| Deutsche Bank Natl. Trust Co. v Webster |
| 2016 NY Slip Op 05846 [142 AD3d 636] |
| August 24, 2016 |
| Appellate Division, Second Department |
[*1]
| Deutsche Bank National Trust Company, as Trustee forHome Equity Loan Asset-Backed Trust, Series INDS 2006-3,Respondent, v Compton Webster, Appellant. |
Petroff Amshen LLP, Brooklyn, NY (Serge F. Petroff, James Tierney, andChristopher Villanti of counsel), for appellant.
Parker Ibrahim & Berg LLC, New York, NY (John M. Falzone, Brian W.Keatts, and Anthony Del Guercio of counsel), for respondent.
In an action to recover on a promissory note, the defendant appeals, as limited by hisbrief, from so much of an order of the Supreme Court, Kings County (Dear, J.), datedApril 30, 2015, as granted that branch of the plaintiff's motion which was for summaryjudgment on the issue of liability and denied his cross motion, in effect, for summaryjudgment dismissing the complaint.
Ordered that the order is modified, on the law, by deleting the provision thereofgranting that branch of the plaintiff's motion which was for summary judgment on theissue of liability, and substituting therefor a provision denying that branch of the motion;as so modified, the order is affirmed insofar as appealed from, without costs ordisbursements.
This action to recover on a promissory note was commenced on January 24, 2014.The subject note was secured by a mortgage, but the plaintiff elected, pursuant to RPAPL1301, to recover on the note and seek a money judgment. A copy of the note, endorsed inblank, was annexed to the summons and complaint. In his answer, the defendant assertedseveral affirmative defenses, including lack of standing and failure to comply withcertain notice requirements of the RPAPL.
Thereafter, the plaintiff served the defendant with a notice to admit, which included acopy of the note. On this copy of the note, the endorsement in blank was filled in andindicated that the note was endorsed to IndyMac Bank, FSB. This copy of the note alsoincluded, on the same page, a second endorsement from IndyMac Bank, FSB, to theplaintiff and an allonge to the note with a third endorsement in blank from theplaintiff.
The plaintiff moved, inter alia, for summary judgment on the complaint. In support,the plaintiff submitted the affidavit of a representative of the servicer of the loan, whostated that the plaintiff acquired the loan on or about October 25, 2006, and, "directly orthrough its agent, was in possession of the original Note prior to the commencement ofthis action and remains in possession of the original note." The representative stated thatthe defendant defaulted on his payment obligation under the terms of the note on March1, 2011, and that, by letter dated April 15, 2011, the loan servicer advised the defendantof his default. The plaintiff submitted a copy of the letter dated April 15, 2011, thecontent of which conformed with the 90-day notice requirements of RPAPL 1304 (1). Inaddition, the plaintiff submitted a copy of the note, endorsed in blank, that was annexed[*2]to the complaint, and a copy of the note with threeendorsements that was attached to its notice to admit.
The defendant cross-moved, in effect, for summary judgment dismissing thecomplaint, arguing that the two versions of the note submitted by the plaintiff wasevidence of fraud and the plaintiff's lack of standing. The defendant also noted that therepresentative of the loan servicer did not state in his affidavit when the note wasendorsed, nor did he state when the plaintiff received physical possession of the note.Further, the defendant argued that the plaintiff failed to comply with the noticerequirements of RPAPL 1304. The defendant acknowledged that the content of the90-day notice provided by the plaintiff complied with the requirements of RPAPL 1304,but claimed that the notice expired one year after it was sent, on April 15, 2012, beforethe action was commenced. In reply, the plaintiff asserted that RPAPL 1304 was notapplicable because this is not an action to foreclose a mortgage.
In the order appealed from, the Supreme Court, inter alia, granted that branch of theplaintiff's motion which was for summary judgment on the issue of liability and deniedthe defendant's cross motion, in effect, for summary judgment dismissing the complaint.The court found that the plaintiff made a sufficient showing that it was in possession ofthe note at the time of the commencement of the action and, thus, that it had standing.Further, the court determined that RPAPL 1304 was not applicable because this is not amortgage foreclosure action. The defendant appeals.
