HSBC Bank USA v Kone

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HSBC Bank USA v Kone 2021 NY Slip Op 32701(U) December 8, 2021 Supreme Court, Kings County Docket Number: Index No. 41591/07 Judge: Lawrence S. Knipel Cases posted with a "30000" identifier, i.e., 2013 NY Slip Op 30001(U), are republished from various New York State and local government sources, including the New York State Unified Court System's eCourts Service. This opinion is uncorrected and not selected for official publication. [*FILED: 1] KINGS COUNTY CLERK 12/16/2021 02:03 PM NYSCEF DOC. NO. 18 INDEX NO. 41591/2007 RECEIVED NYSCEF: 12/16/2021 Aran !AS Term, Part FRP3 of the Supreme Court of the State of New York, held in and for the County or Kings, at the Courthouse, at Civic Center, Brooklyn, NewYork, on the 8th day of Decctnber, 2021 . PRE SENT: HON. CAWRENCEKNIPEL, Jtisticc. - -·- - - - -.- - - - -·- -. - - - - - - ·- - - - - - - - - - - -·- - -X HSl3C BANK USA, NATIONAL ASSOC!A TION AS TRUSTEE F0RNAAC 2007-3, Plaintiff, Index No. 41591/07 ~against'MARIAME KONE; MORTGAGE ELECTRONIC REGISTRATION SYSTEMS; INC, AS NOMINEE FOR FIRST UNITED MORTGAGE BANKING CORP.; NEw YORK C1rv ENVJR0NMENTALCoNTROL BOARD; NEW YORK CITY TRA NSlT ADJUDICATION BUREAU; PEOPLEOF THESTATEOF NEW YORK: JANET SHARPTON; JCNNIFER Ht\ GLER; U)UISE AN0tRS0N; LY NDONHANGLER; TRUDY ANDERSON; VICTOR PENSASand"JOHN DoE#l'; through ''JOHN Dor;# I 0", the last ten names being fictitious and unknown to the Plaintiff, the persons or parties iritcndcd being the person or parties, if any, having or claiming an interest in or lien upon the mortgaged premises described in the complaint, De fondants. ------ ~ ·- -..~ --.. -------;_ --. --.. ---- ~ -- -· --·· ~x 1 of 9 [*FILED: 2] KINGS COUNTY CLERK 12/16/2021 02:03 PM INDEX NO. 41591/2007 NYSCEF DOC. NO. 18 RECEIVED NYSCEF: 12/16/2021 NYSCEF Doe Nos. 1 The following e-fi!ed papers read herein: Notice of Motion/Order to Show Cause/ Petition/Cross Motioi1 and Affidavits (Affirmations) Annexed~._ _ __ J-J Opposing Affidavits ( Affirrnations)_ _ __ 11-14 Reply Affidavits (Affinnations} _ _ _ __ Upon the foregoing papers in this action to foreclose the property at 179 Buffalo Avenue in Brooklyn (Block 1363, Lot 4) (Property), plaintiff HSBC Bank USA, National Association as Trustee for Nomura Asset Acceptance Corporation, Mortgage Pass,, Through Certificates, Serics2007"3 (HSBC) moves (in motion sequence [mot. seq.] 10) for an order, pursuant to RP APL 1325 and RPL 254 (10), appointing a temporary.receiver for the benefit of HSBC lo collect therents and profits nov.;, dtie and unpaid or that become due during the pcnde11cy of this action and issuing out of the mortgaged Property. On November 9, 2007, HSBC commenced this action to foreclose a $615,200,00 mortgage encumbering defendant Mtiriarnc Kane's residential Property by filing a summons, a complaint verified by counsel and a notice of pendcncy. Kone executed the m01igage on February 2, 2007 to secure a1i adjustable rate promissory note in favor of First United Mortgage Banking Corp; (First United). One week after HSBC commenced this foreclosure actimi, First United assjgned the mortgage "together with the bond or 1 Plaintiffs l1J.OVing papers (the January 6, 2020 notice ofmcitlori, Samantha Moreno '.s September 9, 2019 affidavit a11.d Gerald M . .lacobis January 6, 2020 affirmation), which are nurnbered 1-3~ are the only papei's 011 this motion that are not clectron:ically filed. 2 2 of 9 [*FILED: 3] KINGS COUNTY CLERK 12/16/2021 02:03 PM NYSCEF DOC. NO. 18 INDEX NO. 41591/2007 RECEIVED NYSCEF: 12/16/2021 obligation described in said mortgage ... " to ITS BC by a November 16, 2007 Assignment of Mortgage. In 20}3, the action was dismissed for failure to prosecute and, by a March 15, 2018 order, this action was rcstL1red to the court's active calendar on the: condition that HSBC accept Konc's answer to the complaint. On or about April 19_. 