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COMPLAINT | MONTGOMERY COUNTY, PENNSYLVANIA, RECORDER OF DEEDS v THE BANK OF NEW YORK MELLON et al | $100+ Million Dollar Suit Against Big Banks Due to MERS System

COMPLAINT | MONTGOMERY COUNTY, PENNSYLVANIA, RECORDER OF DEEDS v THE BANK OF NEW YORK MELLON et al | $100+ Million Dollar Suit Against Big Banks Due to MERS System

IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF PENNSYLVANIA

MONTGOMERY COUNTY, PENNSYLVANIA,
RECORDER OF DEEDS, by and through
NANCY J. BECKER, in her official capacity as
the Recorder of Deeds of Montgomery County,
Pennsylvania, on its own behalf and on behalf
of all others similarly situated,
Plaintiff,

vs.

THE BANK OF NEW YORK MELLON, THE
BANK OF NEW YORK MELLON TRUST
COMPANY, N.A., CITIBANK, N.A., DEUTSCHE
BANK NATIONAL TRUST COMPANY,
DEUTSCHE BANK TRUST COMPANY
AMERICAS, HSBC BANK USA, N.A.,
JPMORGAN CHASE BANK, N.A., and WELLS
FARGO BANK, N.A.,
Defendants.

I. NATURE OF THE ACTION

1. The Montgomery County, Pennsylvania, Recorder of Deeds, by and through
Nancy J. Becker, the Montgomery County Recorder of Deeds, brings this action on its own
behalf and on behalf of a class of all other similarly situated Pennsylvania County Recorders of
Deeds (collectively, the “Recorders” or the “Class”) against The Bank of New York Mellon, The
Bank of New York Mellon Trust Company, N.A., Citibank N.A., Deutsche Bank National Trust
Company, Deutsche Bank Trust Company Americas, HSBC Bank, N.A., JPMorgan Chase N.A.,
and Wells Fargo Bank, N.A. (“Defendants”) to remedy Defendants’ failures to properly and
timely record mortgage assignments as required by Pennsylvania law.

2. Defendants have been among the most active participants in the mortgage-backed
securities (“MBS”) industry, including as trustees for numerous MBS trusts into which the
securitized mortgage loans are ultimately conveyed. In a securitization, a mortgage loan typically
is transferred multiple times before it is conveyed to the trustee on behalf of the MBS trust. Each
of the Defendants has engaged in transfers of mortgage loans secured by real property located in
Montgomery County and throughout Pennsylvania,

3. Each of the Defendants is also a member of, and participates in, the “MERS
System,” a private, members-only electronic registry for recording and tracking transfers of
mortgage loans without recording mortgage assignments in public land records offices.

4. In Montgomery County, Pa. v. MERSCORP, Inc., l1-CV-6968, 2014 WL
2957494 (E.D. Pa. Jun. 30,2014), this Court, per the Honorable 1. Curtis Joyner, entered a
declaratory judgment in Plaintiffs favor, finding that the failure to create and record mortgage
assignments evincing the transfers of promissory notes secured by mortgages on Pennsylvania
real estate, under the MERS System and otherwise, violates Pennsylvania recording statutes,
including 21 P.S. §§ 351,444 and 623-1.

5. Each of the Defendants has systematically failed to create and timely record mortgage
assignments in connection with transfers of promissory notes secured by mortgages on Pennsylvania
real estate, both when operating within the MERS System and otherwise. These failures to record
mortgage assignments have damaged the integrity of Pennsylvania’s public land records by
creating gaps in the chain of title and creating confusion amongst property owners and others
about the identity of the owners of their mortgages, and have wrongfully deprived the
Montgomery County Recorder of Deeds and all of the other Pennsylvania Recorders of millions
of dollars in recording fees, in violation of21 P.S. §§ 351,444 and 623-1 (together, the
“Pennsylvania Recording Statutes”). Plaintiff seeks an award of damages for these violations, to quiet
title on all of the adversely affected Pennsylvania properties by requiring Defendants to record the
missing mortgage assignments and pay the related recording fees, restitution for Defendants’ unjust
enrichment, and for declaratory and permanent injunctive relief

[...]

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JPMORGAN CHASE BANK, NATIONAL ASSOCIATION v. Blank | Ohio Appeals Court – question of fact remains as to whether appellee complied with the notice provisions contained in the mortgage

JPMORGAN CHASE BANK, NATIONAL ASSOCIATION v. Blank | Ohio Appeals Court – question of fact remains as to whether appellee complied with the notice provisions contained in the mortgage

2014-Ohio-4135

JPMORGAN CHASE BANK, NATIONAL ASSOCIATION, Plaintiff-Appellee,
v.
LOIS M. BLANK, et al., Defendant-Appellant.

No. 2013-A-0060.
Court of Appeals of Ohio, Eleventh District, Ashtabula County.
September 22, 2014.
Susana Lykins and Bill L. Purtell, Lerner, Sampson & Rothfuss, 120 East Fourth Street, Suite 800, P.O. Box 5480, Cincinnati, OH 45201-5480 (For Plaintiff-Appellee).

Bruce M. Broyles, 5815 Market Street, Suite 2, Youngstown, OH 44512 (For Defendant-Appellant).

OPINION

TIMOTHY P. CANNON, P.J.

{¶1} Appellant, Lois M. Blank, appeals the September 9, 2013 judgment of the Ashtabula County Court of Common Pleas granting summary judgment and issuing a decree of foreclosure in favor of appellee, JPMorgan Chase Bank, National Association. For the reasons that follow, we reverse and remand to the trial court.

{¶2} On February 25, 2008, appellant signed a promissory note payable to Chase Bank USA, N.A in the amount of $382,500. The same day, appellant granted a mortgage in the same amount to Chase Bank USA, N.A. on the property at 3471 Lake Road in Conneaut, Ohio. The mortgage was recorded on February 29, 2008, and was later assigned by Chase Bank USA, N.A. to appellee, which duly recorded the assignment on June 25, 2012.

{¶3} According to appellee, on December 10, 2010, an acceleration warning was mailed, “return service requested,” to appellant. The warning informed appellant that she was in default for her failure to make the required monthly payments on her loan, beginning with the payment due August 1, 2009. The warning also indicated the total amount past due and payable.

{¶4} On June 28, 2012, appellee brought a complaint in foreclosure, alleging that appellant was in default under the terms of the note and that she owed the sum of $379,754.18. Attached to the complaint were copies of the note and mortgage. On August 3, 2012, appellant filed her answer, which included five affirmative defenses.

{¶5} On September 12, 2012, appellee filed a motion for summary judgment, arguing that appellant’s affirmative defenses were “insufficient to comply with the Civil Rules’ requirement of notice pleading.” Additionally, appellee’s motion asserted that appellant failed to set forth any specific facts that demonstrated a genuine issue of material fact for trial.

{¶6} On January 28, 2012, appellant filed a response to appellee’s motion for summary judgment. Attached to appellant’s response was an affidavit in which appellant averred that she never received any notice of her default pursuant to the terms of the promissory note and mortgage either by regular mail, certified mail, or personal delivery.

{¶7} On March 11, 2013, appellee filed a reply in support of its motion for summary judgment. In its reply, appellee asserted that appellant’s affidavit attached to her response was unexecuted and that appellee had not received an executed copy. As a result, appellee argued the trial court could not rely on “[a]ppellant’s unexecuted Affidavit” and that summary judgment was proper.

{¶8} On September 9, 2013, the trial court granted appellee’s motion for summary judgment. In a separate judgment entry, also dated September 9, 2013, the trial court filed an “entry granting summary judgment and decree in foreclosure and reformation of mortgage.”

{¶9} Appellant timely appeals the trial court’s granting of summary judgment and decree in foreclosure in favor of appellee. Appellee chose not to file a merit brief.

{¶10} Appellant sets forth one assignment of error, which states:

{¶11} “The trial court erred in granting summary judgment to Appellee when there were genuine issues of material fact still in dispute.”

{¶12} Under her sole assignment of error, appellant frames three sub-issues for our review. First, appellant contends that “[a]ppellee failed to fulfill a condition precedent to the acceleration of the debt and the filing of the foreclosure complaint.” Second, appellant asserts that “[t]he trial court erred in finding that Appellee had standing to file the foreclosure * * *.” Third, appellant argues that the trial court erred in not considering her affidavit, “as it was not a prohibited `self-serving’ affidavit.”

{¶13} We review a trial court’s decision on a motion for summary judgment de novo. Fed. Home Loan Mtge. Corp. v. Zuga, 11th Dist. Trumbull No. 2012-T-0038, 2013-Ohio-2838, ¶13. Under Civ.R. 56(C), summary judgment is proper if:

(1) No genuine issue as to any material fact remains to be litigated;

(2) the moving party is entitled to judgment as a matter of law; and

(3) it appears from the evidence that reasonable minds can come to but one conclusion, and viewing such evidence most strongly in favor of the party against whom the motion for summary judgment is made, that conclusion is adverse to that party.

Id. at ¶10, citing Temple v. Wean United, Inc., 50 Ohio St.2d 317, 327 (1977).

{¶14} The moving party bears the initial burden to demonstrate from the pleadings, depositions, answers to interrogatories, written admissions, affidavits, transcripts of evidence, and written stipulations of fact, if any, that there is no genuine issue of material fact to be resolved in the case. Id. at ¶12. To properly support a motion for summary judgment in a foreclosure action, a plaintiff must present evidentiary-quality materials showing: (1) the movant is the holder of the note and mortgage, or is a party entitled to enforce it; (2) if the movant is not the original mortgagee, the chain of assignments and transfers; (3) the mortgager is in default; (4) all conditions precedent have been met; and (5) the amount of principal and interest due. Wachovia Bank v. Jackson, 5th Dist. Stark No. 2010-CA-00291, 2011-Ohio-3203, ¶40-45. “If this initial burden is met, the nonmoving party then bears the reciprocal burden to set forth specific facts which prove there remains a genuine issue to be litigated, pursuant to Civ.R. 56(E).” Zuga, supra, at ¶12.

{¶15} Appellant’s three sub-issues will be considered out of order. In her second sub-issue presented for review, appellant asserts that summary judgment was improper, as “[t]he trial court erred in finding that appellee had standing to file the foreclosure complaint in light of the undated allonge that was not attached to the complaint and an assignment of mortgage without a transfer of the underlying debt.”

{¶16} A plaintiff in a foreclosure action must have standing at the time it files the complaint in order to properly invoke the jurisdiction of the trial court. Fed. Home Loan Mtge. Corp. v. Schwartzwald, 134 Ohio St.3d 13, 2012-Ohio-5017, ¶41-42. “It is an elementary concept of law that a party lacks standing to invoke the jurisdiction of the court unless he has, in an individual or representative capacity, some real interest in the subject matter of the action.” Id. at ¶22, quoting State ex rel. Dallman v. Franklin Cty. Court of Common Pleas, 35 Ohio St.2d 176, 179 (1973). A party’s standing to sue is evaluated at the time of the filing of the complaint. Id. at ¶24. Additionally, the lack of standing cannot be cured by a subsequent assignment of the note and mortgage subsequent to filing the complaint. Id. at ¶38.

{¶17} A plaintiff in a foreclosure case demonstrates standing by having an interest in either the promissory note or mortgage. Fed. Home Loan Mtge. Corp. v. Koch, 11th Dist. Geauga No. 2012-G-3084, 2013-Ohio-4423, ¶24, citing Fed. Home Loan Mtge. Corp. v. Rufo, 11th Dist. Ashtabula No. 2012-A-0011, 2012-Ohio-5930, ¶18. The requisite “interest” can be met by demonstrating an assignment of either the note or mortgage. Rufo at ¶44. There is no standing to proceed with the foreclosure if the interest did not exist at the time the foreclosure complaint was filed. Schwartzwald at ¶25-27.

{¶18} The assignment of a mortgage, without an express transfer of the note, is sufficient to transfer both the mortgage and the note if the record indicates the parties’ intent to transfer both. Bank of N.Y. Mellon v. Veccia, 11th Dist. Trumbull No. 2013-T-0101, 2014-Ohio-2711, ¶20, citing Bank of New York v. Dobbs, 5th Dist. Knox No. 2009-CA-000002, 2009-Ohio-474, ¶31. In this case, appellee attached to its complaint the assignment of mortgage which “assign[ed], transfer[red] and set over unto [appellee], * * *, a certain mortgage from [appellant] to Chase Bank USA, N.A.” By attaching a copy of the assignment of mortgage to the complaint, appellee demonstrated the requisite standing existed at the time the foreclosure complaint was filed.

{¶19} Appellant argues that because appellee attached to its motion for summary judgment an undated allonge, not previously attached to appellee’s complaint, a question of fact was created as to whether appellee had standing when the complaint was filed. Appellant argues that had the allonge existed at the commencement of appellee’s action, it would have appeared after the note. We disagree. The fact that the allonge was not attached to the complaint does not require the conclusion that appellee lacked standing.

{¶20} In this case, the record reflects the parties’ intent for the note and mortgage to be transferred together. The mortgage states:

This Security Instrument secures to Lender: (i) the repayment of the Loan, and all renewals, extensions and modifications of the Note; and (ii) the performance of Borrower’s conveyance under the Security Instrument and the Note. For this purpose, Borrower does hereby mortgage, grant and convey to Lender the following described property * * *.

The promissory note states:

In addition to the protections given to the Note Holder under this Note, a Mortgage, Deed of Trust, or Security Deed (the `Security Instrument’), dated the same day as this Note, protects the Note Holder from possible losses which might result if I do not keep the promises which I make in this Note. That Security Instrument describes how and under what conditions I may be required to make immediate payment in full of all amounts I owe under the Note.

{¶21} The language contained in the note and mortgage demonstrates the clear intent that both be transferred together. See, e.g., LSF6 Mercury Reo Invs. v. Garrabrant, 5th Dist. Delaware No. 13-CAE-06-0050, 2014-Ohio-901, ¶18 (the clear intent by the parties to keep the note and mortgage together, rather than transferring the mortgage alone, is demonstrated by the fact that the note refers to the mortgage and the mortgage refers to the note). As a result, appellee sufficiently demonstrated standing to enforce the note and file the foreclosure complaint. Appellant’s second sub-issue is without merit.

{¶22} Appellant’s first and third sub-issues are considered together, as they both argue that appellee failed to properly notify appellant of conditions precedent to foreclosure. In appellant’s first sub-issue, she asserts that summary judgment was improper because “[a]ppellee failed to fulfill a condition precedent to the acceleration of the debt and the filing of the foreclosure complaint.” In appellant’s third sub-issue, she asserts that summary judgment was improper because “[t]he trial court could consider the affidavit of Lois M. Blank, as it was not a prohibited `self-serving’ affidavit.” In summary, appellant argues that (1) appellee mailed the demand letter by way other than first-class mail; (2) she did not receive any notice; and (3) delivery methods other than first-class are not deemed received until actual delivery.

