Bayview Loan Servicing, LLC v Warter

[*1] Bayview Loan Servicing, LLC v Warter 2017 NY Slip Op 50974(U) Decided on July 27, 2017 Supreme Court, Essex County Muller, 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 This opinion is uncorrected and will not be published in the printed Official Reports.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 July 27, 2017
Supreme Court, Essex County

Bayview Loan Servicing, LLC, Plaintiff,

against

Sanford L. Warter, CITIBANK SOUTH DAKOTA N.A., LEGAL SERVICES, LLC and "JOHN DOE" (said name being fictitious, it being the intention of Plaintiff to designate any and all occupants, tenants, persons or corporations, if any, having or claiming an interest in or lien upon the premises being foreclosed herein), Defendants.



673-2013



For Plaintiff:

Barclay Damon LLP, Syracuse (J. Eric Charlton and John M. Nichols, of counsel)

125 E Jefferson St, Syracuse, NY 13202

(315) 425-2805

For defendant Sanford L. Warter

Dennin & Dennin, Lake Placid (Gregory M. Dennin, of counsel),

2745 Main St # 1, Lake Placid, NY 12946

(518) 523-2595
Robert J. Muller, J.

On May 28, 2004, R. Keith and Elizabeth Wadsworth issued a loan to defendant Sanford L. Warter (hereinafter defendant) in the amount of $100,000.00. This loan was evidenced by a promissory note (hereinafter the note) and secured by a mortgage on certain real property located at 30 Anthony Road in the Town of Jay, Essex County. The note stated, in pertinent part:

"I will pay principal and interest based on a thirty (30) month payment schedule with a principal balloon payment of Eighty Seven Thousand Eighty Seven and 98/100 ($87,087.98) Dollars during the thirtieth (30th) month. My monthly payment to Lender will be Nine Hundred ($900.00) Dollars consisting of principal and interest. My monthly payments will be due and payable on the 28th day of each month beginning on June 28, [*2]2004. My last payment of Eighty Seven Thousand . . . Eighty Seven and 98/100 ($87,087.98) Dollars will be due and payable on November 28, 2006. I will pay all amounts owed under this Note, including, but not limited to, [p]rincipal and interest no later than November 28, 2006."

On November 28, 2006, the Wadsworths issued a second loan to defendant in the amount of $87,000.00. This loan — evidenced by a promissory note (hereinafter the supplemental note) and a "Loan Extension and Modification Agreement" — was intended to extend the maturity date of the first loan. While another mortgage was not signed, the original mortgage was expressly referenced in the supplemental note with defendant agreeing to keep all of the promises made therein.

By assignment dated February 1, 2007 and recorded on March 7, 2007, the mortgage was transferred by the Wadsworths to Elm Lansing Realty Corp. d/b/a Adirondack Note Buyers, Inc. (hereinafter Elm Lansing). The mortgage was then transferred by Elm Lansing to Avalar, LLC by assignment dated February 8, 2007 and recorded on March 7, 2007 and, finally, by Avalar to plaintiff by assignment dated March 2, 2007 and recorded on December 18, 2007.

On August 18, 2008, plaintiff and defendant entered into a "Loan Adjustment Agreement" (hereinafter the Adjustment Agreement) with a new principal balance of $93,543.00. Defendant made monthly payments pursuant to the terms of the Adjustment Agreement until May 28, 2013, at which time he defaulted. Plaintiff then commenced this foreclosure action on December 3, 2013. Issue was joined by defendant on or about June 2, 2015.[FN1] Defendant asserted five affirmative defenses/counterclaims:[FN2] (1) that the Adjustment Agreement was signed under duress and is therefore void; (2) that all causes of action are barred by the statute of limitations; (3) that the complaint fails to state a cause of action; (4) that plaintiff lacks standing; and (5) that plaintiff's causes of action are barred by the statute of frauds. Defendants Citibank South Dakota, N.A. and Legal Services, LLC — both of whom are judgment creditors of defendant and named as necessary parties under RPAPL 1311 (3) — defaulted in answering.[FN3]

Presently before the Court is plaintiff's motion for (1) summary judgment as against defendant granting the relief requested in the complaint and dismissing his answer, together with all counterclaims; (2) default judgment as against Citibank South Dakota and Legal Services; (3) amendment of the caption so as to delete "John Doe"; and (4) appointment of a referee. Also before the Court is defendant's cross motion for summary judgment dismissing the complaint as against him. The motion and cross motion will be addressed ad seriatim.

