Opinion
No. 16638–11.
2013-02-22
ONEWEST BANK, FSB, Plaintiff, v. Robert DAVIES, Deborah Davies a/k/a Deborah A. Burke a/k/a Deborah Ann Burke, Mortgage Electronic Registration Systems, Inc., as nominee for Indymac Bank, FSB, Capital One Bank (USA) NA, et als, Defendants.
McCabe, Weisberg & Conway, New Rochelle, Attorneys for Plaintiff. Ronald D. Hariri, Esq., New York, Attorney for Defendants Davies.
McCabe, Weisberg & Conway, New Rochelle, Attorneys for Plaintiff. Ronald D. Hariri, Esq., New York, Attorney for Defendants Davies.
THOMAS F. WHELAN, J.
Upon the following papers numbered 1 to 7 read on this motion for accelerated judgments, deletion and/or substitution of parties and caption amendments to reflect same; and the appointment of a referee to compute; Notice of Motion/Order to Show Cause and supporting papers 1–5; Notice of Cross Motion and supporting papers; Answering Affidavits and supporting papers 6–7; Replying Affidavits and supporting papers; Other; (and after hearing counsel in support and opposed to the motion, it is
ORDERED that this motion (# 001) by the plaintiff for accelerated judgments against the defendants, the appointment of a referee to compute and other incidental relief is considered under CPLR 3212, 3215 and RPAPL 1321 and is granted to the extent set forth below.
The plaintiff commenced this action on May 25, 2011 to foreclose a December 29, 2006 mortgage given by the Davies defendants to secure a mortgage note executed by them on that date in the principal amount of $428,000.00. The plaintiff alleges that the Davies defendants defaulted in their payment obligations in March of 2010. Following service of the summons and complaint, issue was joined by service of a joint answer of the mortgagor defendants dated June 11, 2011. Therein, the Davies defendants deny the material allegations advanced in the plaintiff's complaint and assert ten affirmative defenses thereto, including the plaintiff's purported lack of standing and failures to comply with unspecified conditions precedent.
By the instant motion, the plaintiff moves for an order: (1) awarding it summary judgment against the answering defendants together with a dismissal of the affirmative defenses asserted against the plaintiff; (2) fixing the defaults in answering of the non-answering defendants; (3) identifying and/or substituting certain Joey Davis who was served as defendant John Doe # 1 and deleting as party defendants the remaining unknown defendants; (4) the substitution of a “Deutsche Bank National Trust Company as Trustee for BCAP LLP Trust 2007–AA1” in the place of the named plaintiff and (4) appointing a referee to compute amounts due under the subject mortgage. The motion, together with the opposition served by the Davies defendants, has been considered under CPLR 3215, 3212 and RPAPL § 1321 and it is granted, except those portions wherein the plaintiff seeks substitution of its assignee, for the reasons stated below.
Entitlement to a judgment of foreclosure may be established, as a matter of law, where a mortgagee produces both the mortgage and unpaid note, together with evidence of the mortgagor's default, thereby shifting the burden to the mortgagor to demonstrate, through both competent and admissible evidence, any defense which could raise a question of fact” (Zanfini v. Chandler, 79 AD3d 1031, 912 N.Y.S.2d 911 [2d Dept 2010], quoting HSBC Bank USA v. Merrill, 37 AD3d 899, 900, 830 N.Y.S.2d 598 [2d Dept 2010]; see Bank Natl. Ass'n v. Denaro, 98 AD3d 964, 950 N.Y.S.2d 581 [2d Dept 2012]; Citibank, N.A. v. Van Brunt Prop., LLC, 95 AD3d 1158, 945 N.Y.S.2d 330 [2d Dept 2012]; HSBC Bank v. Shwartz, 88 AD3d 961, 931 N.Y.S.2d 528 [2d Dept 2011]; US Bank N.A. v. Eaddy, 79 AD3d 1022, 1022, 914 N.Y.S.2d 901 [2010] ). Where, as here, an answer served includes the defense of standing or lack of capacity to sue, the plaintiff must further establish its standing to succeed on a motion for summary judgment ( see U.S. Bank, N.A. v. Adrian Collymore, 68 AD3d 752, 890 N.Y.S.2d 578 [2d Dept 2009] ).