On the question of standing, the plaintiff contends that it was the holder of the noteat the time the action was commenced and was in physical possession of the note at thetime the action was commenced. The term "holder" is defined in UCC 1-201 (b) (21) (A)as "the person in possession of a negotiable instrument that is payable either to bearer orto an identified person that is the person in possession" (see Slutsky v BloomingGrove Inn, 147 AD2d 208, 212 [1989]). Further, a plaintiff who has physicalpossession of the original note on the date of commencement of the action has standing(see Aurora Loan Servs., LLC vTaylor, 25 NY3d 355 [2015]).
The attachment of a properly endorsed note to the complaint may be sufficient toestablish, prima facie, that the plaintiff is the holder of the note at the time ofcommencement (see JPMorgan Chase Bank, N.A. v Weinberger, 142 AD3d 643 [2016] [decided herewith]; JPMorgan Chase Bank, N.A. v Roseman, 137 AD3d 1222,1223 [2016]; Deutsche BankNatl. Trust Co. v Leigh, 137 AD3d 841, 842 [2016]; Nationstar Mtge., LLC vCatizone, 127 AD3d 1151, 1152 [2015]). Here, although the plaintiff appendeda copy of the note to the complaint, the plaintiff's submission of two different copies ofthe note with different endorsements in support of its motion for summary judgment failsto eliminate a triable issue of fact as to whether the plaintiff was in possession of theoriginal note at the time the action was commenced (see U.S. Bank N.A. v Handler, 140 AD3d 948, 949 [2016];U.S. Bank, N.A. vCollymore, 68 AD3d 752, 754 [2009]). Thus, the plaintiff failed to establish,prima facie, that it had standing to commence this action.
RPAPL 1304 (1) states that "with regard to a home loan, at least ninety days before alender, an assignee or a mortgage loan servicer commences legal action against theborrower, including mortgage foreclosure, such lender, assignee or mortgage loanservicer shall give notice to the borrower" with statutorily mandated content, includingthat the borrower was in default and "at risk of losing your home." The plain language ofthe statute provides that the statute is applicable to all legal actions involving home loanscommenced against the borrower. A mortgage foreclosure action is one type of legalaction, but an action to recover on a note secured by a mortgage is another type of legalaction. Accordingly, RPAPL 1304 applies to this action (see Cadelrock Joint Venture, L.P. vCallender, 41 Misc 3d 903 [Sup Ct, Kings County 2013]).
Here, the plaintiff submitted a copy of the RPAPL 1304 notice sent to the defendant.The defendant contends that the notice, dated April 15, 2011, expired one year later, andtherefore was not in effect when the instant action was commenced in January 2014. Insupport of that contention, the defendant cites RPAPL 1304 (4), which states that "[t]henotice and the ninety day period required by subdivision one of this section need only beprovided once in a twelve month period to the same borrower in connection with thesame loan." However, RPAPL 1304 (4) stands [*3]for theproposition that where there are multiple defaults in the 12-month period, only oneRPAPL 1304 notice is required (see Chase Home Fin., LLC v Iglio, 2014 NYSlip Op 31318[U] [Sup Ct, Suffolk County 2014]). The statutory language does not statethat the action must be commenced within 12 months of the RPAPL 1304 notice. Thus,contrary to the defendant's contention, the plaintiff did not fail to comply with the statuteby not sending RPAPL 1304 notice within 12 months prior to commencing theaction.
Accordingly, the Supreme Court properly denied the defendant's cross motion, ineffect, for summary judgment dismissing the complaint, but should have denied thatbranch of the plaintiff's motion which was for summary judgment on the issue ofliability. Rivera, J.P., Balkin, Hinds-Radix and Barros, JJ., concur.