Suntrust Mtge., Inc. v Andriopoulos
Annotate this CaseDecided on March 29, 2013
Supreme Court, Suffolk County
Suntrust Mortgage, Inc., Plaintiff,
against
John Andriopoulos, LISA ANDRIOPOULOS GEORGE ANDRIOPOULOS, SUNTRUST MORTGAGE INC., MORTGAGE ELECTRONIC REGISTRATION SYSTEMS, INC., CHASE MANHATTAN BANK, SEARS ROEBUCK & CO., LVNV FUNDING, LLC ASSET ACCEPTANCE, LLC, NASSAU EDUCATIONS FEDERAL CREDIT UNION, ET ALS, Defendants.
11703/11
BERKMAN, HENOCH
Attys. For Plaintiff
100 Garden City Plaza
Garden City, NY 11530
LIEB AT LAW, PC
Attys. For Defs J. & G
Andriopoulos
376A Main St.
Center Moriches, NY 11934
Thomas F. Whelan, J.
Upon the following papers numbered 1 to12read on this motionfor accelerated judgments, deletion of parties and appointment of referee and cross motion for summary judgment; Notice of Motion/Order to Show Cause and supporting papers 1 - 4; Notice of Cross Motion and supporting papers 5-8; Answering Affidavits and supporting papers9-10; Replying Affidavits and supporting papers11-12; Other; (and after hearing counsel in support and opposed to the motion, it is
ORDERED that this motion (#001) by the plaintiff for accelerated judgments against the defendants, the appointment of a referee to compute and other incidental relief is considered under CPLR 3212, 3215 and RPAPL 1321 and is granted; and it is further
ORDERED that the cross motion (#002) by defendants, John Andriopoulous and George Andriopoulous, for an order dismissing the complaint due to a purported lack of standing on the part of the plaintiff or, in the alternative, for leave to serve an amended answer and other relief, is considered under CPLR 3211, 3212, 3025, 3408 and 3126 and is denied.
The plaintiff commenced this action to foreclose a February 21, 2007 mortgage on residential real property situated in Lindenhurst, New York given by the three Andriopoulous defendants. Said mortgage served as security for a mortgage note of the same date executed by defendant, John Andriopoulous, in the principal amount of $274,200.00. Both the note and mortgage of Febraury 21, 2007 were transacted by defendant John Andriopoulous by his attorney-in-fact, co-defendant, Lisa Andriopoulous. The complaint charges the obligor and mortgagor defendants with a default in payment on April 1, 2010. Issue was joined solely by service of an answer by defendants, John and George Andriopoulous, as all other defendants defaulted in answering. The answer served contains one general denial of all allegations advanced in the complaint and some twelve affirmative defenses, including that the plaintiff lacks standing to maintain this action.
The plaintiff now moves for an order: (1) awarding it summary judgment against the answering defendants together with dismissal of the twelve affirmative defenses set forth in their answer; (2) fixing the defaults in answering of the non-answering defendants; (3) deleting as party defendants the unknown defendants listed in the caption; and (4) appointing a referee to compute amounts due under the subject mortgage. Answering defendants, John and George ANDRIOPOULOS, oppose the plaintiff's motion-in-chief in cross moving papers. Therein, the answering defendants demand dismissal of the complaint on their lack of standing defense that is advanced in their answer as their THIRD affirmative defense. Alternatively, the answering defendants seek leave to amend their answer so as to assert a new defense sounding in champerty. In addition, the answering defendants seek a return of this action to the specialized mortgage foreclosure part and a conditional order striking the complaint in the event the plaintiff fails to serve [*2]a bill of particulars or fails to respond to discovery demands. For the reasons stated below, the plaintiff's motion-in-chief is granted while the cross motion of the defendants is in all respect denied.
