| JP Morgan Chase Bank v Munoz |
| 2011 NY Slip Op 05671 [85 AD3d 1124] |
| June 28, 2011 |
| Appellate Division, Second Department |
| JP Morgan Chase Bank, Appellant, v Alba Munoz et al.,Defendants, and Mark O'Connor, Respondent. |
—[*1] Scott R. Cohen, P.C., Bellmore, N.Y., for respondent.
In an action to foreclose a mortgage, the plaintiff appeals, as limited by its brief, from somuch of an order of the Supreme Court, Suffolk County (Spinner, J.), entered March 3, 2010, asdenied those branches of its motion which were for summary judgment dismissing theaffirmative defenses and counterclaims of the defendant Mark O'Connor.
Ordered that the order is modified, on the law, by deleting the provision thereof denying thatbranch of the plaintiff's motion which was for summary judgment dismissing the affirmativedefense of the defendant Mark O'Connor of lack of personal jurisdiction, and substitutingtherefor a provision granting that branch of the motion; as so modified, the order is affirmedinsofar as appealed from, without costs or disbursements.
In 2004, the property at issue in this foreclosure action was owned by Alfredo Zambrano, andthe defendant Mark O'Connor was injured on the property. In December 2004, Zambranoconveyed ownership of the property to his daughter, Alba Munoz. In January 2005, O'Connorcommenced an action against Zambrano to recover damages for the personal injuries hesustained on the subject property. In September 2005, while that action was pending, Munozobtained a mortgage loan from Premium Capital Funding, LLC (hereinafter Premium). In July2006, O'Connor obtained a default judgment against Zambrano and filed a judgment lien againstthe subject property. Premium eventually transferred its mortgage interest to the plaintiff, whichcommenced this foreclosure action after Munoz stopped making payments on the mortgage.
O'Connor, the only defendant who filed an answer, asserted two affirmative defenses andthree counterclaims, alleging that the Zambrano-Munoz conveyance was fraudulent and that theplaintiff knew or should have known of facts sufficient for it to conduct an inquiry into thecircumstances surrounding that conveyance. O'Connor alleged that his judgment lien had priorityover the plaintiff's mortgage. He also alleged as an affirmative defense that the court lackedpersonal jurisdiction over him. The plaintiff moved, inter alia, for summary judgment dismissingO'Connor's affirmative defenses and counterclaims, arguing, among other things, that it wasprotected from O'Connor's claims of a superior interest because its assignor, Premium, was abona [*2]fide mortgagee without notice of the alleged fraud. TheSupreme Court denied the aforementioned branches of the plaintiff's motion. We modify.
The Supreme Court properly denied that branch of the plaintiff's motion which was forsummary judgment dismissing O'Connor's affirmative defenses and counterclaims alleging thepriority of his interest over the plaintiff's mortgage. "A mortgagee's interest in the property isprotected unless it has notice of a previous fraud affecting the title of its grantor" (Thomas v LaSalle Bank N.A., 79AD3d 1015, 1017 [2010]; see Real Property Law § 266). "[A] mortgagee isunder a duty to make an inquiry where it is aware of facts that would lead a reasonable, prudentlender to make inquiries of the circumstances of the transaction at issue" (Stracham v Bresnick, 76 AD3d1009, 1010 [2010] [citations and internal quotation marks omitted]; see Thomas vLaSalle Bank N.A., 79 AD3d at 1017). " 'A mortgagee who fails to make such an inquiry isnot a bona fide encumbrancer for value' " (Thomas v LaSalle Bank N.A., 79 AD3d at1017, quoting Booth v AmeriquestMtge. Co., 63 AD3d 769, 769 [2009]).
Here, where there is a claim of a priority interest based on an earlier fraudulent conveyance,the plaintiff bears the initial burden on its motion for summary judgment to establish its primafacie entitlement to protection as an assignee of a good faith mortgagee (see Morris v Adams, 82 AD3d946, 947 [2011]). The plaintiff was required to show that its assignor, Premium, had noknowledge of the alleged fraud or of facts that would have led a reasonable mortgagee to makeinquiry of the possible fraud at the time the mortgage was entered into with Munoz (id.).The only evidence submitted by the plaintiff to establish lack of knowledge or notice of thealleged fraud was the affidavit of its own employee, who claimed only to have had personalknowledge of relevant facts based on documents in the loan file kept in the plaintiff's ordinarycourse of business. He failed, however, to give an adequate and full description of the contents ofthe loan file and the information known or not known to Premium. The statements in theaffidavit were vague, conclusory, and not fully supported by documentary evidence. Under thecircumstances of this case, the plaintiff failed to meet its prima facie burden of establishing thatits assignor was a bona fide mortgagee. Accordingly, this Court need not consider the sufficiencyof the opposing papers on that issue (see Alvarez v Prospect Hosp., 68 NY2d 320, 324[1986]).
However, the Supreme Court should have granted that branch of the plaintiff's motion whichwas for summary judgment dismissing O'Connor's affirmative defense of lack of personaljurisdiction. "[A]n objection that the summons and complaint . . . was not properlyserved is waived if, having raised such an objection in a pleading, the objecting party does notmove for judgment on that ground within sixty days after serving the pleading" (CPLR 3211 [e]).Because O'Connor did not move to dismiss the complaint for lack of personal jurisdiction on thebasis of improper service within 60 days of serving his answer, he has waived the defense (see Federici v Metropolis Night Club,Inc., 48 AD3d 741, 742 [2008]).
The parties' remaining contentions are without merit, or need not be reached in light of ourdetermination. Prudenti, P.J., Eng, Hall and Lott, JJ., concur.