Via Clouded Titles –

It is with great sadness that I report to you that Kings County, New York Judge Arthur Schack has died at age 71.  He was a champion of the truth and will be notably remembered for being reversed in the HSBC BANK USA NA v Taher case because the higher courts did not like his ruling (which I believe was for political reasons). You can read the latest article on Judge Schack here: Beloved Bay Ridge Justice Arthur Schack dies at 71 | Brooklyn Daily Eagle   My condolences go out to his family.

This is not the news I was expecting in my inbox this morning, given the number of foreclosures that are now being filed in all of the New York boroughs right now.  In fact, due to the downturn in certain areas of the economy (which Wall Street and its pundits claim is on the rebound), various sectors of wage-earning workers are finding themselves unemployed (e.g., Lorain County, Ohio) and when people are unemployed, mortgages don’t get paid and foreclosures start back up again.

When we lose a justice like Judge Arthur Schack, the economy suffers because the banks have one less “hurdle” to face in court, which gets them closer to a win, especially in light of the apparent and continued use of illicitly-manufactured documents, supervised by the foreclosure mill law firms and manufactured by the servicers bringing the foreclosure actions on behalf of REMICs that have been paid off multiple times over!

[CLOUDED TITLES]

Perhaps if these judges did their research and weren’t bank friendly, they would have seen exactly what Judge Schack learned.

New York Law Journal-

A Brooklyn appellate court has once again upset a ruling by a trial court judge, saying he “flagrantly ignore[d]” precedent.

In Deutsche Bank National Trust Company v Islar, 2013-06996, the Appellate Division, Second Department, on Wednesday reversed Brooklyn Supreme Court Justice Arthur Schack (See Profile) and ordered the case to be reassigned to a new judge.

Schack had denied a summary judgment motion from the lender, Deutsche Bank National Trust Company, on grounds that the plaintiff had not demonstrated its standing to foreclose on the mortgage.

Read more: http://www.newyorklawjournal.com/id=1202675644543/Panel-Faults-Flagrant-Disregard-of-Precedent#ixzz3IhXtjWMb

image: NYLJ/Rick Kopstein

Decided on July 5, 2013

1686/10

Plaintiff

JP Morgan Chase

by Sarah Feor, Esq.

Garden City NY

Defendant

Yolande I. Nicholson, Esq.

Brooklyn NY

Arthur M. Schack, J.

Plaintiff, JP MORGAN CHASE BANK, NATIONAL ASSOCIATION, AS PURCHASER OF THE LOANS AND OTHER ASSETS OF WASHINGTON MUTUAL BANK, FORMERLY KNOWN AS WASHINGTON MUTUAL BANK, FA (THE “SAVINGS BANK”) FROM THE FEDERAL DEPOSIT INSURANCE CORPORATION, ACTING AS RECEIVER FOR THE SAVINGS BANK AND PURSUANT TO ITS AUTHORITY UNDER THE FEDERAL INSURANCE ACT, 12 U.S.C. § 1821 (d) [CHASE], commenced the instant foreclosure action against defendant FREDERICK BUTLER [BUTLER], for the premises located at 325 Macon Street, Brooklyn, New York (Block 1847, Lot 49, County of Kings). After numerous CPLR Rule 3408 mandatory settlement conferences, first conducted by a Special Referee in the Foreclosure Settlement Part and then personally before me, the instant action for the foreclosure of the subject mortgage became moot, with the sale of the subject premises and the recording of a satisfaction by CHASE. The issue before the Court is the distribution of $490,000.00, deposited by defendant BUTLER with the Kings County Clerk, pursuant to my June 27, 2011 order authorizing the sale of the premises. This money is claimed by both CHASE and BUTLER. However, CHASE never owned the subject mortgage and note, despite asserting for almost two years that it did, and BUTLER never paid the balance due.

After numerous misrepresentations to the Court by various counsel for CHASE, it is clear that the actual BUTLER mortgage and note, given in 2007 by the defunct WASHINGTON MUTUAL BANK, FA [WAMU], was acquired in 2007 by the FEDERAL NATIONAL MORTGAGE ASSOCIATION [FANNIE MAE] from WAMU. Despite CHASE’S claims, before December 2011, to the Special Referee and the Court that it owned the subject mortgage and note, plaintiff CHASE only purchased the servicing rights to the subject mortgage and note from the FEDERAL DEPOSIT INSURANCE CORPORATION [FDIC] in September 2008, when WAMU was seized by the FDIC.

Plaintiff CHASE, as will be explained, never owned the subject BUTLER mortgage and note. Therefore, CHASE had no right to foreclose on the subject mortgage and note. Moreover, the continued subterfuge by CHASE and its counsel to the Special Referee and Court that it owned the subject BUTLER mortgage and note demonstrated “bad faith” in violation of CPLR Rule 3408 (f), which requires that “[b]oth the plaintiff and defendant shall negotiate in good faith to reach a mutually agreeable resolution, including a loan modification, if possible.”

The Court has before it two orders to show cause by defendant BUTLER. The first order to show cause, dated October 26, 2011, seeks: the release, to defendant BUTLER, pursuant to [*2]CPLR Rule 2606, of the $490,000.00 deposited with the Kings County Clerk; reinstating defendant BUTLER’s May 10, 2011 order to show cause which sought dismissal of the instant action with prejudice since plaintiff CHASE was not the holder of the subject promissory note; dismissing the action with prejudice, pursuant to CPLR Rule 3211 (a) (1), (3), (7) and (8); sanctioning plaintiff and plaintiff’s counsel, pursuant to 22 NYCRR § 130-1.1; and, declaring the subject BUTLER note to be fully satisfied. Defendant BUTLER’s second order to show cause, dated March 29, 2012, seeks leave to amend defendant’s February 22, 2010-answer. Plaintiff CHASE, by an amended cross-motion, seeks the release, pursuant to CPLR Rule 2606, of the $490,000.00 deposited by defendant BUTLER with the Kings County Clerk, to plaintiff CHASE.

This case is troubling because various counsel for CHASE falsely claimed for almost two years, from January 20, 2010 until December 2011, that CHASE was the owner of the mortgage and note. Ultimately, in late 2011, after the subject mortgage had been satisfied, plaintiff CHASE’s counsel admitted, in opposition to defendant BUTLER’s October 26, 2011 order to show cause, that plaintiff CHASE did not own the BUTLER mortgage and note, but only the servicing rights to it. CHASE’s counsel, in its opposition papers, submitted an affidavit, dated December 9, 2011, from Greg De Castro, “Director-Servicing Management” of FANNIE MAE, claiming that FANNIE MAE acquired from WAMU the BUTLER Mortgage and Note and “Chase is the servicer of the loan.” Further, Mr. De Castro makes the ludicrous claim, in violation of New York law, that “[a]s Fannie Mae’s servicer, CHASE has authority to commence a foreclosure action on the Loan and to receive and/or collect the proceeds from the sale of the Property.”

For reasons to be explained, in applying the Court’s equitable powers, the Court grants the October 26, 2011 order to show cause of defendant BUTLER to the extent that: the Kings County Clerk shall release to defendant BUTLER $55,617.11 from the $490,000.00 deposited with the Kings County Clerk; the Court’s declares that the subject BUTLER Note is fully satisfied; and a hearing shall be conducted to (1) determine whether CHASE or FANNIE MAE is entitled to the balance of $434,382.89 deposited with the Kings County Clerk, pursuant to my order and, (2) to give CHASE and its counsel an opportunity to be heard as to whether or not they engaged in frivolous conduct, in violation of 22 NYCRR § 130-1.1, and if so should CHASE and/or its counsel pay any costs and sanctions. The March 29, 2012 order to show cause of defendant BUTLER is denied as moot. The amended cross-motion of plaintiff CHASE for the release of the $490,000.00 deposited with the Kings County Clerk, to plaintiff CHASE, is denied.

Background

Defendant’s parents, William Butler and Louisa Butler, purchased the subject premises in 1966 (Reel 224, Page 471 of the New York City Register for Kings County). On July 12, 2002, the subject premises were deeded to defendant BUTLER by Louisa Butler, the surviving spouse of William Butler (Reel 5727, Page 1870 of the New York City Register for Kings County). Defendant BUTLER, on January 30, 2007, refinanced his home by executing a note and mortgage with WAMU for $450,000.00, recorded in the Office of the City Register of the City of New York, at CRFN 2007000123607, on March 7, 2007. Also, on January 30, 2007, Mr. Butler received a home equity line of credit with WAMU, recorded in the Office of the New York City Register, at CRFN 2007000123608, on March 7, 2007. [*3]

The Automated City Register Information System (ACRIS) does not show any assignments of the WAMU mortgage to FANNIE MAE or CHASE. However, a CHASE representative, Yvonne Brooks, “Home Loan Senior Research Specialist,” in her December 8, 2011-affidavit attached to plaintiff’s cross-motion, claims, in ¶ 6, that FANNIE MAE, in April 2007, purchased the BUTLER loan and WAMU retained the servicing rights. Exhibit D of the cross-motion contains a computer printout, dated April 20, 2007, showing this. Thus, plaintiff CHASE ultimately acknowledged that FANNIE MAE is the “Wizard of Oz,” operating behind the curtain, and the real owner of the subject BUTLER note and mortgage.

Then, on September 24, 2008, WAMU failed and its deposits and assets were seized by the federal government. On September 25, 2008, the Office of Thrift Supervision, a now-defunct federal agency, named the Federal Deposit Insurance Corp. (FDIC) as Receiver for WAMU. WAMU had not corrected its errors by re-instituting Butler’s line of credit and correcting the erroneous reporting to credit bureaus before it was seized by the FDIC. CHASE, despite its assertions to the contrary for almost two years in the instant action, purchased the servicing rights to WAMU’s mortgages and notes, not the actual mortgages and notes.

In a letter, dated October 10, 2008, CHASE advised BUTLER that WAMU was closed by the Office of Thrift Supervision and the FDIC was named Receiver. It then states that CHASE “acquired certain assets of Washington Mutual Bank from the FDIC, including the right to service your loan.”

Plaintiff CHASE’s counsel, then Steven J. Baum, P.C., commenced the instant foreclosure action on the subject premises, with the filing of a summons, complaint and notice of pendency on January 20, 2010. In the first paragraph of the complaint, Steven J. Baum, P.C., “alleges upon information and belief” that plaintiff CHASE is “the owner and holder of a note and mortgage being foreclosed.”

After plaintiff CHASE filed a Request for Judicial Intervention, an initial CPLR Rule 3408 mandatory settlement conference was held on March 22, 2010, followed by at least nine additional conferences, before Special Referee Deborah Goldstein. Defendant BUTLER appeared pro se except for the last conference, when he was represented by Yolande I. Nicholson, Esq. At the conclusion of the April 7, 2011-settlement conference, Special Referee Goldstein ordered that “Plaintiff is directed to appear by Sarah Feor, the attorney of Baum with knowledge of the standing and litigation issues. Production of all title and ownership documentation, including the note and all assignments are required to be produced in accordance with [CPLR] 3408 (e) at the next conference on 4/11/11 and Sarah Feor, Esq. must appear with a Chase rep.”

In her April 14, 2011 order, Special Referee Goldstein noted that plaintiff Chase and its counsel “failed to abide by my last directive requiring a Chase representative to be present with a [*4]copy of the Note. In addition, Plaintiff appeared by two different law firms, Baum and Cullen & Dykman LLP, and they cannot agree on who is authorized to appear and negotiate on behalf of Chase.” Moreover, Special Referee Goldstein noted that the payoff letters provided by CHASE’s counsel included attorneys’ fees for settlement conferences. Therefore, Special Referee Goldstein required plaintiff to provide defense “with a clear payoff reflecting only principal and capitalized arrears on or before 4/21/11,” and to “produce a copy of the Note and all documents reflecting the transfer of title from WAMU to Chase at the next conference on 5/2/11.”

The next conference was held before me on May 2, 2011. Counsel were present from both Baum and Cullen & Dykman for plaintiff, as well as counsel for defendant. CHASE’S new counsel, Cullen & Dykman, finally presented to the Court for its inspection the original note to WAMU executed by BUTLER. Plaintiff’s counsel from both Baum and Cullen & Dykman represented to the Court that CHASE was the holder of the note. However, the WAMU note was not endorsed by the FDIC as Receiver or any other entity and ACRIS does not show any assignment of the mortgage. The conference did not result in a settlement.

Several days later, defendant BUTLER received in his home mailbox from the Baum law firm a J. P. Morgan Payment History on his loan, No. 3012577379, for the subject premises. The computerized printout received by defendant BUTLER states that there was full settlement on “5/22/10” and that the loan was “REMOVED LOSS MITIGATION.” The printout shows that on “5-22-10” a transaction for “$454,337.35” took place, of which “$434,382.89” is listed as “PRINCIPAL” and “$19,954.46” is listed as “INTEREST.” This is no reference as to who paid the $454,337.35. Sarah Feor, Esq., then of the Baum firm, in her December 12, 2011 affirmation attached to plaintiff’s cross-motion, states, in ¶ 28:

On or about April 29, 2011, our office [Baum’s] received the

previously requested loan payment history from Plaintiff. As the borrower

was previously appearing pro se and had only recently retained counsel,

the payment history was inadvertently [emphasis added] sent to the

Defendant directly by a legal assistant from Plaintiff’s counsel office.

