Midland Funding, LLC v CoiaAnnotate this Case
Decided on June 4, 2018
Supreme Court, Monroe County
Midland Funding, LLC, Plaintiff,
Mary Coia, Defendant.
Attorney for Plaintiff:
Mariya S. Burtseva, Esq.
Stephen Einstein & Associates, P.C.
39 Broadway, Suite 1250
New York, NY 10006
Attorney for Defendant:
David M. Kaplan, Esq.
401 Penbrooke Drive, Building 2, Suite B
Penfield, NY 14526
Thomas A. Stander, J.
The Defendant, Mary Coia, submits a motion seeking an order awarding summary judgment dismissing the complaint of the Plaintiff, Midland Funding, LLC, in its entirety; and for such other and further relief deemed proper by the Court.
The Plaintiff, Midland Funding, LLC (Midland), submits a cross-motion seeking an order denying Defendant's motion for summary judgment to dismiss; pursuant to CPLR §3212 granting summary judgment in favor of the Plaintiff and against Defendant, on the plaintiff's verified complaint, dismissing the affirmative defenses and granting judgment in favor of the plaintiff in the amount of $1,460.16 plus interest, costs and disbursements as demanded in the verified [*2]complaint; and for such other and further relief as to this Court may seem just and proper.
Plaintiff commenced this action against the Defendant seeking to recover a balance due on a credit card account in the amount of $1,460.16. The original creditor was Credit One Bank, N.A. and the Plaintiff, Midland Funding, LLC is a debt buyer. The complaint alleges the chain of title to be Credit One Bank, N.A. to MHC Receivables, LLC to Sherman Originator III LLC to Midland Funding LLC. The complaint alleges that the Defendant defaulted on December 4, 2015.
I. SUMMARY JUDGMENT
Plaintiff and Defendant both seek summary judgment in their favor. For summary judgment to be granted to either party, they must submit sufficient proof, including an affidavit of a person having knowledge of the facts, to show the cause of action or the defense have no merit. If upon all the evidence submitted it is established that either party is entitled to judgment as a matter of law, then summary judgment is warranted.
A. Position of Defendant
Defendant seeks summary judgment dismissing the complaint based upon the affirmative defense set forth in the Answer that Plaintiff lacks standing to bring this claim. Defendant argues that the burden is on the Plaintiff to prove in its opposition papers that Plaintiff has standing by evidence demonstrating that the original creditor assigned its interest in Defendant's debt to Plaintiff. Defendant argues that if Plaintiff cannot prove it has standing, then the action must be dismissed.
In the opposition to the Plaintiff's motion and reply to Defendant's motion, Defendant asserts that Plaintiff has failed to produce admissible evidence to demonstrate that it has standing because the chain of title of the debt is incomplete and conflicting. Defendant argues that the submitted bills of sale fail to establish a viable chain of assignments as alleged in the Complaint. The basis for this argument in part, is that the bill of sale from Credit One Bank, N.A. references the account as being in a data file included in Exhibit A; however, there is no Exhibit A with the bill of sale identifying any accounts. Defendant asserts that this lack of proof of a particular account being assigned or transferred makes the chain of title fail. Further that other bill of sales claimed to show the chain of title also lack any information identifying the account of the Defendant as being transferred or assigned. Defendant argues that they have demonstrated that every link in the chain of title is deficient; and thus, Plaintiff fails to prove standing with admissible evidence.
Defendant submits an attorney Affirmation, with exhibits of the complaint and answer, together with a Memorandum of Law and a Memorandum of Law in Reply and Response. Defendant relies upon case law as the basis for summary judgment and in opposition to the Plaintiff's cross-motion for summary judgment. Specifically relying upon a case where a defendant cross-moved for summary judgment seeking dismissal based on an affirmative defense of lack of standing where the Fourth Department held:To establish such standing, plaintiff was required to submit evidence in admissible form establishing that [the original creditor] had assigned its interest in defendant's debt to plaintiff [citation omitted].
(Unifund CCR Partners v Youngman, 89 AD3d 1377 [4th Dept 2011]; see Palisades Collection, LLC v Kedik, 67 AD3d 1329 [4th Dept 2009]). Defendant also relies upon Second Department [*3]cases to assert that where lack of standing is raised, the plaintiff must submit documents to demonstrate standing to prosecute the action (citing Bank of NY v Silverberg, 86 A.D. 274, 279 [2d Dept. 2011]; U.S. Bank, National Assoc. v Sharif, 89 AD3d 723,723 [2d Dept. 2011]).
