Deutsche Bank Nat'l Trust Co. v. Barnett, N.Y. App. Div., Judgment, Law, casemine.com

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Attorney(S)

Joell C. Barnett, Brooklyn, N.Y., appellant pro se.

Judges

Reinaldo E. Rivera
John M. Leventhal
Sheri S. Roman

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Smart Summary

Factual and Procedural Background

This appeal arises from a mortgage foreclosure action initiated by Deutsche Bank National Trust Company (plaintiff) against Joell C. Barnett (defendant). The Supreme Court, Kings County, granted the plaintiff's motion to strike the defendant's answer, for summary judgment on the complaint, and for an order of reference, while denying the defendant's cross motion to dismiss the complaint pursuant to CPLR 3211(a)(3). The defendant, proceeding pro se, appeals from these rulings.

Legal Issues Presented

Whether the plaintiff had standing to commence the foreclosure action by being the holder or assignee of both the mortgage and the underlying note at the time the action was commenced.
Whether the Supreme Court properly granted summary judgment and struck the defendant’s answer given the plaintiff’s alleged failure to establish standing.
Whether the defendant’s cross motion to dismiss the complaint pursuant to CPLR 3211(a)(3) should have been granted.

Arguments of the Parties

Appellant's Arguments

The defendant contended that the plaintiff failed to establish standing to commence the foreclosure action because it did not hold both the mortgage and the underlying note at the time the action began.
The defendant argued that the plaintiff’s affidavits and documentation were insufficient to prove proper assignment or possession of the note prior to commencing the action.

Respondent's Arguments

The plaintiff maintained that an affidavit was not required since it was not proceeding on the defendant’s default under CPLR 3215(f).
The plaintiff submitted copies of allonges purportedly endorsing the note to establish standing.
The plaintiff presented affidavits from its servicing agent’s vice president and counsel affirming possession of the original note.
The plaintiff submitted Certificates of Resolution and Incumbency to establish authority to execute the mortgage assignment.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
Bank of N.Y. v. Silverberg, 86 A.D.3d 274, 926 N.Y.S.2d 532	Standing requires holding or assignment of both mortgage and note at commencement.	Confirmed that plaintiff must hold both mortgage and note to have standing; plaintiff failed to establish this.
Aurora Loan Servs., LLC v. Weisblum, 85 A.D.3d 95, 923 N.Y.S.2d 609	Either written assignment or physical delivery of note suffices to transfer obligation.	Noted plaintiff did not prove physical delivery or proper assignment prior to commencement.
Wells Fargo Bank, N.A. v. Marchione, 69 A.D.3d 204, 887 N.Y.S.2d 615	Standing requires legal or equitable interest in mortgage.	Reinforced the requirement of standing; plaintiff failed to meet this standard.
U.S. Bank, N.A. v. Collymore, 68 A.D.3d 752, 890 N.Y.S.2d 578	Assignment of mortgage without note assignment is null; endorsement or delivery of note required.	Highlighted inconsistencies in assignments and endorsements submitted by plaintiff.
Countrywide Home Loans, Inc. v. Gress, 68 A.D.3d 709, 888 N.Y.S.2d 914	Standing requires proper assignment of both mortgage and note.	Supported the court’s conclusion that plaintiff failed to establish standing.
Merritt v. Bartholick, 36 N.Y. 44	Assignment of mortgage without assignment of note conveys no interest.	Used to confirm that mortgage assignment alone is insufficient for standing.
LaSalle Bank Natl. Assn. v. Ahearn, 59 A.D.3d 911, 875 N.Y.S.2d 595	Assignment of mortgage must be accompanied by note assignment.	Supported the principle that plaintiff’s assignment was defective.
Slutsky v. Blooming Grove Inn, Inc., 147 A.D.2d 208, 542 N.Y.S.2d 721	UCC 3–202(2) governs negotiation and transfer of negotiable instruments.	Referenced regarding the validity of the allonges attached to the note.
U.S. Bank N.A. v. Madero, 80 A.D.3d 751, 915 N.Y.S.2d 612	Standing is a threshold issue that must be established before summary judgment.	Supported denial of plaintiff’s motion for summary judgment due to unresolved standing issues.

Court's Reasoning and Analysis

The court analyzed whether the plaintiff had standing to commence the foreclosure action by holding or being assigned both the mortgage and the underlying note at the time of commencement. It emphasized established New York law requiring that an assignment of the mortgage without an assignment of the note is ineffective to confer standing. The plaintiff submitted conflicting documents, including two versions of an undated allonge endorsing the note, which conflicted with the note’s endorsements. The plaintiff also failed to prove physical delivery of the note prior to commencement, as affidavits lacked factual details about when possession was obtained. Additionally, the Certificates of Resolution and Incumbency submitted to validate assignment authority were executed after the assignment date, undermining their evidentiary value. These material inconsistencies raised genuine issues of fact regarding standing, precluding summary judgment and the striking of the answer. The defendant’s cross motion to dismiss was properly denied as the plaintiff had met the threshold to maintain the action pending resolution of standing.

Holding and Implications

The court modified the Supreme Court order by denying the plaintiff's motions to strike the answer, for summary judgment, and for an order of reference. The order was otherwise affirmed with costs awarded to the appellant.

This decision directly affects the parties by requiring the plaintiff to establish standing with clearer evidence before proceeding with foreclosure. No new legal precedent was established; the ruling reaffirmed existing New York law on standing in foreclosure actions and the necessity of proper note and mortgage assignment or possession.

