Opinion
15208/07.
Decided October 9, 2007.
Robert D. Aronin, Esq. Druckman Sinel, LLP, Plaintiff.
Aurora Loan Services, LLC, (Aurora) alleges to be the plaintiff in this ex parte application for an order for service by publication, pursuant to CPLR § 316, on defendants Abdul Sattar and Lourdes Belte, and to appoint a guardian ad litem on behalf of defendants served by publication, in an action to foreclose a mortgage for real property located at 564 Lafayette Avenue, Brooklyn, New York (Block 1788, Lot 44, County of Kings). The plaintiff lacks standing to bring this action. Aurora is not now nor has ever been the creditor for the Sattar mortgage and note. The instant application is denied. Further, the underlying complaint in this action is dismissed, and the Kings County Clerk is directed to cancel Aurora's April 24, 2007 notice of pendency against Block 1788, Lot 44, County of Kings.
Additionally, the Court is troubled that Aurora's counsel, Druckman Sinel, LLP, and Robert S. Aronin, Esq., of counsel to Druckman Sinel, appears to be wasting judicial resources in an action that could be construed as frivolous conduct. Druckman Sinel, at the home page of their website, www.callthebestlawyer.com, has a headline, "Lawyering is a Difficult Business." It certainly is, if your client lacks standing and your firm engages in wasting of judicial resources.
Background
Defendant Sattar borrowed $756,000.00 from First Magnus Financial Corporation
(First Magnus) on October 25, 2006. Sattar executed a thirty-year adjustable rate note for this amount and a mortgage to secure the loan for the 564 Lafayette Avenue premises. Mortgage Electronic Registration Systems, Inc. (MERS) was named in the mortgage as First Magnus' nominee and mortgagee of record. The instant mortgage and note were recorded in the Office of the City Register, New York City Department of Finance, on January 11, 2007, with City Register File Number (CRFN) 2007000022742 [Attorney Aronin's September 19, 2007 affirmation of regularity; April 24, 2007 Notice of Pendency, April 24, 2007 summons, and April 24, 2007 verified complaint — exhibit A of application].
I checked the Automated City Register Information System (ACRIS) website of the Office of the City Register, New York City Department of Finance, and verified that the Sattar Note and Mortgage were recorded on January 11, 2007, as stated by counsel for Aurora. However, as of today, October 9, 2007, ACRIS shows there has never been an assignment of the First Magnus mortgage and note by MERS. Even if the assignment took place and was not recorded, Mr. Aronin has failed to present the court with any documentary evidence of an unrecorded assignment. Without any shred of evidence of an assignment from MERS to Aurora, the Court must conclude that Aurora is not the owner of the mortgage and note.
Aurora, at its website, www.alservices.com, states that it is a Lehman Brothers Company. At the page entitled "about," it states that, "At Aurora, we shine a light on innovation in everything we do — products, relationships, solutions." It is quite innovative to claim to be a plaintiff, when not a plaintiff.
If the Sattar mortgage and note have not yet been assigned to Aurora, Aurora faces a major complication in having the instant mortgage and note assigned. Cathy Luebke reported in the August 17, 2007-edition of The Business Journal of Phoenix, in her bylined article, "Tucson's First Magnus Financial cuts off loan funding, sends workers home":
First Magnus Financial Corp., one of the nation's largest privately held mortgage companies has fallen victim to the mortgage industry meltdown.
The Tucson company's Web site and phone service say First Magnus will not fund any future mortgage loans. Employees and customers are asked to leave a message with any questions. The Associated Press reports that the majority of the company's workers were sent home Thursday and that an official said a bankruptcy filing is possible.
First Magnus, at its website, www.firstmagnus.com, has the following announcement on the home page:
Notice of Filing Chapter 11 Bankruptcy Petition
On August 21, 2007, First Magnus filed a voluntary petition for relief underChapter 11 of the U.S. Bankruptcy Code in the U.S. Bankruptcy Court for the District of Arizona, Case No. 4-07-bk-01578. Greenberg Traurig, LLP is acting as legal counsel to First Magnus with respect to the bankruptcy. First Magnus will post additional information about the Chapter 11 case on this website as it becomes available.
Mr. Aronin, in ¶ 1 of his affirmation of regularity, states "I am of-counsel to the law firm of DRUCKMAN SINEL, LLP, attorneys for the plaintiff in the within foreclosure action. I am fully familiar with the subject matter of this action . . ." Stuart L. Druckman, Esq., in his April 24, 2007 verification of the instant complaint, claims that the summons and complaint "is true to affirmant's own knowledge, except as to the matters therein stated to be alleged on information and belief." The April 24, 2007 complaint, in unequivocal language recites in ¶ 's 2 and 3 the details about the execution and recording of the First Magnus's mortgage and note to defendant Sattar. The complaint then states:
3A. The note and mortgage were thereafter duly assigned to plaintiff by an assignment to be recorded, if applicable.