{¶23} “Where prior notice of default and/or acceleration is required by a provision in a note or mortgage instrument, the provision of notice is a condition precedent subject to Civ.R. 9(C).” Citimortgage, Inc. v. Hijjawi, 11th Dist. Lake No. 2013-L-0105, 2014-Ohio-2886, ¶17, quoting First Fin. Bank v. Doellman, 12th Dist. Butler No. CA2006-02-029, 2007-Ohio-0222, ¶20. Additionally, a general denial of the performance of conditions precedent is insufficient to place performance of a condition precedent at issue. Doellman, supra, at ¶20.

{¶24} In this case, the mortgage contained language requiring that appellant be given notice before the acceleration of the debt and the filing of a foreclosure complaint. Specifically, the mortgage states:

Acceleration; Remedies. Lender shall give notice to Borrower prior to acceleration following Borrower’s breach of any covenant or agreement in this Security Instrument * * *. The notice shall specify: (a) the default; (b) the action required to cure the default; (c) a date, not less than 30 days from the date the notice is given to Borrower, by which the default must be cured; and (d) that failure to cure the default on or before the date specified in the notice may result in acceleration of the note secured by this Security Instrument, foreclosure by judicial proceedings and sale of the Property.

{¶25} The mortgage also specifies how notice is to be given. Specifically, “[a]ny notice to Borrower in connection with this Security Instrument shall be deemed to have been given to Borrower when mailed by first class mail or when actually delivered to Borrower’s notice address if sent by other means.”

{¶26} In support of its motion for summary judgment, appellee offered the affidavit of Richard H. Eubanks, a vice president for appellee. Eubanks’ affidavit stated:

1. I am authorized to execute this affidavit on behalf of [appellee]. The statements made in this Affidavit are based on my personal knowledge.

* * *

4. In my capacity as Vice President, I have access to [appellee]‘s business records, maintained in the ordinary course of regularly conducted business activity, including the business records for and relating to the Borrower’s loan. Their records include the historic records of Chase Home Finance LLC, which merged with [appellee] effective May 1, 2011. I make this affidavit based upon my review of those records relating to the Borrower’s loan and from my own personal knowledge of how they are kept and maintained. The loan records for the Borrower are maintained by [appellee] in the course of its regularly conducted business activities and are made at or near the time of the event, by or from information transmitted by a person with knowledge.

5. [Appellee]‘s business records that relate to [appellant]‘s loan I reviewed and relied upon for the statements made in this affidavit include but are not limited to the Note, Mortgage and [appellee]‘s electronic servicing system. True and exact copies of the Note (Exhibit A), Mortgage (Exhibit B), Assignment (Exhibit C) and Demand Letter (Exhibit D) are attached hereto.

{¶27} Appellant filed an affidavit in support of her memorandum in opposition to appellant’s motion for summary judgment. Appellant’s affidavit stated:

4. At no time prior to [ ] the filing of the complaint for foreclosure did JPMorgan Chase Bank, National Association send a notice of acceleration to pursuant to the terms of the mortgage.

5. I did not receive a notice of default or notice of acceleration, by regular mail or by certified mail at any time prior to the filing of the complaint for foreclosure.

6. No one personally delivered to me a notice of default or notice of acceleration at any time prior to the filing of the complaint for foreclosure.

{¶28} Upon review of the record, we hold that a genuine question of material fact remains as to whether the required notice provisions of the mortgage had been met by appellee. The acceleration warnings attached to Eubanks’ affidavit stated that the notices were sent “return service requested.” Whether this is first-class mail or some other form of delivery that would produce confirmation of receipt is not clear from the record. Appellee offered no affidavit evidence to support that the notices were sent first-class mail. The mortgage states notice is given upon mailing when using first-class mail, but only upon delivery when sent through other means. Based on this plain language, appellee does not need to prove delivery of the notice only when using first-class mail. Appellant’s affidavit declares that notice was not received. If notice was not sent via first-class mail, but rather sent by other means that provides a receipt of service, that receipt should have been provided.

{¶29} In sum, appellee did not present sufficient evidence to indicate how the notice was sent. A question of fact exists as to whether appellee sent the notice via first-class mail or through some other means. Once appellant contested the receipt of notice, appellee could have offered an affidavit stating that notice was sent first-class mail or offered proof of actual delivery if some other method was used. See, CitiMortgage, Inc. v. Loncar, 7th Dist. Mahoning No. 11 MA 174, 2013-Ohio-2959, ¶28. Furthermore, appellee’s affidavit does not declare that the conditions precedent were met prior to the filing of the foreclosure complaint. See id.

{¶30} For these reasons, appellant’s first and third sub-issues are well taken. The record in this case demonstrates that a question of fact remains as to whether appellee complied with the notice provisions contained in the mortgage. As such, appellant’s assignment of error has merit to the extent indicated.

{¶31} For the reasons stated in this opinion, the judgment of the trial court is reversed and remanded to the trial court.

THOMAS R. WRIGHT, J., COLLEEN MARY O’TOOLE, J., concur.

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Inside the New York Fed: Secret Recordings and a Culture Clash

Inside the New York Fed: Secret Recordings and a Culture Clash

We will get to the truth


Truth-Out-

Barely a year removed from the devastation of the 2008 financial crisis, the president of the Federal Reserve Bank of New York faced a crossroads. Congress had set its sights on reform. The biggest banks in the nation had shown that their failure could threaten the entire financial system. Lawmakers wanted new safeguards.

The Federal Reserve, and, by dint of its location off Wall Street, the New York Fed, was the logical choice to head the effort. Except it had failed miserably in catching the meltdown.

New York Fed President William Dudley had to answer two questions quickly: Why had his institution blown it, and how could it do better? So he called in an outsider, a Columbia University finance professor named David Beim, and granted him unlimited access to investigate. In exchange, the results would remain secret.

[TRUTH-OUT]

(Photo: Earl Wilson / The New York Times)

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Real property, financial services & title insurance update – September 22, 2014 . . . A collection of national “reverse and remands”

Real property, financial services & title insurance update – September 22, 2014 . . . A collection of national “reverse and remands”

REAL PROPERTY UPDATE

  • Parol Evidence: trial court erred by considering extrinsic evidence to determine parties’ intent because contract for sale of property that provided certain prior deposits be paid to seller as consideration for buyer’s extensions of closing date was clear and unambiguous – Dirico v. Redland Estates, Inc., No. 3D12-3132 (Fla. 3d DCA Sept. 10, 2014) (substitute opinion on rehearing, reversed and remanded)
  • Jurisdiction: trial court lacked subject matter jurisdiction and erred by entering summary judgment in favor of lender after action had been dismissed for lack of prosecution – Magloire v. The Bank of New York, No. 4D11-4540 (Fla. 4th DCA Sept. 10, 2014) (reversed and remanded)
  • Foreclosure: trial court erred by entering judgment of foreclosure without taking testimony or considering evidence – Muhammad v. BAC Home Loans Servicing, LP, No. 4D13-1580 (Fla. 4th DCA Sept. 10, 2014) (reversed and remanded)
  • Email Service: summary judgment improper where plaintiff failed to serve pleadings on defendant at designated e-mail address – Charles v. H&R Block Bank, No. 4D13-2895 (Fla. 4th DCA Sept. 10, 2014) (reversed and remanded)
  • Trial Notice: judgment based on defendants’ failure to appear at trial set within less than 30 days from notice was improper per Florida Rule of Civil Procedure 1.440(c) – BAC Home Loans Servicing L.P. v. Parrish, No. 1D13-4150 (Fla. 1st DCA 2014) (reversed and remanded)
  • Foreclosure/Standing: plaintiff failed to demonstrate it had standing at lawsuit’s commencement and, further, assigned note after lawsuit but never received assignment of note back – Pennington v. Ocwen Loan Servicing, LLC, No. 1D13-3072 (Fla. 1st DCA Sept. 16, 2014) (reversed and remanded for further proceedings).
  • Foreclosure/Contractor’s Lien: reversing final judgment of foreclosure in favor of entity that purchased loans because fact issue remained regarding whether entity created investors that controlled developers for improper purpose of extinguishing contractor’s liens – CDC Builders, Inc. v. Biltmore-Sevilla Debt Investors, LLC, No. 3D13-603 (Fla. 3d DCA Sept. 17, 2014) (reversing summary judgment and remanding for further proceedings).
  • Foreclosure/Striking Pleadings: affirming striking of pro se defendant’s pleadings for willful and deliberate failure to comply with multiple orders – Ledo v. Seavie Resources, LLC, No. 3D14-21 (Fla. 3d DCA Sept. 17, 2014).
  • Quiet Title/Amendment of Pleadings: property owners should have been permitted leave to amend before dismissal of their quiet title claim with prejudice – Ledo Unrue v. Wells Fargo Bank, N.A., No. 5D13-3443 (Fla. 5th DCA Sept. 19, 2014).
  • Sinkhole/Appraisal Clause: appraiser could determine method or scope of necessary repairs when determining “amount of loss” where insurer admitted insured sustained covered loss, but appraiser had to be disinterested – Fla. Ins. Guar. Ass’n, etc v. Branco, No. 5D13-2929 (Fla. 5th DCA Sept. 19, 2014) (reversing order allowing party’s attorney to serve as appraiser, but affirming in all other respects)

FINANCIAL SERVICES UPDATE – NONE

TITLE INSURANCE UPDATE

  • Duty to Defend: where insurer knew of existing litigation against insured, insurer had duty to provide defense; thus, insurer liable for pre-tender costs of defense even before insured requested defense – CH Properties, Inc. v. First American Title Ins. Co., Case No. 13-1354 (D. Puerto Rico Sept. 9, 2014) (granting in part, denying in part cross motions for summary judgment)
  • Duty to Defend: where allegations of complaint do not directly contest or otherwise affect validity of insured interest, insurer has no duty to defend pursuant to eight corners rule – CH Properties, Inc. v. First American Title Ins. Co., Case No. 13-1354 (D. Puerto Rico Sept. 9, 2014) (granting in part, denying in part cross motions for summary judgment)
  • Coverage: presence of trespassers does not give rise to coverage under leasehold title insurance policy – CH Properties, Inc. v. First American Title Ins. Co., Case No. 13-1354 (D. Puerto Rico Sept. 9, 2014) (granting in part, denying in part cross motions for summary judgment)
  • Coverage: title insurance does not insure against imposition of taxes assessed after date policy issued and a pending tax appeal did not render title unmarketable or constitute a defect in title – Princeton South Investors, LLC v. First American Title Ins. Co., Case No. A-0850-12T3 (N.J. App. Sept. 8, 2014)(affirming summary judgment)
  • Economic Loss Rule: claim based on failure to properly carry out title search undertaken pursuant to written contract sounds in contract and not tort, no matter how plead – Dawkins v. First American Title Co., LLC, Case No. 07-12-00437-CV (Tex. App. Sept. 11, 2014)(affirming summary judgment)
  • Release: where insured is paid pursuant to a title insurance policy and signs a release of all claims relating to the defect and the insurer issues an endorsement excepting the instrument creating the defect from coverage, insured’s future claims are barred – Chorches v. Stewart Title Guar. Co., Case No. 3:13-cv-01182 (D. Conn. Sept. 10, 2014) (order granting motion to dismiss and summary judgment)

source: Carlton Fields

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MAGLOIRE v. Bank of New York, Fla: Dist. Court of Appeals, 4th Dist. 2014 | A trial court lacks jurisdiction to hear a case once it has been dismissed

MAGLOIRE v. Bank of New York, Fla: Dist. Court of Appeals, 4th Dist. 2014 | A trial court lacks jurisdiction to hear a case once it has been dismissed

 

MORIN MAGLOIRE and GERMAIN JEAN CLAUDE, Appellants,
v.
THE BANK OF NEW YORK as Trustee for the certificate holders CWABS, INC. ASSET-BACKED CERTIFICATES, SERIES 2006-23, Appellee.

No. 4D11-4540.
District Court of Appeal of Florida, Fourth District.
September 10, 2014.
S. Tracy Long of Law Offices of S. Tracy Long, P.A., Deerfield Beach (withdrawn as counsel after filing brief); Morin Magloire and Germain Jean-Clause, Lauderdale Lakes, pro se.

Michael P. Bruning of Connolly, Geaney, Ablitt & Willard, P.C., West Palm Beach, for appellee.

PER CURIAM.

The homeowners appeal the trial court’s order granting final summary judgment of foreclosure in favor of the bank. The homeowners argue that the trial court erred in granting the bank’s motion for summary judgment after the trial court previously dismissed the case for lack of prosecution. We agree.

On October 10, 2008, the bank filed a mortgage foreclosure complaint based on a mortgage and note executed by the homeowners in September of 2006. On October 15, 2008, the homeowners filed an answer to the complaint, in the form of a letter to the court, explaining that they had “experienced a serious hardships [sic] that have prevented [them] from making the mortgage payments on [their] primary residence.” Additionally, they stated that they were trying to work with the leader “to work out a re-instatement or re-payment plan.”

On November 19, 2009, the trial court filed a notice of intent to dismiss the bank’s complaint after there had been no record activity in the case since November 5, 2008. The trial court set a hearing on the issue, and the bank filed a statement asserting good cause as to why the action should remain pending.[1] Within its response, the bank stated that it was currently evaluating the homeowner’s loan to determine if the homeowners would qualify for a settlement offer, and asked the court to allow the case to remain open until the bank could complete negotiations with the homeowners. On December 16, 2009, the trial court entered a final order of dismissal of the bank’s complaint, because there was “no record activity > 1 yr (since 11/5/2008) and no good cause.”

On June 28, 2010, the bank filed a motion for summary judgment. Then, on November 9, 2011, a hearing was held on the bank’s motion for summary judgment. On the same date, the trial court entered a summary final judgment of foreclosure in favor of the bank. The homeowners appeal this order.

There were no transcripts provided of the motion for summary judgment hearing, and it is therefore unknown whether the homeowners raised the issue of the previous dismissal of the case and the trial court’s subsequent lack of jurisdiction over the case. However, “the issue of subject-matter jurisdiction . . . may be raised for the first time on appeal.” Rudel v. Rudel, 111 So. 3d 285, 291 (Fla. 4th DCA 2013).[2]

“Whether a court has subject matter jurisdiction is a question of law reviewed de novo.” Sanchez v. Fernandez, 915 So. 2d 192, 192 (Fla. 4th DCA 2005).

