Deutsche Bank Natl. Trust Co. v Bailey

[*1] Deutsche Bank Natl. Trust Co. v Bailey 2009 NY Slip Op 50191(U) [22 Misc 3d 1119(A)] Decided on February 9, 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 This opinion is uncorrected and will not be published in the printed Official Reports.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 February 9, 2009
Supreme Court, Kings County

Deutsche Bank National Trust Company, As Trustee under Pooling and Servicing Agreement Dated as of April 1, 2007 Securities Asset Backed Receivables, LLC Trust 2007-BR2 Mortgage Pass- Through Certificates, Series 2007-BR2, Plaintiff,

against

Linda Bailey, et. al., Defendants.



3747/08

Arthur M. Schack, J.

In this mortgage foreclosure action for the premises located at 177 Grafton Street, Brooklyn, New York (Block 3552, Lot 17, County of Kings) plaintiff DEUTSCHE BANK NATIONAL TRUST COMPANY, AS TRUSTEE UNDER POOLING AND SERVICING AGREEMENT DATED AS OF APRIL 1, 2007 SECURITIES ASSET BACKED RECEIVABLES, LLC TRUST 2007-BR2 MORTGAGE PASS-THROUGH CERTIFICATES, SERIES 2007-BR2 [DEUTSCHE BANK] moves, upon the default of all defendants, for an order of reference. The motion is denied without prejudice, with leave to renew upon submitting to the Court within sixty (60) days of this decision and order: documents demonstrating that DEUTSCHE BANK had an ownership interest in the subject mortgage and note prior to the February 4, 2008 commencement of this action; an affidavit from an officer of DEUTSCHE BANK explaining why DEUTSCHE BANK [*2]purchased the instant nonperforming loan, then 110 days in arrears; and an affidavit or affirmation identifying whether the instant mortgage loan, pursuant to L 2008, ch 472, § 3-a is a subprime home loan as defined in Real Property and Actions Proceedings Law § 1304 or is a high-cost home loan as defined in Banking Law § 6-l.

Background

Defendant LINDA BAILEY [BAILEY] executed the instant mortgage and note on December 8, 2006 and borrowed $433,600.00 from NEW CENTURY MORTGAGE CORPORATION [NEW CENTURY]. MORTGAGE ELECTRONIC REGISTRATION SYSTEMS, INC. [MERS], as nominee for NEW CENTURY, recorded the instant mortgage and note on January 5, 2007, in the Office of the City Register of the City of New York, City Register File Number (CRFN) 200700007656. According to the March 17, 2008-affidavit of Rolando Reyes, Vice President of DEUTSCHE BANK, defendant BAILEY defaulted on the subject loan by failing to make her November 1, 2007 payment.

As noted above, plaintiff DEUTSCHE BANK commenced this action by filing the summons, complaint and notice of pendency with the Office of the Kings County Clerk on February 4, 2008.

On February 15, 2008, MERS, as nominee for NEW CENTURY, assigned the

subject mortgage and note to plaintiff DEUTSCHE BANK and the assignment was recorded on April 9, 2008 in the Office of the City Register of the City of New York, CRFN 20080000141220. Absent proof that DEUTSCHE BANK had possession of the mortgage and note on February 4, 2008, it is clear that MERS, as nominee for NEW CENTURY, not DEUTSCHE BANK, owned the BAILEY mortgage that day, the day that this action commenced.

Further, the assignment by MERS, as nominee for NEW CENTURY, to DEUTSCHE BANK took place almost four months after BAILEY'S default. The assignment of the BAILEY nonperforming loan to DEUTSCHE BANK appears to be a small ripple in what former Federal Reserve Board Chairman Alan Greenspan called, in his October 23, 2008 testimony before the House Oversight Committee, "a once in a century credit tsunami." The Court wonders did DEUTSCHE BANK purchase the BAILEY mortgage loan at a deep discount or did DEUTSCHE BANK violate its fiduciary duty to its stockholders with the purchase of a loan that defaulted almost four months prior to its assignment to DEUTSCHE BANK?

Discussion

Plaintiff DEUTSCHE BANK must have "standing" to bring this 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 [*3]

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 DEUTSCHE BANK lacked standing to foreclose on the instant mortgage and note when this action commenced on February 4, 2008, the day DEUTSCHE BANK filed the summons and complaint with the Kings County Clerk, because it did not own the mortgage and note on that day. 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 Winn, 19 AD3d 545 [2d Dept 2005]; Sears Mortgage Corp. v Yaghhobi, 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 Mortg. Corp. v Fern, 298 AD2d 490 [2d Dept 2002]; Village Bank v Wild Oaks Holding, Inc., 196 AD2d 812 [2d Dept 1993]).

