Aurora Loan Servs., LLC v. Komarovsky

• Decision Date: 21 June 2017
• Citation: 151 A.D.3d 924,58 N.Y.S.3d 96
• Parties: AURORA LOAN SERVICES, LLC, plaintiff, v. Reuven KOMAROVSKY, et al., appellants, et al., defendants; Nationstar Mortgage, LLC, nonparty-respondent.
• Court: New York Supreme Court — Appellate Division

151 A.D.3d 924

58 N.Y.S.3d 96

AURORA LOAN SERVICES, LLC, plaintiff,

v. Reuven KOMAROVSKY, et al., appellants, et al., defendants;Nationstar Mortgage, LLC, nonparty-respondent.

Supreme Court, Appellate Division, Second Department, New York.

June 21, 2017.

Beth Goldman, New York, NY (Noelle F. Eberts and Timothy D. Brennan of counsel), for appellants.

Sandelands Eyet, LLP, New York, NY (William C. Sandelands of counsel), for nonparty-respondent.

L. PRISCILLA HALL, J.P., SANDRA L. SGROI, JOSEPH J. MALTESE, and COLLEEN D. DUFFY, JJ.

In an action to foreclose a mortgage, the defendants Reuven Komarovsky and Alexander Komarovsky appeal, as limited by their brief, from so much of an order of the Supreme Court, Kings County (Bayne, J.), dated March 23, 2015, as granted those branches of the motion of nonparty Nationstar Mortgage, LLC, as assignee of the plaintiff, which were for summary judgment on the complaint insofar as asserted against them, to strike their answer, and for an order of reference, and denied their cross motion, in effect, for summary judgment dismissing the complaint insofar as asserted against them.

ORDERED that the order is modified, on the law, by deleting the provision thereof granting those branches of the motion of nonparty Nationstar Mortgage, LLC, which were for summary judgment on the complaint insofar as asserted against the defendants Reuven Komarovsky and Alexander Komarovsky, to strike their answer, and for an order of reference, and substituting therefor a provision denying those branches of the motion; as so modified, the order is affirmed insofar as appealed from, without costs or disbursements.

In July 2004, Reuven Komarovsky borrowed the sum of $516,300 from Odyssey Funding, LLC (hereinafter Odyssey). As security for the obligation, Reuven Komarovsky and Alexander Komarovsky (hereinafter together the defendants) delivered to Odyssey a mortgage on real property located on 65th Street in Brooklyn. In May 2007, Reuven Komarovsky borrowed the additional sum of $146,960.48 from Odyssey, secured by a second mortgage on the subject property. The same year, the defendants executed a consolidation, extension, and modification agreement (hereinafter CEMA), and Reuven Komarovsky executed a consolidated note in the sum of $647,000. The defendants executed a consolidated mortgage as security for the consolidated loan.

In November 2009, Aurora Loan Services, LLC (hereinafter Aurora), commenced this action to foreclose the consolidated mortgage. Thereafter, Aurora allegedly assigned the consolidated mortgage and underlying instruments to nonparty Nationstar Mortgage, LLC (hereinafter Nationstar). After discovery, Nationstar moved, inter alia, for summary judgment on the complaint insofar as asserted against the defendants, to strike their answer, and for an order of reference. The defendants cross-moved, in effect, for summary judgment dismissing the complaint insofar as asserted against them. The Supreme Court granted Nationstar's motion and denied the defendants' cross motion.

"To establish a prima facie case in an action to foreclose a mortgage, a plaintiff must produce ‘the mortgage, the unpaid note, and evidence of default’ " ( Flagstar Bank, FSB v. Mendoza, 139 A.D.3d 898, 899, 32 N.Y.S.3d 278, quoting Emigrant Mtge. Co., Inc. v. Beckerman, 105 A.D.3d 895, 895, 964 N.Y.S.2d 548 ). Additionally, where, as here, the plaintiff's standing has been placed in issue by the defendants' answer, the plaintiff must prove its standing as part of its prima facie showing on a motion for summary judgment (see Flagstar Bank, FSB v. Mendoza, 139 A.D.3d at 899, 32 N.Y.S.3d 278 ; LaSalle Bank, N.A. v. Zaks, 138 A.D.3d 788, 29 N.Y.S.3d 514 ; Aurora Loan Servs., LLC v. Mercius, 138 A.D.3d 650, 651, 29 N.Y.S.3d 462 ).

In a foreclosure action, a plaintiff has standing if it is the holder or assignee of the underlying note at the time the action is commenced (see Aurora Loan Servs., LLC v. Taylor, 25 N.Y.3d 355, 361–362, 12 N.Y.S.3d 612, 34 N.E.3d 363 ; One W. Bank, FSB v. Albanese, 139 A.D.3d 831, 832, 30 N.Y.S.3d 337 ; Aurora Loan Servs., LLC v. Mercius, 138 A.D.3d at 651, 29 N.Y.S.3d 462 ). A plaintiff may demonstrate that it is the holder or assignee of the underlying note by showing either a written assignment or physical delivery of the note (see Aurora Loan Servs., LLC v. Mercius, 138 A.D.3d at 651, 29 N.Y.S.3d 462 ).

Here, Nationstar failed to meet its prima facie burden of establishing that Aurora had standing to commence the action. In support of its motion, Nationstar relied on the affidavit of Doris Raimundi, a vice president of Nationstar, who asserted that "pursuant to the business records of Aurora Loan Services, LLC, the original Note was held in its custody since September 23, 2009, prior to commencement of this action," and that the note had since been delivered to Nationstar. However, Nationstar failed to demonstrate the admissibility of the records relied upon by Raimundi under the business records exception to the hearsay rule (see CPLR 4518[a] ), since Raimundi did not attest that she was personally familiar with Aurora's record-keeping practices and procedures (see Aurora Loan Servs., LLC v. Baritz, 144 A.D.3d 618, 620, 41 N.Y.S.3d 55 ; U.S. Bank N.A. v. Handler, 140 A.D.3d 948, 949, 34 N.Y.S.3d 463 ; Aurora Loan Servs., LLC v. Mercius, 138 A.D.3d at 652, 29 N.Y.S.3d 462 ). Inasmuch as Nationstar's motion was based on evidence that was not in admissible form, it failed to establish its prima facie entitlement to judgment as a matter of law (see HSBC Mtge. Servs., Inc. v. Royal, 142 A.D.3d 952, 37 N.Y.S.3d 321 ; Aurora Loan Servs., LLC v. Mercius, 138 A.D.3d 650, 29 N.Y.S.3d 462 ). Accordingly, the Supreme Court should have denied those branches of Nationstar's motion which were for summary judgment on the complaint insofar as asserted against the defendants, to strike their answer, and for an order of reference.

The Supreme Court properly denied that branch of the defendants' cross motion which,...