A trial court lacks jurisdiction to hear a case once it has been dismissed. See Gardner v. Nioso, 108 So. 3d 1122, 1123 (Fla. 1st DCA 2013) (“[B]y the trial court’s dismissal of the action against them, and the subsequent affirmance of that dismissal, the trial court no longer has jurisdiction over Appellees.”); Harrison v. La Placida Cmty. Ass’n, 665 So. 2d 1138, 1141 (Fla. 4th DCA 1996) (“Once [the defendat] was dismissed, the trial court no longer had jurisdiction over her.’); Ludovici v. McKiness, 545 So. 2d 335, 336 n.3 (Fla. 3d DCA 1989) (“A trial court lacks jurisdiction to vacate an order of dismissal without prejudice after the order becomes final. An exception to this finality is a Rule 1.540 motion. The trial court has jurisdiction to entertain a timely motion for rehearing or to revisit the cause on the court’s own initiative within the time allowed for a rehearing motion.”) (internal citations omitted); Derma Lift Salon, Inc v. Swanko, 419 So. 2d 1180, 1180-81 (Fla. 3d DCA 1982). (“The trial court’s order of dismissal entered May 11, 1982, albeit `without prejudice,’ was a final appealable order, subject to the further jurisdiction of the trial court only upon a timely filed motion for rehearing under Florida Rule of Civil Procedure 1.530.”) (internal citation omitted). Since there was no motion for rehearing or motion to vacate filed or ruled upon regarding the order of dismissal in the instant case, the trial court did not have jurisdiction to enter an order granting the bank’s subsequently-filed motion for summary judgment. Additionally, although the trial court’s final order of dismissal was entered “without prejudice to refile,” the bank never refiled the complaint prior to filing its motion for summary judgment.

The bank argues that the trial court’s order should be allowed to stand because it exercised its powers of “equitable jurisdiction” in granting the bank’s motion for summary judgment. However, we find the bank’s argument, basically that equitable jurisdiction can replace subject-matter jurisdiction, unconvincing. See Black’s Law Dictionary 18(c) (9th ed. 2009) (quoting William Q. de Funiak, Handbook of Modern Equity 38 (2d ed. 1956)) (“[T]he term equity jurisdiction does not refer to jurisdiction in the sense of the power conferred by the sovereign on the court over specified subject-matters or to jurisdiction over the res or the persons of the parties in a particular proceeding but refers rather to the merits. The want of equity jurisdiction does not mean that the court has no power to act but that it should not act, as on the ground, for example, that there is an adequate remedy at law.”) (emphasis added) (internal quotation marks omitted).

Therefore, we reverse the trial court’s order granting the bank’s motion for summary judgment and remand the case to the trial court for proceedings consistent with this opinion.

Reversed and remanded.

GROSS, GERBER and CONNER, JJ., concur.

Not final until disposition of timely filed motion for rehearing.

[1] “[T]he action shall be dismissed by the court on its own motion or on the motion of any interested person, whether a party to the action or not, after reasonable notice to the parties, unless a party shows good cause in writing at least 5 days before the hearing on the motion why the action should remain pending. Mere inaction for a period of less than 1 year shall not be sufficient cause for dismissal for failure to prosecute.” Fla. R. Civ. P. 1.420(e) (emphasis added).

[2] The type of jurisdiction at issue in the instant case is that of subject-matter jurisdiction. See Bernard v. Rose, 68 So. 3d 946, 948 (Fla. 3d DCA 2011) (referring to the trial court’s jurisdiction over a case after a dismissal for lack of prosecution as that of subject-matter jurisdiction).

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Deutsche Bank Natl. Trust Co. v Tassone | NYSC – the initial assignment of the mortgage and note from New Century to DBNT, is circumspect, thereby rendering any subsequent assignments questionable….fails to indicate whether the Note was assigned as well.

Deutsche Bank Natl. Trust Co. v Tassone | NYSC – the initial assignment of the mortgage and note from New Century to DBNT, is circumspect, thereby rendering any subsequent assignments questionable….fails to indicate whether the Note was assigned as well.

Decided on June 20, 2014

Supreme Court, Putnam County

 

Deutsche Bank National Trust Company, AS TRUSTEE UNDER POOLING AND SERVICING AGREEMENT DATED AS OF MAY 1, 2003 MORGAN STANLEY ABS CAPITAL I INC. TRUST 2003-NC5, Plaintiff, -against -

against

Cosmo Tassone, CARMELA TASSONE, and “JOHN DOE” No.1-10, “MARY DOE” #1-10, and “JANE DOE” #1-10, the names being fictitious, their true names being unknown to the plaintiff, persons intended being persons in possession of portions of the premises herein described, Defendants.

2480/2011

Bruce H. Ashbahian, Esq.

DeRose & Surico

Attorney for Plaintiff

213-44 38th Avenue

Bayside, New York 11361

Nicole M. Black, Esq.

Clair & Gjersten, Esqs.

Attorney for Defendant

720 White Plains Road

Scarsdale, New York 10583
Victor G. Grossman, J.

The following papers, numbered 1 to 28, were considered in connection with Plaintiff’s motion to: (1) strike Defendant’s answer and grant summary judgment in Plaintiff’s favor; (2) change the name of plaintiff pursuant to an assignment of the mortgage; (3) amend the caption of the summons and complaint, notice of pendency, and all other papers filed by discontinuing the action against “John Doe” #1-10, “Mary Doe” #1-10, and “Jane Doe” #1-10 without prejudice; (4) appoint a referee; and (5) grant Plaintiff such other and further relief as the Court may deem just and proper; and Defendant’s Cross-Motion to Dismiss the Action in its Entirety.

PAPERSNUMBERED

Notice of Motion/Affirmation/Affidavit of Indebtedness/

Exhs. A-K1-14

Notice of Cross Motion/Affirmation in Opposition and In

Support of Cross Motion/Exhs. A-D15-20

Affirmation in Opposition/Exhs. A-G21-28

On February 18, 2003, Defendants Cosmo and Carmela Tassone executed an Adjustable Rate Note (the “Note”) with New Century Mortgage Corporation, wherein Defendants promised to repay New Century Mortgage Corporation, the principal sum of $280,000.00 with interest (Affirmation, Exh. A). At the same time, Defendants executed an Adjustable Rate Rider (Affirmation, Exh. A). To secure payment of the sum represented in the Note, Defendants duly executed and delivered to New Century Mortgage Corporation, a mortgage (the “Mortgage”), dated February 18, 2003, encumbering property located at 9 Fieldstone Road, Putnam Valley, New York 10579 (Affirmation, Exh. B). The Mortgage was recorded on April 2, 2003, in the Office of the Clerk of Putnam County at Liber 3552, Page 275 (Affirmation, Exh. B).

According to the documents presented to this Court, New Century Mortgage Corporation allegedly assigned the Mortgage and Note to Deutsche Bank National Trust Company f/k/a Bankers Trust Company of California, N.A., as Trustee (Affirmation, Exh. C). However, it is unclear when this occurred because the date of this document is January 2, 2004, but the document was not notarized until May 6, 2005 (Affirmation, Exh. C).

On July 1, 2011, Deutsche Bank National Trust Company f/k/a Bankers Trust Company of California, N.A., apparently assigned the Mortgage to Deutsche Bank National Trust Company, as Trustee Under Pooling and Servicing Agreement Dated as of May 1, 2003 Morgan Stanley ABS Capital 1 Inc. Trust 2003-NC5 (Affirmation, Exh. C).

There appears to be another assignment of the Mortgage on May 20, 2013 by Plaintiff Deutsche Bank National Trust Company, as Trustee Under Pooling and Servicing Agreement Dated [*2]as of May 1, 2003 Morgan Stanley ABS Capital 1 Inc. Trust 2003-NC5, to Deutsche Bank National Trust Company, As Trustee For Morgan Stanley ABS Capital 1 Inc. Trust 2003-NC5, Mortgage Pass-Through Certificates, Series 2003-NC5 (Affirmation, Exh. C) — almost two years after this action for foreclosure was commenced (Affirmation, Exh. D).

According to Plaintiff, Defendants defaulted by failing to make the monthly payment that was due on December 1, 2009, and each successive month thereafter (Affirmation, Exh. D).

On March 24, 2011, Plaintiff allegedly sent Defendants their ninety (90) day notice (Cross-Motion, Exh. B). The next day, on March 25, 2011, Plaintiff allegedly sent Defendants a thirty (30) day notice of default. As a result of Defendants’ failure to cure the default, Plaintiff declared the balance of the principal indebtedness immediately due and owing (Affirmation; Affidavit of Indebtedness; Exh. J).

On August 11, 2011, Plaintiff filed the Summons and Complaint and Notice of Pendency (Affirmation, Exhs. D-E). On August 24, 2011, Defendant Carmela Tassone was personally served the Summons and Complaint, along with RPAPL §1303 Notice (Affirmation, Exh. F).

Defendants interposed an Answer on September 6, 2011, denying the allegations in the complaint and alleging thirteen (13) affirmative defenses (Affirmation, Exh. G).

Settlement conferences were held on February 8, 2012, April 11, 2012, May 23, 2012, and July 25, 2012 (Report to Court, Exh. K). After the July 25, 2012 hearing, Court Attorney-Referee Albert J. DeGatano ruled that Plaintiff, by virtue of being under a pooling agreement, was not acting in bad faith for not offering a loan modification where that pooling agreement specifically prohibited Plaintiff from do so, the matter was released from the Foreclosure Settlement Part, and the instant motion was filed. Defendants are opposing, and cross moving for dismissal.RPAPL §1304 provides that at least 90 days before a lender commences an action to foreclose on a mortgage, notice must be provided to the borrower that the loan is in default and that his or her home is at risk. The lender is required to send this notice “by registered or certified mail and also by first-class mail” See RPAPL §1304. “[P]roper service of RPAPL notice on the borrower or borrowers is a condition precedent to the commencement of a foreclosure action, and the plaintiff has the burden of establishing satisfaction of this condition.” Aurora Loan Services, LLC v. Weisbaum, 85 AD3d 95, 103 (2d Dept. 2011). Since satisfaction of a statutory condition precedent is an element of the claim itself which must be proved by plaintiff, the failure to show strict compliance would require dismissal. Id.

Here, the 90-day notice was sent to Defendant on March 24, 2011 (Affirmation, Exh. J). While there is a typed notation at the top of the document reflecting that it was sent “VIA First Class Mail,” and “VIA Certified Mail (return receipt requested),” and noting the certified number, there is no affidavit of service submitted to establish proper service on the borrowers, thereby confirming these notations. See Aurora Loan Services, LLC v. Weisblum, 85 AD3d, supra at 106. As such, Plaintiff has failed to satisfy a “mandatory condition precedent,” and the foreclosure action must be dismissed.

And to the extent Plaintiff submitted its opposition to Defendants’ cross-motion and attached a printout from the USPS reflecting the same certified number, this Court will not accept it. First, this affirmation, dated February 28, 2014, was served over two months after Defendants’ December 13, 2013 cross-motion was made, and there is no indication in the papers or the file that Plaintiff was granted an extension. Moreover, Plaintiff fails to explain why there was a delay. While this Court prefers to decide issues on their merits, this Court cannot ignore [*3]this excessive delay. And second, even it the Court were to consider this printout — which is arguably not even in admissible form — Plaintiff cannot rely on evidence submitted for the first time in its reply papers to remedy deficiencies in its prima facie showing. See Novita, LLC v. Hotel Times Square, LLC, 2013 WL 5785929 (Sup.Ct. October 17, 2013), citing Those Certain Underwriters at Lloyds, London v. Gray, 49 AD3d 1, 9 (1st Dept. 2007); see also Gampero v. Mathai, 105 AD3d 995 (2d Dept. 2013). As such, this Court will not consider the reply papers.In further support of their cross-motion, Defendants contest Plaintiff’s standing to commence this action. Although the failure to properly serve RPAPL §1304 Notice is sufficient reason to grant Defendants’ cross-motion and dismiss the complaint, this Court will address the standing issue in light of the possibility that the action may be recommenced after Plaintiff effects proper service of RPAPL §1304 Notice.

The plaintiff in a foreclosure action must establish the existence of the promissory note and a related mortgage referable to the subject property, its ownership of the mortgage and the defendant’s default in payment. Campaign v. Barba, 23 AD3d 327 (2d Dept. 2005). With respect to the issue of ownership, “[a]n assignment of a mortgage without assignment of the underlying note or bond is a nullity, and no interest is acquired by it.” Deutsche Bank National Trust Co. v. Barnett, 88 AD3d 636, 637 (2d Dept. 2011). The foreclosing party, as plaintiff, must establish that it is “both the holder or assignee of the subject mortgage, and the holder of the underlying note, at the time the action is commenced.” Homecomings Financial, LLC v. Guldi, 103 AD3d 506 (2d Dept. 2013), quoting Bank of New York v. Silverberg, 86 AD3d 274, 282-83 (2d Dept. 2011).

Here, in the documents provided, the initial assignment of the mortgage and note from New Century Mortgage Corporation to Deutsche Bank National Trust Company f/k/a Bankers Trust Company of California, N.A., is circumspect, thereby rendering any subsequent assignments questionable. Moreover, the subsequent assignment of the mortgage to the current Plaintiff fails to indicate whether the Note was assigned as well.

Moreover, putting aside the validity of the initial assignment, it is still unclear from the affidavit of Alexa Benincasa whether Plaintiff was in physical possession of the Note at the time the action was commenced. As a threshold matter, as Defendant correctly points out, there is no indication in the record or moving papers, what authority a “Contract Management Coordinator” has to attest to the facts that she has. Moreover, her blanket statement that Plaintiff possessed the Note at the time of the commencement of the action, without any facts to support this statement, is insufficient to establish that Plaintiff did in fact have such possession. And the assignment of mortgage to the instant Plaintiff lends no further proof. As such, Plaintiff needs to be prepare to answer these questions at a future hearing, if one is ordered, as it has failed to establish a prima facie case.In light of the foregoing, this Court need not address the remaining issues, and it is hereby

ORDERED that Plaintiff’s motion is denied; and it is further

ORDERED that Defendant’s cross-motion is granted, and the action is dismissed without prejudice.The foregoing constitutes the Decision and Order of the Court.

Dated:Carmel, New York

June 20, 2014

__________________________________

HON. VICTOR G. GROSSMAN, J.S.C.

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The Reasons Bankers Weren’t Busted

The Reasons Bankers Weren’t Busted

One word: Government


Bloomberg View-

“There Were No Convictions of Bankers for Good Reason” is the headline of a post by Mark F. Pomerantz, a lawyer and retired partner at Paul, Weiss, Rifkind, Wharton & Garrison in the New York Times’s Room for Debate discussion:

The reason that senior bankers did not face charges, even though investigators interviewed countless witnesses and pored over truckloads of emails and other documents for many years, is that the executives running companies like Bank of America, Citigroup and JP Morgan were not engaged in criminal acts.

At least that is why according to Pomerantz. It should surprise no one that a lawyer who spent much of his career representing financial institutions and their executives wouldn’t see any prosecutable crimes. Fortunately, it is easily refutable, which is our task for today and tomorrow.

