| US Bank N.A. v Faruque |
| 2014 NY Slip Op 05785 [120 AD3d 575] |
| August 13, 2014 |
| Appellate Division, Second Department |
[*1]
| US Bank National Association, as Trustee for CSABMortgage-Backed Pass-Through Certificates, Series 2006-1,Appellant, v Jahanara Faruque, Respondent, et al.,Defendants. |
Hogan Lovells US LLP, New York, N.Y. (David Dunn, Chava Brandriss, andHeather R. Gushue of counsel), for appellant.
Robert Levy, Jamaica, N.Y., for respondent.
In an action to foreclose a mortgage, the plaintiff appeals, as limited by its brief, fromso much of an order of the Supreme Court, Queens County (Taylor, J.), entered June 27,2013, as, in effect, denied that branch of its motion which was for summary judgment onthe complaint insofar as asserted against the defendant Jahanara Faruque, and, in effect,granted that branch of the cross motion of that defendant which was pursuant to CPLR3211 (a) (3) to dismiss the complaint insofar as asserted against her on the ground thatthe plaintiff lacked standing to commence the action.
Ordered that the order is modified, on the law, by deleting the provision thereof, ineffect, granting that branch of the cross motion of the defendant Jahanara Faruque whichwas pursuant to CPLR 3211 (a) (3) to dismiss the complaint insofar as asserted againsther on the ground that the plaintiff lacked standing to commence the action, andsubstituting therefor a provision denying that branch of the cross motion; as so modified,the order is affirmed insofar as appealed from, without costs or disbursements.
In December 2005, the defendant Jahanara Faruque executed a note, pursuant towhich she promised to repay the sum of $630,000 that she borrowed from FairmontFunding, Ltd. (hereinafter Fairmont Funding). The note was secured by a mortgage onFaruque's real property, located in Richmond Hill, Queens. The mortgage provided, interalia, that Mortgage Electronic Registration Systems, Inc. (hereinafter MERS), was actingas a nominee for Fairmont Funding and its successors and assigns. On August 7, 2009,MERS assigned the mortgage to US Bank National Association, as Trustee for CSABMortgage-Backed Pass-Through Certificates, Series 2006-1 (hereinafter the plaintiff). InSeptember 2009, the plaintiff commenced this action to foreclose the mortgage, allegingthat Faruque defaulted on her loan repayment obligations. Faruque answered thecomplaint and, inter alia, specifically denied that the note was delivered to the plaintiff orthat an assignment from Fairmont Funding to the plaintiff had been recorded. Theplaintiff moved, among other things, for summary judgment on the complaint insofar asasserted against Faruque. Faruque cross-moved, inter alia, to dismiss the complaintinsofar as asserted against her on the ground that the plaintiff lacked standing tocommence the action (see CPLR 3211 [a] [3]). The Supreme Court, in effect,denied that branch of the plaintiff's motion which was for summary judgment on thecomplaint insofar as asserted against Faruque and, in effect, granted that branch ofFaruque's motion which was to dismiss the complaint insofar as asserted against her onthe ground that the plaintiff [*2]lacked standing tocommence the action. The plaintiff appeals.
In order to commence a foreclosure action, a plaintiff must have a legal or equitableinterest in the mortgage (seeHSBC Bank USA v Hernandez, 92 AD3d 843, 843 [2012]). Where standing isput into issue by a defendant's answer, a plaintiff must prove its standing if it is to beentitled to relief (see Bank ofN.Y. Mellon v Gales, 116 AD3d 723 [2014]; Deutsche Bank Natl. Trust Co. vWhalen, 107 AD3d 931, 932 [2013]; Bank of N.Y. v Silverberg, 86 AD3d 274, 279 [2011]; U.S. Bank, N.A. v Collymore,68 AD3d 752, 753 [2009]). Contrary to the plaintiff's contention, Faruque put theplaintiff's standing into issue by the specific denials in her answer regarding the note andmortgage and, under such circumstances, she was not required to plead lack of standingas an affirmative defense (see CPLR 3018 [b]). Thus, in order for the plaintiff tobe entitled to relief, it had to prove its standing (see Bank of N.Y. Mellon v Gales, 116 AD3d 723[2014]).