4.The plaintiff [Aurora] is still the owner and holder of the note and mortgage.
More than five months (168 days to be exact) have elapsed from April 24, 2007 to October 9, 2007. Yet, there is no evidence of the alleged assignment from MERS to Aurora. This Court must conclude that Aurora is not now, and has never been, the mortgagee in the instant foreclosure action. Therefore, the application for service by publication is denied, the complaint is dismissed, and the notice of pendency is cancelled.
Discussion
The Court of Appeals, in Saratoga County Chamber of Commerce, Inc. v Pataki,
100 NY2d 801, 812 (2003), cert denied 540 US 1017 (2003), declared that "[s]tanding to sue is critical to the proper functioning of the judicial system. It is a threshold issue. If standing is denied, the pathway to the courthouse is blocked. The plaintiff who has standing, however, may cross the threshold and seek judicial redress." Professor David Siegel, in NY Prac, § 136, at 232 [4th ed] instructs that:
[i]t is the law's policy to allow only an aggrieved person to bring a lawsuit . . . A want of "standing to sue," in other words, is just another way of saying that this particular plaintiff is not involved in a genuine controversy, and a simple syllogism takes us from there to a "jurisdictional" dismissal: (1) the courts have jurisdiction only over controversies; (2) a plaintiff found to lack "standing" is not involved in a controversy; and (3) the courts therefore have no jurisdiction of the case when such a plaintiff purports to bring it.
In Caprer v Nussbaum, 36 AD3d 176, 181 (2nd Dept 2006), the Court held that "[s]tanding to sue requires an interest in the claim at issue in the lawsuit that the law will recognize as a sufficient predicate for determining the issue at the litigant's request." If a plaintiff lacks standing to sue, the plaintiff may not proceed in the action. Stark v Goldberg, 297 AD2d 203 (1st Dept 2002).
It is clear that plaintiff Aurora lacks standing to foreclose on the instant Sattar mortgage and note. Aurora has never established ownership of the mortgage and note.
Despite alleging in ¶ 3A of the complaint, that the "note and mortgage were thereafter duly assigned to plaintiff by an assignment to be recorded," no evidence has been presented to the Court of this alleged assignment. The Court, in Campaign v Barba, 23 AD3d 327 (2nd Dept 2005), instructed that "[t]o establish a prima facie case in an action to foreclose a mortgage, the plaintiff must establish the existence of the mortgage and the mortgage note, ownership of the mortgage, and the defendant's default in payment [ Emphasis added]." See Witelson v Jamaica Estates Holding Corp I, 40 AD3d 284 (1st Dept 2007); Household Finance Realty Corp. of New York v Wynn, 19 AD3d 545 (2nd Dept 2005); Sears Mortgage Corp. v Yahhobi, 19 AD3d 402 (2nd Dept 2005); Ocwen Federal Bank FSB v Miller, 18 AD3d 527 (2nd Dept 2005); U.S. Bank Trust Nat. Ass'n Trustee v Butti, 16 AD3d 408 (2nd Dept 2005); First Union Mortgage Corp. v Fern, 298 AD2d 490 (2nd Dept 2002); Village Bank v Wild Oaks, Holding, Inc., 196 AD2d 812 (2nd Dept 1993).
Since Aurora does not have ownership of the Sattar mortgage and note, the Court must not only deny the instant application for service by publication and appointment of a guardian ad litem, but dismiss the underlying foreclosure action.
With dismissal of the complaint, the notice of pendency filed by Aurora must be cancelled. CPLR § 6501 provides that the filing of a notice of pendency against a property is to give constructive notice to any purchaser of real property or encumbrancer against real property of an action that "would affect the title to, or the possession, use or enjoyment of real property, except in a summary proceeding brought to recover the possession of real property." Professor David Siegel, in NY Prac, § 334, at 535 [4th ed] observes about a notice of pendency that:
The plaintiff files it with the county clerk of the real property county, putting the world on notice of the plaintiff's potential rights in the action and thereby warning all comers that if they then buy the property or lend on the strength of it or otherwise rely on the defendant's right, they do so subject to whatever the action may establish as the plaintiff's right.
The Court of Appeals, in 5303 Realty Corp. v O Y Equity Corp, 64 NY2d 313, 315 (1984), commented that "[a] notice of pendency, commonly known as a " lis pendens," can be a potent shield to litigants claiming an interest in real property." The Court, at 318-320, outlined the history of the doctrine of lis pendens back to 17th century England. It was formally recognized in New York courts in 1815 and first codified in the Code of Procedure [Field Code] enacted in 1848. At 319, the Court stated that "[t]he purpose of the doctrine was to assure that a court retained its ability to effect justice by preserving its power over the property, regardless of whether a purchaser had any notice of the pending suit," and, at 320, "the statutory scheme permits a party to effectively retard the alienability of real property without any prior judicial review."
