Case Summary: LaSALLE BANK, N.A. v. Aryeh Zaks

Factual and Procedural Background

This is an appeal by defendant Aryeh Zaks from a judgment of foreclosure and sale of the Supreme Court, Rockland County dated April 14, 2014. That judgment had been entered following an earlier order dated July 27, 2009 that, among other things, granted a branch of the plaintiff's motion for summary judgment on the complaint and to appoint a referee and directed the sale of the subject premises. By decision and order on motion dated February 3, 2015, the Appellate Division granted the defendant's renewed motion to stay the foreclosure sale pending appeal. The Appellate Division subsequently reversed the foreclosure judgment, denied the plaintiff's motion branch for summary judgment and to appoint a referee, and modified the July 27, 2009 order.

Legal Issues Presented

Whether the plaintiff established its prima facie entitlement to judgment as a matter of law in a mortgage foreclosure action by producing the mortgage, the unpaid note, and evidence of default.
Whether the plaintiff proved its standing to commence the foreclosure action — specifically, whether the plaintiff was the holder or assignee of the underlying note at the time the action was commenced (including whether the note had been assigned or physically delivered to the plaintiff prior to commencement).

Arguments of the Parties

The opinion does not contain a detailed account of the parties' legal arguments.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
Loancare v. Firshing, 130 A.D.3d 787, 788, 14 N.Y.S.3d 410	Supporting the proposition that a plaintiff establishes prima facie entitlement to judgment by producing the mortgage, the unpaid note, and evidence of default.	Cited as authority for the evidentiary elements a plaintiff must produce to make a prima facie showing on a foreclosure motion.
Wells Fargo Bank, N.A. v. Erobobo, 127 A.D.3d 1176, 9 N.Y.S.3d 312	Same principle: production of mortgage, unpaid note, and evidence of default to establish prima facie entitlement.	Used with other cases to define the documentary showing required for summary judgment in foreclosure actions.
Wells Fargo Bank, N.A. v. DeSouza, 126 A.D.3d 965, 3 N.Y.S.3d 619	Same proposition re: prima facie proof for foreclosure motions.	Cited to support the standard for what the plaintiff must produce on summary judgment.
One W. Bank, FSB v. DiPilato, 124 A.D.3d 735, 998 N.Y.S.2d 668	Also cited for the rule that mortgage, unpaid note, and evidence of default establish prima facie entitlement.	Part of the group of authorities specifying the required prima facie documentary showing.
HSBC Bank USA, N.A. v. Baptiste, 128 A.D.3d 773, 10 N.Y.S.3d 255	Where standing is placed in issue by the defendant's answer, the plaintiff must prove its standing as part of its prima facie showing.	Applied to conclude that the plaintiff here had to establish standing in addition to producing the mortgage, note, and default evidence.
Aurora Loan Servs., LLC v. Taylor, 25 N.Y.3d 355, 361, 12 N.Y.S.3d 612, 34 N.E.3d 363	Defines standing in foreclosure actions: a plaintiff has standing if it is either the holder or assignee of the underlying note at the time the action was commenced.	Used to set the standard by which the plaintiff's standing must be measured (holder or assignee at commencement).
Emigrant Sav. Bank–Brooklyn/Queens v. Doliscar, 124 A.D.3d 831, 2 N.Y.S.3d 539	General authority concerning standing in foreclosure actions (cited generally with Aurora).	Cited as additional supporting authority on standing principles referenced by the court.
HSBC Bank USA v. Hernandez, 92 A.D.3d 843, 939 N.Y.S.2d 120	General authority regarding standing in foreclosure contexts (cited with Aurora and Doliscar).	Relied upon as corroborating authority for the standing standard.
Bank of Am., N.A. v. Paulsen, 125 A.D.3d 909, 6 N.Y.S.3d 68	Authority cited for the proposition that evidence must show assignment or physical delivery of the note prior to commencement to establish standing.	Applied to determine that the plaintiff's proofs did not establish assignment or delivery before the action was commenced.
U.S. Bank N.A. v. Dellarmo, 94 A.D.3d 746, 748, 942 N.Y.S.2d 122	Also cited for the requirement that assignment or delivery of the note occur prior to commencement to establish standing.	Used to support the court's conclusion that the plaintiff failed to show assignment or physical delivery before commencement.

Court's Reasoning and Analysis

The court applied settled principles for foreclosure summary judgment motions. It began by identifying the documentary showing ordinarily required for a plaintiff to make a prima facie case on a foreclosure motion: production of the mortgage, the unpaid note, and evidence of default. The court cited multiple authorities for that rule.

The court then addressed standing. Because the defendant had placed the plaintiff's standing in issue by way of his answer, the court held that the plaintiff was required to prove standing as part of its prima facie showing. The court relied on precedent stating that a plaintiff has standing only if it was the holder or assignee of the note at the time the action was commenced.