A plaintiff establishes its standing in a mortgage foreclosure action by demonstratingthat it is both the holder or assignee of the subject mortgage and the holder or assignee ofthe underlying note at the time the action is commenced (see Kondaur Capital Corp. vMcCary, 115 AD3d 649, 650 [2014]; HSBC Bank USA v Hernandez,92 AD3d at 843; Bank of N.Y. v Silverberg, 86 AD3d at 279). Either a writtenassignment of the underlying note or the physical delivery of the note prior to thecommencement of the foreclosure action is sufficient to transfer the obligation (see Aurora Loan Servs., LLC vTaylor, 114 AD3d 627 [2014]; HSBC Bank USA v Hernandez, 92AD3d at 844; U.S. Bank, N.A. v Collymore, 68 AD3d at 754). As a generalmatter, once a promissory note is tendered to and accepted by an assignee, the mortgagepasses as an incident to the note (see Bank of N.Y. v Silverberg, 86 AD3d at280). However, the transfer of the mortgage without the debt is a nullity, and no interestis acquired by it (see Bank ofN.Y. Mellon v Gales, 116 AD3d 723 [2014]; Bank of N.Y. v Silverberg,86 AD3d at 280), because a mortgage is merely security for a debt or other obligationand cannot exist independently of the debt or obligation (see Deutsche Bank Natl. Trust Co.v Spanos, 102 AD3d 909, 911 [2013]).
Here, the evidence submitted by the plaintiff in support of that branch of its motionwhich was for summary judgment on the complaint insofar as asserted against Faruquedid not establish that the note was physically delivered to it prior to the commencementof the action (see Bank of N.Y.Mellon v Gales, 116 AD3d 723 [2014]). The affidavit of the plaintiff's servicingagent contained conclusory statements regarding the plaintiff's possession of the note,and did not give any factual details of a physical delivery and, thus, failed to establishthat the plaintiff had physical possession of the note prior to commencing the action (see Deutsche Bank Natl. Trust Co.v Haller, 100 AD3d 680, 682 [2012]; cf. Aurora Loan Servs., LLC v Taylor, 114 AD3d 627[2014]; Deutsche Bank Natl.Trust Co. v Whalen, 107 AD3d 931 [2013]). Regarding the purportedassignment of the note and mortgage, the assignment from MERS to the plaintiff datedAugust 7, 2009, transferred only the mortgage and, thus, the plaintiff failed todemonstrate that the note had also been assigned at that time (cf. Mortgage Elec. RegistrationSys., Inc. v Coakley, 41 AD3d 674 [2007]). Further, the plaintiff's contentionthat the unsigned excerpt from a Pooling and Servicing Agreement dated May 1, 2006,constituted a written assignment of the note is improperly raised for the first time onappeal and, thus, is not properly before this Court (see HSBC Bank USA, N.A. v Calderon, 115 AD3d 708[2014]). Accordingly, the Supreme Court properly, in effect, denied that branch of theplaintiff's motion which was for summary judgment on the complaint insofar as assertedagainst Faruque, since the plaintiff failed to establish, prima facie, that it had standing tocommence the action (seeHomecomings Fin., LLC v Guldi, 108 AD3d 506, 509 [2013]).
The Supreme Court erred, however in, in effect, granting that branch of Faruque'scross motion which was pursuant to CPLR 3211 (a) (3) to dismiss the complaint insofaras asserted against her on the ground that the plaintiff lacked standing to commence theaction. Although the plaintiff failed to establish its entitlement to judgment as a matter oflaw on the complaint insofar as asserted against Faruque, the Supreme Court should nothave directed the dismissal of the complaint. The issue of standing cannot be determinedas a matter of law on this record, since a question of fact remains with respect to the issueof whether the plaintiff was the lawful holder of the note when it commenced the action(see Deutsche Bank Natl. Trust Co. v Haller, 100 AD3d at 683; Deutsche Bank Natl. Trust Co. vRivas, 95 AD3d 1061 [2012]).
[*3] The parties' remaining contentions either are without merit, are raised for the firsttime on appeal, or have been rendered academic by our determination. Dillon, J.P., Lott,Austin and Barros, JJ., concur.