| U.S. Bank N.A. v Handler |
| 2016 NY Slip Op 04706 [140 AD3d 948] |
| June 15, 2016 |
| Appellate Division, Second Department |
[*1]
| U.S. Bank National Association,Appellant, v Michael Handler et al., Respondents, et al.,Defendants. |
Woods Oviatt Gilman, LLP, Rochester, NY (Richard S. Mullen of counsel), forappellant.
Jeremy Rosenberg, New York, NY, for respondents.
In an action to foreclose a mortgage, the plaintiff appeals, as limited by its brief, fromso much of an order of the Supreme Court, Kings County (Kurtz, J.), entered February27, 2014, as denied that branch of its motion which was for summary judgment on thecomplaint insofar as asserted against the defendants Michael Handler and MiriamHandler and granted the cross motion of the defendants Michael Handler and MiriamHandler for summary judgment dismissing the complaint insofar as asserted againstthem.
Ordered that the order is modified, on the law, by deleting the provision thereofgranting the cross motion of the defendants Michael Handler and Miriam Handler forsummary judgment dismissing the complaint insofar as asserted against them, andsubstituting therefor a provision denying the cross motion; as so modified, the order isaffirmed insofar as appealed from, without costs or disbursements.
On September 10, 2002, the defendant Michael Handler executed and delivered anote evidencing a $640,000 loan to him from First Financial Equities, Inc. (hereinafterFirst Financial). On the same day, Handler and his wife, the defendant Miriam Handler(hereinafter together the Handlers), executed and delivered a mortgage against their realproperty, located in Brooklyn, to Mortgage Electronic Registration Systems, Inc.(hereinafter MERS), as nominee for First Financial. Thereafter, the mortgage allegedlywas assigned to the plaintiff.
In November 2007, the plaintiff commenced this action to foreclose the mortgage,alleging that the Handlers defaulted on their loan payments. The Handlers answered thecomplaint and disputed that the plaintiff had standing to commence the action. Theplaintiff moved, inter alia, for summary judgment on the complaint insofar as assertedagainst the Handlers. The Handlers cross-moved for summary judgment dismissing thecomplaint insofar as asserted against them. The Supreme Court denied that branch of theplaintiff's motion which was for summary judgment on the complaint insofar as assertedagainst the Handlers and granted the Handlers' cross motion. The plaintiffappeals.
[*2] Where as here, standing is placedin issue, the plaintiff is required to prove its standing in order to be entitled to relief (see Deutsche Bank Natl. Trust Co.v Weiss, 133 AD3d 704, 705 [2015]; Bank of N.Y. Mellon v Gales, 116 AD3d 723 [2014]). Aplaintiff has standing in a mortgage foreclosure action where it is the holder or assigneeof the underlying note at the time the action is commenced (see Aurora Loan Servs., LLC vTaylor, 25 NY3d 355, 361 [2015]). "Either a written assignment of theunderlying note or the physical delivery of the note prior to the commencement of theforeclosure action is sufficient to transfer the obligation" (U.S. Bank, N.A. v Collymore,68 AD3d 752, 754 [2009]; see US Bank N.A. v Faruque, 120 AD3d 575, 577 [2014];Aurora Loan Servs., LLC vTaylor, 114 AD3d 627 [2014], affd 25 NY3d 355 [2015]). Generally,once a promissory note is tendered to and accepted by an assignee, the mortgage passesas an incident to the note (seeBank of N.Y. v Silverberg, 86 AD3d 274, 280 [2011]).
Here, the plaintiff failed to establish, prima facie, that it had standing to commencethis action. The evidence submitted by the plaintiff did not demonstrate, prima facie, thatthe note was physically delivered to it prior to the commencement of the action (see Aurora Loan Servs., LLC vMercius, 138 AD3d 650, 652 [2016]; US Bank N.A. v Faruque, 120AD3d at 577). The plaintiff is not the original lender on the note, and the plaintiff'scomplaint, verified by the plaintiff's attorney, contains no allegation that the note wasdelivered or assigned to the plaintiff, or that the plaintiff was in possession of the note.The affidavit from a vice president of the plaintiff's servicing agent, who did not attestthat he was personally familiar with the plaintiff's record keeping practices with respectto the note, failed to establish, prima facie, that the plaintiff had physical possession ofthe note prior to the commencement of the action (see Aurora Loan Servs., LLC vMercius, 138 AD3d at 652). Furthermore, the submission by the plaintiff of twodifferent copies of the note with endorsements raises a triable issue of fact as to whetherthe note was assigned to the plaintiff prior to the commencement of the action (see Deutsche Bank Natl. Trust Co.v Idarecis, 133 AD3d 702, 702 [2015]; Flagstar Bank, FSB v Anderson, 129 AD3d 665, 666[2015]; Wells Fargo Bank, NAv Burke, 125 AD3d 765, 767 [2015]). Accordingly, the Supreme Court properlydenied that branch of the plaintiff's motion which was for summary judgment on thecomplaint insofar as asserted against the Handlers (see US Bank N.A. v Faruque,120 AD3d at 576).
The Supreme Court erred, however in granting the Handlers' cross motion forsummary judgment dismissing the complaint insofar as asserted against them. TheHandlers failed to establish their prima facie entitlement to judgment as a matter of law,as their submissions did not demonstrate that the plaintiff lacked standing to commencethe action. At best, the Handlers demonstrated that issues of fact exist, inter alia,regarding the plaintiff's standing as the lawful holder or assignee of the subject note onthe date of commencement of the action (see Bank of Am., N.A. v Paulsen, 125 AD3d 909, 911[2015]).
The parties' remaining contentions either are without merit or have been renderedacademic by our determination. Rivera, J.P., Hall, Cohen and Hinds-Radix, JJ.,concur.