[BLOOMBERG VIEW]

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Courts Have Ability To Issue Sanctions In Foreclosure Cases

Courts Have Ability To Issue Sanctions In Foreclosure Cases

New York Law Journal-

In response to the insightful article by Daniel Wise, “Panel Shifts Toward Remedy in ‘Sarmiento,’” (Aug. 29), I would raise one small point. Wise lamented that “The 2009 New York law (mandating settlement conferences in foreclosure cases) specifically instructed the Judiciary to issue rules to ‘ensure’ that judges have ‘the necessary authority and power’ to see that ‘conferences not be unduly delayed or subject to willful dilatory tactics,’” but that “the Judiciary has taken no action on the Legislature’s command.”

What the Legislature actually stated was “The chief administrator of the courts shall … promulgate such additional rules as may be necessary to ensure the just and expeditious processing of all settlement conferences authorized hereunder.”1

Although banks and mortgage servicers have argued in a number of cases that the failure of the chief administrator to have issued rules specifying what sanctions might be imposed for failing to negotiate in good faith at a settlement conference means that courts do not have any authority to sanction a violation, those arguments have been uniformly rejected.2

[NEW YORK LAW JOURNAL]

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CHASE PLAZA CONDOMINIUM ASSOCIATION, INC. v. JPMorgan Chase Bank, NA, DC: Court of Appeals 2014 | In sum, we hold that a condominium association can extinguish a first deed of trust by foreclosing on its six-month super-priority lien under D.C. Code § 42-1903.13 (a)(2).

CHASE PLAZA CONDOMINIUM ASSOCIATION, INC. v. JPMorgan Chase Bank, NA, DC: Court of Appeals 2014 | In sum, we hold that a condominium association can extinguish a first deed of trust by foreclosing on its six-month super-priority lien under D.C. Code § 42-1903.13 (a)(2).

I’m looking for the pdf for this.

CHASE PLAZA CONDOMINIUM ASSOCIATION, Inc. and DARCY, LLC, Appellants,
v.
JPMORGAN CHASE BANK, N.A., Appellee.

Nos. 13-CV-623 & 13-CV-674.
District of Columbia Court of Appeals.
Argued April 17, 2014.
Decided August 28, 2014.
Robert C. Gill, with whom Carolyn Due was on the brief, for appellant Chase Plaza Condominium Association, Inc.

Rachel Abramson for appellant Darcy, LLC.

Thomas J. McKee, Jr., with whom Michael R. Sklaire was on the brief, for appellee JPMorgan Chase Bank, N.A.

Thomas Moriarty, >Jason E. Fisher, >Laura M. Gagliuso, >Henry Goodman, and Loura Sanchez filed a brief on behalf of the Community Associations Institute as amicus curiae, in support of appellant Chase Plaza Condominium Association, Inc.

Before THOMPSON and McLEESE, Associate Judges, and KING, Senior Judge.

This opinion is subject to formal revision before publication in the Atlantic and Maryland Reporters. Users are requested to notify the Clerk of the Court of any formal errors so that corrections may be made before the bound volumes go to press.

McLEESE, Associate Judge.

Brian York purchased a condominium unit, financing the purchase through a mortgage loan that was secured by a deed of trust on the unit. After Mr. York defaulted on his monthly condominium assessments, appellant Chase Plaza Condominium Association, Inc. foreclosed on the unit. Appellant Darcy, LLC purchased the property at a foreclosure sale. Several months later, appellee JPMorgan Chase Bank, N.A. filed a complaint alleging that the foreclosure sale was void, because the price at the sale was unconscionably low and because the sale impermissibly purported to extinguish the lien created by the deed of trust. The trial court agreed on the latter point and granted summary judgment to JPMorgan. We reverse and remand.

I.

Except as noted, the following facts are undisputed. In July 2005, Mr. York purchased a condominium unit in Washington, D.C. Mr. York financed the purchase by executing a promissory note for $280,000 that was secured by a deed of trust on the unit. The deed of trust named Mr. York as “Borrower,” First Financial Services, Inc. as “Lender,” Federal Title & Escrow Co. as “Trustee,” and Mortgage Electronic Registration Systems, Inc. (“MERS”) as beneficiary and as a nominee for First Financial Services, Inc. The deed of trust was recorded in August 2005.

By late 2008, Mr. York was delinquent both on his mortgage payments and on the monthly condominium-association payments he was required to make to Chase Plaza. In April 2009, Chase Plaza recorded a condominium-assessment lien on the unit. Chase Plaza also conducted a title search on the unit, which revealed three outstanding liens: (1) the first deed of trust; (2) a second mortgage for $60,000; and (3) the condominium-assessment lien for $9,415.

Chase Plaza subsequently initiated foreclosure proceedings against Mr. York, seeking to recover six months’ worth of unpaid assessments. In January 2010, Chase Plaza filed a notice of foreclosure sale, published the notice, and mailed the notice to the parties named in the deed of trust. The notice specified that the foreclosure sale would not be subject to the first deed of trust. In other words, the notice reflected the position that Chase Plaza’s lien had a higher priority than the lien created by the first deed of trust and that if the foreclosure sale generated insufficient proceeds to satisfy Chase Plaza’s lien, the foreclosure sale would extinguish the lien created by the first deed of trust. See generally, e.g., Pappas v. Eastern Sav. Bank, FSB, 911 A.2d 1230, 1234 (D.C. 2006) (general rule is that valid foreclosure sale extinguishes subordinate liens that cannot be satisfied from proceeds of sale).

In February 2010, Darcy purchased the unit for $10,000 at a foreclosure sale.[1] Darcy was the only bidder at the sale. A deed of trust reflecting Darcy’s purchase was executed in March 2010.

In April 2010, JPMorgan commenced foreclosure proceedings against Mr. York for failure to make mortgage payments. After discovering that Chase Plaza had already foreclosed on the unit, JPMorgan filed a complaint against Chase Plaza and Darcy requesting that the trial court set aside the foreclosure sale and declare that JPMorgan held title to the unit. In explaining its interest in the unit, JPMorgan stated that in March 2009 MERS, which was designated as the beneficiary and nominee in the first deed of trust, had assigned its interest in the deed of trust to an entity JPMorgan referred to as Washington Mutual. JPMorgan further stated that it had acquired Washington Mutual in 2008, and that it also was the current holder of the original promissory note.

The trial court granted partial summary judgment to JPMorgan. Specifically, the trial court (1) determined that JPMorgan had standing to bring the action; (2) determined that Chase Plaza could not lawfully extinguish the first deed of trust; (3) voided the foreclosure sale because the unit had not been sold subject to the first deed of trust; and (4) declared that JPMorgan held title to the unit. Pursuant to the stipulation of the parties, the trial court subsequently dismissed JPMorgan’s remaining claims.

II.

We begin by addressing three threshold issues: whether JPMorgan has standing to raise its claims; whether the trial court’s order granting summary judgment is void because it violated the automatic stay under federal bankruptcy law; and whether Mr. York and Washington Mutual are indispensable parties to this case under Rule 19 of the Superior Court Rules of Civil Procedure.

A.

Chase Plaza and Darcy argue that JPMorgan lacks an interest in the unit sufficient to confer standing on JPMorgan. We disagree. JPMorgan alleges, and Chase Plaza and Darcy do not dispute, that JPMorgan has physical possession of the original promissory note, which is a negotiable instrument indorsed in blank. “An indorsement in blank is essentially a stamp that indorses an instrument without specially indorsing it to a specific party. Usually it makes that instrument payable to the bearer and transfers with it legal title to security attached to the instrument.” Leake v. Prensky, 798 F. Supp. 2d 254, 256 n.3 (D.D.C. 2011). Under District of Columbia law, the holder of a negotiable instrument indorsed in blank is normally entitled to enforce the instrument, including through foreclosure proceedings. See D.C. Code § 28:3-301 (2012 Repl.) (holder of negotiable instrument may enforce instrument), -205 (b) (2012 Repl.) (instrument indorsed in blank is payable to bearer and may be negotiated by transfer of possession); Leake, 789 F. Supp. 2d at 256-57 (bank in possession of note indorsed in blank was entitled to commence non-judicial foreclosure proceedings); Grant II v. BAC Home Loans Servicing, No. 10-cv-01543, 2011 WL 4566135, at *4 (D.D.C. Sept. 30, 2011) (“[A]s the Note is indorsed in blank, [the loan-servicing company's] possession of the Note establishes its status as holder of the Note . . . . As holder of the note, [the loan-servicing company] could properly enforce its provisions” through foreclosure proceedings.). We therefore conclude that JPMorgan has standing to seek to set aside the foreclosure sale.[2]

B.

During the course of the events at issue in this case, two of the dramatis personae declared bankruptcy: Mr. York, who had purchased the unit in 2005 but whose default in 2008 led to the 2010 foreclosure, declared personal bankruptcy in June 2011; and Washington Mutual, Inc., which arguably was assigned an interest in the promissory note in 2009, declared bankruptcy under Chapter 11 of the federal bankruptcy laws in 2008. Under federal bankruptcy law, the filing of certain kinds of bankruptcy petitions triggers an automatic stay. 11 U.S.C. § 362 (a) (2012) (filing petition for bankruptcy relief “operates as a stay”). That stay extends, among other things, to certain lawsuits “against the debtor . . . or to recover a claim against the debtor”; “to obtain possession of property of the [bankruptcy] estate or of property from the estate or to exercise control over property of the estate”; to enforce a lien against property of the estate; or to enforce against property of the debtor a lien securing a claim that arose before commencement of the bankruptcy proceeding. Id. at § 362 (a)(1), (3)-(5). Judgments rendered in violation of the automatic stay are void. Jones v. Cain, 804 A.2d 322, 329 (D.C. 2002). This court has the authority to decide in the first instance whether a trial-court ruling violated the bankruptcy stay. See id. at 325-29 (deciding in first instance that judgment against defendant violated automatic stay and was therefore void, because judgment was rendered after defendant filed petition for bankruptcy).

We perceive no violation of the automatic stay. With respect to Mr. York’s bankruptcy proceedings, which began in 2011, JPMorgan obtained an order lifting the stay to permit JPMorgan to foreclose against the unit “free and clear of any interest” of Mr. York or the bankruptcy estate. Moreover, Mr. York’s interest in the unit had been foreclosed upon in 2010, without any objection from Mr. York; Mr. York did not list the unit on his schedule of assets in the bankruptcy proceedings; and Mr. York denied owning the unit as of the time he filed for bankruptcy. Under the circumstances, we agree with the parties that the unit was not property of Mr. York’s bankruptcy estate and that the present lawsuit did not otherwise run afoul of the automatic stay. Cf., e.g., Foskey v. Plus Props., LLC, 437 B.R. 1, 11-12 (D.D.C. 2010) (property in which debtor has no legal or equitable interest “is deemed to be outside the property of the estate” and not subject to automatic stay; automatic stay did not bar post-petition acts concerning property previously owned by debtor but sold in pre-petition tax sale).

With respect to Washington Mutual, any interest it might have in the first deed of trust did not arise until 2009, after Washington Mutual, Inc. filed for bankruptcy. Where the bankruptcy debtor is a corporation that continues to operate during the pendency of the bankruptcy proceeding, as apparently was the case with Washington Mutual, Inc., property obtained by the debtor corporation after the filing of the bankruptcy petition may well be property of the bankruptcy estate. See 3 Alan N. Resnick & Henry J. Sommer, Collier Bankruptcy Manual § 541.02, at 541-6 to -7 (4th ed. 2014) (citing 11 U.S.C. § 541 (a)(6)-(7) (2012)). But it is not at all clear on the record before us whether the interest in the deed of trust should properly be viewed as part of the Washington Mutual, Inc. bankruptcy estate. There are a number of different but apparently related entities with some variant of the name Washington Mutual. The document assigning MERS’s interest in the deed of trust refers to Washington Mutual without clearly indicating the precise entity to which the interest was being assigned. Moreover, JPMorgan purchased some of the assets of Washington Mutual Bank on September 25, 2008, the day before Washington Mutual, Inc. filed its bankruptcy petition. JPMorgan appears to claim that the interest subsequently transferred to Washington Mutual by MERS fell within the scope of that transaction, and thus that JPMorgan rather than the bankruptcy estate is the owner of the interest in the deed of trust. It appears that there has been significant litigation in the bankruptcy case with respect to the question of which Washington Mutual assets were acquired by JPMorgan in the September 2008 transaction. We cannot tell from the record in this case whether this case involved property of Washington Mutual, Inc.’s bankruptcy estate or otherwise violated the automatic stay. Under the circumstances, we have no basis upon which to conclude that the trial court’s judgment in this case is void as a violation of the automatic stay. Cf. In re Angelo, 480 B.R. 70, 83 (Bankr. D. Mass. 2012) (“A party seeking to establish that a judgment was entered in violation of the automatic stay bears the burden of proof.”) (citation omitted).[3]

C.

Finally, we conclude that Mr. York and Washington Mutual are not indispensable parties to this case. Under Rule 19 (b) of the Superior Court Rules of Civil Procedure, a court may not grant relief in the absence of an indispensable party. To qualify as an indispensable party, a person must either be necessary to grant complete relief to the parties or “claim[] an interest relating to the subject of the action.” Super. Ct. Civ. R. 19 (a). Because there is insufficient evidence in this record that either Mr. York or Washington Mutual has a present interest in the unit or is otherwise essential to grant complete relief to the parties, we have no basis to find that they are indispensable parties. Cf., e.g., Habib v. Miller, 284 A.2d 56, 56-58 (D.C. 1971) (company that claimed “no interest” in deposit was not indispensable in action to recover deposit).

III.

Turning to the merits, we review de novo orders granting summary judgment. District of Columbia v. Place, 892 A.2d 1108, 1110-11 (D.C. 2006). “Summary judgment is only appropriate where there is no genuine issue of material fact and the moving party is entitled to judgment as a matter of law.” Ward v. Wells Fargo Bank, N.A., 89 A.3d 115, 126 (D.C. 2014) (internal quotation marks omitted). “In considering summary judgment, we view the facts in the light most favorable to the non-moving [parties].” Id. (internal quotation marks omitted).

This case turns on the proper understanding of D.C. Code § 42-1903.13 (2012 Repl.), which addresses condominium foreclosures. Chase Plaza and Darcy argue that a condominium association is permitted to foreclose on a six-month condominium-assessment lien and distribute the proceeds from the foreclosure sale first to satisfy the condominium-assessment lien and then to satisfy any remaining liens in order of lien priority. Any liens that are unsatisfied by the foreclosure-sale proceeds are extinguished, and the foreclosure-sale purchaser acquires free and clear title. JPMorgan argues, to the contrary, that although a condominium association is permitted to foreclose on a six-month condominium-assessment lien, the foreclosure is subject to any previously recorded first mortgage lien. We agree with Chase Plaza and Darcy.

A.