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DEUTSCHE BANK NATIONAL TRUST COMPANY, etc., respondent, v. Joell C. BARNETT, appellant, et al., defendants.

REINALDO E. RIVERA, J.P., ANITA R. FLORIO, JOHN M. LEVENTHAL, and SHERI S. ROMAN, JJ.

Joell C. Barnett, Brooklyn, N.Y., appellant pro se.

REINALDO E. RIVERA, J.P., ANITA R. FLORIO, JOHN M. LEVENTHAL, and SHERI S. ROMAN, JJ.

In an action to foreclose a mortgage, the defendant Joell C. Barnett appeals, as limited by her brief, from so much of an order of the Supreme Court, Kings County (Jackson, J.), dated February 23, 2010, as granted those branches of the plaintiff's motion which were to strike the answer, for summary judgment on the complaint, and for an order of reference, and denied her cross motion pursuant to CPLR 3211(a)(3) to dismiss the complaint.

ORDERED that the order is modified, on the law, by deleting the provisions thereof granting those branches of the plaintiff's motion which were to strike the answer, for summary judgment on the complaint, and for an order of reference, and substituting therefor provisions denying those branches the motion; as so modified, the order is affirmed insofar as appealed from, with costs to the appellant.

In order to commence a foreclosure action, a plaintiff must have a legal or equitable interest in the mortgage. A plaintiff has standing where it is the holder or assignee of both the subject mortgage and of the underlying note at the time the action is commenced ( see Bank of N.Y. v. Silverberg, 86 A.D.3d 274, 926 N.Y.S.2d 532; Aurora Loan Servs., LLC v. Weisblum, 85 A.D.3d 95, 923 N.Y.S.2d 609; Wells Fargo Bank, N.A. v. Marchione, 69 A.D.3d 204, 207, 887 N.Y.S.2d 615; U.S. Bank, N.A. v. Collymore, 68 A.D.3d 752, 890 N.Y.S.2d 578; Countrywide Home Loans, Inc. v. Gress, 68 A.D.3d 709, 888 N.Y.S.2d 914). An assignment of a mortgage without assignment of the underlying note or bond is a nullity, and no interest is acquired by it ( see Merritt v. Bartholick, 36 N.Y. 44, 45; Bank of N.Y. v. Silverberg, 86 A.D.3d 274, 926 N.Y.S.2d 532; LaSalle Bank Natl. Assn. v. Ahearn, 59 A.D.3d 911, 912, 875 N.Y.S.2d 595). “Either a written assignment of the underlying note or the physical delivery of the note prior to the commencement of the foreclosure action is sufficient to transfer the obligation” ( U.S. Bank, N.A. v. Collymore, 68 A.D.3d at 754, 890 N.Y.S.2d 578; see Aurora Loan Servs., LLC v. Weisblum, 85 A.D.3d at 108, 923 N.Y.S.2d 609). Here, the plaintiff failed to establish, as a matter of law, that it had standing to commence the action. The Supreme Court thus erred in awarding the plaintiff summary judgment.

Contrary to the contention of the defendant Joell C. Barnett, an affidavit made by the plaintiff was not required, since the plaintiff was not proceeding upon Barnett's default ( cf. CPLR 3215[f] ). However, the documentation submitted failed to establish that, prior to commencement of the action, the plaintiff was the holder or assignee of both the note and mortgage. The plaintiff submitted copies of two different versions of an undated allonge which was purportedly affixed to the original note pursuant to UCC 3–202(2) ( see Slutsky v. Blooming Grove Inn, Inc., 147 A.D.2d 208, 212, 542 N.Y.S.2d 721). Moreover, these allonges purporting to endorse the note from First Franklin, A

Division of National City Bank of Indiana (hereinafter Franklin of Indiana) to the plaintiff conflict with the copy of the note submitted, which contains undated endorsements from Franklin of Indiana to First Franklin Financial Corporation (hereinafter Franklin Financial), then from Franklin Financial in blank.

The plaintiff also failed to establish that the note was physically delivered to it prior to the commencement of this action. The vice president of the plaintiff's servicing agent and the plaintiff's counsel both affirmed that the original note is in the possession of the plaintiff's counsel. However, the affidavits did not state any factual details concerning when the plaintiff received physical possession of the note and, thus, failed to establish that the plaintiff had physical possession of the note prior to commencing this action ( see Aurora Loan Servs., LLC v. Weisblum, 85 A.D.3d at 108, 923 N.Y.S.2d 609; U.S. Bank, N.A. v. Collymore, 68 A.D.3d at 754, 890 N.Y.S.2d 578). Finally, the Certificates of Resolution and Incumbency submitted to establish the authority of one Eileen Gonzales to execute a September 14, 2007, assignment of mortgage from Franklin Financial to the plaintiff were executed after the subject assignment and, thus, cannot establish that she had such authority at the time the mortgage assignment was made. These inconsistencies raise an issue of fact as to the plaintiff's standing to commence this action. Thus, the Supreme Court should have denied those branches of the plaintiff's motion which were to strike the answer, for summary judgment on the complaint, and for an order of reference; the cross motion was properly denied ( see U.S. Bank N.A. v. Madero, 80 A.D.3d 751, 753, 915 N.Y.S.2d 612).

Deutsche Bank Nat'l Trust Co. v. Barnett