B. Position of Plaintiff
In opposition to the summary judgment motion of Defendant and in support of it's cross-motion for summary judgment, Plaintiff asserts that this motion for summary judgment was brought before any exchange of discovery. Plaintiff argues that it has satisfied all requirements necessary to establish valid assignments, both in accordance with case law and the Office of the Court Administration requirements. Plaintiff asserts that the documentation submitted demonstrates that this account of Defendant was assigned from Credit One Bank, N.A. to MHC Receivables, LLC on April 26, 2016; from MHC Receivables, LLC to Sherman Originator III LLC on May 12, 2016; and from Sherman Originator III LLC to Plaintiff on May 20, 2016. Plaintiff relies upon the Bill of Sale and Assignment showing the account was part of a portfolio referenced on a spreadsheet.
Plaintiff submits an affidavit of Melissa Smelter, who attests she is an officer for Plaintiff and has "access to pertinent account records for Midland Credit Management, Inc., servicer of this account on behalf of Plaintiff" (Exhibit B, Affidavit of Melissa Smelter, ¶1). There are various affidavits and bill of sales submitted in support of Plaintiff's motion.Plaintiff submits that the chain of title affidavit by Melissa Smelter, along with the chain of title establishes that Plaintiff is the current assignee and owner of this unpaid debt.
Plaintiff argues that the affirmative defenses of Defendant should be dismissed as they are all without merit and sets forth specific arguments as to each defense. Plaintiff concludes that the burden has been met by the supporting documentation to establish it is entitled to judgment as a matter of law and that there is no triable issue of fact.
The Courts's, including the Fourth Department, have established the standard for a plaintiff's summary judgment motion when a defendant has set forth the affirmative defense of lack of standing. On a summary judgment motion by plaintiff, where the defendant places the plaintiff's standing in issue by reason of defendant's answer, "it is incumbent upon the plaintiff to prove its standing to be entitled to relief" (Deutsche Bank Trust Company Americas v Vitellas, 131 AD3d 52, 59 [2d Dept. 2015]; see Aurora Loan Services, LLC v Mercius, 138 AD3d 650, 652 [2d Dept. 2016]). When a plaintiff seeks summary judgment dismissing a defendant's affirmative defense of lack of standing, and plaintiff is ordered to provide evidence to prove it has standing but fails to do so, a court may sua sponte grant summary judgment to the defendant dismissing the complaint (Palisades Collection at 1330).
"[O]n a defendant's motion for summary judgment, the burden is on the moving defendant to establish, prima facie, the plaintiff's lack of standing as a matter of law" (LGF Holdings, LLC v Skydel, 139 AD3d 814 [2d Dept 2016]). On a summary judgment motion by a defendant based on the affirmative defense of lack of standing, the burden is initially on the defendant to establish plaintiff's lack of standing, "rather than on the plaintiff to affirmatively [*4]establish its standing in order for the motion to be denied" (Aurora Loan Services at 652).[FN1]
When both plaintiff and defendant seek summary judgment, the Fourth Department has established that judgment as a matter of law is warranted if plaintiff fails to submit evidence sufficient to demonstrate standing (Unifund CCR Partners v Youngman, 89 AD3d 1377 [4th Dept 2011]; see Palisades Collection, LLC v Kedik, 67 AD3d 1329 [4th Dept 2009]). Where a defendant moves for summary judgment seeking dismissal based on lack of standing and the plaintiff also seeks summary judgment, "[t]o establish such standing, plaintiff was required to submit evidence in admissible form establishing that [the original creditor] had assigned its interest in defendant's debt to plaintiff [citation omitted]" (Unifund CCR Partners at 1377; see Palisades Collection, at 1329 ). Where plaintiff fails to do so, the proper remedy is to grant summary judgment to the defendant who is seeking dismissal of the complaint on the ground that plaintiff lacks standing (Unifund CCR at 1377).
Where, as here, there is a motion and cross-motion by plaintiff and defendant, with both seeking summary judgment, the parties must demonstrate they are entitled to judgment as matter of law (CPLR Rule 3212[b]). The motion by Defendant is for summary judgment based on the affirmative defense that Plaintiff lacks standing and the motion by Plaintiff is for summary judgment asserting the submissions are sufficient to show it has standing. In this procedural posture, both parties are required to establish that they are entitled to judgment as a matter of law. Under the current case law, on motions for summary judgment by both parties, if the plaintiff fails to submit evidence to establish its standing then summary judgment is appropriate to the defendant (Unifund CCR Partners at 1377; Palisades Collection at 1329).[FN2]
Here Plaintiff submits extensive affidavits and bill of sales to attempt to demonstrate that it has standing on the debt of Defendant. However, the Reply and Response of Defendant points out conflicting and incomplete information contained in Plaintiff's supporting documentation. Upon review, the initial document in the chain of title from the original creditor Credit One Bank, N.A. to MHC Receivables, LLC references an Exhibit A to establish that the account of the Defendant was transferred and assigned. However, this Exhibit A is not included in the supporting documentation of the Plaintiff. There is no documentation demonstrating that the Defendant's account was assigned and transferred from the original creditor.
