Pennymac Holdings, LLC v. Biedermann
| Decision Date | 07 February 2022 |
| Docket Number | Index 850032/2019 |
| Citation | 2022 NY Slip Op 30472 (U) |
| Parties | PENNYMAC HOLDINGS, LLC, Plaintiff, v. JUDITH BIEDERMANN a/k/a GRACE BIEDERMANN, YONASH E. BIEDERMANN, BOARD OF MANAGERS OF L'ECOLE CONDOMINIUM, NEW YORK STATE DEPARTMENT OF TAXATION AND FINANCE and JOHN DOE #1 -#10, Defendants. Motion Seq. No. 001 |
| Court | New York Supreme Court |
DECISION + ORDER ON MOTION
FRANCIS A. KAHN, III, A.J.S.C.
The following e-filed documents, listed by NYSCEF document number (Motion 001) 28, 29, 30, 31, 32, 33, 34, 35, 36, 37, 38, 39 40, 41, 42, 43, 44, 45, 46, 47, 48, 49, 50, 51, 52, 53, 54 55, 56, 58, 59, 61, 62, 63, 64, 65, 66, 67, 68, 69, 70, 71, 72, 73, 74 were read on the motion/cross-motion to/for SUMMARY JUDGMENT/EXTEND TIME TO ANSWER.
Upon the foregoing documents, the motion and cross-motion are decided as follows:
Plaintiff, Pennymac Holdings, LLC ("Pennymac"), commenced this action to foreclose on a mortgage encumbering real property located at 212 East 47th Street, Unit B, New York, New York. Defendant/Mortgagor Judith Biedermann a/k/a Grace Biedermann ("Biedermann") answered, pro se, and raised numerous affirmative defenses and counterclaims. Defendant Board of Managers of L'Ecole ! Condominium ("L'Ecole") defaulted in appearing.
Now, Ariel Bronxville LLC ("Ariel"), as claimed assignee and successor-in-interest to Pennymac, moves for inter alia summary judgment against Biedermann, dismissal of affirmative defenses and counterclaims in Biedermann's answer, amending the caption to substitute named parties for the John Doe Defendants, for a default judgment against the non-appearing Defendants, for an order of reference and to substitute Ariel as Plaintiff. Defendant L'Ecole opposes Plaintiffs motion and cross-moves pursuant CPLR §§2004 and 3012[d] for an order extending its time to answer or compelling Plaintiff to accept same.
Preliminarily, the branch of the motion to substitute Ariel as Plaintiff in the place and stead of Pennymac is granted. For the limited purpose of substitution only, Ariel has demonstrated it presently is the real party in interest (see U.S. Bank, N.A. v Duran, 174 A.D.3d 768, 769 [2d Dept 2019]; Central Fed. Sav., F.S.B v. 405 West 45th St., Inc., 242 A.D.2d 512 [1st Dept 1997]). Indeed, Ariel could have continued to prosecute this action in the name of Pennymac without a formal substitution (see CPLR §1018; B & H Fla. Notes LLC v Ashkenazi, 149 A.D.3d 401 [1st Dept 2017]).
On the branch of its motion for summary judgment, Plaintiff was required to establish prima facie proof of the mortgage, the note, and evidence of the borrower's default (see U.S. Bank, N.A., v James, 180 A.D.3d 594 [1st Dept 2020]; Bank of NY v Knowles, 151 A.D.3d 596 [1st Dept 2017]; Fortress Credit Corp. v Hudson Yards, LLC, 78 A.D.3d 577 [1st Dept 2010]). Proof supporting a prima facie case on a motion for summary judgment must be in admissible form (see CPLR §3212[b]; Tri-State Loan Acquisitions III, LLC v Litkowski, 172 A.D.3d 780 [1st Dept 2019]). Plaintiff was also required to demonstrate its standing since Defendant Biedermann raised this affirmative defense in the answer (see eg Wells Fargo Bank, N.A. v Tricario, 180 A.D.3d 848 [2nd Dept 2020]; Wells Fargo Bank, N.A. v McKenzie, 186 A.D.3d 1582 [2d Dept 2020]). Additionally, based on the affirmative defenses raised, Plaintiff was obliged to prove its compliance with RPAPL §1304, §1306 and the notice requisites under paragraph 22 of the mortgage (see U.S. Bank, NA v Nathan, 173 A.D.3d 1112 [2d Dept 2019]; HSBC Bank USA, N.A. v Bermudez, 175 A.D.3d 667, 669 [2d Dept 2019]).
In support of the branch of the motion for summary judgment, Plaintiff submitted the affidavit of Oleg Langbort ("Langbort"), the managing member of Ariel. Langbort's affidavit laid a proper foundation for the admission of Ariel's records into evidence under CPLR §4518 (see Bank of N.Y.Mellon v Gordon, 171 A.D.3d 197 [2d Dept 2019]). The records of other entities were also admissible since Langbort sufficiently established that those records were received from the makers and incorporated into the records Ariel which routinely relied upon such documents in its business (see U.S. Bank N.A. v Kropp-Somoza, 191 A.D.3d 918 [2d Dept 2021]). Further, the records Langbort relied on were referenced and annexed to the motion (cf. Deutsche Bank Natl. Trust Co. v Kirschenbaum, 187 A.D.3d 569 [1st Dept 2020]).