The loan history was sent in an effort to comply with a prior directive of

Referee Goldstein.

Defendant’s counsel, as a result of this payment history, moved by an order to show cause, dated May 10, 2011, for, among other things: dismissal of the instant action based upon plaintiff’s lack of good faith in that “plaintiff had received payment on May 22, 2010 for the amount specified” as owing in the complaint [$434,382.89]; and, awarding costs and sanctions against plaintiff because “plaintiff withheld material information, including the May 22, 2010 payment from the Court.” In the May 10, 2011 order to show cause, I directed plaintiff to provide the Court with detailed information as to “the entity or third party that made the payment to it on May 22, 2010 that is specified in the payment history it delivered to defendant on May 4, 2011 . . . which payment resulted in plaintiff marking its loan payment history records fully settled,’ in its opposition papers to be filed and served by June 13, 2011.” Plaintiff failed to comply with this order and at the June 27, 2011 hearing before me made an application to extend the time to identify the May 22, 2010 payor. I denied this request.

In my June 27, 2011 decision and order, I granted defendant BUTLER’s May 10, 2011 order to show cause to the extent that he could close on a long-sale of the subject premises and deposit [*5]$490,000.00 of the proceeds with the Kings County Clerk, pursuant to the CPLR § 1006 (g). Further, I directed that a certified copy of this order be filed with the City Register and that at the closing on the sale of the subject premises the title company could accept no proceeds on behalf of plaintiff CHASE. The parties could then move for distribution of the $490,000.00 deposited with the Kings County Clerk, after the closing of title on the subject premises.

The closing on the sale of the subject premises, for $839,000.00, took place on July 18, 2011. $490,000.00, pursuant to my order, was deposited with Kings County Clerk on that day. As per my June 27, 2011 order, CHASE issued a satisfaction of the subject BUTLER mortgage on September 7, 2011 and recorded it on September 26, 2011, in the Office of the City Register of the City of New York, at CRFN 2011000340485

In her August 25, 2011 order, Special Referee Goldstein referred the instant action back “to Part 27 for all purposes when they [the parties] reached an impasse regarding production of the original note.”

The parties then made the orders to show cause and cross-motion now pending before the Court. Cullen & Dykman, in its opposition to defendant’s instant order to show cause and in support of its cross-motion for the release of the $490,000.00 deposited with the Kings County Clerk to plaintiff CHASE, asserts that CHASE is entitled to receive the funds, on page 2 of its December 9, 2011-memorandum of law because “Chase, the servicer of the loan made by Washington Mutual Bank, N.A. andnow owned by Fannie Mae, is the designated entity to collect and receive the pay-off funds to satisfy the mortgage on the Property.” In his December 9, 2011-affidavit, Greg De Castro, “Director-Servicing Management,” for FANNIE MAE states, in ¶ 3, that “Fannie Mae acquired from Washington Mutual Bank, F.A. . . . ownership of the loan executed by Frederick Butler in the principal amount of $450,000.00 which is secured by a lien on the Property . . . Chase is the servicer of the Loan.” Further, in ¶ 5, Mr. De Castro claims that “[a]s Fannie Mae’s servicer, CHASE has authority to commence a foreclosure action on the Loan and to receive and/or collect the proceeds from the sale.”CHASE, Mr. De Castro and FANNIE MAE must be unaware that in New York “[t]o establish a prima facie case in an action to foreclose a mortgage, the plaintiff must establish the existence of the mortgage and mortgage note, ownership of the mortgage, and the defendant’s default in payment [emphasis added].” (Campaign v Barba, 23 AD3d 327 [2d Dept 2005]). Further, “foreclosure of a mortgage may not be brought by one who has no title to it.” (Kluge v Fugazy, 145 AD2d 537, 538 [2d Dept 1988]). Moreover, “[p]laintiff’s attempt to foreclose upon a mortgage in which he had no legal or equitable interest was without foundation in law or fact.” (Katz v East-Ville Realty Co., 249 AD2d 243 [1d Dept 1998]). It is clear, that after almost two years of its bad faith assertions to the contrary, CHASE never owned the subject mortgage and note. Therefore, CHASE lacks authority to be the plaintiff in the instant action. “The foreclosure of a mortgage cannot be pursued by one who has no demonstrated right to the debt.” (Bank of New York v Silverberg, 86 AD3d 274, 280 [2d Dept 2011]).

Yvonne Brooks, CHASE’s Home Loan Senior Research Specialist, in her December 8, 2011-affidavit, admits, in ¶ 6, that FANNIE MAE, in April 2007 “purchased the loan from Washington Mutual . . . However, Washington Mutual retained the servicing rights.” Then, Ms. Brooks, in ¶ 7 of her affidavit, states that on September 25, 2008 WAMU was placed into [*6]receivership by the FDIC and CHASE purchased certain assets, “including mortgage servicing rights.” She then states, in ¶ 8, “[d]ue to the Chase’s purchase of Washington Mutual’s servicing rights, Chase took over the servicing obligations of the Loan.”

Ms. Brooks, in ¶ 13 of her affidavit, alleges that the Fannie Mae 2006 Servicing Guide, VIII, 102, “Initiation of Foreclosure Proceedings [exhibit H of cross-motion],” allows CHASE to be the plaintiff in the instant action. A reading of this FANNIE MAE regulation demonstrates the lengths to which FANNIE MAE evaded its responsibility to be the real plaintiff in interest in the instant action or other foreclosure proceedings. It demonstrates the “unclean hands” of FANNIE MAE and its servicer, CHASE. It is FANNIE MAE’S roadmap of how to inveigle and deceive a court. This FANNIE MAE regulation states, in relevant part:

Fannie Mae is at all times the owner of the mortgage note, whether

the note is in our portfolio or whether we own it as trustee for an MBS trust.

In addition, Fannie Mae at all times has possession of and is the holder of

the mortgage note, except in the limited circumstances expressly described

below. We may have direct possession of the note or a custodian may have custody of the note for us. If we possess the note through a document

custodian, the document custodian has custody of the note for our exclusive

use and benefit.

In most cases, a servicer will have a copy of the mortgage note that

it can use to begin the foreclosure process. However, some jurisdictions

require that the servicer produce the original note before or shortly after

initiating foreclosure proceedings. If our possession of the note is direct

because the custody documents are at our document delivery facility, to

obtain the note or any other custody documents that are needed, the servicer

should submit a request to our Custody Department . . . the servicer should

specify whether the original note is required or whether the request if for

a copy.

In some jurisdictions, only the “holder” of the note may conduct a

foreclosure. In any jurisdiction in which our servicer must be the holder

of the note in order to conduct the foreclosure, we temporarily transfer

our possession of the note to our servicer, effective automatically and

immediately before commencement of the foreclosure proceeding. When

we transfer our possession, our servicer becomes the holder of the note

during the foreclosure proceedings. If the borrower reinstates the loan or

the servicer ceases to service the loan for Fannie Mae for any reason, then

possession of the note at that time automatically reverts to Fannie Mae and

the note must be returned to the document custodian. At that time, Fannie

Mae also resumes being the holder, just as it was before the foreclosure

proceedings. The transfer of our possession, and any reversion of

possession to us are evidenced and memorialized by our publication of

this paragraph. This Guide provision may be relied upon by a court to

establish that the servicer conducting the foreclosure proceeding has

possession, and is the holder, of the note during the foreclosure proceeding, [*7]

unless the court is otherwise notified by Fannie Mae. [Emphasis added].”

Thus, it appears to the Court that the delay by CHASE in producing the subject

BUTLER Note was to give Baum and/or Cullen & Dykman ample time to temporarily borrow the BUTLER Note from FANNIE MAE for its May 2, 2011 presentation to the Court. Despite its December 2011 admission that FANNIE MAE owned the subject BUTLER mortgage and note, CHASE, prior to this, continuously presented its ownership subterfuge to Special Referee Goldstein and the Court. The Court cannot countenance the deceptive behavior of CHASE, the alleged owner of the subject BUTLER mortgage and note, its counsel, and FANNIE MAE, the real owner of the subject BUTLER mortgage and note. FANNIE MAE’s Servicing Guide, with its deceptive practices to fool courts, does not supercede New York law.

Further, Ms. Brooks explains the May 22, 2010 transaction, in ¶ 14 of her affidavit, as “an automatic cashless Fannie Mae transaction . . . which reclassifed the loan from being a schedule/schedule loan to an actual actual/actual remittance loan mortgage. See Fannie Mae 2006 Servicing Guide I, 208.06: Reclassification of Certain MBS Pool Mortgages attached hereto as Exhibit “H [sic].” This regulation, in its version of Orwellian Nineteen Eighty-Four “Newspeak,” states:

Rather than requiring the servicer to repurchase certain delinquent

MBS pool mortgages that are serviced under the special servicing option –

those for which we have the entire foreclosure loss risk and those for

which Fannie Mae and the servicer share the foreclosure loss risk with

Fannie Mae having the responsibility for marketing the acquired property –

we will automatically reclassify a mortgage that satisfies our selection

criteria as an “actual/actual” remittance type portfolio mortgage. Generally,

we will select mortgages that have at least three payments past due for

reclassification in the month when the fourth payment is delinquent.

Ms. Brooks, based upon the reclassification of the Butler mortgage, alleges in ¶ 16 of her affidavit, that the BUTLER loan “reclassification presents as FULL SETTLEMENT 5/22/10′ on defendant’s loan history and does not represent a payment [exhibit G of cross-motion].”

Discussion

In analyzing the instant orders to show cause and cross-motion, the Court is

cognizant that, with the sale of the subject premises and the $490,000.00 of the proceeds deposited with the Kings County Clerk, the instant BUTLER foreclosure action is now moot. However, the Court must deal with the aftermath, namely: the issue of bad faith by CHASE, its counsel and FANNIE Mae; the distribution of the $490,000.00 on deposit with the Kings County Clerk; and, whether the bad faith by CHASE and its counsel is frivolous conduct.

“A foreclosure action is equitable in nature and triggers the equitable powers of the court (see Notey v Darien Constr. Corp., 41 NY2d 1055, 1055-1056 [1977]). Once equity is invoked, the court’s power is as broad as equity and justice require.’ (Norstar Bank v Morabito, 201 AD2d 545 [2d Dept 1994]).” (Mortgage Elec. Registration Sys., Inc. v Horkan (68 AD3d 948 [2d Dept 2009]). (See Jamaica Sav. Bank v M.S. Inv. Co., 274 NY 215 [1937]). “Since it is the plaintiff lender who seeks equitable relief from this court, the onus is upon the lender to satisfy the requisites of equity and come to this court with clean hands.’ (Junkersfeld v Bank of Manhattan Co., 250 App Div 646 [ld Dept 1937].)” (M & [*8]T Mtge. Corp. v Foy, 20 Misc 3d 274, fn 1 [Sup Ct, Kings County 2008]). (See Wells Fargo Bank, N.A. v Hughes, 27 Misc 3d 628, 634 [Sup Ct, Erie County 2010]).

A principal of equity is that “[a] wrongdoer should not be permitted to profit from his or her wrong (see Kirschner v KMPG LLP, 15 NY3d 446, 464 [2010]; Campbell v Thomas, 73 AD3d 103, 116-117 [2d Dept 2010]; Beaumont v American Can Co., 215 AD3d 249 [1d Dept 1995]).” (Norwest Bank Minn. N.A. v E.M.V. Realty Corp., 84 AD3d 835, 836 [2d Dept 2012]).

CHASE, in the instant action, committed a fraud upon the Court by claiming to be the plaintiff. FANNIE MAE should have been the plaintiff as the owner of the note and mortgage when the BUTLER foreclosure action commenced. Thus, CHASE went to numerous CPLR Rule 3408 mandatory settlement conferences with unclean hands, falsely alleging that it was the plaintiff owner of the BUTLER mortgage and note. Recently, the Court in Wells Fargo Bank, N.A. v Meyers (___ AD3d ___, 2013 NY Slip Op 03085 at

* 1-2 [2d Dept, May 1, 2013]) instructed:

CPLR 3408 provides for mandatory settlement conferences in

certain residential foreclosure actions (see former CPLR 3408). In 2009,

shortly after the passage of the Subprime Residential Loan and Foreclosure

Laws, the Legislature amended a number of the recently enacted statutes,

including CPLR 3408 (see L 2009, ch 507). The purposes of the

amendments were to allow more homeowners at risk of foreclosure

to benefit from consumer protection laws and opportunities to prevent

foreclosure; to establish certain requirements for plaintiffs in foreclosure

actions obligating them to maintain the subject properties; to establish

protections for tenants living in foreclosed properties; and to strengthen

consumer protections aimed at defeating “rescue scams” (Governor’s

Mem, Bill Jacket, L 2009, ch 507, at 5). The 2009 amendments include

a provision requiring that “[b]oth the plaintiff and defendant shall

negotiate in good faith to reach a mutually agreeable resolution,

including a loan modification, if possible” (CPLR 3408 [f]).