"Entitlement to a judgment of foreclosure may be established, as a matter of law, where a mortgagee produces both the mortgage and unpaid note, together with evidence of the mortgagor's default, thereby shifting the burden to the mortgagor to demonstrate, through both competent and admissible evidence, any defense which could raise a question of fact" (Zanfini v Chandler, 79 AD3d 1031, 912 NYS2d 911 [2d Dept 2010], quoting HSBC Bank USA v Merrill, 37 AD3d 899, 900, 830 NYS2d 598 [2d Dept 2010]; see Bank Natl. Ass'n. v Denaro, 98 AD3d 964, 950 NYS2d 581 [2d Dept 2012]; Citibank, N.A. v Van Brunt Prop., LLC, 95 AD3d 1158, 945 NYS2d 330 [2d Dept 2012]; HSBC Bank v Shwartz, 88 AD3d 961, 931 NYS2d 528 [2d Dept 2011]; US Bank N.A. v Eaddy, 79 AD3d 1022, 1022, 914 NYS2d 901 [2010]). Where, as here, an answer served includes the defense of standing or lack of capacity to sue, the plaintiff must further establish its standing to succeed on a motion for summary judgment (see US Bank, N.A. v Adrian Collymore, 68 AD3d 752, 890 NYS2d 578 [2d Dept 2009]).
Here, the moving papers established the plaintiff's entitlement to summary judgment on its foreclosure complaint to the extent it asserts claims against the answering defendants as such papers included copies of the mortgage, the unpaid note executed together with due evidence of a default under the terms thereof secured by the mortgage (see CPLR 3212; RPAPL § 1321;US Bank Natl. Ass'n. v Denaro, 98 AD3d 964, 950 NYS2d 581 [2d Dept 2012]; Neighborhood Hous. Serv. of New York City v Hawkins, 97 AD3d 554, 947 NYS2d 321 [2d Dept 2012]; Baron Assoc., LLC v Garcia Group Enter., 96 AD3d 793, 946 NYS2d 611 [2d Dept 2012]; Washington Mut. Bank v Valencia, 92 AD3d 774, 939 NYS2d 73 [2d Dept 2012]; Archer Capital Fund, L.P. v GEL, LLC, 95 AD3d 800, 944 NYS2d 179 [2d Dept 2012]; Rossrock Fund II, L.P. v Osborne, 82 AD3d 737, 918 NYS2d 514 [2d Dept 2011]). The moving papers further established, prima facie, that the plaintiff was the original lender and as such, the owner of the note at the time of the commencement of this action and thus had standing to sue. The moving papers also included sufficient proof to establish that each of the remaining affirmative defenses set forth in the answer of the defendants are subject to dismissal due to their total lack of merit (see e.g., Liberty Pointe Bank v 7 Waterfront Prop., LLC, 94 AD3d 1061, 942 NYS2d 610 [2d Dept 2012]; Wells Fargo Bank, N.A. v Cohen, 80 AD3d 753, 915 NYS2d 569 [2d Dept 2010]; La Salle Bank Natl. Ass'n. v Kosarovich, 31 AD3d 904, 820 NYS2d 144 [3d Dept 2006]; Grogg Assocs. v South Rd. Assocs., 74 AD3d 1021, 907 NYS2d 22 [2d Dept 2010]). Indeed, the lack of merit in several of these affirmative defenses, including those that charge the plaintiff with pleading omissions and a purported failure to state a claim for foreclosure and sale, are flatly contradicted by a reading of the complaint. The plaintiff thus established a prima facie entitlement to the summary judgment and other relief demanded in its moving papers.
