| Homecomings Fin., LLC v Guldi |
| 2013 NY Slip Op 05048 [108 AD3d 506] |
| July 3, 2013 |
| Appellate Division, Second Department |
| Homecomings Financial, LLC, Formerly Known asHomecomings Financial Network, Inc., Respondent, v George O. Guldi, asAdministrator of the Estate of Walter E. Guldi, Deceased, Appellant, et al.,Defendants. |
—[*1] Zeichner Ellman & Krause, LLP, New York, N.Y. (Jantra Van Roy and RobertGuttmann of counsel), for respondent.
In an action to foreclose a mortgage, the defendant George O. Guldi, as administratorof the estate of Walter E. Guldi, appeals from (1) an order of the Supreme Court, SuffolkCounty (Cohalan, J.), dated December 28, 2011, which denied his motion, denominatedas one for leave to renew and reargue, but which was, in actuality, one for leave toreargue his opposition to the plaintiff's motion for summary judgment on the amendedcomplaint, and (2) a judgment of foreclosure and sale of the same court entered June 20,2012, which, upon an order of the same court dated May 19, 2010, granting the plaintiff'smotion for summary judgment on the amended complaint, confirmed a referee's reportand directed the sale of the subject property.
Ordered that the appeal from the order dated December 28, 2011, is dismissed, as noappeal lies from an order denying reargument; and it is further,
Ordered that the judgment is reversed, on the law, the plaintiff's motion for summaryjudgment on the amended complaint is denied, and, upon searching the record, thedefendant George O. Guldi, as administrator of the estate of Walter E. Guldi, is awardedsummary judgment dismissing the amended complaint insofar as asserted against him,without prejudice, and the order dated May 19, 2010, is modified accordingly; and it isfurther,
Ordered that one bill of costs is awarded to the defendant George O. Guldi, asadministrator of the estate of Walter E. Guldi.
In August 2004, Walter E. Guldi executed an adjustable rate note and mortgage infavor of nonparty Greenpoint Mortgage Funding, Inc. (hereinafter GreenpointMortgage). The mortgage instrument identified Greenpoint Mortgage as the lender, andMortgage Electronic Registration Systems, Inc. (hereinafter MERS), as "nominee" forthe lender. In May 2005, MERS, as nominee for Greenpoint Mortgage, commenced thisaction to foreclose on the mortgage. In an [*2]answer,Walter E. Guldi raised the defense of lack of standing.
On February 8, 2006, MERS purportedly assigned the mortgage instrument toHomecomings Financial Network, Inc. On February 28, 2006, Walter E. Guldi died. InNovember 2007, Walter's son, the defendant George O. Guldi (hereinafter the appellant),was appointed as the administrator of Walter's estate. In a decision and order dated April30, 2008, the Supreme Court, inter alia, substituted the appellant for his deceased father,and amended the caption by removing MERS as the plaintiff and substituting therefor theplaintiff Homecomings Financial, LLC, formerly known as Homecomings FinancialNetwork, Inc. (hereinafter the plaintiff).
In May 2008, the plaintiff filed a supplemental summons and amended complaint,among other things, to include additional defendants in the foreclosure action. In ananswer to the amended complaint, the appellant raised the defense of lack of standing.Thereafter, the plaintiff moved for summary judgment on the amended complaint. In anorder dated May 19, 2010, the Supreme Court granted the plaintiff's motion, concluding,among other things, that the defense of lack of standing constituted a "mere conclusoryallegation[ ], expression[ ] of hope or unsubstantiated claim[ ]." In an order datedDecember 28, 2011, the Supreme Court denied the appellant's motion, which wasdenominated as one for leave to renew and reargue, but which was, in actuality, one forleave to reargue his opposition to the motion for summary judgment. Thereafter, uponthe order dated May 19, 2010, the Supreme Court entered a judgment of foreclosure andsale.
The appeal from the order dated December 28, 2011, must be dismissed, as no appeallies from an order denying reargument (see generally Tyson v Tower Ins. Co. of N.Y., 68 AD3d977 [2009]; JP MorganChase Bank, N.A. v Mark Elliot Korn & Assoc., LLC, 66 AD3d 844 [2009]).However, the appeal from the judgment of foreclosure and sale entered June 20, 2012,brings up for review the order dated May 19, 2010, wherein the Supreme Court grantedthe plaintiff's motion for summary judgment on the amended complaint (seeCPLR 5501 [a] [1]; Brown BarkII, L.P. v Weiss & Mahoney, Inc., 90 AD3d 963, 964 [2011]; Lancer Ins. Co. v Marine MotorSales, Inc., 84 AD3d 1318, 1320 [2011]).