While CPLR 3408 (f) requires the parties at a settlement

conference to negotiate in good faith, that section “does not set forth

any specific remedy for a party’s failure” to do so (Hon. Mark C.

Dillon, The Newly-Enacted CPLR 3408 for Easing the Mortgage

Foreclosure Crisis: Very Good Steps, but not Legislatively Perfect,

30 Pace L. Rev 855 at 875 [2010]).

The Chief Administrator for the Courts promulgated 22 NYCRR 202.12-a, the rules for CPLR Rule 3408 mandatory settlement conferences. 22 NYCRR 202.12-a (c) (4) provides that: [*9]

The parties shall engage in settlement discussions in good faith

to reach a mutually agreeable resolution, including a loan modification

if possible. The court shall ensure that each party fulfills its obligation

to negotiate in good faith and shall see that conferences not be unduly

delayed or subject to willful dilatory tactics so that the rights of both

parties may be adjudicated in a timely manner.

In HSBC Bank, USA v McKenna (37 Misc 2d 885, 905-906 [Sup Ct, Kings County 2012]), the Court provides a lengthy discussion as to the meaning of “good faith,” finding:

Generally, “good faith” under New York law is a subjective

concept, “necessitat[ing] examination of a state of mind.” (See Credit

Suisse First Boston v Utrecht-America Finance Co., 80 AD3d 485,

487 [1d Dept 2011], quoting Coan v Estate of Chapin, 156 AD2d 318,

319 [1d Dept 1989]). “Good Faith” is an intangible and abstract quality

with no technical meaning or statutory definition.” (Adler v 720 Park

Ave. Corp., 87 AD2d 514, 515 [1d Dept 1982], quoting Doyle v

Gordon, 158 NYS 2d 248, 249 [Sup Ct, New York County 1954]).

“It encompasses, among other things, an honest belief, the absence of

malice and the absence of a design to defraud or to seek an unconscionable advantage.” (Doyle v Gordon, 158 NYS2d at 259-160; see also UCC

1-201 [19] [“Good Faith’ means honesty in fact in the conduct or

transaction concerned.”] “Good faith is . . . lacking when there is a

failure to deal honestly, fairly, and openly.” (Matter of CIT Group/

Commerical Servc., Inc. v 160-09 Jamaica Ave. Ltd. Partnership,

25 AD3d 301, 303 [1d Dept 2006] [internal quotation marks and

citation omitted]; see also Southern Indus. v Jeremias, 166 AD2d 178,

183 [2d Dept 1978]). “In New York, as elsewhere, good faith’

connotes an actual state of mind—a state of mind motivated by

proper motive.” Plotti v Fleming, 277 Fed 864, 868 [2d Cir 1960]).

In the context of negotiations, the absence of agreement does not itself

establish the lack of good faith. (See Brookfield Indus. v Goldman,

87 AD2d, 752, 753 [1d Dept 1982]). [*10]Usually, a finding of lack of good faith in CPLR Rule 3408 settlement conferences has been determined from the conduct of the mortgagee/plaintiff. “Conduct such as providing conflicting information, refusal to honor agreements, unexcused delay, unexplained charges, and misrepresentations have been held to constitute “bad faith.” (Flagstar Bank, FSB v Walker, 37 Misc 3d 312, 318 [Sup Ct, Kings County 2012]). (See Wells Fargo Bank, N.A. v Ruggiero, 39 Misc 3d 1233 (A), at * 6 [Sup Ct, Kings County 2013]; One W. Bank, FSB v Greenhut, 36 Misc 3d 1205 (A), at * 4-5 [Sup Ct, Westchester County 2012]). In the instant action, it is obvious that plaintiff CHASE and its counsel provided conflicting information, unexplained charges and misrepresentations. Clearly, CHASE and its counsel engaged in bad faith, with its “failure to deal honestly, fairly, and openly.”

The Appellate Division, Second Department, in Wells Fargo Bank, N.A. v Meyers at * 7, discussed the remedies that courts may use if foreclosure plaintiffs violated their obligation, pursuant to CPLR Rule 3408 (f), to negotiate in good faith. The Court observed:

In the absence of specific guidance from the Legislature or the

Chief Administrator of the Courts as to the appropriate sanctions or

remedies to be employed where a party is found to have violated its

obligation to negotiate in good faith pursuant to CPLR 3408 (f), the

courts have resorted to a variety of alternatives in an effort to enforce

the statutory mandate to negotiate in good faith. For example, upon

finding that foreclosing plaintiffs have failed to negotiate in good faith,

courts have barred them from collecting interest, legal fees, and expenses

(see Bank of Am., N.A. v Lucido, 35 Misc 3d 1211 [A] [Sup Ct., Suffolk

County 2012]; BAC Home Loans v Westervelt, 29 Misc 3d 1224 [A]

[Sup Ct., Dutchess County 2010]; . . . Wells Fargo Bank v Hughes,

27 Misc 3d 628 [Sup Ct., Erie County 2010] . . . [and] imposed a

monetary sanction pursuant to 22 NYCRR part 130 (see Deutsche

Bank Trust Co. of Am. v Davis, 32 Misc 3d 1210 [A] [Sup Ct, Kings

County 2011]; cf. BAC Home Loans v Westervelt, 29 Misc 3d 1224.

Further, in Wells Fargo Bank, N.A. v Meyers at * 9, the Court instructed:

In the absence of a specifically authorized sanction or remedy in the

statutory scheme, the courts must employ appropriate, permissible,

and authorized remedies, tailored to the circumstances of each given

case. What may prove appropriate recourse in one case may be

inappropriate or unauthorized under the circumstances presented in

another. Accordingly, in the absence of further guidance from the

Legislature or the Chief Administrator of the Courts, the courts must

prudently and carefully select among available and authorized remedies,tailoring their application to the circumstances of the case. [*11]

Therefore, in the instant action, the Court has tailored an equitable remedy to the particular circumstances of the BUTLER foreclosure action, that will determine how the $490,000.00 on deposit with the Kings County Clerk will be distributed. According to the CHASE or FANNIE MAE computerized printout sent to defendant BUTLER, in May 2011, there was full settlement of the BUTLER loan on “5/22/10,” with the loan “REMOVED LOSS MITIGATION.” The printout shows that on “5-22-10” a transaction for “$454,337.35” took place, of which “$434,382.89” is listed as “PRINCIPAL” and “$19,954.46” is listed as “INTEREST.” This is no reference as to who paid the $454,337.35. Therefore, a hearing shall be held to determine whether CHASE, FANNIE MAE or any other entity is entitled to the $434,382.89 settlement of the BUTLER loan. Since CHASE failed to negotiate in good faith, not admitting until December 2011 that FANNIE MAE was the real plaintiff, and numerous CPLR Rule 3408 mandatory settlement conferences were conducted before Special Referee Goldstein and myself, CHASE is barred from collecting interest, legal fees, and expenses after May 22, 2010. (See Wells Fargo Bank, N.A. v Meyers at * 7; Bank of Am., N.A. v Lucido, supra; BAC Home Loans v Westervelt, supra; Wells Fargo Bank v Hughes, supra.). $55,617.11, the balance of the $490,000.00 on deposit with the Kings County Clerk, will be distributed to defendant BUTLER. This remedy is necessitated by the bad faith of CHASE in this action. This Court will follow the observations of the Court in Bank of Am., N.A. v Lucido, at * 6, that:

equity will not intervene on behalf of one who acts in an unjust,

unconscionable or egregious manner, York v Searles, 97 AD331

[2d Dept 1907], aff’d 189 NY 573 [1907]). This Court cannot, and will

not, countenance a lack of good faith in the proceedings that are brought

before it, especially where blatant and repeated misrepresentations of

fact are advanced, neither will it permit equitable relief to lie in favor of one who so flagrantly demonstrates such obvious bad faith. Further, the Court needs to determine if the bad faith of CHASE and its counsel, Cullen & Dykman is frivolous conduct. 22 NYCRR § 130-1.1 (a) states that “the Court, in its discretion may impose financial sanctions upon any party or attorney in a civil action or proceeding who engages in frivolous conduct as defined in this Part, which shall be payable as provided in section 130-1.3 of this Subpart.” Further, it states in 22 NYCRR § 130-1.1 (b), that “sanctions may be imposed upon any attorney appearing in the action or upon a partnership, firm or corporation with which the attorney is associated.”

22 NYCRR § 130-1.1(c) states that:

For purposes of this part, conduct is frivolous if:

(1) it is completely without merit in law and cannot be supported

by a reasonable argument for an extension, modification or

reversal of existing law;

(2) it is undertaken primarily to delay or prolong the resolution of

the litigation, or to harass or maliciously injure another; or

(3) it asserts material factual statements that are false.

It is clear that CHASE’s representations that it was the plaintiff in the instant action “is [*12]completely without merit in law” and “asserts material factual statements that are false.”

Several years before the drafting and implementation of the Part 130 Rules for

costs and sanctions, the Court of Appeals (A.G. Ship Maintenance Corp. v Lezak, 69 NY2d 1, 6 [1986]) observed that “frivolous litigation is so serious a problem affecting the

proper administration of justice, the courts may proscribe such conduct and impose sanctions in this exercise of their rule-making powers, in the absence of legislation to the contrary (see NY Const, art VI, § 30, Judiciary Law § 211 [1] [b]).”

Part 130 Rules were subsequently created, effective January 1, 1989, to give the courts an additional remedy to deal with frivolous conduct, along with Appellate Division disciplinary case law against attorneys for abuse of process or malicious prosecution. The Court, in Gordon v Marrone (202 AD2d 104, 110 [2d Dept 1994], lv denied 84 NY2d 813 [1995]), instructed that:

Conduct is frivolous and can be sanctioned under the court rule if

it is completely without merit . . . and cannot be supported by a

reasonable argument for an extension, modification or reversal of

existing law; or . . . it is undertaken primarily to delay or prolong

the resolution of the litigation, or to harass or maliciously injure

another” (22 NYCRR 130-1.1[c] [1], [2] . . . ).

In Levy v Carol Management Corporation (260 AD2d 27, 33 [1st Dept 1999]) the Court stated that in determining if sanctions are appropriate the Court must look at the broad pattern of conduct by the offending attorneys or parties. Further, “22 NYCRR 130-1.1 allows us to exercise our discretion to impose costs and sanctions on an errant party . . .” Levy at 34, held that “[s]anctions are retributive, in that they punish past conduct. They also are goal oriented, in that they are useful in deterring future frivolous conduct not only by the particular parties, but also by the Bar at large.”

The Court, in Kernisan, M.D. v Taylor (171 AD2d 869 [2d Dept 1991]), noted that the intent of the Part 130 Rules “is to prevent the waste of judicial resources and to deter vexatious litigation and dilatory or malicious litigation tactics (cf. Minister, Elders & Deacons of Refm. Prot. Church of City of New York v 198 Broadway, 76 NY2d 411; see Steiner v Bonhamer, 146 Misc 2d 10) [Emphasis added].” The instant action, with CHASE, the improper plaintiff, engaging in bad faith is “a waste of judicial resources.”

This conduct, as noted in Levy, must be deterred. In Weinstock v Weinstock (253 AD2d 873 [2d Dept 1998]), the Court ordered the maximum sanction of $10,000.00 for an attorney who pursued an appeal “completely without merit,” and holding, at 874, that “[w]e therefore award the maximum authorized amount as a sanction for this conduct (see, 22 NYCRR 130-1.1) calling to mind that frivolous litigation causes a substantial waste of judicial resources to the detriment of those litigants who come to the Court with real grievances [Emphasis added].” Citing Weinstock, the Appellate Division, Second Department, in Bernadette Panzella, P.C. v De Santis (36 AD3d 734 [2d Dept 2007]), affirmed a Supreme Court, Richmond County $2,500.00 sanction, at 736, as “appropriate in view of the plaintiff’s waste of judicial resources [Emphasis added].” [*13]

In Navin v Mosquera (30 AD3d 883 [3d Dept 2006]), the Court instructed that when considering if specific conduct is sanctionable as frivolous, “courts are required to

examine whether or not the conduct was continued when its lack of legal or factual basis was apparent [or] should have been apparent’ (22 NYCRR 130-1.1 [c]).” The Court, in Sakow ex rel. Columbia Bagel, Inc. v Columbia Bagel, Inc. (6 Misc 3d 939, 943 [Sup Ct,

New York County 2004]), held that “[i]n assessing whether to award sanctions, the Court must consider whether the attorney adhered to the standards of a reasonable attorney (Principe v Assay Partners, 154 Misc 2d 702 [Sup Ct, NY County 1992]).”

Therefore, the Court will examine the conduct of plaintiff CHASE and plaintiff’s counsel, in a hearing, pursuant to 22 NYCRR § 130-1.1, to determine if plaintiff CHASE and plaintiff’s present counsel, Jennean Rogers, Esq. and her firm, Cullen & Dykman LLP engaged in frivolous conduct, and to allow plaintiff CHASE and plaintiff’s present counsel, Jennean Rogers, Esq. and her firm, Cullen & Dykman LLP a reasonable opportunity to be heard.

