HSBC Bank USA Natl. Assn. v Delacadena

[*1] HSBC Bank USA Natl. Assn. v Delacadena 2009 NY Slip Op 52150(U) [25 Misc 3d 1216(A)] Decided on October 22, 2009 Supreme Court, Suffolk County Spinner, 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 This opinion is uncorrected and will not be published in the printed Official Reports.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 October 22, 2009
Supreme Court, Suffolk County

HSBC Bank USA National Association As Trustee For ACE Securities Corp. Home Equity Loan Trust Series 2006-OP2 Asset Backed Pass-Through Certificates, Plaintiff,

against

Wilson R. Delacadena a/k/a WILSON DELACADENA a/k/a WILSON DE LA CADENA, OLGA DELACADENA and ROYAL HOME PRODUCTS INC., Defendants.



2008-01138



John DiCaro Esq.

Shapiro & DiCaro LLP

Attorneys for Plaintiff

250 Mile Crossing Boulevard

Rochester, New York 14624

Wilson R. Delacadena

Olga Delacadena

Defendants Pro Se 1547 Manatuck Boulevard

Bay Shore, New York 11706

Steven M. Burton Esq.

Referee

P.O. Box 697

Central Islip, New York 11722

Jeffrey Arlen Spinner, J.

Plaintiff commenced this action on January 3, 2008 claiming foreclosure of a consolidated first mortgage encumbering premises commonly known as 1547 Manatuck Boulevard, Bay Shore, Town of Islip, New York. Said mortgage was given by Defendants Wilson R. Delacadena and Olga Delacadena unto Option One Mortgage Corporation on April 4, 2005 to secure a note in the principal amount of $ 292,500.00 executed by Defendant Olga Delacadena in favor of Option One Mortgage Corporation. Said mortgage was recorded with the Clerk of Suffolk County on May 5, 2005 in Liber 21041, Mp 176. A successive note and mortgage, dated May 25, 2006, in the principal amount of $ 109,255.34, was executed by said Defendants in favor of Option One Mortgage Corporation was recorded with the Clerk of Suffolk County on June 26, 2006 in Liber 21324, Mp 1. Pursuant to a Consolidation, Extension and Modification Agreement between Wilson R. Delacadena and Olga Delacadena as obligors and Option One Mortgage Corporation as obligees, dated May 25, 2006, the foregoing notes and mortgages were consolidated and extended so as to form a single first lien of $ 399,500.00, which Agreement was recorded with the Clerk of Suffolk County on June 26, 2006 in Liber 21324, Mp 2. Plaintiff asserts that the note and mortgage has been assigned to it by way of a written instrument and that it is the successor in interest to Option One Mortgage Corporation.

Defendants Wilson R. Delacadena and Olga Delacadena now move this Court for an order pursuant to CPLR § 3211, dismissing this action, asserting a lack of standing by the Plaintiff to commence and maintain this action. They also seek imposition of sanctions upon Plaintiff for what they view as frivolous conduct. The gravamen of the motion is that the Plaintiff's failure to have recorded a written assignment of mortgage in advance of the commencement of this action, renders this lawsuit a nullity. The moving Defendants boldly assume, without documentary or other proof, that Plaintiff is not seised of any legal or equitable interest in the mortgage it seeks to foreclose, relying upon such diverse authority as Kluge v. Fugazy 145 AD2d 537, 536 NYS2d 92 (2nd Dept. 1988), Katz v. East-Ville Realty Co. 249 AD2d 243, 672 NYS2d 308 (1st Dept. 1998) together with an opinion letter from the Referee previously appointed herein suggesting abandonment of the action. Defendants seem to suggest that the Referee's opinion that Plaintiff should "abandon" its action is in some way a mandatory directive and the failure of Plaintiff to comply therewith constitutes conduct that is both frivolous and sanctionable pursuant to 22 NYCRR § 130-1.1. Plaintiff opposes Defendants' application, asserting that it has standing to sue and further that Defendants have waived their right to raise the issue at this stage of the proceeding.

Prior to the filing of this application, Defendants requested a Mandatory Settlement Conference as the indebtedness at issue is or may be "high cost" or "sub-prime" as the same is defined by RPAPL § 1304, CPLR § 3408 and Banking Law § 6-l. The Court granted the request, stayed the proceedings and scheduled a conference which was initially held on January 14, 2009. The settlement conference was adjourned on no less than ten occasions, each at the request of and for the benefit of Defendants. The Court deferred any ruling upon the instant application while attempting to pursue a settlement. While Defendants did thereafter retain counsel to represent their interests, they elected to discharge their attorney during the summer of 2009. At the last conference, which was scheduled for October 20, 2009, Defendants failed, for the first time, to appear as required but instead, by way of a facsimile transmittal sent to Chambers the prior evening, requested a sixty day adjournment, stating that their attorney had "quit" and that they wished to retain new counsel. Though Defendant Wilson R. Delacadena is an attorney who is admitted in a jurisdiction other than New York (even so, the Court sees fit to extend considerable latitude since he is appearing pro se), he did not see fit to give Plaintiff's counsel any advance notification of his request for adjournment. Indeed, Plaintiff's counsel was somewhat miffed, having been unaware of that request until she appeared for the conference. Accordingly, the Court concludes that said request was in the nature of a deliberate ex parte communication which should not be seriously considered.

