Opinion
2017/05221
06-04-2018
LVNV FUNDING, LLC, Plaintiff, v. Eileen SENGILLO, Defendant.
Attorney for Plaintiff:Tess E. Gunther, Esq., Co-counsel, Forster & Garbus, LLP, 60 Motor Parkway., P. O. Box 9030, Commack, New York, 11725, Mallory K. Smith, Esq., Co-counsel, Davidson Fink LLP, 28 East Main Street, Suite 1700, Rochester, New York, 14614 Attorney for Defendant:David M. Kaplan, Esq., 401 Penbrooke Drive, Building 2, Suite B, Penfield, New York 14526
Attorney for Plaintiff:Tess E. Gunther, Esq., Co-counsel, Forster & Garbus, LLP, 60 Motor Parkway., P. O. Box 9030, Commack, New York, 11725, Mallory K. Smith, Esq., Co-counsel, Davidson Fink LLP, 28 East Main Street, Suite 1700, Rochester, New York, 14614
Attorney for Defendant:David M. Kaplan, Esq., 401 Penbrooke Drive, Building 2, Suite B, Penfield, New York 14526
Thomas A. Stander, J.
The Defendant, Eileen Sengillo, submits a motion seeking an order awarding summary judgment dismissing the complaint of the Plaintiff, LVNV Funding, LLC, in its entirety; and for such other and further relief deemed proper by the Court.
Plaintiff commenced this action against the Defendant seeking to recover a balance due on a credit card account in the amount of $843.82 with interest from October 9, 2016. The original creditor was Credit One Bank, N.A. and the Plaintiff, LVNV Funding, LLC is a debt buyer. The complaint alleges the chain of title to be Credit One Bank, N.A. to FNBM, LLC to Sherman Originator III LLC to Sherman Originator LLC to LVNV Funding LLC, with all of these transactions occurring on November 14, 2016. The complaint alleges that the Defendant defaulted on April 8, 2016.
I. SUMMARY JUDGMENT
Defendant seeks summary judgment dismissing the complaint based upon her affirmative defense that Plaintiff lacks standing to sue. For summary judgment to be granted the Defendant has the burden to submit sufficient proof, including an affidavit of a person having knowledge of the facts, to show the cause of action has no merit. If upon all the evidence submitted it is established that Defendant is entitled to judgment as a matter of law, then summary judgment is warranted.
A. Position of Defendant
Defendant seeks summary judgment dismissing the complaint based upon the affirmative defense set forth in the Answer that Plaintiff lacks standing to bring this claim. Defendant argues that the burden is on the Plaintiff to prove in its opposition papers that Plaintiff has standing by evidence demonstrating that the original creditor assigned its interest in Defendant's debt to Plaintiff. Defendant argues that if Plaintiff cannot prove it has standing, then the action must be dismissed.
In the reply, Defendant asserts that Plaintiff has failed to produce admissible evidence to demonstrate that it has standing because the chain of title of the debt is incomplete and conflicting. Defendant argues that there is no showing of an assignment from Credit One Bank, N.A.; that the original creditor seller data sheet submitted by Plaintiff is inadmissible; and there is no proof of notice of any of the assignments to the debtor.
Defendant submits an attorney Affirmation, with exhibits of the complaint and answer, together with a Memorandum of Law. Defendant relies upon case law as the basis for summary judgment. Specifically relying upon a case where a defendant cross-moved for summary judgment seeking dismissal based on an affirmative defense of lack of standing where the Fourth Department held:
To establish such standing, plaintiff was required to submit evidence in admissible form establishing that [the original creditor] had assigned its interest in defendant's
debt to plaintiff [citation omitted].
( Unifund CCR Partners v. Youngman , 89 A.D.3d 1377, 932 N.Y.S.2d 609 [4th Dept. 2011] ; see Palisades Collection, LLC v. Kedik , 67 A.D.3d 1329, 890 N.Y.S.2d 230 [4th Dept. 2009] ). Defendant also relies upon Second Department cases to assert that where lack of standing is raised, the plaintiff must submit documents to demonstrate standing to prosecute the action (citing Bank of N.Y. v. Silverberg , 86 A.D.3d 274, 279, 926 N.Y.S.2d 532 [2d Dept. 2011] ; U.S. Bank, National Assoc. v. Sharif , 89 A.D.3d 723, 723, 933 N.Y.S.2d 293 [2d Dept. 2011] ).
B. Position of Plaintiff
In opposition to the summary judgment motion, Plaintiff asserts that this motion for summary judgment was brought before any exchange of discovery or discovery demands, and before any preliminary conference. Plaintiff argues that there is a triable question of fact. Plaintiff submits an affidavit of an authorized representative for LVNV Funding LLC who states that Plaintiff is the current owner of the account of Defendant. Plaintiff states that on November 14, 2016 Credit One assigned Defendant's credit card account and records to MHC Receivables LLC and that Credit One acknowledged the sale and assignment. And that the account was transferred by MHC Receivables LLC and FNBM LLC to Sherman Originator III LLC; and then to Sherman Originator LLC; and then to LVNV Funding LLC. Plaintiff also submits an Affidavit of Purchase and Sale of Account for Sherman Originator LLC and Sherman Originator III LLC, as well as various transfer and assignments. Plaintiff asserts that there is a triable issue of fact on this motion for summary judgment concerning standing.
