Citibank, N.A. v Herman

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Citibank, N.A. v Herman 2013 NY Slip Op 30920(U) April 23, 2013 Sup Ct, Suffolk County Docket Number: 09-34089 Judge: Joseph C. Pastoressa 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] INDEX NO. 0 9 - 3 4 0 , k SUPREME COURT - STATE OF NEW YORK I.A.S. PART 34 - SUFFOLK COUNTY PRESENT: Hon. JOSEPH C. PASTORESSA Justice of the Supreme Court Mot. Seq. ## 001 - MD X CI'TIBANK, N.A., as trustee for CERTIFICATE HOLDERS OF STRUCTURED ASSET MORTGAGE INVESTMENTS I1 TRUST 2007AR6, PASS-THROUGH CERTIFICATES, SERIES 2007-AR6 800 State Highway 121 Bypass Lewisville. TX 75067 Plaintiffs, - against STINE & ASSOCIATES, P.C. Attorney for Plaintiff 187 East Main Street Huntington, New York 1 1743 WESTERMAN BALL EDERER MILL,ER & SHARFSTEIN, LLP Attorney for Defendants Herman 1201 RXR Plaza Uniondale, New York 1 1556 - THOMAS HERMAN, BARBARA HERMAN, PEOPLE OF THE STATE OF NEW Y O N , JOHN DOE (Said name being fictitious, it being the intention of Plililltiff to designate any and all occupants of premises being foreclosed herein, and any parties. cctrporations or entities, if any, having or claiming an interest or lien upon the mortgaged premises, Defendants. Upon the folloi.\ ing papers niimbered 1 to 1 read on this motion for summary iudgrnerc; Notice of Motion/ Order 0 to Show Cause and supporting papers 1 - 5 ; Notice of Cross Motion and supporting papers -; Answering Affidavits and supporting papers 6-8: Replying Affidavits and supporting papers 9 - I O ; Other -; (awh%rk) it is. [* 2] Citibank v Herman Index No. 09-34089 Page No. 2 ORDERED that the motion by defendants Thomas Herman and Barbara Herman for summary judgment dismissing the complaint pursuant to CPLR 32 12, canceling the notice of pendency pursuant to CPLR 65 14. and striking the plaintiffs complaint with prejudice pursuant to CPLR 3 126 is denied in its entirety. On May 24. 2007, defendants Thomas Herman and Barbara Herman (collectively the Hermans ), borrowed $9 10,000 from American Brokers Conduit ( ABC ) executing a note secured by a mortgage on the property located at 408 River Avenue in Patchogue, New York (the Property ). The mortgage, recorded on June 29, 2007 in the Suffolk County Clerk s office, reflects that Mortgage Electronic Registration Systems, Inc. ( MERS ) is the nominee for ABC. The Hermans defilulted on the note by failing to make the monthly installments due on March 1, 2009 and thereafter. On ,4ugust 25,2009, MERS assigned the mortgage to the plaintiff, and on August 27, 2009, the plaintiff filed a notice of pendency and commenced the instant foreclosure action. The Hermans interposed a verified answer denying that they defaulted in making payments, and asserted affirmative defenses, including lack of standing. On October 22, 2009, the Request for Judicial Intervention was filed, and the case was referred to the foreclosure part where settlement conferences were held from Decleinber 14, 2009 through March 17,2011. Thus, there has been compliance with CPLR 3408. Thereafter, on November 11, 2009 the Hermans served plaintiff with interrogatories and document demands to which the plaintiff has not responded. The Hermans now move for summary dismissal of the complaint based on their seventh affirmative defense that the plaintiff lacks standing to bring this action. The Hermans also move to cancel the notice of pendency pursuant to CPLR 65 14 on the grounds that the plaintiff lacks standing, and to strike the complaint pursuant to CPLR 3 126 on the grounds that the plaintiffhas failed, and refuses to respond to their discovery demands. Where, as here, standing is challenged by the defendants, the plaintiff must establish that it has standing to be entitled to any relief requested in the complaint (see U.S. Bank Nat. Assn. v Dellarmo, 94 AD3d 746,942 NYS2d 122 [2d Dept 20121; Bank of New York v Silverberg, 86 AD3d 280, 926 NYS2d 532 12d Dept 201 11; Wells Fargo Bank Minnesota v Mastropaolo, 42 AD3d 239, 837 NYS2d 247 [ 2d Dept 20071). A plaintiff establishes its standing in a mortgage foreclosure action by demonstrating that it is both the holder or assignee of the subject mortgage and the holder or assignee of the underlying note. either by physical delivery or execution o f a written assignment prior to the commencement of the action (Deutsclze Bank Nat. Trust Co. v Rivas, 95 AD3d 106 1, 106 1- 1062, 945 NYS2d 328 [2d Dcpt 20121. quoting Aurora Loan Servs., LLC v Weisblum, 85 AD3d 95, 108, 923 NYS2d 609 [2d Dept 201 I]: see HSBC Bank USA v Hernandez, 92 AD3d 843,939 NYS2d 120 [2d Dept 2012l). An assignment oftlie mortgage without an assignment of the underlying note or bond is a nullity. and no intcrc.