Maddox v. Bank of New York Mellon Trust Co., No. 19-1774 (2d Cir. 2021)Annotate this Case
The Second Circuit affirmed the district court's order denying the Bank's motion for judgment on the pleadings. The court held that state legislatures may create legally protected interests whose violation supports Article III standing, subject to certain federal limitations. The court also decided that the New York law violations alleged here constitute a concrete and particularized harm to plaintiffs in the form of both reputational injury and limitations in borrowing capacity over the nearly ten-month period during which their mortgage discharge was unlawfully not recorded and in which the Bank allowed the public record to reflect, falsely, that plaintiffs had an outstanding debt of over $50,000.
The court further concluded that the Bank's failure to record plaintiffs' mortgage discharge created a material risk of concrete and particularized harm to plaintiffs by providing a basis for an unfavorable credit rating and reduced borrowing capacity. The court explained that these risks and interests, in addition to that of clouded title, which an ordinary mortgagor would have suffered (but plaintiffs did not), are similar to those protected by traditional actions at law. Therefore, plaintiffs have Article III standing and they may pursue their claims for the statutory penalties imposed by the New York Legislature, as well as other relief. Accordingly, the court affirmed and remanded.
The court issued a subsequent related opinion or order on November 17, 2021.