HSBC Bank USA, Nat'l Ass'n v. Ozcan

• Citation: 154 A.D.3d 822,64 N.Y.S.3d 38
• Parties: HSBC BANK USA, NATIONAL ASSOCIATION, as trustee for Nomura Asset–Backed Certificate Series, 2006–AF1, respondent, v. Hasan OZCAN, also known as H. Ozcan, appellant, et al., defendants.
• Decision Date: 18 October 2017
• Court: New York Supreme Court Appellate Division

154 A.D.3d 822
64 N.Y.S.3d 38

HSBC BANK USA, NATIONAL ASSOCIATION, as trustee for Nomura Asset–Backed Certificate Series, 2006–AF1, respondent,
v.
Hasan OZCAN, also known as H. Ozcan, appellant, et al., defendants.

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

Oct. 18, 2017.

64 N.Y.S.3d 40

Harvey Sorid, Uniondale, NY (Melissa Montenes of counsel), for appellant.

Hogan Lovells US LLP, New York, NY (David Dunn, Chava Brandriss, and Suzanne Novak of counsel), for respondent.

REINALDO E. RIVERA, J.P., CHERYL E. CHAMBERS, JOSEPH J. MALTESE, and BETSY BARROS, JJ.

154 A.D.3d 822

In an action to foreclose a mortgage, the defendant Hasan Ozcan, also known as H. Ozcan, appeals, as limited by his brief, from so much of an order of the Supreme Court, Nassau County (Adams, J.), entered April 10, 2015, as granted those branches of the plaintiff's motion which were for summary judgment on the complaint insofar as asserted against him and

154 A.D.3d 823

for an order of reference, and denied his cross motion for summary judgment dismissing the complaint insofar as asserted against him.

ORDERED that the order is affirmed insofar as appealed from, with costs.

In June 2006, the defendant Hasan Ozcan, also known as H. Ozcan (hereinafter the defendant), purchased real property in Inwood, Nassau County. At or near the same time, the defendant executed a note in the sum of $497,000 in favor of Approved Funding Corp. (hereinafter the original lender), which was secured by a mortgage on the property. Subsequently, by an assignment of mortgage dated January 17, 2012, the mortgage was assigned to the plaintiff. In June 2012, the plaintiff commenced this action against the defendant, among others, to foreclose the mortgage. The plaintiff served the summons, complaint, and notice pursuant to RPAPL 1303 upon the defendant at his actual place of residence in Cedarhurst, Nassau County, which was listed on the deed transferring the Inwood property to him. The plaintiff also served the summons, complaint, and notice pursuant to RPAPL 1303 upon six individually named tenants, who resided in apartments at the Inwood property.

In July 2012, the defendant served an answer with affirmative defenses and a counterclaim. In an order dated December 4, 2012, the Supreme Court directed the plaintiff to proceed with the foreclosure

64 N.Y.S.3d 41

action after the defendant failed to appear at a scheduled residential foreclosure conference.

Thereafter, the plaintiff moved, inter alia, for summary judgment on the complaint insofar as asserted against the defendant and for an order of reference, and the defendant cross-moved for summary judgment dismissing the complaint insofar as asserted against him. The Supreme Court granted the plaintiff's motion and denied the defendant's cross motion. The defendant appeals.

Where, as here, the issue of standing is raised by a defendant, a plaintiff must prove its standing in order to be entitled to relief (see U.S. Bank N.A. v. Cox, 148 A.D.3d 962, 49 N.Y.S.3d 527 ; HSBC Bank USA, N.A. v. Roumiantseva, 130 A.D.3d 983, 983, 15 N.Y.S.3d 117 ). A plaintiff has standing where it is either 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, 12 N.Y.S.3d 612, 34 N.E.3d 363 ; Central Mtge. Co. v. Jahnsen, 150 A.D.3d 661, 56 N.Y.S.3d 107 ; HSBC Bank USA, N.A. v. Spitzer, 131 A.D.3d 1206, 1207, 18 N.Y.S.3d 67 ). "Either a written assignment of the underlying note or the physical delivery of the note ... is sufficient to transfer the obligation,

154 A.D.3d 824

and the mortgage passes with the debt as an inseparable incident" ( U.S. Bank, N.A. v. Collymore, 68 A.D.3d 752, 754, 890 N.Y.S.2d 578 ; see Aurora Loan Servs., LLC v. Taylor, 25 N.Y.3d at 361–362, 12 N.Y.S.3d 612, 34 N.E.3d 363 ; JPMorgan Chase Bank, N.A. v. Weinberger, 142 A.D.3d 643, 644–645, 37 N.Y.S.3d 286 ).