Langbort's affidavit and the referenced documents sufficiently evidenced the note and mortgage. As to Biedermann's default, it "is established by (1) an admission made in response to a notice to admit, (2) an affidavit from a person having personal knowledge of the facts, or (3) other evidence in admissible form" (Deutsche Bank Natl. Trust Co. v McGann, 183 A.D.3d 700, 702 [2d Dept 2020]). Here, the attached modification agreement is sufficient proof of Defendant Biederman's default as she acknowledged the debt and her default thereunder (see Redrock Kings, LLC v Kings Hotel, Inc., 109 A.D.3d 602 [2d Dept 2013]; EMC Mortg. Corp. v Stewart, 2 A.D.3d 772 [2d Dept 2003]).
Standing in a foreclosure action is established in one of three ways: [1] direct privity between mortgagor and mortgagee, [2] physical possession of the note prior to commencement of the action that contains an indorsement in blank or bears a special indorsement payable to the order of the plaintiff either on its face or by allonge, and [3] assignment of the note to Plaintiff prior to commencement of the action (see eg Wells Fargo Bank, N.A. v Tricario, 180 A.D.3d 848 [2d Dept 2020]; Wells Fargo Bank, NA v Ostiguy, 127 A.D.3d 1375 [3d Dept 2015]). As to the latter two circumstances, the note is the dispositive instrument (Aurora Loan Servs., LLC v Taylor, 25 N.Y.3d 355, 361-362 [2015]). Here, Plaintiff is required to demonstrate that Pennymac, not Ariel, was the holder of the note at the time the action was commenced. Since there is no dispute that Pennymac was not the original lender, one of the two other requisites must be proved.
The second circumstance requires Plaintiff to show, in this case, that Pennymac, was the "holder" of the note at the time the action was commenced. "Holder status is established where the plaintiff possesses a note that, on its face or by allonge, contains an indorsement in blank or bears a special indorsement payable to the order of the plaintiff (Wells Fargo Bank, NA v Ostiguy, 127 A.D.3d 1375, 1376 [2d Dept 2015] [citations omitted]). The indorsement must be made either on the face of the note or on an allonge "so firmly affixed thereto as to become a part thereof (UCC §3-202[2]). In a mortgage foreclosure action, "[t]he attachment of a properly endorsed note to the complaint may be sufficient to establish, prima facie, that the plaintiff is the holder of the note at the time of commencement" (Deutsche Bank Natl. Trust Co. v Webster, 142 A.D.3d 636, 638 [2d Dept 2016]; cf. JPMorgan Chase Bank, N.A. v Grennan, 175 A.D.3d 1513 [2d Dept 2019]).
Plaintiffs assertion that Pennymac attached the note to the complaint is unavailing. At the outset, the note was not annexed to the complaint, but rather to the certificate of merit required under CPLR §3012-b (NYSCEF Doc No 3). As that statute states that the complaint be "accompanied" by the certificate of merit, it has been held that annexing the note to the certificate of merit does not constitute attachment to the complaint (Wilmington Sav. Fund Socy., FSB v Matamoro, 200 A.D.3d 79 [2d Dept 2021]). Even if the attachment to the certificate of merit was sufficient, Plaintiff failed to establish Pennymac was holder of the note at that time. Since the indorsements at issue were on separate allonges, not note itself, Plaintiff was required, but neglected, to establish the indorsements or allonges were "firmly affixed" to the original note (see Nationstar Mtge., LLC v Calomarde, ___A.D.3d___, 2022 NY Slip Op 00428 [2d Dept 2022]; JPMorgan Chase Bank, N.A. v Grennan, supra at 1516). Langbort's affidavit on this point was nothing more that conclusory boilerplate which is insufficient (see Wells Fargo Bank, N.A. v Jones, 139 A.D.3d 520, 524 [1st Dept 2016]; Deutsche Bank Natl. Trust Co. v Weiss, 133 A.D.3d 704, 705 [2d Dept 2015]). Not every attachment can satisfy UCC §3-202[2] (see HSBC Bank, USA, N.A. v Roumiantseva, 130 A.D.3d 983 [2d Dept 2015]; Slutsky v Blooming Grove Inn, 147 A.D.2d 208 [2d Dept 1989]) and Langbort offered no description of the nature of the attachment other than to say the allonges were "appended" to the note.
Proof of the third circumstance is also lacking. No proof of a written assignment of the note was proffered. Langbort's affidavit and corroborating documents only show that a written assignment of the mortgage was made to Pennymac. "[W]hile assignment of a promissory note also effectuates assignment of the mortgage, the converse is not true: since a mortgage is merely security for a debt, it cannot exist independently of the debt, and thus, a transfer or assignment of only the mortgage without the debt is a nullity and no interest is acquired by it" (see U.S. Bank N.A. v Dellarmo, 94 A.D.3d 746, 748 [2d Dept 2012] [internal citations omitted]). On this issue, therefore, Plaintiff has shown written assignment of the mortgage only which is a nullity (see eg U.S. Bank, NA v Collymore, 68 A.D.3d 752, 754 [2d Dept 2009]).
To the extent Plaintiff relies on naked physical possession of the note to establish Pennymac's standing, "mere physical possession of a note at the commencement of a foreclosure action is insufficient to confer standing or to make a plaintiff the lawful holder of a negotiable instrument for the purposes of enforcing the note" (...
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