Conclusion

Accordingly, it is

ORDERED, that the order to show cause of defendant FREDERICK BUTLER, dated October 26, 2011, is granted to the extent that: the Kings County Clerk shall release to defendant FREDERICK BUTLER $55,617.11, made payable to him, from the $490,000.00 deposited with the Kings County Clerk; the Court’s declares that the subject BUTLER Note is fully satisfied; and a hearing shall be conducted to (1) determine whether plaintiff JP MORGAN CHASE BANK, NATIONAL ASSOCIATION, AS PURCHASER OF THE LOANS AND OTHER ASSETS OF WASHINGTON MUTUAL BANK, FORMERLY KNOWN AS WASHINGTON MUTUAL BANK, FA (THE “SAVINGS BANK”) FROM THE FEDERAL DEPOSIT INSURANCE CORPORATION, ACTING AS RECEIVER FOR THE SAVINGS BANK AND PURSUANT TO ITS AUTHORITY UNDER THE FEDERAL INSURANCE ACT, 12

U.S.C. § 1821 (d) or the FEDERAL NATIONAL MORTGAGE ASSOCIATION is entitled to the balance of $434,382.89 deposited with the Kings County Clerk, pursuant to my June 27, 2011 decision and order and, (2) to give plaintiff JP MORGAN CHASE BANK, NATIONAL ASSOCIATION, AS PURCHASER OF THE LOANS AND OTHER ASSETS OF WASHINGTON MUTUAL BANK, FORMERLY KNOWN AS WASHINGTON MUTUAL BANK, FA (THE “SAVINGS BANK”) FROM THE FEDERAL DEPOSIT INSURANCE CORPORATION, ACTING AS RECEIVER FOR THE SAVINGS BANK AND PURSUANT TO ITS AUTHORITY UNDER THE FEDERAL INSURANCE ACT, 12 U.S.C. § 1821 (d) and its present counsel, Jennean Rogers, Esq. and her firm, CULLEN & DYKMAN LLP an opportunity to be heard as to whether or not they engaged in frivolous conduct, in violation of 22 NYCRR § 130-1.1, and if so should plaintiff JP MORGAN CHASE BANK, NATIONAL ASSOCIATION, AS PURCHASER OF THE LOANS AND OTHER ASSETS OF WASHINGTON MUTUAL BANK, FORMERLY KNOWN AS WASHINGTON MUTUAL BANK, FA (THE “SAVINGS BANK”) FROM THE FEDERAL DEPOSIT INSURANCE CORPORATION, ACTING AS RECEIVER FOR THE SAVINGS BANK AND PURSUANT TO ITS AUTHORITY UNDER THE FEDERAL INSURANCE ACT, 12 U.S.C. § 1821 (d) [*14]and/or its present counsel, Jennean Rogers, Esq. and her firm, CULLEN & DYKMAN LLP pay any costs and sanctions; and it is further

ORDERED, that the order to show cause of defendant FREDERICK BUTLER,

dated March 29, 2012, is denied as moot; and it is further

ORDERED, that the amended cross-motion of plaintiff JP MORGAN CHASE BANK, NATIONAL ASSOCIATION, AS PURCHASER OF THE LOANS AND OTHER ASSETS OF WASHINGTON MUTUAL BANK, FORMERLY KNOWN AS WASHINGTON MUTUAL BANK, FA (THE “SAVINGS BANK”) FROM THE FEDERAL DEPOSIT INSURANCE CORPORATION, ACTING AS RECEIVER FOR THE SAVINGS BANK AND PURSUANT TO ITS AUTHORITY UNDER THE FEDERAL INSURANCE ACT, 12 U.S.C. § 1821 (d), for the release of the $490,000.00 deposited with the Kings County Clerk, to plaintiff JP MORGAN CHASE BANK, NATIONAL ASSOCIATION, AS PURCHASER OF THE LOANS AND OTHER ASSETS OF WASHINGTON MUTUAL BANK, FORMERLY KNOWN AS WASHINGTON MUTUAL BANK, FA (THE “SAVINGS BANK”) FROM THE FEDERAL DEPOSIT INSURANCE CORPORATION, ACTING AS RECEIVER FOR THE SAVINGS BANK AND PURSUANT TO ITS AUTHORITY UNDER THE FEDERAL INSURANCE ACT, 12 U.S.C. § 1821 (d), is denied; and it is further

ORDERED, that: (1) to determine the distribution of the $434,832.89 balance on deposit with the Kings County Clerk; and (2) it appearing that plaintiff JP MORGAN CHASE BANK, NATIONAL ASSOCIATION, AS PURCHASER OF THE LOANS

AND OTHER ASSETS OF WASHINGTON MUTUAL BANK, FORMERLY KNOWN AS WASHINGTON MUTUAL BANK, FA (THE “SAVINGS BANK”) FROM THE

FEDERAL DEPOSIT INSURANCE CORPORATION, ACTING AS RECEIVER FOR THE SAVINGS BANK AND PURSUANT TO ITS AUTHORITY UNDER THE FEDERAL INSURANCE ACT, 12 U.S.C. § 1821 (d), plaintiff’s present counsel Jennean Rogers, Esq. and her firm, CULLEN & DYKMAN LLP engaged in “frivolous conduct,” as defined in the Rules of the Chief Administrator, 22 NYCRR § 130-1 (c), and that pursuant to the Rules of the Chief Administrator, 22 NYCRR § 130.1.1 (d), “[a]n award of costs or the imposition of sanctions may be made . . . upon the court’s own initiative, after a reasonable opportunity to be heard”; this Court will conduct a hearing in Part 27, on Thursday, September 12, 2013, at 2:30 P.M., in Room 277, 360 Adams Street, Brooklyn, NY 11201; and it is further

ORDERED, that Ronald David Bratt, Esq., my Principal Law Clerk, is directed to serve this order by first-class mail, upon: Jamie Dimon, Chairman and Chief Executive Officer of plaintiff, JP MORGAN CHASE BANK, NATIONAL ASSOCIATION, 270 Park Avenue, New York, New York 10017; Jennean Rogers, Esq., CULLEN & DYKMAN LLP, 100 Quentin Roosevelt Boulevard, Garden City, New York 11530; CULLEN & DYKMAN LLP, 100 Quentin Roosevelt Boulevard, Garden City, New York 11530; and Yolande I. Nicholson, Esq., 26 Court Street, Suite 602, Brooklyn, New York

11242.

This constitutes the Decision and Order of the Court. [*15]

ENTER

___________________________

HON. ARTHUR M. SCHACKJ. S. C.

Decided on May 2, 2013

10596/08

Appearances:

Plaintiff

Jennifer R. Brennan, Esq.

Frenkel Lembert Weiss Weisman & Gordon, LLP

Bay Shore NY

Defendant

Swenda A. Cepeda, pro se

Brooklyn NY

Arthur M. Schack, J.

The following papers numbered 1 – 1 read on this motion:Papers Numbered:Notice of Motion/Exhibits___________________________1

________________________________________________________________________

In this foreclosure action, plaintiff, THE BANK OF NEW YORK AS TRUSTEE

FOR THE CERTIFICATEHOLDERS CWALT, INC. ALTERNATE LOAN TRUST 2005-58 MORTGAGE PASS-THROUGH CERTIFICATES, SERIES 2005-58 (BNY),

moves to: vacate an order of reference issued by another Justice of the Supreme Court, Kings County for the premises, located at 45 Cumberland Street, Brooklyn, New York (Block 2030, Lot [*2]2, County of Kings), filed in the Kings County Clerk’s Office on July 9, 2009; and, have the Court issue a new order of reference for the subject premises. On June 26, 2012, that Justice of the Supreme Court granted the instant motion “on default subject to review by the foreclosure department.” Subsequently, that Justice of the Supreme Court, in an order dated February 26, 2013, recused himself from the instant action. The instant motion and underlying papers were sent to me as the new IAS Justice for this foreclosure action.

After a thorough review of plaintiff’s papers, the Court finds that plaintiff BNY cannot prove that it owns the subject mortgage and note. Therefore, plaintiff BNY has no right to foreclose and the Court dismisses the instant action and cancels the notices of pendency. As will be explained, the instant motion is granted to the extent of vacating the 2009 order of reference, but the instant action is dismissed without prejudice.

Defendant SWENDA A. CEPEDA (CEPEDA) borrowed $588,5000.00 from COUNTRYWIDE BANK, N.A. (COUNTRYWIDE) on September 26, 2005. The mortgage to secure the note was recorded by MORTGAGE ELECTRONIC REGISTRATION SYSTEMS, INC. (MERS), “acting solely as a nominee for Lender [COUNTRYSIDE]” and “FOR PURPOSES OF RECORDING THIS MORTGAGE, MERS IS THE MORTGAGEE OF RECORD,” in the Office of the City Register of the City of New York, New York City Department of Finance, on November 9, 2005, at City Register File Number (CRFN) 2005000623741.

Defendant CEPEDA allegedly defaulted in his mortgage loan payments with the September 1, 2007 payment. Subsequently, on March 27, 2008, 209 days after defendant CEPEDA defaulted, M. Kelly Michie, 1st Vice President of MERS, “acting solely as a nominee of Countrywide Bank, N.A.” assigned the nonperforming CEPEDA mortgage and note to plaintiff BNY. This was recorded in the Office of the City Register of the City of New York, New York City Department of Finance, on May 23, 2008, at CRFN 2008000210182.

Plaintiff BNY, four days after the MERS assignment to plaintiff BNY, on March 31, 2008, commenced the instant action with the filing of the subject summons, complaint and original notice of pendency. As noted above, another Justice of the Supreme Court, Kings County, appointed a referee who on or about November 10, 2009 executed a report. According to ¶ 6 of the attorney’s affirmation in support of the instant motion:

Plaintiff seeks to vacate the prior order of this court because plaintiff is unable to confirm that a proper review of the records was made and a proper notary taken when the prior affidavit, executed by Keri Selman in support of the previous order, was signed. Plaintiff is unable to confirm said information because the records, sufficient to demonstrate such compliance conclusively, were not maintained at that time. Therefore, submitted herewith is a new affidavit, in support of an order of reference, which was executed after a review of the business records and in compliance with notary requirements.

Ms. Selman has a documented history as a robosigner. While in the instant action she executed the affidavit of merit for the original motion for an order of reference on May 15, 2008 as Assistant Vice President of plaintiff BNY, she has executed other documents presented to this [*3]Court as “foreclosure specialist of Countrywide Home Loans, Inc.,” “Assistant Vice President of MERS” and “Vice President of Countrywide Home Loans.”

On November 16, 2007, I denied an application for an order of reference in Bank of New York a Trustee for the CertificateHolders of CWABS, Inc. Asset-Backed Certificates, Series 2008 v Nunez, et. al., Index No. 10457/07, in which the same Ms. Selman, in her affidavit of merit, claimed to be “Vice President of COUNTRYWIDE HOME LOANS, Attorney in fact for BANK OF NEW YORK.” In my decision in The Bank of New York, as Trustee for the Certificateholders CWALT, Inc. Alternative Loan Trust 2006-OC1 Mortgage Pass-Through Certificates, Series 2006-OC1 v Mulligan (28 Misc 3d 1226 [A] [Sup Ct Kings County 2010]), at * 4, I was presented with an affidavit of merit, dated August 23, 2007, from Ms. Selman, in which she claimed to be “a foreclosure specialist of Countrywide Home Loans, Inc. Servicing Agent for BANK OF NEW YORK, AS TRUSTEE FOR THE CERTIFICATEHOLDERS CWALT, INC. ALTERNATIVE LOAN TRUST 2006-OC1 MORTGAGE PASS-THROUGH CERTIFICATES, SERIES 2006-OC1.” In Bank of New York as Trustee for Certificateholders CWABS, Inc. Asset-Backed Certificate Series 2006-22 v Myers (22Misc 3d 1117 [A] [Sup Ct, Kings County 2009]), I found that Ms. Selman assigned the subject mortgage to plaintiff BNY on June 28, 2008 as Assistant Vice President of MERS, nominee for Homebridge Mortgage Bankers Corp., and five days later executed an affidavit of merit as Assistant Vice President of plaintiff BNY.

Therefore, the Court agrees with plaintiff BNY to vacate the other Supreme Court Justice’s original 2009 order of reference. However, with respect to that branch of the instant motion to issue a new order of reference, plaintiff has several problems.

First, plaintiff BNY fails to demonstrate how the assignment of the subject mortgage and note from MERS to BNY is valid. As will be explained, there is no authority for M. Kelly Michie, 1st Vice President of MERS, “acting solely as a nominee of Countrywide Bank, N.A.,” to assign the subject mortgage and note.

