Foreclosure Standing: Unendorsed Notes and Allonges Without Proof of Attachment at Commencement Cannot Support Summary Judgment

1. Introduction

In U.S. Bank N.A. v Sukljian, the Third Department addressed the evidence necessary for a mortgage foreclosure plaintiff to establish standing as the holder of a transferred promissory note. The central question was whether possession of an unendorsed note, supplemented on summary judgment by undated allonges, established standing without evidence that those allonges were possessed and firmly affixed to the note when the action began.

The court held that it did not. Its decision applies established principles governing negotiable instruments and foreclosure standing, emphasizing that possession of the original note is not interchangeable with proof of lawful holder status.

Background and parties

In December 2005, Moses Sukljian executed a promissory note in favor of WMC Mortgage Corp., secured by a mortgage on Albany County property. After the note was transferred to Ocwen Loan Servicing, LLC, Sukljian entered into a 2018 modification agreement that increased the principal balance and established a new monthly payment. Ocwen merged into PHH Mortgage Corporation in 2019; PHH became the loan servicer and U.S. Bank’s attorney-in-fact.

On July 17, 2023, U.S. Bank National Association, acting as trustee, commenced foreclosure proceedings. It alleged that it held the note and mortgage and that Sukljian had defaulted. Sukljian answered and expressly asserted lack of standing as an affirmative defense.

Supreme Court granted U.S. Bank summary judgment, struck Sukljian’s answer, and appointed a referee to calculate the amount owed. Sukljian appealed, principally challenging whether U.S. Bank had established holder status at commencement.

2. Summary of the Opinion

The Third Department unanimously modified Supreme Court’s order. It denied the portions of U.S. Bank’s motion seeking summary judgment on the complaint, appointment of a referee, and striking of Sukljian’s answer.

The decisive evidentiary deficiencies were:

• The note attached to the complaint was not endorsed in blank or specially endorsed to U.S. Bank, and no endorsing allonge accompanied it.
• U.S. Bank later submitted two undated allonges with its summary judgment motion, including one containing an endorsement payable to U.S. Bank.
• No evidence established that either allonge was firmly affixed to the note when the action commenced.
• No evidence established that U.S. Bank possessed the allonges at commencement.
• The loan analyst’s affirmation concerning precommencement possession of the “original Note” did not supply the missing information about the allonges.

Although U.S. Bank submitted the note, mortgage, modification agreement, and evidence of default, Sukljian’s standing defense required an additional showing. Because U.S. Bank did not establish standing as a matter of law, its otherwise ordinarily sufficient foreclosure evidence did not entitle it to summary judgment.

The court did not dismiss the foreclosure action or conclusively determine that U.S. Bank lacked standing. It held that U.S. Bank had not established standing on this motion. The order was otherwise affirmed, without costs.

3. Analysis

A. Precedents Cited and Their Influence

The opinion builds on three connected bodies of precedent: the foreclosure plaintiff’s summary judgment burden, the distinction between possession and holder status, and the requirements governing endorsements placed on separate allonges.

Standing as part of the plaintiff’s initial burden

• Bayview Loan Servicing, LLC v Freyer, 192 AD3d 1421, 1422 (3d Dept 2021), and Deutsche Bank Natl. Trust Co. v Monica, 131 AD3d 737, 738 (3d Dept 2015), support the threshold proposition that a foreclosure plaintiff must establish standing when the defendant raises that issue in the answer. These authorities explain why proof of the debt and default did not complete U.S. Bank’s prima facie showing.

• McCormack v Maloney, 160 AD3d 1098, 1099-1100 (3d Dept 2018), lv dismissed 32 NY3d 1185 (2019), serves two functions. It supports the obligation to establish standing when challenged and, more specifically, the conclusion that possession of a note lacking the necessary endorsement does not establish holder status.

• Bank of N.Y. Mellon v Cronin, 151 AD3d 1504, 1506 (3d Dept 2017), lv dismissed 31 NY3d 1061 (2018), likewise supports the standing burden. Its additional significance is the principle that the note, rather than the mortgage itself, conveys standing to foreclose.

The note-centered framework for foreclosure standing

• Wilmington Sav. Fund Socy., FSB v LaFrate, 215 AD3d 1023, 1024 (3d Dept 2023), supplies the general formulation that a foreclosure plaintiff must be the holder or assignee of the mortgage and underlying note when the action begins. U.S. Bank Trust, N.A. v Varian, 156 AD3d 1255, 1256 (3d Dept 2017), supports that formulation and the related rules governing transfer and holder status.