Plaintiff's Motion

Turning first to that aspect of plaintiff's motion seeking summary judgment, "[a] plaintiff can establish entitlement to summary judgment by producing evidence of the mortgage, the unpaid note and the defendant's default" (Wells Fargo Bank, N.A. v Walker, 141 AD3d 986, 987 [2016]; see Deutsche Bank Natl. Trust Co. v Monica, 131 AD3d 737, 738 [2015]; Wells Fargo Bank, NA v Ostiguy, 127 AD3d 1375, 1376 [2015]). "'Where, as here, the issue of standing is raised as an affirmative defense, the plaintiff must also prove its standing in order to be entitled to relief'" (Deutsche Bank Natl. Trust Co. v Monica, 131 AD3d at 738, quoting Wells Fargo Bank, NA v Ostiguy, 127 AD3d at 1376 [citations omitted]; see Wells Fargo Bank, N.A. v Walker, 141 AD3d at 987; Nationstar Mtge., LLC v Catizone, 127 AD3d 1151, 1152 [2015]).

To that end, "[a] plaintiff has standing in a mortgage foreclosure action 'where it is both the holder or assignee of the subject mortgage and the holder or assignee of the underlying note at the time the action is commenced'" (Chase Home Fin., LLC v Miciotta, 101 AD3d 1307, 1307 [2012], quoting Bank of NY v Silverberg, 86 AD3d 274, 279 [2011]; accord Wells Fargo Bank, N.A. v Wine, 90 AD3d 1216, 1217 [2011]; CitiMortgage, Inc. v Rosenthal, 88 AD3d 759, 761 [2011]). "'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'" (Chase Home Fin., LLC v Miciotta, 101 AD3d at 1307, quoting U.S. Bank, N.A. v Collymore, 68 AD3d 752, 754 [2009]). "'[N]o 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'" (Chase Home Fin., LLC v Miciotta, 101 AD3d at 1308, quoting Bank of NY v Silverberg, 86 AD3d at 280-281 [internal quotation marks and citations omitted]).

Here, plaintiff has produced evidence of the loan documents and defendant's default relative thereto. Plaintiff has thus established its prima facie entitlement to summary judgment for the relief requested in the complaint (Wells Fargo Bank, N.A. v Walker, 141 AD3d at 987; Deutsche Bank Natl. Trust Co. v Monica, 131 AD3d at 738; Wells Fargo Bank, NA v Ostiguy, 127 AD3d at 1376).

To establish its standing, plaintiff has produced copies of the assignments from the Wadsworths to Elm Lansing, from Elm Lansing to Avalar and from Avalar to plaintiff. Each of these written assignments includes the following language:

"[The assignor] does by these presents, hereby grant, bargain, sell, assign, transfer and set over unto [the assignee] all of the [assignor's] rights, title and interest, as holder thereof, in and to the following described lien in the form of a mortgage, the property therein described and the indebtedness thereby secured:"MORTGAGES:"(1) EXECUTED BY: Sanford L. Warter

PAYABLE TO: R. Keith Wadsworth and Elizabeth Wadsworth

BEARING DATE OF: May 28, 2004

RECORDED ON: May 28, 2004

LIBER: 1383 PAGE: 56

ORIGINAL PRINCIPAL AMOUNT: $100,000.00 "COUNTY OF: Essex"PROPERTY ADDRESS: 30 ANTHONY ROAD, TOWN OF JAY, COUNTY OF ESSEX, NEW YORK; and Amended by

MORTGAGE NOTE

EXECUTED BY: Sanford L. Warter

PAYABLE TO: R. Keith Wadsworth and Elizabeth Wadsworth

BEARING DATE OF: November 28, 2006

RECORDED ON: December 22, 2006

LIBER: 1674 PAGE: 252 Document No.: 2006-00008144 "As Extended and Modified by Loan Extension and Modification Agreement between R. Keith Wadsworth and Elizabeth Wadsworth, Lender and Sanford L. Warter, Borrower, dated November 28, 2006, . . ."TOGETHER with the bond or note or obligation described in said Mortgage, as amended, and the money due and to grow due thereon, with interest"

The Court finds that this language is broad enough to transfer the interest in the mortgage as well as the underlying debt secured by the note and supplemental note (see Chase Home Fin., LLC v Miciotta, 101 AD3d at 1308). Accordingly, plaintiff has also established its standing to commence this action.

In opposition, defendant contends that plaintiff has failed to demonstrate its physical possession of either the note or the supplemental note. Plaintiff, in fact, admits that it does not have physical possession of the note, which was apparently lost by Avalar.[FN4]

The Court finds this contention to be without merit. As stated above, either a written assignment of the note or the physical delivery of the note prior to commencement of the foreclosure action is sufficient to transfer the obligation (see Chase Home Fin., LLC v Miciotta, 101 AD3d at 1307; U.S. Bank, N.A. v Collymore, 68 AD3d at 754). Here, there was a written assignment of both the note and supplemental note. Physical delivery was therefore unnecessary (see U.S. Bank N.A. v Akande, 136 AD3d 887, 890 [2016]).

