BAC Home Loans Servicing, LP v. Rychik

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Equivalent Citations

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Docket Number

2015–01703

Attorney(S)

Michael M. Cohen, Brooklyn, NY, for appellants. Frenkel Lambert Weiss Weisman & Gordon, LLP (Bryan Cave LLP, New York, N.Y. [Suzanne M. Berger and Megan A. Pierson ], of counsel), for respondent.

Judges

Joseph J. Maltese
Jeffrey A. Cohen
John M. Leventhal

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Smart Summary

Factual and Procedural Background

In February 2008, defendants Nili Rychik and Shmuel Rychik executed a note for $864,000 in favor of Countrywide Bank, secured by a mortgage on their Brooklyn residential property. In February 2010, Mortgage Electronic Registration Systems, Inc., as nominee for Countrywide, assigned the mortgage to plaintiff BAC Home Loans Servicing, LP. In May 2010, the plaintiff initiated a mortgage foreclosure action against the defendants. The defendants answered, asserting lack of standing as an affirmative defense. The plaintiff moved for summary judgment and an order of reference. The defendants cross-moved pursuant to CPLR 3211(a)(3) to dismiss the complaint for lack of standing. The Supreme Court, Kings County, denied the defendants' cross motion. The defendants appeal only the denial of their motion to dismiss for lack of standing.

Legal Issues Presented

Whether the defendants established, prima facie, that the plaintiff lacked standing to commence the mortgage foreclosure action against them.
Whether the plaintiff was the holder or assignee of the underlying note at the time the foreclosure action was commenced.

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
DLJ Mtge. Capital, Inc. v. Pittman, 150 A.D.3d 818, 56 N.Y.S.3d 120	Defendant bears burden on motion to dismiss for plaintiff's lack of standing.	Confirmed that defendants had the burden to establish prima facie lack of standing.
New York Community Bank v. McClendon, 138 A.D.3d 805, 29 N.Y.S.3d 507	Standard for standing in mortgage foreclosure actions.	Supported the principle that plaintiff must be holder or assignee of note to have standing.
Bank of N.Y. Mellon v. Green, 132 A.D.3d 706, 17 N.Y.S.3d 651	Standing requires holding or assignment of the note at commencement.	Applied to determine that questions of fact remained regarding plaintiff's standing.
Aurora Loan Servs., LLC v. Taylor, 25 N.Y.3d 355	Standing in foreclosure requires holder or assignee of the note at commencement.	Reinforced the legal standard for standing applied by the court.
U.S. Bank, N.A. v. Noble, 144 A.D.3d 786, 41 N.Y.S.3d 76	Standing based on holder or assignee status.	Supported the court's application of standing principles.
U.S. Bank, N.A. v. Collymore, 68 A.D.3d 752, 890 N.Y.S.2d 578	Assignment or physical delivery of note transfers standing.	Used to explain transfer of obligation and mortgage as inseparable incident.
Deutsche Bank Trust Co. Ams. v. Garrison, 147 A.D.3d 725, 46 N.Y.S.3d 185	Written assignment or physical delivery of note sufficient for standing.	Applied to confirm that mortgage passes with debt upon assignment.
U.S. Bank N.A. v. Saravanan, 146 A.D.3d 1010, 45 N.Y.S.3d 547	Assignment principles for standing in foreclosure.	Supported the court's reasoning on standing.
Deutsche Bank Natl. Trust Co. v. Logan, 146 A.D.3d 861, 45 N.Y.S.3d 189	Mortgage passes with the underlying debt after assignment.	Reinforced the inseparability of mortgage and note.
Citicorp Mtge. v. Adams, 153 A.D.3d 779, 60 N.Y.S.3d 337	Failure to eliminate questions of fact defeats motion to dismiss for lack of standing.	Applied to find defendants failed to establish lack of standing.
LGF Holdings, LLC v. Skydel, 139 A.D.3d 814, 32 N.Y.S.3d 243	Standing requires factual elimination of doubt regarding holder or assignee status.	Supported denial of defendants' motion to dismiss.

Court's Reasoning and Analysis

The court analyzed the defendants' motion to dismiss under CPLR 3211(a)(3), which challenges the plaintiff’s standing. The burden rested on the defendants to establish prima facie that the plaintiff lacked standing. The court explained that standing in a mortgage foreclosure action requires the plaintiff to be the holder or assignee of the underlying note at the time the action was commenced. This standing is established either through a written assignment of the note or physical delivery of the note before commencement, as the mortgage passes with the debt as an inseparable incident.

The defendants failed to eliminate material questions of fact regarding the plaintiff’s standing as holder or assignee on the date the action was commenced. Because the defendants did not meet their burden to show lack of standing, the court agreed with the Supreme Court's denial of the motion to dismiss for lack of standing.

Holding and Implications

The court affirmed the Supreme Court’s order denying the defendants’ motion to dismiss the complaint for lack of standing.

