U.S. Bank Natl. Assn. v White

[*1] U.S. Bank Natl. Assn. v White 2009 NY Slip Op 50100(U) [22 Misc 3d 1112(A)] Decided on January 23, 2009 Supreme Court, Kings County Schack, J. Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431. This opinion is uncorrected and will not be published in the printed Official Reports.

Decided on January 23, 2009
Supreme Court, Kings County

U.S. Bank National Association, AS TRUSTEE FOR STRUCTURED ASSET SECURITIES CORPORATION, SERIES 2006-GEL3, Plaintiff,

against

Joni White, BEVERLY BRITTON, MORTGAGE ELECTRONIC REGISTRATION SYSTEMS, INC. AS NOMINEE FOR PEOPLE'S CHOICE HOME LOAN, INC., et. al., Defendants.



32112/07/07



Plaintiff

Tracy M Fourtner, Esq.

Steven J. Baum, PC

Amherst NY

Defendant - MERS

Bradley Wank, Esq.

Delbello Donnellan Weingarten Wise & Wiederkehr LLP

White Plains NY

Arthur M. Schack, J.

In this mortgage foreclosure action for the premises located at 180 Jefferson Street, Brooklyn, New York (Block 3173, Lot 15, County of Kings) plaintiff U.S. BANK NATIONAL ASSOCIATION, AS TRUSTEE FOR STRUCTURED ASSET SECURITIES CORPORATION, SERIES 2006-GEL3 [U.S. BANK] moves for: summary judgment and dismissal, pursuant to CPLR Rules 3212 and 3211, of the answer of defendant MORTGAGE ELECTRONIC [*2]REGISTRATION SYSTEMS, INC.

AS NOMINEE FOR PEOPLE'S CHOICE HOME LOAN, INC. [MERS]; permission to treat MERS' answer as a limited notice of appearance; and, upon the default of all other defendants, an order of reference to compute the amount due to plaintiff. Defendant MERS cross-moves for summary judgment, pursuant to CPLR Rule 3212, for summary judgment and dismissal of plaintiffs' complaint against it as nominee for PEOPLE'S CHOICE HOME LOAN, INC. Plaintiff U.S. BANK lacks standing to bring the instant action. Therefore, the instant complaint is dismissed with prejudice. The instant notice of pendency is cancelled. Plaintiff's summary judgment motion is denied and defendant MERS' cross-motion is moot.

Background

Defendant JONI WHITE [WHITE] executed the instant mortgage and note on January 9, 2006 and borrowed $649,999.00 from BNC MORTGAGE, INC. [BNC]. MERS as nominee for BNC recorded the instant mortgage and note on February 2, 2006, in the Office of the City Register of the City of New York, City Register File Number (CRFN) 2006000064402 [exhibit E of motion]. Plaintiff commenced the instant action by filing the summons, complaint and notice of pendency with the Office of the Kings County Clerk on August 24, 2007, when the owner of the mortgage and note was MERS as nominee for BNC. MERS, as nominee for BNC, assigned the instant mortgage and note to plaintiff U.S. BANK on March 13, 2008 [exhibit F of motion], 202 days subsequent to the commencement of this action. The Court checked the records of the Automated City Register Information System (ACRIS) of the New York City Department of Finance and discovered that the assignment of the mortgage and note were recorded on April 2, 2008, in the Office of the City Register of the City of New York, City Register File Number (CRFN) 2008000130962. No proof has been presented that U.S. BANK had possession of the mortgage and note on August 24, 2007. Thus, MERS as nominee for BNC, not U.S. BANK, owned the WHITE mortgage on the day that this action commenced.

Further, the March 13, 2008 assignment was executed by "Elpiniki Bechakas, Assistant Secretary and Vice President" of MERS. The business address of Ms. Bechakas, according to her Office of Court Administration's Attorney Registration, is "Steven Baum, P.C., 220 Northpointe Parkway, Suite G, Amherst, NY 14228-1894." Steven J. Baum, P.C. is the attorney for plaintiff U.S. BANK, the assignee. The Court is concerned that the simultaneous representation by Steven J. Baum, P.C. of both MERS, as nominee for BNC, and U.S. 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."