2018, Kone answered the complaint, denied the allegations therein, and asserted several afiitrnativc defenses, including lack of standing. After issue \vas joined; HSBC moved fm summary judgment and an order of reference and defendant Kone cross-moved for smrnnary judgment dismissing the complaint, By aMarch 5, 2020 decision and order, the court(Joseph,J.) denied the parties' sum1nary judgment motion and cross motion and held that "there arc issues of fact that preclude anaward ofsurnmai-y judg1ncnt in favor of either party on the issue ofstanding" because ''there c1re two different versib1is of the note, only one of which contains an executed cndorsenicnt in blank [and] the submission by FIS BC of two different cclpies of the note \Vith cndorscmei1ts raise a triable issue of fact as to whether the 1iotc was assigned to HSBC prior to the commencement of the instant action ..." HSBC's Instant klotion For theAppointment of ,i Receiver Mem1whi1e, on January 24 1 2020, while the parties· summary judgment motion and cross motion were pending, HSBC filed the instant motion for the appointment ofa receiver to collect the rchts.·and profits. HSBC submits an affidavit fro111 SamantJut Moreno (Moreno\ an Assistant Vice 3 of 9 [*FILED: 4] KINGS COUNTY CLERK 12/16/2021 02:03 PM NYSCEF DOC. NO. 18 INDEX NO. 41591/2007 RECEIVED NYSCEF: 12/16/2021 President of Wells Fargo Bank, N.A. (WcHs Fargo), HSBC's purported servicing agcnt,2 which states that ii. is ,based entirely on Moreno's review of Wells Fargo's businessrccords. Moreno asse1is that the subject mortgage, a copy of which is annexed as Exhibit 1 to her afftdavh, ''encumbers'' the Property ''together with the buildings, iinprovenients, fixtures, royalties, profits and all other rights owned or held by the defendant mortgagor, Mariarne Kerne.'' Morcnorcfercnccs and quotes the "l-4 Family Rider (Assignment oJRent)" to the rnm'tgage, which provides, in relevant part, that: "1-4 FAMILY COVENANTS; In addition to the covenants and agreements lnadc in the Security Instrurncnt,Hnrrnwerand Lender further covenant and agree HS fo!lows: * * * "H. ASSIGNMENT OF RENTS; APPOINTMENT OF RECEIVE!{; LENDER IN POSSESSION. Borrower absoh.rtely and unconditionally assigns and transfers to Lender all of the rents and revenues ('Rents') oJ the Property, regardless ofto whom the Rents of the Property are payable. Bnrl'ower authclrizes Lender or Lcndcr;s Agents to collect the items, and agtces that each tenant ofthe Property shall pay the rents lo Lender or Lender· s agents. "IfLender gives notice of default to Borrower: (i) a11 Rents received by Borrower shall be held by Borrower as trustee for the benefit of Lend et only, tn be applied to the sums due under the Security Instrument; {ii) Lender shall be entitled to collect and receive all of the Rents of the Property; (iii) Borrower agrees that each tenant of the Property shall pay all Rents due and unpaid 10 Lend er or Lend er' s agen ts upon Len dcr' s \vri tten demand to the tenant ... and (vi) Lender shall be c'ntitlcd to ·have a receiver appointed to tak~posscssion . of and manage the 2 'l'here is no power 0J'attori1cy.or at1y other document indicating that Well:s.Fargo is.the authorized servicing agentof the subject loan for HSBC in lhe record. 