C. Law
A defendant may bring a motion to dismiss for lack of standing pursuant to CPLR Rule 3211[a][3] or by stating it as an affirmative defense in the answer to the complaint ( CPLR Rule 3211[a][3] and [e] ). If a defendant chooses to state lack of standing as an affirmative defense, then a motion for summary judgment is appropriate to address that legal issue (see CPLR Rule 3212[b] and [c] ). Courts have recently addressed the requirements for dismissing a complaint for lack of standing under a CPLR Rule 3212 motion for summary judgment.
When summary judgment is based on lack of standing, which is a ground set forth in CPLR 3211[a][3], "the court may, when appropriate for the expeditious disposition of the controversy, order an immediate trial of such issues of fact raised by the motion ..." (CPLR Rule 3212[c] ). However, the moving party must first meet its initial burden to show it is entitled to judgment as a matter of law; and then the opposing party must submit evidence to raise a triable issue of fact.
"[O]n a defendant's motion for summary judgment, the burden is on the moving defendant to establish, prima facie, the plaintiff's lack of standing as a matter of law" ( LGF Holdings, LLC v. Skydel , 139 A.D.3d 814, 32 N.Y.S.3d 243 [2d Dept. 2016] ). On a summary judgment motion by a defendant based on the affirmative defense of lack of standing, the burden is initially on the defendant to establish plaintiff's lack of standing, "rather than on the plaintiff to affirmatively establish its standing in order for the motion to be denied" ( Aurora Loan Services, LLC v. Mercius , 138 A.D.3d 650, 652, 29 N.Y.S.3d 462 [2d Dept. 2016] ).
In comparison, the courts's, including the Fourth Department, have also established the standard for a plaintiff's summary judgment motion when a defendant has set forth the affirmative defense of lack of standing. On a summary judgment motion by plaintiff, where the defendant places the plaintiff's standing in issue by reason of defendant's answer, "it is incumbent upon the plaintiff to prove its standing to be entitled to relief" (Deutsche Bank Trust Company Americas v. Vitellas , 131 A.D.3d 52, 59, 13 N.Y.S.3d 163 [2d Dept. 2015] ; see Aurora Loan Services at 652, 29 N.Y.S.3d 462 ).When a plaintiff seeks summary judgment dismissing a defendant's affirmative defense of lack of standing, and plaintiff is ordered to provide evidence to prove it has standing but fails to do so, a court may sua sponte grant summary judgment to the defendant dismissing the complaint (Palisades Collection at 1330, 890 N.Y.S.2d 230 ).
By contrast, where there is a motion by plaintiff for summary judgment and a cross-motion by defendant for summary judgment, both parties are attempting to demonstrate they are entitled to judgment as matter of law. Thus, where a defendant cross-moves for summary judgment seeking dismissal based on lack of standing and the plaintiff also seeks summary judgment, "[t]o establish such standing, plaintiff was required to submit evidence in admissible form establishing that [the original creditor] had assigned its interest in defendant's debt to plaintiff [citation omitted]" (Unifund CCR Partners v. Youngman , 89 A.D.3d 1377, 932 N.Y.S.2d 609 [4th Dept. 2011] ; see Palisades Collection, LLC v. Kedik , 67 A.D.3d 1329, 890 N.Y.S.2d 230 [4th Dept. 2009] ). Where plaintiff fails to do so, the proper remedy is to grant summary judgment to the defendant who is seeking dismissal of the complaint on the ground that plaintiff lacks standing (Unifund CCR at 1377, 932 N.Y.S.2d 609 ).
Regarding a motion based on standing, in 2018 both the Fourth Department and Second Department have addressed the standard for dismissing a complaint upon a defendant's pre-answer motion asserting lack of standing. When a defendant moves to dismiss a complaint under CPLR Rule 3211[a][3] based upon plaintiff's alleged lack of standing, "the burden is on the moving defendant to establish, prima facie, the plaintiff's lack of standing as a matter of law [citations omitted ]. To defeat the motion, a plaintiff must submit evidence which raises a question of fact as to its standing" ( U.S. Bank N.A. v. Guy , 125 A.D.3d 845, 5 N.Y.S.3d 116 [2d Dept. 2015] ; see Mariners Atlantic Portfolio, LLC v. Hector , 159 A.D.3d 686, 69 N.Y.S.3d 502 [2d Dept. 2018] ). The Fourth Department states:
Where ... a defendant makes a pre-answer motion to dismiss based on lack of standing, "the burden is on the moving defendant to establish, prima facie, the plaintiff's lack of standing, rather than on the plaintiff to affirmatively establish its standing in order for the motion to be denied' [citations omitted ]" In order "[t]o defeat a defendant's motion, the plaintiff has no burden of establishing its standing as a matter of law; rather, the motion will be defeated if the plaintiff's submissions raise a question of fact as to its standing" (citations omitted ).
