Opinion
No. 2022-07463 Index No. 603397/19
08-21-2024
Lakeview Loan Servicing, LLC, respondent, v. John Florio, Jr., appellant, et al., defendants.
Stim & Warmuth, P.C., Farmingville, NY (Glenn P. Warmuth of counsel), for appellant. Troutman Pepper Hamilton Sanders LLP, New York, NY (Joseph M. DeFazio of counsel), for respondent.
Stim & Warmuth, P.C., Farmingville, NY (Glenn P. Warmuth of counsel), for appellant.
Troutman Pepper Hamilton Sanders LLP, New York, NY (Joseph M. DeFazio of counsel), for respondent.
COLLEEN D. DUFFY, J.P. LINDA CHRISTOPHER WILLIAM G. FORD LAURENCE L. LOVE, JJ.
DECISION & ORDER
In an action to foreclose a mortgage, the defendant John Florio, Jr., appeals from an order and judgment of foreclosure and sale (one paper) of the Supreme Court, Suffolk County (Thomas F. Whelan, J.), entered August 19, 2022. The order and judgment of foreclosure and sale, upon two orders of the same court, both dated December 22, 2021, inter alia, granting those branches of the plaintiff's motion which were for summary judgment on the complaint insofar as asserted against the defendant John Florio, Jr., to strike his answer, and for an order of reference, granted the plaintiff's motion to confirm the referee's report and for a judgment of foreclosure and sale, confirmed the referee's report, and directed the sale of the subject property.
ORDERED that the order and judgment of foreclosure and sale is reversed, on the law, with costs, the plaintiff's motion to confirm the referee's report and for a judgment of foreclosure and sale is denied, those branches of the plaintiff's motion which were for summary judgment on the complaint insofar as asserted against the defendant John Florio, Jr., to strike his answer, and for an order of reference are denied, and the orders dated December 22, 2021, are modified accordingly.
The plaintiff commenced this action against the defendant John Florio, Jr. (hereinafter the defendant), among others, to foreclose a mortgage on certain real property located in Mount Sinai. The defendant interposed an answer asserting various affirmative defenses, including lack of standing. The plaintiff subsequently moved, inter alia, for summary judgment on the complaint insofar as asserted against the defendant, to strike his answer, and for an order of reference. The defendant opposed the motion, contending that the plaintiff failed to demonstrate its standing to commence the action. By order dated December 22, 2021, the Supreme Court, among other things, granted those branches of the plaintiff's motion which were for summary judgment on the complaint insofar as asserted against the defendant, to strike his answer, and for an order of reference. On the same date, the court issued an order, inter alia, granting the same relief to the plaintiff, striking the defendant's answer, and appointing a referee to compute the amount due to the plaintiff. In a related appeal (see Lakeview Loan Servicing, LLC v Florio, ____ A.D.3d ____ [Appellate Division Docket No. 2022-01212; decided herewith]), the defendant appealed from the two orders dated December 22, 2021.
Thereafter, the plaintiff moved to confirm the referee's report and for a judgment of foreclosure and sale. The defendant opposed the motion. By order and judgment of foreclosure and sale entered August 19, 2022, the Supreme Court granted the plaintiff's motion to confirm the referee's report and for a judgment of foreclosure and sale, confirmed the referee's report, and directed the sale of the subject property. The defendant appeals.
The appeals from the orders dated December 22, 2021, were dismissed in a related appeal pursuant to Matter of Aho (39 N.Y.2d 241, 248), on the ground that the right of direct appeal therefrom terminated with the entry of the order and judgment of foreclosure and sale (see Lakeview Loan Servicing, LLC v Florio, ____ A.D.3d ____ [Appellate Division Docket No. 2022-01212). The issues raised on the appeals from the orders are brought up for review and have been considered on the appeal from the order and judgment of foreclosure and sale (see CPLR 5501[a][1]; Matter of Aho, 39 N.Y.2d at 248).
Where, as here, the plaintiff's standing has been placed in issue by a defendant's answer, the plaintiff must prove its standing as part of its prima facie showing on a motion for summary judgment (see Nationstar Mtge., LLC v Shivers, 179 A.D.3d 931, 932). A plaintiff has standing to maintain a mortgage foreclosure action where it is the holder or assignee of the underlying note at the time the action is commenced (see Aurora Loan Servs., LLC v Taylor, 25 N.Y.3d 355, 361-362). "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, and the mortgage passes with the debt as an inseparable incident" (Dyer Trust 2012-1 v Global World Realty, Inc., 140 A.D.3d 827, 828). "A plaintiff may establish, prima facie, its standing as the holder of the note by demonstrating that a copy of the note, including an endorsement in blank, was among the exhibits annexed to the complaint at the time the action was commenced" (JPMorgan Chase Bank, N.A. v Grennan, 175 A.D.3d 1513, 1515; see U.S. Bank N.A. v Fisher, 169 A.D.3d 1089, 1090-1091). "A promissory note [is] a negotiable instrument within the meaning of the Uniform Commercial Code" (JPMorgan Chase Bank, N.A. v Grennan, 175 A.D.3d at 1515 [internal quotation marks omitted]; see UCC 3-104 [2][d]). A "holder" is "the person in possession of a negotiable instrument that is payable either to bearer or to an identified person that is the person in possession" (UCC 1-201 [b][21][A]; see 3-301; JPMorgan Chase Bank, N.A. v Grennan, 175 A.D.3d at 1515). Where an instrument is endorsed in blank, it may be negotiated by delivery (see UCC 3-202 [1]; 3-204[2]; JPMorgan Chase Bank, N.A. v Grennan, 175 A.D.3d at 1515). "An indorsement must be... on the instrument or on a paper so firmly affixed thereto as to become a part thereof" (UCC 3-202 [2]).
Here, the plaintiff failed to make a prima facie showing that it had standing to commence the action. Although the plaintiff attached a copy of the note and a purported allonge endorsed in blank to the complaint, the plaintiff failed to demonstrate that the purported allonge "was so firmly affixed [to the note] as to become a part thereof, as required by UCC 3-202(2)" (Wells Fargo Bank, N.A. v Mitselmakher, 216 A.D.3d 1056, 1058 [internal quotation marks omitted]). Moreover, an affidavit of an assistant secretary of the plaintiff's servicer/attorney-in-fact, submitted in support of the plaintiff's motion, inter alia, for summary judgment on the complaint insofar as asserted against the defendant, to strike his answer, and for an order of reference, was also insufficient to demonstrate the plaintiff's compliance with UCC 3-302(2), as it was bereft of any reference to the purported allonge (see Wells Fargo Bank, N.A. v Mitselmakher, 216 A.D.3d at 1058).
Accordingly, the Supreme Court should have denied those branches of the plaintiff's motion which were for summary judgment on the complaint insofar as asserted against the defendant, to strike his answer, and for an order of reference.
DUFFY, J.P., CHRISTOPHER, FORD and LOVE, JJ., concur.