| HSBC Bank USA, N.A. v Taher |
| 2013 NY Slip Op 01806 [104 AD3d 815] |
| March 20, 2013 |
| Appellate Division, Second Department |
| HSBC Bank USA, N.A., as Indenture Trustee for theRegistered Noteholders of Renaissance Home Equity Loan Trust 2007-2,Appellant, v Eileen N. Taher et al., Defendants. Shapiro, DiCaro & Barak, LLP,Nonparty Appellant. |
—[*1] Goldberg Segalla LLP, Rochester, N.Y. (Patrick B. Naylon of counsel), for nonpartyappellant.
In an action to foreclose a consolidated mortgage, the plaintiff appeals, as limited byits brief, from (1) so much of an order of the Supreme Court, Kings County (Schack, J.),dated July 1, 2011, as denied that branch of its motion which was pursuant to RPAPL1321 for an order of reference and, by permission, from so much of the same order as,sua sponte, directed dismissal of the complaint with prejudice, cancellation of a certainnotice of pendency filed against the subject property, and a hearing on the issue ofsanctions against it, and (2) so much of an order of the same court dated December 22,2011, as, after a hearing, directed it to pay a sanction in the sum of $10,000 to theLawyers' Fund for Client Protection, and the nonparty Shapiro, DiCaro & Barak, LLP,separately appeals, as limited by its brief, from so much of the order dated December 22,2011, as directed it to pay a sanction in the sum of $5,000 to the Lawyers' Fund forClient Protection.
Ordered that the order dated July 1, 2011, is reversed insofar as appealed from, onthe law, without costs or disbursements, and that branch of the plaintiff's motion whichwas pursuant to RPAPL 1321 for an order of reference is granted; and it is further,
Ordered that the order dated December 22, 2011, is reversed, on the law, withoutcosts or disbursements; and it is further,
Ordered that the matter is remitted to the Supreme Court, Kings County, for furtherproceedings consistent herewith before a different Justice.
The defendant Eileen N. Taher defaulted on her consolidated mortgage loan. Theplaintiff, the alleged holder of the consolidated mortgage and the consolidated note,commenced this action to foreclose the consolidated mortgage. None of the defendantsappeared in the action or answered the complaint. In June 2009, the plaintiff moved, interalia, pursuant to RPAPL 1321 for an order of reference.
In an order dated July 1, 2011, the Supreme Court denied that branch of theplaintiff's [*2]motion which was pursuant to RPAPL1321 for an order of reference and, sua sponte, directed dismissal of the complaint withprejudice, cancellation of a certain notice of pendency filed against the subject property,and a hearing on the issue of sanctions against the plaintiff and the law firm representingthe plaintiff, the nonparty Shapiro, DiCaro & Barak, LLP (hereinafter the law firm)(see HSBC Bank USA, N.A. v Taher, 32 Misc 3d 1208[A], 2011 NY Slip Op51208[U] [Sup Ct, Kings County 2011]). The court concluded that sua sponte dismissalof the complaint was warranted because the plaintiff lacked standing to commence thisaction. The court determined that a hearing on the issue of sanctions was appropriatebecause, among other things, its independent research had revealed that the plaintiff andthe law firm had relied upon a "robosigner" employed by the plaintiff's loan servicer.
In an order dated December 22, 2011, following a hearing, the Supreme Courtdirected the plaintiff to pay a sanction in the sum of $10,000 to the Lawyers' Fund forClient Protection and directed the law firm to pay a sanction in the sum of $5,000 to theLawyers' Fund for Client Protection (see HSBC Bank USA, N.A. v Taher, 34Misc 3d 1201[A], 2011 NY Slip Op 52317[U] [Sup Ct, Kings County 2011]). Theplaintiff and the law firm separately appeal.