Second, the affidavit of merit attached to the instant motion is not executed by an officer of plaintiff BNY, but by Elysha James Armbruster, Assistant Vice President of Bank of America, N.A., who claims, in ¶ 1 of his affidavit of merit, that “I am authorized to sign this affidavit on behalf of Bank of America, N.A. as successor by merger to BAC Home Loans Servicing LP (“BANA”), as an officer of BANA, the servicing agent forplaintiff.” There is no valid power of attorney provided by plaintiff BNY to demonstrate how BANA is plaintiff BNY’s servicing agent. Further, attached to exhibit C of the instant motion is the Referee’s Report of November 11, 2009. Schedule C attached to the Referee’s Report is an affidavit, dated September 17, 2009, by Mary Kist, Vice President of “BAC Home Leans Servicing, L.P., attorney in fact [for plaintiff BNY] pursuant to a power of attorney recorded in Kings County on 1/9/09 as CRFN No. 2009000008160.” I checked the official ACRIS (Automated City Register Information System) website of the New York City Department of Finance and discovered that this power of attorney, dated August 15, 2005, was originally recorded on October 31, 2005 in Lockport, New York, in the Office of the Niagara County Clerk at Liber 3337, Page 123 and subsequently in ACRIS on January 9, 2009. However, the power of [*4]attorney is from The Bank of New York, “as Trustee under the Pooling and Servicing Agreements” to “Countrywide Home Loans Servicing LP and its authorized officers” to execute foreclosure documents. There is no mention of BAC Home Loans Servicing, LP or BANA in this recorded power of attorney.

Third, plaintiff’s counsel presents the Court in the instant motion with an affirmation by counsel, that on December 11, 2012 “I received a communication from the

following representative . . . of plaintiff . . . Elysha James Armbruster, Assistant Vice President Bank of America, NA servicer for Plaintiff,” confirming the accuracy of the documents and the notarizations, pursuant to Administrative Order 431/11 of the Chief Administrative Judge.” Absent a valid power of authority, Mr. Armbruster is not a representative of plaintiff BNY.

In a foreclosure action, a plaintiff must plead and prove as part of its prima facie case its ownership of the mortgage and note. The Court, in Campaign v Barba (23 AD3d 327 [2d Dept 2005]), instructed that “[t]o establish a prima facie case in an action to foreclose a mortgage, the plaintiff must establish the existence of the mortgage and the mortgage note, ownership of the mortgage, and the defendant’s default in payment [Emphasis added].” (See Witelson v Jamaica Estates Holding Corp. I, 40 AD3d 284 [1d Dept 2007]; Household Finance Realty Corp. of New York v Wynn, 19 AD3d 545 [2d Dept 2005]; Sears Mortgage Corp. v Yahhobi, 19 AD3d 402 [2d Dept 2005]; Ocwen Federal Bank FSB v Miller, 18 AD3d 527 [2d Dept 2005]; U.S. Bank Trust Nat. Ass’n

Trustee v Butti, 16 AD3d 408 [2d Dept 2005]; First Union Mortgage Corp. v Fern, 298 AD2d 490 [2d Dept 2002]; Village Bank v Wild Oaks, Holding, Inc., 196 AD2d 812 [2d Dept 1993]). Further, “foreclosure of a mortgage may not be brought by one who has no title to it.” (Kluge v Fugazy, 145 AD2d 537, 538 [2d Dept 1988]). The Appellate

Division, First Department, citing Kluge v Fugazy, in Katz v East-Ville Realty Co., (249 AD2d 243 [1d Dept 1998]), instructed that “[p]laintiff’s attempt to foreclose upon a mortgage in which he had no legal or equitable interest was without foundation in law or fact.” Thus, “to commence a foreclosure action, the plaintiff must have a legal or equitable interest in the mortgage (see Wells Fargo Bank, N.A. v Marchione, 69 AD3d 204, 207 [2d Dept 2009]).” (Aurora Loan Services, LLC v Weisblum, 85 AD2d 95, 108 [2sd Dept 2011]).

MERS, in the instant action, lacks authority to assign the subject mortgage. The subject COUNTRYWIDE mortgage, executed on September 26, 2005 by defendant CEPEDA, states on page 1 that “MERS is a separate corporation that is acting solely as a nominee for Lender [COUNTRYWIDE] and LENDER’s successors and assigns.” Further, it states “FOR PURPOSES OF RECORDING THIS MORTGAGE, MERS IS THE MORTGAGEE OF RECORD.” The word “nominee” is defined as “[a] person designated to act in place of another, usu. in a very limited way” or “[a] party who holds bare legal title for the benefit of others.” (Black’s Law Dictionary 1076 [8th ed 2004]). “This definition suggests that a nominee possesses few or no legally [*5]enforceable rights beyond those of a principal whom the nominee serves.” (Landmark National Bank v Kesler, 289 Kan 528, 538 [2009]). The Supreme Court of Kansas, in Landmark National Bank, 289 Kan at 539, observed that:

The legal status of a nominee, then, depends on the context of

the relationship of the nominee to its principal. Various courts have

interpreted the relationship of MERS and the lender as an agency

relationship. See In re Sheridan, 2009 WL631355, at *4 (Bankr. D.

Idaho, March 12, 2009) (MERS “acts not on its own account. Its

capacity is representative.”); Mortgage Elec. Registrations Systems,

Inc. v Southwest, 2009 Ark. 152 ___, ___SW3d___, 2009 WL 723182

(March 19, 2009) (“MERS, by the terms of the deed of trust, and its

own stated purposes, was the lender’s agent”); La Salle Nat. Bank v

Lamy, 12 Misc 3d 1191 [A], at *2 [Sup Ct, Suffolk County 2006]) . . .

(“A nominee of the owner of a note and mortgage may not effectively

assign the note and mortgage to another for want of an ownership interest

in said note and mortgage by the nominee.”)

The New York Court of Appeals in MERSCORP, Inc. v Romaine (8 NY3d 90 [2006]), explained how MERS acts as the agent of mortgagees, holding at 96:

In 1993, the MERS system was created by several large

participants in the real estate mortgage industry to track ownership

interests in residential mortgages. Mortgage lenders and other entities,

known as MERS members, subscribe to the MERS system and pay

annual fees for the electronic processing and tracking of ownership

and transfers of mortgages. Members contractually agree to appoint

MERS to act as their common agent on all mortgages they register

in the MERS system. [Emphasis added]

Thus, it is clear that MERS’ relationship with its member lenders is that of agent with the lender-principal. This is a fiduciary relationship, resulting from the manifestation of consent by one person to another, allowing the other to act on his behalf, subject to his control and consent. The principal is the one for whom action is to be taken, and the agent is the one who acts.It has been held that the agent, who has a fiduciary relationship with the principal, “is a party who acts on behalf of the principal with the latter’s express, implied, or apparent authority.” (Maurillo v Park [*6]Slope U-Haul, 194 AD2d 142, 146 [2d Dept 1992]). “Agents are bound at all times to exercise the utmost good faith toward their principals. They must act in accordance with the highest and truest principles of morality.” (Elco Shoe Mfrs. v Sisk, 260 NY 100, 103 [1932]). (See Sokoloff v Harriman

Estates Development Corp., 96 NY 409 [2001]); Wechsler v Bowman, 285 NY 284

[1941]; Lamdin v Broadway Surface Advertising Corp., 272 NY 133 [1936]). An agent

“is prohibited from acting in any manner inconsistent with his agency or trust and is at all times bound to exercise the utmost good faith and loyalty in the performance of his duties.” (Lamdin at 136).

Thus, in the instant action, MERS, as nominee for COUNTRYWIDE, is an agent of COUNTRYWIDE for limited purposes. It only has those powers given to it and authorized by its principal, COUNTRYWIDE. Plaintiff BNY failed to submit documents authorizing MERS, as nominee for COUNTRYWIDE, to assign the subject mortgage to plaintiff BNY. Therefore, MERS lacked authority to assign the CEPEDA mortgage and note, making the assignment to plaintiff BNY defective. In Bank of New York v Alderazi, 28 Misc 3d 376 [Sup Ct Kings County 2010], Justice Saitta, at 379-380, explains:

A party who claims to be the agent of another bears the burden

of proving the agency relationship by a preponderance of the evidence

(Lippincott v East River Mill & Lumber Co., 79 Misc 559 [1913])

and “[t]he declarations of an alleged agent may not be shown for

the purpose of proving the fact of agency.” (Lexow & Jenkins, P.C. v

Hertz Commercial Leasing Corp., 122 AD2d 25 [2d Dept 1986]; see

also Siegel v Kentucky Fried Chicken of Long Is. 108 AD2d 218 [2d

Dept 1985]; Moore v Leaseway Transp/ Corp., 65 AD2d 697 [1st Dept

1978].) “[T]he acts of a person assuming to be the representative of

another are not competent to prove the agency in the absence of evidence

tending to show the principal’s knowledge of such acts or assent to them.”

(Lexow & Jenkins, P.C. v Hertz Commercial Leasing Corp., 122 AD2d

at 26, quoting 2 NY Jur 2d, Agency and Independent Contractors § 26).

Plaintiff has submitted no evidence to demonstrate that the

original lender, the mortgagee America’s Wholesale Lender, authorized

MERS to assign the secured debt to plaintiff [the assignment was [*7]

executed by the multi-hatted Keri Selman].

In the instant action, MERS, as nominee for COUNTRYWIDE, not only had no authority to assign the CEPEDA mortgage, but no evidence was presented to the Court to demonstrate COUNTRYWIDE’s knowledge or assent to the assignment by MERS to plaintiff BNY.

In Bank of New York v Silverberg (86 AD3d 274 [2d Dept 2011]), the Court

instructed, at 281-282:

the assignment of the notes was thus beyond MERS’s authority as

nominee or agent of the lender (see Aurora Loan Servs., LLC v

Weisblum, AD3d, 2011 NY Slip Op 04184, *6-7 [2d Dept 2011];

HSBC Bank USA v Squitteri, 29 Misc 3d 1225 [A] [Sup Ct, Kings

County, F. Rivera, J.]; ; LNV Corp. v Madison Real Estate, LLC,

2010 NY Slip Op 33376 [U] [Sup Ct, New York County 2010,

York, J.]; LPP Mtge. Ltd. v Sabine Props., LLC, 2010 NY Slip Op

32367 [U] [Sup Ct, New York County 2010, Madden, J.]; Bank of

NY v Mulligan, 28 Misc 3d 1226 [A] [Sup Ct, Kings County 2010,

Schack, J.]; One West Bank, F.S.B., v Drayton, 29 Misc 3d 1021

[Sup Ct, Kings County 2010, Schack, J.]; Bank of NY v Alderazi,

28 Misc 3d 376, 379-380 [Sup Ct, Kings County 2010, Saitta, J.]

[the “party who claims to be the agent of another bears the burden

of proving the agency relationship by a preponderance of the evidence”];

HSBC Bank USA v Yeasmin, 24 Misc 3d 1239 [A] [Sup Ct, Kings

County 2010, Schack, J.]; HSBC Bank USA, N.A. v Vasquez, 24

Misc 3d 1239 [A], [Sup Ct, Kings County 2009, Schack, J.]; Bank of

NY v Trezza, 14 Misc 3d 1201 [A] [Sup Ct, Suffolk County 2006,

Mayer, J.]; La Salle Bank Natl. Assn. v Lamy, 12 Misc 3d 1191 [A]

[Sup Ct, Suffolk County, 2006, Burke, J.]; Matter of Agard, 444 BR

231 [Bankruptcy Court, ED NY 2011, Grossman, J.]; but see U.S.

Bank N.A. v Flynn, 27 Misc 3d 802 [Sup Ct, Suffolk County 2011,

Whelan, J.]).

Moreover, the Silverberg Court concluded, at 283, that “because MERS was never the lawful holder or assignee of the notes described and identified in the consolidation agreement, the . . . assignment of mortgage is a nullity, and MERS was without authority to [*8]assign the power to foreclose to the plaintiff.” Further, the Silverberg Court observed, at 283, that “the law must not yield to expediency and the convenience of lending institutions. Proper procedures must be followed to ensure the reliability of the chain of ownership, to secure the dependable transfer of property, and to assure the enforcement of the rules that govern real property [Emphasis added].”

Real Property Actions and Proceedings Law (RPAPL) § 1321 allows the Court in a foreclosure action, upon the default of defendant or defendant’s admission of mortgage payment arrears, to appoint a referee “to compute the amount due to the plaintiff” and plaintiff BNY’s application for an order of reference is a preliminary step to obtaining a default judgment of foreclosure and sale. (Home Sav. Of Am., F.A. v Gkanios, 230 AD2d 770 [2d Dept 1996]). However, plaintiff BNY fails to meet the clear requirements of CPLR § 3215 (f) for a default judgment:

On any application for judgment by default, the applicant

shall file proof of service of the summons and the complaint, or

a summons and notice served pursuant to subdivision (b) of rule

305 or subdivision (a) of rule 316 of this chapter, and proof of

the facts constituting the claim, the default and the amount due

by affidavit made by the party . . . Where a verified complaint has

been served, it may be used as the affidavit of the facts constituting

the claim and the amount due; in such case, an affidavit as to the

default shall be made by the party or the party’s attorney. [Emphasis added].