4 4 of 9 [*FILED: 5] KINGS COUNTY CLERK 12/16/2021 02:03 PM INDEX NO. 41591/2007 NYSCEF DOC. NO. 18 RECEIVED NYSCEF: 12/16/2021 Property and collect the Rents and profits derived from the Property without any showing as to the inadequacy of the Pro11erty as security. "Lender, or Lender's agents or a.judicially appointed receiver, shall not be required to eritcr upon, take control of or maintain the Property before or aflcr giving notice of default to Borrower. However, Lcndct, or Lender's agents or a.judicially appointed receiver, may do so at any time when a defliult occurs." Moreno attests_, upon information and belief, that the Property is "a non-owncroccupicd multi-unit i-csidential building consisting of at least two units, with at least two tenants'' and that ··the gross monthly rental income fol' the Mortgaged Premises is approximately $5,200.'; Notably, Moreno does not annex any business records supporting this assertion. Moreno also asserts that Kone has not paid the property taxes for the Property sincc2OO7, and that HSBC has made tax payments in the aggregate amount of $86,046.60 in order to protect its security interest. Exhibit 2 to Morcn6's moving affidavit is a one-page list of years and dollar ainou·nts, without any indication of what they represent. Moreno alleges that although Kone rernains in dcJau11, she continues to cM!ect rents generated by the Property while failing and refusing to pay the real property taxes. . . . . Moreno. further asserts that the appointment of a receiver is needed ''to collect the rents generated by the Mortg 8gcd Premises and to protect, maintain and preserve the real property." Defendant Jfone's Opposition Kone, in opposition~ submits. an attorney affirmation noting .that J:ISBC 5 5 of 9 [*FILED: 6] KINGS COUNTY CLERK 12/16/2021 02:03 PM NYSCEF DOC. NO. 18 INDEX NO. 41591/2007 RECEIVED NYSCEF: 12/16/2021 "conveniently omit1ed 1' to tell the court about the parties' summary judgment motion and cross motion, which were sub ju dice at the time that HSBC filed the instant motion fotthe appointment of a receiver. Defense counsel submits a copy of the court's March 5, 2020 decision and order denying the parties' summary judgment motion and cross motion . . . because HSBC submitted two different versions ofthe. note and failed to estaplish that it was the holder of the promissory note at the time when this action ,vas commenced. Defense counsel argues that "PlaiI1tiffcannot be entitled to a court-appointed receiver for the very same tcasons it cannot foreclose; as a threshold matter, any entitlement to a receiver ... is inexorably bound and prcdictited upon standing to enforce the subject mortgage .. .'' Defense counsel contends that the FamilyRider in the mortgage specifically states that the "Lender" is entitled to a receiver; and the "Lender'' \Vas First United. Defense counsel argues that "only if Plaintiff is the valid transferee of the rights of First United and can stand in the·prnverbial shoes ofl'iirstUt1ited, cart Plaintiff have standing to enforce said mMtgage." Defense counsel J'urther argues that F-lSI3C's motion for the appointment of a receiver should also be denied because it is based on Moreno's inad1nissihle hearsay. Det~nse counsel notes that Morcri.O's affidavit regarding HSBC's payment of property taxes is inadmissible hearsay because it is based cntfrely on Moreno's revi·ew ofWeJls t7 argb' s ·business re.cords, which were not produced. HSBC's Reply HSBC, in reply,. argues that "New York courts have previously granted tnotions 6 6 of 9 t() [*FILED: 7] KINGS COUNTY CLERK 12/16/2021 02:03 PM NYSCEF DOC. NO. 18 INDEX NO. 41591/2007 RECEIVED NYSCEF: 12/16/2021 appoint temporary receivers where standing has not yet been dcrnortstratcd as a matter of law''and provides a copy of a 2019 decision by the Bronx County Supreme Coutt. HSBC' s counsel asserts that "Defendant has not provided any basis in fact or law for this Court to disregard the parties' express contractual agre<::mcnt ... simply because standing has not yet been finally detem1ined in this