Also, Plaintiff's affidavit of facts in support of the motion for summary judgment motion was executed on July 21, 2008 by Kim Miller, "Vice President of WELLS FARGO BANK, N.A. D/B/A AMERICA'S SERVICING COMPANY, Attorney in Fact for, U.S. BANK NATIONAL ASSOCIATION, AS TRUSTEE FOR STRUCTURED ASSET SECURITIES CORPORATION, SERIES 2006-GEL3, the Plaintiff." Plaintiff's "affidavit of merit and amount due" was executed on February 19, 2008, 23 days prior to the MERS as nominee for BNC assignment to U.S. BANK, by Dawn Ward, "Vice President of Wells Fargo Bank, N.A. as Attorney in Fact for U.S. BANK NATIONAL ASSOCIATION, AS TRUSTEE FOR STRUCTURED ASSET SECURITIES CORPORATION, SERIES 2006-GEL3." The limited power of attorney attached to plaintiff's motion, from U.S. BANK to WELLS FARGO BANK, N.A [exhibit G of motion], is [*3]an uncertified photocopy, executed on August 28, 2006, by Diane J. Kenneally, Assistant Vice President of "U.S. Bank National Association as Trustee." There is no listing of any collateralized debt obligations for which U.S. BANK is the Trustee. This limited power of attorney never mentions "U.S. BANK NATIONAL ASSOCIATION AS TRUSTEE FOR STRUCTURED ASSET SECURITIES CORPORATION, SERIES 2006-GEL3."

Plaintiff's lack of standing prompts the denial of plaintiff's motion and dismissal of the instant action. Therefore, defendant MERS' cross-motion is moot, and it is unnecessary to recite MERS' cross-motion claims.

Plaintiff's lack of standing

Plaintiff U.S. BANK lacks "standing" to bring the instant action. "Standing 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." (Saratoga County Chamber of Commerce, Inc. v Pataki, 100 NY2d 801 812 [2003], cert denied 540 US 1017 [2003]). Professor David Siegel, in NY Prac, § 136, at 232 [4th ed] instructs that:

[i]t is the law's policy to allow only an aggrieved person to bring a

lawsuit . . . A want of "standing to sue," in other words, is just another

way of saying that this particular plaintiff is not involved in a genuine

controversy, and a simple syllogism takes us from there to a "jurisdictional"

dismissal: (1) the courts have jurisdiction only over controversies; (2) a

plaintiff found to lack "standing" is not involved in a controversy; and

(3) the courts therefore have no jurisdiction of the case when such a

plaintiff purports to bring it.

"Standing 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." (Caprer v Nussbaum (36 AD3d 176, 181 [2d Dept 2006]). If a plaintiff lacks standing to sue, the plaintiff may not proceed in the action. (Stark v Goldberg, 297 AD2d 203 [1st Dept 2002]).

Plaintiff U.S. BANK lacked standing to foreclose on the instant mortgage and note when this action commenced on August 24, 2007, the day that U.S. BANK filed the summons and complaint with the Kings County Clerk, because it did not own the mortgage and note that day. The instant mortgage and note were assigned to U.S.BANK 202 days later on March 13, 2008, The Court, in Campaign v Barba (23 AD3d 327 [2d Dept 2005]), instructed 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 Witelson v Jamaica Estates Holding Corp. I, 40 AD3d 284 [1st Dept 2007]; 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 Trustee 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]).

Assignments of mortgages and notes are made by either written instrument or the assignor physically delivering the mortgage and note to the assignee. "Our courts have repeatedly held that a bond and mortgage may be transferred by delivery without a written [*4]instrument of assignment." (Flyer v Sullivan, 284 AD 697, 699 [1d Dept 1954]). The written March 13, 2008 assignment by MERS, as nominee for BNC, to U.S. BANK is clearly 202 days after the commencement of the action. No evidence has been offered that U.S. BANK had physical possession of the note and mortgage until the March 13, 2008 assignment. Plaintiff U.S. BANK did not own the mortgage and note when the instant action commenced. (See Levy v Louvre Realty Co., 222 NY 14, 20 [1917]; Curtis v Moore, 152 NY 159 [1897]; Indymac Bank FSB v Boyd, ___ Misc 3d ___, 2009 NY Slip Op 50094 (U) [Sup Ct, Kings County Jan. 22, 2009]; Credit-Based Asset Management and Securitization, LLC v Akitoye,___Misc 3d ___, 2009 NY Slip Op 50076 (U) [Sup Ct, Kings County Jan. 20, 2009]; Washington Mut. Bank v Patterson, 21 Misc 3d 1145 (A) [Sup Ct, Kings County 2008]; Fremont Investment & Loan v Laroc, 21 Misc 3d 1124 (A) [Sup Ct, Queens County 2008]; Deutsche Bank Trust Co. Americas v Peabody, 20 Misc 3d 1108 [A] [Sup Ct, Saratoga County 2008]; Countrywide Home Loans, Inc. v Taylor, 17 Misc 3d 595 [Sup Ct, Suffolk County 2007]. Plaintiff U.S. BANK "offers no evidence that it took physical possession of the note and mortgage before commencing this action, and again, the written assignment was signed after defendant was served." (Deutsche Bank Trust Co. Americas v Peabody, supra).

