Deutsche Bank Nat'l Trust Co. v. Brewton

• Decision Date: 31 August 2016
• Citation: Deutsche Bank Nat'l Trust Co. v. Brewton, 2016 NY Slip Op 5906, 142 A.D.3d 683, 37 N.Y.S.3d 25 (N.Y. App. Div. 2016)
• Parties: DEUTSCHE BANK NATIONAL TRUST COMPANY, etc., appellant, v. Stuart BREWTON, respondent, et al., defendants.
• Court: New York Supreme Court — Appellate Division

142 A.D.3d 683

37 N.Y.S.3d 25

2016 N.Y. Slip Op. 05906

DEUTSCHE BANK NATIONAL TRUST COMPANY, etc., appellant,

v.Stuart BREWTON, respondent, et al., defendants.

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

Aug. 31, 2016.

Hogan Lovells U.S. LLP, New York, N.Y. (David Dunn, Chava Brandriss, and Benjamin P. Jacobs of counsel), for appellant.

RUTH C. BALKIN, J.P., SANDRA L. SGROI, COLLEEN D. DUFFY, and FRANCESCA E. CONNOLLY, JJ.

In an action to foreclose a mortgage, the plaintiff appeals, as limited by its brief, from so much of an order of the Supreme Court, Kings County (Baynes, J.), dated June 26, 2013, as denied its motion, inter alia, for summary judgment on the complaint and granted that branch of the cross motion of the defendant Stuart Brewton which was to compel discovery.

ORDERED that the order is modified, on the law, by deleting the provision thereof granting that branch of the cross motion of the defendant Stuart Brewton which was to compel discovery, and substituting therefor a provision denying that branch of the cross motion; as so modified, the order is affirmed insofar as appealed from, without costs or disbursements.

On April 3, 2006, the defendant Stuart Brewton (hereinafter the defendant) obtained a loan in the amount of $496,000 from nonparty WMC Mortgage Corp. In return, the defendant executed a note and gave a mortgage on certain real property. The note contains an undated endorsement in blank by “Alex Arguello, Asst. Sect. WMC Mortgage Corp.” The defendant allegedly defaulted under the terms of the note by failing to make the payment due on August 1, 2009. On January 8, 2010, the plaintiff commenced this foreclosure action. In his answer, the defendant asserted the defense of lack of standing.

The plaintiff subsequently moved, inter alia, for summary judgment on the complaint. The defendant cross-moved for summary judgment dismissing the complaint on the ground that the plaintiff lacked standing or, in the alternative, to compel further unspecified discovery. The Supreme Court denied the plaintiff's motion and that branch of the defendant's motion which was for summary judgment dismissing the complaint, and granted that branch of the defendant's cross motion which was to compel discovery. The plaintiff appeals.

“Generally, in moving for summary judgment in an action to foreclose a mortgage, a plaintiff establishes its prima facie case through the production of the mortgage, the unpaid note, and evidence of default” (Plaza Equities, LLC v. Lamberti, 118 A.D.3d 688, 689, 986 N.Y.S.2d 843 ). “Where, as here, standing is put into issue by a defendant, the plaintiff must prove its standing in order to be entitled to relief” (Aurora Loan Servs., LLC v. Taylor, 114 A.D.3d 627, 628, 980 N.Y.S.2d 475affd. 25 N.Y.3d 355, 12 N.Y.S.3d 612, 34 N.E.3d 363 [internal quotation marks omitted] ). A plaintiff has standing in a mortgage foreclosure action where 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 at 361, 12 N.Y.S.3d 612, 34 N.E.3d 363 ; U.S. Bank N.A. v. Handler, 140 A.D.3d 948, 34 N.Y.S.3d 463 ). “Either a written assignment of the underlying note or the physical delivery of the note prior to the commencement of the foreclosure action is sufficient to transfer the obligation, and the mortgage passes with the debt as an inseparable incident” (US Bank, N.A. v. Collymore, 68 A.D.3d 752, 754, 890 N.Y.S.2d 578 ).

Here, the plaintiff failed to establish, prima facie, that it was a holder or assignee of the note prior to commencement of the action. “[A] promissory note [is] a negotiable instrument within the meaning of the Uniform Commercial Code” (Mortgage Elec. Registration Sys., Inc. v. Coakley, 41 A.D.3d 674, 674, 838 N.Y.S.2d 622 ; see UCC 3–104[2][d] ). A “holder” is “the person in possession of a negotiable instrument that is payable either to bearer or to an identified person that is the person in possession” (UCC 1–201[b][21] ; see UCC 3–301 [“The holder of an instrument whether or not he is the owner may ... enforce payment in his own name”] ). Where, as here, the instrument is endorsed in blank, it may be negotiated by delivery (see UCC 3–202[1], 3–204 [2 ] ). Accordingly, to establish standing as holder of the note, the plaintiff was required to demonstrate that it was in physical possession of the note endorsed in blank prior to commencement of the action.

“To obtain summary judgment it is necessary that the movant establish his cause of action or defense sufficiently to warrant the court as a matter of law in directing judgment in his favor, and he must do so by tender of evidentiary proof in admissible form ” (Zuckerman v. City of New York, 49 N.Y.2d 557, 562, 427 N.Y.S.2d 595, 404 N.E.2d 718 [citation and internal quotation marks omitted] [emphasis added] ). Here, the plaintiff attempted to establish its standing by submitting the affidavit of Angela Frye, Vice President of Loan Documentation for Wells Fargo Bank, N.A. (hereinafter Wells Fargo), the servicer of the defendant's loan on behalf of the plaintiff. Frye...