( Matter of Violet Realty, Inc. v. County of Erie , 158 A.D.3d 1316, 1317 72 N.Y.S.3d 267 [4th Dept. 2018] ; see Deutsche Bank Trust Company Americas v. Vitellas , 131 A.D.3d 52, 59–60, 13 N.Y.S.3d 163 [2d Dept. 2015] ).
The current case law for dismissing a complaint based upon lack of standing under both a pre-answer motion pursuant to CPLR Rule 3211[a][3] and a summary judgment motion pursuant to CPLR Rule 3212[b] requires the defendant to establish, prima facie, the plaintiff's lack of standing.
D. Analysis
This motion by Defendant is for summary judgment based on the affirmative defense that Plaintiff lacks standing ( CPLR Rule 3212[b] ). Plaintiff argues that the Defendant's motion is not proper because there is no affidavit from a person with knowledge of the facts as required by CPLR 3212[b]. On this summary judgment motion, the burden is on the moving Defendant to establish prima facie that Plaintiff lacks standing, "rather than on the plaintiff to affirmatively establish its standing in order for the motion to be denied" (see Aurora Loan Services at 652, 29 N.Y.S.3d 462 ; LGF Holdings at 814, 32 N.Y.S.3d 243 ).
This standard applies in the case of a pre-answer motion by a defendant. Even where there is no answer and no discovery, the defendant is required to establish, prima facie, with some evidence, that plaintiff lacks standing (see Matter of Violet Realty, Inc. v. County of Erie , 158 A.D.3d 1316, 1317, 72 N.Y.S.3d 267 [4th Dept. 2018] ; Mariners Atlantic Portfolio, LLC v. Hector , 159 A.D.3d 686, 69 N.Y.S.3d 502 [2d Dept. 2018] ).
The legal argument of the Defendant relies upon cases where both the plaintiff and defendant seek summary judgment ( Unifund CCR Partners at 1377, 932 N.Y.S.2d 609 ; Palisades Collection at 1329, 890 N.Y.S.2d 230 ). Under that procedural posture, both parties are required to establish that they are entitled to judgment as a matter of law on the issue of standing, and if the plaintiff fails to submit evidence to establish its standing then summary judgment is appropriate to the defendant (Id. ). This is a different procedural posture than the instant one, where Defendant alone seeks summary judgment against Plaintiff. The legal arguments of Defendant, that the burden is on Plaintiff merely because there is an affirmative defense of lack of standing set forth in the Answer, is misplaced.
Defendant submits this summary judgment motion without any affidavit by a person having knowledge of the facts, without a recitation of the material facts, and without any other available proof to show that the cause of action has no merit. On a motion based upon the affirmative defense of lack of standing, it is incumbent upon Defendant to submit an evidentiary showing sufficient to establish that judgment is warranted as a matter of law ( CPLR Rule 3212(b) ; see Aurora Loan Services at 652, 29 N.Y.S.3d 462 ; LGF Holdings at 814, 32 N.Y.S.3d 243 ; Matter of Violet Realty at 1317, 72 N.Y.S.3d 267 ; Deutsche Bank Trust at 59–60, 13 N.Y.S.3d 163 ).
Upon the current case law addressing a motion for summary judgment by defendant based upon an affirmative defense of lack of standing, Defendant must present sufficient evidence to establish it is entitled to judgment as a matter of law. On Defendant's summary judgment motion, the initial burden is upon Defendant, not upon Plaintiff to affirmatively establish that it has standing. Defendant fails to meet its initial burden. Upon all the papers and proof submitted, the affirmative defense of lack of standing has not been established sufficiently to warrant the court as a matter of law in directing judgment in favor of Defendant.
In similar actions where the defendants' motions for summary judgment were denied, the appeal to the Fourth Department Appellate Division were dismissed, prior to any determination, upon stipulations of discontinuance (Midland Funding, LLC v. Gunsalus , 143 A.D.3d 1293, 38 N.Y.S.3d 507 [4th Dept. 2016] ; Portfolio Recovery Associates, LLC v. Fiumano , 143 A.D.3d 1294, 38 N.Y.S.3d 507 [4th Dept. 2016] ).
The motion of Defendant for summary judgment dismissing the complaint of Plaintiff on the ground of lack of standing is DENIED, without prejudice to renew upon completion of discovery.
SUBMIT ORDER
Counsel for the Plaintiff, LVNV Funding, LLC., shall submit an Order within ten (10) days, with this Decision attached, upon approval of all Counsel.