Here, the plaintiff alleged in the complaint that it was the current holder of the note, and that the note was endorsed by the original lender and delivered to the plaintiff prior to the commencement of the action. In moving for summary judgment, the plaintiff established, prima facie, that it had standing by demonstrating that it had physical possession of the note prior to the commencement of the action, as evidenced by its attachment of the note, containing an endorsement in blank executed by the original lender, to the summons and complaint when the action was commenced (see U.S. Bank N.A. v. Saravanan, 146 A.D.3d 1010, 1011, 45 N.Y.S.3d 547 ; Deutsche Bank Natl. Trust Co. v. Logan, 146 A.D.3d 861, 862–863, 45 N.Y.S.3d 189 ; JPMorgan Chase Bank, N.A. v. Weinberger, 142 A.D.3d at 645, 37 N.Y.S.3d 286 ). Contrary to the defendant's contention, the plaintiff was not required to provide factual details of the delivery to establish how it came into possession of the note (see PennyMac Corp. v. Chavez, 144 A.D.3d 1006, 1007, 42 N.Y.S.3d 239 ; compare JPMorgan Chase Bank, N.A. v. Weinberger, 142 A.D.3d at 645, 37 N.Y.S.3d 286, with Central Mtge. Co. v. Jahnsen, 150 A.D.3d 661, 56 N.Y.S.3d 107 ). In opposition, the defendant failed to raise a triable issue of fact as to whether the plaintiff had standing.

Further, contrary to the view of our dissenting colleague, the Supreme Court properly determined that the plaintiff established, prima facie, its compliance with RPAPL 1304. At the outset, the plaintiff contends that RPAPL 1304 is inapplicable to this case insofar as the subject property was not the defendant's principal dwelling and, therefore, the mortgage loan was not a "home loan" for purposes of the statute.

The defendant argues that this issue was not raised in the Supreme Court, and has been improperly raised for the first time on appeal. However, the specific contention that this mortgage loan was not a "home loan" for purposes of RPAPL 1304 may be reached because it involves a question of law that is apparent on the face of this record and could not have been avoided by the court if it had been brought to its attention (see

64 N.Y.S.3d 42

Stassa v. Stassa, 123 A.D.3d 804, 806, 999 N.Y.S.2d 116 ; 126 Newton St., LLC v. Allbrand Commercial Windows & Doors, Inc., 121 A.D.3d 651, 652, 993 N.Y.S.2d 558 ; see also Telaro v. Telaro, 25 N.Y.2d 433, 439, 306 N.Y.S.2d 920, 255 N.E.2d 158 ). Our dissenting colleague relies upon PHH Mtge. Corp. v. Celestin, 130 A.D.3d 703, 11 N.Y.S.3d 871 to conclude that this specific

154 A.D.3d 825

contention is not reviewable on this appeal. However, PHH Mtge. Corp. v. Celestin is distinguishable because, in that case, the defendant's entire contention that the plaintiff failed to demonstrate its compliance with the notice requirements of RPAPL 1304 was raised for the first time on appeal (see id. at 704, 11 N.Y.S.3d 871 ). Here, the issue of the plaintiff's compliance with RPAPL 1304 was squarely before the court.

Turning to the merits of the "home loan" issue, the record shows that the subject property is a multi-unit apartment building with several tenants, the defendant did not reside at the property at the time he signed the mortgage or at the time the action was commenced, and the deed transferring the property to the defendant was a commercial property deed. The defendant does not refute that this was a commercial property and that he lived elsewhere. Thus, the record reflects that this was not a "home loan" subject to the notice requirements of RPAPL 1304 (see RPAPL 1304[5] ; cf. JP Morgan Chase Bank, N.A. v. Venture, 148 A.D.3d 1269, 48 N.Y.S.3d 824 ; Flushing Sav. Bank v. Latham, 139 A.D.3d 663, 665, 32 N.Y.S.3d 206 ; Prompt Mtge. Providers of N. Am., LLC v. Singh, 132 A.D.3d 833, 834, 18 N.Y.S.3d 668 ).

Furthermore, even if the subject loan was a "home loan" within the meaning of RPAPL 1304, the plaintiff submitted evidence sufficient to establish, prima facie, that it mailed the RPAPL 1304 notice in compliance with the statute.

In 2006, the Legislature passed the first provisions of the Home Equity Theft Prevention Act ( Real Property Law § 265–a ; hereinafter HETPA), which included various amendments and additions to the Real Property Actions and Proceedings Law (see generally First National Bank of Chicago v. Silver, 73 A.D.3d 162, 165–166, 899 N.Y.S.2d 256 ). RPAPL 1304, entitled "Required prior notices," was first added in 2008 as a legislative response to the subprime lending crisis and the epidemic of foreclosures at that time (L. 2008, ch. 472, § 2). RPAPL 1304(1) provides, in pertinent part, that at least 90 days before a lender or a mortgage loan servicer commences a legal action against the borrower, the lender or mortgage loan servicer shall give notice to the borrower. The statute sets forth the requirements for the contents of the notice (see RPAPL 1304[1] ), and provides that the notice must be sent to the borrower by registered or certified mail, and by first-class mail, to the last known address of the borrower and, if...