Whether the foreclosure sale extinguished the first deed of trust under D.C. Code § 42-1903.13 is a question of statutory interpretation that we determine de novo. Hernandez v. Banks, 84 A.3d 543, 552 (D.C. 2014). “The first step in construing a statute is to read the language of the statute and construe its words according to their ordinary sense and plain meaning.” O’Rourke v. District of Columbia Police & Firefighters’ Ret. & Relief Bd., 46 A.3d 378, 383 (D.C. 2012) (internal quotation marks omitted). “The literal words of a statute, however, are not the sole index to legislative intent, but rather, are to be read in the light of the statute taken as a whole, and are to be given a sensible construction and one that would not work an obvious injustice.” Columbia Plaza Tenants’ Ass’n v. Columbia Plaza Ltd. P’ship, 869 A.2d 329, 332 (D.C. 2005) (internal quotation marks and brackets omitted). We “consult the legislative history of a statute for guidance as necessary.” Robert Siegel, Inc. v. District of Columbia, 892 A.2d 387, 393 (D.C. 2006). “[A]s a general rule, we presume that where a legislature adopts a term of art, it knows and adopts the cluster of ideas that were attached to each borrowed word.” Doe No. 1 v. Burke, 91 A.3d 1031, 1041 (D.C. 2014) (internal quotation marks omitted). Moreover, “[n]o statute should be construed as altering the common law, farther than its words import. It is not to be construed as making any innovation upon the common law which it does not fairly express.” Estate of Gulledge, 673 A.2d 1278, 1281 (D.C. 1996) (internal quotation marks omitted); see also United States v. Texas, 507 U.S. 529, 534 (1993) (“[S]tatutes which invade the common law . . . are to be read with a presumption favoring the retention of long-established and familiar principles, except when a statutory purpose to the contrary is evident.”) (internal quotation marks omitted).

The District of Columbia Condominium Act governs the creation and operation of condominiums. D.C. Code § 42-1901.01 et seq. (2012 Repl.). Under the Act, a condominium association may impose a lien against a unit for non-payment of condominium-association assessments. Id. at § 42-1903.13 (a). The lien is “prior to any other lien or encumbrance except [among other things,] . . . [a] first mortgage . . . or [first] deed of trust . . . recorded before the date on which the assessment sought to be enforced became delinquent[.]” Id. at § 42-1903.13 (a)(1)(B). The Act, however, provides the highest priority to liens relating to the most recent six months of condominium assessments:

The lien shall also be prior to a [first] mortgage or [first] deed of trust . . . to the extent of the common expense assessments . . . which would have become due in the absence of acceleration during the [six] months immediately preceding institution of an action to enforce the lien.

Id. at § 42-1903.13 (a)(2). Thus, the Act effectively splits condominium-assessment liens into two liens of differing priority: (1) a lien for six months of assessments that is higher in priority than the first mortgage or first deed of trust — sometimes called a “super-priority lien” — and (2) a lien for any additional unpaid assessments that is lower in priority than the first mortgage or first deed of trust.

The Act does not expressly address what happens when, as in this case, a condominium association forecloses solely on its super-priority lien and the proceeds of the sale are not sufficient to pay off a first deed of trust. A general principle of foreclosure law, however, potentially provides an answer: liens with lower priority are extinguished if a valid foreclosure sale yields proceeds insufficient to satisfy a higher-priority lien. Pappas, 911 A.2d at 1234. That general principle is derived from the common law and is well settled in this and other jurisdictions. See, e.g., Waco Scaffold & Shoring Co. v. 425 Eye St. Assocs., 355 A.2d 780, 783 (D.C. 1976) (foreclosure sale based on lien with “superior” priority extinguished liens with lower priority); In re Cypresswood Land Partners, I, 409 B.R. 396, 437 (Bankr. S.D. Tex. 2009) (noting “common-law rule that foreclosure of a senior lien extinguishes all junior liens”) (internal quotation marks omitted); Conseco Fin. Servicing Corp. v. J & J Mobile Homes, Inc., 120 S.W.3d 878, 885 (Tex. App. 2003) (relying on “common-law rule that foreclosure of a senior lien extinguishes all junior liens”); cf. Abdoney v. York, 903 So. 2d 981, 983 (Fla. Dist. Ct. App. 2005) (“Under the common law, the foreclosure of a senior mortgage extinguishes the liens of any junior mortgagees. . . .”); Restatement (Third) of Property (Mortgages) § 7.1 (2014) (“A valid foreclosure of a mortgage terminates all interests in the foreclosed real estate that are junior to the mortgage being foreclosed. . . .”).[4]

The parties in this case do not dispute that, under D.C. Code § 42-1903.13 (a)(2), Chase Plaza’s super-priority lien had a higher priority than JPMorgan’s first deed of trust. The parties also do not dispute that the proceeds from the foreclosure sale were insufficient to satisfy the first deed of trust. Taking the language of the statute together with basic principles of foreclosure law, it would seem to follow that Chase Plaza’s foreclosure sale extinguished JPMorgan’s first deed of trust. The concept of a split-priority lien does not appear to have been part of the common law, however, and we therefore confront the question whether the general principles of foreclosure law apply in this novel context. For the reasons that follow, we conclude that they do.

First, JPMorgan’s interpretation of D.C. Code § 42-1903.13 (a)(2) would create a six-month condominium-assessment lien that had priority over the first deed of trust but could not extinguish the first deed of trust. Such an interpretation would be a significant departure from the basic principle that foreclosure on a higher priority lien extinguishes lower-priority liens. The language of § 42-1903.13 (a)(2) does not suggest that the District of Columbia Council intended such a departure. Cf. Conseco Fin. Servicing Corp., 120 S.W.3d at 885 (“Nothing in the legislative history or in the language of the statute itself indicates legislative intent to super[s]ede the common-law rule that foreclosure of a senior lien extinguishes all junior liens. Indeed, if junior liens were to survive a foreclosure sale, buyers would have no incentive to bid on the property.”). We are inclined to think that if the Council had intended to depart from well-settled principles of foreclosure law, it would have done so explicitly. See, e.g., Newell-Brinkley v. Walton, 84 A.3d 53, 58 (D.C. 2014) (“[I]t is highly unlikely that the Council would have altered preexisting law in so fundamental a way implicitly rather than explicitly.”) (citing Whitman v. American Trucking Ass’ns, 531 U.S. 457, 468 (2001) (“Congress . . . does not alter the fundamental details of a regulatory scheme in vague terms or ancillary provisions—it does not, one might say, hide elephants in mouseholes.”)); cf., e.g., Samantar v. Yousuf, 560 U.S. 305, 320 n.13 (2010) (“Congress is understood to legislate against a background of common-law. . . principles”) (internal quotation marks omitted; ellipses in Samantar).

The legislative history of D.C. Code § 42-1903.13 (a)(2) supports the same conclusion. The provision creating the six-month super-priority lien for condominium assessments was enacted in 1991. Condominium Act of 1976 Reform Amendment Act of 1990, D.C. Law 8-233, § 2 (gg)(1), 38 D.C. Reg. 283-84 (1991). The Committee Report on the Act describes that provision as giving condominium “associations the maximum flexibility in collecting unpaid condominium assessments.” D.C. Council, Report on Bill 8-65, at 3 (Nov. 13, 1990). The provision was modeled on the Uniform Common Ownership Interest Act (“UCOIA”) and the Uniform Condominium Act (“UCA”), each of which includes a quite similar provision creating a six-month super-priority lien. UCOIA § 3-116 (b), 7 U.L.A. 122 (1982); UCA § 3-116 (b), 7 U.L.A. 626 (amended 1980). The official comments to the UCOIA and UCA indicate that the drafters of those uniform laws understood that foreclosure on the super-priority lien could extinguish a first mortgage or first deed of trust, but expected that mortgage lenders would take the necessary steps to prevent that result, either by requiring payment of assessments into an escrow account or by paying assessments themselves to prevent foreclosure. UCOIA § 3-116, cmt. 1, 7 U.L.A. 124; UCA § 3-116, cmt. 2, 7 U.L.A. 627. An example provided by the drafters of the uniform laws further illustrates the point, describing the first mortgage lien as “junior” to the six-month super-priority lien, and noting that lenders could protect themselves by requiring escrow of six months of assessments, as lenders do with property taxes. UCA § 2-118, ex. 1B, 7 U.L.A. 571, 572.[5]

Because the pertinent provision of the District’s Condominium Act is based on the UCA and UCOIA, the official comments by the drafters of those uniform acts provide important guidance in construing our provision. See generally, e.g., Platt v. Aspenwood Condo. Ass’n, Inc., 214 P.3d 1060, 1063-64 (Colo. App. 2009) (relying on drafters’ comments to UCOIA for guidance in interpreting state statute based on UCOIA; “We accept the intent of the drafters of a uniform act as the General Assembly’s intent when it adopts that uniform act.”) (internal quotation marks omitted); Hunt Club Condos., Inc. v. Mac-Gray Servs., Inc., 721 N.W.2d 117, 123-25 (Wis. Ct. App. 2006) (official and published comments accompanying provision of UCA are “valid indicator” of state legislature’s intent in enacting corresponding state statute).[6]

Taken together, the language of D.C. Code § 42-1903.13 (a)(2), general principles of foreclosure law, and the legislative history of the provision support a conclusion that Chase Plaza’s foreclosure pursuant to the super-priority lien extinguished JPMorgan’s first deed of trust. See, e.g., 7912 Limbwood Ct. Trust v. Wells Fargo Bank, N.A., 979 F. Supp. 2d 1142, 1146-53 (D. Nev. 2013) (under Nevada law, foreclosure sale on super-priority lien extinguished all junior interests, including first deed of trust); Summerhill Vill. Homeowners Ass’n v. Roughley, 289 P.3d 645, 647-48 (Wash. Ct. App. 2012) (same under Washington law). But see, e.g., Premier One Holdings, Inc. v. BAC Home Loans Servicing LP, No. 2:13-CV-895, 2013 WL 4048573, at *3-6 (D. Nev. Aug. 9, 2013) (under Nevada law, homeowner association’s foreclosure on super-priority lien did not extinguish first deed of trust, and foreclosure-sale purchaser took property subject to first deed of trust) (citing cases); Bayview Loan Servicing, LLC v. Alessi & Koenig, LLC, 962 F. Supp. 2d 1222, 1226-30 (D. Nev. 2013) (same).

B.

We are not persuaded by JPMorgan’s arguments to the contrary. First, JPMorgan contends that D.C. Code § 42-1903.13 (a)(2) does not allow foreclosure on a super-priority lien to extinguish a first deed of trust, because the provision does not explicitly state that the super-priority lien is a “senior lien” and that the first deed of trust is a “junior lien.” JPMorgan does not cite authority for its contention that the use of the terms “senior lien” and “junior lien” is essential to the application of the general principle that foreclosure on a lien with higher priority extinguishes a lien with lower priority. To the contrary, our cases discussing that principle of foreclosure law do not invariably use the terms “senior lien” and “junior lien.” See, e.g., Pappas, 911 A.2d at 1234 (“[W]here a valid foreclosure sale yields proceeds insufficient to satisfy a priority lien, the result is extinguishment of subordinate liens.”) (citing cases). Moreover, there is no mention of the terms “senior lien” or “junior lien” in Title 42, Chapter 8 of the D.C. Code, which governs mortgages and deeds of trust, D.C. Code § 42-801 et seq. (2012 Repl.), or in Title 40 of the D.C. Code, which governs liens. D.C. Code § 40-101 et seq. (2012 Repl.). Under the logic of JPMorgan’s theory, the absence of such terminology would mean that foreclosure on the liens governed by these provisions could not operate to extinguish liens with lower priority, which would turn the general rule of foreclosure law on its head. Focusing more specifically on the Condominium Act, § 42-1903.13 (a)(1)(B) does not use the term “senior lien” when referring to the priority of the first deed of trust, but JPMorgan concedes that foreclosure on the first deed of trust extinguishes liens with lower priority. In sum, the terms “senior lien” and “junior lien” are simply one way of referring to liens with higher and lower priority, see supra page 16 n.4, and the absence of those terms from § 42-1903.13 (a)(2) does not affect the applicability of the general rule that foreclosure on a lien with greater priority extinguishes liens with lower priority.

Second, JPMorgan points out that condominium-assessment liens are given priority only “to the extent” of six months’ worth of assessments. D.C. Code § 42-1903.13 (a)(2). According to JPMorgan, the words “to the extent” mean that foreclosure on the super-priority lien cannot extinguish a first deed of trust. We disagree. The words “to the extent” limit the amount and size of the condominium-assessment lien that is given super-priority status. Id. at § 42-1903.13 (a)(2) (condominium-assessment lien is “prior to a [first] mortgage or [first] deed of trust . . . to the extent of the common expense assessments . . . which would have become due . . . [six] months immediately preceding” foreclosure action) (emphasis added). There is no indication that the words were intended to impose any other limit, much less to create a novel lien with higher priority and the right to foreclose, but without the ability extinguish a lower-priority lien.

Third, JPMorgan argues it would be unreasonable as a matter of policy to interpret D.C. Code § 42-1903.13 (a)(2) to permit six-month condominium-assessment liens to extinguish first mortgages or first deeds of trust. JPMorgan points out that the Condominium Act does not require that the condominium association give notice to mortgage lenders or other lienholders before foreclosure and does not permit either the property owner or the mortgage lender to redeem foreclosed property by paying the delinquent amounts.[7] According to JPMorgan, permitting condominium-assessment foreclosures to extinguish mortgage liens under such circumstances will leave mortgage lenders unable to protect their interests, which in turn will cripple mortgage lending in the District of Columbia. These are legitimate policy concerns, but Chase Plaza and Darcy point to corresponding policy arguments that support interpreting § 42-1903.13 (a)(2) to permit foreclosure on the six-month super-priority lien to extinguish a first mortgage or first deed of trust. Specifically, Chase Plaza and Darcy contend that if foreclosure on super-priority condominium-association liens did not extinguish mortgage liens, then condominium associations often might be unable to find buyers at foreclosure sales, and thus condominium associations would be unable to take prompt steps to obtain timely payment of assessments. See Report of the Joint Editorial Bd. for Unif. Real Prop. Acts, The Six-Month “Limited Priority Lien” for Association Fees Under the Uniform Common-Interest Ownership Act, at 2-6 (“Joint Editorial Bd. Report”); UCOIA § 3-116, cmt. 1, 7 U.L.A. 124 (purpose of super-priority lien is “[t]o ensure prompt and efficient enforcement of the association’s lien for unpaid assessments”); cf. Park Place E. Condo. Ass’n v. Hovbilt, Inc., 652 A.2d 781, 783 (N.J. Super. Ct. Ch. Div. 1994) (“The legislative scheme for collection of assessments . . . against individual unit owners is a recognition that such [assessments] are the financial life-blood of the Association.”). Moreover, there is support for the idea that lenders can decrease the risk that their mortgage liens will be extinguished, by among other things creating an escrow requirement. Joint Editorial Bd. Report, at 4; UCOIA § 3-116, cmt. 1, 7 U.L.A. 124; UCA § 3-116, cmt. 2, 7 U.L.A. 627.

