WMC Mortg. Corp. v. Vandermulen

Decision Date13 April 2022
Docket Number2019–06996,Index No. 371/05
Citation204 A.D.3d 865,164 N.Y.S.3d 507 (Mem)
Parties WMC MORTGAGE CORP., respondent, v. Hendrika VANDERMULEN, et al., defendants, Bank of New York Mellon Trust Company, N.A., etc., appellant.
CourtNew York Supreme Court — Appellate Division

Nelson Mullins Riley & Scarborough LLP, New York, NY (Alan F. Kaufman and Lisa A. Herbert of counsel), for appellant.

Cuddy & Feder LLP, White Plains, NY (Joshua E. Kimerling and Troy D. Lipp of counsel), for respondent.

Patricia Ann Weiss, Sag Harbor, NY, for defendants Donald MacPherson and Carrie MacPherson.

MARK C. DILLON, J.P., COLLEEN D. DUFFY, VALERIE BRATHWAITE NELSON, SHERI S. ROMAN, JJ.

DECISION & ORDER

In an action, inter alia, to foreclose a mortgage, the defendant Bank of New York Mellon Trust Company, N.A., appeals from an order of the Supreme Court, Suffolk County (Elizabeth H. Emerson, J.), dated March 20, 2019. The order, insofar as appealed from, granted that branch of the plaintiff's motion which was for summary judgment on the cause of action to foreclose a mortgage insofar as asserted against the defendant Bank of New York Mellon Trust Company, N.A., and denied that defendant's cross motion for summary judgment dismissing the fourth amended complaint insofar as asserted against it.

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

This is an action, inter alia, to foreclose a mortgage held by the plaintiff on property located in Southampton. The mortgage secured a loan made on September 28, 2000, by the plaintiff to the defendant Hendrika Vandermulen in the principal amount of $383,000. The purpose of the loan was to finance Vandermulen's purchase of the property from the defendants Donald MacPherson and Carrie MacPherson (hereinafter together the MacPhersons). It is undisputed that neither the mortgage given to the plaintiff nor the Vandermulen deed were recorded at the time of the September 28, 2000 transaction. Vandermulen failed to make any monthly payments of principal and interest under the note, and the plaintiff commenced this action, inter alia, to foreclose its mortgage on the property.

In the fourth amended complaint, the plaintiff alleged that any interest held by the defendant Bank of New York Mellon Trust Company, N.A. (hereinafter BNY Mellon), in the property was subject and subordinate to the plaintiff's mortgage. The plaintiff alleged that in May 2003, BNY Mellon's predecessor in interest, the defendant Homecomings Financial Network, Inc. (hereinafter Homecomings), obtained a mortgage on the property to secure a loan in the principal amount of $337,500 to the defendant John Eugene Sheehan, as attorney-in-fact for his father Eugene John Sheehan. It is undisputed that the plaintiff's mortgage was not recorded when Homecomings recorded its mortgage in July 2003. By assignment of mortgage dated September 11, 2007, the mortgage obtained by Homecomings was assigned to BNY Mellon.

The plaintiff moved, inter alia, for summary judgment on the cause of action to foreclose its mortgage insofar as asserted against BNY Mellon. BNY Mellon opposed the motion and cross-moved for summary judgment dismissing the fourth amended complaint insofar as asserted against it. In an order dated March 20, 2019, the Supreme Court, among other things, granted that branch of the plaintiff's motion which was for summary judgment on the cause of action to foreclose its mortgage insofar as asserted against BNY Mellon and denied BNY Mellon's cross motion. The court determined that the mortgage held by the plaintiff was superior in priority to the mortgage held by BNY Mellon, as Homecomings, BNY Mellon's predecessor in interest, was not a good-faith lender for value. BNY Mellon appeals.

"Under New York's Recording Act ( Real Property Law § 291 ), a mortgage loses its priority to a subsequent mortgage where the subsequent mortgagee is a good-faith lender for value, and records its mortgage first without actual or constructive knowledge of the prior mortgage" ( Washington Mut. Bank, FA v. Peak Health Club, Inc., 48 A.D.3d 793, 797, 853 N.Y.S.2d 112 ; see ...

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