HSBC Bank USA, N.A. v Clemente

[*1] HSBC Bank USA, N.A. v Clemente 2018 NY Slip Op 50952(U) Decided on February 9, 2018 Supreme Court, Albany County Hartman, 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 This opinion is uncorrected and will not be published in the printed Official Reports.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 February 9, 2018
Supreme Court, Albany County

HSBC Bank USA, N.A., Plaintiff,

against

Thomas A. Clemente, Jr., a/k/a Thomas A. Clemente a/k/a Thomas Clemente, Jr.; Citibank South Dakota, N.A.; "John Doe" and "Jane Doe," said names being fictitious, it being the intention of Plaintiff to designate any and all occupants of premises being foreclosed herein, Defendants.



900948-15



Fein, Such & Crane, LLP

Craig K. Beideman, of Counsel

Attorneys for Plaintiff

28 East Main Street, Suite 1800

Rochester, New York 14614

The Rehfuss Law Firm, P.C.

Stephen J. Rehfuss, Jr., of CounselAttorneys for Defendant

40 British American Boulevard

Latham, New York 12110
Denise A. Hartman, J.

In this mortgage foreclosure action, plaintiff HSBC Bank USA, N.A. moves for a second time for summary judgment and an order of reference to compute the sums due on the note. Defendant homeowner Thomas A. Clemente, Jr. opposes, arguing that plaintiff lacked standing to commence this proceeding. Because plaintiff has established prima facie entitlement to judgment in its favor and defendant has not raised a material issue of fact in opposition, summary judgment is granted.

Plaintiff also moves to amend the caption to substitute Nationstar Mortgage LLC as the new plaintiff and remove unnecessary parties. Plaintiff's motion is granted in this regard as well.

[*2]Background

Plaintiff has established the following through documentary evidence. In December 2004, defendant executed a note whereby he promised to pay $440,000 to HSBC Mortgage Corporation. At the same time, he executed a mortgage securing the note in favor of Mortgage Electronic Registration Systems, Inc. (MERS) as Nominee for HSBC Mortgage Corporation. In December 2007, he executed a Consolidated Promissory Note and a Consolidation, Extension, and Modification Agreement with HSBC Mortgage Corporation, in which he promised to repay $411,000 pursuant to the terms of the consolidated agreement. The consolidated agreement was recorded on December 31, 2007. MERS assigned the mortgage to plaintiff by an assignment of mortgage dated November 17, 2011 and recorded November 21, 2011. In November 2010, defendant defaulted on the loans. Plaintiff mailed defendant a notice of default in December 2010.

Plaintiff commenced this action by filing the summons and complaint on August 4, 2015. Plaintiff personally served defendant with the summons, complaint, certificate of merit and RPAPL § 1303 notice on August 19, 2015. Defendant appeared and answered, asserting 17 affirmative defenses, including lack of standing. After the Court released the case from the settlement part, plaintiff filed its first motion for summary judgment and defendant moved to compel discovery on the issue of standing. By decision and order dated October 3, 2016, the Court denied summary judgment based on plaintiff's failure to provide a power of attorney in favor of the affidavit of merit affiant and because the affiant did not aver that she examined the original note. The Court granted defendant's motion to compel discovery, explaining that, despite plaintiff's protestations that the material sought was irrelevant, "[e]ach demand goes directly to ownership and possession of the note and mortgage."

In September 2017, the Court granted plaintiff's motion to extend its time to file a summary judgment motion. Plaintiff now brings its second motion for summary judgment.

In support of this motion, plaintiff submitted the affidavit of April Simmons, Document Execution Specialist for Nationstar Mortgage LLC, to which the mortgage was assigned in December 2016. Ms. Simmons explains that the records she reviewed were made in the regular course of business and avers that Nationstar's "systems also include records of HSBC Mortgage Corporation" (USA), HSBC Bank USA, N.A., and PHH Mortgage Corporation, the prior servicers of the mortgage loan." According to Ms. Simmons, "Plaintiff was the holder of the Consolidated Note with Allonge at commencement of the action. After commencement of the action, the original Consolidated Note with Allonge endorsed in blank was delivered to The Bank of New York Mellon Trust Company NA. (Mellon), as document custodian for Nationstar, on November 7, 2016."

