Washington Mut. Bank v. Valencia

Citation Codes

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Docket Number

Attorney(S)

Stephen A. Katz, New York, N.Y., for appellants. Rosicki, Rosicki & Associates, P.C., Plainview, N.Y. (Andrew Morganstern of counsel), for respondent.

Judges

William F. Mastro

Acts

Commerce And Trade — Consumer Credit Protection — Consumer Credit Cost Disclosure — General Provisions — Congressional Findings And Declaration Of Purpose
Commerce And Trade — Consumer Credit Protection — Consumer Credit Cost Disclosure — Credit Transactions — Right Of Rescission As To Certain Transactions

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Smart Summary

Factual and Procedural Background

This case arises from an action to foreclose a mortgage initiated by Washington Mutual Bank against defendants Edith Valencia and Ricaurte Valencia. The Supreme Court, Queens County, granted the plaintiff's motion for summary judgment on the complaint due to Edith Valencia's default in appearing or answering. Edith Valencia appealed from the order, as did Ricaurte Valencia.

Legal Issues Presented

Whether the defendant Edith Valencia may appeal from an order entered upon her default.
Whether the plaintiff established its prima facie entitlement to summary judgment in the mortgage foreclosure action.
Whether the defendant Ricaurte Valencia raised a triable issue of fact regarding a defense based on rescission under the Truth in Lending Act (TILA).
Whether the defendant's contention raised for the first time on appeal is properly before the court.

Arguments of the Parties

Defendant Ricaurte Valencia's Arguments

The defendant asserted a defense based on rescission of the underlying transaction pursuant to the Truth in Lending Act (TILA).
The defendant claimed authorization to rescind under TILA, arguing that the transaction was rescinded.

Plaintiff's Arguments

The plaintiff established its case for summary judgment through production of the mortgage, unpaid note, and evidence of default.
The plaintiff contended that the defendant was not authorized to rescind under TILA because he was not an obligor on the note.
The plaintiff argued that the defendant failed to show that the property was used as a principal dwelling, a requirement for TILA rescission rights.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
Development Strategies Co., LLC, Profit Sharing Plan v. Astoria Equities, Inc., 71 A.D.3d 628	No appeal lies from an order entered on the default of the appealing party (CPLR 5511).	Dismissed Edith Valencia's appeal as no appeal lies from an order entered on her default.
Wells Fargo Bank, N.A. v. Webster, 61 A.D.3d 856	In a mortgage foreclosure, a plaintiff must produce the mortgage, unpaid note, and evidence of default to establish a prima facie case for summary judgment.	Found that the plaintiff satisfied its prima facie burden for summary judgment against Ricaurte Valencia.
Republic Natl. Bank of N.Y. v. O'Kane, 308 A.D.2d 482	Same as above, supporting the standard for summary judgment in foreclosure actions.	Supported the plaintiff's entitlement to summary judgment.
Grogg v. South Rd. Assoc., L.P., 74 A.D.3d 1021	Once the plaintiff meets its burden, the defendant must show a triable issue of fact by admissible evidence to defeat summary judgment.	Outlined the defendant's burden to establish a triable issue of fact.
Falkiner v. OneWest Bank, FSB, 780 F.Supp.2d 460	Only an obligor under TILA is authorized to rescind a transaction.	Supported the court's conclusion that the defendant was not authorized to rescind because he was not an obligor.
Moazed v. First Union Mtge. Corp., 319 F.Supp.2d 268	Clarifies the scope of TILA rescission rights and obligor status.	Reinforced that the defendant was not entitled to rescind under TILA.
Ferreira v. Mortgage Elec. Registration Sys., Inc., 794 F.Supp.2d 297	Discusses rescission rights under TILA and who qualifies as an obligor.	Referenced for comparison regarding TILA rescission authority.
Wells Fargo Bank, N.A. v. Cohen, 80 A.D.3d 753	Issues raised for the first time on appeal are not properly before the court.	Rejected defendant's contention raised for the first time on appeal.

Court's Reasoning and Analysis

The court first determined that Edith Valencia's appeal was procedurally barred because no appeal lies from an order entered upon the default of the appealing party, citing CPLR 5511 and relevant precedent. Regarding Ricaurte Valencia, the court found that the plaintiff met its prima facie burden for summary judgment by producing the mortgage, unpaid note, and evidence of default. The burden then shifted to the defendant to present admissible evidence of a triable issue of fact.

The defendant claimed a defense based on rescission under the Truth in Lending Act (TILA). The court analyzed the statutory language and relevant case law, concluding that only an obligor may rescind under TILA. Since the defendant signed the mortgage but not the note, he was not an obligor and thus lacked authority to rescind. Additionally, the defendant failed to provide evidence that the property was used as a principal dwelling, a prerequisite for TILA rescission rights. Consequently, the defendant did not meet the burden to raise a triable issue of fact on the rescission defense.

The court also noted that the defendant's remaining contention was raised for the first time on appeal and therefore was not properly before the court.

Holding and Implications

The court dismissed Edith Valencia's appeal and affirmed the order granting summary judgment to the plaintiff against Ricaurte Valencia.

