Emigrant Mtge. Co., Inc. v Patton
Annotate this Case
Download PDF
Emigrant Mtge. Co., Inc. v Patton 2012 NY Slip Op 31760(U) June 25, 2012 Supreme Court, New York County Docket Number: 115045/2008 Judge: Marcy S. Friedman Republished from New York State Unified Court System's E-Courts Service. Search E-Courts (http://www.nycourts.gov/ecourts) for any additional information on this case. This opinion is uncorrected and not selected for official publication. [* 1] A$ + SUPREME COURT OF THE STATE OF NEW YORK - NEW YORK COUNTY PRESENT: MARCY S. FRIEDMAN PART ,57 Jwtlce -v- 00% MOTION SEQ. NO. PAPERS NIJMBERED Natlce of Motion/ Order to Show Cause -Affidavits - Exhibits ... Answering Affldavlts - Exhibits Replying Affldavits s Jk > ,!2/8! - L L ,3* I Upon the foregoing papers, It is ordered that thls motion 0CASE DISPOSED MOTION IS: 0GRANTED 0 DENIED 0GRANTED IN PART 0 OTHER(CHECKA~APPROPRIATE) CHECK IF APPROPRIATE: 0 SETTLE ORDER SUBMIT ORDER 0 DO NOT POST 0FIDUCIARY APPOINTMENT 0REFGRENCE I. CHECK ONE: 2. 3. [* 2] F1L SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF NEW Y O U - PART 57 PWSEN?': Hon. Marcy S. Friedman, JSC X EMIGRAN'I' MORTGAGE COMPANY, INC., Plainiff; - against - Index No.: 115045/2008 JACQlJELlNE T,. PATTON, et al., DECISXON/ORDER Defendunts. X In this action to foreclose a $1,150,000 million mortgage, defendandmortgagor Jacqueline Patton moves to amend her answer. Plaintiff/mortgagee Emigrant Mortgage Company, lnc. (EMC) cross-moves to confirm a referee's report, and for a judgment of foreclosure and sale, and other relief. By prior order dated October 22, 201 0, this court granted plaintif[ partial summary judgment as to liability and directed the reference. Defendant initially moved to amend hcr answer to add thc affirmative defense that plaintiffvjolatcd the Truth in Lending Act by failing to disclose the correct finance charges to which defendant would be subjcci. (AK in Support ofMotion to Amend, ll[a].) Defendant claims, based on a forensic audit prepared at her request on May 23,201 0, that the finance charges were understated by $1 8,388.21 of a total of $1,413,586.87, based on a disclosed annual percentage rate (APR) of 6.583%, as opposed to an APR of 6.682% that was used by the auditor I I I i n calculating the finance charges. (& Audit at 2 [annexed as Ex. B to Def.'s Motion].) Defcndant orfkrs no cxplanation for her delay, in moving to assert the proposed defense, of approximately eight months after issuance of the prior order granting plaintilf partial summary judgment. Moreovcr, shc makes no showing of merit of thc proposed defensc, as there is no explanation for the. auditor's use of the 6.682% APR in calculating the h a n c e charges. Absent [* 3] such a showing, the motion to anieiid to add this defense niust be denied. (See generallv, NonLinear I radinK Co., Inc. v Rraddis Assocs., Inc., 243 AD2d 107, 116 [IstDept 19981.) After service of its motion to confirm the referec s report, plaintiff submitted the affirmation of its attorney, Robert Holland, dated October 28, 201 1, in which he stated that he had coderred with Milagros Riverd-Perez, plaintiffs Assistant Vice President and Foreclosure Administrator, regarding the accuracy of the allegations of the complaint and the supporting affirmations. He statcd that she had confirmed the accuracy, with the exception that the complaint (paragraph 15) and the supporting affidavit of James Raborn both mistakenly stated that plaintifl-is the owner of the mortgage being foreclosed in this action. (Holland Aff., 711 4-5.) He furthcr represented that review of plaintiff s records and files indicated that prior to commenccmcnt o r the action, plaintiff had assigned the mortgage and note io its affiliate Emigrant Savings Rank- Manhattan (Emigrant Savings), and that simultaneous with the execution of the assignment, EmibTant Savings endorsed the note in blank back to EMC. (a, 77 5-6.) Hc stated that he was advised that the assignment of the mortgage was never recorded, and that at all tiincs since the note and inortgage were executed, EMC has always had actual