filing of

an attorney’s affirmation where a proceeding to terminate parental

rights of a foster child is brought before a different judge than the one

who presided over the last related proceeding); id. § 205.52 (same,

adoption); see generally id. § 130-1.1-a(b) (attorney’s or party’s signature

on a paper certifies that, based on reasonable inquiry, contentions

therein are not frivolous); id. § 130-1.1(c)(3) (defining frivolous conduct

to include the assertion of false material facts); 22 N.Y.C.R.R. Part 1200,

rule 4.1 (prohibiting attorneys from “knowingly make a false statement

of fact or law to a third person” in the course of representing a client).

The due diligence requirements in the administrative order and rule at

  29

issue here are not different in kind or extent from similar requirements

that have been part of the administration of the court system for years.

Further, contrary to the conclusion of the court below, requiring

the attorney’s affirmation in residential foreclosure proceedings governs

the administration of proceedings because it does not impose any

additional procedural or substantive requirements on the parties, alter

the procedural rules governing these proceedings, or change the burden

of proof. The administrative order and rule do not require the plaintiff

mortgage holder to submit additional information to prove its case.

Rather, the attorney must affirm simply that the plaintiff has reviewed

the documents that it relies on to establish its right to foreclosure and

confirmed their accuracy. This does not change the quantum or burden

of proof, or otherwise alter the procedure of a foreclosure action. In the

absence of the affirmation requirement, the plaintiff would have had no

right to submit false or inaccurate information.

Finally, the purpose of the affirmation fits squarely within the

Chief Administrative Judge’s obligation to protect the integrity of the

judicial process and to prevent continuation of the fraud that was being

perpetrated upon the court. The acknowledged wide-spread practice of

  30

“robo-signing” affidavits by mortgage servicers in residential foreclosure

proceedings demonstrated that existing requirements regarding

attestations as to truth and accuracy of information in pleadings and

affidavits were insufficient to protect the integrity of the courts.

Plaintiffs in residential mortgage foreclosure actions were routinely

flouting the requirement that the individual signing pleadings and

affidavits attest to the truth and accuracy of the information contained

therein -- in many cases the signer was unfamiliar with the underlying

facts and documents or had not even reviewed the affidavit he was

signing.

Thus, the attorney affirmation requirement was imposed as an

additional check on existing requirements regarding the accuracy and

truthfulness of documents submitted to the court. The administration

of justice demands that foreclosure proceedings are based on truthful

and accurate pleadings, and that the public perceive this is so. The

administrative order and rule constitute a minimal precaution intended

to guard against the well-documented proliferation of neglect and fraud.

Accordingly, the administrative order and the rule were authorized by

  31

the Chief Administrative Judge’s plenary constitutional authority to

supervise the administration of the court system.

B. The Chief Administrative Judge’s Order Was Also a Proper Exercise of Authority Delegated by the Legislature. The Constitution authorizes the Legislature to regulate court

practice and procedure and permits the Legislature to delegate its

regulatory authority to a trial court, the appellate division, or the Chief

Administrative Judge. N.Y. Const. art. 6, § 30. Thus, while the Chief

Judge and Chief Administrative Judge exercise plenary, complete

authority over the administration of the courts, see Point A above, the

Chief Administrative Judge may also exercise authority to regulate

practice and procedure that the Legislature has delegated by statute.

In this case, the administrative order and the rule are supported both

by the broad delegation of authority contained in the Judiciary Law and

by the specific grant of authority contained in the 2009 foreclosure

legislation.

1. The Judiciary Law and 2009 foreclosure legislation authorize the order and the rule. In the Judiciary Law, the Legislature delegated broad authority to

the Chief Judge regarding court practice and procedure. Pursuant to

  32

Judiciary Law § 211(1)(b), the Chief Judge may adopt “rules and orders

regulating practice and procedure in the courts, subject to the reserved

power of the [L]egislature provided for in section thirty of article six of

the constitution.” See also Judiciary Law § 212(2)(d) (authorizing the

Chief Administrative Judge to adopt “rules and orders regulating

practice in the courts as authorized by statute”).

