Deutsche Bank Nat'l Trust Co. v. Torres

• Decision Date: 26 September 2014
• Docket Number: No. 2999–08.,2999–08.
• Citation: 5 N.Y.S.3d 327 (Table)
• Parties: DEUTSCHE BANK NATIONAL TRUST CO., Plaintiff, v. Carmen L. TORRES, Defendant.
• Court: New York Supreme Court

5 N.Y.S.3d 327 (Table)

DEUTSCHE BANK NATIONAL TRUST CO., Plaintiff

v.Carmen L. TORRES, Defendant.

No. 2999–08.

Supreme Court, Suffolk County, New York.

Sept. 26, 2014.

Kozeny, McCubbin, Melville, attorneys for plaintiff.

Howard B. Arber, Esq., Hempstead, attorneys for Carmen L. Torres.

Opinion

THOMAS F. WHELAN, J.

Upon the following papers numbered 1 to 7 read on this motion by the plaintiff for summary judgment and an order appointing a referee to compute and other relief; Notice of Motion/Order to Show Cause and supporting papers 1–3; Notice of Cross Motion and supporting papers; Opposing papers: 4–5; Reply papers 6–7; Other; (and after hearing counsel in support of and in opposition to the motion) it is,

ORDERED that this motion (# 006) by the plaintiff for, an order awarding summary judgment dismissing the affirmative defenses advanced in the amended answer of mortgagor defendant Carmen Torres and for summary on the plaintiff's complaint against such defendant together with an order appointing a referee to compute is considered and other relief is considered under CPLR 3212 and RPAPL 1321 and granted only to the extent that the Second, Third and Fourth affirmative defenses asserted in the answer of defendant Torres is denied; and it is further

ORDERED that a certification conference shall be held herein on Tuesday, October 28, 2014 at 9:30 a.m, in the courtroom of the undersigned located in the Annex Building of the Supreme Court at One Court Streee, Riverhead, New York 11901.

In this mortgage foreclosure action, the plaintiff moves for summary judgment against the surviving, mortgagor defendant, Carmen Torres. A prior order awarding such relief to the plaintiff dated October 9, 2010 was vacated by order of this court dated January 28, 2011 upon the stipulation of counsel. The instant motion is opposed by defendant Torres who asserts the several affirmative defenses contained in her amended answer, including that the plaintiff lacks standing to prosecute its claims for foreclosure and sale. While the court finds that the moving papers sufficiently demonstrated that three of the four affirmative defenses contained in the answer of defendant Torres are without merit, the plaintiff failed to adequately demonstrate that the affirmative defense of a lack of standing is without merit.

Entitlement to a judgment of foreclosure may be established, as a matter of law, where a mortgagee produces both the mortgage and unpaid note, together with evidence of the mortgagor's default, thereby shifting the burden to the mortgagor to demonstrate, through both competent and admissible evidence, any defense which could raise a question of fact” (Zanfini v. Chandler, 79 A.D.3d 1031, 912 N.Y.S.2d 911 [2d Dept 2010], quoting HSBC Bank USA v. Merrill, 37 A.D.3d 899, 900, 830 N.Y.S.2d 598 [2d Dept 2010] ; see Plaza Equities, LLC v. Lamberti, 118 A.D.3d 688, 986 N.Y.S.2d 843 [2d Dept 2014] ; Emigrant Mtge. Co., Inc. v. Beckerman, 105 A.D.3d 895, 964 N.Y.S.2d 548 [2d Dept 2013] ; Solomon v. Burden, 104 A.D.3d 839, 961 N.Y.S.2d 535 [2d Dept 2013] ; US Bank Natl. Ass'n. v. Denaro, 98 A.D.3d 964, 950 N.Y.S.2d 581 [2d Dept 2012] ; Baron Assoc., LLC v. Garcia Group Enter., 96 A.D.3d 793, 946 N.Y.S.2d 611 [2d Dept 2012] ). This standard is enlarged to include a demonstration that the plaintiff is possessed of the requisite standing to pursue its claims where, and only where, the defense of standing is due and timely asserted by a defendant possessed of such defense (see Plaza Equities, LLC v. Lamberti, 118 A.D.3d 688, 986 N.Y.S.2d 843, supra; see Peak Fin. Partners, Inc. v. Brook, 119 A.D.3d 539, 987 N.Y.S.2d 916 [2d Dept 2014] ; Kondaur Capital Corp. v. McCary, 115 A.D.3d 649, 981 N.Y.S.2d 547 [2d Dept 2014] ; Deutsche Bank Natl. Trust Co. v. Whalen, 107 A.D.3d 931, 969 N.Y.S.2d 82 [2d Dept 2013] ; Deutsche Bank Natl. Trust Co. v. Rivas, 95 A.D.3d 1061, 945 N.Y.S.2d 328 [2d Dept 2012] ; Citimortgage, Inc. v. Stosel, 89 A.D.3d 887, 888, 934 N.Y.S.2d 182 [2d Dept 2011] ; U.S. Bank, N.A. v. Adrian Collymore, 68 A.D.3d 752, 890 N.Y.S.2d 578 [2d Dept 2009] ; Wells Fargo Bank Minn., N.A. v. Mastropaolo, 42 A.D.3d 239, 837 N.Y.S.2d 247 [2d Dept 2007] ).

