| Wells Fargo Bank, N.A. v Walker |
| 2016 NY Slip Op 05605 [141 AD3d 986] |
| July 21, 2016 |
| Appellate Division, Third Department |
[*1]
| Wells Fargo Bank, N.A., as Trustee for CarringtonMortgage Loan Trust, Series 2006-NC2 Asset-Backed Pass-Through Certificates,Respondent, v Jonathan G. Walker, Appellant, et al.,Defendant. |
John P. Kingsley, PC, Catskill (John P. Kingsley of counsel), for appellant.
Peter T. Roach & Associates, PC, Syosset (Michael C. Manniello of counsel),for respondent.
Lynch, J. Appeals (1) from an order of the Supreme Court (Melkonian, J.), enteredApril 28, 2015 in Ulster County, which, among other things, granted plaintiff's motionfor summary judgment, and (2) from the judgment entered thereon.
In April 2006, defendant Jonathan G. Walker (hereinafter defendant) executed a notein favor of New Century Mortgage
Corporation (hereinafter NCMC) that was secured by a mortgage on real propertylocated in Ulster County. In a 2006 pooling and servicing agreement (hereinafter PSA),plaintiff was named as trustee of a loan trust and NCMC was designated predecessor ininterest to Carrington Mortgage Services, LLC (hereinafter CMS), as servicer. AfterNCMC filed for bankruptcy in 2007, certain assets were transferred to New CenturyLiquidating Trust (hereinafter NCLT). Also, as part of NCMC's bankruptcy, it sold itsmortgage loan servicing business to CMS and named it the attorney-in-fact relative to themortgages sold. In 2010, CMS entered into a loan modification agreement withdefendant that increased the principal balance of the existing mortgage. In May 2012, themortgage and underlying note were assigned to plaintiff. Three days later, plaintiffcommenced this foreclosure action. Following joinder of issue, defendant [*2]sent a document demand to plaintiff regarding the note andmortgage, including a demand for production of the original note. Without responding,plaintiff moved for summary judgment, which was granted by Supreme Court(Melkonian, J.). Thereafter, Supreme Court (Cahill, J.) issued a judgment of foreclosureand sale. Defendant now appeals both the order and the judgment.
A plaintiff can establish entitlement to summary judgment by producing evidence ofthe mortgage, the unpaid note and the defendant's default (see Deutsche Bank Natl. Trust Co.v Monica, 131 AD3d 737, 738 [2015]; Wells Fargo Bank, NA v Ostiguy, 127 AD3d 1375, 1376[2015]). However, where, as here, the defendant raised the issue of standing in theanswer, the "plaintiff bore the additional burden of demonstrating that, 'at the time theaction was commenced, [it] was the holder or assignee of the mortgage and the holder orassignee of the underlying note' " (Bank of N.Y. Mellon v McClintock, 138 AD3d 1372,1373-1374 [2016], quoting Deutsche Bank Natl. Trust Co. v Monica, 131 AD3dat 738). "Either a written assignment of the underlying note or the physical delivery ofthe note prior to . . . commencement of the foreclosure action is sufficient totransfer the obligation" (ChaseHome Fin., LLC v Miciotta, 101 AD3d 1307, 1307 [2012], quoting U.S. Bank, N.A. v Collymore,68 AD3d 752, 754 [2009]). "That said, the note, and not the mortgage, is thedispositive instrument that conveys standing to foreclose under New York law"(Deutsche Bank Natl. Trust Co. v Monica, 131 AD3d at 738; see Aurora Loan Servs., LLC vTaylor, 25 NY3d 355, 361-362 [2015]). Notably, as relevant here, the holder ofa note is "the person in possession of a negotiable instrument that is payable either tobearer or to an identified person that is the person in possession" (UCC 1-201 [b] [21][A]; see UCC 1-201 [b] [5]).
Here, plaintiff sought to establish standing by virtue of the 2012 assignment, coupledwith its assertion that it has had possession of the note since 2006. To that end, plaintiffproduced the affidavit of Elizabeth Ostermann, a vice-president for CMS, which, asnoted, had been appointed attorney-in-fact for plaintiff in February 2012. As to the issueof possession, Ostermann avers that plaintiff, as trustee, has been in continuouspossession of the note since the PSA was signed in June 2006 and "is still in possessionof the [n]ote, and can produce same if the [c]ourt so requires." As CMS was servicer andattorney-in-fact, Ostermann was entitled to rely on the transaction records (seeDeutsche Bank Natl. Trust Co. v Monica, 131 AD3d at 739). For proof ofpossession, however, she simply refers to the PSA, which is not in the record(compare Aurora Loan Servs., LLC v Taylor, 25 NY3d at 359; Bank of N.Y.Mellon v McClintock, 138 AD3d at 1374-1375; HSBC Bank USA, N.A. v Sage, 112 AD3d 1126,1127-1128 [2013], lvs dismissed 23 NY3d 1015 [2014], 22 NY3d 1172 [2014]),and makes no representation as to having examined the original note (see JP Morgan Chase Bank, N.A. vHill, 133 AD3d 1057, 1058 [2015]). Contrary to Supreme Court's findings, thenote is not indorsed and, thus, the court's conclusion that plaintiff was the holder of thenote was in error (see UCC 1-201 [b] [5], [21]; 3-202). In our view, plaintiff'sproof falls short of establishing standing by physical delivery of the note.
As to the assignment, Ostermann avers that "[t]he [m]ortgage was assigned bywritten agreement on May 14, 2012 . . . from New Century Corporation, toWells Fargo Bank, N.A., as Trustee." We recognize that, by its terms, the assignmentconveys the mortgage "together with the bond or note or obligation described in saidmortgage"—language that effects an assignment of both the note and mortgage.The focus here, however, is on whether the assignor had authority to actually assign thenote (see Bank of N.Y. vSilverberg, 86 AD3d 274, 281 [2011]). Plaintiff has the burden of proof on thisissue (see id.). The assignment identifies the assignor as NCMC, while thedocument is executed on behalf of "New Century Liquidating Trust Successor-In-Interestto New Century Mortgage Corporation By Carrington Mortgage Services, LLC as [*3]Attorney-in-Fact" by Ostermann as vice-president offoreclosure for CMS. Plaintiff points to several documents in the record to establish theunderlying authority for this assignment. Specifically, in November 2008, NCLT, assuccessor to NCMC, gave CMS a limited power of attorney to, among other things,execute mortgage assignments. Previously, NCMC had transferred its servicing rights toCMS. Significantly, in 2010, CMS and defendant entered into a "Loan ModificationAgreement" restating the principal balance at $266,277—a transactionmemorializing a continuing ownership interest in the note held by NCLT as successor toNCMC and exercised through its agent CMS. Given the foregoing, we agree thatplaintiff established authority for NCLT, as successor to NCMC, to effectuate theassignment of the note to plaintiff. That CMS served as power of attorney for bothparties to the assignment does not undermine its validity. As such, we conclude thatSupreme Court properly found that plaintiff had standing to initiate this foreclosureaction (see Aurora Loan Servs., LLC v Taylor, 25 NY3d at 361-362). We furtherconclude that plaintiff duly demonstrated compliance with the 90-day noticerequirements and corresponding filing requirements set forth in RPAPL 1304 and 1306,respectively (see TD Bank, N.A.v Leroy, 121 AD3d 1256, 1257 [2014]).
Lahtinen, J.P., Egan Jr., Devine and Mulvey, JJ., concur. Ordered that the order andjudgment are affirmed, with costs.