| Aurora Loan Servs., LLC v Komarovsky |
| 2017 NY Slip Op 05061 [151 AD3d 924] |
| June 21, 2017 |
| Appellate Division, Second Department |
[*1]
| Aurora Loan Services, LLC, Plaintiff, v ReuvenKomarovsky et al., Appellants, et al., Defendants. Nationstar Mortgage, LLC, NonpartyRespondent. |
Beth Goldman, New York, NY (Noelle F. Eberts and Timothy D. Brennan of counsel), forappellants.
Sandelands Eyet, LLP, New York, NY (William C. Sandelands of counsel), fornonparty-respondent.
In an action to foreclose a mortgage, the defendants Reuven Komarovsky and AlexanderKomarovsky appeal, as limited by their brief, from so much of an order of the Supreme Court,Kings County (Bayne, J.), dated March 23, 2015, as granted those branches of the motion ofnonparty Nationstar Mortgage, LLC, as assignee of the plaintiff, which were for summaryjudgment on the complaint insofar as asserted against them, to strike their answer, and for anorder of reference, and denied their cross motion, in effect, for summary judgment dismissing thecomplaint insofar as asserted against them.
Ordered that the order is modified, on the law, by deleting the provision thereof grantingthose branches of the motion of nonparty Nationstar Mortgage, LLC, which were for summaryjudgment on the complaint insofar as asserted against the defendants Reuven Komarovsky andAlexander Komarovsky, to strike their answer, and for an order of reference, and substitutingtherefor a provision denying those branches of the motion; as so modified, the order is affirmedinsofar as appealed from, without costs or disbursements.
In July 2004, Reuven Komarovsky borrowed the sum of $516,300 from Odyssey Funding,LLC (hereinafter Odyssey). As security for the obligation, Reuven Komarovsky and AlexanderKomarovsky (hereinafter together the defendants) delivered to Odyssey a mortgage on realproperty located on 65th Street in Brooklyn. In May 2007, Reuven Komarovsky borrowed theadditional sum of $146,960.48 from Odyssey, secured by a second mortgage on the subjectproperty. The same year, the defendants executed a consolidation, extension, and modificationagreement (hereinafter CEMA), and Reuven Komarovsky executed a consolidated note in thesum of $647,000. The defendants executed a consolidated mortgage as security for theconsolidated loan.
In November 2009, Aurora Loan Services, LLC (hereinafter Aurora), commenced this actionto foreclose the consolidated mortgage. Thereafter, Aurora allegedly assigned the consolidatedmortgage and underlying instruments to nonparty Nationstar Mortgage, LLC (hereinafterNationstar). After discovery, Nationstar moved, inter alia, for summary judgment on thecomplaint insofar as asserted against the defendants, to strike their answer, and for an order of[*2]reference. The defendants cross-moved, in effect, forsummary judgment dismissing the complaint insofar as asserted against them. The SupremeCourt granted Nationstar's motion and denied the defendants' cross motion.
"To establish a prima facie case in an action to foreclose a mortgage, a plaintiff must produce'the mortgage, the unpaid note, and evidence of default' " (Flagstar Bank, FSB v Mendoza, 139AD3d 898, 899 [2016], quoting Emigrant Mtge. Co., Inc. v Beckerman, 105 AD3d 895, 895[2013]). Additionally, where, as here, the plaintiff's standing has been placed in issue by thedefendants' answer, the plaintiff must prove its standing as part of its prima facie showing on amotion for summary judgment (see Flagstar Bank, FSB v Mendoza, 139 AD3d at 899; LaSalle Bank, N.A. v Zaks, 138 AD3d788 [2016]; Aurora Loan Servs.,LLC v Mercius, 138 AD3d 650, 651 [2016]).
In a foreclosure action, a plaintiff has standing if it is the holder or assignee of the underlyingnote at the time the action is commenced (see Aurora Loan Servs., LLC v Taylor, 25 NY3d 355, 361-362[2015]; One W. Bank, FSB vAlbanese, 139 AD3d 831, 832 [2016]; Aurora Loan Servs., LLC v Mercius, 138AD3d at 651). A plaintiff may demonstrate that it is the holder or assignee of the underlying noteby showing either a written assignment or physical delivery of the note (see Aurora LoanServs., LLC v Mercius, 138 AD3d at 651).