As noted above, to foreclose on a mortgage, a party must have title to the

mortgage, which plaintiff U.S. BANK lacked when this action commenced. 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."

Conflict of interest of plaintiff's counsel

Even if plaintiff overcomes the hurdle of securing ownership of the mortgage and note 202 days after the commencement of the action, a conflict of interest exists where plaintiff represents both the assignor of the instant mortgage, MERS as nominee for BNC, and the assignee of the instant mortgage, U.S. 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:

(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 [*5]

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]

If plaintiff U.S. BANK moves to renew or reargue the denial of this motion

for summary judgment and an order of reference, the Court requires an affirmation by Steven J. Baum, Esq., the principal of Steven J. Baum, P.C., explaining why both MERS and U.S. 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. Bechakas 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.

Plaintiff's motion for summary judgment

With respect to plaintiff's motion for summary judgment, plaintiff's lack of standing renders the motion moot. Even if plaintiff could have gone forward with its summary judgment motion against answering defendant MERS, plaintiff's summary judgment motion, with respect to the defaulting defendants, including defendant WHITE, the mortgagee, could not have gone forward. Plaintiff U.S. BANK failed to meet the clear requirements of CPLR § 3215 (f) for a default judgment.

On any application for judgment by default, the applicant

shall file proof of service of the summons and the complaint, or

a summons and notice served pursuant to subdivision (b) of rule

305 or subdivision (a) of rule 316 of this chapter, and proof of

the facts constituting the claim, the default and the amount due [*6]

by affidavit made by the party . . . Where a verified complaint has

been served, it may be used as the affidavit of the facts constituting

the claim and the amount due; in such case, an affidavit as to the

default shall be made by the party or the party's attorney. [Emphasis

added].

Plaintiff failed to submit "proof of the facts" in "an affidavit made by the party."

The affidavits were submitted by Kim Miller and Dawn Ward, both Vice Presidents of WELLS FARGO BANK, N.A. as Attorney in Fact for U.S. BANK NATIONAL ASSOCIATION, AS TRUSTEE FOR STRUCTURED ASSET SECURITIES CORPORATION, SERIES 2006-GEL3. Both Ms. Miller and Ms. Ward must have, as plaintiff's agent, a valid power of attorney for that express purpose. Neither had a valid power of attorney. Plaintiff presented to the Court an uncertified photocopy of a limited power of attorney, executed by an officer of "U.S. Bank National Association, as Trustee," not as "U.S. BANK NATIONAL ASSOCIATION, AS TRUSTEE FOR STRUCTURED ASSET SECURITIES CORPORATION, SERIES 2006-GEL3." A 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]).

Cancellation of the notice of pendency

The dismissal with prejudice of the instant foreclosure action requires the cancellation of the notice of pendency. CPLR § 6501 provides that the filing of a notice of pendency against a property is to give constructive notice to any purchaser of real property or encumbrancer against real property of an action that "would affect the title to, or the possession, use or enjoyment of real property, except in a summary proceeding brought to recover the possession of real property." The Court of Appeals, in 5308 Realty Corp. v O & Y Equity Corp. (64 NY2d 313, 319 [1984]), commented that "[t]he purpose of the doctrine was to assure that a court retained its ability to effect justice by preserving its power over the property, regardless of whether a purchaser had any notice of the pending suit," and, at 320, that "the statutory scheme permits a party to effectively retard the alienability of real property without any prior judicial review."

