Midland Funding LLC v Goldberg

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[*1] Midland Funding LLC v Goldberg 2010 NY Slip Op 51823(U) [29 Misc 3d 1214(A)] Decided on October 19, 2010 District Court Of Nassau County, Second District Ciaffa, 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 This opinion is uncorrected and will not be published in the printed Official Reports.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 19, 2010
District Court of Nassau County, Second District

Midland Funding LLC, d/b/a in New York as Midland Funding of Delaware LLC, Plaintiff(s)


Stanley Goldberg, Defendant(s)


Pressler & Pressler, LLP 305 Broadway, 9th Floor, New York, NY 10007, Attorney for Plaintiff

Martin & Molinari, Esqs. 148 South Long Beach Ave. Freeport, NY 11520, Attorney for Defendant

Michael A. Ciaffa, J.

Motion by plaintiff for an order striking defendant's answer and/or directing defendant to respond to interrogatories, is determined as follows:

Plaintiff, suing as an alleged assignee of a credit card debt, served a demand for interrogatories and a notice to admit upon defendant following receipt of defendant's answer. When defendant failed to timely respond to the demand and the notice to admit, plaintiff filed the instant motion. Defendant did not answer the motion. Nor did he appear on the return date of the motion.

Under the circumstances presented, plaintiff's entitlement to any relief largely depends upon the assumption that it has standing to prosecute the action as an assignee. In his first affirmative defense, defendant alleges that plaintiff "lacks standing to bring this action." Moreover, proof of standing is a necessary prerequisite for obtaining any form of relief from this Court. See Midland Funding v. Haye, index no. 09377/09, decision dated November 5, 2009; see also Option One Mortg. Corp. v. Duke, 2009 NY Slip Op 51773(U) (Sup Ct Kings Co. 2009) (denying order of reference in mortgage foreclosure case upon sua sponte inquiry into plaintiff's standing); LVNV Funding v. Delgado, 2009 NY Slip Op 51677(U) (Dist Ct Nassau Co. 2009)(requiring proof of assignment before Court will entertain application for extending time to serve alleged debtor).

On the other hand, the legitimate owner of an assigned debt claim is entitled to all the rights and privileges of the original creditor. Once it establishes its standing, it is entitled, by law, to seek judgment upon the underlying claim through appropriate evidence of defendant's indebtedness. See Citibank, N.A. v. Martin, 11 Misc 3d 219, 225-6 (Civ Ct NY Co. 2005).

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As a practical matter, an assigned debt creditor faces a formidable burden in trying to make out a prima facie case for judgment upon an assigned debt. It cannot prove that the defendant owed a valid debt to the original creditor simply by submitting its own business records. See Rushmore Recoveries X, LLC v. Skolnick, 15 Misc 3d 1139(A), 2007 NY Slip Op 51041(U) (Dist Ct Nassau Co. 2007). Rather, under well established principles requiring a proper foundation for the submission of business records, the plaintiff ordinarily would be required to subpoena the records custodian of the original creditor in order to make a prima facie showing, in evidentiary form, that the defendant actually owed the debt in question.

But there is nothing in the law that restricts the assignee's ability to establish its claim through other means. The plaintiff, in this case, apparently hopes to prove its claim through a different route: namely, interrogatories and a notice to admit. Both are legitimate pre-trial devices which may properly be used in a District Court action. See UDCA §1101.

As permitted by CPLR §§3130-3132, plaintiff served a demand for interrogatories upon defendant's counsel on July 13, 2010, by mail. At the same time, plaintiff served a notice to admit upon defendant's counsel, as permitted by CPLR §3123. When defendant failed to provide timely responses, plaintiff followed up with a letter, dated August 8, 2010, affording defendant ten more days to comply.

The demands, in some respects, appear to be overbroad, unduly burdensome, or palpably improper. Nevertheless, the demands, as a whole, are aimed at obtaining relevant information from defendant. Many requests appears to concern the underlying debt which plaintiff is suing upon as an alleged assignee.

In the final analysis, the Court concludes that issuance of a conditional order of preclusion may be appropriate once it is satisfied, from documentary proof, that plaintiff possesses the requisite standing to pursue the underlying claim. Insistence upon such proof fairly balances the Court's interest in limiting use of its coercive powers to bona-fide cases and controversies, where the plaintiff can establish standing, and the rights of such a plaintiff to try to prove its claim through appropriate lawful means. See Midland Funding v. Haye, supra.

Accordingly, upon submission to the Court of complete proof of a valid assignment of the specific indebtedness referenced in the complaint, the Court will be prepared to entertain a request for a limited conditional preclusion order which may result in the striking of defendant's answer if he fails to provide adequate responses to the demand for interrogatories and the notice to admit or otherwise fails to provide meaningful discovery, in accordance with the Court's direction. [*3]

Consistent with the foregoing, the instant motion is held in abeyance, subject to


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plaintiff's submission to the Court of a complete copy of the alleged assignment. It must include any referenced attachments and related agreements, with all referenced assigned accounts included as part of the submission. Plaintiff must provide that submission to the Court, with a copy to the defendant, on or before November 30, 2010. This matter shall be heard, again, in this Court, on December 9, 2010. If defendant appears in Court on that date, the Court will allow him to satisfy his obligation to respond to plaintiff's demand and notice immediately, by giving testimony on the record or by mailing written responses made within a reasonable time thereafter. If defendant fails to appear, as required, the Court will, upon further review of plaintiff's demand and notice, draft an appropriate order of preclusion.



Dated: October 19, 2010