Plaintiff BNY fails to submit “proof of the facts” in “an affidavit made by the

party.” (Blam v Netcher, 17 AD3d 495, 496 [2d Dept 2005]; Goodman v New York City Health & Hosps. Corp. 2 AD3d 581[2d Dept 2003]; Drake v Drake, 296 AD2d 566 [2d Dept 2002]; Parratta v McAllister, 283 AD2d 625 [2d Dept 2001]; Finnegan v Sheahan,

269 AD2d 491 [2d Dept 2000]; Hazim v Winter, 234 AD2d 422 [2d Dept 1996]).

Instead, plaintiff BNY submits an affidavit of merit by Elysha James Armbruster, who alleges “I am authorized to sign this affidavit on behalf of Bank of America, N.A. as successor by merger to BAC Home Loans Servicing LP (“BANA”), as an officer of BANA, the servicing agent for plaintiff” and fails to submit a valid power of attorney for that express purpose.

With plaintiff BNY unable to prove that it owns the CEPEDA mortgage and note, the Court dismisses the instant foreclosure action without prejudice and cancels the notice of pendency. CPLR § 6501 provides that the filing of a notice of pendency against a property is to give constructive notice to any purchaser of real property or encumbrancer against real property of an [*9]action that “would affect the title to, or the possession, use or enjoyment of real property, except in a summary proceeding brought to recover the possession of real property.” The Court of Appeals, in 5308 Realty Corp. v O & Y Equity Corp. (64 NY2d 313, 319 [1984]), commented that “[t]he purpose of the doctrine was to assure that a court retained its ability to effect justice by preserving its power over the property, regardless of whether a purchaser had any notice of the pending suit,” and, at 320, that “the statutory scheme permits a party to effectively retard the alienability of real property without any prior judicial review.”

CPLR § 6514 (a) provides for the mandatory cancellation of a notice of pendency by:

The Court, upon motion of any person aggrieved and upon such

notice as it may require, shall direct any county clerk to cancel

a notice of pendency, if service of a summons has not been completed

within the time limited by section 6512; or if the action has been

settled, discontinued or abated; or if the time to appeal from a final

judgment against the plaintiff has expired; or if enforcement of a

final judgment against the plaintiff has not been stayed pursuant

to section 551. [emphasis added]

The plain meaning of the word “abated,” as used in CPLR § 6514 (a) is the ending of an action. “Abatement” is defined as “the act of eliminating or nullifying.” (Black’s Law Dictionary 3 [7th ed 1999]). “An action which has been abated is dead, and any further enforcement of the cause of action requires the bringing of a new action, provided that a cause of action remains (2A Carmody-Wait 2d § 11.1).” (Nastasi v Natassi, 26 AD3d 32, 40 [2d Dept 2005]). Further, Nastasi at 36, held that the “[c]ancellation of a notice of pendency can be granted in the exercise of the inherent power of the court where its filing fails to comply with CPLR § 6501 (see 5303 Realty Corp. v O & Y Equity Corp., supra at 320-321; Rose v Montt Assets, 250 AD2d 451, 451-452 [1d Dept 1998]; Siegel, NY Prac § 336 [4th ed]).” Thus, the dismissal of the instant complaint must result in the mandatory cancellation of plaintiff BNY’s notice of pendency against the property “in the

exercise of the inherent power of the court.”

Accordingly, it is

ORDERED, that the motion of plaintiff, THE BANK OF NEW YORK AS TRUSTEE FOR THE CERTIFICATEHOLDERS CWALT, INC. ALTERNATE LOAN TRUST 2005-58 MORTGAGE PASS-THROUGH CERTIFICATES, SERIES 2005-58, to: vacate an order of reference issued by another Justice of the Supreme Court, Kings County, for the premises, located at 45 Cumberland Street, Brooklyn, New York (Block 2030, Lot 2, County of Kings), [*10]filed in the Kings County Clerk’s Office on July 9, 2009; and, have the Court issue a new order of reference for the subject premises, is granted to the extent that the order of reference issued by that other Justice of the Supreme Court, Kings County, for the premises, located at 45 Cumberland Street, Brooklyn, New York (Block 2030, Lot 2, County of Kings), filed in the Kings County Clerk’s Office on July 9, 2009, is granted, and it is further

ORDERED, that the instant action, Index Number 10596/08, is dismissed without

prejudice; and it is further

ORDERED that the Notices of Pendency in this action, filed with the Kings

County Clerk on March 31, 2008 and March 24, 2011, by plaintiff, THE BANK OF NEW YORK AS TRUSTEE FOR THE CERTIFICATEHOLDERS CWALT, INC.

ALTERNATE LOAN TRUST 2005-58 MORTGAGE PASS-THROUGH CERTIFICATES, SERIES 2005-58, to foreclose on a mortgage for real property located

at 45 Cumberland Street, Brooklyn, New York (Block 2030, Lot 2, County of Kings), are cancelled.

This constitutes the Decision and Order of the Court.

ENTER

________________________________HON. ARTHUR M. SCHACK

J. S. C.

Decided on November 30, 2012

New York Mortgage Trust, Inc., Plaintiff,

against

Adem Dasdemir, NURTEN DASDEMIR, et. al., Defendants.

18194/11

Plaintiff

Deutsch & Schneider, LLP

Glendale NY

Arthur M. Schack, J.

In this mortgage foreclosure action, for the premises located at 75 West End Avenue, Brooklyn, New York (Block 8726, Lot 57, County of Kings), plaintiff NEW YORK MORTGAGE TRUST, INC. (NYMT), moves, upon the default of defendants, for an order of reference and related relief. The instant motion is denied without prejudice, with leave to renew within sixty (60) days of this decision and order, by providing the Court with: (1) written proof of the grant of authority from the original mortgagee, NEW YORK MORTGAGE COMPANY, LLC (NYMC) to its nominee, MORTGAGE ELECTRONIC REGISTRATION SYSTEMS, INC. (MERS), to assign the subject mortgage and note to plaintiff NYM; and, (2) an affidavit from the conflicted Nathan Reese, a possible robosigner in this action, explaining why he acted as both assignor and assignee of the subject mortgage and note in the instant action.

Mr. Reese, on July 7, 2011, assigned the subject mortgage and note from MERS, as [*2]nominee for NYMC, to assignee NYMT, as Vice President of MERS. Then, 27 days later, on August 3, 2011, Mr. Reese executed the verification to the instant complaint, stating “I am the VICE PRESIDENT of the plaintiff [NYMT] in the within action.” Further, Mr. Reese, on October 11, 2011, executed the affidavit of amount due for an order of reference in the instant action, as Vice President of NYMT. Also, Mr. Reese executed the MERS assignment, the complaint verification and the affidavit of amount due before the same New York County Notary Public, Monica Mendoza.

Moreover, Mr. Reese, on August 11, 2011, before another notary public, executed the affidavit attached to the affirmation of plaintiff’s counsel, pursuant to the Chief Administrative Judge’s Administrative Order 548/10, as amended by Administrative Order 431/11, requiring an affirmation by plaintiff’s counsel that counsel has communicated with a representative of plaintiff who personally reviewed the documents and records in the action for factual accuracy and confirmed their accuracy. AO 431/11 and its predecessor, AO 548/10, were promulgated to stop numerous foreclosure action problems with respect to standing, faulty notarizations and “robosigning.” Plaintiff’s counsel affirmed, on August 22, 2011, that based upon his conversations with Mr. Reese, “as well as upon my own inspection and other reasonable inquiry under the Circumstances . . . the Summons, complaint, and other papers filed or submitted to the Court in this matter contain no false statements of fact or law.” In ¶ 6 of the verified complaint, plaintiff’s counsel falsely states, “[t]hat at the time this proceeding is commenced, plaintiff is the holder and owner of the subject mortgage and note.”

However, Nathan Reese’s assignment of the subject mortgage and note to NYMT, for MERS, as nominee for NYMC, in the instant foreclosure action is without legal authority. Therefore, plaintiff NYMT could not be the holder of the subject mortgage and note when the action commenced. Thus, plaintiff NYMT lacked standing to commence the instant foreclosure action. The instant motion for an order of reference and related relief, with a defective MERS assignment to plaintiff NYMT, is denied without prejudice with leave to renew within sixty (60) days if plaintiff can demonstrate how MERS, as nominee for NYMC, had authority to assign the subject mortgage and note to plaintiff NYMT. Mr. Reese’s conflicted activities and the false affirmation of plaintiff’s counsel pervert the purpose of Administrative Order 548/10, as amended by Administrative Order 431/11.

The DASDEMIR defendants, on February 6, 2007, borrowed $673,000.00 from NYMC and executed a mortgage and note for that amount. In the subject mortgage it states that NYMC is the “lender” and MERS “is a separate corporation that is acting solely as a nominee for Lender” and “FOR PURPOSES OF RECORDING THIS MORTGAGE, MERS IS THE MORTGAGEE OF RECORD.” The subject note states that NYMC is the “Lender” and the “Note Holder” is “[t]he Lender or anyone who takes this Note by transfer.” MERS, as nominee for NYMC, recorded the subject mortgage and note on March 8, 2007, in the Office of the City Register of the City of New York, at CRFN 2007000126475. The DASDEMIR defendants allegedly defaulted in their mortgage loan payment on November 1, 2010

Subsequently, MERS, as nominee for NYMC, assigned the instant nonperforming mortgage and note to NYMT, on July 7, 2011, with Nathan Reese executing the assignment as Vice President of MERS. This assignment was recorded in the Office of the City Register of the [*3]City of New York, on July 26, 2011, at CRFN 20011000263593. However, there is no evidence that MERS, as NYMC’s nominee, was authorized by NYMC, its principal, to assign the subject DASDEMIR mortgage and note to plaintiff NYMT.

Plaintiff NYMT commenced the instant foreclosure action on August 10, 2011 by filing with the Kings County Clerk’s Office the summons and complaint. Then, plaintiff NYMT filed the notice of pendency on August 23, 2011. On October 19, 2011, plaintiff NYMT filed the instant motion for an order of reference. As noted above, attached to plaintiff NYMT’s moving papers is the October 11, 2011-affidavit of amount due by Nathan Reese, in which he claims to be Vice President of plaintiff NYMT.

Further, the Court needs to address questions about the employment status of the conflicted Mr. Reese. According to p. 18 of plaintiff NYMT’s April 4, 2012-proxy statement, filed with the U.S. Securities and Exchange Commission, pursuant to § 14 (a) of the Securities Exchange Act of 1934, “Nathan R. Reese is our Vice President and Secretary. Mr. Reese was named Vice President of our Company in March 2007 and Secretary effective January 1, 2008 . . . In his capacity as Vice President, Mr. Reese manages company operations . . . and is responsible for . . . foreclosure and delinquency monitoring.” Yet, Mr. Reese, as MERS’ Vice President, assigned the subject mortgage and note to assignee plaintiff NYMT, for whom he is in charge of foreclosures. Plaintiff NYMT, despite Mr. Reese’s conflicted employment, according to p. 21 of the above-named proxy statement, rewarded Mr. Reese with compensation packages of $322,505 in 2010 and $328,948 in 2011.

The conflicted Mr. Reese must explain to the Court why he acted as both assignor and assignee in the instant action. The Court notes that plaintiff NYMT, according to p. 21 of the above-named proxy statement, included in the compensation rewarded to the conflicted Mr. Reese in 2011 a $100,000 cash bonus and a restricted stock award valued at $8,821.00, for his “individual performance and the Company’s performance in 2011.”

Real Property Actions and Proceedings Law (RPAPL) § 1321 allows the Court in a foreclosure action, upon the default of defendant or defendant’s admission of mortgage payment arrears, to appoint a referee “to compute the amount due to the plaintiff.” Plaintiff NYMT’s motion application for an order of reference is a preliminary step to obtaining a default judgment of foreclosure and sale. (Home Sav. Of Am., F.A. v Gkanios, 230 AD2d 770 [2d Dept 1996]).

However, the instant motion for an order of reference and related relief is denied. Plaintiff NYMT lacks standing. MERS lacks authority to assign the subject DASDEMIR mortgage and note to plaintiff NYMT. Further, there is no evidence presented that MERS physically possessed the DASDEMIR note. Under the terms of the DASDEMIR note, NYMC, not MERS, is the “Note Holder.” As described above, the DASDEMIR note defines the “Note Holder” as the “[t]he Lender or anyone who takes this Note by transfer.”

There is no power of attorney recorded or presented to the Court authorizing MERS, as nominee of NYMC, to transfer the DASDEMIR mortgage and note. Real Property Law (RPL) § 254 (9) states:

Power of attorney to assignee. The word “assign” or other words of

assignment, when contained in an assignment of a mortgage and bond

or mortgage and note, must be construed as having included in their [*4]

meaning that the assignor does thereby make, constitute and appoint

the assignee the true and lawful attorney, irrevocable, of the assignor,

in the name of the assignor, or otherwise, but at the proper costs and

charges of the assignee, to have, use and take all lawful ways and means

for the recovery of the money and interest secured by the said mortgage

and bond or mortgage and note, and in case of payment to discharge

the same as fully as the assignor might or could do if the assignment

were not made. [Emphasis added]

To have a proper assignment of a mortgage by an authorized agent, a power of attorney is necessary to demonstrate how the agent is vested with the authority to assign the mortgage. “No special form or language is necessary to effect an assignment as long as the language shows the intention of the owner of a right to transfer it [Emphasis added].” (Tawil v Finkelstein Bruckman Wohl Most & Rothman, 223 AD2d 52, 55 [1d Dept 1996]). (See Suraleb, Inc. v International Trade Club, Inc., 13 AD3d 612 [2d Dept 2004]).