In Israelson v Bradley, 308 NY 511, 516 (1955), the Court observed that with a notice of pendency a plaintiff who has an interest in real property has received from the State:
an extraordinary privilege which . . . upon the mere filing of the notice of a pendency of action, a summons and a complaint and strict compliance with the requirements of section 120 [of the Civil Practice Act; now codified in CPLR §§ 6501, 6511 and 6512] is required. Proper administration of the law by the courts requires promptness on the part of a litigant so favored and that he accept the shield which has been given him upon the terms imposed and that he not be permitted to so use the privilege granted that it becomes a sword usable against the owner or possessor of realty. If the terms imposed are not met, the privilege is at an end. [ Emphasis added]
Article 65 of the CPLR outlines notice of pendency procedures. The Court, in Da Silva v Musso, 76 NY2d 436, 442 (1990) held that "the specific statutorily prescribed mechanisms for implementing this provisional remedy . . . were designed with a view toward balancing the interests of the claimant in the preservation of the status quo against the equally legitimate interests of the property owner in the marketability of his title." In In Re Sakow, 97 NY2d 436, 441 (2002), the Court of Appeals, quoted Professor Siegel, in holding that "[t]he ability to file a notice of pendency is a privilege that can be lost if abused" (Siegel, New York Practice § 336, at 512).'"
The instant case, with Aurora never having been a plaintiff, and the complaint dismissed, meets the criteria for losing "a privilege that can be lost if abused." CPLR § 6514 (a) provides for the mandatory cancellation of a notice of pendency by:
[t]he court, upon motion of any person aggrieved and upon such notice as it may require, shall direct any county clerk to cancel a notice of pendency, if service of a summons has not been completed within the time limited by section 6512; or if the action has been settled, discontinued or abated; or if the time to appeal from a final judgment against the plaintiff has expired; or if enforcement of a final judgment against the plaintiff has not been stayed pursuant to section 5519. [ Emphasis added]
The plain meaning of the word "abated," as used in CPLR § 6514 (a) is the ending of an action. Abatement is defined in Black's Law Dictionary 3 [7th ed 1999] as "the act of eliminating or nullifying." The Court, in Nastasi v Nastasi, 26 AD3d 32, 40 (2nd Dept 2005), notes that" [a]n action which has abated is dead, and any further enforcement of the cause of action requires the bringing of a new action, provided that a cause of action remains" (2A Carmody-Wait 2d § 11.1).'" The Nastasi Court, at 36, held that "[c]ancellation of a notice of pendency can be granted in the exercise of the inherent power of the court where its filing fails to comply with CPLR 6501 ( see 5303 Realty Corp. v O Y Equity Corp., supra at 320-321; Rose v Montt Assets, 250 AD2d 451, 451-452[1st Dept 1998]; Siegel, NY Prac § 336 [4th ed])." As Aurora never owned the instant mortgage and note, and lacked standing to sue, the dismissal of Aurora's complaint must result in the mandatory cancellation of Aurora's notice of pendency against the property "in the exercise of the inherent power of the Court." The Court will notify the Kings County Clerk of the cancellation of the notice of pendency
The prosecution of this action by Mr. Aronin and Druckman Sinel on behalf of Aurora appears to be "frivolous." 22 NYCRR § 130-1.1 (a) states that "the Court, in its discretion may impose financial sanctions upon any party or attorney in a civil action or proceeding who engages in frivolous conduct as defined in this Part, which shall be payable as provided in section 130-1.3 of this Subpart." Further, it states in 22 NYCRR § 130-1.1 (2), that "sanctions may be imposed upon any attorney appearing in the action or upon a partnership, firm or corporation with which the attorney is associated."
22 NYCRR § 130-1.1 states that:
For purposes of this part, conduct is frivolous if:
(1) it is completely without merit in law and cannot be supported by a reasonable argument for an extension, modification or reversal of existing law;
(2) it is undertaken primarily to delay or prolong the resolution of the litigation, or to harass or maliciously injure another; or
(3) it asserts material factual statements that are false.
It is clear that Aurora's instant application for service by publication and the prosecution of the underlying foreclosure action is "completely without merit in law" and "asserts material factual statements that are false."
Part 130 Rules were created, effective January 1, 1989, to give the courts a remedy to deal with frivolous conduct. These stand beside Appellate Division disciplinary case law against attorneys for abuse of process or malicious prosecution. The Court, in Gordon v Marrone, 202 AD2d 104, 110 (2nd Dept 1994), lv denied 84 NY2d 813 (1995), instructed that:
Conduct is frivolous and can be sanctioned under the court rule if "it is completely without merit . . . and cannot be supported by a reasonable argument for an extension, modification or reversal of existing law; or . . . it is undertaken primarily to delay or prolong the resolution of the litigation, or to harass or maliciously injure another" ( 22 NYCRR 130-1.1[c] [1], [2] . . .).
