U.S. Bank Nat'Lass'N v. Faruque

• Court: New York Supreme Court — Appellate Division
• Writing for the Court: MARK C. DILLON
• Citation: U.S. Bank Nat'l Ass'n v. Faruque, 2014 NY Slip Op 5785, 120 A.D.3d 575, 991 N.Y.S.2d 630 (N.Y. App. Div. 2014)
• Decision Date: 13 August 2014
• Parties: U.S. BANK NATIONAL ASSOCIATION, etc., appellant, v. Jahanara FARUQUE, respondent, et al., defendants.

120 A.D.3d 575

991 N.Y.S.2d 630

2014 N.Y. Slip Op. 05785

U.S. BANK NATIONAL ASSOCIATION, etc., appellant,

v.Jahanara FARUQUE, respondent, et al., defendants.

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

Aug. 13, 2014.

Hogan Lovells U.S. LLP, New York, N.Y. (David Dunn, Chava Brandriss, and Heather R. Gushue of counsel), for appellant.

Robert Levy, Jamaica, N.Y., for respondent.

MARK C. DILLON, J.P., PLUMMER E. LOTT, LEONARD B. AUSTIN, and BETSY BARROS, 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, Queens County (Taylor, J.), entered June 27, 2013, as, in effect, denied that branch of its motion which was for summary judgment on the complaint insofar as asserted against the defendant Jahanara Faruque, and, in effect, granted that branch of the cross motion of that defendant which was pursuant to CPLR 3211(a)(3) to dismiss the complaint insofar as asserted against her on the ground that the plaintiff lacked standing to commence the action.

ORDERED that the order is modified, on the law, by deleting the provision thereof, in effect, granting that branch of the cross motion of the defendant Jahanara Faruque which was pursuant to CPLR 3211(a)(3) to dismiss the complaint insofar as asserted against her on the ground that the plaintiff lacked standing to commence the action, 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.

In December 2005, the defendant Jahanara Faruque executed a note, pursuant to which she promised to repay the sum of $630,000 that she borrowed from Fairmont Funding, Ltd. (hereinafter Fairmont Funding). The note was secured by a mortgage on Faruque's real property, located in Richmond Hill, Queens. The mortgage provided, inter alia, that Mortgage Electronic Registration Systems, Inc. (hereinafter MERS), was acting as a nominee for Fairmont Funding and its successors and assigns. On August 7, 2009, MERS assigned the mortgage to U.S. Bank National Association, as Trustee for CSAB Mortgage–Backed Pass–Through Certificates, Series 2006–1 (hereinafter the plaintiff). In September 2009, the plaintiff commenced this action to foreclose the mortgage, alleging that Faruque defaulted on her loan repayment obligations. Faruque answered the complaint and, inter alia, specifically denied that the note was delivered to the plaintiff or that an assignment from Fairmont Funding to the plaintiff had been recorded. The plaintiff moved, among other things, for summary judgment on the complaint insofar as asserted against Faruque. Faruque cross-moved, inter alia, to dismiss the complaint insofar as asserted against her on the ground that the plaintiff lacked standing to commence the action ( seeCPLR 3211[a][3] ). The Supreme Court, in effect, denied that branch of the plaintiff's motion which was for summary judgment on the complaint insofar as asserted against Faruque and, in effect, granted that branch of Faruque's motion which was to dismiss the complaint insofar as asserted against her on the ground that the plaintiff lacked standing to commence the action. The plaintiff appeals.

In order to commence a foreclosure action, a plaintiff must have a legal or equitable interest in the mortgage ( see HSBC Bank USA v. Hernandez, 92 A.D.3d 843, 843, 939 N.Y.S.2d 120). Where standing is put into issue by a defendant's answer, a plaintiff must prove its standing if it is to be entitled to relief ( see Bank of N.Y. Mellon v. Gales, 116 A.D.3d 723, 982 N.Y.S.2d 911; Deutsche Bank Natl. Trust Co. v. Whalen, 107 A.D.3d 931, 932, 969 N.Y.S.2d 82; Bank of N.Y. v. Silverberg, 86 A.D.3d 274, 279, 926 N.Y.S.2d 532; U.S. Bank, N.A. v. Collymore, 68 A.D.3d 752, 753, 890 N.Y.S.2d 578). Contrary to the plaintiff's contention, Faruque put the plaintiff's standing into issue by the specific denials in her answer regarding the note and mortgage and, under such circumstances, she was not required to plead lack of standing as an affirmative defense ( seeCPLR 3018[b] ). Thus, in order for the plaintiff to be entitled to relief, it had to prove its standing ( see Bank of N.Y. Mellon v. Gales, 116 A.D.3d 723, 982 N.Y.S.2d 911).

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 ( see Kondaur Capital Corp. v. McCary, 115 A.D.3d 649, 650, 981 N.Y.S.2d 547; see HSBC Bank USA v. Hernandez, 92 A.D.3d at 843, 939 N.Y.S.2d 120; Bank of N.Y. v. Silverberg, 86 A.D.3d at 279, 926 N.Y.S.2d 532). 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 ( see Aurora Loan Serv., LLC v. Taylor, 114 A.D.3d 627, 980 N.Y.S.2d 475; HSBC Bank USA v. Hernandez, 92 A.D.3d at 844, 939 N.Y.S.2d 120; U.S. Bank, N.A. v. Collymore, 68 A.D.3d at 754, 890 N.Y.S.2d 578). 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 Bank of N.Y. v. Silverberg, 86 A.D.3d at 280, 926 N.Y.S.2d 532). However, the transfer of the mortgage without the debt is a nullity, and no interest is acquired by it ( see Bank of N.Y. Mellon v. Gales, 116 A.D.3d 723, 982 N.Y.S.2d 911; Bank of N.Y. v. Silverberg, 86 A.D.3d at 280, 926 N.Y.S.2d 532), because a mortgage is merely security for a debt or other obligation and cannot exist independently of...