Here, the moving papers established the plaintiff's entitlement to summary judgment against the answering defendants as such papers included copies of the mortgage, the unpaid note executed by them on December 29, 2006 together with due evidence of their defaults in payment under the terms of the loan documents ( seeCPLR 3212; RPAPL § 1321; Neighborhood Hous. Serv. of New York City v. Hawkins, 97 AD3d 554, 947 N.Y.S.2d 321 [2d Dept 2012]; Baron Assoc., LLC v. Garcia Group Enter., 96 AD3d 793, 946 N.Y.S.2d 611 [2d Dept 2012]; Citibank, N.A. v. Van Brunt Prop., LLC, 95 AD3d 1158,supra; Archer Capital Fund, L.P. v. GEL, LLC, 95 AD3d 800, 944 N.Y.S.2d 179 [2d Dept 2012]; Swedbank, AB v. Hale Ave. Borrower, LLC., 89 AD3d 922, 932 N.Y.S.2d 540 [2d Dept 2011]; Rossrock Fund II, L.P. v. Osborne, 82 AD3d 737, 918 N.Y.S.2d 514 [2d Dept 2011] ). The moving papers further established, prima facie, that the plaintiff has standing to prosecute its pleaded claims for foreclosure and sale by, among other things, its possession of the mortgage note bearing an indorsement in blank by the original mortgagee at the time of the commencement of this action.
The standing of a plaintiff in a mortgage foreclosure action is measured by its ownership, holder status or possession of the note and mortgage at the time of the commencement of the action ( see U.S. Bank of N.Y. v. Silverberg, 86 AD3d 274, 279, 926 N.Y.S.2d 532 [2d Dept 2011]; U.S. Bank, N.A. v. Adrian Collymore, 68 AD3d 752,supra; Wells Fargo Bank, N.A. v. Marchione, 69 AD3d 204, 887 N.Y.S.2d 615 [2d Dept 2009] ). Because “a mortgage is merely security for a debt or other obligation and cannot exist independently of the debt or obligation” (Deutsche Bank Natl. Trust Co. v. Spanos, 102 AD3d 909, 2013 WL 361084 [2d Dept 2013, internal citations omitted] ), a mortgage passes as an incident of the note upon its physical delivery to the plaintiff. Holder status is established where the plaintiff is the special indorsee of the note or takes possession of a mortgage note that contains an indorsement in blank on the face thereof as the mortgage follows as incident thereto ( seeUCC § 3–202; § 3–204; § 9–203[g] ). Here, the plaintiff established that it took possession of the note, a copy of which was attached to its complaint, prior to the commencement of the action and was the holder thereof as such note contained an indorsement in blank on the face thereof ( see Mortgage Elec. Registration Sys., Inc. v. Coakley, 41 AD3d 674, 838 N.Y.S.2d 622 [2d Dept.2007]; Deutsche Bank Natl. Trust Co. v. Pietranico, 33 Misc.3d 528, 928 N.Y.S.2d 818 [Sup.Ct. Suffolk County 2011], aff'd, 102 AD3d 724, 957 N.Y.S.2d 868 [2d Dept 2013] ). The plaintiff thus established, prima facie, its has standing to prosecute this action.
In addition, the record contains evidence that in July of 2008, the original lender failed and its assets were seized and placed into the hand of a receiver by the FDIC. In March of 2009, the assets of the receivership were acquired by and merged into the plaintiff, a new entity formed for that purpose under the terms of the Purchase and Assumption Agreement. Since such agreements have been found to confer upon the purchaser the right to foreclose on a defaulting borrower ( see JP Morgan Chase Bank Natl. Ass'n v. Miodownik, 91 AD3d 546, 937 N.Y.S.2d 192 [1st Dept 2012] ), these circumstances also give rise to a prima facie case of standing on the part of the plaintiff.
