Deutsche Bank Natl. Trust Co. v Campbell
Annotate this CaseDecided on December 16, 2008
Supreme Court, Kings County
Deutsche Bank National Trust Company, AS TRUSTEE FOR FIRST FRANKLIN MORTGAGE LOAN TRUST 2006-FF 11, 3476 Stateview Boulevard Fort Mill, SC 29715, Plaintiff,
against
Rolando Campbell, et al., Defendants.
31764/07
Plaintiff:
Tracy M Fourtner, Esq.
Steven Baum PC
Buffalo NY
Arthur M. Schack, J.
Plaintiff's motion for summary judgment and an order of reference for the
premises located at 780 New Jersey Avenue, Brooklyn, New York (Block 4299, Lot
43, County of Kings) is denied without prejudice, with leave to renew upon providing the Court
with: a copy of a valid assignment of the instant mortgage to plaintiff DEUTSCHE BANK NATIONAL TRUST COMPANY, AS
TRUSTEE FOR FIRST FRANKLIN MORTGAGE LOAN TRUST 2006-FF11 (DEUTSCHE
BANK); a satisfactory explanation of the conflict of
interest by plaintiff's counsel, Steven J. Baum, P.C., with respect to the August 20, 2007
assignment of the instant mortgage and note from MORTGAGE ELECTRONIC
REGISTRATION SYSTEMS, [*2]INC. (MERS), as nominee for
FIRST FRANKLIN, A DIVISION OF NATIONAL CITY BANK OF IN (FIRST FRANKLIN),
by Darleen Karaszewski, Esq., the assignor, an attorney employed by Steven J. Baum, P.C.,
plaintiff's counsel, and the simultaneous representation by Steven J. Baum, P.C., of assignee
plaintiff DEUTSCHE BANK; and, an affidavit by an officer of the FIRST FRANKLIN
MORTGAGE LOAN TRUST 2006-FF11, explaining why plaintiff DEUTSCHE BANK
purchased the instant nonperforming loan.
Background
Defendant ROLANDO
CAMPBELL borrowed $420,000.00 from FIRST
FRANKLIN on May 1, 2006. The note and mortgage were recorded in the Office of
the City Register, New York City Department of Finance on June 2, 2006, at City Register File
Number (CRFN) 2006000308921. MERS, the nominee of FIRST FRANKLIN for the purpose of
recording the mortgage, purportedly assigned the mortgage and note to plaintiff DEUTSCHE
BANK on August 20, 2007, effective August 10, 2007, with the assignment recorded on
September 11, 2007, at CRFN 2007000467191. The assignment was executed by "Darleen
Karaszewski, Esq. On [sic] behalf of MERS, by Corporate Resolution dated 7/19/07." Neither a
corporate resolution nor a power of attorney to Ms. Karaszewski were recorded with the
assignment. Thus, the assignment is invalid and plaintiff DEUTSCHE BANK lacks standing to
bring the instant foreclosure action.
Further, the assignor, Ms. Karaszewski, according to the Office of Court Administration's
Attorney Registration, has as her business address, "Steven Baum, P.C.,
220 Northpointe Parkway, Suite G, Amherst, NY 14228-1894." Two days after Ms.
Karaszweski executed the invalid MERS assignment, August 22, 2007, plaintiff's counsel,
Steven J. Baum, P.C., commenced the instant action on behalf of purported assignee
DEUTSCHE BANK, with the filing of a notice of pendency, and the summons and complaint in
the Kings County Clerk's Office. The Court is concerned that the simultaneous representation by
Steven J. Baum, P.C. of both MERS and DEUTSCHE BANK is a conflict of interest in violation
of 22 NYCRR § 1200.24, the Disciplinary Rule of the Code of Professional Responsibility,
entitled "Conflict of Interest; Simultaneous Representation."
The instant foreclosure application states that defendant CAMPBELL defaulted on his mortgage payments by failing to make his April 1, 2007 and subsequent monthly loan payments. Yet, on August 20, 2007, 142 days subsequent to defendant CAMPBELL's alleged May 1, 2007 payment default, plaintiff DEUTSCHE BANK was willing to take an assignment of the instant nonperforming loan from MERS, as nominee for FIRST FRANKLIN. Thus, the Court requires, upon renewal of this motion for summary judgment and an order of reference, a satisfactory explanation from an officer of the FIRST FRANKLIN MORTGAGE LOAN TRUST 2006-FF11 as to why DEUTSCHE BANK purchased a nonperforming mortgage loan from MERS, as nominee for FIRST FRANKLIN.
