U.S. Bank Trust, N.A. v. Moomey-Stevens

• Decision Date: 03 January 2019
• Docket Number: 526630
• Citation: 91 N.Y.S.3d 788,168 A.D.3d 1169
• Parties: U.S. BANK TRUST, N.A., AS TRUSTEE FOR LSF9 MASTER PARTICIPATION TRUST, Respondent, v. Elizabeth MOOMEY-STEVENS, Also Known as Elizabeth Stevens and Elizabeth Moomey, et al., Appellants, et al., Defendants.
• Court: New York Supreme Court — Appellate Division

168 A.D.3d 1169

91 N.Y.S.3d 788

U.S. BANK TRUST, N.A., AS TRUSTEE FOR LSF9 MASTER PARTICIPATION TRUST, Respondent,

v.Elizabeth MOOMEY-STEVENS, Also Known as Elizabeth Stevens and Elizabeth Moomey, et al., Appellants, et al., Defendants.

526630

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

Calendar Date: November 15, 2018

Decided and Entered: January 3, 2019

Sandra Poland Demars, Albany, for appellants.

Shapiro Dicaro & Barak LLC, Rochester (Jason P. Dionisio of counsel), for respondent.

Before: Garry, P.J., Egan Jr., Lynch, Aarons and Pritzker, JJ.

MEMORANDUM AND ORDER

Egan Jr., J.Appeal from an order of the Supreme Court (Crowell, J.), entered February 12, 2018 in Saratoga County, which, among other things, granted plaintiff's motion for summary judgment.

In October 2004, defendants Elizabeth Moomey–Stevens and David Stevens (hereinafter collectively referred to as defendants) executed a note to borrow $115,000 from Flagstar Bank, FSB that was secured by a mortgage, executed in favor of Mortgage Electronic Registration Systems, Inc. (hereinafter MERS), as nominee for Flagstar Bank, FSB, on certain real property located in the Village of Ballston Spa, Saratoga County. Defendants defaulted under the note and mortgage by failing to make the requisite payment due on June 1, 2008. MERS thereafter assigned the mortgage to Countrywide Home Loans Servicing, L.P. and, in April 2009, Countrywide commenced a foreclosure action against defendants based upon their default. Defendants failed to answer and, in October 2009, filed a petition for bankruptcy. In May 2011, defendants' bankruptcy petition was dismissed and, thereafter, following a series of unsuccessful settlement conferences in the pending foreclosure action, no subsequent action was taken with respect thereto such that, in September 2015, Supreme Court – without rendering an order specifically dismissing the petition – "administratively closed" the file due to inactivity. In the interim, the mortgage was ultimately assigned to plaintiff. In February 2017, plaintiff filed a motion seeking to, among other things, restore the foreclosure action to Supreme Court's calendar, amend the caption and obtain entry of a default judgment in its favor. Defendants opposed the motion, arguing, in relevant part, that the action should be dismissed as abandoned pursuant to CPLR 3215(c). In March 2017, Supreme Court denied plaintiff's motion and dismissed the action, without prejudice to plaintiff commencing a new action based upon the same transaction pursuant to CPLR 205(a).

In August 2017, plaintiff then commenced this foreclosure action. Defendants answered, asserting multiple affirmative defenses, including plaintiff's lack of standing and that the action was barred by the applicable statute of limitations, to which plaintiff replied. In November 2017, defendants served plaintiff with certain discovery demands. Plaintiff failed to respond and, instead, the following month, moved for, among other things, summary judgment. Defendants opposed the motion, arguing, in relevant part, that plaintiff lacked standing insofar as it was not in possession of the note prior to the commencement of the action and that plaintiff was not entitled to the six-month savings provision to commence a new action pursuant to CPLR 205(a) following Supreme Court's dismissal of the initial foreclosure action such that the present action was barred by the statute of limitations. Supreme Court rejected defendants' affirmative defenses and granted plaintiff's motion for summary judgment. Defendants now appeal.

Defendants contend that plaintiff's mortgage foreclosure action was barred by the statute of limitations as it was commenced more than six years from the date that the subject mortgage was previously accelerated (see CPLR 213[4] ), and that Supreme Court erred when it provided plaintiff an additional six months to commence suit pursuant to CPLR 205(a) following its dismissal of the prior mortgage foreclosure action as abandoned (see CPLR 3215[c] ).¹ Specifically, defendants argue that Supreme Court's dismissal of the prior foreclosure action was akin to a dismissal for neglect to prosecute such that the CPLR 205(a) tolling provision was inapplicable. We disagree. Pursuant to CPLR 205(a), "[i]f an action is timely commenced and is terminated in any other manner than by a voluntary discontinuance, a failure to obtain personal jurisdiction over the defendant, a dismissal of the complaint for neglect to prosecute the action, or a final judgment upon the merits, the plaintiff ... may commence a new action upon the same transaction or occurrence or series of transactions or occurrences within six months after the termination provided that the new action would have been timely commenced at the time of commencement of the prior action and that service upon defendant is effected within such six-month period."