The Supreme Court erred in granting the plaintiff's motion for summary judgment onthe amended complaint. "In a mortgage foreclosure action, a plaintiff has standing whereit is both the holder or assignee of the subject mortgage and the holder or assignee of theunderlying note at the time the action is commenced" (Bank of N.Y. v Silverberg, 86AD3d 274, 279 [2011]; seeUS Bank N.A. v Cange, 96 AD3d 825, 826 [2012]; U.S. Bank, N.A. v Collymore,68 AD3d 752, 753-754 [2009]; Countrywide Home Loans, Inc. v Gress, 68 AD3d 709[2009]). "Either a written assignment of the underlying note or the physical delivery ofthe note prior to the commencement of the foreclosure action is sufficient to transfer theobligation, and the mortgage passes with the debt as an inseparable incident" (U.S.Bank, N.A. v Collymore, 68 AD3d at 754; see HSBC Bank USA v Hernandez, 92 AD3d 843 [2012]).However, "a transfer or assignment of only the mortgage without the debt is a nullity andno interest is acquired by it," since a mortgage is merely security for a debt and cannotexist independently of it (U.S.Bank N.A. v Dellarmo, 94 AD3d 746, 748 [2012]; see Deutsche Bank Natl. Trust Co.v Barnett, 88 AD3d 636 [2011]). "Where, as here, the issue of standing is raisedby a defendant, a plaintiff must prove its standing in order to be entitled to relief"(Bank of N.Y. v Silverberg, 86 AD3d at 279; see Wells Fargo Bank Minn., N.A. v Mastropaolo, 42 AD3d239, 242 [2007]).
In this case, the plaintiff failed to make a prima facie showing that MERS was alawful holder of the mortgage and note at the time of the commencement of the action.Although the mortgage instrument identified MERS as the nominee, and purported togrant MERS the authority to foreclose on the subject property, the mere presence of suchlanguage in the mortgage instrument itself "cannot overcome the requirement that theforeclosing party be both the holder or assignee of the subject mortgage, and the holderor assignee of the underlying note, at the time the action is commenced" (Bank ofN.Y. v Silverberg, 86 AD3d at 282-283; cf. Mortgage Elec. Registration Sys., Inc. v Coakley, 41 AD3d674 [2007]). The adjustable rate note specifically identified Greenpoint Mortgage asthe "Lender" and "Note Holder," and the plaintiff failed to submit any evidencedemonstrating that the note was physically delivered to MERS prior to thecommencement of the action, or that Greenpoint Mortgage assigned the note to MERSprior to the commencement of the action (see [*3]Deutsche Bank Natl. TrustCo. v Spanos, 102 AD3d 909 [2013]; Deutsche Bank Natl. Trust Co. v Haller, 100 AD3d 680[2012]; U.S. Bank N.A. vDellarmo, 94 AD3d 746, 749 [2012]; HSBC Bank USA v Hernandez, 92 AD3d 843 [2012]).Moreover, although there was evidence that MERS assigned the mortgage instrument tothe plaintiff during the course of the action, such an assignment would not render theplaintiff the holder of the note, since MERS could not transfer that which it did not hold(see UCC 3-201; Matter of International Ribbon Mills [Arjan Ribbons],36 NY2d 121, 126 [1975]; Bank of N.Y. v Silverberg, 86 AD3d at 282).Furthermore, the affidavit from the plaintiff's servicing agent, which stated that the notewas delivered to the custodian of records for the plaintiff during the course of the actionon November 15, 2005, was insufficient to demonstrate that the party commencing theaction, i.e., MERS, had standing to do so at the time of the filing of the summons andcomplaint (see Wells FargoBank, N.A. v Marchione, 69 AD3d 204, 210 [2009]). In any event, the affidavitdid not give factual details as to the physical delivery of the note and, thus, wasinsufficient to establish that the plaintiff had physical possession of the note at any time(see Deutsche Bank Natl. TrustCo. v Haller, 100 AD3d 680 [2012]; HSBC Bank USA v Hernandez, 92 AD3d 843 [2012]; Aurora Loan Servs., LLC vWeisblum, 85 AD3d 95, 109 [2011]). Accordingly, the Supreme Court shouldhave denied the plaintiff's motion for summary judgment on the amended complaint.
Upon our authority to search the record and award summary judgment to thenonmoving party with respect to an issue that was the subject of the motion before theSupreme Court (see CPLR 3212 [b]), we award summary judgment to theappellant, dismissing the amended complaint insofar as asserted against him, withoutprejudice. The evidence submitted by the plaintiff demonstrated that GreenpointMortgage was the original holder of the note. There was no evidence to establish thatGreenpoint Mortgage assigned, or physically delivered, the note to MERS prior to thecommencement of the action, such that there were any triable issues of fact as to whetherMERS had standing to foreclose, or as to whether MERS could confer such standing tothe plaintiff (cf. Deutsche BankNatl. Trust Co. v Haller, 100 AD3d 680 [2012]; HSBC Bank USA vHernandez, 92 AD3d 843 [2012]).
Accordingly, we reverse the judgment, deny the plaintiff's motion for summaryjudgment on the amended complaint, upon searching the record, award summaryjudgment to the appellant dismissing the complaint insofar as asserted against him,without prejudice, and modify the order dated May 19, 2010, accordingly. Mastro, J.P.,Hall, Lott and Sgroi, JJ., concur.