Discussion
The proponent of a summary judgment
motion must make a prima facie showing
of entitlement to judgment as a matter of law, tendering sufficient evidence to
eliminate any material issues of fact from the case. (Alvarez v Prospect Hospital, 68
NY2d 320, 324 [1986]; Zuckerman v City of New York, 49 NY2d 557, 562 [1980];
Sillman v Twentieth Century-Fox Film Corp., 3 NY2d 395, 404 [1957]). Failure to make
such a showing requires denial of the [*3]motion, regardless of
the sufficiency of the opposing papers. (Matter of Redemption Church of Christ v
Williams, 84 AD2d 648, 649 [3d Dept 1981]; Greenberg v Manlon Realty, 43 AD2d
968, 969 [2d Dept 1974]; Winegrad v New York University Medical Center, 64 NY2d
851 [1985]).
CPLR 3212 (b) requires that for a court to grant summary judgment the court must
determine if the movant's papers justify holding as a matter of law "that there is no
defense to the cause of action or that the cause of action or defense has no merit." The evidence
submitted in support of the movant must be viewed in the light most favorable to the
non-movant. (Marine Midland Bank, N.A. v Dino & Artie's Automatic Transmission
Co., 168 AD2d 610 [2d Dept 1990]). Once the movant has established his or her prima
facie case, the party opposing a motion for summary judgment bears the burden of
"produc[ing] evidentiary proof in admissible form sufficient to require a trial of material
questions of fact . . . mere conclusions, expressions of hope or unsubstantiated allegations or
assertions are insufficient" (Zuckerman v City of New York, supra at 562; see
also Romano v St. Vincent's Medical Center of Richmond, 178 AD2d 467, 470 [2d Dept
1991]; Tessier v New York City Health & Hospitals Corp., 177 AD2d 626 [2d Dept
1991]). Summary judgment shall be granted only when there are no issues of material fact and
the evidence requires the court to direct judgment in favor of the movant as a matter of law.
(Friends of Animals, Inc., v Associated Fur Mfrs., 46 NY2d 1065 [1979]).
Plaintiff, in the instant action, moved for summary judgment and an order of reference on July 9, 2008. Defendant CAMPBELL appeared pro se, with opposition papers, in the Foreclosure Motion Part on August 7, 2008. The motion was adjourned to October 3, 2008 for oral argument before me. On October 3, 2008 the matter was adjourned to December 12, 2008.
Plaintiff appeared on December 12, 2008 for oral argument, but defendant CAMPBELL defaulted. However, the Court is required to review, as noted above, the motion papers to determine if plaintiff made a prima facie showing of entitlement to judgment as a matter of law, tendering sufficient evidence to eliminate any material issues of fact from the case. (Alvarez v Prospect Hospital, supra; Zuckerman v City of New York, supra; Sillman v Twentieth Century-Fox Film Corp., supra). The Court's review of plaintiff's moving papers demonstrates that plaintiff DEUTSCHE BANK fails to make such a showing. Therefore, the Court denies the instant motion.
Plaintiff DEUTSCHE BANK must have "standing" to bring this action. The Court of Appeals (Saratoga County Chamber of Commerce, Inc. v Pataki, 100 NY2d, 901, 812 [2003]), cert denied 540 US 1017 [2003]) held that "[s]tanding to sue is critical to the proper functioning of the judicial system. It is a threshold issue. If standing is denied, the pathway to the courthouse is blocked. The plaintiff who has standing, however, may cross the threshold and seek judicial redress." In Carper v Nussbaum, 36 AD3d 176, 181 (2d Dept 2006), the Court held that "[s]tanding to sue requires an interest in the claim at issue in the lawsuit that the law will recognize as a sufficient predicate for determining the issue at the litigant's request." If a plaintiff lacks standing to sue, the plaintiff may not proceed in the action. (Stark v Goldberg, 297 AD2d 203 [1d Dept 2002]). "Since standing is jurisdictional and goes to a court's authority to resolve litigation [the court] can raise this matter sua sponte." (Axelrod v New York State Teachers' Retirement System, 154 AD2D 827, 828 [3d Dept 1989]).
In the instant action, the August 20, 2007 assignment from MERS to DEUTSCHE BANK [*4]is defective. Therefore, DEUTSCHE BANK has no standing to bring this action. The recorded assignment by "Darleen Karaszewski, Esq. On [sic] behalf of MERS, by Corporate Resolution dated 7/19/07," has neither the corporate resolution nor a power of attorney attached and recorded. Real Property Law (RPL) § 254 (9) states:
Power of attorney to assignee. The word "assign" or other words of
assignment, when contained in an assignment of a mortgage and bond
or mortgage and note, must be construed as having included in their
meaning that the assignor does thereby make, constitute and appoint
the assignee the true and lawful attorney, irrevocable, of the assignor,
in the name of the assignor, or otherwise, but at the proper costs and
charges of the assignee, to have, use and take all lawful ways and means
for the recovery of the money and interest secured by the said mortgage
and bond or mortgage and note, and in case of payment to discharge
the same as fully as the assignor might or could do if the assignment
were not made. [Emphasis added]
To have a proper assignment of a mortgage by an authorized agent, a power of attorney is necessary to demonstrate how the agent is vested with the authority to assign the mortgage. "No special form or language is necessary to effect an assignment as long as the language shows the intention of the owner of a right to transfer it [Emphasis added]." (Tawil v Finkelstein Bruckman Wohl Most & Rothman, 223 AD2d 52, 55 [1d Dept 1996]; see Suraleb, Inc. v International Trade Club, Inc., 13 AD3d 612 [2d Dept 2004]).