Here, Supreme Court's dismissal of the prior mortgage foreclosure action was granted based upon abandonment pursuant to CPLR 3215(c) and not neglect to prosecute pursuant to CPLR 3216.² Although Supreme Court's prior order of dismissal noted that plaintiff had "completely failed to offer a reasonable excuse for the delay between May 30, 2013 and March 11, 2016" in seeking entry of a default judgment, it did not otherwise "include any findings of specific conduct demonstrating ‘a general pattern of delay in proceeding with the litigation’ " ( Wells Fargo Bank, N.A. v. Eitani, 148 A.D.3d 193, 198, 47 N.Y.S.3d 80 [2017], appeal dismissed 29 N.Y.3d 1023, 55 N.Y.S.3d 157, 77 N.E.3d 892 [2017], quoting CPLR 205[a] ; see Bank of N.Y. Mellon v. Slavin, 156 A.D.3d 1073, 1073–1074, 67 N.Y.S.3d 328 [2017] ; compare Andrea v. Arnone, Hedin, Casker, Kennedy & Drake, Architects & Landscape Architects, P.C. [Habiterra Assoc.], 5 N.Y.3d 514, 520–521, 806 N.Y.S.2d 453, 840 N.E.2d 565 [2005] ). In fact, it was only in response to plaintiff's motion seeking to restore this action to Supreme Court's calendar that defendants – who were otherwise in default – raised the issue of abandonment pursuant to CPLR 3215(c). Accordingly, under the circumstances, we find that Supreme Court did not err in allowing plaintiff to commence a new action pursuant to CPLR 205(a) and that this action was timely commenced within six months following the prior dismissal.

Defendants also contend that plaintiff was not entitled to summary judgment because it failed to establish standing. When a defendant raises standing as an affirmative defense, it is incumbent on plaintiff to prove that it has standing in order to be entitled to affirmative relief (see JPMorgan Chase Bank, N.A. v. Verderose, 154 A.D.3d 1198, 1199, 63 N.Y.S.3d 579 [2017] ; Wells Fargo Bank, NA v. Ostiguy, 127 A.D.3d 1375, 1376, 8 N.Y.S.3d 669 [2015] ). To establish standing, plaintiff was required to submit proof demonstrating that it was "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" ( Goldman Sachs Mtge. Co. v. Mares, 166 A.D.3d 1126, 87 N.Y.S.3d 665, 668 [2018] [internal quotation marks and citations omitted]; see U.S. Bank Trust, N.A. v. Varian, 156 A.D.3d 1255, 1256, 68 N.Y.S.3d 556 [2017] ; Bank of N.Y. Mellon v. Cronin, 151 A.D.3d 1504, 1505–1506, 57 N.Y.S.3d 733 [2017], appeal dismissed 31 N.Y.3d 1061, 77 N.Y.S.3d 329, 101 N.E.3d 970 [2018] ). As the note is the dispositive instrument that confers standing to foreclose (see Aurora Loan Servs., LLC v. Taylor, 25 N.Y.3d 355, 361, 12 N.Y.S.3d 612, 34 N.E.3d 363 [2015] ; JP Morgan Chase Bank, N.A. v. Hill , 133 A.D.3d 1057, 1058–1059, 21 N.Y.S.3d 363 [2015] ), "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" ( JPMorgan Chase Bank, N.A. v. Verderose, 154 A.D.3d at 1200, 63 N.Y.S.3d 579 [internal quotation marks, brackets and citation omitted] ).

Here, plaintiff failed to demonstrate that it has standing as the assignee of the mortgage from MERS. By its express terms, the initial written assignment from MERS only assigns the mortgage, not the note, and no proof was submitted establishing that MERS was ever conferred with the requisite authority to assign the note (see JP Morgan Chase Bank, N.A. v. Venture, 148 A.D.3d 1269, 1270, 48 N.Y.S.3d 824 [2017] ; Bank of N.Y. v. Silverberg, 86 A.D.3d 274, 281, 926 N.Y.S.2d 532 [2011] ). Moreover, contrary to Supreme Court's holding, this Court has held that merely attaching the note with a blank indorsement to the complaint is not sufficient for plaintiff to meet its prima facie burden on the issue of standing or to prove plaintiff's possessory interest in the note; proof of actual possession is required (see Deutsche Bank Natl. Trust Co. v. Monica, 131 A.D.3d 737, 738–739, 15 N.Y.S.3d 863 [2015] ; Bank of Am., N.A. v. Kyle , 129 A.D.3d 1168, 1169, 13 N.Y.S.3d 253 [2015] ; see also UCC 3–204[2] ; compare U.S. Bank N.A. v. Coppola, 156 A.D.3d 934, 935, 68 N.Y.S.3d 120 [2017] ; Bank of N.Y. Mellon v. Knowles, 151 A.D.3d 596, 597, 57 N.Y.S.3d 473 [2017] ).

Plaintiff similarly failed to establish its standing by demonstrating that it had physical possession of the note at the time of the commencement of the action. In support of its motion for summary judgment, plaintiff submitted, among other things, a copy of its complaint,...