Plaintiff also submitted an "Affidavit of Lost Note" from Sharonna Davis, Assistant Vice President for PHH Mortgage Corporation, plaintiff's servicer. Ms. Davis avers that PHH's records are made in the regular course of business and include records received in the regular course of business from other entities, including Bank of New York Mellon Trust Company, N.A. (Mellon). According to Ms. Davis, Mellon's possession of the consolidated note as custodian for plaintiff "could be confirmed from November 1, 2011 until May 8, 2015, at which time the original Note could not be located and therefore Servicer considered such original Note lost." She also avers that the note was not assigned or transferred. Finally, according to Ms. Davis, "the original Note was located and the original Note was confirmed to be in the possession of . . . Mellon on November 7, 2016."

[*3]Analysis

Generally, a "plaintiff establishe[s] its prima facie entitlement to summary judgment as a matter of law by submitting the mortgage, unpaid note (endorsed in blank) and evidence of defendants' default" (Green Tree Servicing LLC v Bormann, — AD3d &mdash, 2018 NY Slip Op 00217, *3 [3d Dept 2018]). Plaintiff has done so here and defendant does not challenge the note, mortgage, or evidence of default.

When a defendant raises standing as a defense in a mortgage foreclosure action, the plaintiff must also prove that it was the holder or assignee of the promissory note at the time of commencement of the action (Aurora Loan Servs., LLC v Taylor, 25 NY3d 355, 361 [2015]; JP Morgan Chase Bank, N.A. v Hill, 133 AD3d 1057, 1057 [3d Dept 2015], appeal dismissed 27 NY3d 1148 [2016]). An endorsement in blank renders the note a bearer instrument, but does not provide evidence of possession (NY UCC § 3-202 [1]; Wells Fargo Bank, N.A. v Walker, 141 AD3d 986, 987 [3d Dept 2016]). When a plaintiff alleges in the complaint that it possesses the note and attaches a copy of the note to the complaint, it has proven prima facie that it possessed the note at commencement (JP Morgan Chase Bank, N.A. v Venture, 148 AD3d 1269, 1270-1271 [3d Dept 2017]). A plaintiff can also prove prima facie possession of the note at commencement with an affidavit of merit stating that, based on a record review, plaintiff came into possession of the note on a specific date and continued to possess it at commencement (Bormann, 2018 NY Slip Op 00217, *3).[FN1]

Here, the complaint alleges that plaintiff held the note at commencement, and the note was attached to the complaint. Even if this were not sufficient in itself (see Venture, 148 AD3d at 1271), plaintiff established standing through the affidavits it submitted in support of summary judgment, which show prima facie that plaintiff held the note prior to commencement and that the note did not leave plaintiff's custody until after commencement.

Based on her review of the records, Ms. Davis avers that Mellon's records, which were incorporated into PHH's records, confirm possession of the note as custodian for plaintiff from November 1, 2011 until May 8, 2015. As of May 8, 2015, Mellon considered the note lost. Mellon found the note on November 7, 2017, when possession of the note was transferred from plaintiff to Nationstar, the current holder of the note and mortgage. Ms. Davis avers that the Note was not "assigned, endorsed, or delivered to another party, cancelled, pledged, hypothecated or otherwise transferred, nor was the loss of possession the result of a lawful seizure of the Note." Ms. Simmons, based on a review of records that incorporated records of plaintiff and PHH, avers that plaintiff was the holder of the note at the time of commencement.

