Wells Fargo Bank, N.A. v. Erobobo

• Decision Date: 29 April 2013
• Docket Number: No. 31648/2009.,31648/2009.
• Citation: 2013 N.Y. Slip Op. 50675,972 N.Y.S.2d 147,39 Misc.3d 1220
• Parties: WELLS FARGO BANK, N.A., as Trustee for ABFC 2006–OPT3 Trust, ABFC Asset–Backed Certificates, Series 2006–OPT3, Plaintiff, v. Rotimi EROBOBO, The City Of New York Environmental Control Board, “John Doe” and “Jane Doe” said names being fictitious, it being the intention of Plaintiff to designate any and all occupants of the premises being foreclosed herein, Defendants.
• Court: New York Supreme Court

39 Misc.3d 1220

972 N.Y.S.2d 147

2013 N.Y. Slip Op. 50675

WELLS FARGO BANK, N.A., as Trustee for ABFC 2006–OPT3 Trust, ABFC Asset–Backed Certificates, Series 2006–OPT3, Plaintiff,

v.Rotimi EROBOBO, The City Of New York Environmental Control Board, “John Doe” and “Jane Doe” said names being fictitious, it being the intention of Plaintiff to designate any and all occupants of the premises being foreclosed herein, Defendants.

No. 31648/2009.

Supreme Court, Kings County, New York.

April 29, 2013.

Fein, Such & Crane, LLP. Rochester, for Plaintiff.

Kenneth S. Pesinger, Esq., Levittown, for Defendants.

WAYNE P. SAITTA, J.

Plaintiff, WELLS FARGO BANK, N.A., as Trustee for ABFC 2006–OPT3 TRUST, ABFC ASSET–BACKED CERTIFICATES, SERIES 2006–OPT3, (herein “Plaintiff”), moves this Court for an Order for summary judgment pursuant to CPLR 3212.

Upon reading the Notice of Motion by V.S. Vilkhu, Esq., Attorney for Plaintiff, WELLS FARGO BANK, N.A., as Trustee for ABFC 2006–OPT3 TRUST, ABFC ASSET–BACKED CERTIFICATES, SERIES 2006–OPT3, dated May 11th, 2010, together with the Attorney Affidavit of V.S. Vilkhu, Esq ., dated May 11th, 2010, and all exhibits annexed thereto; the Memorandum of Law by V.S. Vilkhu, Esq., undated; the Affirmation in Opposition by Kenneth S. Pelsinger, Esq., Attorney for Defendant ROTIMI EROBOBO, dated November 19th, 2010; the Supplemental Affirmation in Opposition by Kenneth S. Pelsinger, Esq., dated August 3rd, 2011, and all exhibits annexed thereto; the Reply Affirmation of V.S. Vilkhu, Esq., dated January 24th, 2011, and all exhibits annexed thereto; the Memorandum of Law in Opposition to Plaintiff's Motion for Summary Judgment by Kenneth S. Pelsinger, Esq ., dated November 9th, 2011; the Pooling and Servicing Agreement of WELLS FARGO BANK, N.A., as Trustee for ABFC 2006–OPT3 TRUST, ABFC ASSET–BACKED CERTIFICATES, SERIES 2006–OPT3, dated October 1st, 2006; and after argument of counsel and due deliberation thereon, Plaintiff's motion is denied for the reasons set forth below.

FACTS

Plaintiff brings this action to foreclose on a mortgage, dated July 16, 2006, which secured a loan of $420,000 issued to the Defendant by Alliance Mortgage Banking Corp., (“Alliance”). On July 17, 2006, Alliance assigned the note and mortgage to Option One Mortgage Corporation, (“Option One”). Option One then assigned the note and mortgage to Plaintiff by assignment executed July 15, 2008. Plaintiff is the trustee for a securitized trust entitled ABFC 2006–OPT3 TRUST, ABFC, ASSET BACKED CERTIFICATES, SERIES 2006–OPT3, (“the Trust”).

The Trust was formed as a vehicle for purchasing mortgage backed securities. The Trust is subject to the terms of a Pooling and Servicing Agreement, (“the PSA”). The PSA was signed by the Depositor, Asset Backed Funding Corporation (“ABFC”), by the Servicer, Option One, and by the Trustee, WELLS FARGO BANK, NA, and is dated October 1, 2006.The PSA set forth the manner in which mortgages would be purchased by the trust, as well as the duties of the trustee.

Section 2.01, subsection 1 of the PSA requires that transfer and assignment of mortgages must be effected by hand delivery, for deposit with the Trustee with the original note endorsed in blank.

Section 2.05 of the PSA requires that the Depositor transfer all right, title, interest in the mortgages to the Trustee, on behalf of the trust, as of the Closing Date. The Closing Date as provided in the PSA is November 14, 2006.

Option One assigned Defendant's mortgage loan to the Plaintiff, as the Trustee, on July 15, 2008, approximately eighteen months after the trust had closed.

Plaintiff commenced this action on December 10, 2009, and alleged that it possessed the Note with an allonge on the date that this foreclosure action was commenced. Defendant, pro se, filed an answer containing a general denial.

Plaintiff filed a motion for summary judgment on May 11, 2010. After Defendant answered, he obtained counsel and opposed Plaintiff's motion for summary judgment.

ARGUMENTS Plaintiff argues it is entitled to summary judgment to foreclose because it was in possession of the note and mortgage at the time the action was filed.