To foreclose on a mortgage, a party must have title to the mortgage. The instant assignment is a nullity. The Appellate Division, Second Department (Kluge v Fugazy, 145 AD2d 537, 538 [2d Dept 1988]), held that a "foreclosure of a mortgage may not be brought by one who has no title to it and absent transfer of the debt, the assignment of the mortgage is a nullity." The Appellate Division, First Department, citing Kluge v Fugazy, (Katz v East-Ville Realty Co., 249 AD2d 243 [1st Dept 1998]), instructed that "[p]laintiff's attempt to foreclose upon a mortgage in which he had no legal or equitable interest was without foundation in law or fact."
It is clear that plaintiff DEUTSCHE BANK, with the invalid assignment of the instant mortgage and note from MERS, lacks standing to foreclose on the instant mortgage. The Court, in Campaign v Barba (23 AD3d 327 [2d Dept 2005]), held that "[t]o establish a prima facie case in an action to foreclose a mortgage, the plaintiff must establish the existence of the mortgage and the mortgage note, ownership of the mortgage, and the defendant's default in payment [Emphasis added]." (See Household Finance Realty Corp. of New York v Wynn, 19 AD3d 545 [2d Dept 2005]; Sears Mortgage Corp. v Yahhobi, 19 AD3d 402 [2d Dept 2005]; Ocwen Federal Bank FSB v Miller, 18 AD3d 527 [2d Dept 2005]; U.S. Bank Trust Nat. Ass'n v Butti, 16 AD3d 408 [2d Dept 2005]; First Union Mortgage Corp. v Fern, 298 AD2d 490 [2d Dept 2002]; Village Bank v Wild Oaks Holding, Inc., 196 AD2d 812 [2d Dept 1993]).
Even if plaintiff can cure the assignment defect, plaintiff's counsel then has to address the conflict of interest in the representation of both the assignor of the instant mortgage, MERS, and the assignee of the instant mortgage, DEUTSCHE BANK. 22 NYCRR § 1200.24, of the Disciplinary Rules of the Code of Professional Responsibility, entitled "Conflict of Interest; Simultaneous Representation," states in relevant part: [*5]
(a) A lawyer shall decline proffered employment if the exercise of independent professional judgment in behalf of a client will be or is
likely to be adversely affected by the acceptance of the proffered
employment, or if it would be likely to involve the lawyer in representing
differing interests, except to the extent permitted under subdivision (c)
of this section. (b) A lawyer shall not continue multiple employment if the
exercise of independent professional judgment in behalf of a client
will be or is likely to be adversely affected by the lawyer's representation
of another client, or if it would be likely to involve the lawyer in
representing differing interests, except to the extent permitted under
subdivision (c) of this section.(c) in the situations covered by subdivisions (a) and (b) of this
section, a lawyer may represent multiple clients if a disinterested lawyer
would believe that the lawyer can competently represent the interest
of each and if each consents to the representation after full disclosure
of the implications of the simultaneous representation and the
advantages and risks involved. [Emphasis added]
The Court needs to know if both MERS and DEUTSCHE BANK were aware
of
the simultaneous representation by plaintiff's counsel, Steven J.
Baum, P.C., and whether both consented. If plaintiff moves to renew its motion for summary
judgment and an order of reference, the Court needs an affirmation by Steven J. Baum, Esq., the
principal of Steven J. Baum, P.C., explaining if both MERS and DEUTSCHE BANK consented
to simultaneous representation in the instant action with "full disclosure of the implications of the
simultaneous representation and the advantages and risks involved." The Appellate Division,
Fourth Department, the Department in which both Ms. Karaszewski and Mr. Baum are
registered, (In re Rogoff, 31 AD3d 111 [2006]) censured an attorney, for inter
alia, violating 22 NYCRR § 1200.24, by representing both a buyer and sellers in the
sale of a motel. The Court, at 112, found that the attorney, "failed to make appropriate
disclosures to either the sellers or the buyer concerning dual representation." Further, the Court,
at 113, censured the attorney, after it considered the matters submitted by respondent in
mitigation, including:
that respondent undertook the dual representation at the insistence of
the buyer, had no financial interest in the transaction and charged the
sellers and the buyer one half of his usual fee. Additionally, we note
that respondent cooperated with the Grievance Committee and has
expressed remorse for his misconduct.
