HSBC Bank USA, N.A. v Sideri

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[*1] HSBC Bank USA, N.A. v Sideri 2018 NY Slip Op 50161(U) Decided on January 18, 2018 Supreme Court, Warren County Muller, 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 This opinion is uncorrected and will not be published in the printed Official Reports.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 January 18, 2018
Supreme Court, Warren County

HSBC Bank USA, N.A., Plaintiff,

against

Karen Sideri, AS EXECUTRIX OF THE ESTATE OF ROLF ONDECK RONNING a/k/a ROLF O. RONNING, DECEASED, TERESA J. RONNING, INK FUNDING LLC, EDWARD P. FOY, JR., BERKSHIRE BANK, LEONARD DEVITO, KAREN SIDERI, CHRISTINE J. TIMBER, GEORGE GOODWIN, DAVID MYERS, NEW YORK STATE DEPARTMENT OF TAXATION AND FINANCE, CARMINE D'UVA, DAVID GUILIANO and INTERNAL REVENUE SERVICE, Defendants.



62356



McCabe, Weisberg & Conway, P.C., New Rochelle (Heino J. Muller and Matthew Smith of counsel), for plaintiff.

Thomas A. Toscano, P.C., Mineola (Thomas A. Toscano of counsel), for defendant INK Funding LLC.
Robert J. Muller, J.

On December 14, 2001, Rolf Ondeck Ronning (hereinafter decedent) gave a mortgage to HSBC Mortgage Corporation (USA) (hereinafter HSBC) on certain real property located at 86 Homer Point Road in the Town of Bolton Landing, Warren County. The mortgage — given to secure a note in the amount of $295,000.00 — was recorded on December 20, 2001.

Decedent gave HSBC a second mortgage on the subject premises on August 12, 2003, which mortgage secured a note in the amount of $4,970.44. On that same date, he executed a Consolidation, Extension and Modification Agreement whereby the notes underlying the first and second mortgages were consolidated with a new principal balance of $280,000.00 and gave HSBC a third mortgage on the subject premises to secure the $280,000.00. On August 19, 2003, the second and third mortgages were recorded together with the Consolidation, Extension and Modification Agreement.

Decedent gave HSBC a fourth mortgage on the subject premises on August 30, 2004, which mortgage secured a note in the amount of $713,000.07. On that same date, he executed a second Consolidation Extension and Modification Agreement whereby the notes underlying all prior mortgages were consolidated with a new principal balance of $980,000.00 and gave HSBC a fifth mortgage on the subject premises to secure the $980,000.00. On September 14, 2004, the fourth and fifth mortgages were recorded together with the second Consolidation, Extension and Modification Agreement. All loan documents were thereafter assigned to plaintiff.

On February 28, 2005, a satisfaction of mortgage was recorded indicating that the first, second and third mortgages had been satisfied.

On February 15, 2007, decedent gave Frank V. DeSantis a mortgage on the subject premises to secure a note in the amount of $150,000.00.[FN1] This mortgage was recorded on February 27, 2007 and then assigned to defendant INK Funding, LLC (hereinafter defendant) by assignment dated August 10, 2007 and recorded August 22, 2007.

On February 27, 2007, decedent gave Orion Funding a mortgage on the subject premises to secure a note in the amount of $300,000.00.[FN2] The mortgage was recorded on that same date and thereafter assigned to defendant by assignment dated August 10, 2007 and recorded August 22, 2007.

Finally, on December 31, 2007, decedent gave defendant a mortgage on the subject premises to secure a note in the amount of $100,000.00. This mortgage was recorded on January 16, 2008.

On January 22, 2016, plaintiff commenced this action seeking to discharge the satisfaction of mortgage recorded relative to the first, second and third mortgages, alleging that the same was recorded in error. Defendant then served an answer on March 15, 2016.[FN3] Presently before the Court is (1) defendant's motion for summary judgment seeking to dismiss the complaint; and (2) plaintiff's motion for leave to serve a supplemental summons and amended complaint. The motions will be addressed ad seriatim.