\t is acquired by it (HSBC Bank USA v Hernandez, ,supl-u ai 843; see Bank of New York v Silverbtprg s i p i u ) . I-lowever, a written assignment of the underlying note or the physical delivery of the notc prior to coininencement of the foreclosure action is sufficient to transfer the obligation and vest standing i n the plaintiff. since the mortgage passes with the debt that is evidenced by the note as an inseparablc incident thereto (see U.S. Bank, NA v Slzcirif, 89 AD3d 723, 933 NYS2d 293 [* 3] Citibank v Herman Index No. 09-34080 Page No. 3 [2d Dept 20 1 I]: Brink o New York v Silverberg, supra; US. Bank, N.A. v Collymore, 68 AD3d 752, f 753. 890 NI S2d 5 7 8 [2d Dept ZOOS]). Where a notc is payable to order, it is negotiated by delivery with any necessary indorsement (McKinney s Cons 1,aws ofNY, Book 62%, UCC 5 3-202[1]). The indorsement must be written on the note or on a paper so lirmly afiixed thereto as to become a part thereof (id.at tj :3-202[2]). An indorsement in blank specifies no particular indorsee and may consist of a mere signature...and becomes payable to bearer arid may be negotiated by delivery alone until specifically indorsed (McKinney s Cons Laws ofNY, Book 62%, UCC tj 3-204[2]). I n support of their motion, the Hermans have submitted, h t e r alia, an afficlavit from Barbara Herman wherein she acknowledges that she and her husband defendant Thomas Herman executed, in favor ofAB(3, a note secured by a mortgage on their Property, but asserts that although she has the mortgage document. she is unable to locate the note. Nevertheless, counsel for the Hermans has attached to the motion papers a copy of the note and the mortgage, as well as the ,4ssignment of Mortgage from ME RS to the plaintiff which was recorded in the Suffolk County Clerk s office on September 28,2009 (the Assignment ). The Hermans argue, although the Assignment provides that MERS, as nominec fhr ABC. assigns to plaintiff TO HAVE AND TO HOLD the said Mortgage and Note ... MERS was never the holder, in possession of, or the assignee of the underlying note. Thus, the Hermans maintain, ILlERS assigned the mortgage to plaintiff but not the note, which is insufficient to confer standing upon the plaintiff to bring this action. It is well-settled that to grant a motion for summary judgment, there must be no issues of material fact, and if such an issue exists, or where the issue is arguable then the motion must be denied (Sillman v Twentieth Cetztciiy-Fox Film Corp. 3 NY2d 395,404, 165 NYS2d 498 [ 19571; Rivers v Birnbaum,102 AD3d 26, 953 NYS2d 232 [2d Dept 20121; Celardo v Bell, 222 AD2d 647,635 NYS2d 85 [2d Dept 19951). Here, affording plaintiff as the non-movant the benefit of every favorable inference as required on a motion fbr summary judgment, the branch of the motion to dismiss based on standing must be denied. I n oppositioii. the plaintiff has proffered the pleadings. the affidavits of service for the summons and complaint and thc requisite foreclosure notices required by RPAPL $ 5 1303, 1304 and 1320. The plaintiff has also prol l cred a copy of the note indorsed in blank by ABC. However, the indorsement in blank is undatcd. and the plaintil l has failed to establish that the note was physically delivered to it prior to the commencement of thc action. Nevertheless. it is not clear whether the indorsement was effectuated prior to the commenecment of this action, as the copy of the note submitted by the Hermans does not contain the indorsenicnt (see Decitsclze Bank Nationid Trust Co. v Hnller, 100 AD3d 680, 954 NYS2d 551 [2d I k p r 201 21; Deirtsclie Batik National Trust Co. v Barnett, 88 AD3d 636, 931 NYS2d 630[2d Dept 201 1 I). l herctbre. the Hermans have failed to establish, prima facie, that the plaintiff lacked standing t o commence this action inasmuch as there are issues of fact as to whether the plaintiff There is iio indication in the moving papers as to whether the note proffered by the Hermans was SCI cd upon them by the plaintiff. [* 4] Citibank v Herman Index No. 09-34080 Page No. 4 had standing by virtue of physical delivery of the note prior to the commencement of the foreclosure action (U.S Batik NutionalAs.str. vPia, 73 AD3d 752, 753, 901 NYS2d 104 [2tl Dept 20101, quoting U S . Bank, ,VA. v Co/lJ?inore, AD_?d752, 754, 890 NYS2d 578 [2d Dept 20091). 