“Standing to sue is critical to the proper functioning of the judicial system. It is a threshold issue. If standing is denied, the pathway to the courthouse is blocked. The plaintiff who has standing, however, may cross the threshold and seek judicial redress.” (Saratoga County Chamber of Commerce, Inc. v Pataki, 100 NY2d 801 812 [2003], cert denied 540 US 1017 [2003]). Professor David Siegel (NY Prac, § 136, at 232 [4d ed]), instructs that:

[i]t is the law’s policy to allow only an aggrieved person to bring a

lawsuit . . . A want of “standing to sue,” in other words, is just another

way of saying that this particular plaintiff is not involved in a genuine

controversy, and a simple syllogism takes us from there to a “jurisdictional”

dismissal: (1) the courts have jurisdiction only over controversies; (2) a

plaintiff found to lack “standing”is not involved in a controversy; and

(3) the courts therefore have no jurisdiction of the case when such a

plaintiff purports to bring it.

“Standing to sue requires an interest in the claim at issue in the lawsuit that the law will recognize as a sufficient predicate for determining the issue at the litigant’s request.” (Caprer v Nussbaum (36 AD3d 176, 181 [2d Dept 2006]). If a plaintiff lacks standing to sue, the plaintiff may not proceed in the action. (Stark v Goldberg, 297 AD2d 203 [1st Dept 2002]).

The Appellate Division, Second Department instructed, in Aurora Loan Services, LLC v Weisblum (85 AD3d 95, 108 [2d Dept 2011]):

In order to commence a foreclosure action, the plaintiff must

have a legal or equitable interest in the mortgage (see Wells Fargo

Bank, N.A. v Marchione, 69 AD3d, 204, 207 [2d Dept 2009]). A

plaintiff has standing where it is both (1) the holder or assignee of

the subject mortgage and (2) the holder or assignee of the underlying

note, either by physical delivery or execution of a written assignment

prior to the commencement of the action with the filing of the complaint [*5]

(see Wells Fargo Bank, N.A. v Marchione, 69 AD3d at 207-209; U.S.

Bank v Collymore, 68 AD3d 752, 754 [2d Dept 2009].)

Assignments of mortgages and notes are made by either written instrument or the

assignor physically delivering the mortgage and note to the assignee. “Our courts have repeatedly held that a bond and mortgage may be transferred by delivery without a written instrument of assignment.” (Flyer v Sullivan, 284 AD 697, 699 [1d Dept 1954]).

In the instant action, even if MERS had authority to transfer the mortgage to NYMT, NYMC, not MERS, is the note holder. Therefore, MERS cannot transfer something it never possessed. A “foreclosure of a mortgage may not be brought by one who has no title to it and absent transfer of the debt, the assignment of the mortgage is a nullity [Emphasis added].” (Kluge v Fugazy (145 AD2d 537, 538 [2d Dept 1988]). Moreover, “a mortgage is but an incident to the debt which it is intended to secure . . . the logical conclusion is that a transfer of the mortgage without the debt is a nullity, and no interest is assigned by it. The security cannot be separated from the debt, and exist independently of it. This is the necessary legal conclusion.” (Merritt v Bartholick, 36 NY 44, 45 [1867]. The Appellate Division, First Department, citing Kluge v Fugazy in Katz v East-Ville Realty Co. ( 249 AD2d 243 [1d Dept 1998]), instructed that “[p]laintiff’s attempt to foreclose upon a mortgage in which he had no legal or equitable interest was without foundation in law or fact.” (See U.S. Bank v Collymore, 68 AD3d at 754.

Presently, MERS lacks authority to assign the DASDEMIR mortgage and note. Nathan Reese, wearing his MERS’ Vice President’s hat as assignor, did not have specific authority to assign the DASDEMIR mortgage and note. Under the terms of the subject mortgage, MERS “is a separate corporation that is acting solely as a nominee for Lender [NYMC].” The term “nominee” is defined as “[a] person designated to act in place of another, usu. in a very limited way” or “[a] party who holds bare legal title for the benefit of others.” (Black’s Law Dictionary 1076 [8th ed 2004]). “This definition suggests that a nominee possesses few or no legally enforceable rights beyond those of a principal whom the nominee serves.” (Landmark National Bank v Kesler, 289 Kan 528, 538 [2009]). The Kansas Supreme Court, in Landmark National Bank, at 539, observed:

The legal status of a nominee, then, depends on the context of

the relationship of the nominee to its principal. Various courts have

interpreted the relationship of MERS and the lender as an agency

relationship. See In re Sheridan, 2009 WL631355, at *4 (Bankr. D.

Idaho, March 12, 2009) (MERS “acts not on its own account. Its

capacity is representative.”); Mortgage Elec. Registrations Systems,

Inc. v Southwest, 2009 Ark. 152 ___, ___SW3d___, 2009 WL 723182

(March 19, 2009) (“MERS, by the terms of the deed of trust, and its

own stated purposes, was the lender’s agent”); La Salle Nat. Bank v

Lamy, 12 Misc 3d 1191 [A], at *2 [Sup Ct, Suffolk County 2006]) . . .

(“A nominee of the owner of a note and mortgage may not effectively

assign the note and mortgage to another for want of an ownership

interest in said note and mortgage by the nominee.”)

The New York Court of Appeals in MERSCORP, Inc. v Romaine (8 NY3d 90 [2006], explained how MERS acts as the agent of mortgagees, holding at 96: [*6]

In 1993, the MERS system was created by several large

participants in the real estate mortgage industry to track ownership

interests in residential mortgages. Mortgage lenders and other entities,

known as MERS members, subscribe to the MERS system and pay

annual fees for the electronic processing and tracking of ownership

and transfers of mortgages. Members contractually agree to appoint

MERS to act as their common agent on all mortgages they register

in the MERS system. [Emphasis added]

Thus, it is clear that MERS’s relationship with its member lenders is that of agent with the lender-principal. This is a fiduciary relationship, resulting from the manifestation of consent by one person to another, allowing the other to act on his behalf, subject to his control and consent. The principal is the one for whom action is to be taken, and the agent is the one who acts.It has been held that the agent, who has a fiduciary relationship with the principal, “is a party who acts on behalf of the principal with the latter’s express, implied, or apparent authority.” (Maurillo v Park Slope U-Haul, 194 AD2d 142, 146 [2d Dept 1992]). “Agents are bound at all times to exercise the utmost good faith toward their principals. They must act in accordance with the highest and truest principles of morality.” (Elco Shoe Mfrs. v Sisk, 260 NY 100, 103 [1932]). (See Sokoloff v Harriman Estates Development Corp., 96 NY 409 [2001]); Wechsler v Bowman, 285 NY 284 [1941]; Lamdin v Broadway Surface Advertising Corp., 272 NY 133 [1936]). An agent “is prohibited from acting in any manner inconsistent with his agency or trust and is at all times bound to exercise the utmost good faith and loyalty in the performance of his duties.” (Lamdin, at 136).

Thus, in the instant action, MERS, as nominee for NYMC, is NYMC’s agent for limited purposes. It only has those powers given to it and authorized by NYMC, its

principal. Plaintiff NYMT failed to submit documents demonstrating how MERS is authorized, as nominee for NYMC, to assign the subject DASDEMIR mortgage and note to plaintiff NYMT. Therefore, with MERS lacking authority to assign the DASDEMIR mortgage and note, the June 7, 2011 assignment by the conflicted Mr. Reese is defective. In Bank of New York v Alderazi (28 Misc 3d 376, 379-380 [Sup Ct, Kings County 2010]), Justice Saitta instructed that:

A party who claims to be the agent of another bears the burden

of proving the agency relationship by a preponderance of the evidence

(Lippincott v East River Mill & Lumber Co., 79 Misc 559 [1913])

and “[t]he declarations of an alleged agent may not be shown for

the purpose of proving the fact of agency.” (Lexow & Jenkins, P.C. v

Hertz Commercial Leasing Corp., 122 AD2d 25 [2d Dept 1986]; see

also Siegel v Kentucky Fried Chicken of Long Is. 108 AD2d 218 [2d

Dept 1985]; Moore v Leaseway Transp/ Corp., 65 AD2d 697 [1st Dept

1978].) “[T]he acts of a person assuming to be the representative of

another are not competent to prove the agency in the absence of evidence

tending to show the principal’s knowledge of such acts or assent to them.”

(Lexow & Jenkins, P.C. v Hertz Commercial Leasing Corp., 122 AD2d

at 26, quoting 2 NY Jur 2d, Agency and Independent Contractors § 26). [*7]

The Appellate Division, Second Department in Bank of New York v Silverberg, (86 AD3d 274, 275 [2d Dept 2011]), confronted the issue of “whether a party has standing to commence a foreclosure action when that party’s assignor—in this case, Mortgage Electronic Registration Systems, Inc. (hereinafter MERS)—was listed in the underlying

mortgage instruments as a nominee and mortgagee for the purpose of recording, but was

never the actual holder or assignee of the underlying notes.” The Court held, “[w]e answer this question in the negative.” MERS, in the Silverberg case and the instant DASDEMIR action, never had title or possession of the Note. The Silverberg Court instructed, at 281-282:

the assignment of the notes was thus beyond MERS’s authority as

nominee or agent of the lender (see Aurora Loan Servs., LLC v

Weisblum, AD3d, 2011 NY Slip Op 04184, *6-7 [2d Dept 2011];

HSBC Bank USA v Squitteri, 29 Misc 3d 1225 [A] [Sup Ct, Kings

County, F. Rivera, J.]; ; LNV Corp. v Madison Real Estate, LLC,

2010 NY Slip Op 33376 [U] [Sup Ct, New York County 2010,

York, J.]; LPP Mtge. Ltd. v Sabine Props., LLC, 2010 NY Slip Op

32367 [U] [Sup Ct, New York County 2010, Madden, J.]; Bank of

NY v Mulligan, 28 Misc 3d 1226 [A] [Sup Ct, Kings County 2010,

Schack, J.]; One West Bank, F.S.B., v Drayton, 29 Misc 3d 1021

[Sup Ct, Kings County 2010, Schack, J.]; Bank of NY v Alderazi,

28 Misc 3d 376, 379-380 [Sup Ct, Kings County 2010, Saitta, J.]

[the “party who claims to be the agent of another bears the burden

of proving the agency relationship by a preponderance of the evidence”];

HSBC Bank USA v Yeasmin, 24 Misc 3d 1239 [A] [Sup Ct, Kings

County 2010, Schack, J.]; HSBC Bank USA, N.A. v Vasquez, 24

Misc 3d 1239 [A], [Sup Ct, Kings County 2009, Schack, J.]; Bank of

NY v Trezza, 14 Misc 3d 1201 [A] [Sup Ct, Suffolk County 2006,

Mayer, J.]; La Salle Bank Natl. Assn. v Lamy, 12 Misc 3d 1191 [A]

[Sup Ct, Suffolk County, 2006, Burke, J.]; Matter of Agard, 444 BR

231 [Bankruptcy Court, ED NY 2011, Grossman, J.]; but see U.S.

Bank N.A. v Flynn, 27 Misc 3d 802 [Sup Ct, Suffolk County 2011,

Whelan, J.]).

Moreover, the Silverberg Court concluded, at 283, that “because MERS was never the lawful holder or assignee of the notes described and identified in the consolidation

agreement, the . . . assignment of mortgage is a nullity, and MERS was without authority to assign the power to foreclose to the plaintiff. Consequently, the plaintiff failed to show that it had standing to foreclose.” Further, the Silverberg Court observed, at 283, that “the law must not yield to expediency and the convenience of lending institutions. Proper procedures must be followed to ensure the reliability of the chain of ownership, to secure the dependable transfer of property, and to assure the enforcement of the rules that

govern real property [Emphasis added].”

The Court is granting plaintiff NYMT an opportunity to cure its defective standing. Plaintiff NYMT is granted leave to renew its motion for an order of reference and related relief, [*8]within sixty (60) days of this decision and order, if it can provide the Court with written proof of the grant of authority from the original mortgagee, NEW YORK MORTGAGE COMPANY, LLC (NYMC) to its nominee, MORTGAGE ELECTRONIC REGISTRATION SYSTEMS, INC. (MERS), to assign the subject mortgage and note to plaintiff NYM. Further, the conflicted Nathan Reese, a possible robosigner in this action, must provide the Court with an affidavit explaining why he acted as both assignor and assignee of the subject DASDEMIR mortgage and note in the instant action.