The Supreme Court erred in denying that branch of the plaintiff's motion which waspursuant to RPAPL 1321 for an order of reference. In support of the motion, the plaintiffsubmitted documentary proof showing, inter alia, that the defendants failed to answer thecomplaint within the time allowed, that it was the holder of the consolidated mortgageand consolidated note, evidence of the mortgagor's default, and that, as a preliminary stepin obtaining a judgment of foreclosure, the appointment of a referee to compute theamount due on the consolidated mortgage would be proper (see RPAPL 1321; Bank of N.Y. v Alderazi, 99AD3d 837, 837-838 [2012]; Aurora Loan Servs., LLC v Shahmela Shah Sookoo, 92 AD3d705, 707 [2012]; EmigrantMtge. Co., Inc. v Fisher, 90 AD3d 823, 824 [2011]).
The Supreme Court abused its discretion in, sua sponte, directing dismissal of thecomplaint with prejudice and cancellation of the notice of pendency (see Bank ofN.Y. v Alderazi, 99 AD3d at 838; Bank of Am., N.A. v Bah, 95 AD3d 1150, 1151 [2012]; Aurora Loan Servs., LLC vShahmela Shah Sookoo, 92 AD3d 705 [2012]; US Bank, N.A. v Guichardo,90 AD3d 1032 [2011]; USBank, N.A. v Emmanuel, 83 AD3d 1047 [2011]; HSBC Bank USA, N.A. vValentin, 72 AD3d 1027 [2010]). "A court's power to dismiss a complaint, suasponte, is to be used sparingly and only when extraordinary circumstances exist towarrant dismissal" (U.S. Bank, N.A. v Emmanuel, 83 AD3d at 1048; see Aurora Loan Servs., LLC vSobanke, 101 AD3d 1065, 1066 [2012]; Rienzi v Rienzi, 23 AD3d 450 [2005]). Here, the SupremeCourt was not presented with any extraordinary circumstances warranting sua spontedismissal of the complaint. Moreover, as the defendants failed to answer the complaintand did not make pre-answer motions to dismiss the complaint, they waived the defenseof lack of standing (see Bank of N.Y. v Alderazi, 99 AD3d at 838; CitiMortgage, Inc. vRosenthal, 88 AD3d 759, 761 [2011]; U.S. Bank, N.A. v Emmanuel, 83AD3d at 1048-1049). Furthermore, a party's lack of standing does not constitute ajurisdictional defect and does not warrant sua sponte dismissal of a complaint by thecourt (see Bank of N.Y. v Alderazi, 99 AD3d at 838; U.S. Bank, N.A. vEmmanuel, 83 AD3d at 1048-1049).
In addition, the Supreme Court abused its discretion in directing a hearing on theissue of sanctions and, thereafter, directing the plaintiff and the law firm to pay sanctions(see 22 NYCRR 130-1.1, 130-1.3).
We note that in U.S. Bank,N.A. v Emmanuel (83 AD3d 1047 [2011]), this Court reversed an order issuedby the same Justice assigned to this case which similarly directed dismissal of acomplaint in a mortgage foreclosure action, sua sponte, for lack of standing. InEmmanuel, we held, as we reiterate here, that a mortgagee's alleged lack ofstanding is not an "extraordinary circumstance" that warrants sua sponte dismissal of aforeclosure complaint. Indeed, lack of standing is an affirmative defense which is waivedif not raised by the defendant in either an answer or a pre-answer motion to dismiss (see Wells Fargo Bank Minn., N.A.v Mastropaolo, 42 AD3d 239, 242 [2007]). Since Emmanuel wasdecided approximately two months before the Supreme Court improperly directeddismissal of the complaint in the instant action, sua sponte, for lack of standing, we takethis opportunity to remind the Justice of his obligation to remain abreast of and be guided[*3]by binding precedent. We also caution the Justice thathis independent internet investigation of the plaintiff's standing that included newspaperarticles and other materials that fall short of what may be judicially noticed, and whichwas conducted without providing notice or an opportunity to be heard by any party(see HSBC Bank USA, N.A. v Taher, 32 Misc 3d 1208[A], 2011 NY Slip Op51208[U], *4 [2011]), was improper and should not be repeated.
Under these circumstances, we deem it appropriate to remit the matter to theSupreme Court, Kings County, for further proceedings before a different Justice. Dillon,J.P., Angiolillo, Leventhal and Miller, JJ., concur. [Prior Case History: 32 Misc 3d1208(A), 2011 NY Slip Op 51208(U).]