The direct effect is that the plaintiff may proceed with the mortgage foreclosure action against the defendants. No new legal precedent was established; the court applied well-established principles regarding standing in foreclosure actions.

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BAC HOME LOANS SERVICING, LP, etc., respondent, v. Nili RYCHIK, et al., appellants, et al., defendants.

Michael M. Cohen, Brooklyn, NY, for appellants.

Frenkel Lambert Weiss Weisman & Gordon, LLP (Bryan Cave LLP, New York, N.Y. [Suzanne M. Berger and Megan A. Pierson ], of counsel), for respondent.

JOHN M. LEVENTHAL, J.P., JEFFREY A. COHEN, JOSEPH J. MALTESE, BETSY BARROS, JJ.

DECISION & ORDER

In an action to foreclose a mortgage, the defendants Nili Rychik and Shmuel Rychik appeal from an order of the Supreme Court, Kings County (Peter P. Sweeney, J.), dated October 20, 2014. The order, insofar as appealed from, denied that branch of the cross motion of those defendants which was pursuant to CPLR 3211(a)(3) to dismiss the complaint insofar as asserted against them for lack of standing.

ORDERED that the order is affirmed insofar as appealed from, with costs.

In February 2008, Nili Rychik and Shmuel Rychik (hereinafter together the defendants) executed a note in the sum of $864,000 in favor of Countrywide Bank, FSB (hereinafter Countrywide). The note was secured by a mortgage on residential property located in Brooklyn. In February 2010, Mortgage Electronic Registration Systems, Inc., as nominee for Countrywide, assigned the mortgage to the plaintiff, BAC Home Loans Servicing, LP, formerly known as Countrywide Home Loans Servicing, LP. In May 2010, the plaintiff commenced this action against the defendants, among others, to foreclose the mortgage. The defendants served an answer in which they asserted the affirmative defense of lack of standing. Thereafter, the plaintiff moved, inter alia, for summary judgment on the complaint and for an order of reference. The defendants cross-moved, inter alia, pursuant to CPLR 3211(a)(3) to dismiss the complaint insofar as asserted against them on the ground that the plaintiff lacked standing. In an order dated October 20, 2014, the Supreme Court denied the motion and the cross motion. The defendants appeal, as limited by their brief, from so much of the order as denied that branch of their cross motion which was pursuant to CPLR 3211(a)(3) to dismiss the complaint insofar as asserted against them for lack of standing.

On a defendant's motion to dismiss the complaint based upon the plaintiff's alleged lack of standing, the burden is on the moving defendant to establish, prima facie, the plaintiff's lack of standing (see DLJ Mtge. Capital, Inc. v. Pittman, 150 A.D.3d 818, 820, 56 N.Y.S.3d 120 ; New York Community Bank v. McClendon, 138 A.D.3d 805, 806, 29 N.Y.S.3d 507 ; Bank of N.Y. Mellon v. Green, 132 A.D.3d 706, 707, 17 N.Y.S.3d 651 ). A plaintiff has standing to maintain a mortgage foreclosure action where, at the time the action was commenced, it was either the holder or assignee of the underlying note (see Aurora Loan Servs., LLC v. Taylor, 25 N.Y.3d 355, 361–362, 12 N.Y.S.3d 612, 34 N.E.3d 363 ; U.S. Bank, N.A. v. Noble, 144 A.D.3d 786, 787, 41 N.Y.S.3d 76 ; U.S. Bank, N.A. v. Collymore, 68 A.D.3d 752, 753–754, 890 N.Y.S.2d 578 ). 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 (see Deutsche Bank Trust Co. Ams. v. Garrison, 147 A.D.3d 725, 726, 46 N.Y.S.3d 185 ; U.S. Bank N.A. v. Saravanan, 146 A.D.3d 1010, 1011, 45 N.Y.S.3d 547 ; Deutsche Bank Natl. Trust Co. v. Logan, 146 A.D.3d 861, 862, 45 N.Y.S.3d 189 ).

Here, the defendants failed to establish, prima facie, the plaintiff's lack of standing, as they failed to eliminate questionsof fact regarding the plaintiff's standing as the holder or assignee of the note on the date of commencement of the action (see Citicorp Mtge. v. Adams, 153 A.D.3d 779, 780, 60 N.Y.S.3d 337 ; LGF Holdings, LLC v. Skydel, 139 A.D.3d 814, 815, 32 N.Y.S.3d 243 ; Bank of N.Y. Mellon v. Green, 132 A.D.3d at 707, 17 N.Y.S.3d 651 ). The defendants' remaining contention is without merit. Accordingly, we agree with the Supreme Court's denial of that branch of the defendants' cross motion which was pursuant to CPLR 3211(a)(3) to dismiss the complaint insofar as asserted against them for lack of standing.

LEVENTHAL, J.P., COHEN, MALTESE and BARROS, JJ., concur.