The direct effect of this decision is the affirmation of the foreclosure judgment against the defendant Ricaurte Valencia and the dismissal of Edith Valencia's appeal based on procedural default. One bill of costs was awarded to the plaintiff payable by Ricaurte Valencia. The court did not establish new precedent but applied existing legal standards governing summary judgment in foreclosure actions and the scope of rescission rights under TILA.

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WASHINGTON MUTUAL BANK, etc., respondent, v. Edith VALENCIA, et al., appellants, et al., defendants.

WILLIAM F. MASTRO

Stephen A. Katz, New York, N.Y., for appellants. Rosicki, Rosicki & Associates, P.C., Plainview, N.Y. (Andrew Morganstern of counsel), for respondent.

WILLIAM F. MASTRO, A.P.J., ARIEL E. BELEN, L. PRISCILLA HALL and PLUMMER E. LOTT, JJ.

In an action, inter alia, to foreclose a mortgage, the defendants Edith Valencia and Ricaurte Valencia appeal from an order of the Supreme Court, Queens County (Markey, J.), dated August 12, 2010, which, among other things, upon the default of the defendant Edith Valencia in appearing or answering, granted the plaintiff's motion for summary judgment on the complaint. Justice Hall has been substituted for Justice Angiolillo ( see 22 NYCRR 670.1[c] ).

ORDERED that the appeal by the defendant Edith Valencia is dismissed, as no appeal lies from an order entered on the default of the appealing party ( see CPLR 5511; Development Strategies Co., LLC, Profit Sharing Plan v. Astoria Equities, Inc., 71 A.D.3d 628, 628, 896 N.Y.S.2d 396); and it is further,

ORDERED that the order is affirmed insofar as appealed from by the defendant Ricaurte Valencia; and it is further,

ORDERED that one bill of costs is awarded to the plaintiff, payable by the defendant Ricaurte Valencia.

“ ‘[I]n moving for summary judgment in an action to foreclose a mortgage, a plaintiff establishes its case as a matter of law through the production of the mortgage, the unpaid note, and evidence of default’ ” ( Wells Fargo Bank, N.A. v. Webster, 61 A.D.3d 856, 856, 877 N.Y.S.2d 200, quoting Republic Natl. Bank of N.Y. v. O'Kane, 308 A.D.2d 482, 482, 764 N.Y.S.2d 635; see Rossrock Fund II, L.P. v. Osborne, 82 A.D.3d 737, 737, 918 N.Y.S.2d 514; Aames Funding Corp. v. Houston, 44 A.D.3d 692, 693, 843 N.Y.S.2d 660, cert. denied 555 U.S. 1048, 129 S.Ct. 646, 172 L.Ed.2d 614; Village Bank v. Wild Oaks Holding, 196 A.D.2d 812, 812, 601 N.Y.S.2d 940). Here, the plaintiff satisfied its prima facie burden on that branch of its motion which was for summary judgment on the complaint insofar as asserted against the defendant Ricaurte Valencia (hereinafter the defendant). Accordingly, it was incumbent on the defendant to establish by admissible evidence the existence of a triable issue of fact as to a defense ( see Grogg v. South Rd. Assoc., L.P., 74 A.D.3d 1021, 1022, 907 N.Y.S.2d 22; see also Pennsylvania Higher Educ. Assistance Agency v. Musheyev, 68 A.D.3d 736, 736, 888 N.Y.S.2d 911; Quest Commercial, LLC v. Rovner, 35 A.D.3d 576, 576, 825 N.Y.S.2d 766; Famolaro v. Crest Offset, Inc., 24 A.D.3d 604, 605, 807 N.Y.S.2d 387; Bank of N.Y. v. Vega Tech. USA, LLC, 18 A.D.3d 678, 679, 794 N.Y.S.2d 922).

The defendant raised the defense that he was authorized to rescind the underlying transaction, and in fact did so, pursuant to the Truth in Lending Act (hereinafter TILA) ( see 15 USC § 1601, et seq.). However, under the relevant provisions of the TILA, only an “obligor” is authorized to rescind a subject transaction (15 USC § 1635[a] ). Although the defendant signed the mortgage, he did not sign the note at issue. Thus, the defendant was not an obligor within the meaning of 15 USC § 1635(a), and therefore was not authorized pursuant to the TILA to rescind the underlying transaction at issue ( see Falkiner v. OneWest Bank, FSB, 780 F.Supp.2d 460 [E.D.Va.]; Moazed v. First Union Mtge. Corp., 319 F.Supp.2d 268, 273 n. 4 [D.Conn.]; cf. Ferreira v. Mortgage Elec. Registration Sys., Inc., 794 F.Supp.2d 297 [D.Mass] ). Furthermore, the defendant did not tender any evidence tending to show that he or the defendant Edith Valencia, his wife, was using the subject property as a “principal dwelling,” and therefore, that the right of rescission set forth in 15 USC § 1635(a) was applicable to the underlying transaction. Thus, the defendant failed to establish by admissible evidence the existence of a triable issue of fact as to a defense based on the TILA right of rescission set forth in 15 USC § 1635(a).

The defendant's remaining contention is improperly raised for the first time on appeal, and, accordingly, is not properly before this Court ( see Wells Fargo Bank, N.A. v. Cohen, 80 A.D.3d 753, 755, 915 N.Y.S.2d 569).