Further, the Affidavit of Melissa Smelter, as an officer of Plaintiff, provides testimony regarding records for Midland Credit Management, Inc., a separate company who is alleged to be the servicer of this account.[FN3] There is no document connecting or authorizing such representation. There is a Bill of Sale and Assignment in the chain of title from FNBM, LLC to Sherman Originator III LLC, with an acknowledgment of Credit One Bank, N.A. but no assignment to FNBM, LLC; or reference in the chain of title. The Bill of Sale and Assignment from Credit One Bank, N.A. to MHC Receivables, LLC references Exhibit A to show the accounts transferred; however, there is no Exhibit A attached.
The affidavits of facts have conflicting and inconsistent information. The Affidavit of Crystal Offord as an employee of Credit One Bank, NA, also references being an authorized representative of FNBM, LLC and MHC Receivables, LLC however there is no documentation to support this. The information contained in this affidavit blurs the lines among Credit One, FNBM and MHC Receivables, although they are all separate entities. In addition, the notice to the debtor contained in Exhibit C of the Plaintiff's attorney affidavit states that the debtors Credit One Bank, N.A. account was sold to Midland Funding LLC on May 20, 2016. This notice disregards the other transfers in between Midland Funding and Credit One. The totality of the evidence submitted by Plaintiff fails to sufficiently demonstrate the chain of title of the debtor's account from Credit One Bank to Plaintiff Midland Funding LLC.
Plaintiff fails to submit sufficient supporting documentation to establish that it has standing. The Defendant is entitled to summary judgment based upon the lack of standing of Plaintiff (Unifund CCR Partners at 1377; Palisades Collection at 1329). Summary judgment to the Defendant based upon the failure of Plaintiff to submit sufficient evidence to establish it has standing is GRANTED.
The motion of the Plaintiff for summary judgment is DENIED.
Counsel for the Defendant, Mary Coia, shall submit an Order within ten (10) days, with this Decision attached, upon approval of all Counsel.
Dated: June 4, 2018
Rochester, New York
Thomas A. Stander
Supreme Court Justice Footnotes
Footnote 1: In comparison, in 2018 both the Fourth Department and Second Department addressed the standard for dismissing a complaint upon a defendant's pre-answer motion asserting lack of standing, determining "the burden is on the moving defendant to establish, prima facie, the plaintiff's lack of standing as a matter of law [citations omitted]. To defeat the motion, a plaintiff must submit evidence which raises a question of fact as to its standing" (U.S. Bank N.A. v. Guy, 125 AD3d 845 [2d Dept 2015]; see Mariners Atlantic Portfolio, LLC v Hector, __ AD3d __, 2018 NY Slip Op 01458, 2018 NY App.Div. LEXIS 1434 [2d Dept 2018]). The Fourth Department states: Where . . . a defendant makes a pre-answer motion to dismiss based on lack of standing, "the burden is on the moving defendant to establish, prima facie, the plaintiff's lack of standing, rather than on the plaintiff to affirmatively establish its standing in order for the motion to be denied' [citations omitted]" In order "[t]o defeat a defendant's motion, the plaintiff has no burden of establishing its standing as a matter of law; rather, the motion will be defeated if the plaintiff's submissions raise a question of fact as to its standing" (citations omitted). (Matter of Violet Realty, Inc. v County of Erie , 158 AD3d 1316, 1317 [4th Dept 2018]; see Deutsche Bank Trust Company Americas v Vitellas, 131 AD3d 52, 59-60 [2d Dept 2015]).
Footnote 2: This is a different procedural posture than where defendant alone seeks summary judgment against plaintiff. In that instance, the courts have made clear that the initial burden is on defendant. On a summary judgment motion, the burden is on the moving Defendant to establish prima facie that Plaintiff lacks standing, "rather than on the plaintiff to affirmatively establish its standing in order for the motion to be denied" (see Aurora Loan Services at 652; LGF Holdings at 814).
Footnote 3: The court notes that in the Attorney Affidavit for Plaintiff, counsel states that "Plaintiff produces the affidavit of Melissa Smelter, an officer of Midland Credit Management Inc., a servicer of this account on behalf of Midland ... " (Attorney Affidavit of Mariya Burtseva, Esq., ¶15).