| Deutsche Bank Natl. Trust Co. v Brewton |
| 2016 NY Slip Op 05906 [142 AD3d 683] |
| August 31, 2016 |
| Appellate Division, Second Department |
[*1]
| Deutsche Bank National Trust Company, as Trustee forHSI Asset Securitization Corporation Trust 2006-WMC1, 3476 Stateview Boulevard, Ft.Mill, SC 29715, Appellant, v Stuart Brewton, Respondent, et al.,Defendants. |
Hogan Lovells US LLP, New York, NY (David Dunn, Chava Brandriss, andBenjamin P. Jacobs of counsel), for appellant.
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 (Baynes, J.), dated June 26,2013, as denied its motion, inter alia, for summary judgment on the complaint andgranted that branch of the cross motion of the defendant Stuart Brewton which was tocompel discovery.
Ordered that the order is modified, on the law, by deleting the provision thereofgranting that branch of the cross motion of the defendant Stuart Brewton which was tocompel discovery, and substituting therefor a provision denying that branch of the crossmotion; as so modified, the order is affirmed insofar as appealed from, without costs ordisbursements.
On April 3, 2006, the defendant Stuart Brewton (hereinafter the defendant) obtaineda loan in the amount of $496,000 from nonparty WMC Mortgage Corp. In return, thedefendant executed a note and gave a mortgage on certain real property. The notecontains an undated endorsement in blank by "Alex Arguello, Asst. Sect. WMCMortgage Corp." The defendant allegedly defaulted under the terms of the note by failingto make the payment due on August 1, 2009. On January 8, 2010, the plaintiffcommenced this foreclosure action. In his answer, the defendant asserted the defense oflack of standing.
The plaintiff subsequently moved, inter alia, for summary judgment on thecomplaint. The defendant cross-moved for summary judgment dismissing the complainton the ground that the plaintiff lacked standing or, in the alternative, to compel furtherunspecified discovery. The Supreme Court denied the plaintiff's motion and that branchof the defendant's motion which was for summary judgment dismissing the complaint,and granted that branch of the defendant's cross motion which was to compel discovery.The plaintiff appeals.
"Generally, in moving for summary judgment in an action to foreclose a mortgage, aplaintiff establishes its prima facie case through the production of the mortgage, theunpaid note, and evidence of default" (Plaza Equities, LLC v Lamberti, 118 AD3d 688, 689[2014]). "Where, as here, standing is put into issue by a defendant, the plaintiff mustprove its standing in order to be entitled to relief" (Aurora Loan Servs., LLC v Taylor, 114 AD3d 627, 628[2014], affd 25 NY3d 355 [2015] [internal quotation marks omitted]). A plaintiffhas standing in a mortgage foreclosure action where it is the [*2]holder or assignee of the underlying note at the time theaction is commenced (see Aurora Loan Servs., LLC v Taylor, 25 NY3d at 361;U.S. Bank N.A. v Handler,140 AD3d 948 [2016]). "Either a written assignment of the underlying note or thephysical delivery of the note prior to the commencement of the foreclosure action issufficient to transfer the obligation, and the mortgage passes with the debt as aninseparable incident" (U.S.Bank, N.A. v Collymore, 68 AD3d 752, 754 [2009]).
Here, the plaintiff failed to establish, prima facie, that it was a holder or assignee ofthe note prior to commencement of the action. "[A] promissory note [is] a negotiableinstrument within the meaning of the Uniform Commercial Code" (Mortgage Elec. Registration Sys.,Inc. v Coakley, 41 AD3d 674, 674 [2007]; see UCC 3-104 [2] [d]). A"holder" 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];see UCC 3-301 ["The holder of an instrument whether or not he is the owner may. . . enforce payment in his own name"]). Where, as here, the instrument isendorsed in blank, it may be negotiated by delivery (see UCC 3-202 [1]; 3-204[2]). Accordingly, to establish standing as holder of the note, the plaintiff was required todemonstrate that it was in physical possession of the note endorsed in blank prior tocommencement of the action.
"To obtain summary judgment it is necessary that the movant establish his cause ofaction or defense sufficiently to warrant the court as a matter of law in directingjudgment in his favor, and he must do so by tender of evidentiary proof in admissibleform" (Zuckerman v City of New York, 49 NY2d 557, 562 [1980] [citationand internal quotation marks omitted; emphasis added]). Here, the plaintiff attempted toestablish its standing by submitting the affidavit of Angela Frye, Vice President of LoanDocumentation for Wells Fargo Bank, N.A. (hereinafter Wells Fargo), the servicer of thedefendant's loan on behalf of the plaintiff. Frye averred, in relevant part, that she"reviewed the books and records regularly maintained by Wells Fargo in the ordinarycourse of its business as servicer of Defendant's loan for and on behalf of the Trust," andthat "Wells Fargo's regularly maintained records reflect that both the original Note,indorsed in blank by WMC Mortgage Corp., and the Mortgage were physically deliveredto the Trust prior to the commencement of this action." The plaintiff failed todemonstrate that the records relied upon by Frye were admissible under the businessrecords exception to the hearsay rule (see CPLR 4518 [a]) because Frye, anemployee of Wells Fargo, did not attest that she was personally familiar with theplaintiff's record-keeping practices and procedures (see U.S. Bank N.A. v Handler, 140 AD3d 948 [2016]; Aurora Loan Servs., LLC vMercius, 138 AD3d 650 [2016]; Citibank, N.A. v Cabrera, 130 AD3d 861, 861 [2015] ["Aproper foundation for the admission of a business record must be provided by someonewith personal knowledge of the maker's business practices and procedures"]; see alsoMatter of Leon RR, 48 NY2d 117, 122 [1979]).
The plaintiff also failed to establish, in the alternative, through the submission ofexcerpts of a Pooling and Servicing Agreement, that it had standing by virtue of a writtenassignment of the note prior to commencement of the action (see US Bank N.A. v Weinman,123 AD3d 1108, 1110 [2014]).
Accordingly, since the plaintiff failed to establish, prima facie, that it had standing asholder or assignee of the note prior to commencement of the action, the Supreme Courtproperly denied its motion, inter alia, for summary judgment on the complaint (seeAurora Loan Servs., LLC v Mercius, 138 AD3d at 652).
However, the Supreme Court improvidently granted that branch of the defendant'smotion which was to compel further unspecified discovery, as the defendant failed toidentify what discovery he sought or establish that the plaintiff had ignored a properdiscovery demand (see CPLR 3101 [a]; see also CPLR 3124; Altonen v Kmart of NY Holdings,Inc., 94 AD3d 920 [2012]; cf. U.S. Bank N.A. v Ventura, 130 AD3d 919 [2015]).Balkin, J.P., Sgroi, Duffy and Connolly, JJ., concur.