It was thus incumbent upon the answering defendants to submit proof sufficient to raise a genuine question of fact rebutting the plaintiff's prima facie showing or in support of the affirmative defenses asserted in their answer or otherwise available to them ( see Flagstar Bank v. Bellafiore, 94 AD3d 1044, 943 N.Y.S.2d 551 [2d Dept 2012]; Grogg Assocs. v. South Rd. Assocs., 74 AD3d 1021, 907 N.Y.S.2d 22 [2d Dept 2010]; Wells Fargo Bank v. Karla, 71 AD3d 1006, 896 N.Y.S.2d 681 [2d Dept 2010]; Washington Mut. Bank v. O'Connor, 63 AD3d 832,supra; J.P. Morgan Chase Bank, N.A. v. Agnello, 62 AD3d 662, 878 N.Y.S.2d 397 [2d Dept 2009]; Aames Funding Corp. v. Houston, 44 AD3d 692, 843 N.Y.S.2d 660 [2d Dept 2007] ). Notably, self-serving and conclusory allegations do not raise issues of fact and do not require plaintiff to respond to alleged affirmative defenses which are based on such allegations ( see Charter One Bank, FSB v. Leone, 45 AD3d 958, 845 N.Y.S.2d 513 [3d Dept 2007]; Rosen Auto Leasing, Inc. v. Jacobs, 9 AD3d 798, 780 N.Y.S.2d 438 [3d Dept 2004] ). Where a defendant fails to oppose some or all matters advanced on a motion for summary judgment, the facts as alleged in the movants' papers may be deemed admitted as there is, in effect, a concession that no question of fact exists ( see Kuehne & Nagel, Inc. v. Baiden, 36 N.Y.2d 539, 369 N.Y.S.2d 667 [1975];see also Madeline D'Anthony Enter., Inc. v. Sokolowsky, 101 AD3d 606, 957 N.Y.S.2d 88 [1st Dept 2012]; Argent Mtge. Co., LLC v. Mentesana, 79 AD3d 1079, 915 N.Y.S.2d 591[2d Dept 2010] ).
In their opposing papers, the Davies defendants re-assert their pleaded affirmative defense that the plaintiff lacks standing to prosecute its claims for foreclosure and sale. They also re-assert their pleaded defenses of unclean hands, bad faith and estoppel. Also asserted are objections as to the sufficiency of proof regarding the amounts alleged to owing from the defendants and the plaintiff's request for a substitution of the plaintiff by the Deutsche Bank National Trust Company as Trustee for BCAP LLP Trust 2007–AA1. The court finds, however, that none of these asserted defenses nor those not asserted on this motion but raised in the answer rebut the plaintiff's prima facie showing of its entitlement to summary judgment.
The Davies defendants contend that a question of fact exists with respect to the plaintiff's standing by reason of its request for a substitution of the Deutsche Bank National Trust Company as Trustee for BCAP LLP Trust 2007–AA1, in place of the plaintiff. Defense counsel questions the interests of the proposed new plaintiff in the subject note and mortgage. He complains that the same is not explained by the plaintiff in its moving papers, notwithstanding that a written assignment of the note and mortgage from the plaintiff to Deutsche Bank National Trust Company as Trustee for BCAP LLP Trust 2007–AA1 dated May 11, 2011 is attached to the plaintiff's moving papers. Counsel further claims that because the affidavit of merit was prepared by an employee of the current plaintiff, he avers that such plaintiff is the holder of the note and the plaintiff's claims of standing have been rebutted.
The court finds, however, that none of these nuanced allegations give rise to questions of fact that implicate a lack of standing on the part of the plaintiff. As indicated above, the standing of every foreclosure plaintiff is measured at the time of the commencement of the action. Contrary to the contentions of the defendants, no assignment or other event occurring subsequent to the commencement of this action, including a post-commencement assignment of the note and mortgage, would effect a divestiture of a plaintiff possessed of standing when the action was commenced ( see e.g.,CPLR 1018; see also LaSalle Bank, N.A. v. Pace, 31 Misc.3d 627, 919 N.Y.S.2d 794 [Sup.Ct. Suffolk County 2011], aff'd100 AD3d 970, 955 N.Y.S.2d 161 [2d Dept 2012). Here, the plaintiff established that at the time of the commencement of this action it possessed the requisite standing to prosecute its pleaded claims for foreclosure and sale of the mortgaged premises. The defendants' contentions that the plaintiff lacks standing due to circumstances occurring subsequent to the commencement of this action are thus unavailing.
Also unavailing are the defendants' claims that the amounts the plaintiff claims are owing have not been sufficiently established and accordingly, summary judgment in its favor is precluded. It is well settled law that “[a] dispute as to the exact amount owed by the mortgagor to the mortgagee may be resolved after a reference pursuant to RPAPL 1321, and the existence of such a dispute does not preclude the issuance of summary judgment directing the sale of the mortgaged property” (Long Island Savings Bank v. Denkensohn, 222 A.D.2d 659, 635 N.Y.S.2d 683 [2d Dept 1995], quoting Crest/Good Mfg. Co. v. Baumann, 160 A.D.2d 831, 832, 554 N.Y.S.2d 264 [2d Dept 1990] ).