“A plaintiff establishes its standing in a mortgage foreclosure action by demonstrating that it is both the holder or assignee of the subject mortgage and the holder or assignee of the underlying note” at the time the action is commenced (US Bank, N.A. v. Morrison, ––– A.D.3d ––––, 993 N.Y.S.2d 50, 2014 WL 4435687 quoting Kondaur Capital Corp. v. McCary, 115 A.D.3d 649, 650, 981 N.Y.S.2d 547 [2d Dept see Bank of N.Y. v. Silverberg, 86 A.D.3d 274, 279, 926 N.Y.S.2d 532 [2d Dept 2011] ; U.S. Bank, N.A. v. Collymore, 68 A.D.3d 752, 753, 890 N.Y.S.2d 578 [2d Dept 2009] ).¹ The plaintiff may demonstrate that it is the holder or assignee of the underlying note by showing “[e]ither a written assignment of the underlying note or the physical delivery of the note” (see Midfirst Bank v. Agho, ––– A.D.3d ––––, 991 N.Y.S.2d 623, 2014 WL 3929100 [2d Dept 2014] ; US Bank, N.A. v. Morrison, –––A.D.3d ––––, 993 N.Y.S.2d 50, 2014 WL 4435687 [2d Dept 2014] ; US Bank of N.Y. v. Silverberg, 86 A.D.3d 274, 926 N.Y.S.2d 532 [2d Dept 2011] ).

The foregoing rule governing note transfer is the result of the ancient principal/incident rule which provides that a mortgage may not stand separate from the note evidencing the principal debt or obligation because the mortgage is merely security therefor (see Weaver Hardware Co. v. Solomovitz, 235 N.Y. 321, 331–332, 139 N.E. 353 [1923] ; US Bank of N.Y. v. Silverberg, 86 A.D.3d 274, 280, 926 N.Y.S.2d 532, supra ). Accordingly, a mortgage passes as an incident of the note upon such note's written assignment or upon its physical delivery to the plaintiff prior to commencement of the action (see PHH Mortg. Corp. v. Israel, ––– A.D.3d ––––, 992 N.Y.S.2d 355, 2014 WL 4627577 [2d Dept 2014] ; Deutsche Bank Natl. Trust Co. v. Whalen, 107 A.D.3d 931, 969 N.Y.S.2d 82 [2d Dept 2013] ; One West Bank FSB v. Carey, 104 A.D.3d 444, 960 N.Y.S.2d 306 [1st Dept 2013] ; Deutsche Bank Trust Co. Am. v. Codio, 94 A.D.3d 1040, 943 N.Y.S.2d 545 [2d Dept 2012] ; GRP Loan, LLC v. Taylor, 95 A.D.3d 1172, 945 N.Y.S.2d 336 [2d Dept 2012] ). In all cases wherein the plaintiff is one other than the original mortgage lender, a valid transfer of the note to the plaintiff prior to the commencement of the action, which effects a valid transfer of the mortgage under the principal/incident rule, will resolve the standing issue in favor of the plaintiff (see PHH Mortg. Corp. v. Israel, ––– A.D.3d ––––, 992 N.Y.S.2d 355, 2014 WL 4627577 [2d Dept 2014], supra; Deutsche Bank Natl. Trust Co. v. Whalen, 107 A.D.3d 931, 969 N.Y.S.2d 82, supra; One West Bank FSB v. Carey, 104 A.D.3d 444, 960 N.Y.S.2d 306, supra; US Bank Natl. Ass'n v. Cange, 96 AD3d 825,96 A.D.3d 825, 947 N.Y.S.2d 522 [2d Dept 2012] ; Deutsche Bank Trust Co. Am. v. Codio, 94 A.D.3d 1040, 943 N.Y.S.2d 545 [2d Dept 2012]U.S. Bank, N.A. v. Adrian Collymore, 68 A.D.3d 752, 890 N.Y.S.2d 578, supra ).