Defendant's Motion for Summary Judgment

On a motion for summary judgment, the movant must establish, by admissible proof, its entitlement to judgment as a matter of law (see Gilbert Frank Corp. v Federal Ins. Co., 70 NY2d 966, 967 [1988]; Alvarez v Prospect Hosp., 68 NY2d 320, 324 [1986]). Once the movant has met this initial burden, the burden then shifts to the opponent of the motion to establish, by admissible proof, the existence of genuine issues of fact (see Zuckerman v City of New York, 49 NY2d 557, 560 [1980]).

Here, defendant contends that it "relied upon the allegedly erroneous [s]atisfaction of [*2][m]ortgage at the time it accepted its rights and responsibilities under the assignment and subsequent mortgage financing transactions with [d]ecedent . . . ." Defendant further contends that, in deciding whether to enter into the financing transactions with decedent, it "did not expect to be subject to an additional superior lien totaling $280,000.00 against the [subject p]remises, which would substantially diminish its ability to recover in any foreclosure proceeding against the [p]remises." In support of these contentions, defendant has submitted a copy of the title search it performed prior to entering into the financial transactions with decedent.

"'A mortgagee may have an erroneous discharge of mortgage, without concomitant satisfaction of the underlying mortgage debt, set aside, and have the mortgage reinstated where there has not been detrimental reliance on the erroneous recording'" (Bank of Am., N.A. v Snyder, 154 AD3d 671, 671 [2017], quoting New York Community Bank v Vermonty, 68 AD3d 1074, 1076 [2009], lv dismissed 15 NY3d 906 [2010]; see Deutsche Bank Trust Co., Ams. v Stathakis, 90 AD3d 983, 984 [2011]).

While the results of the title search submitted by defendant indicate that the first, second and third mortgages held by plaintiff are satisfied, the results further indicate that the fourth and fifth mortgages are not satisfied and remain valid liens against the property. Defendant was therefore aware of these mortgages when it entered into the financial transactions with decedent. To the extent that the $980,000.00 secured by the fifth mortgage reflects the new principal balance following a consolidation of all prior mortgages — including the first, second and third mortgages — it simply cannot be said that defendant relied upon the satisfaction of mortgage to its detriment. The Court therefore finds that defendant did not satisfy its initial burden of demonstrating its entitlement to judgment as a matter of law.

The Court further finds that, because defendant failed to satisfy its initial burden, it need not consider the sufficiency of plaintiff's opposition papers (see Winegrad v New York Univ. Med. Ctr., 64 NY2d 851, 853 [1985]; BAC Home Loans Servicing, LP v Bixby, 135 AD3d 1009, 1010-1011 [2016], lv dismissed 27 NY3d 1014 [2016]).[FN4]

Briefly, during oral argument defendant argued that this action is barred by the statute of limitations. With that said, because this argument was raised for the first time during oral argument, it is not properly before the Court (see Rinzler v Rinzler, 97 AD3d 215, 217 n 2 [2012]; see also Gonzalez v Sun Moon Enters. Corp., 53 AD3d 526, 526 [2008]).

Based upon the foregoing, defendant's motion for summary judgment is denied in its entirety.



Plaintiff's Motion for Leave to Amend

"[O]n a motion for leave to amend a pleading, the movant need not establish the merits of the proposed amendment and, in the absence of prejudice or surprise resulting directly from the delay in seeking leave, such applications are to be freely granted unless the proposed amendment is palpably insufficient or patently devoid of merit" (Bynum v Camp Bisco, LLC, 155 AD3d 1503, 1503 [2017] [internal quotation marks and citations omitted]; see Palmatier v Mr. Heater Corp., ___ AD3d ___, ___, 2017 NY Slip Op 08918, *2 [2017]).