The administrative order and the rule regulate court practice and

procedure within the meaning of sections 211 and 212 of the Judiciary

Law. They require simply that the plaintiff’s counsel affirm the

accuracy of the pleadings and documents, and file the affirmation at the

time that the RJI is filed. The Court of Appeals has recognized similar

requirements as procedural for this purpose. See Matter of A.G. Ship

Maintenance Corp. v. Lezak, 69 N.Y.2d 1, 6 (1986) (recognizing that, in

the exercise of their delegated authority to regulate practice and

procedure, courts may proscribe frivolous conduct and impose sanctions).

In addition to the broad general grant of authority contained in

the Judiciary Law, the Legislature has specifically authorized the Chief

Administrative Judge to adopt rules to implement the mortgage

foreclosure settlement conference process. In establishing the

  33

settlement conference process and then expanding it in 2009, the

Legislature provided that the Chief Administrative Judge may adopt

“such additional rules as may be necessary to ensure the just and

expeditious processing of all settlement conferences hereunder.” New

York Laws of 2009, ch. 507, § 10-a(1). As explained in Point A above,

the administrative order and rule at issue here are designed to further

the legislative goals of the settlement conference process. The

affirmation requirement helps to ensure that the settlement

conferences are meaningful because the plaintiffs are coming to them

with documents that are truthful. See also CPLR 3401 (directing the

Chief Administrator of the Courts to “adopt rules regarding the hearing

of causes, which may include the filing of notes of issue, the preparation

and publication of calendars, and the calendar practice for the courts”).

Thus, the administrative order and the rule adopted by the Chief

Administrative Judge at the direction of the Chief Judge, see AO 431-11,

are authorized by the authority lawfully delegated to the Chief Judge

by the Legislature to regulate the practice and procedure of the courts

and by the Legislature’s specific delegation of rule making authority to

the Chief Administrative Judge.

  34

2. The order and the rule are consistent with limitations on the Chief Administrative Judge’s authority. The Court of Appeals has recognized that the rules and orders of

the Chief Administrative Judge issued pursuant to a delegation of

Legislative authority must be consistent with existing statutes and

cannot “‘invade recognized rights of person or property.’” People v.

Ramos, 85 N.Y.2d 678, 687-88 (1995) (quoting McQuigan v. Delaware,

Lackawanna & W.R.R. Co., 129 N.Y. 50, 55 (1891)); see Matter of A.G.

Ship Maintenance Corp. v. Lezak, 69 N.Y.2d at 6. Thus, where the

Legislature has defined the legal relationship between the parties by

statute or conferred certain rights, an order or rule of the Chief

Administrative Judge may not significantly alter that legal relationship

or abridge those rights. People v. Ramos, 85 N.Y.2d at 687-88.

The Chief Administrative Judge did not exceed this limitation in

issuing the order and rule. The limitation bars only additional

procedural hurdles “that impair statutory remedies.” Id. at 688. Thus,

in People v. Ramos, the Court of Appeals found a rule of the Appellate

Division, Second Department requiring personal service of the People’s

appellate brief on criminal defendants unauthorized both because it

was inconsistent with general rules of practice requiring, inter alia,

  35

service of the notice of appeal on defendant’s counsel and because it

allowed the defendant to completely defeat the People’s statutory right

to appeal. Id. at 688-89. Moreover, the purpose for which the rule in

that case was promulgated -- to implement what the Appellate Division

mistakenly believed was a criminal defendant’s due process right to

personal notice -- demonstrated that the rule was intended to affect

substantive rights rather than to control administrative or procedural

aspects of the proceeding. Id. at 689.