Our role is not to resolve this policy dispute between the parties or to second-guess the policy determinations of the Council. See, e.g., Allman v. Snyder, 888 A.2d 1161, 1169 (D.C. 2005) (“we have no license to substitute our views of public policy for those of the legislature”). Rather, we simply conclude that JPMorgan has failed to establish that it would be absurd or clearly unreasonable to interpret D.C. Code § 42-1903.13 (a)(2) as permitting a condominium association’s six-month super-priority lien to extinguish a first mortgage or first deed of trust.

Finally, relying on Malakoff v. Washington, 434 A.2d 432, 435 (D.C. 1981), JPMorgan argues that the six-month condominium-assessment lien could be given super-priority status only if the legislature made it clear that it intended that result. The Council did make explicit, however, that a condominium association’s six-month lien was to be given priority over a first mortgage or first deed of trust. The issue in this case is whether that super-priority extends to extinguishing a first mortgage or first deed of trust, and Malakoff does not suggest that a clear statement is required on that topic.

IV.

Finally, JPMorgan argues that Chase Plaza’s by-laws do not permit Chase Plaza to extinguish JPMorgan’s first deed of trust. We conclude otherwise.

Under the Condominium Act, a condominium association can choose to forego its power to foreclose on property based on the owner’s failure to pay assessments. D.C. Code § 42-1903.13 (c)(1) (condominium instruments may prohibit association from non-judicial foreclosure if such foreclosure is “specifically and expressly prohibited by the condominium instruments”). This provision, however, does not seem to be relevant, because JPMorgan does not contend that Chase Plaza’s by-laws waived Chase Plaza’s right of non-judicial foreclosure. Rather, JPMorgan argues that Article XI, § (2)(D) of Chase Plaza’s by-laws provides that a first mortgage or first deed of trust is “prior to” the condominium-assessment lien. It is unclear whether such a provision in a condominium association’s by-laws could constitute an effective waiver of the association’s statutory right of priority. See D.C. Code § 42-1901.07 (“Except as expressly provided by this chapter, a provision of this chapter may not be varied by agreement and any right conferred by this chapter may not be waived.”). In any event, the Fourth Amendment to Chase Plaza’s by-laws provides that Chase Plaza may foreclose on an assessment lien “pursuant to D.C. Code Section 45-1853 [now codified at D.C. Code § 42-1903.13].” The latter provision appears to authorize Chase Plaza to rely on the rights conferred upon it under § 42-1903.13 (a)(2). To the extent that the Fourth Amendment and Article XI, § (2)(D) of the by-laws appear to contradict each other, the D.C. Code provides a rule to resolve any conflict. In the event of a conflict among condominium instruments, “a construction consistent with [Chapter Nineteen of Title 42] controls in all cases over any inconsistent construction.” D.C. Code § 42-1902.07. We therefore must construe the by-laws as a whole as permitting Chase Plaza to exercise its rights under the Condominium Act to foreclose on its six-month super-priority lien and to thereby extinguish the first deed of trust.

In sum, we hold that a condominium association can extinguish a first deed of trust by foreclosing on its six-month super-priority lien under D.C. Code § 42-1903.13 (a)(2). We therefore reverse the trial court’s grant of summary judgment to JPMorgan and remand for further proceedings.[8]

So ordered.

[1] After Chase Plaza deducted the six months of unpaid condominium assessments, the interest on the unpaid assessments, and various expenses associated with the foreclosure sale, the remaining balance from the foreclosure-sale proceeds was $478. Chase Plaza forwarded the $478 to MERS as the nominee of record under the first deed of trust, but that money was returned to Chase Plaza.

[2] JPMorgan also claims to be a successor in interest under the deed of trust, because MERS, a beneficiary and nominee under the deed of trust, transferred its interest to Washington Mutual, which had been purchased by JPMorgan. Chase Plaza and Darcy argue, however, that it is unclear whether JPMorgan obtained an interest in the deed of trust, because (1) it is unclear to which of several Washington Mutual entities MERS transferred its interest, (2) JPMorgan only purchased some, not all, of the assets of Washington Mutual Bank, and (3) JPMorgan’s purchase occurred before the date of MERS’s transfer of its interest in the deed of trust to Washington Mutual. JPMorgan, however, can seek to protect its interests under the promissory note even if it is not a successor in interest under the deed of trust, because “the rights under the Deed of Trust follow the Note.” Grant II, 2011 WL 4566135, at *4; see also Smith v. Wells Fargo Bank, 991 A.2d 20, 29-30 n.19 (D.C. 2010) (“The transfer of the note carries with it the security, without any formal assignment or delivery, or even mention of the latter.”) (internal quotation marks omitted). Because JPMorgan’s interest under the promissory note is sufficient to confer standing on JPMorgan, we need not address whether JPMorgan obtained an interest in the deed of trust through Washington Mutual. Chase Plaza and Darcy also raise other challenges to the validity of JPMorgan’s alleged interest in the unit, including that JPMorgan cannot assert any interest in the unit against Chase Plaza and Darcy because JPMorgan failed to properly record documents relating to the transactions giving rise to JPMorgan’s alleged interest. We do not view those contentions as going to JPMorgan’s standing, and in light of our disposition of the case on the merits, we see no need at this juncture to address the additional arguments raised by Chase Plaza and Darcy.

[3] As a precaution, we are sending a copy of this opinion to the bankruptcy judge and the bankruptcy trustee in the Washington Mutual, Inc. bankruptcy proceeding.

[4] A “junior lien” is a lien that “is subordinate to one or more other liens on the same property[,]” and a “senior lien” is a lien that “has priority over liens on the same property.” Black’s Law Dictionary 1063, 1064 (10th ed. 2014); see also, e.g., Indiana Lawrence Bank v. PSB Credit Servs., Inc., 706 N.E.2d 570, 574 n.6 (Ind. Ct. App. 1999); City of Chanute v. Polson, 836 P.2d 6, 10 (Kan. Ct. App. 1992).

[5] We also note a recent report of the Joint Editorial Board for Uniform Property Acts, which includes representatives of the Uniform Law Commission, the American Bar Association Real Property, Trust and Estate Law Section, and the American College of Real Estate Lawyers. That report concludes that foreclosure pursuant to the six-month super-priority lien under the UCOIA is properly understood to extinguish a first mortgage lien, leaving the buyer at the foreclosure sale with clear title to the property. Report of the Joint Editorial Bd. for Unif. Real Prop. Acts, The Six-Month “Limited Priority Lien” for Association Fees Under the Uniform Common Interest Ownership Act, at 8-10 (June 1, 2013).

[6] “[O]rdinarily, the views of a subsequent legislature form a hazardous basis for inferring the intent of an earlier one.” Hargrove v. District of Columbia, 5 A.3d 632, 637 (D.C. 2010) (brackets and internal quotation marks omitted). We do note, however, that within a year of the enactment of the provision creating the super-priority lien, the Council considered a proposal to repeal the provision. D.C. Council, Report on Bill 9-240, at 4 (Dec. 12, 1991). In support of the proposal, the Department of Consumer and Regulatory Affairs (“DCRA”) submitted a report contending that the super-priority lien provision created an “obvious threat [to lending institutions] of the use of foreclosure proceedings to collect unpaid assessments.” Statement of Aubrey H. Edwards on Bill 9-240, Dir., DCRA, at 9 (Oct. 30, 1991). The DCRA report further noted that the provision could have “a chilling effect on the availability of condominium mortgage loans.” Id. After considering the DCRA report, the Council declined to repeal the provision creating the super-priority lien, because “[n]o adverse effect on lending” had occurred in states that had enacted such a provision. D.C. Council, Report on Bill 9-240, at 4.

[7] With respect to the issue of notice, it appears that Chase Plaza did give notice of foreclosure to all parties listed on the first deed of trust, but JPMorgan did not receive notice because it had failed to record its subsequently obtained interest in the unit. We also note that JPMorgan has not argued that the lack of a notice requirement renders D.C. Code § 42-1903.13 (a)(2) unconstitutional either facially or as applied to JPMorgan in this case. We therefore have no occasion to address those issues.

[8] Among the issues that remain to be resolved on remand is JPMorgan’s claim that the foreclosure sale should be invalidated because the purchase price was unconscionably low.

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Posted in STOP FORECLOSURE FRAUD0 Comments

HSBC vs. MILLER | NYSC – Plaintiff 2nd Attempt to Foreclose…This Court Finds NO Reference to Def. Miller’s Obligation in the Pooling and Servicing Agreement…PSA & Lost Note Goes Down in Flames

HSBC vs. MILLER | NYSC – Plaintiff 2nd Attempt to Foreclose…This Court Finds NO Reference to Def. Miller’s Obligation in the Pooling and Servicing Agreement…PSA & Lost Note Goes Down in Flames

SUPREME COURT OF THE STATE OF NEW YORK
COUNTY OF SULLIVAN

HSBC BANK USA, NATIONAL ASSOCIATION, A3
TRUSTEE FOR WELLS FARGO ASSET SECURITIES
CORPORATION, MORTGAGE ASSET-BACKED PASS
THROUGH CERTIFICATES SERIES 2007-PA2

Plaintiffs

against

JEFFREY F. MILLER,
CHASE BANK USA, N.A.,
GEMINI CAPITAL GROUP, LLC,
Defendants

Down Load PDF of This Case

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Posted in STOP FORECLOSURE FRAUD1 Comment

The revolving door spins as the DOJ Fraud Section chief, Jeffrey H. Knox moves to Simpson Thacher

The revolving door spins as the DOJ Fraud Section chief, Jeffrey H. Knox moves to Simpson Thacher

Obviously, there is something going on here and this might be a way to keep some quiet in the game.

 

NY TIMES-

Jeffrey H. Knox, a senior federal prosecutor who butted heads with a number of Wall Street banks, is switching sides.

The Justice Department announced on Tuesday that Mr. Knox, chief of its fraud section, was leaving the government. In turn, the law firm Simpson Thacher Bartlett released its own announcement: Mr. Knox will join the firm as a partner in Washington.

The move by Mr. Knox, which caps more than a decade-long prosecutorial career, comes just as one of his biggest Wall Street cases nears a turning point. The Justice Department, along with regulators in Washington and London, is closing in on actions against some of the world’s biggest banks for suspected manipulation of foreign currencies.

[NEW YORK TIMES]

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Posted in STOP FORECLOSURE FRAUD0 Comments

HSBC Bank USA, N.A. v Gilbert | NY Appeals Court – plaintiff failed to demonstrate its prima facie entitlement to judgment as a matter of law, because it did not eliminate triable issues of fact regarding whether it had standing as the lawful holder or assignee of the subject note on the date it commenced the action

HSBC Bank USA, N.A. v Gilbert | NY Appeals Court – plaintiff failed to demonstrate its prima facie entitlement to judgment as a matter of law, because it did not eliminate triable issues of fact regarding whether it had standing as the lawful holder or assignee of the subject note on the date it commenced the action

Decided on August 27, 2014 SUPREME COURT OF THE STATE OF NEW YORK Appellate Division, Second Judicial Department
WILLIAM F. MASTRO, J.P.
MARK C. DILLON
ROBERT J. MILLER
JOSEPH J. MALTESE, JJ.
2013-01081
(Index No. 9436/09)

[*1]HSBC Bank USA, National Association, etc., respondent,

v

Arlene Gilbert, et al., appellants, et al., defendants.

Amed Marzano & Sediva, PLLC, New York, N.Y. (Alexander Sediva and Naved Amed of counsel), for appellants.

Friedman Harfenist Kraut & Perlstein, LLP, Lake Success, N.Y. (Andrew Lang of counsel), for respondent.

DECISION & ORDER

In an action to foreclose a mortgage, the defendants Arlene Gilbert and James Coffey appeal, as limited by their brief, from so much of an order of the Supreme Court, Dutchess County (Brands, J.), dated November 30, 2012, as granted that branch of the plaintiff’s motion which was for summary judgment on the complaint insofar as asserted against them.

ORDERED that the order is reversed insofar as appealed from, on the law, with costs, and that branch of the plaintiff’s motion which was for summary judgment on the complaint insofar as asserted against the appellants is denied.

On or about May 14, 2005, the defendant Arlene Gilbert executed a note to borrow the sum of $227,500 from Homebridge Mortgage Bankers Corp. The note was secured by a mortgage executed by Gilbert and the defendant James Coffey (hereinafter together the appellants). The mortgage was subsequently assigned to the plaintiff and, when the appellants defaulted, the plaintiff commenced this action to foreclose the mortgage, alleging, inter alia, that it was the owner and holder of the note and the mortgage. The appellants asserted the plaintiff’s lack of standing as an affirmative defense. The plaintiff moved, inter alia, for summary judgment on the complaint insofar as asserted against the appellants, and the Supreme Court granted that branch of the motion.

In a mortgage foreclosure action, where the plaintiff’s standing to commence the action is placed in issue by the defendant, the plaintiff must prove standing to be entitled to relief (see Bank of N.Y. Mellon v Gales, 116 AD3d 723; U.S. Bank, N.A. v Collymore, 68 AD3d 752). The plaintiff has standing where, at the time the action is commenced, it is the holder or assignee of both the subject mortgage and the underlying note (see Bank of N.Y. Mellon v Gales, 116 AD3d 723; Deutsche Bank Natl. Trust Co. v Haller, 100 AD3d 680; Bank of N.Y. v Silverberg, 86 AD3d 274). Written assignment of the underlying note or physical delivery of the note prior to the commencement of the action is sufficient to transfer the obligation (see Bank of N.Y. Mellon v Gales, 116 AD3d 723; Deutsche Bank Natl. Trust Co. v Haller, 100 AD3d 680; U.S. Bank, N.A. v [*2]Collymore, 68 AD3d 752). Once a promissory note is tendered to and accepted by an assignee, the mortgage passes as an incident to the note (see Bank of N.Y. v Silverberg, 86 AD3d 274; Mortgage Elec. Registration Sys., Inc. v Coakley, 41 AD3d 674). However, the assignment of a mortgage without assignment of the underlying debt is a nullity, and no interest is acquired by it (see Bank of N.Y. Mellon v Gales, 116 AD3d 723; HSBC Bank USA v Hernandez, 92 AD3d 843; Bank of N.Y. v Silverberg, 86 AD3d 274).

Here, the plaintiff failed to demonstrate its prima facie entitlement to judgment as a matter of law, because it did not eliminate triable issues of fact regarding whether it had standing as the lawful holder or assignee of the subject note on the date it commenced the action (see Bank of N.Y. Mellon v Gales, 116 AD3d 723; HSBC Bank USA v Hernandez, 92 AD3d 843; U.S. Bank, N.A. v Collymore, 68 AD3d 752).