Here, the plaintiff predicates upon its possession of the mortgage note that was endorsed in blank by the original lender on the face of such note. In addition, the plaintiff rests its standing upon an indenture entitled “Assignment of Mortgage” in favor of the plaintiff that was executed by Mortgage Electronic Registration Systems, Inc., [hereinafter “MERS”] as nominee of WMC Mortgage Corp., the original lender,, on January 17, 2008, which predates the commencement of this action on January 22, 2008 by five days.

Mortgage notes may be transferred by mere delivery to a third party transferee as it has long been recognized that “a good assignment is made by delivery only” (see Fryer v. Rockefeller, 63 N.Y. 268, 276 [1875] ). In addition, it is clear “[n]o special form or language is necessary to effect an assignment as long as the language shows the intention of the owner of a right to transfer it' “ (Bank of New York v. Silverberg, 86 A.D.3d 274, 926 N.Y.S.2d 532 [2d Dept 2011], quoting Suraleb, Inc. v. International Trade Club, Inc., 13 A.D.3d 612, 612, 788 N.Y.S.2d 403 [2d Dept 2004] ; see also OneWest Bank FSB v. Carey, 104 A.D.3d 444, 960 N.Y.S.2d 306 [1st Dept 2013] ; Chase Home Finance, LLC v. Miciotta, 101 A.D.3d 1307, 956 N.Y.S.2d 271 [3d Dept 2012] ). As a general matter, once a promissory note is tendered to and accepted by an assignee, the mortgage passes as an incident to the note (see HSBC Bank USA, Nat. Ass'n v. Gilbert, 120 A.D.3d 756, 991 N.Y.S.2d 358 [2d Dept 2014] ; U.S. Bank Nat. Ass'n v. Faruque, 120 A.D.3d 575, 991 N.Y.S.2d 630, 2014 WL 3928918 [2d Dept 2014] ; Bank of New York v. Silverberg, 86 A.D.3d 274, 926 N.Y.S.2d 532, supra ).

In addition to mere delivery, mortgage notes may be transferred to third party “holders” by negotiation provided that such notes qualify as negotiable instruments under the Uniform Commercial Code (see UCC 3–104 ; Mortgage Elec. Registration Sys., Inc. v. Coakley, 41 A.D.3d 674, 838 N.Y.S.2d 622 [2d Dept.2007] ). New York's Uniform Commercial Code (UCC) § 1–201(20) defines “holder” as “a person who is in possession of a document of title, an instrument or an investment security drawn, issued or indorsed to him or to his order or to bearer or in blank” and a person becomes the holder of an instrument “through its negotiation” to him or her (see UCC § 3–202[1] ). Where the instrument is payable to order, it is negotiated by delivery and all necessary endorsements and where it is payable to the bearer by virtue of an indorsement in blank or otherwise, delivery alone is sufficient to transfer it to a third party (see UCC 3–204[2] ; Franzese v. Fidelity New York FSB, 214 A.D.2d 646, 625 N.Y.S.2d 275 [2d Dept 1995] ).

Holder status of a note and mortgage may thus arise where the plaintiff possesses a mortgage note which bears, on its face or in an affixed allonge, a special indorsement payable to the order of the plaintiff or...