In Levy v Carol Management Corporation, 260 AD2d 27, 33 (1st Dept 1999), the Court stated that in determining if sanctions are appropriate the Court must look at the broad pattern of conduct by the offending attorneys or parties. Further, "22 NYCRR 130-1.1 allows us to exercise our discretion to impose costs and sanctions on an errant party . . ." The Levy Court held, at 34, that "[s]anctions are retributive, in that they punish past conduct. They also are goal oriented, in that they are useful in deterring future frivolous conduct not only by the particular parties, but also by the Bar at large."
The Court, in Kernisan, M.D. v Taylor, 171 AD2d 869 (2nd Dept 1991), noted that the intent of the Part 130 Rules "is to prevent the waste of judicial resources and to deter vexatious litigation and dilatory or malicious litigation tactics ( cf. Minister, Elders Deacons of Refm. Prot. Church of City of New York v 198 Broadway, 76 NY2d 411; see Steiner v Bonhamer, 146 Misc 2d 10) [ Emphasis added]." The instant action by a party that never had any standing is "a waste of judicial resources." This conduct, as noted in Levy, must be deterred. In Weinstock v Weinstock, 253 AD2d 873 (2nd Dept 1998), the Court ordered the maximum sanction of $10,000.00 for an attorney who pursued an appeal "completely without merit," and holding, at 87, that "[w]e therefore award the maximum authorized amount as a sanction for this conduct ( see, 22 NYCRR 13-1) calling to mind that frivolous litigation causes a substantial waste of judicial resources to the detriment of those litigants who come to the Court with real grievances [ Emphasis added]." Citing Weinstock, the Appellate Division, Second Department, in Bernadette Panzella, P.C. v De Santis, 36 AD3d 734 (2nd Dept 2007), affirmed a Supreme Court, Richmond County $2,500.00 sanction, at 736, as "appropriate in view of the plaintiff's waste of judicial resources [ Emphasis added]."
In Navin v Mosquera, 30 AD3d 883 (3rd Dept 2006), the Court instructed that when considering if specific conduct is sanctionable as frivolous, "courts are required to examine whether or not the conduct was continued when its lack of legal or factual basis was apparent [or] should have been apparent' ( 22 NYCRR 130-1.1 [c])." In Sakow ex rel. Columbia Bagel, Inc. v Columbia Bagel, Inc., 6 Misc 3d 939, 943 (Sup Ct, New York County 2004), the Court held that "[i]n assessing whether to award sanctions, the Court must consider whether the attorney adhered to the standards of a reasonable attorney (Principe v Assay Partners, 154 Misc 2d 702 [Sup Ct, NY County 1992])." In the instant action, plaintiff's attorney should have determined if MERS ever assigned the Sattar mortgage and note to Aurora. A "reasonable attorney" can easily perform an ACRIS search before commencing a foreclosure action to determine if his client actually owns the mortgage and note in question.
Since Mr. Aronin and the firm of Druckman Sinel have not previously engaged in any frivolous conduct before this Court, and they must explain this decision and order to their client, Aurora, a Lehman Brothers subsidiary, this Court will not pursue sanctions and costs against Mr. Aronin and Druckman Sinel. This Court issues the strongest warning possible to both Mr. Aronin and Druckman Sinel that any future "waste of judicial resources" will not be tolerated and will result in hearing pursuant to 22 NYCRR § 130-1.1, to determine if they engaged in frivolous conduct.
Conclusion
Accordingly, it is
ORDERED that the application of alleged plaintiff Aurora Loan Services, LLC, for an order of service by publication, pursuant to CPLR § 316, on defendants Abdul Sattar and Lourdes Belte, and to appoint a guardian ad litem on behalf of defendants served by publication, in an action to foreclose a mortgage for real property located at 564 Lafayette Avenue, Brooklyn, New York (Block 1788, Lot 44, County of Kings), is denied; and it is further
ORDERED, that since alleged plaintiff Aurora Loan Services, LLC, lacks standing and is not the mortgagee in this foreclosure action, this action, Index No. 15208/07, is dismissed; and it is further
ORDERED, that the April 24, 2007 Notice of Pendency, docketed by the Kings County Clerk on May 2, 2007, filed by alleged plaintiff Aurora Loan Services, LLC, in an action to foreclose a mortgage for real property located at 564 Lafayette Avenue, Brooklyn, New York (Block 1788, Lot 44, County of Kings) is cancelled; and it is further
ORDERED, that Mr. Ronald D. Bratt, my Principal Law Clerk, shall personally serve the Kings County Clerk with a copy of this decision and order.
This constitutes the Decision and Order of the Court.