Accordingly, the Supreme Court erred in granting that branch of the plaintiff’s motion which was for summary judgment on the complaint insofar as asserted against the appellants.

MASTRO, J.P., DILLON, MILLER and MALTESE, JJ., concur.

ENTER:

Aprilanne Agostino

Clerk of the Court

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U.S. Bank N.A. v Pia | NYSC – Plaintiff cannot escape responsibility for the loan it acquired. Public policy neither provides for shifting the burden of Plaintiff’s violation of TILA to Defendants, nor does it allow for Plaintiff to claim it is somehow insulated or protected from the obligation to correct the violation they acquired

U.S. Bank N.A. v Pia | NYSC – Plaintiff cannot escape responsibility for the loan it acquired. Public policy neither provides for shifting the burden of Plaintiff’s violation of TILA to Defendants, nor does it allow for Plaintiff to claim it is somehow insulated or protected from the obligation to correct the violation they acquired

Decided on August 26, 2014

Supreme Court, Putnam County

 

U.S. Bank National Association AS TRUSTEE UNDER POOLING AND SERVICING AGREEMENT DATED AS OF MARCH 1, 2006 ASSET BACKED SECURITIES CORPORATION HOME EQUITY LOAN TRUST, SERIES NC-2006- HE2 ASSET BACKED PASS-THROUGH CERTIFICATES, SERIES NC 2006-HE2, Plaintiff,

against

Lisa Ann Pia AND XAVIER F. PIA, Defendants.

976/2007

Marco Cercone, Esq.

Rupp, Baas, Pfalzgraf,

Cunningham, & Coppola LLC

Attorneys for Plaintiff

1600 Liberty Building

Buffalo, New York 14202

Daniel A. Schlanger, Esq.

Schlanger & Schlanger, LLP

Attorneys for Defendants

343 Manville Road

Pleasantville, New York 10570
Victor G. Grossman, J.

On December 8, 2005, Defendant Lisa Ann Pia executed a Note and Mortgage in the amount of $372,000.00 secured by her property at 13 Lowell Road, Carmel, New York. On or about May 10, 2007, the instant foreclosure action was commenced. Defendants answered the Complaint, asserted counterclaims, and interposed a third-party action, as well as an Amended Answer on July 9, 2007, and a Second Amended Verified Answer on February 14, 2008, containing counterclaims and a third-party complaint. Plaintiff replied to the counterclaims. The gravamen of Defendants’ allegations are that Plaintiff and Third-Party Defendants violated the Truth-in-Lending Act (“TILA”), Real Estate Settlement Procedures Act (“RESPA”), and various state laws, including General Business Law (“GBL”) §349. They sought, inter alia, rescission of the loan and damages. In May 2009, Defendants moved for partial summary judgment, and Plaintiff moved for summary judgment on the foreclosure action and dismissal of Defendants’ counterclaims. The motions were denied by Decision and Order dated May 15, 2009 as the Court (O’Rourke, J.) observed, “There are many issues which must be determined and cannot be resolved by summary judgment.” The issues were heard in a “framed-issue” hearing before the Hon. Francis A. Nicolai in March 2011.

The Court, by Order entered October 19, 2011 (Nicolai, J.), determined that Defendants were entitled to rescission of the instant mortgage and to attorney’s fees and costs, pursuant to the Truth in Lending Act. A Referee was appointed to determine the specific amounts to be paid to affect rescission of the loan. United States Bank Nat’l Assn v. Pia, 2011 NY Misc. LEXIS 4962 (N.Y.Sup. Ct. Oct. 7, 2011). Justice Nicolai’s Decision was affirmed by the Appellate Division. U.S.Bank, N.A. v Pia, 106 AD3d 991 (2d Dept. 2013), and leave to appeal was denied by the Court of Appeals. 21 NY3d 1071 (2013).

By Order dated April 25, 2013, this Court adopted the Referee’s Report and Recommendation, and directed Plaintiff to:

“1.Tender to the Defendants the sum of $37,472.91 with interest thereon at the statutory rate of 9% from October 9, 2011 to October 9, 2013;

2.Terminate the existing Mortgage on the subject property by preparing a Release of Mortgage for Defendants to review;

3.Deliver to Defendants a proposed new Mortgage for $ 196,277.09 payable by one payment of $37,472.91 and 267 monthly payments of $733.00 and one final payment of $566.09.”[FN1]

No appeal was taken from this Order, and Plaintiff did not undertake any efforts to [*2]comply with the Order between April 25, 2013 and November 6, 2013. Pursuant to the Court’s instructions on November 6, 2013, Defendants filed a proposed order giving Plaintiff a thirty-day opportunity to comply with the prior Orders of the Court. The Order was signed with minor modifications on December 9, 2013, and Plaintiff was served with the Order with Notice of Entry on December 24, 2013. The new Order, in salient terms, directed the same relief as the April 25, 2013 Order. No appeal was taken from the Order entered on December 24, 2013.

The October 19, 2011 Order awarded attorney’s fees, but left the amount to be determined upon future application. This Court, by Justice Nicolai, awarded attorney’s fees of $265,453.86 and costs of $12,252.52, by Decision entered on December 17, 2013, and served with Notice of Entry on December 26, 2013. The Decision was reduced to a money Judgment on January 6, 2014, and was served with Notice of Entry on January 13, 2014. No appeal was taken from that Judgment.

On January 14, 2014, Defendants served an Information Subpoena and Restraining Notice, pursuant to CPLR §§5224(a)(3) and 5222. Plaintiff’s deadline to answer the Information Subpoena and comply with the Restraining Notice has passed, without compliance. No attempt was made to condition or quash the Information Subpoena and/or Restraining Notice until the instant Cross-Motion was filed on or about May 8, 2014.

Plaintiff’s Cross-Motion seeks to quash or modify the Information Subpoena and Restraining Notice on the grounds they are based on an interlocutory judgment, and are calculated to harass, annoy, intimidate, or otherwise put undue pressure on Plaintiff to comply with the Decision and Order of the Trial Court, which Plaintiff considers “unlawful”, despite its affirmance by the Second Department and the denial of leave to appeal by the Court of Appeals. Plaintiff further seeks an Order, pursuant to CPLR §5016, disposing of all claims that remain outstanding, in order to pursue its appellate remedies. Thus, the Court is presented with three Orders and Judgment, which have neither been complied with, nor appealed from. Plaintiff asserts the ordered remedy is unlawful, and Defendants’ assert they are entitled to enforcement of their Judgment and the Orders entered herein.

In view of the issues raised, the parties appeared for oral argument on June 6, 2014, and the Court reserved decision allowing for post-argument submissions.[FN2]

The Judgment awarding attorney’s fees then due and owing has not been appealed. It is final and conclusive on that issue. The finality is strengthened by the Appellate Division’s affirmance of Justice Nicolai’s October 19, 2011 Order, which held attorney’s fees were properly awarded. Moreover, the April 25, 2013 Order, confirming the Referee’s Report and Recommendation, from which no appeal was taken, supports the award of attorney’s fees. Plaintiff fails to offer any support for the claim that the Information Subpoena and Restraining Notices are calculated to harass, annoy, intimidate, or otherwise put undue pressure on Plaintiff. Instead, Plaintiff proposes Justice Nicolai’s Order, affirmed by the Appellate Division, and the Order confirming the Report and Recommendation of the Referee, are “unlawful”. In short, Plaintiff wants “another bite of the apple” by way of a further ruling from this Court that may be appealed.

Specifically, Plaintiff further seeks an Order “fully disposing of all outstanding claims or, in the alternative, issuing a scheduling order with respect to its remaining claims.” Plaintiff asserts there are outstanding claims against it that have not been resolved, precluding the entry of final judgment (Cercone Affirmation ¶81). Plaintiff asserts Defendants’ Third Counterclaim regarding alleged violations of GBL §349 remains unresolved (Cercone Affirmation ¶84), and the Court has not issued a final order or judgment disposing of all claims. As a result, as Plaintiff claims, its appellate remedies are limited because there is no “final determination” of the matter, as the determinations made herein are non-final. Plaintiff observes the denial of leave to appeal Justice Nicolai’s October 19, 2011 Order was due to the fact that it was “not a final order”, and further proceedings were undertaken.

However, a careful reading of the Record reveals the lack of any outstanding issues. Notably, when Justice Nicolai signed an Order, confirming the Referee’s Report and Recommendations, the issue of attorney’s fees and “any remaining claims are hereby severed and shall be addressed at a hearing,” which he scheduled for June 7, 2013. To the extent that the hearing only addressed the issue of attorney’s fees, the remaining issues, such as the third counterclaim (GBL §349) or third-party claims, were waived by Defendants. Defendants’ failure to pursue the third counterclaim constitutes a default under CPLR §3215(a). Eller v. Eller, 116 AD2d 617 (2nd Dept. 1986). Plaintiff cannot rely on Defendants’ default or waiver as a basis for further appellate relief. Certainly, Plaintiff cannot claim to be harmed by not having to defend a claim. Insofar as no further testimony was offered with respect to the Third Counterclaim, or the Third-Party action, those matters have been waived, and the Judgment entered on January 13, 2014, was, and is, the final Judgment in this matter. No appeal was taken from the Judgment; consequently, Plaintiff’s Cross-Motion seeking an order disposing of all claims, or in the alternative, issuing a scheduling order, is denied.

Defendant’s motion is granted. Plaintiff is in contempt for failing to comply with the Order Confirming the Referee’s Report and Judgment of this Court awarding attorney’s fees. The Decision, Order and Judgment of December 17, 2013, to the extent that it addressed two of the three counterclaims, also implicitly dismissed the third counterclaim under GBL §349 as having been waived by Defendants, or defaulted upon, when it was not pursued at the hearing. While the better practice would have been to recite the dismissal of the third counterclaim, the failure to do so is not fatal to the “finality” of the action. The finality of the Order and Judgment rests on the disposition of the causes of action between the parties, leaving nothing for future judicial action. Burke v. Crosson, 85 NY2d 10 (1995). The failure to appeal from the Decision, Order and Judgment entered on June 17, 2013 is not saved or excused by the entry of a separate judgment on the issue of attorney’s fees from which no appeal was taken. Shah v. State, 212 AD2d 876 (3rd Dept. 1995). A final order may not be reviewed on appeal from a later judgment. Crystal v. Manes, 130 AD2d 979 (4th Dept. 1987); Matter of Burke v. Axelrod, 90 AD2d 577 (3d Dept. 1982). According to Professor Siegel, the term “final” “has usually been given a pragmatic interpretation meaning a judgment or order that puts an end to the case, or to a logically separable part of it, and leaves nothing else in respect of it to be decided” Siegel, New York Practice, 4th ed. §527, p. 900 (emphasis added).

Plaintiff fails to offer any viable, or cognizable, excuse for its failure to comply with the Judgment awarding attorney’s fees and disbursements. The delays and excuses offered by Plaintiff’s counsel, based on their recent entry into the matter, are far from persuasive. This is especially true when Plaintiff’s counsel claims, at oral argument, that he “had teams of people [*3]looking at pulling the servicing agreement,” and his firm began its review in February 2014, but did not substitute into the matter until April 4, 2014 (Didone Affidavit ¶80, 84). The explanations offered focus on the enforcement, compliance with, or challenge to the Order Confirming the Referee’s Report, and fail to address the issue of the Judgment awarding attorney’s fees. Interest is accruing on the Judgment awarding attorney’s fees, costs, and disbursements, but compliance is inexcusably outstanding. The Court is concerned that Plaintiff’s pattern of delay, failure to comply, failure to seek relief, and general inertia is designed to evade the remedies to which Defendants are entitled.

Plaintiff’s request to quash Defendants’ Information Subpoena is denied. Plaintiff fails to identify any reason for supporting a Protective Order. Plaintiff’s contention — that “Defendants’ efforts to enforce an interlocutory judgment before the entire matter is brought to finality is premature” — is erroneous. The award of attorney’s fees, which is the basis of the Judgment, occurred after a full opportunity to be heard to litigate the matter. No appeal was taken. Defendants may pursue all enforcement remedies available to them until the Judgment is satisfied. The award of attorney’s fees is derived from violations of TILA. The alleged “unlawful order” (Order Confirming Referee’s Report) is an attempt to remedy the situation which, regardless of whether it had been properly and timely challenged, would not affect Defendants’ rights to recover legal fees for the underlying violation. The Court will reserve decision on the issue of further sanctions, additional attorneys’ fees and orders of commitment as available remedies. Kahn v. Enbar, 2011 NY Slip Op. 31192(U) (Sup. Ct., NY Co., April 26, 2011); 1319 Third Avenue Realty Corp. v. Chauteaubriant Restaurant Development Co., LLC, 57 AD3d 340 (1st Dept. 2008); Lipstick, Ltd. v. Grupo Tribasa, S.A., de C.V., 304 AD2d 482 (1st Dept. 2003).

Plaintiff further claims it cannot be held in contempt for refusing to comply with the Order Confirming the Referee’s Report, because the Order is “unlawful” in that it would force Plaintiff to violate one federal law by complying with another, and it may suffer tax consequences as a result. This claim is rejected. First, no appeal was taken from the Order, nor was any motion made to reargue it. Second, Plaintiff assumed certain risks when it acquired the loan, and it cannot evade or avoid the risks by attempting to insulate itself from liability at Defendants’ expense. Third, the claim made by present counsel, that former counsel “dropped the ball” (Cercone, oral argument, pp. 23), is not a basis for relief. Fourth, TILA violations are subject to equitable remedies, and it cannot be said the equitable remedy here was “unlawful”. Berkely Federal Bank and Trust, FSB, v. Siegel, 247 AD2d, supra at 499; 15 U.S.C. §1635(b). Fifth, Plaintiff has failed to comply with, or appeal from, three separate Orders and a Judgment of this Court. Sixth, Plaintiff’s late submission of a March 20, 2014 letter from Ocwen Loan Servicing to Credit Suisse (Didone Affidavit, July 17, 2014, Exhibit B) contains an acknowledgment that “Repurchase is required under Section 2.03(a) due to a breach of the warranties made by the Seller that render Loan 70651414 to borrower Lisa Ann Pia unenforceable”. The letter also contains the acknowledgment “there is some case law precedent for this [remedy] procedure which ultimately is an equitable remedy” . Plaintiff cannot escape responsibility for the loan it acquired. Public policy neither provides for shifting the burden of Plaintiff’s violation of TILA to Defendants, nor does it allow for Plaintiff to claim it is somehow insulated or protected from the obligation to correct the violation they acquired.