Turning to the proofs submitted by the plaintiff, the court acknowledged that the plaintiff had produced the mortgage, the unpaid note, and evidence of default. However, the court concluded that the plaintiff's evidence did not establish that the note had been assigned to the plaintiff prior to the commencement of the action, nor that the note had been physically delivered to the plaintiff prior to commencement. The court cited authorities to support the necessity of demonstrating assignment or delivery before commencement.

Because the plaintiff failed to meet the standing requirement, the court determined that the plaintiff was not entitled to summary judgment on the complaint or to appointment of a referee. On that basis the court reversed the judgment of foreclosure and sale, denied that branch of the plaintiff's motion, and modified the prior July 27, 2009 order. The court also awarded costs to the defendant.

Holding and Implications

Holding: The Appellate Division reversed the judgment of foreclosure and sale and held that the plaintiff was not entitled to summary judgment on the complaint or to appointment of a referee because it failed to establish standing. The court ordered that the July 27, 2009 order be modified and awarded costs to the appellant.

Direct Effect on the Parties: The foreclosure judgment was reversed; the plaintiff's motion branch for summary judgment and for appointment of a referee was denied; the prior order directing sale was modified; and costs were awarded to the defendant.

The opinion does not announce or discuss any broader legal rule beyond applying existing precedents on the documentary showing required for summary judgment in foreclosure actions and the necessity of proving standing (holder or assignee at commencement). No new precedent was stated.

Show full summary ...

LaSALLE BANK, N.A., etc., respondent, v. Aryeh ZAKS, appellant, et al., defendants.

Philip J. Murphy, New City, N.Y., for appellant.

Eckert Seamans Cherin & Mellott, LLC, White Plains, N.Y. (Kenneth J. Flickinger of counsel), for respondent.

L. PRISCILLA HALL, J.P., JEFFREY A. COHEN, HECTOR D. LaSALLE, and FRANCESCA E. CONNOLLY, JJ.

Opinion

In an action to foreclose a mortgage, the defendant Aryeh Zaks appeals from a judgment of foreclosure and sale of the Supreme Court, Rockland County (Garvey, J.), dated April 14, 2014, which, upon an order of the same court dated July 27, 2009, inter alia, granting that branch of the plaintiff's motion which was for summary judgment on the complaint and to appoint a referee, among other things, directed the sale of the subject premises. By decision and order on motion dated February 3, 2015, this Court granted the renewed motion of the defendant Aryeh Zaks to stay the foreclosure sale of the subject premises pending hearing and determination of the appeal.

ORDERED that the judgment of foreclosure and sale is reversed, on the law, with costs, that branch of the plaintiff's motion which was for summary judgment on the complaint and to appoint a referee is denied, and the order dated July 27, 2009, is modified accordingly.

In a mortgage foreclosure action, a plaintiff establishes its prima facie entitlement to judgment as a matter of law by producing the mortgage, the unpaid note, and evidence of default (see Loancare v.

Firshing, 130 A.D.3d 787, 788, 14 N.Y.S.3d 410 ; Wells Fargo Bank, N.A. v. Erobobo, 127 A.D.3d 1176, 9 N.Y.S.3d 312 ; Wells Fargo Bank, N.A. v. DeSouza, 126 A.D.3d 965, 3 N.Y.S.3d 619 ; One W. Bank, FSB v. DiPilato, 124 A.D.3d 735, 998 N.Y.S.2d 668 ). Where, as here, the plaintiff's standing has been placed in issue by the defendant's answer, the plaintiff also must prove its standing as part of its prima facie showing ( see HSBC Bank USA, N.A. v. Baptiste, 128 A.D.3d 773, 10 N.Y.S.3d 255 ). In a foreclosure action, a plaintiff has standing if it is either the holder or assignee of the underlying note at the time the action was commenced ( see Aurora Loan Servs., LLC v. Taylor, 25 N.Y.3d 355, 361, 12 N.Y.S.3d 612, 34 N.E.3d 363 ; see generally Emigrant Sav. Bank–Brooklyn/Queens v. Doliscar, 124 A.D.3d 831, 2 N.Y.S.3d 539 ; HSBC Bank USA v. Hernandez, 92 A.D.3d 843, 939 N.Y.S.2d 120 ).

Here, although the plaintiff produced the mortgage, the unpaid note, and evidence of default in support of that branch of its motion which was for summary judgment on the

complaint, it failed to establish that it had standing to commence this action. The evidence the plaintiff tendered did not establish either that the note was assigned to it prior to the commencement of the action or that the note was physically delivered to it prior to the commencement of the action ( see Bank of Am., N.A. v. Paulsen, 125 A.D.3d 909, 6 N.Y.S.3d 68 ; U.S. Bank N.A. v. Dellarmo, 94 A.D.3d 746, 748, 942 N.Y.S.2d 122 ). Accordingly, the plaintiff was not entitled to summary judgment on the complaint and the appointment of a referee.

Lasalle Bank, N.A. v. Zaks