physical control and physical possession of thcse documents. (I, d 7 7.) As this allidavit was based solely 011 hearsay, the court directed plaintiff to submit an affidavit on personal knowlcdgc explaining these transfers, and thcir effect on plaintiffs standing to bring the action at the time it was commenced by fling of the sumnions and complaint 011 Novcmber 7, 2008. The matter was adjourned lor further argument. (Dec. 14, 201 1 Transcript of Oral Arguiiieiit at 1 1.j In response, plaintiff submitted the affidavit of Filippo Ruggiero, a Vice Presidcnt of -2- . [* 4] GMC. Mr. Kuggicm stated that plaintifrs attorney was mistaken when he stated that the allonge was prepared and executed simultaneously with plaintiffs exccution of the assignment of mortgage. (Ruggiero Aff., 7 7.) He stated that although the mortgage was assigned from EMC to Emigrant Savings in 2008, it was never recorded, and the original assignment has at all times remained in the loan file for this particular loan, which is in the vault where Plaintiffs loan files arc maintained. (u,. ) He further stated that the Emigrant entities were involved in a 75 borrowing agreement with thc Federal Home Loan Bank of New York (FHLR), and that as part of this agreement, mortgagc loans were pledged but not assigned by the various Emigrant entities to FHLB as security lor loans given by FHLB to them. (Id, 8-9.) fl7 In a change in policy, FHLI3 advised that it would require the Emigrant entities to deliver the collateral to FHLB. AS a result, between November 2009 and January 2010, the Emigrant entities prepared assignments and allonges for all collateral which they intended to give as security for loans from FHLB. (u, lfl 10-12.) Based on his review of his computer, Mr. Ruggiero attested that the allonge transferring the note was created on December 10, 2009, that it contains his signature, and that it was fully executed on bchali of Emigrant Savings within a day or days thereaficr. (h, He 7 13.) concludcd that EMC was the holdcr ofthe note until December 10, 2009, and that prior to that time, it had only executed the assignment to Emigrant Savings of the mortgage on March 10, 2008. (&,ll 14.) Further argument on plaintiff s motion was held on February 2, 2012. At the argument, defendant, represented by counsel, made an oral application to vacate this court s prior order granting partial summary judgnient, on the ground that plaintiff had no standing to corniiiencc this action. -3- [* 5] It is well settled that [i]n a mortgage forcclosure action, a plaintiff has standing where it is both the holder or assignee of the subject mortgage and the holder or assignee of the underlying note at the time thc action is commenced. (U.S. Bank, N.A. v Collvmore, 68 AD3d 752, 753 [2d 13ept 20091; see also Aurora Loan Svcs., LLC v Weisblum, 85 AD3d 95, 108 [2nd Dept 201 11,) Either a written assignment of the underlying note or the physical delivery of the note prior to the coininencement of the foreclosure action is suficient to transfer the obligation. (Collvmore, 68 AD3d at 754.) Thus, an assignment of a note and mortgage need not be in writing and can be effectuated by physical delivery. (Bank of New York v Silverberg, 86 AD3d 274,280 [Znd Dept 201 1 I,) Further, a transfer of a mortgage without assignment of the underlying note or bond is a nullity. (Collvmore, 68 AD3d at 754; Silverberg, 86 AD3d at 280.) Conversely, [als a general matter, once a promissory note is tendered to and accepted by an assignee, the mortgage passes as an incident to the note. (Id.at 280; MortgaKe Electronic Registration Svs.. lac. v Coakley, 4 1 AD3d 674 [2 dDept 20071.) A party does not have standing to bring a foreclosure action where it is listed as the mortgagee but was never the actual holder OF assignee of the underlying note. (Silverberg, 86 AD3d at 275.) As can be seen from review of the plaintiffs attorney s affirmation and the Ruggiero affidavit, plaintill s attorney madc statements, based on his discussion with Ms. Rivera-Perez, an Assistant Vice President of plaintiff, which conflict with the statements of Mr. Ruggiero, a Vice President, about the date on which the underlying note was transferred from EMC to Emigrant Savings. 