Assets Recovery 26, LLC v Rivera

[*1] Assets Recovery 26, LLC v Rivera 2013 NY Slip Op 50962(U) Decided on June 17, 2013 Supreme Court, Richmond County Minardo, 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 This opinion is uncorrected and will not be published in the printed Official Reports.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 June 17, 2013
Supreme Court, Richmond County

Assets Recovery 26, LLC [FN1], Plaintiff,

against

Anthony Rivera, GLORIA RIVERA, CRIMINAL COURT OF THE CITY OF NEW YORK, BETHPAGE FEDERAL CREDIT UNION, NEW YORK CITY PARKING VIOLATIONS BUREAU, NEW YORK CITY ENVIRONMENTAL CONTROL BOARD, NEW YORK CITY TRANSIT ADJUDICATION BUREAU, CREDIT RECOVERY SYSTEMS, INC., EMPIRE PORTFOLIOS, INC., CITICORP., N.A. and JENNIFER RIVERA, Defendants.



131466/09

Philip G. Minardo, J.

Upon the foregoing papers, the plaintiff's motion (No. 002) for, inter alia, summary judgment and the appointment of a referee to compute is denied; the cross motion (No. 003) of defendants Anthony Rivera and Gloria Rivera is granted.

This action was brought to foreclose a certain mortgage on real property located at 10 Benjamin Drive, Staten Island, New York 10303. Said mortgage was given by defendants Anthony Rivera and Gloria Rivera on December 6, 2006 to plaintiff's remote predecessor-in-interest, Accredited Home Lenders, Inc., to secure an adjustable rate note executed by them in the principal sum of $270,000.00.

By way of background, defendants Anthony and Gloria Rivera (hereinafter, "defendants") appeared pro se and interposed a verified answer dated October 2, 2009, asserting as their only defense the claim that they did not receive the notice "Help for Homeowners in Foreclosure" along with the summons and complaint, as required by Real Property Actions and Proceedings Law § 1303. On February 22, 2010, the matter was assigned to the Foreclosure Conference Part of this Court, where numerous settlement conferences were conducted pursuant to CPLR 3408 without resolution. The action was released to DCM Part 6 on September 1, 2010 upon defendants' failure to appear at a scheduled conference. On or about September 11, 2012 plaintiff filed the instant motion for summary judgment and the appointment of a referee to compute. In addition, plaintiff sought leave to amend the caption by substituting "Assets Recovery 26, LLC", the real party in interest, as the plaintiff, and Jennifer Rivera in the place of "John Doe 1".[FN2] In response, defendants, now represented by counsel, cross-moved, inter alia, for leave to serve and file an amended answer, and thereupon, to dismiss the complaint pursuant to CPLR 3211 on the ground that plaintiff lacks standing.

It is well established that "[m]otions for leave to amend pleadings should be freely granted, absent prejudice or surprise directly resulting from the delay in seeking leave, [*2]unless the proposed amendment is palpably devoid of merit" (Aurora Loan Servs., LLCv Thomas, 70 AD3d 986, 987; see CPLR 3025[b]; Aurora Loan Services, LLC v Dimura, 104 AD3d 796, 796-797). "A determination whether to grant such leave is within the Supreme Court's broad discretion, and the exercise of that discretion will not be lightly disturbed" (Aurora Loan Services, LLC v Dimura, 104 AD3d at 797, quoting Gitlin v Chirinkin, 60 AD3d 901, 902). Thus, "[m]ere lateness is not a barrier to the amendment. It must be lateness coupled with significant prejudice to the other side, the very elements of the laches doctrine" (Edenwald Constr. Co. v City of New York, 60 NY2d 957, 959 [internal quotation marks omitted]; see U.S. Bank, N. A. v Sharif, 89 AD3d 723, 724).

Consonant with the foregoing principles, it is the Court's opinion that plaintiff has failed to demonstrate any prejudice that would result from defendants' delay in seeking leave, or that the proposed amendment is palpably insufficient or patently devoid of merit (see Aurora Loan Servs. v Dimura, 104 AD3d 796, 797; Aurora Loan Servs., LLC v Thomas, 70 AD3d at 987). Moreover, while plaintiff correctly points out that a defense of lack of standing is waived unless asserted in either a verified answer or pre-answer motion to dismiss (see CPLR 3211[e]), "defenses waived under [that subdivision] can nevertheless be interposed by leave of court pursuant to CPLR 3025(b) so long as the amendment does not cause the other party prejudice or surprise directly resulting from the delay" (Aurora Loan Services, LLC v Dimura, 104 AD3d at 797; see U.S. Bank, Natl. Assoc. v Sharif, 89 AD3d at 724). Accordingly, so much of defendants' cross motion as requests leave to interpose an amended answer in the form annexed to their cross motion is granted and deemed served.