• Aurora Loan Servs., LLC v Taylor, 25 NY3d 355, 361 (2015), explains why separate possession of the mortgage is unnecessary: a full transfer of the note obligation ordinarily transfers the mortgage as well, unless the parties agree otherwise. This Court of Appeals authority focuses the inquiry on entitlement under the note rather than an independently documented physical transfer of the mortgage.

• U.S. Bank N.A. v Shaughnessy, 178 AD3d 1324, 1326-1327 (3d Dept 2019), identifies written assignment or physical delivery of the note before commencement as routes to establishing standing. It also supports denying summary judgment when the necessary standing proof is deficient. Here, U.S. Bank relied on holder status, not a written-assignment theory.

• Citibank, NA v Abrams, 144 AD3d 1212, 1214-1215 (3d Dept 2016), supplies the operative holder-status rule for the transferred note: possession must be coupled with an endorsement in blank or a special endorsement payable to the plaintiff, appearing on the note or a qualifying allonge. The decision thus distinguishes physical custody from the legal entitlement asserted by U.S. Bank.

Why possession of the complaint’s unendorsed note was insufficient

• Residential Mtge. Loan Trust 2013-TT2 v Kaodichimma, 212 AD3d 742, 743 (2d Dept 2023), supports the court’s treatment of the complaint attachment: the attached note contained neither an endorsement in blank nor a special endorsement to U.S. Bank, and no qualifying allonge accompanied it. Attaching the note therefore did not establish the claimed holder status.

• Fifth Third Bank, N.A. v Stitt, 240 AD3d 576, 577 (2d Dept 2025), supplies the explicit proposition that mere physical possession at commencement is insufficient where neither the note nor an allonge contains the necessary endorsement. Together with McCormack v Maloney, it directly answers U.S. Bank’s reliance on possession alone.

The statutory requirement that an allonge be firmly affixed

• U.S. Bank N.A. v Chrismas-Beck, 219 AD3d 534, 537 (2d Dept 2023), and U.S. Bank N.A. v Moulton, 179 AD3d 734, 737 (2d Dept 2020), support the application of UCC § 3-202 (2). An endorsement on a separate paper must be “so firmly affixed” to the instrument “as to become a part thereof.” These decisions establish why producing copies of the allonges on the motion did not, without more, prove effective endorsement at commencement.

Comparison authorities concerning documentary and possession evidence

• Flat Rock Mtge. Inv. Trust v Lott, 214 AD3d 1221, 1222 (3d Dept 2023), is cited by comparison when the court observes that the allonges here were neither attached to nor mentioned in the complaint. Its role is evidentiary: the initial pleadings supplied no contemporaneous connection between these allonges and the note. The opinion does not establish a categorical rule that every allonge must accompany the complaint.

• Aurora Loan Servs., LLC v Taylor, 25 NY3d at 360; U.S. Bank N.A. v Craft, 240 AD3d 1140, 1142 (3d Dept 2025); LNV Corp. v Allison, 206 AD3d 710, 712 (2d Dept 2022); Goldman Sachs Mtge. Co. v Mares, 166 AD3d 1126, 1129 (3d Dept 2018); and Citibank, NA v Abrams, 144 AD3d at 1215, are cited comparatively in discussing the loan analyst’s affirmation. Their collective function is to contrast the evidentiary showing here with proof addressing the relevant possession and instrument issues. The court’s particular criticism was that this analyst said nothing about whether the allonges accompanied the note or were firmly affixed to it.

Authorities supporting denial of summary judgment

Finally, United Wholesale Mtge., LLC v Smith, 237 AD3d 1339, 1341-1342 (3d Dept 2025); Citimortgage, Inc. v Ustick, 188 AD3d 793, 795 (2d Dept 2020); U.S. Bank N.A. v Shaughnessy, 178 AD3d at 1326; and Wells Fargo Bank, NA v Ostiguy, 127 AD3d 1375, 1377 (3d Dept 2015), support the disposition. U.S. Bank’s failure to establish standing as a matter of law required reversal of the relevant summary judgment relief.

B. Legal Reasoning

1. Proof of default did not resolve entitlement to enforce

U.S. Bank submitted documents ordinarily sufficient to establish a foreclosure claim: the note, mortgage, modification agreement, payment history, and notice reflecting missed payments. But those materials addressed the debt and breach. They did not necessarily establish that this plaintiff was entitled to enforce the note when it sued.

Because Sukljian pleaded lack of standing, U.S. Bank had to establish that entitlement as part of its initial summary judgment showing. The deficiency therefore arose in U.S. Bank’s own proof; it was not necessary to sustain summary judgment merely because the borrower had not conclusively disproved standing.