Here, Nationstar failed to meet its prima facie burden of establishing that Aurora hadstanding to commence the action. In support of its motion, Nationstar relied on the affidavit ofDoris Raimundi, a vice president of Nationstar, who asserted that "pursuant to the businessrecords of Aurora Loan Services, LLC, the original Note was held in its custody since September23, 2009, prior to commencement of this action," and that the note had since been delivered toNationstar. However, Nationstar failed to demonstrate the admissibility of the records reliedupon by Raimundi under the business records exception to the hearsay rule (see CPLR4518 [a]), since Raimundi did not attest that she was personally familiar with Aurora'srecord-keeping practices and procedures (see Aurora Loan Servs., LLC v Baritz, 144 AD3d 618, 620 [2016];U.S. Bank N.A. v Handler, 140AD3d 948, 949 [2016]; Aurora Loan Servs., LLC v Mercius, 138 AD3d at 652).Inasmuch as Nationstar's motion was based on evidence that was not in admissible form, it failedto establish its prima facie entitlement to judgment as a matter of law (see HSBC Mtge. Servs., Inc. v Royal,142 AD3d 952 [2016]; Aurora LoanServs., LLC v Mercius, 138 AD3d 650 [2016]). Accordingly, the Supreme Court shouldhave denied those branches of Nationstar's motion which were for summary judgment on thecomplaint insofar as asserted against the defendants, to strike their answer, and for an order ofreference.
The Supreme Court properly denied that branch of the defendants' cross motion which, ineffect, sought summary judgment dismissing the complaint insofar as asserted against them forlack of standing. "[T]he burden is on the moving defendant to establish, prima facie, theplaintiff's lack of standing, rather than on the plaintiff to affirmatively establish its standing inorder for the motion to be denied. To defeat a defendant's motion, the plaintiff has no burden ofestablishing its standing as a matter of law" (Deutsche Bank Trust Co. Ams. v Vitellas, 131 AD3d 52, 59-60[2015] [citations omitted]; see Aurora Loan Servs., LLC v Mercius, 138 AD3d at 652).Here, the defendants, as the moving parties, failed to make a prima facie showing that Auroralacked standing (see Aurora Loan Servs., LLC v Mercius, 138 AD3d at 652; DeutscheBank Trust Co. Ams. v Vitellas, 131 AD3d at 59-60).
In contrast, the defendants demonstrated their prima facie entitlement to summary judgmentdismissing the complaint insofar as asserted against them on the ground that Aurora failed tocomply with RPAPL 1304. At the time the action was commenced, RPAPL 1304 applied to"high-cost," "subprime," and "non-traditional" home loans (L 2008, ch 472, § 2).Proper service of RPAPL 1304 notice containing the statutorily mandated content is a conditionprecedent to the commencement of a foreclosure action pertaining to the loans specified therein(see Aurora Loan Servs., LLC vWeisblum, 85 AD3d 95, 98 [2011]).
Here, the defendants demonstrated that Aurora served a RPAPL 1304 notice on ReuvenKomarovsky only. Although only Reuven Komarovsky was identified as the "borrower" on theconsolidated note, both Reuven Komarovsky and Alexander Komarovsky executed the [*3]CEMA, are collectively defined in the CEMA as "borrower," andmutually agreed, under that definition as "borrower," to "take over all of the obligations" underthe consolidated note. Moreover, the CEMA provided that "[i]f more than one person signs thisAgreement as Borrower, each of us is fully and personally obligated to keep all of Borrower'spromises and obligations contained in this Agreement," and the "Note Holder" was entitled toenforce its rights against each signatory individually. Thus, the record is sufficient to establishthat Alexander Komarovsky was a "borrower" within the meaning of RPAPL 1304 (1) (seeAurora Loan Servs., LLC v Weisblum, 85 AD3d at 105).
Additionally, the defendants established, prima facie, that the instant loan was a"non-traditional home loan" (L 2008, ch 472, § 2). It is undisputed that the loan,which was an interest-only loan consummated prior to September 1, 2008, was a"non-traditional" loan, as that term was defined by the statute at the time this action wascommenced (L 2008, ch 472, § 2). Further, the defendants demonstrated, primafacie, through evidence that the "borrower" Alexander Komarovsky lived at the subject premisesas his primary residence and the averments of Reuven Komarovsky that a portion of the proceedswere used to perform repairs on the subject premises and for other personal and family uses, thatthe loan was a "home loan" (L 2008, ch 472, § 2).
However, in opposition, Nationstar raised a triable issue of fact as to whether the subject loanwas a "home loan" (L 2008, ch 472, § 2). In particular, in light of certain writtenstatements made by Reuven Komarovsky when he applied for the loan, there is a triable issue offact as to whether the proceeds of the loan were, in fact, used for "personal, family, or householdpurposes," or whether they were used for investment purposes (L 2008, ch 472,§ 2). Thus, the defendants were not entitled to summary judgment on the groundthat Aurora failed to comply with RPAPL 1304.
In light of our determination, we need not reach the defendants' remaining contention. Hall,J.P., Sgroi, Maltese and Duffy, JJ., concur.