In the series of conferences that were held before the Court, the Defendants doggedly propounded their vociferous assertions that Plaintiff had no standing to sue, even going so far as to vacuously accuse Plaintiff's counsel of commencing this action without having ever seen the notes and mortgages, baselessly averring that the original documents had never even been in Plaintiff's possession (at the request of the Court, Attorney John DiCaro readily produced the instruments of indebtedness for examination, thereby demonstrating the fallacious nature of this claim by Defendants) and other such equally weighty but patently false pronouncements. During [*2]the course of the conferences, Defendant Wilson R. Delacadena continued to engage in a course of conduct that was both voluble and reprehensible, in spite of his attorney's repeated admonitions that he desist therefrom as well as the Court's patient albeit fruitless attempts to steer the discussions back toward a possible settlement. The persistent demands made by Defendants at the conferences were both facially and flagrantly unreasonable, the Defendants were stubbornly unwilling to assume any responsibility at all for the situation, they acted in a most uncooperative manner with the Court and Plaintiff and they refused engage in any serious or constructive negotiation to try and resolve the matter. In short, the Defendants knowingly and deliberately perverted the process, improperly employing the mechanism of the Mandatory Settlement Conference not for its intended purpose of reaching an amicable resolution but instead manipulated it so as to effect a ten month delay of these proceedings. Needless to say, this substantial delay has greatly prejudiced all parties to this action, resulting in the continued accrual of interest, tax advances and other charges and further eroding the equity, if any, in the property that secures the indebtedness.

Upon review of a motion to dismiss, the pleadings must be construed liberally, Leon v. Martinez 84 NY2d 83, 614 NYS2d 972 (1994), giving the benefit of every favorable inference to the pleader and, if a valid cause of action is readily cognizable on the face thereof, the pleading at issue will survive a motion to dismiss, Negrin v. Norwest Mortgage Inc. 293 AD2d 726, 741 NYS2d 287 (2nd Dept. 2002). Here, even the most cursory reading of the Plaintiff's complaint shows that the necessary elements of an action to foreclose a mortgage have been clearly articulated.

Turning to Defendants' assertion that Plaintiff is without standing to maintain this action, this claim is completely devoid of both legal and factual efficacy and must be denied. An examination of all of the original documents produced by Attorney John DiCaro at the conferences indubitably demonstrates that Plaintiff is in possession of the instruments of indebtedness. In the view of this Court, the controlling authority on this point is found within Fryer v. Rockefeller 63 NY 268 (1875) which holds, in pertinent part, that "A good assignment of a mortgage is made by delivery only." 63 NY at 276. It logically follows, then, that mere delivery of the instruments of indebtedness is sufficient to confer standing and the recording of a written assignment of mortgage merely serves to put the world on record notice of the transfer of rights. This line of reasoning has likewise been followed in the matters of Flyer v. Sullivan 284 AD 697, 134 NYS2d 521 (1st Dept. 1954) and National Mortgage Consultants v. Elizaitis 3 Misc 3d 1090A, 787 NYS2d 679 (Sup. Ct. Suffolk Co., 2004), aff'd 23 AD3d 630, 804 NYS2d 799 (2nd Dept. 2004) to cite but two. It is beyond dispute that Plaintiff has shown its interest in the indebtedness herein sufficient to confer standing as a matter of law, Federal National Mortgage Association v. Youkelsone 303 AD2d 546, 755 NYS2d 730 (2nd Dept. 2003), thereby vitiating any claims of Defendants to the contrary.

Plaintiff asserts that, as a matter of law, Defendants have waived their right to challenge standing because of their failure to interpose the same as an affirmative defense. In the matter of Wells Fargo Bank Minnesota , National Association v. Mastropaolo 42 AD3d 239, 837 NYS2d 247 (2nd Dept. 2007) the Second Department held, in relevant part, that "...defendant's failure to raise its alleged lack of standing as an affirmative defense in his answer or in a timely motion to dismiss the complaint constituted a waiver of the defense..." 42 AD3d at 243-244, 837 NYS2d at [*3]250-251. In the matter sub judice, the Notice of Pendency, Summons and Verified Complaint were filed with the Clerk of Suffolk County on January 3, 2008 and were thereafter served upon Defendants on January 14, 2008. Upon default in appearance and pleading, Plaintiff filed an application for appointment of a Referee pursuant to RPAPL § 1321. Defendants did not respond to that application, resulting in the granting of an Order of Reference on October 16, 2008. The Defendants failed to interpose any pleading or other papers in this matter until the present application which was filed with the Clerk of the Supreme Court on February 19, 2009, well over a year after service of initial process. No excuse has been proffered for the default by Defendants and there is no other application presently pending before the Court.

After due and careful consideration, it is

ORDERED that the application by Defendants WILSON R. DELACADENA and OLGA DELACADENA shall be and the same is hereby denied in its entirety; and it is further

ORDERED that Plaintiff is granted leave to forthwith continue prosecution of the within action, including its Order of Reference heretofore granted on October 16, 2008; and it is further

ORDERED that all future applications in this action shall be upon notice to Defendants; and it is further

ORDERED that all relief not expressly granted herein shall be and the same is hereby denied.

This shall constitute the decision and order of the Court.

Dated: October 22, 2009

Riverhead, New York

ENTER:

______________________________________

JEFFREY ARLEN SPINNER, J.S.C.

To:

John DiCaro Esq.

Shapiro & DiCaro LLP

Attorneys for Plaintiff

250 Mile Crossing Boulevard

Rochester, New York 14624

Wilson R. Delacadena

Olga Delacadena

Defendants Pro Se

1547 Manatuck Boulevard [*4]

Bay Shore, New York 11706

Steven M. Burton Esq.

Referee

P.O. Box 697

Central Islip, New York 11722