Here, in contrast, the requirement that the plaintiff’s attorney

submit an affirmation confirming communication with her client as to

the factual accuracy of the papers relied upon does not “invade

recognized rights of person or property.” The plaintiff has no right to

submit false or inaccurate information to the court and must already

attest to the truthfulness of information submitted in verified pleadings

and affidavits. Similarly, as noted in Point A above, the requirement

that the attorney affirm to the best of her knowledge, information and

belief that the complaint and other documents filed with the court

contain no false statements is not substantively different than the

attorney’s obligation under existing rules to avoid frivolous conduct and

  36

false statements of fact. See 22 N.Y.C.R.R. § 130-1.1(c)(3); 22 N.Y.C.R.R.

Part 1200, rule 4.1. Thus, to the extent that the affirmation

requirement rests on the Chief Administrative Judge’s delegated

authority to regulate the practice and procedure of the courts, it is a

proper exercise of the delegated authority because it is not inconsistent

with statute and does not impair the existing rights of the parties.

Supreme Court’s contrary reasoning is unpersuasive. The court

concluded that the administrative order imposed an additional,

substantive requirement on foreclosure plaintiffs concerning the

required nature and sufficiency of their proof (R. 15). As we have

explained, however, the administrative order and rule do not require

additional or different proof to establish plaintiff’s right to foreclosure,

but merely require the plaintiff’s attorney to confirm that she performed

minimal due diligence in ensuring that plaintiff possesses and has

reviewed the proof on which plaintiff relies.

In addition, the court mistakenly characterized the order as

“affect[ing] the nature of evidence to be received and considered by the

court,” and found that the order diminished the court’s constitutional

jurisdiction to hear and decide foreclosure actions (R. 14-15). However,

  37

the Court of Appeals has explained that procedural rules may properly

affect the ability of a party to litigate a proceeding or the ability of a

court to adjudicate a matter. In People v. Ramos, the Court contrasted

rules for processing and perfecting appeals that, if disregarded, may

properly result in a party’s forfeiture of the right to appeal, with the

rule at issue in that case that improperly impaired the People’s

statutory right to appeal by giving the defendant the ability to defeat

the People’s attempt to comply with the rule. 85 N.Y.2d at 688-89. The

order and rule at issue here are not comparable to the rule in Ramos;

they do not enable another party to defeat the plaintiff’s attempt to

comply with them.8

Because the order and rule fall within the Legislature’s broad

delegation to the Chief Judge and Chief Administrative Judge of

authority to regulate practice and procedure of the courts, as well as the

Legislature’s specific delegation in the 2009 legislation, and do not

conflict with any existing legislation nor invade existing rights, they

should be upheld as a proper exercise of delegated legislative authority.

                                                          8  The order and rule do not specify the consequences of a plaintiff’s failure to comply, and Supreme Court Justices have reached different conclusions on that issue.

  38

CONCLUSION

The administrative order and rule constitute a valid exercise of

the Chief Administrative Judge’s constitutional and delegated powers.

Accordingly, they are constitutional.

Dated: Albany, New York March 1, 2012

Respectfully submitted,

ERIC T. SCHNEIDERMAN Attorney General of the State of New York

By:____________________________

LAURA ETLINGER Assistant Solicitor General Office of the Attorney General The Capitol Albany, New York 12224 (518) 474-2256

BARBARA D. UNDERWOOD Solicitor General ANDREW D. BING Deputy Solicitor General LAURA ETLINGER Assistant Solicitor General of Counsel

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CERTIFICATE OF COMPLIANCE I hereby certify pursuant to 22 NYCRR § 670.10.3(f) that the

foregoing brief was prepared on a computer.

Type. A monospaced typeface was used, as follows:

Name of typeface: Century Schoolbook Point size: 14 Line spacing: Double

Word Count. The total number of words in the brief, inclusive

of point headings and footnotes and exclusive of pages

containing the table of contents, table of citations, proof of

service, certificate of compliance, or any authorized addendum

containing statutes, rules, regulations, etc. is 6479.

Date: Albany, New York March 1, 2012

ERIC T. SCHNEIDERMAN Attorney General of the State of New York (LAURA ETLINGER, of Counsel)

Intervenor The Capitol

Albany, New York 12224 (518) 474-2256