The Davies defendants' claims that the plaintiff's motion should be denied because the plaintiff has engaged in acts which give rise to cognizable defenses such as, unclean hands, bad faith and estoppel, are rejected as unmeritorious. All of these claims are premised upon alleged acts of misconduct on the part of the plaintiff that occurred subsequent to the Davies' default in payment, including, the plaintiff's failure to modify the terms of the loan following the defendants' alleged payment of reduced amounts under the terms of a 2010 trial modification implemented by the parties; the plaintiff's failure to modify the loan following the end of the trial term, particularly in light of the personal and economic circumstances of the defendants and the plaintiff's failure to forebear and resort to its legal remedies under the latest forbearance agreement just offered by the plaintiff and allegedly accepted by the defendants. However, a foreclosing plaintiff has no obligation to modify the terms of its loan before or after a default in payment ( see Graf v. Hope Bldg. Corp., 254 N.Y. 1, 4–5, 171 NE 884 [1930];Wells Fargo Bank, N.A. v. Van Dyke, 101 AD3d 638, 2012 WL 6699200 [1st Dept 2012] ); or after the borrower's participation in trial modification programs not governed by recently amended federal guidelines ( see JP Morgan Chase Bank, Natl. Assn. v. Ilardo, 36 Misc.3d 359, 940 N.Y.S.2d 829 [Sup.Ct. Suffolk County 2012] ). Consequently, a failure to modify or forbear does not constitute bad faith or unclean hands or other conduct upon which a mortgagor defendant may predicate a cognizable defense to a claim for foreclosure and sale ( see Graf v. Hope Bldg. Corp., 254 N.Y. 1,supra; Jo–Ann Homes v. Dworetz, 25 N.Y.2d 112, 302 N.Y.S.2d 799 [1969];Wells Fargo Bank, N.A. v. Van Dyke, 101 AD3d 638,supra; Citibank, N.A. v. Van Burnt Prop., LLC, 95 AD3d 1158, 945 N.Y.S.2d 330 [2d Dept 2012]; JP Morgan Chase Bank, Natl. Assn. v. Ilardo, 36 Misc.3d 359,supra ).
The defendants' further claims that the plaintiff should be estopped from pursuing its remedy of foreclosure and sale due to its failure to extend the loan maturity date or to otherwise forbear its remedies, its bad faith and unclean hands are equally lacking in merit. Modification of mortgages and/or forbearance agreements are subject to our statute of frauds and accordingly, must be in writing to be enforceable and signed by the party to be charged ( seeGOL § 5–703[4] ). A defense resting upon a proposed forbearance agreement, the material terms of which were modified by the defendant borrower, that was neither signed nor otherwise accepted by the plaintiff is as unavailing as one resting upon parol evidence since neither satisfies the statute of frauds above cited ( see William J. Jenack Estate Appraisers v. Rabizadeh, 99 AD3d 270, 952 N.Y.S.2d 197 [2d Dept 2012]; Del Pozo v. Impressive Homes, Inc., 95 AD3d 1268, 945 N.Y.S.2d 368 [2d Dept 2012]; Martini v. Rogers, 6 AD3d 404, 774 N.Y.S.2d 378 [2d Dept 2004] ). Here, the Davies defendants' reliance on a proposed forbearance agreement not signed by the plaintiff, the terms of which were substantially modified by the defendants, are insufficient to rebut the plaintiff's prima facie showing of its motion for summary judgment.