It was thus incumbent upon the answering defendants to submit proof sufficient to raise a genuine question of fact rebutting the plaintiff's prima facie showing or in support of the affirmative defenses asserted in their answer or otherwise available to them (see Flagstar Bank v Bellafiore, 94 AD3d 1044, 943 NYS2d 551 [2d Dept 2012]; Grogg Assocs. v South Rd. Assocs., 74 AD3d [*3]1021, supra; Wells Fargo Bank v Karla, 71 AD3d 1006, 896 NYS2d 681 [2d Dept 2010]; Washington Mut. Bank v O'Connor, 63 AD3d 832,880 NYS2d 696 [2d Dept 2009]; J.P. Morgan Chase Bank, N.A. v Agnello, 62 AD3d 662,878 NYS2d 397 [2d Dept 2009]; Aames Funding Corp. v Houston, 44 AD3d 692, 843 NYS2d 660 [2d Dept 2007]). Notably, self-serving and conclusory allegations do not raise issues of fact and do not require plaintiff to respond to alleged affirmative defenses which are based on such allegations (see Charter One Bank, FSB v Leone, 45 AD3d 958, 845 NYS2d 513 [3d Dept 2007]; Rosen Auto Leasing, Inc. v Jacobs, 9 AD3d 798, 780 NYS2d 438 [3d Dept 2004]). Where a defendant fails to oppose some or all matters advanced on a motion for summary judgment, the facts as alleged in the movants' papers may be deemed admitted as there is, in effect, a concession that no question of fact exists (see Kuehne & Nagel, Inc. v Baiden, 36 NY2d 539, 369 NYS2d 667 [1975]; see also Madeline D'Anthony Enter., Inc. v Sokolowsky, 101 AD3d 606, 957 NYS2d 88 [1st Dept 2012]; Argent Mtge. Co., LLC v Mentesana, 79 AD3d 1079, 915 NYS2d 591 [2d Dept 2010]). A review of the opposing papers submitted by the defendants reveals that the same were insufficient to raise any genuine question of fact requiring a trial on the merits of the plaintiff's claims for foreclosure and sale and insufficient to demonstrate any bona fide defense to the plaintiff's claim for a judgment of foreclosure and sale (see Cochran Inv. Co., Inc. v Jackson, 38 AD3d 704, 834 NYS2d 198 [2d Dept 2007]).
The only pleaded defense raised by the answering defendants on these motions was the lack of standing defense which was asserted as the THIRD affirmative defense in their answer. The failure to raise and/or assert each of the remaining pleaded defenses in opposition to the plaintiff's motion for summary judgment warrants the dismissal of these abandoned affirmative defenses under the case authorities cited above (see Kuehne & Nagel, Inc. v Baiden, 36 NY2d 539, supra; Madeline D'Anthony Enter., Inc. v Sokolowsky, 101 AD3d 606, supra).
With respect to the lack of standing defense, the court finds that such defense is without merit. The standing of a plaintiff in a mortgage foreclosure action is measured by its ownership, holder status or possession of the note and mortgage at the time of the commencement of the action (see US Bank of NY v Silverberg, 86 AD3d 274, 279, 926 NYS2d 532 [2d Dept 2011]; US Bank, N.A. v Adrian Collymore, 68 AD3d 752, supra; Wells Fargo Bank, N.A. v Marchione, 69 AD3d 204, 887 NYS2d 615 [2d Dept 2009]). Because "a mortgage is merely security for a debt or other obligation and cannot exist independently of the debt or obligation" (Deutsche Bank Natl. Trust Co. v Spanos, 102 AD3d 909, 2013 WL 361084 [2d Dept 2013, internal citations omitted]), a mortgage passes as an incident of the note upon such note's physical delivery to the plaintiff (see US Bank Natl. Ass'n. v Cange, 96 AD3d 825, 947 NYS2d 522 [2d Dept 2012]). The delivery the note also effects an unwritten assignment of both the note and mortgage (see Bank of NY v Silverberg, 86 AD3d 274, supra; US Bank, N.A. v Collymore, 68 AD3d 752, supra; LaSalle Bank Natl. Ass'n. v Ahearn, 59 AD3d 911, 875 NYS2d 595 [3d Dept 2009]). Because the converse is not true, an assignment of a mortgage without assignment of the underlying note or bond is a nullity, and no interest therein is acquired by the intended transferee (see Bank of NY v Silverberg, 86 AD3d 274, supra; US Bank, N.A. v Collymore, 68 AD3d 752, supra).
As indicated above, the plaintiff was the original lender and, as such, acquired possession [*4]of the note at the time of the closing of the loan which possession continues to date. In addition, a March 28, 2011 written assignment of the note and mortgage to the plaintiff by the plaintiff's nominee, Mortgage Electronics Registration Systems Inc. [MERS], purportedly conferred assignee status upon the plaintiff and it extinguished any title and ownership interests MERS may have had in the mortgage. Such interests seemingly arose from the language of the mortgage indenture itself. Therein, Mortgage Electronics Registration Systems Inc. [MERS] was designated as the "Mortgagee of Record for Purposes of Recording" under paragraph (c) of the mortgage and it was granted "legal title" to the rights granted to the Lender under the "Borrower's Transfer to Lender's of Rights in the Property" provisions on page 3 of the mortgage. Lenders holding the original note and a mortgage containing these provisions often seek an assignment of the mortgage from MERS back to itself prior its comment of foreclosure actions in an effort to clarify the chain title, particularly, where the recording page of the mortgage reflects that MERS was the mortgagee of record.