Here, plaintiff seeks to supplement the summons and amend the complaint so as to add certain entities which may also have liens against the subject premises. In support of the motion, counsel for plaintiff has submitted an affirmation stating as follows:

"Subsequent to filing the . . . pleadings, and upon further review, it was discovered that the following lienholders were not named in the previous complaint: (1) HSBC Bank USA, N.A.; (2) New York State Department of Taxation and Finance, Civil Enforcement-CO-ATC; and (3) United States of America o/b/o Internal Revenue Service."

This is the extent of the information provided to the Court. There is nothing relative to the type of liens held by the proposed additional defendants, nor the amount of any such liens. It must also be noted that New York State Department of Taxation and Finance and the Internal Revenue Service have already been named as defendants — and there is no explanation as to how these defendants differ from proposed additional defendants New York State Department of Taxation and Finance, Civil Enforcement-CO-ATC and United States of America o/b/o Internal Revenue Service. Finally, it appears that plaintiff — HSBC Bank USA, N.A. — is seeking to add itself as a defendant. Again, with no explanation whatsoever.

Under the circumstances, the Court finds that plaintiff's proposed amendment is palpably insufficient. Plaintiff's motion for leave to serve a supplemental summons and amended complaint is therefore denied without prejudice.

The Court notes that there was no opposition to plaintiff's motion. While plaintiff submitted an affidavit of service, counsel for defendant indicated at oral argument that he never received the motion papers. With that said, the Court need not address this issue in view of its denial of the motion.

Counsel are hereby directed to appear for a preliminary conference on February 26, 2018 at 11:00 A.M. at the Warren County Courthouse in Lake George, New York.

Therefore, having considered the Affirmation of Thomas A. Toscano, Esq. with exhibits attached thereto, dated May 22, 2017, submitted in support of defendant's motion for summary judgment; Affidavit of Edward English with exhibits attached thereto, sworn to May 22, 2017, submitted in support of defendant's motion for summary judgment; Affirmation of Heino J. Muller, Esq. with exhibits attached thereto, dated July 7, 2017, submitted in opposition to defendant's motion for summary judgment; Affirmation of Matthew Smith, Esq. with exhibits attached thereto, dated July 14, 2017, submitted in support of plaintiff's motion for leave to amend; and oral argument having been heard on December 5, 2017 with Carl Hasselbarth, Esq. appearing on behalf of plaintiff and Thomas A. Toscano, Esq. appearing on behalf of defendant, it is hereby

ORDERED that defendant's motion for summary judgment is denied in its entirety; and it is further

ORDERED that plaintiff's motion for leave to serve a supplemental summons and amended complaint is denied without prejudice; and it is further

ORDERED that counsel shall appear for a preliminary conference on February 26, 2018 at 11:00 A.M. at the Warren County Courthouse in Lake George, New York.

The original of this Decision and Order has been filed by the Court together with the Notice of Motion dated May 23, 2017, the Notice of Motion dated July 14, 2017 and the [*3]submissions enumerated above. Counsel for plaintiff is hereby directed to obtain a filed copy of the Decision and Order for service with notice of entry in accordance with CPLR 5513.



ENTER:

Dated: January 18, 2018

Lake George, New York

____________________________________

ROBERT J. MULLER, J.S.C. Footnotes

Footnote 1:While the subject premises was not initially included as security in the mortgage, it was added by Mortgage Modification Agreement dated August 14, 2007 and recorded August 22, 2007.

Footnote 2:Again, while the subject premises was not initially included as security in the mortgage, it was added by Mortgage Modification Agreement dated August 14, 2007 and recorded August 22, 2007.

Footnote 3:None of the other defendants have answered or otherwise appeared.

Footnote 4:The Court notes that, if these papers were to be considered, they raise the same issues outlined above relative to defendant's knowledge of the fifth mortgage and, as such, they succeed in raising a triable issue of fact.



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