| Wells Fargo Bank, NA v Ostiguy |
| 2015 NY Slip Op 03015 [127 AD3d 1375] |
| April 9, 2015 |
| Appellate Division, Third Department |
[*1]
| Wells Fargo Bank, Na, Appellant, v Pierre N. Ostiguy,Also Known as Pierre Ostiguy, et al., Respondents, et al.,Defendants. |
Hogan Lovells US LLP, New York City (Robin L. Muir of counsel), forappellant.
Kim Dsouza, Newburgh, for respondents.
Peters, P.J. Appeal from an order of the Supreme Court (Zwack, J.), enteredSeptember 27, 2013 in Columbia County, which, among other things, granted a crossmotion by defendants Pierre N. Ostiguy and Elaine R. Thomas for summary judgmentdismissing the complaint against them.
In 2009, defendants Pierre N. Ostiguy and Elaine R. Thomas (hereinafter collectivelyreferred to as defendants) executed a note in favor of plaintiff that was secured by amortgage on real property located in Columbia County. Shortly thereafter, plaintiff solddefendants' loan to Freddie Mac but continued to service the loan. Defendants defaultedon the note in 2011, and plaintiff commenced this foreclosure action in 2012. Followingjoinder of issue, plaintiff moved for summary judgment striking the answer andappointing a referee to compute the amount due and owing. Defendants cross-moved forsummary judgment dismissing the complaint on the basis of, among other things, lack ofstanding. Finding that plaintiff failed to prove that it physically possessed the note or wasotherwise entitled to enforce it at the time this action was commenced, Supreme Courtconcluded that plaintiff lacked standing and granted defendants' cross motion dismissingthe complaint. Plaintiff now appeals.
To establish entitlement to summary judgment in a foreclosure action, a plaintiffmust produce evidence of the mortgage and unpaid note along with proof of themortgagor's default (see HSBCBank USA, N.A. v Sage, 112 AD3d 1126, 1127 [2013], lvs dismissed22 NY3d 1172 [2014], 23 NY3d 1015 [2014]; PHH Mtge. Corp. v Davis, 111 AD3d 1110, 1111 [2013],lv [*2]dismissed 23 NY3d 940 [2014]). Where, ashere, the issue of standing is raised as an affirmative defense, the plaintiff must alsoprove its standing in order to be entitled to relief (see MLCFC 2007-9 Mixed Astoria, LLC v 36-02 35th Ave. Dev.,LLC, 116 AD3d 745, 746 [2014]; CitiMortgage, Inc. v Rosenthal, 88 AD3d 759, 761 [2011])."A plaintiff has standing in a mortgage foreclosure action where it is both the holder orassignee of the subject mortgage and the holder or assignee of the underlying note at thetime the action is commenced" (Chase Home Fin., LLC v Miciotta, 101 AD3d 1307, 1307[2012] [internal quotation marks and citations omitted]; see Wells Fargo Bank, N.A. vWine, 90 AD3d 1216, 1217 [2011]).
In support of its cross motion and in opposition to defendants' motion, plaintiffproduced the mortgage, the unpaid note, the notice of default sent to defendants and theaffidavit of Shae E. Herman, its vice-president of loan documentation, attesting todefendants' default and failure to cure. Despite this proof, Supreme Court found that, asto standing, plaintiff's admitted sale of the loan to Freddie Mac was fatal to its claim thatit was the lawful holder of the note and mortgage at the time this action was commenced.We cannot agree. Holder status is established where the plaintiff possesses a note that, onits face or by allonge, contains an indorsement in blank or bears a special indorsementpayable to the order of the plaintiff (see UCC 1-201 [former (20)]; 3-202, 3-204;Hartford Acc. & Indem. Co. v American Express Co., 74 NY2d 153, 159[1989]; DH Cattle Holdings Co. v Smith, 195 AD2d 202, 208 [1994]; see also Nationstar Mtge., LLC vDavidson, 116 AD3d 1294, 1296 [2014], lv denied 24 NY3d 905[2014]; Deutsche Bank TrustCo. Ams. v Codio, 94 AD3d 1040, 1041 [2012]; Mortgage Elec. Registration Sys.,Inc. v Coakley, 41 AD3d 674, 674 [2007]). Notably, "[t]he holder of aninstrument whether or not he [or she] is the owner may transfer or negotiate it[,]and . . . discharge it or enforce payment in his [or her] own name" (UCC3-301 [emphasis added]; see generally Glens Falls Indem. Co. v Chase Natl.Bank, 257 NY 441, 445 [1931]; Gates v Manufacturers Hanover TrustCo./Capital Region, 98 AD2d 829, 829 [1983], abrogated on other groundsGolden v Citibank, N.A., 23 NY3d 935, 936 [2014]). Here, the note was originatedby plaintiff and a copy submitted on the motion, alleged to be in plaintiff's possession atthe time it commenced this action, is endorsed in blank. Thus, notwithstanding the sale ofthe beneficial interests of the note to Freddie Mac, plaintiff has the right to enforce thenote as its lawful holder so long as it can prove that it physically possessed the note at thetime the action was commenced.
In that regard, Herman averred that, upon her review of the books and recordsmaintained by plaintiff in the ordinary course of business, plaintiff has remained theholder of the note and mortgage at all times since the loan's origination, including thedate that this action was commenced. Yet, at another point in her affidavit, she states that"[plaintiff], directly or through an agent, has possession of the Promissory Note andMortgage." She further equivocates that plaintiff "is either the original payee of thePromissory Note or the Promissory Note [h]as been duly endorsed." Herman's varying,and potentially inconsistent, statements do not definitively establish that plaintiffmaintained physical possession of the note at the relevant time, and her affidavit fails todisclose who plaintiff's purported "agent" could be or establish that any such agencyrelationship does, in fact, exist (cf. Bank of N.Y. v Silverberg, 86 AD3d 274, 281 [2011]).Because the issue of standing cannot be resolved as a matter of law on this record,summary judgment was not warranted in favor of either party (see Bank of Am., N.A. vPaulsen, 125 AD3d 909, 911 [2015]; US Bank N.A. v Faruque, 120 AD3d 575, 578 [2014]; Deutsche Bank Natl. Trust Co. vRivas, 95 AD3d 1061, 1061-1062 [2012]; U.S. Bank, N.A. v Collymore, 68 AD3d 752, 754[2009]).
McCarthy, Rose and Clark, JJ., concur. Ordered that the order is modified, on thelaw, without costs, by reversing so much thereof as granted the cross motion ofdefendants Pierre N. Ostiguy and Elaine R. Thomas for summary judgment dismissingthe complaint against them; cross motion denied; and, as so modified, affirmed.