An unintended consequence of such assignments is to undermine, rather than clarify, the title and ownership interests in the note and mortgage that vested in the original lender when the loan closed. Thus, an original lender who retained the note and mortgage and who relies upon a MERS assignment, rather than on its status as the original lender and possessor of the note and mortgage, may put itself at risk of a standing challenge. Such risk arises from case authorities which hold that MERS can not effectively assign the note or mortgage to a third party transferee absent MERS' possession of an ownership interest in the note (see Bank of NY v Silverberg, 86 AD3d 274, supra; but see Mortgage Elec. Registration Sys., Inc. v Coakley, 41 AD3d 674, 838 NYS2d 622 [2d Dept 2007]; US Bank N.A. v Flynn, 27 Misc 3d 802, 897 NYS2d 855 [Sup. Ct. Suffolk County 2010]). A third party transferee claiming ownership of the note under a MERS assignment may thus be non-suited where there is sufficient evidence that MERS could not effectively have assigned the note due to a lack of an ownership or other interest in the note or a lack of authority to so transact on behalf of the note as its nominee.
The circumstances of this case do not, however, give rise to a viable defense of a lack of standing on the part of the plaintiff for two reasons. First, the written assignment by MERS of the note and mortgage was not an assignment to a third party transferee, but instead, one to the original lender who already held the note. Second, any invalidity in the MERS assignment due to its inclusion of an assignment of note, in which it may not have had a true ownership interest, simply left the plaintiff with its original and continuing ownership of the note and of the mortgage, notwithstanding that such mortgage may have been recorded as being owned by MERS, or by MERS as nominee of the plaintiff.
The court thus finds that the plaintiff established by due and sufficient proof that it was the owner and possessor of the note and mortgage prior to the commencement of the this action and thus has standing to prosecute same. The defendant's claim of a lack of standing on the part of the plaintiff is thus without merit. Accordingly, those portions of the defendants' cross motion wherein they seek dismissal pursuant to CPLR 3211 and/or 3212 of the plaintiff's complaint are denied.
Also denied are the remaining portions of the defendants' cross motion. The standard for determining a party's right for leave of the court to amend its pleading is simply whether the [*5]amendment is palpably improper or patently insufficient as a matter of law (see Koenig v Action Target, Inc., 76 AD3d 997, 907 NYS2d 692 [2d Dept 2010]; Lucido v Mancuso, 49 AD3d 220, 851 NYS2d 238 [2d Dept 2008]). If it is neither, leave to amend should be granted unless an adverse party demonstrates that surprise or prejudice will directly result from the amendment (see Koenig v Action Target, Inc., 76 AD3d 997, supra; Yemini v Goldberg, 46 AD3d 806, 848 NYS2d 676 [2d Dept 2007]). Here, the proposed new affirmative defense of champerty is totally lacking in merit since the plaintiff is the original lender who never transferred the note and mortgage nor illegally split them. Those portions of the defendants' cross motion for leave to amend its answer are thus denied.