Under these circumstances, contempt is not only an appropriate remedy, but also a necessary one. Should Plaintiff fail to fully comply with the Information Subpoena and [*4]Restraining Notice within thirty (30) days of service of this Decision and Order with Notice of Entry, Defendants may apply to this Court for further relief. In the interim, Defendants may pursue any and all enforcement and contempt remedies they deem appropriate, including additional attorney’s fees. Further, Plaintiff shall pay all attorney’s fees which have been reduced to Judgment entered on January 6, 2014, with interest thereon, and shall pay a statutory fine of $250.00.

The foregoing constitutes the Decision and Order of the Court.

Dated:Carmel, New York

__________________________________

HON. VICTOR G. GROSSMAN, J.S.C.

Footnotes

Footnote 1:TILA (15 U.S.C.§1601 et. seq.) provides for equitable remedies such as those outlined in Referee’s Report. Berkeley Federal Bank & Trust, FSB v. Siegel, 247 AD2d 498 (2nd Dept. 1998). In light of specific statutory authority providing for rescission, an equitable doctrine, upon a TILA violation (15 U.S.C. 1635[b]), it cannot be said the remedy is unlawful.

Footnote 2:

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FHFA Announces Settlement with Goldman Sachs

FHFA Announces Settlement with Goldman Sachs

HAPPY FRIDAY! In hopes this all is forgotten by Monday and so their stock don’t take a hit. Nice going as usual.

Heard from the sources that Wells Fargo is next…

FOR IMMEDIATE RELEASE
8/22/2014

? Washington, D.C. – The Federal Housing Finance Agency (FHFA), as conservator of Fannie Mae and Freddie Mac, today announced it has reached a settlement with Goldman Sachs, related companies and certain named individuals.  The settlement addresses claims alleging violations of federal and state securities laws in connection with private-label mortgage-backed securities (PLS) purchased by Fannie Mae and Freddie Mac between 2005 and 2007.

Under the terms of the settlement, Goldman Sachs will pay $3.15 billion in connection with releases and the purchase of securities that were the subject of statutory claims in the lawsuit FHFA v. Goldman Sachs & Co., et al., in the U.S. District Court of the Southern District of New York.  Goldman Sachs will pay approximately $2.15 billion to Freddie Mac and approximately $1 billion to Fannie Mae.  This settlement, worth approximately $1.2 billion, effectively makes Fannie Mae and Freddie Mac whole on their investments in the securities at issue.  As part of the settlement, FHFA, Fannie Mae and Freddie Mac will release certain claims against Goldman Sachs & Co. related to the securities involved.

The settlement also resolves claims that involved a Goldman Sachs security in FHFA v. Ally Financial Inc., et al.  FHFA previously settled claims against Ally Financial Inc.

This is the sixteenth settlement reached in the 18 PLS lawsuits? FHFA filed in 2011.  Three cases remain outstanding and FHFA is committed to satisfactory resolution of those actions.

Link to Settlement Agreement with Fannie Mae

Link to Settlement Agreement with Freddie Mac???

 

###

? The Federal Housing Finance Agency regulates Fannie Mae, Freddie Mac and the 12 Federal Home Loan Banks.  These government-sponsored enterprises provide more than $5.6 trillion in funding for the U.S. mortgage markets and financial institutions.

Contacts:

?Corinne Russell (202) 649-3032 / Stefanie Johnson (202) 649-3030?

SOURCE: fhfa.gov

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A.G. Eric Schneiderman Led State & Federal Working Group Announces Record-Breaking $16.65 Billion Settlement With Bank Of America

A.G. Eric Schneiderman Led State & Federal Working Group Announces Record-Breaking $16.65 Billion Settlement With Bank Of America

RMBS Task Force, Co-Chaired By Schneiderman, Secures Settlement That Includes $800 Million For New Yorkers, Including, For The First Time, Relief For Borrowers With FHA-Insured Loans

Settlement Addresses Misconduct That Contributed To The 2008 Financial Crisis

Schneiderman: “Today’s Settlement Is A Major Victory In The Fight To Hold Those Who Caused The Financial Crisis Accountable”

NEW YORK – Attorney General Eric T. Schneiderman today joined members of a state and federal working group he co-chairs to announce a $16.65 billion settlement with Bank of America. The settlement is the largest in U.S. history with a single institution, surpassing the $13 billion settlement with JPMorgan Chase that was secured by the same state and federal working group last November. The settlement includes $800 million – $300 million in cash, and a minimum of $500 million worth of consumer relief – that will be allocated to New York State. As part of today’s settlement, Bank of America acknowledged it made serious misrepresentations to the public – including the investing public – arising out of the packaging, marketing, sale and issuance of residential mortgage-backed securities (RMBS) by Bank of America, as well as by Countrywide Financial and Merrill Lynch, institutions that Bank of America acquired in 2008. The resolution also requires Bank of America to provide relief to underwater homeowners, distressed borrowers, and affected communities through a variety of means, including relief that for the first time will assist certain homeowners with mortgages insured by the Federal Housing Administration (FHA) who were ineligible for relief under previous settlements.

The settlement requires Bank of America to pay $9.65 billion in hard dollars and provide $7 billion in consumer relief. New York State will receive at least $800 million: $300 million in cash and a minimum of $500 million in consumer relief for struggling New Yorkers. The settlement was negotiated through the Residential Mortgage-Backed Securities Working Group, a joint state and federal working group formed in 2012 to share resources and continue investigating wrongdoing in the mortgage-backed securities market prior to the financial crisis. Attorney General Schneiderman co-chairs the RMBS working group.

“Since my first day in office, one of my top priorities has been to pursue accountability for the misconduct that led to the crash of the housing market and the collapse of the American economy,” said Attorney General Schneiderman. “This historic settlement builds upon our work bringing relief to families around the country and across New York who were hurt by the housing crisis, and is exactly what our working group was created to do. The frauds detailed in Bank of America’s statement of facts harmed countless of New York homeowners and investors. Today’s result is a major victory in the fight to hold those who caused the financial crisis accountable.”

The settlement includes an agreed-upon statement of facts that describes how Bank of America, Merrill Lynch and Countrywide made representations to RMBS investors about the quality of the mortgage loans they securitized and sold to investors.  Contrary to those representations, the firms securitized and sold RMBS with underlying mortgage loans that they knew had material defects. Bank of America also made representations to the FHA, an agency within the U.S. Department of Housing and Urban Development, about the quality of FHA-insured loans that Bank of America originated and underwrote. Contrary to those representations, Bank of America originated and underwrote FHA-insured mortgages that were not eligible for FHA insurance. Bank of America and Countrywide also made representations and warranties to Fannie Mae and Freddie Mac about mortgages they originated and sold to those Government Sponsored Entities (GSE’s). Contrary to those representations and warranties, many of those mortgages were defective or otherwise ineligible for sale to GSE’s.

As the statement of facts explains, on a number of occasions, Merrill Lynch employees learned that significant percentages of the mortgage loans reviewed by a third party due diligence firm had material defects. Significant numbers of loans—50% in at least one pool—that were found in due diligence not to have been originated in compliance with applicable laws and regulations, not to be in compliance with applicable underwriting guidelines and lacking sufficient offsetting compensating factors, and loans with files missing one or more key pieces of documentation were nevertheless waived into the purchase pool for securitization and sale to investors. In an internal email that discussed due diligence on one particular pool of loans, a consultant in Merrill Lynch’s due diligence department wrote: “[h]ow much time do you want me to spend looking at these [loans] if [the co-head of Merrill Lynch’s RMBS business] is going to keep them regardless of issues? . . . Makes you wonder why we have due diligence performed other than making sure the loan closed.” A report by one of Merrill Lynch’s due diligence vendors found that from the first quarter of 2006 through the second quarter of 2007, 4,009 loans that were part of loan pool samples reviewed by the vendor were not in compliance with underwriting guidelines or applicable laws and regulations, and were waived in to purchase pools by Merrill Lynch. This conduct, along with similar conduct by other banks that bundled defective and toxic loans into securities and misled investors who purchased those securities, contributed to the financial crisis.

Attorney General Schneiderman was elected in 2010 and took office in 2011, when the five largest mortgage servicing banks, 49 state attorneys general, and the federal government were on the verge of agreeing to a settlement that would have released the banks – including Bank of America – from liability for virtually all misconduct related to the financial crisis. Attorney General Schneiderman refused to agree to such sweeping immunity for the banks. As a result, Attorney General Schneiderman secured a settlement that preserved a wide range of claims for further investigation and prosecution.

In his 2012 State of the Union address, President Obama announced the formation of the RMBS Working Group. The collaboration brought together the Department of Justice (DOJ), other federal entities, and several state law enforcement officials – co-chaired by Attorney General Schneiderman – to investigate those responsible for misconduct contributing to the financial crisis through the pooling and sale of residential mortgage-backed securities. The negotiations for settlement, which were led by Associate Attorney General Tony West of DOJ, were part of the RMBS Working Group.

Under the settlement, Bank of America will be required to provide a minimum of $500 million in creditable consumer relief directly to struggling families and communities across the state. The settlement includes a menu of options for consumer relief to be provided, and different categories of relief are credited at different rates toward the bank’s $500 million obligation. The agreement also requires Bank of America to provide minimum amounts of creditable relief under certain priority categories in New York. The Consumer Relief Credit Menu, available here, details the how each category of relief will be credited and the minimum amounts for each category where applicable.

The most significant priority on the Consumer Relief Credit Menu is a change that will allow first lien principal reductions for certain types of FHA-insured mortgages. Borrowers with these types of loans have previously been excluded from getting the benefits of principal reduction under past settlements, despite the fact that a significant number of distressed loans fall into this category. According to data collected by the Office of the Attorney General, roughly 23% of all distressed loans in New York have FHA insurance, and FHA-insured loans represent the largest portion of Bank of America’s remaining distressed loan portfolio in New York.

Attorney General Schneiderman made it a high priority to extend principal forgiveness to FHA-insured mortgages in negotiations with Bank of America, and their inclusion in this settlement represents a huge step forward in Attorney General Schneiderman’s ongoing commitment to helping families move past the foreclosure crisis.

“Empire Justice Center is very pleased that the settlement with Bank of America provides for principal balance reductions on FHA-insured loans,” said Kirsten Keefe, Senior Attorney at the Empire Justice Center. “This is a critical component that has not been included in prior bank settlements. It has left homeowners with FHA loans at a disadvantage when trying to negotiate with their bank to save their homes. We thank Attorney General Schneiderman for making this a priority in the Bank of America Settlement.”

Bank of America will provide a minimum of $60 million in first lien principal reductions in New York, including the FHA-insured portfolio. Other New York-specific minimum requirements for consumer relief under this settlement include:

  • A minimum value of $20 million in donations, including cash and contributions of vacant and abandoned properties to land banks, units of local government and other nonprofits. Bank of America estimates that this will help address as many as 300 vacant properties—also known as zombie properties—across the state of New York.
  • The bank must also earn at least $35 million in credits for making cash donations to legal service providers, housing counseling agencies, land banks and other community development nonprofits. These relief options are a direct compliment to the investment Attorney General Schneiderman has made to these types of programs over the past three years, including more than $60 million in funding to support a network of housing counseling and legal service provider across the state under the Homeowner Protection Program (HOPP), which has provided free, high-quality services to more than 30,000 homeowners since launching in 2012.
  • Bank of America must also provide $125 million in credits to create and preserve hundreds of units of affordable rental housing across New York State. This initiative is particularly critical in New York, where affordable rental housing is scarce and many families are struggling to find decent and affordable alternatives to homeownership following the economic crisis.

New York City Mayor Bill DeBlasiosaid, “We’re in the midst of an affordability crisis hitting New Yorkers from the very poor to those once solidly middle class. We are deeply grateful to the Attorney General for securing a historic settlement that will make a real difference for families struggling across the city and state. We are pushing hard to build and preserve an unprecedented amount of affordable housing to meet this crisis, and the Attorney General’s continued advocacy is proving vitally important in supporting that effort.”

“We applaud AG Schneiderman’s efforts to hold the too-big-to-fail banks accountable to lower income communities,” said Josh Zinner, Co-Director of New Economy Project. “We are hopeful that this settlement will provide relief to people and communities that have been hardest hit by predatory lending and high rates of foreclosure.”

Compliance with the settlement will be overseen by an independent monitor who will be responsible for ensuring that targets under the settlement are met and that quarterly reporting requirements, which will measure how relief is being allocated at a Census Tract level, are made available to the public.

This matter was led by former Deputy Attorney General for Economic Justice Virginia Chavez Romano, Chief of the Investor Protection Bureau Chad Johnson, Senior Enforcement Counsel for Economic Justice Steven Glassman, and Assistant Attorneys General in the Investor Protection Bureau Hannah Flamenbaum and Melissa Gable.

SOURCE: http://ag.ny.gov

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Inside the Dark, Lucrative World of Consumer Debt Collection

Inside the Dark, Lucrative World of Consumer Debt Collection

NYT-

One afternoon in October 2009, a former banking executive named Aaron Siegel waited impatiently in the master bedroom of a house in Buffalo that served as his office. As he stared at the room’s old fireplace and then out the window to the quiet street beyond, he tried not to think about his investors and the $14 million they had entrusted to him. Siegel was no stranger to money. He grew up in one of the city’s wealthiest and most prominent families. His father, Herb Siegel, was a legendary playboy and the majority owner of a hugely profitable personal-injury law firm. During his late teenage years, Aaron lived essentially unchaperoned in a sprawling, 100-year-old mansion. His sister, Shana, recalls the parties she hosted — lavish affairs with plenty of Champagne — and how their private-school classmates would often spend the night, as if the place were a clubhouse for the young and privileged.

So how, Siegel wondered, had he gotten into his current predicament? His career started with such promise. He earned his M.B.A. from the highly regarded Simon Business School at the University of Rochester. He took a job at HSBC and completed the bank’s executive training course in London. By all indications, he was well on his way to a very respectable future in the financial world. Siegel was smart, hardworking and ambitious. All he had to do was keep moving up the corporate ladder.

Instead, he decided to take a gamble. Siegel struck out on his own, investing in distressed consumer debt — basically buying up the right to collect unpaid credit-card bills. When debtors stop paying those bills, the banks regard the balances as assets for 180 days. After that, they are of questionable worth. So banks “charge off” the accounts, taking a loss, and other creditors act similarly. These huge, routine sell-offs have created a vast market for unpaid debts — not just credit-card debts but also auto loans, medical loans, gym fees, payday loans, overdue cellphone tabs, old utility bills, delinquent book-club accounts. The scale is breathtaking. From 2006 to 2009, for example, the nation’s top nine debt buyers purchased almost 90 million consumer accounts with more than $140 billion in “face value.” And they bought at a steep discount. On average, they paid just 4.5 cents on the dollar. These debt buyers collect what they can and then sell the remaining accounts to other buyers, and so on. Those who trade in such debt call it “paper.” That was Aaron Siegel’s business.

[NEW YORK TIMES]

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