2. The chosen standing theory required an effective endorsement

The court expressly identified U.S. Bank’s theory as standing through possession as a holder, rather than standing as an assignee. Under that theory, possession of this transferred note required the appropriate endorsement: either an endorsement in blank or one payable specifically to U.S. Bank.

The complaint’s attachment lacked both. Its assertion of precommencement possession therefore did not establish the legal status claimed.

3. The later-produced allonges left essential gaps

One allonge contained a special endorsement payable to U.S. Bank. Nevertheless, its wording alone did not establish that it functioned as part of the note at the legally relevant time. UCC § 3-202 (2) required firm attachment, and standing had to exist when the action commenced.

The motion evidence did not establish either possession of the allonges at commencement or their attachment to the note at that time. Their undated character and absence from the complaint compounded those gaps.

Importantly, the court did not hold that an undated allonge is automatically ineffective. Nor did it find that the allonges were actually detached. The holding concerns the absence of proof establishing timely possession and attachment on this record.

4. The servicing affirmation did not connect the necessary facts

PHH’s senior loan analyst confirmed possession of the “original Note” before commencement. But the affirmation did not explain whether that note then included the allonges, whether they were firmly affixed, when they were created, or when the relevant note-and-allonge combination came into possession.

Thus, the problem was not simply a failure to assert precommencement custody. It was a failure to establish custody of a properly endorsed instrument at commencement.

5. The remedy reflected an evidentiary failure, not a final merits determination

The court reversed the grant of summary judgment and the related relief striking the answer and appointing a referee. It did not direct dismissal or award judgment to Sukljian. The distinction preserves the difference between failure to prove standing on a particular motion and a conclusive determination that standing did not exist.

The second allonge transferred the note from U.S. Bank to its wholly owned subsidiary. Supreme Court had also permitted substitution of that subsidiary as plaintiff. Because the appellate modification did not reverse that relief, the substitution remained undisturbed. The opinion did not separately analyze the second allonge’s ultimate effect on ownership or enforcement rights.

C. Potential Impact

The decision reinforces, rather than replaces, existing standing doctrine. Its practical importance lies in applying the allonge-attachment requirement rigorously within the Third Department.

• For foreclosure plaintiffs: A possession affirmation should address the endorsed instrument actually relied upon, including relevant allonges and their attachment at commencement. Merely referring to the “original Note” may leave a dispositive gap.
• For loan servicers and custodians: Records connecting endorsements, document custody, and attachment to the commencement date may be critical. A later motion exhibit does not itself establish the earlier condition of the instrument.
• For borrowers: A pleaded standing defense can require scrutiny of endorsement and custody evidence even where default is well documented. This decision illustrates that evidentiary weakness in standing can defeat a lender’s summary judgment motion.
• For future courts: The inquiry should distinguish possession of a note from holder status and should focus on the instrument’s condition when suit began.

The opinion does not prescribe one exclusive method of proving attachment, require every allonge to bear a date, or decide the sufficiency of a properly supported assignment theory. Its reach should remain tied to the holder-based theory and deficient proof before the court.

4. Complex Concepts Simplified

Standing

The plaintiff’s legal entitlement to bring the foreclosure action. Here, the question was whether U.S. Bank held the enforceable note when it filed suit.

Holder

In the context of this transferred note, a possessor whose entitlement is supported by the necessary endorsement. Simply keeping the original document does not establish that status.

Endorsement in blank

An endorsement that does not name a particular recipient, allowing the instrument to be payable to its bearer.

Special endorsement

An endorsement directing payment to a named person or entity, such as U.S. Bank.

Allonge

A separate paper bearing an endorsement. Under the statutory rule applied here, it must be firmly attached to the note so that it becomes part of the instrument.

The mortgage follows the note

Ordinarily, transferring the entire note obligation also transfers the mortgage securing it, unless the parties agree otherwise.

Prima facie showing and summary judgment

The moving party must first present evidence establishing entitlement to judgment without a trial. If its own evidence leaves an essential element unproven, summary judgment cannot be granted.

Referee to compute

A court-appointed person who calculates the amount owed in the foreclosure proceeding. The appointment here was reversed along with the unsupported summary judgment relief.

5. Conclusion

U.S. Bank N.A. v Sukljian underscores a precise distinction: possession of an original note is not necessarily possession as its lawful holder. When holder status depends on separate allonges, the plaintiff must establish that the necessary endorsements formed part of the note when the foreclosure action commenced.

U.S. Bank’s evidence did not establish timely possession or firm attachment of the allonges. That failure defeated its summary judgment motion, notwithstanding its evidence of the debt and default. The broader lesson is evidentiary: foreclosure entitlement must be demonstrated through a legally effective instrument at commencement, not inferred from later-produced endorsement papers.