Defendant argues that Plaintiff is not in fact the owner or holder of the note because it obtained the note and mortgage after the trust had closed in violation of the terms of the PSA, and therefore the acquisition of the note and mortgage is void. Defendant also argues that Plaintiff obtained the mortgage and note without an intervening assignment, in violation of the PSA.

Plaintiff argues that Defendant's claim that Plaintiff does not own the note and mortgage amounts to a standing argument, and because Defendant failed to raise standing in his answer as an affirmative defense or pre answer motion, he cannot do so now.

ANALYSIS

Defendant contested whether Plaintiff owns the mortgage and note by answering with a general denial of the facts alleged in the complaint, which included Plaintiff's allegation that it owns the note and mortgage.

Many decisions treat the question of whether the Plaintiff in a foreclosure action owns the note and mortgage as if it were a question of standing and governed by CPLR 3211(e). Citigroup Global Markets Realty Corp. v. Randolph Bowling, 25 Misc.3d 1244(A), 906 N.Y.S.2d 778 (Sup.Ct. Kings Cty 2009); Federal Natl. Mtge. Assn. v. Youkelsone, 303 A.D.2d 546, 546–547 (2d Dept 2003); Nat'l Mtge. Consultants v. Elizaitis, 23 AD3d 630, 631 (2d Dept 2005); Wells Fargo Bank, N.A. v. Marchione, 2009 N.Y. Slip Op 7624, (2d Dept 2009).

However, Plaintiff's ownership of the note is not an issue of standing but an element of its cause of action which it must plead and prove.

The term “standing” has been applied to two legally distinct concepts. The first is legal capacity, or authority to sue. The second is whether a party has asserted a sufficient interest in the outcome of a dispute.

Standing and capacity to sue are related, but distinguishable legal concepts. Capacity requires an inquiry into the litigant's status, i.e., its “power to appear and bring its grievance before the court”, while standing requires an inquiry into whether the litigant has “an interest in the claim at issue in the lawsuit that the law will recognize as a sufficient predicate for determining the issue.” Wells Fargo Bank Minnesota, Nat. Ass'n v. Mastropaolo, 42 AD3d 239, 242 (2d Dept 2007) (internal citations omitted). Both concepts can result in dismissal on a pre answer motion by the defendant and are waived if not raised in a timely manner. Id.CPLR 3211(a)(3) provides that an action may be dismissed based on the grounds that the Plaintiff lacks the legal capacity to sue. It governs no other basis for dismissal.CPLR 3211(e) provides that a motion to dismiss pursuant to CPLR 3211(a)(3) is waived if not raised in a pre-answer motion or a responsive pleading.

There is a difference between the capacity to sue which gives the right to come into court, and possession of a cause of action which gives the right to relief. Kittinger v. Churchill Evangelistic Assn Inc., 239 AD 253, 267 NYS 719 (4th Dept 1933). Incapacity to sue is not the same as insufficiency of facts to sue upon. Ward v.. Petri, 157 NY3d 301 (1898).

In the case of Ohlstein v. Hillcrest, a defendant moved to dismiss a complaint in part based on lack of legal capacity to sue where plaintiff had assigned her stock. The Court denied that branch of the motion holding that even if plaintiff had assigned her stock, “the defect to be urged is that the complaint does not estate [sic] a cause of action in favor of the one who is suing, the alleged assignor-not that the plaintiff does not have the legal capacity to sue. Legal incapacity, as properly understood, generally envisages a defect in legal status, not lack of a cause of action in one who is sui juris.” Ohlstein v. Hillcrest, 24 Misc.2d 212, 214, 195 N.Y.S.2d 920, 922 (Sup Ct N.Y. Co 1959).

The difference was articulated by the Court in the case of Hebrew Home for Orphans v. Freund, 208 Misc. 658, 144 N.Y.S.2d 608 (Sup Ct Bx 1955). The plaintiff in that case sought a judgment declaring that an assignment of a mortgage it held was valid. The defendants moved to dismiss the complaint on the grounds that since the assignment was not accompanied by delivery of the bond and mortgage to plaintiff, plaintiff did not own the bond and mortgage and thus had no legal capacity to sue or standing to maintain the action. The Court denied the motion, stating:

The application to dismiss the complaint on the alleged ground that the plaintiff lacks legal capacity to sue rests upon a misapprehension of the meaning of the term. See Gargiulo v. Gargiulo, 207 Misc. 427, 137 N.Y.S.2d 886. Rule 107(2) of the Rules of Civil Practice relates to a plaintiff's right to come into Court, and not to his possessing a cause of action. Id at 660–661, 610.

The Court then quotes Kittinger v. Churchill for the principle that,

“The provision for dismissal of the complaint where the plaintiff has not the capacity to sue (Rules of Civil Practice, rules 106, 107) has reference to some legal disability, such as infancy, or lunacy, or want of title in the plaintiff to the character in which he sues. There is a difference between capacity to sue, which gives the right to come into court, and possession of a cause of action, which gives the right to relief in court. Ward v. Petrie, 157 N.Y. 301, 51 N.E. 1002;Bank of Havana v. Magee, 20 N.Y. 355;Ullman v. Cameron, 186 N.Y. 339, 78 N.E. 1074. The plaintiff is an individual suing as such. He is under no disability, and sues in no representative capacity. He is entitled to bring his suits before the court, and to cause a summons to be issued, the service of which upon the defendants brings the defendants into court. There is no lack of capacity to sue.'

Similarly here. By not receiving delivery of the bond and mortgage it may be urged that the plaintiff did not get title to them under the assignment—but...