U.S. Bank, Nat'l Ass'n v. Sharif

MARK C. DILLON

Steven Alexander Biolsi, Forest Hills, N.Y., for appellant. Shapiro, DiCarlo & Barak, LLC, Rochester, N.Y. (Ellis M. Oster of counsel), for respondent.

In an action to foreclose a mortgage, the defendant Mohamed Y. Sharif appeals, as limited by his brief, from so much of an order of the Supreme Court, Nassau County (Adams, J.), entered August 20, 2010, as granted those branches of the plaintiff's motion which were for summary judgment on the complaint insofar as asserted against him and for an order of reference, and denied those branches of his cross motion, made jointly with the defendant Nazimah Sharif, which were for leave to serve and file an amended answer to assert a defense based on lack of standing and, thereupon, to dismiss the complaint insofar as asserted against him based on lack of standing.

ORDERED that the order is reversed insofar as appealed from, on the law, on the facts, and in the exercise of discretion, with costs, those branches of the plaintiff's motion which were for summary judgment on the complaint insofar as asserted against the defendant Mohamed Y. Sharif and for an order of reference are denied, and those branches of the cross motion of the defendant Mohamed Y. Sharif, made jointly with the defendant Nazimah Sharif, which were for leave to serve and file an amended answer, and thereupon, to dismiss the complaint insofar as asserted against the defendant Mohamed Y. Sharif based on lack of standing are granted.

“ ‘Entitlement to a judgment of foreclosure may be established, as a matter of law, where a mortgagee produces both the mortgage and unpaid note, together with evidence of the mortgagor's default, thereby shifting the burden to the mortgagor to demonstrate, through both competent and admissible evidence, any defense which could raise a question of fact’ ” ( Zanfini v. Chandler, 79 A.D.3d 1031, 1031–1032, 912 N.Y.S.2d 911, quoting HSBC Bank USA v. Merrill, 37 A.D.3d 899, 900, 830 N.Y.S.2d 598; see Household Fin. Realty Corp. of N.Y. v. Winn, 19 A.D.3d 545, 546, 796 N.Y.S.2d 533; Sears Mtge. Corp. v. Yaghobi, 19 A.D.3d 402, 403, 796 N.Y.S.2d 392; Ocwen Fed. Bank FSB v. Miller, 18 A.D.3d 527, 527, 794 N.Y.S.2d 650). However, “foreclosure of a mortgage may not be brought by one who has no title to it” ( Kluge v. Fugazy, 145 A.D.2d 537, 538, 536 N.Y.S.2d 92). Where standing is raised as a defense by the defendant, the plaintiff is required to prove its standing before it may be determined whether the plaintiff is entitled to relief ( see U.S. Bank, N.A. v. Collymore, 68 A.D.3d 752, 753, 890 N.Y.S.2d 578; Wells Fargo Bank Minn., N.A. v. Mastropaolo, 42 A.D.3d 239, 242, 837 N.Y.S.2d 247).

Here, the defendant Mohamed Y. Sharif (hereinafter Sharif) initially did not raise a defense based on lack of standing in his answer or in a pre-answer motion to dismiss. “[A]n argument that a plaintiff lacks standing, if not asserted in the defendant's answer or in a pre-answer motion to dismiss the complaint, is waived pursuant to CPLR 3211(e)” ( Wells Fargo Bank Minn., N.A. v. Mastropaolo, 42 A.D.3d at 242, 837 N.Y.S.2d 247; see JP Morgan Chase Bank, N.A. v. Strands Hair Studio, LLC, 84 A.D.3d 1173, 1173, 923 N.Y.S.2d 670). However, defenses waived under CPLR 3211(e) can nevertheless be interposed in an answer amended by leave of court pursuant to CPLR 3025(b) so long as the amendment does not cause the other party prejudice or surprise resulting directly from the delay ( Complete Mgt., Inc. v. Rubenstein, 74 A.D.3d 722, 723, 903 N.Y.S.2d 439; see Nunez v. Mousouras, 21 A.D.3d 355, 356, 800 N.Y.S.2d 185; Aurora Loan Servs., LLC v. Thomas, 70 A.D.3d 986, 987, 897 N.Y.S.2d 140).

After the plaintiff moved for summary judgment, Sharif, with the defendant Nazimah Sharif, cross-moved, inter alia, for leave to serve and file an amended answer to assert a defense based on the plaintiff's lack of standing, and, upon the assertion of that defense, to dismiss the complaint insofar as asserted against them. “Motions for leave to amend pleadings should be freely granted, absent prejudice or surprise directly resulting from the delay in seeking leave, unless the proposed amendment is palpably insufficient or patently devoid of merit” ( Aurora Loan Servs., LLC v. Thomas, 70 A.D.3d at 987, 897 N.Y.S.2d 140; see CPLR 3025[b]; Lucido v. Mancuso, 49 A.D.3d 220, 222, 851 N.Y.S.2d 238). “ ‘Mere lateness is not a barrier to the amendment. It must be lateness coupled with significant prejudice to the other side, the very elements of the laches doctrine’ ” ( Public Adm'r of Kings County v. Hossain Constr. Corp., 27 A.D.3d 714, 716, 815 N.Y.S.2d 621, quoting Edenwald Contr. Co. v. City of New York, 60 N.Y.2d 957, 959, 471 N.Y.S.2d 55, 459 N.E.2d 164; see Abrahamian v. Tak Chan, 33 A.D.3d 947, 949, 824 N.Y.S.2d 117).

The Supreme Court improvidently exercised its discretion in denying that branch of Sharif's cross motion which was for leave to serve and file an amended answer to assert a defense based on lack of standing. In opposition to that branch of the cross motion, the plaintiff failed to demonstrate the existence of any prejudice or surprise that would result from the amendment , or that the proposed amended answer was palpably insufficient or patently devoid of merit ( see Aurora Loan Servs., LLC v. Thomas, 70 A.D.3d at 987, 897 N.Y.S.2d 140).

Upon Sharif's assertion of the defense of lack of standing, the plaintiff was required to demonstrate its standing to prosecute this action ( see U.S. Bank, N.A. v. Collymore, 68 A.D.3d at 753, 890 N.Y.S.2d 578). In opposition to that branch of Sharif's cross motion which, upon the amendment of the answer, was to dismiss the complaint insofar as asserted against him, the plaintiff failed to make any showing that it had standing to maintain this action. The plaintiff did submit an assignment of the mortgage. However, “[w]here a mortgage is represented by a bond or other instrument, an assignment of the mortgage without assignment of the underlying note or bond is a nullity” ( U.S. Bank, N.A. v. Collymore, 68 A.D.3d at 754, 890 N.Y.S.2d 578; see Merritt v. Bartholick, 36 N.Y. 44, 45; Kluge v. Fugazy, 145 A.D.2d at 538, 536 N.Y.S.2d 92). “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, and the mortgage passes with the debt as an inseparable incident” ( U.S. Bank, N.A. v. Collymore, 68 A.D.3d at 754, 890 N.Y.S.2d 578). In opposing the cross motion, the plaintiff did not submit a written assignment of the note. Moreover, the plaintiff submitted no evidence to establish physical delivery of the note. Accordingly, in the absence of any evidence to demonstrate the existence of a written assignment of the note or physical delivery of the note, the Supreme Court should have granted that branch of Sharif's cross motion which, upon the amendment of the answer, was to dismiss the complaint insofar as asserted against him for lack of standing ( see CPLR 3211[a][3]; 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, 109, 923 N.Y.S.2d 609; U.S. Bank, N.A. v. Collymore, 68 A.D.3d at 753–754, 890 N.Y.S.2d 578).