CPLR § 6514 (a) provides for the mandatory cancellation of a notice of pendency by:

The Court, upon motion of any person aggrieved and upon such

notice as it may require, shall direct any county clerk to cancel

a notice of pendency, if service of a summons has not been completed

within the time limited by section 6512; or if the action has been

settled, discontinued or abated; or if the time to appeal from a final

judgment against the plaintiff has expired; or if enforcement of a [*7]

final judgment against the plaintiff has not been stayed pursuant

to section 551. [emphasis added]

The plain meaning of the word "abated," as used in CPLR § 6514 (a) is the ending of an action. "Abatement" is defined (Black's Law Dictionary 3 [7th ed 1999]) as "the act of eliminating or nullifying." "An action which has been abated is dead, and any further enforcement of the cause of action requires the bringing of a new action, provided that a cause of action remains (2A Carmody-Wait 2d § 11.1)." (Nastasi v Natassi, 26 AD3d 32, 40 [2d Dept 2005]). Further, Nastasi at 36, held that " [c]ancellation of a notice of pendency can be granted in the exercise of the inherent power of the court where its filing fails to comply with CPLR § 6501 (see 5303 Realty Corp. v O & Y Equity Corp., supra at 320-321; Rose v Montt Assets, 250 AD2d 451, 451-452 [1d Dept 1998]; Siegel, NY Prac § 336 [4th ed])." Thus, the dismissal of the instant complaint must result in the mandatory cancellation of U.S. BANK's notice of pendency against the property "in the exercise

of the inherent power of the Court.

Conclusion

Accordingly, it is

ORDERED that the motion of plaintiff U.S. BANK NATIONAL ASSOCIATION, AS TRUSTEE FOR STRUCTURED ASSET SECURITIES CORPORATION, SERIES 2006-GEL3, for: summary judgment and dismissal, pursuant to CPLR Rules 3212 and 3211, of the answer of defendant MORTGAGE ELECTRONIC REGISTRATION SYSTEMS, INC. AS NOMINEE FOR PEOPLE'S CHOICE HOME LOAN, INC.; permission to treat the answer of defendant MORTGAGE ELECTRONIC REGISTRATION SYSTEMS, INC. AS NOMINEE FOR PEOPLE'S CHOICE HOME LOAN, INC. as a limited notice of appearance; and, an order of reference for the premises located at 180 Jefferson Street, Brooklyn, New York (Block 3173 Lot 15, County of Kings) and for a Referee to compute the amount due to plaintiff U.S. BANK NATIONAL ASSOCIATION, AS TRUSTEE FOR STRUCTURED ASSET SECURITIES CORPORATION, SERIES 2006-GEL3, is denied with prejudice because plaintiff U.S. BANK NATIONAL ASSOCIATION, AS TRUSTEE FOR STRUCTURED ASSET SECURITIES CORPORATION, SERIES 2006-GEL3, lacks standing; and it is further

ORDERED, that the instant complaint of plaintiff U.S. BANK NATIONAL ASSOCIATION, AS TRUSTEE FOR STRUCTURED ASSET SECURITIES CORPORATION, SERIES 2006-GEL3, for the foreclosure on the premises located at 180 Jefferson Street, Brooklyn, New York (Block 3173 Lot 15, County of Kings) is dismissed with prejudice; and it is further

ORDERED, that the Notice of Pendency in this action, filed with the Kings County Clerk on August 24, 2007, by plaintiff U.S. BANK NATIONAL ASSOCIATION, AS TRUSTEE FOR STRUCTURED ASSET SECURITIES CORPORATION, SERIES 2006-GEL3, to foreclose a mortgagefor real property located at 180 Jefferson Street, Brooklyn New York (Block 3173, Lot 15, County of Kings), is cancelled; and it is further

ORDERED, that the cross-motion of defendant MORTGAGE ELECTRONIC [*8]REGISTRATION SYSTEMS, INC. AS NOMINEE FOR PEOPLE'S CHOICE HOME LOAN, INC. for summary judgment and dismissal of plaintiffs' complaint against it is denied as moot.

This constitutes the Decision and Order of the Court.

ENTER

___________________________

HON. ARTHUR M. SCHACKJ. S. C..