Defendant next contends that the assignment from Avalar to plaintiff — which was executed in Arkansas — fails to comply with Real Property Law § 309-b (1) and is therefore insufficient. Real Property Law § 309-b (1) provides as follows:

"The certificate of an acknowledgement, without this state, of a conveyance or other instrument with respect to real property situate in this state, by a person, may conform substantially with the following form, the blanks being properly filled:"State, District of Columbia,)"Territory, Possession, or) ss.:"Foreign Country)"On the day of in the year before me, the undersigned, personally appeared , personally known to me or proved to me on the basis of satisfactory evidence to be the individual(s) whose name(s) is (are) subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their capacity(ies), and that by his/her/their signature(s) on the instrument, the individual(s), or the person upon behalf of which the individual(s) acted, executed the instrument."(Signature and office of individual taking acknowledgement.)"

The acknowledgement in the assignment from Avalar to plaintiff did not include the language set forth in Real Property Law § 309-b (1), instead stating as follows:

"On this the 2nd day of March, 2007, before me, the undersigned, a notary public in and for said state personally appeared Travis Creed, personally known to me and who stated that he had so signed, executed and delivered the foregoing instrument for the consideration, uses and purposes therein mentioned and set forth."

Although this language is not identical to that set forth in Real Property Law § 309-b (1), the Court nonetheless finds the assignment from Avalar to plaintiff to be sufficient. Indeed, Real Property Law § 309-b (1) requires only that the language in the acknowledgement "conform substantially" to the language in the statute — and here there is substantial conformance (see Midfirst Bank v Agho, 121 AD3d 343, 351 [2014]).

It must also be noted that "the defense of standing may be waived by a mortgagor who negotiates and executes a loan modification agreement with the foreclosing plaintiff to whom the subject mortgage note and mortgage were transferred prior to the commencement of a foreclosure action" (Wilmington Trust Co. v Hurtado, 48 Misc 3d 1201[A], 2015 NY Slip Op 50922[U], *3 [Sup Ct, Suffolk County 2015]). Indeed, "[t]he execution of such agreement, coupled with the defendant's payment of the monthly amounts due under the terms of the modification agreement, has been held to effect waiver of all defenses and claims resting on the plaintiff's purported lack of ownership in the note and mortgage as modified by the plaintiff . . . " (Wilmington Trust Co. v Hurtado, 2015 NY Slip Op 50922[U] at *3; see IRB-Brasil Resseguros S.A. v Portobello Intl. Ltd., 84 AD3d 637, 637 [2011]). To the extent that defendant entered into the Adjustment Agreement with plaintiff and made payments thereunder for approximately five years, he has waived the defense of standing.[FN5]

Insofar as defendant's counterclaims are concerned, defendant does not oppose the dismissal of counterclaims (2), (3) and (5) listed above. Plaintiff is therefore entitled to summary judgment in this regard.

With respect to counterclaim (1) listed above, defendant contends that he "signed the [Adjustment Agreement] under duress arising from plaintiff's threat to foreclose." This contention, however, is without merit. It is by now well established that "'[t]he threatened [*3]exercise of a legal right cannot constitute duress'" (Marine Midland Bank v Mitchell, 100 AD2d 733, 734 [1984], quoting Marine Midland Bank v Stukey, 75 AD2d 713, 713 [1980], affd 55 NY2d 633 [1981]; see Friends Lbr. v Cornell Dev. Corp., 243 AD2d 886, 888 [1997]). Plaintiff is therefore entitled to summary judgment dismissing counterclaim (1) listed above.

Finally, in accordance with the foregoing analysis, plaintiff is entitled to summary judgment dismissing counterclaim (4) listed above, which alleges a lack of standing.

Based upon the foregoing, that aspect of plaintiff's motion seeking summary judgment as against defendant for the relief requested in the complaint and for the dismissal of his answer, together with all counterclaims, is granted. Defendant's answer is hereby deemed a notice of appearance whereby he is entitled to notice of all further proceedings.

Turning now to the remainder of plaintiff's motion, the Court finds that plaintiff is entitled to a default judgment as against Citibank South Dakota and Legal Services and the appointment of a referee. The Court further finds that plaintiff — having provided proof that there are no tenants at the subject premises — is entitled to amendment of the caption so as to delete "John Doe."

Based upon the foregoing, the remainder of plaintiff's motion is granted.

Defendant's Cross Motion for Summary Judgment

In accordance with the discussion set forth above, defendant's cross motion for summary judgment dismissing the complaint is denied in its entirety.

To the extent not specifically addressed herein, the parties' remaining contentions have been considered and are either academic or without merit.