The defendants' remaining claims may fairly be characterized as an appeal to the equity powers of the court to limit or otherwise adjust the harshness of the remedy the plaintiff seeks in light of the circumstances in which the defendants find themselves and their good faith efforts to negotiate a settlement and/or loan modification and their full participation in a trial modification in 2010. While the judiciary has recognized that the remedy of foreclosure may result in the loss of one's home, “[w]hen a default is undisputed, the court (cannot) abrogate the right of foreclosure and sale ... which is incorporated in the contract and on the strength of which (the creditor) lent his money” (Home Loan Inv. Bank, F.S.B. v. Goodness and Mercy, 2011 WL 1701795 [ED N.Y.2011]quoting United States v. Victory Hwy. Vil., Inc., 662 F.2d 488, 494 [8th Cir.1981], quoting United States v. Sylacauga Prop., Inc., 323 F.2d 487, 491 [5th Cir.1963]; see also United States v.. Flaherty, 172 F.3d 39, 1999 WL 66153 [2d Cir.1999] ). However, recent appellate case authorities have reminded trial courts that the stability of contract obligations must not be undermined by judicial sympathy” (Emigrant Mtge. Co., Inc. v. Fisher, 90 AD3d 823, 935 N.Y.S.2d 313 [2d Dept.2011] quoting First Natl. Stores v. Yellowstone Shopping Ctr., 21 N.Y.2d 630, 638, 290 N.Y.S.2d 721 [1968],quoting Graf v. Hope Bldg. Corp., 254 N.Y. 1, 4–5,supra ). The court thus declines the Davies' invitation to deny the plaintiff the contractual remedy of foreclosure and sale which the Davies willingly conferred upon the plaintiff in exchange for the advancement of the mortgage loan.
The court thus finds that the plaintiff is entitled to summary judgment on its complaint and dismissing the affirmative defenses set forth in the joint answer of the mortgagor defendants. Those portions of this motion wherein the plaintiff seeks such relief are granted.
Those portions of the instant motion wherein the plaintiff seeks an order identifying Joey Davis as a defendant in the place of John Doe # 1 and dropping as party defendants the remaining unknown defendants listed in the caption and an amendment of the caption to reflect same are granted. All future proceedings shall be captioned accordingly.
The court, however denies the plaintiff's request for a substitution of the recent assignee of the note and mortgage for the plaintiff, without prejudice, to a new application for such relief upon proper papers. Although the assignment of the note and mortgage to the proposed new plaintiff assignee qualifies such assignee for its substitution as plaintiff under CPLR 1018 ( see Citibank, N.A. v. Van Brunt Prop., LLC, 95 AD3d 1158,supra ), the action may continue to be prosecuted by the original plaintiff ( see IndyMac Bank F.S.B. v. Thompson, 99 AD3d 669, 952 N.Y.S.2d 86 [2d Dept 2012] ). Nevertheless, a substitution of plaintiffs may not be accomplished by a mere caption amendment since a non-party may not be substituted nor otherwise made a party-plaintiff to a pending action without its consent and declared willingness to take up the prosecution of the claims of its predecessor-in-interest and its submission to the jurisdiction of the court. This rule is mandated by the provisions of CPLR 1001(a) which provide, among other things, that an unwilling plaintiff shall be joined as a defendant to the action. In addition, counsel for the original plaintiff may not appear on behalf of the newly proposed plaintiff without due proof of such counsel's retention by such new plaintiff. Here, the moving papers failed to demonstrate that Deutsche Bank National Trust Company as Trustee for BCAP LLP Trust 2007–AA1, the proposed new plaintiff, consents to the requested substitution and submits to the jurisdiction of the court by its retention of and appearance by plaintiff's counsel or by other counsel of its own choosing.
The plaintiff's moving papers also established the default in answering on the part of the newly identified defendant and/or remaining defendants, none whom served answers to the plaintiff's complaint. Accordingly, the defaults of all such defendants are hereby fixed and determined. Since the plaintiff has been awarded summary judgment against the sole answering defendants and has established a default in answering by the remaining defendants, the plaintiff is entitled to an order appointing a referee to compute amounts due under the subject note and mortgage ( seeRPAPL § 1321; Bank of East Asia, Ltd. v. Smith, 201 A.D.2d 522, 607 N.Y.S.2d 431 [2d Dept 1994]; Vermont Fed. Bank v. Chase, 226 A.D.2d 1034, 641 N.Y.S.2d 440 [3d Dept 1996]; LaSalle Bank, NA v. Pace, 31 Misc.3d 627,supra ). Those portions of the instant motion wherein plaintiff demands such relief are thus granted.
The moving papers further established that a conference of the type mandated by the Laws of Laws of 2008, Ch. 472 § 3–a as amended by the Laws of 2009 Ch. 507 § 10 or by CPLR 3408 was previously conducted on October 6, 2011 in the specialized mortgage foreclosure part of this court and that no further conferences are required under any statute, law or rule. Under these circumstances, the plaintiff is entitled to the issuance of an order of reference due to the accelerated judgments granted to the plaintiff on this motion.
The proposed order appointing a referee to compute, as modified by the court, has been signed simultaneously herewith.