[*6]
Next, if a power of attorney is used for an agent to act as MERS' assignor of
the
instant mortgage and loan to DEUTSCHE BANK, the power of
attorney presented to the Court must be an original or a copy certified by an attorney, pursuant to
CPLR § 2105. CPLR § 2105 states that "an attorney admitted to practice in the court
of the state may certify that it has been compared by him with the original and found to be a true
and complete copy." (See Security Pacific Nat. Trust Co. v Cuevas, 176 Misc 2d 846
[Civ Ct, Kings County 1998]).
Last, the Court requires a satisfactory explanation from an officer of the FIRST FRANKLIN
MORTGAGE LOAN TRUST 2006-FF 11 as to why in the middle of our national subprime
mortgage financial crisis, plaintiff DEUTSCHE BANK purchased from MERS, as nominee of
FIRST FRANKLIN, the instant nonperforming loan. The Court wonders if DEUTSCHE BANK
violated a corporate fiduciary duty to the noteholders of the FIRST FRANKLIN MORTGAGE
LOAN TRUST 2006-FF11with the purchase of a loan that defaulted 142 days prior to its
assignment from MERS to FIRST FRANKLIN MORTGAGE LOAN TRUST 2006-FF11, rather
than keep the mortgage loan on FIRST FRANKLIN's books. The Court is not sure that the
noteholders of the FIRST FRANKLIN MORTGAGE LOAN TRUST 2006-FF11 are aware that
DEUTSCHE BANK purchased the instant "toxic" nonperforming mortgage loan for the Trust. It
could well be that MERS, as nominee for FIRST FRANKLIN, with the acquiescence of
DEUTSCHE BANK, transferred the instant nonperforming loan, as well as others, to the FIRST
FRANKLIN MORTGAGE LOAN TRUST 2006-FF11, as part of what former Federal Reserve
Board Chairman Alan Greenspan referred to in his October 23, 2008 testimony, before the House
Oversight Committee, as "a once in a century credit tsunami."
Conclusion
Accordingly, it is
ORDERED that the motion of plaintiff DEUTSCHE BANK NATIONAL TRUST COMPANY, AS TRUSTEE FOR FIRST FRANKLIN MORTGAGE LOAN TRUST 2006-FF11, for summary judgment and an order of reference for the premises located at 780 New Jersey Avenue, Brooklyn, New York (Block 4299, Lot 43, County of Kings) is denied without prejudice, and it is further
ORDERED that leave is granted to plaintiff DEUTSCHE BANK NATIONAL TRUST
COMPANY, AS TRUSTEE FOR FIRST FRANKLIN MORTGAGE LOAN TRUST
2006-FF11, to renew its motion for summary judgment and an order of reference for the premises
located at 780 New Jersey Avenue, Brooklyn, New York (Block 4299, Lot 43, County of Kings),
upon presentation to the Court, within sixty (60) days of this decision and order of: (1) a valid
assignment of the instant mortgage and note to plaintiff,
DEUTSCHE BANK NATIONAL TRUST COMPANY, AS TRUSTEE FOR FIRST
FRANKLIN MORTGAGE LOAN TRUST 2006-FF11; (2) an affirmation from Steven J. Baum,
Esq., the principal of Steven J. Baum, P.C., explaining if both MORTGAGE ELECTRONIC
REGISTRATION SYSTEMS, INC., the assignor of the instant mortgage and note, and
DEUTSCHE BANK NATIONAL TRUST COMPANY, AS TRUSTEE FOR FIRST
FRANKLIN MORTGAGE LOAN TRUST 2006-FF11, the assignee of the instant mortgage and
note, pursuant to 22 NYCRR § 1200.24, consented to simultaneous representation in the
instant action, with "full disclosure of the implications of the simultaneous representation and the
[*7]advantages and risks involved" explained to them; and, (3) an
affidavit from an officer of the FIRST FRANKLIN MORTGAGE LOAN TRUST 2006-FF11,
explaining why plaintiff DEUTSCHE BANK NATIONAL TRUST COMPANY, AS TRUSTEE
FOR FIRST FRANKLIN MORTGAGE LOAN TRUST 2006-FF11 purchased a nonperforming
loan from MORTGAGE ELECTRONIC REGISTRATION SYSTEMS, INC., as nominee for
FIRST FRANKLIN, A DIVISION OF NATIONAL CITY BANK OF IN.
This constitutes the Decision and Order of the Court.
ENTER
___________________________
HON. ARTHUR M. SCHACK
J. S. C.
Some case metadata and case summaries were written with the help of AI, which can produce inaccuracies. You should read the full case before relying on it for legal research purposes.
This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.