68 The branch ol the motion to strike the plaintiffs complaint is also denied. A court has the discretion to striltc a pleading against a party who refuses to obey an order for disclosure or willfully fails to disclose inlhrniation which the court finds should have been disclosed (CPLR 3 126; see Tos v Jackson Heights C crre c tr., LLC, 91 AD3d 943,937 NYS2d 629 [2d Dept 20121; Dank vSears Holding Mgt. Gorp.. 69 AD3d 557, 892 NYS2d 510 [2d Dept 20101). A party selzking the drastic sanction of striking a pleading has the initial burden of coming forward with evidence clearly showing that the failure to comply with disclosure orders or discovery demands was willful, contumacious or in bad faith (see Coticirrtori v Port Autlz. of N.Y. & N.J., 46 AD3d 501, 846 NYS2d 659 [2d Dept 20071; Shupiro v Kurtznznn, 32 AD3d 508, 820 NYS2d 3 11 [2d Dept 20061). Willful and contumacious conduct niay be inferred from a party s repeated failure to respond to discovery demands or to comply with disclosure orders. coupled with inadequate excuses for such default (see Tos v Jackson HeiglztsCare Ctr., LLC, supru; Daizk v Sears Holding Mgt. Corp., supra). Here, counsel for the Hermans sets forth the good faith efforts made to resolve the discovery issues with plaintiff s predecessor counsel, the law firm of Steven J. Baum, P.C. (the Baum firm ), and plaintiffs current counsel, all of which it is claimed were futile. Specifically, the Hermans counsel asserts that a letter dated January 23, 2012 mailed to the Baum firm, and letters dated March 5 and March 26, 201 2 niailcd to the plaintiff s current counsel, advised that responses h,ad not been received to the November 1, 20 1 1 interrogatories and document demands; the letters went unanswered and as of the filing of the instant motion, no response had been received. In opposition. the plaintiff s counsel points out that on November 20, 201 I , the Baum firm announced its dissolution. effectiLe February 20, 2012, and the case was not transferred to current counsel until February 2, 2012 as evidenced by the Consent to Change Attorney notification filed with the Suffolk County C lcrl< sofiicc. Moreover, plaintiffs counsel asserts, the Baurn firm did correspond with Hermans counsel on October 27, 201 1 in response to a Notice to Take Deposition Upon Oral Examination datcd October 24, 20 1 1. The Baum firm advised the Hermans counsel that it and the plaintiff were una\,-tilable to attend a deposition that had been scheduled for January 24, 2012, and requested I1erman.s counsel to contact the Baum firm to discuss available dates. Additiondl \ . plaintiff s counsel cites to NYCRR 4 202.12-a (c)(7) which provides that motions ~ shall be held i n a b c ance whilc hrcclosure settlement conferences are being held Thus, counsel asserts, the decision h a s matlc not to maLc a motion during the 15-month period the case was in the foreclosure Pa* The explanation 01 plainti 1 I-s counsel, which in essence amounts to law office failure as documents ha\ e not Ixwi produccd since the case was transferred to the current firm in February 201 2 and the instant motion \\as originally made returnable in September 201 2, under the circumstances, is accepted as a reasonable excusc. There is no evidence that plaintift s conduct was willful, contumacious h 103 or a result of bad h ~ t (5ee Snq>fh Get@ Petroleum Marketing, IIIC., AD3d 790, 959 NYS2d 543 19 [* 5] Citibank v Hermaii Index No. 0()-3408c) Page No. 5 [2d Ilept 201 3; Wrrpic~r 229 Metro, LLC, 59 AD3d 53 1, 873 NYS2d 117 [2d Dept 20091; v Hnlikiopocilos v Nerrv I ork Hosp. Med. Ctr. of Queens, 284 AD2d 373, 725 NYS2d 895 [2d Dept 2001 1). Moreover. in light of tlic strong public policy of resolving cases on the merits and the lack of any demonstration 01 pl-e.judice to the Hermans caused by the delay, the drastic rernedy of striking the complaint is not u m x i t e d (see Smyth v Getty Petroleum Mnrketing, Inc., szpra; Hdikiopoulos v New York Hosp. Med. Ctr. o Queeris, stipm). f Accordingly. tlic motion is denied. As a preliminaiy conference has not been held in this action, the parties counsel are directed to appear at 9:30 a.m. 1011 June 19, 20 13, for such a conference. h Dated: April 23, 20 HOM. JOSEPH C. PAS TORESSA, J.S.C. FlNA 1 DISPOSITION , X NON-FINAL DISPOSITIOlV

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