Likewise denied are the answering defendants' claims that the plaintiff's motion is premature due to the absence of discovery. The rule at CPLR 3212(f) provides that "should it appear from affidavits submitted in opposition to the motion that facts essential to justify opposition may exist but cannot then be stated, the court may deny the motion or may order a continuance to permit affidavits to be obtained or disclosure to be had and may make such other order as may be just". Appellate case authorities have long instructed that to avail oneself of the safe harbor this rule affords, the claimant must "offer an evidentiary basis to show that discovery may lead to relevant evidence and that the facts essential to justify opposition to the motion were exclusively within the knowledge and control of the plaintiff" (Martinez v Kreychmar, 84 AD3d 1037, 923 NYS2d 648 [2d Dept 2011]; see Seaway Capital Corp. v 500 Sterling Realty Corp., 94 AD3d 856, 941 NYS2d 871 [2d Dept 2012]). The " mere hope or speculation that evidence sufficient to defeat a motion for summary judgment may be uncovered' by further discovery is an insufficient basis for denying the motion" (Woodard v Thomas, 77 AD3d 738 at 740, 913 NYS2d 103 [2d Dept 2010], quoting, Lopez v WS Distrib., Inc., 34 AD3d 759, 760, 825 NYS2d 516; see Friedlander Org., LLC v Ayorinde, 94 AD3d 693, 943 NYS2d 538 [2d Dept 2012]; JP Morgan Chase Bank, N.A. v Agnello, 62 AD3d 662, supra; see Lambert v Bracco, 18 AD3d 619, 795 NYS2d 662 [2d Dept 2005]). Where a party relying on CPLR 3212(f) fails to demonstrate that he or she made reasonable attempts to discover facts which would give rise to a triable issue or that further discovery might lead to relevant evidence, such party's claim of prematurity lacks merit (see Swedbank, AB v Hale Ave. Borrower, LLC., 89 AD3d 922, 932 NYS2d 540 [2d Dept 2011]).
Here, the defendants failed to meet these criteria. Their participation in the transactions by which the mortgage loan documents were executed, the absence of a denial of their default under the loan documents and their failure to advance any material and relevant defenses to the claims on which summary judgment have been demanded, warrant the rejection of any claim of prematurity in the plaintiff's motion. Likewise rejected are the answering defendants' demands for a bill of particulars and responses to document demands and a conditional order if they are not responded to by the plaintiff. Finally, the defendants' demands for a restoration of this case to the specialized mortgage conference part of this court is also lacking merit. Only one conference is required by statute and the defendants were twice afforded the opportunity to a conference in an effort to reach, "if possible", a mutually agreeable settlement but were not successful in such endeavor. Since no further conferences are required by any statute, law or rule, the court declines the defendants' request for a further conference of the type contemplated by CPLR 3404 or otherwise. The defendants' cross [*6]motion for such relief and the other relief addressed above is thus denied.
Under these circumstances, the court finds that the plaintiff is entitled to summary judgment on its complaint and to summary judgment dismissing the affirmative defenses set forth in the joint answer of defendants John and George Andriopoulos. Those portions of this motion wherein the plaintiff seeks such relief are thus granted.
Those portions of the motion by plaintiff wherein it seeks an order substituting or dropping as party defendants the unknown defendants listed in the caption and an amendment of the caption to reflect same are granted.
The plaintiff's moving papers further established the default in answering on the part of the remaining defendants none whom served answers to the plaintiff's complaint. Accordingly, the defaults of all such defendants are hereby fixed and determined. Since the plaintiff has been awarded summary judgment against the answering defendants and has established a default in answering by the remaining defendants, the plaintiff is entitled to an order appointing a referee to compute amounts due under the subject note and mortgage (see RPAPL § 1321; Bank of East Asia, Ltd. v Smith, 201 AD2d 522, 607 NYS2d 431 [2d Dept 1994];Vermont Fed. Bank v Chase, 226 AD2d 1034, 641 NYS2d 440 [3d Dept 1996]; LaSalle Bank, NA v Pace, 31 Misc 3d 627, 919 NYS2d 794 [Sup. Ct. Suffolk County 2011], aff'd, 100 AD3d 970, 955 NYS2d 161 [2d Dept 2012]). Those portions of the instant motion wherein plaintiff demands such relief are thus granted.
In view of the foregoing, the plaintiff's motion (#002) for summary judgment on its complaint against the answering defendants and the dismissal of the affirmative defenses in their answer, default judgments against the other known defendants, the deletion of certain party defendants and an order appointing a referee to compute is granted. The affirmative defenses set forth in the answer of the defendants are thus dismissed. The cross motion (#003) by the answering defendants is denied in its entirety.
The proposed order appointing a referee to compute, as modified by the court, has been signed simultaneously herewith.
Dated: March 29, 2013________________________________
THOMAS F. WHELAN, J.S.C.
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