Read together, the affidavits in support establish that Mellon, as custodian for plaintiff, [*4]took possession of the note prior to commencement of the action on August 4, 2015, maintained custody of the note despite not being able to locate it, and then located it on November 7, 2017, when the note was transferred from plaintiff to Nationstar. Thus, plaintiff has established prima facie its entitlement to summary judgment (see Bormann, 2018 NY Slip Op 00217, *3; Venture, 148 AD3d at 1271; Deutsche Bank Natl. Trust Co. v Monica, 131 AD3d 737, 739 [3d Dept 2015]).

Defendant has not raised a material issue of fact in opposition. First, as explained in the preceding paragraph, Ms. Simmons's assertion that the note was lost is not inconsistent with Ms. Davis's assertion that plaintiff possessed the note at commencement. Second, the letter from HSBC Mortgage Corporation (USA), the original lender, dated March 14, 2011 stating that Freddie Mac was the owner of "plaintiff's mortgage loan," and a printout of a web page stating that "Freddie Mac owns your mortgage and note," do not raise a material issue of fact. "The holder of an instrument whether or not he is the owner may . . . enforce payment in his own name" (NY UCC § 3-301 [emphasis added]). In other words, even assuming the letter raised a question of fact regarding ownership, it does not raise a question of fact regarding plaintiff's right to enforce the note (see Wells Fargo Bank, NA v Ostiguy, 127 AD3d 1375, 1376-1377 [3d Dept 2015]).

Plaintiff has also established prima facie entitlement to amendment of the caption.

Accordingly, it is

Ordered that plaintiff's motion is granted in its entirety;

Ordered the caption is amended to substitute Nationstar Mortgage LLC as plaintiff and delete "John Doe" and "Jane Doe" as defendants, and the caption shall now read:

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Index No. 900948-15

Nationstar Mortgage LLC,

Plaintiff,

against

Thomas A. Clemente, Jr., a/k/a Thomas A. Clemente a/k/a Thomas Clemente, Jr.; Citibank South Dakota, N.A.,

Defendants.

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Ordered that the action is referred to Catherine Ann Barber, of PO Box 1521, Guilderland, NY 12084, (518) 356-0424, as referee to ascertain and compute the amount due to plaintiff for principal, interest and other disbursements advanced as provided in the Consolidated Note and Mortgage upon which this action was brought, to examine and report whether or not the mortgaged premises can be sold in parcels, and to take testimony if required by RPAPL § 1321, and that the referee make her report to the Court with all convenient speed.

This constitutes the decision and order of the Court. The original decision and order is being transmitted to plaintiff's counsel. All other papers are being transmitted to the County Clerk for filing. The signing of this decision and order does not constitute entry or filing under CPLR 2220 and counsel is not relieved from the applicable provisions of that rule respecting filing and service.

Dated: February 9, 2018

Albany, New York

Hon. Denise A. Hartman

Acting Justice of the Supreme Court

Papers Considered

1. Notice of Motion and Attorney Affirmation in Support of Motion

2. Affidavit of April Simmons in Support of Motion

3. Affidavit of Lost Note

4. Supplemental Attorney Affirmation in Support of Motion

5. Exhibits A-S in Support of Motion

6. Attorney Affidavit in Opposition

7. Attorney Affirmation in Reply Footnotes

Footnote 1: In denying plaintiff's first summary judgment motion, this Court relied on JP Morgan Chase Bank, N.A. v Hill, which implied that an affidavit of merit that failed to state that the affiant examined the original note and provide "detail as to how plaintiff actually acquired possession of the original note" was insufficient to establish standing prima facie (133 AD3d 1057, 1058 [3d Dept 2015]). Subsequent decisions have made clear that, although it may be "better practice" to provide detail as to how plaintiff came into possession of the note, such detail is not necessary to establish standing prima facie (see e.g., Bormann, ___AD3d___, 2018 NY Slip Op 00217, *6; Bac Home Loans Servicing, LP v Uvino, 155 AD3d 1155, 1158 [3d Dept 2017]; Wells Fargo Bank N.A. v Wolcott, 2018 NY Slip Op 50127[U] [Sup Ct, Albany County 2018]).