Inasmuch as the standing of plaintiff and its predecessor (Liquidation Properties, Inc.) has now been drawn into question, it was incumbent upon plaintiff to prove such standing before being entitled to any relief (see Citimortgage, Inc. v Stosel, 89 AD3d 887, 888; US Bank, N.A. v Collymore, 68 AD3d 752, 753). In this regard, 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 of a written assignment prior to the commencement of the action" (Aurora Loan Servs., LLC v Weisblum, 85 AD3d 95, 108).

To this end, plaintiff has submitted the affidavit and supplemental affidavit of James Fratangelo, who claims to be the Manager of both Assets Recovery 26, LLC (the current holder of the subject note and mortgage) and Assets Recovery 23, LLC, (its immediate predecessor-in-interest). Turning, first, to the legal sufficiency of these affidavits, Fratangelo's attempt to demonstrate standing based on the purported delivery of the "original note" with an undated allonge indorsed in blank to Assets Recovery 23, LLC as reflected in a certain Confirmation Agreement dated February 14, 2012, fails to accomplish its intended purpose. The present action was commenced on or about August 31, 2009, and Fratangelo's affidavits do not contain any factual details concerning the purported transfer of the subject note to the original plaintiff in advance thereof (see HSBC Bank USA v Hernandez, 92 AD3d 843, 844, [holding that the plaintiff/mortgagee had failed to sufficiently demonstrate standing because the affidavit of its servicing agent "did not give any factual details of a physical delivery of the note and, thus, failed to [*3]establish that the plaintiff had physical possession of the note prior to commencing (the) action"]; see also Deutsche Bank Natl. Trust Co. v Barnett, 88 AD3d 636, 638).

Similarly unavailing is the affirmation of plaintiff's attorney, who attests, "based upon a review of [his office] file", that "the original lender assigned the [subject] Note by affixation of an allonge in blank' to the Note prior to the commencement of the foreclosure action to Liquidation Properties, Inc" (Affirmation in Opposition to Cross Motion, para 8 [emphasis omitted]). However, it is worthy of notice that the photocopy of the note originally submitted by plaintiff in support of its summary judgment motion did not include a copy of this "allonge", which is undated, and was submitted for the first time in opposition to defendants' cross motion. Thus, plaintiff has failed to demonstrate to the satisfaction of this Court that said allonge was executed and/or the note delivered to the original plaintiff prior to the commencement of this action (see Deutsche Bank Natl. Trust Co. v Haller, 100 AD3d 680, 682-683). More specifically, it is the determination of this Court that the Fratangelo affidavits and the affirmation of plaintiff's attorney, separately or together, are legally insufficient to establish how or when Liquidation Properties, Inc. became the lawful holder of the subject note, whether by delivery or valid assignment thereof (see Citimortgage, Inc. v Stosel, 89 AD3d at 888).

Finally, plaintiff cannot successfully rely upon the written assignment of the Riveras' mortgage (Plaintiff's Exhibit "E"), dated June 5, 2009, by MERS, as nominee for Accredited Home Lenders, Inc., to Liquidation Properties, Inc. as demonstrative of the latter's standing. "An assignment of a mortgage without assignment of the underlying note or bond is a nullity, and no interest is acquired by it" (Deutsche Bank Natl. Trust Co. v Barnett, 88 AD3d 636, 637, [citations omitted]; see Bank of NY v Silverberg, 86 AD3d 274).

In the absence of evidence sufficient to establish the existence of a written assignment of the subject note, or the physical delivery thereof to the original plaintiff prior to the commencement of this action, defendants' cross motion for the dismissal of the complaint for lack of standing must be granted (see U.S. Bank, N. A. v Sharif, 89 AD3d 723, 723).

Accordingly, it is

ORDERED, that except to the extent heretofore granted on January 17, 2013, plaintiff's motion, inter alia, for summary judgment is denied; and it is further

ORDERED, that the cross motion of defendants Anthony Rivera and Gloria Rivera is granted and the complaint is dismissed; and it is further

ORDERED, that the Clerk enter judgment accordingly.

E N T E R,

/s/ Philip G. Minardo

J.S.C.

Dated: June 17, 2013 Footnotes

Footnote 1: Under date of January 17, 2013, this Court granted that branch of plaintiff's motion which sought to amend the caption by substituting "Assets Recover 26, LLC" in the place of plaintiff "Liquidation Properties, Inc."; substituting Jennifer Rivera in the place of "John Doe 1"; and striking therefrom the remaining defendants sued herein as "John Doe "2" through "12".

Footnote 2: See footnote 1, supra.