111addition, Mr. Ruggiero does not explain why, according io his version of the events, EMC assigned the mortgage to Emigrant Savings in March 2008, but did not assign the notc until -4- [* 6] December 2010, Put another way, he does not explain why the mortgage was assigned to Emigrant Savings without the note. He also does not attach any support for his apparent claim that the mortgagc remained in the vault for EMC loans, notwithstanding the assignment to Emigrant Savings. Nor does Iic attach the back-up documentation from his computer that assertedly supports his contention that the allongc for the note was not executed until December 10, 2009, after the commencement of this action. Reports of widespread insufficiencies in foreclosure filings, including failure to review documents and files to establish standing, led to this Court's landmark initiative requiring the plaintiff's attorney in a foreclosure action to fllc an affirmation certifying that he or she has reviewed the plaintiffs documents for factual accuracy and confhicd the factual accuracy of the complaint and any supporting affidavits or afknations filed with thc court. (See Administrative Order [AO] 43 1/11, dated Mar. 2, 201 1 .) The October 28, 201 1 affirniation of plaintiffs counsel is such an affirmation in the form prescribed by the Administrative Order. (See id., Form A.) The conflict between this affirmation and the Ruggiero affidavit creates an issue of fact as to whethcr plaintiff had standing to commence this action. (See Collyrnore, 68 AD3d at 754.) It also implicates the integrity of this Court in the foreclosurc process. The court accordingly holds that a hearing must bc held on whether plaintiff had standing to commence this action as of the time of its cornmenccmcnt. In so holding, thc court recognizes that standing is ordinarily waived unless raised as an allinnative defensc or by way of a motion to dismiss. (Sec e.E. Matter of Fossella v Dinkins, 66 NY2d 162, 167-168 [19X5]; Security Paciilc Nat. Bank v Evans, 31 AD3d 278, 280-281 [ l g tDept 20061, appeal dismissed 8 NY3d 837 [2007]; Wells Fargo Bank Minnesota, Natl. Assn. v Mastropaolo, 42 AD3d 239, 242 12"'' Dept 20071.) Hcrc, however, plaintiffs filing of its -5- [* 7] attorncy s October 28, 201 1 A 0 43 1/11 afhnation, acknowledging an error in the pleadings and requesting correction, is tantamount to a request for leave to ainend thc complaint, in response to which defendant was entitled to an opportunity to assert new defenses. The court accordingly holds that Ihe objection to standing has not been waived. It is accordingly hereby ORDERED that defendant s motion fbr leavc to amend is denied as to the defense based on the l ruth In Lending Act; and it is further ORDERED that the issue of whethcr plaintiff had standing to commence this foreclosure action as of the date of its filing is referred to a Special Referee to hear and report with recommendations, except that, in thc event of and upon the kXng of a stipulation of the parties, as permitted by CPLR 43 17, the Special Rcferee, or another person designated by the parties to serve as referee, shall determine the aforesaid issue; and it is further ORDERED that a copy of this ordcr with notice of entry shall be served by plaintiff forthwith on the Clerk of the Special Referee s Ofike (Room 1 19) to arrange a date for the reference to a Special Referee; and is further ORDERED that a motion to confirin or reject the report of the Special Referee shall be made within 15 days of the filing of the report; and it further ORDEKED that in the event it is determined that plaintiff had standing to commence this foreclosure action as of the datc of its tiling, plaintiff may re-serve its motion for confirmation of the Referee s report and for a final judgrnenl of foreclosure and sale. This constitutes the decision and order of the court. Dated: New York, Ncw York June 25,2012 MA RCY F@F&MAN, -6- 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.