Assignments are made by either written instrument or by the assignor physically delivering the mortgage and note to the assignee. DEUTSCHE BANK failed to demonstrate to the Court that it had physical possession of the BAILEY mortgage and note on February 4, 2008. "Our courts have repeatedly held that a bond and mortgage may be transferred by delivery without a written instrument of assignment." (Flyer v Sullivan, 284 AD 697, 699 [1d Dept 1954]). (See Levy v Louvre Realty Co., 222 NY 14, 20 [1917]; Curtis v Moore, 152 NY 159 [1897]; Bankers Trust Co. v Hoovis, 263 AD2d 937, 938 [3d Dept 1999]; Indymac Bank, FSB v Boyd, 22 Misc 3d 1113 (A) [Sup Ct, Kings County 2009]; Credit-Based Asset Management and Securitization, LLC v Akitoye, 22 Misc 3d 1110 (A) [Sup Ct, Kings 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, supra; Countrywide Home Loans, Inc. v Taylor, 17 Misc 3d 595 [Sup Ct, Suffolk County 2007]). Plaintiff DEUTSCHE BANK "offers no evidence that it took physical possession of the note and mortgage before commencing this action, and again, [*4]the written assignment was signed after defendant was served." (Deutsche Bank Trust Co. Americas v Peabody, 20 Misc 3d 1108 [A] [Sup Ct, Saratoga County 2008]).

Conclusion

Accordingly, it is

ORDERED, that the motion of plaintiff DEUTSCHE BANK NATIONAL TRUST COMPANY, AS TRUSTEE UNDER POOLING AND SERVICING AGREEMENT DATED AS OF APRIL 1, 2007 SECURITIES ASSET BACKED RECEIVABLES, LLC TRUST 2007-BR2 MORTGAGE PASS-THROUGH CERTIFICATES, SERIES 2007-BR2 for an order of reference for the premises located at 177 Grafton Street, Brooklyn, New York (Block 3552, Lot 17, County of Kings) is denied without prejudice; and it is further

ORDERED, that leave is granted to plaintiff DEUTSCHE BANK NATIONAL TRUST COMPANY, AS TRUSTEE UNDER POOLING AND SERVICING AGREEMENT DATED AS OF APRIL 1, 2007 SECURITIES ASSET BACKED RECEIVABLES, LLC TRUST 2007-BR2 MORTGAGE PASS-THROUGH CERTIFICATES, SERIES 2007-BR2 to renew its motion for an order of reference for the premises located at 177 Grafton Street, Brooklyn, New York (Block 3552, Lot 17, County of Kings), if it submits to the Court, within sixty (60) days of the date of this decision and order: (1) documents demonstrating that plaintiff DEUTSCHE BANK NATIONAL TRUST COMPANY, AS TRUSTEE UNDER POOLING AND SERVICING AGREEMENT DATED AS OF APRIL 1, 2007 SECURITIES ASSET BACKED RECEIVABLES, LLC TRUST 2007-BR2 MORTGAGE PASS-THROUGH CERTIFICATES, SERIES 2007-BR2 had an ownership interest in the subject mortgage and note prior to the February 4, 2008 commencement of this action;(2) an affidavit from an officer of DEUTSCHE BANK NATIONAL TRUST COMPANY, AS TRUSTEE UNDER POOLING AND SERVICING AGREEMENT DATED AS OF APRIL 1, 2007 SECURITIES ASSET BACKED RECEIVABLES, LLC TRUST 2007-BR2 MORTGAGE PASS-THROUGH CERTIFICATES, SERIES 2007-BR2 explaining why DEUTSCHE BANK NATIONAL TRUST COMPANY, AS TRUSTEE UNDER POOLING AND SERVICING AGREEMENT DATED AS OF APRIL 1, 2007 SECURITIES ASSET BACKED RECEIVABLES, LLC TRUST 2007-BR2 MORTGAGE PASS-THROUGH CERTIFICATES, SERIES 2007-BR2 purchased the instant nonperforming loan, 110 days after its default; and(3) an affidavit or affirmation identifying whether the instant mortgage loan, pursuant to L 2008, ch 472, § 3-a is a subprime home loan as defined in Real Property and Actions Proceedings Law § 1304 or is a high-cost home loan as defined in Banking Law § 6-l.

This constitutes the Decision and Order of the Court. [*5]

ENTER

___________________________

HON. ARTHUR M. SCHACKJ. S. C.

.