Therefore, having considered the Affirmation of J. Eric Charlton, Esq. with exhibits attached thereto, dated July 6, 2016, submitted in support of the motion; Affidavit of Merit of Nicole Currey with exhibits attached thereto, sworn to June 24, 2016, submitted in support of the motion; Affidavit Regarding 2009 Residential Foreclosure Law of Nicole Currey with exhibits attached thereto, sworn to June 9, 2016, submitted in support of the motion; Memorandum of Law of J. Eric Charlton, Esq., dated July 6, 2016, submitted in support of the motion; Affidavit of Gregory M. Dennin, Esq., sworn to September 2, 2016, submitted in opposition to the motion and in support of the cross motion; Reply Memorandum of Law of J. Eric Charlton, Esq. dated September 12, 2016, submitted in opposition to the cross motion and in further support of the motion; Sur-Reply Affidavit of Gregory M. Dennin, Esq., sworn to September 23, 2016, submitted in further support of the cross motion; Correspondence of J. Eric Charlton, Esq. with exhibits attached thereto, dated March 30, 2017; and Correspondence of Gregory M. Dennin, Esq., dated April 13, 2017, and oral argument having been held on July 20, 2017 with John M. Nichols, Esq. appearing on behalf of plaintiff and Gregory M. Dennin, Esq. appearing on behalf of defendant, it is hereby

ORDERED that the aspect of plaintiff's motion seeking summary judgment as against defendant for the relief requested in the complaint and for the dismissal of his answer, together with all counterclaims, is granted in its entirety; and it is further

ORDERED that defendant's answer is hereby deemed a notice of appearance whereby he is entitled to notice of all further proceedings in this action; and it is further

ORDERED that the aspect of plaintiff's motion seeking a default judgment as against Citibank South Dakota and Legal Services is granted; and it is further

ORDERED that the aspect of plaintiff's motion seeking to amend the caption so as to delete "John Doe" is granted and the caption shall hereinafter read as follows:

STATE OF NEW YORK

SUPREME COURTCOUNTY OF ESSEX

________________________________________

BAYVIEW LOAN SERVICING, LLC,

Plaintiff,

Index No. 673-2013

v.RJI No. 15-1-2015-0118

SANFORD L. WARTER, CITIBANK SOUTH

DAKOTA N.A., LEGAL SERVICES, LLC,

Defendants.

_________________________________________

; and it is further

ORDERED that the aspect of plaintiff's motion seeking the appointment of a referee is granted; and it is further

ORDERED that this action be, and the same is hereby referred to Reginald H. Bedell, Esq., P.O. Box 485, 7564 Court Street, Elizabethtown, New York 12932, telephone number (518) 873-9540, as referee to ascertain and compute the amount due to plaintiff for principal, interest and other disbursements advanced as provided for in the loan documents upon which this action was brought, to examine and report whether the mortgaged premises should be sold in one or more parcels; and it is further

ORDERED that, pursuant to CPLR 8003 (a), the referee shall be paid $50.00 for the computation stage and upon the filing of his report; and it is further

ORDERED that by accepting this appointment the referee certifies that he is in compliance with part 36 of the Rules of the Chief Judge (22 NYCRR); and it is further

ORDERED that defendants' cross motion for summary judgment dismissing the complaint is denied in its entirety; and it is further

ORDERED that any relief not specifically addressed has nonetheless been considered and is hereby expressly denied.

The above constitutes the Decision and Order of this Court.

The original of this Decision and Order has been filed by the Court together with the Notice of Motion dated July 6, 2016, Notice of Cross Motion dated September 2, 2016 and the submissions enumerated above. Counsel for plaintiff is hereby directed to promptly obtain a filed copy of the Decision and Order for service with notice of entry in accordance with CPLR 5513.

Dated: July 27, 2017

Lake George, New York

_____________________________

ROBERT J. MULLER, J.S.C. Footnotes

Footnote 1:The action was stayed from January 2014 to April 2015 as a result of defendant's bankruptcy proceeding.

Footnote 2:Defendant's first, second and sixth counterclaims — all of which allege a lack of standing — have been deemed a single counterclaim for purposes of this discussion.

Footnote 3:Legal Services served a notice of appearance on or about December 10, 2013 waiving service of all papers except a notice of discontinuance, notice to amend the complaint, notice of sale and notice of proceedings to obtain surplus monies.

Footnote 4:Plaintiff has submitted a copy of a Lost Note Affidavit executed by Travis Creed — a Managing Member of Avalar — on March 7, 2007.

Footnote 5:While the Adjustment Agreement was not signed by plaintiff's representative until March 28, 2017 — after the Court reviewed the instant motion and requested a fully executed copy of the same — defendant has not raised any issues in this regard.