case'' (emphasis added). HSBC's counsel futther asserts that HSBC did annex business records to Moreno's affidavit and references Exhibit 2, a single page listing of years and dollar ainourtts \vithoutany indication that it relates to the Property and the mo1igagc loan at issue here. Discussion The Second Department has hcldthat''[uJndcr IlealPropci"ty Law§ 254 (10), where ... the parties to a n-wrtgage agree that a receiver may be appointed in the event of default, the appointment ofa receiver without notice and without regard to the adequacy of ~ccurity is proper" (366 Fourth St: Corp. v Foxfire Entaprises, Inc., 149 AD2d 692, 692 [l 989] [e1nphasis added]). ln addition, the Second Departmenthas specifically acknowledged that "tmdcr appropriate circumstances, a court of equity may deny such applicatitm" (id.; see also Essex v Newmon, 220 AD2d 639, 640 [l995J [holding that ''a court of equity. in its discretion and under appropriate circumstances, may deny ... an application [for the appointment of a receiver]}. While th¢ Sll bj ect mortgage .speci ncal ly authorizes the appoi ntmCIJl <J fa recci ver In favor of" Lend er'' to col le.ct the rents in the event thnt Kone qe fa u Its, the co tu1 (Joseph, J.) previously denied HSBC summary jqdgrrient because it failed to dc1nonstrate its standing. /· 7 of 9 [*FILED: 8] KINGS COUNTY CLERK 12/16/2021 02:03 PM NYSCEF DOC. NO. 18 INDEX NO. 41591/2007 RECEIVED NYSCEF: 12/16/2021 to foreclose. The court held that the production of two different vets ions of the promissory note raised triable issues of fact regarding HSBC's ownership of the note when this action was commenced. Thus, HSBC has failed to establish that it stands in the shoes ofFirst United, the original "Lender'; in the mortgage; and is thus entitled to enforce the terms of the mortgage, including the Family Rider regarding the appointment of a receiver. Furthermore , FISBC's 1'n<)tioni;; based on Moreno's inadrn:issiblc hearsay testimony regardirig HSBC's payment of property taxes for the subject Property, which is not supported by Wells Fargo's purported business record annexed to Moreno's affidavit as Exhibit 2 (see Deutsche Bank National Trust Co1npany v Elshiekh, 179 AD3 d 1017, 1021 [2020]; Bank of New York Mellon v Gordon, 171 AD3d 197, 208-209 [2019]). Indeed; the one:-page doc um en t, which has no heading or· indicatior'i that it is from Wells Fargo or HSBC's business records, merely lists the years 2007 throug,h 2019 followed by a dollar amount and does not identify or reference what the dollar amounts represent, the subject loan; Kone as the borrower or the subj cct Property. In "ddition, there is· no evidcntiary support for Moreno's conclµsory assei'tion that a receiver is necessary and warranted to protect, maintain and prcserve·the Property during the pendenty of'this foreclosure action, which HSBC commenced over a decade 1:tgo i112007. Under the circumstances presented here, where the court has pn;viously held that there are triable issues of fact regarding HSBC's standing to enforoc the mortgage and foreclose on the Property and 1-ISBC's motion for the appointment of a receiver is not supported by admissible evidence of HSI3.C's eittitlc111ent to a receiver or the ·need for a 8 of 9 [*FILED: 9] KINGS COUNTY CLERK 12/16/2021 02:03 PM NYSCEF DOC. NO. 18 INDEX NO. 41591/2007 RECEIVED NYSCEF: 12/16/2021 receiver to protect, 111aintain and preserve the Prnpcrly, this court finds, in its discretion, that thcappointrncnt ofa receiver is unwarranted. Accordingly, it is hereby ORDERED 1hatJ-ISBC 1 s motion (mot. seq. 10) is denied. This- constitutes the decision and order of the court. ENTER, HON. LAWRENCE KN!PEL ADMINISTRATIVE JUDGE 9 9 of 9

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