Accordingly, it is

ORDERED, that the motion of plaintiff, NEW YORK MORTGAGE TRUST,

INC., for an order of reference for the premises located at 75 West End Avenue, Brooklyn, New York (Block 8726, Lot 57, County of Kings), is denied without prejudice; and it is further

ORDERED, that leave is granted to plaintiff, NEW YORK MORTGAGE TRUST, INC. to renew its motion for an order of reference for the premises located at 75 West End Avenue, Brooklyn, New York (Block 8726, Lot 57, County of Kings), within sixty (60) days of this decision and order, upon presentation to the Court of: (1) written proof of the grant of authority from the original mortgagee, NEW YORK MORTGAGE COMPANY, LLC (NYMC) to its nominee, MORTGAGE ELECTRONIC REGISTRATION SYSTEMS, INC. (MERS), to assign the subject mortgage and note to plaintiff NYM; and, (2) an affidavit from Nathan Reese explaining why he acted as both assignor and assignee of the subject mortgage and note in the instant action.

This constitutes the Decision and Order of the Court.

ENTER

________________________________HON. ARTHUR M. SCHACK

J. S. C.

Decided on October 4, 2012

IndyMac Federal Bank, FSB, Plaintiff,

against

Mendel Meisels et. al., Defendants.

8752/09

Plaintiff

Fein Such and Crane, LLP

Rochester NY

Defendant:

Hanna & Vlahakis

Brooklyn NY

Arthur M. Schack, J.

In this mortgage foreclosure action, for the premises located at 2062 61st Street, Brooklyn, New York (Block 5528, Lot 33, County of Kings), defendant MENDEL MEISELS (MEISELS) moves, pursuant to CPLR Rule 5015 (a) (4), to vacate the July 27, 2010 order of reference granted upon defendant MEISEL’s default, for “lack of jurisdiction to render the . . . order” to plaintiff INDYMAC FEDERAL BANK, FSB [INDYMAC FED] and then, if vacated, either dismiss the instant action, pursuant to CPLR Rule 3211 (a) (1) and (7), or grant leave to defendant MEISELS to file a late answer, pursuant to the CPLR Rule 2004 and § 3012 (d). [*2]

The Court grants relief to defendant MEISELS. In the instant action, plaintiff INDYMAC FED lacks jurisdiction. It ceased to exist on March 19, 2009, almost three weeks before the instant action commenced on April 9, 2009. If plaintiff INDYMAC FED has jurisdiction and standing it would be the legal equivalent of a vampire – the “living dead.” Further, the Court is concerned that: there are documents in this action in which various individuals claim to be officers of either the “living dead” INDYMAC FED or its deceased predecessor INDYMAC BANK, FSB [INDYMAC]; and, the law firm of Fein, Such & Crane, LLP (FS & C) commenced and prosecuted this meritless action, asserting false material statements, on behalf of a client that ceased to exist 20 days prior to the commencement of the instant action.

If plaintiff INDYMAC FED is a financial “Count Dracula,” then its counsel, FS & C, is its “Renfield.” In the 1931 Bela Lugosi “Dracula” movie, the English solicitor Renfield travels to Transylvania to have Dracula execute documents for the purchase of Carfax Abbey, only to be drugged by Count Dracula and turned into his thrall. Renfield, before his movie death, tells Dracula “I’m loyal to you. Master, I am your slave, I didn’tBetray you! Oh, no, don’t! Don’t kill me! Let me live, please! Punish me, torture me, but let me live! I can’t die with all those lives on my conscience! All that blood on my hands!”(“Memorable quotes for Dracula [1931]” at www.imdb.com/title/tt021814/ quotes). FS & C, similar to Renfield, throughout its papers and at oral argument demonstrated its loyalty by not betraying its client and Master, the “living dead” INDYMAC FED.

Further, the Court finds that it is an extraordinary circumstance for a corporate entity that ceased to exist, plaintiff INDYMAC FED, to retain counsel and proceed to foreclose on a mortgage for real property. This extraordinary circumstance requires the Court to: vacate defendant MEISELS’ default, because it is impossible for the “living dead” plaintiff, INDYMAC FED, to have jurisdiction; dismiss the instant action with prejudice; and, give FS & C an opportunity to be heard as to why the Court should not sanction it for engaging in frivolous conduct, in violation of 22 NYCRR § 130-1.1 (c) (1) and (3), because the instant action is “completely without merit in law” and “asserts material factual representations that are false.”

Defendant MEISELS closed on his $765,000.00 purchase of the subject property, a two-family investment property, on March 7, 2005. The deed was recorded on March 25,

2005, in the Office of the City Register of the City of New York, at City Register File Number (CRFN) 2005000175346. MEISELS, to finance the purchase, borrowed

$460,000.00 from INDYMAC and, at the March 7, 2005 closing, executed a mortgage and note for that amount. In the subject mortgage it states that INDYMAC is the “lender” and Mortgage Electronic Registrations Systems, Inc. [MERS] “is a separate corporation that is acting solely as a nominee for Lender” and “FOR PURPOSES OF RECORDING THIS MORTGAGE, MERS IS THE MORTGAGEE OF RECORD.” The subject note states that INDYMAC is the “lender” and the “Note Holder” is “[t]he Lender or anyone who takes this Note by transfer.” MERS, as nominee for INDYMAC, recorded the subject mortgage and note on March 25, 2005, in the Office of the City Register of the City of New York, at CRFN 2005000175347.

Subsequently, INDYMAC failed in the 2008 financial meltdown. The Federal Deposit [*3]Insurance Corporation [FDIC] stated in its December 15, 2010 “Failed Bank Information” for INDYMAC and INDYMAC FED:

On July 11, 2008, IndyMac Bank, F.S.B., Pasadena, CA was closed

by the Office of Thrift Supervision (OTS) and the FDIC was named

Conservator. All non-brokered insured deposit accounts and substantially

all of the assets of IndyMac Bank, F.S.B. have been transferred to

IndyMac Federal Bank, F.S.B. (IndyMac Federal Bank), Pasadena,

CA (“assuming institution”) a newly chartered full-service FDIC-insured

institution.

Then, the FDIC, approximately eight months later, on March 19, 2009, transferred the assets of INDYMAC FED to a new bank, OneWest Bank, FSB. The FDIC stated in its December 15, 2010 “Failed Bank Information” for INDYMAC and INDYMAC FED:On March 19, 2009, the Federal Deposit Insurance Corporation

(FDIC) completed the sale of IndyMac Federal Bank, FSB, Pasadena,

California, to OneWest Bank, F.S.B., Pasadena, California. OneWest

Bank, FSB is a newly formed federal savings bank organized by IMB

HoldCo LLC. All deposits of IndyMac Federal Bank, FSB have

been transferred to OneWest Bank, FSB.

Meanwhile, MERS, as nominee for INDYMAC, on March 10, 2009, despite INDYMAC’s July 11, 2008 corporate demise, assigned the subject mortgage with “all rights accrued under said Mortgage and all indebtedness secured thereby” to INDYMAC FED. This assignment was recorded in the Office of the City Register of the City of New York, at CRFN 2009000085845, on March 25, 2009. No power of attorney authorizing MERS to assign the mortgage was attached or recorded. Further, MERS’ assignor, as Vice President of MERS, for the “living dead” INDYMAC, was the infamous robosigner

Erica Johnson-Seck. This Court, in several previous decisions, most notably in OneWest Bank, F.S.B. v Drayton (29 Misc 3d 1021 [Sup Ct, Kings County 2010]), discussed Ms. Johnson-Seck’s robosigning activities. In Deutsche Bank v Maraj (18 Misc 3d 1123 [A] [Sup Ct, Kings County 2008]), Ms. Johnson-Seck was Vice President of both assignor MERS and assignee Deutsche Bank. In Indymac Bank, FSB v Bethley (22 Misc 3d 1119 [A] [Sup Ct, Kings County 2009]), Ms. Johnson-Seck was Vice President of both assignor MERS and assignee Indymac Bank. In Deutsche Bank v Harris (Sup Ct, Kings County, Feb. 5, 2008, Index No. 35549/07), Ms. Johnson-Seck executed an affidavit of merit as Vice President of Deutsche Bank.

This Court observed in Drayton, at 1022-1023:

Ms. Johnson-Seck, in a July 9, 2010 deposition taken in a Palm Beach

County, Florida foreclosure case, admitted that she: is a “robo-signer”

who executes about 750 mortgage documents a week, without a notary [*4]

public present; does not spend more than 30 seconds signing each

document; does not read the documents before signing them; and,

did not provide me with affidavits about her employment in two

prior cases.

Moreover, in Drayton, at 1026:

Ms. Johnson-Seck admitted that she is not an officer of MERS, has

no idea how MERS is organized and does not know why she signs

assignments as a MERS officer. Further, she admitted that the MERS

assignments she executes are prepared by an outside vendor, Lender

Processing Services, Inc. (LPS), which ships the documents to her

Austin, Texas office from Minnesota. Moreover, she admitted executing

MERS assignments without a notary public present. She also testified

that after the MERS assignments are notarized they are shipped back

to LPS in Minnesota.

FS & C, as counsel for the “living dead” plaintiff, INDYMAC FED, commenced the instant action on April 9, 2009 by filing the summons, verified complaint and notice of pendency with the Kings County Clerk. These documents are all dated April 8, 2009. Plaintiff’s counsel, FS & C, incorrectly states in the April 8, 2009 complaint that: plaintiff INDYMAC FED is “existing” and “doing business in the State of New York” [¶ 1]; and “the plaintiff is now the owner and holder of the said bond(s)/notes(s) and mortgages securing the same” [¶ 11]. Mark K. Broyles, Esq., the “Renfield” for the “living dead” INDYMAC FED, in his verification of the complaint, dated 20 days after plaintiff INDYMAC FED ceased to exist, states “I am the attorney of record, or of counsel with the attorney(s) of record for the plaintiff. I have read the annexed Summons and Complaint and know the contents thereof and the same are true to my knowledge” and “I verify that the foregoing statement are true under the penalties of perjury [emphasis added].”

In his April 15, 2009 affidavit of amount due, Roger Stotts claims to be Vice President of plaintiff INDYMAC FED, despite the end of its existence on March 19, 2009, and claims, in ¶ 4, “Plaintiff is still the holder of the aforesaid obligation and mortgage” and, in ¶ 7, “I hereby certify that the foregoing statements made by me are true; I am aware that if any of the foregoing statements made by me are willfully false, I am subject to punishment.” Mr. Stotts alleges that defendant MEISELS

defaulted in his mortgage loan payments on August 1, 2008. Then, in his June 2, 2009 certificate of conformity, Mr. Broyles swears that “the foregoing acknowledgment of Roger Stotts . . . and based upon my review thereof, appears to conform with the laws of the State of New York.” The Court wonders why Mr. Broyles and FS & C continue the charade of representing a deceased corporation and falsely asserting its existence.

Subsequent to the Erica Johnson-Seck March 10, 2009 assignment of the subject mortgage “and all indebtedness secured thereby,” from MERS, as nominee for the then “living dead” INDYMAC, to assignee INDYMAC FED, there is another assignment of the subject mortgage “and all indebtedness secured thereby,” on March 30, 2011 by Wendy Traxler, as “Attorney in Fact” for “Federal Insurance Corporation [sic] as Receiver for IndyMac Bank, [*5]F.S.B.” to “Deutsche Bank National Trust Company, as Trustee of the Residential Asset Securitization Trust 2005-A6CB, Mortgage Pass-Through Certificates, Series 2005-F under the Pooling and Servicing Agreement dated May 1, 2005.” This assignment was recorded in the Office of the City Register of the City of New York, at CRFN 2011000132354, on April 12, 2011. No power of attorney is attached to the Wendy Traxler assignment nor is a power of attorney recorded. Moreover, Ms. Traxler, similar to Erica Johnson-Seck, executed the assignment in Austin, Texas. The Court is perplexed about why the FDIC assigned the subject mortgage and note if the assets of INDYMAC and its successor INDYMAC FED were assigned on March 19, 2009 to OneWest Bank, F.S.B.

Mr. Broyles, subsequent to this, on March 9, 2012, executed a new notice of pendency in the instant action for then almost three years deceased plaintiff, INDYMAC FED, and certified the additional notice of pendency as “an attorney licensed to practice in the State of New York, and a partner in the law firm of Fein, Such & Crane, LLP.” Moreover, despite representing the “living dead” INDYMAC FED, Mr. Broyles certified that the additional notice of pendency, “to his knowledge, information and belief, formed after an inquiry reasonable under the circumstances” is “not frivolous as defined in subsection (c) of section 130-1.1 of the Rules of the Chief Administrator [22 NYCRR 130-1.1 (c)].

In the instant action, plaintiff INDYMAC FED ceased to exist prior to the commencement of the action. The FDIC, as outlined above, sold plaintiff INDYMAC FED to One West Bank, F.S.B., on March 19, 2009. Therefore, plaintiff INDYMAC FED could not obtain personal jurisdiction over defendant MEISELS because it lacked the capacity to commence the instant foreclosure on April 8, 2009, subsequent to its corporate demise. The Appellate Division, Second Department, in Westside Federal Sav. & Loan Ass’n v Fitzgerald (136 AD2d 699 [2d Dept 1988]), quoting Sheldon v Kimberly-Clark Corp. (105 AD2d 273, 276 [2d Dept 1984]), instructed that once a banking institution has been merged or absorbed by another banking institution “the absorbed corporation immediately ceases to exist as a separate entity, and may no longer be a named party in litigation.” (See Zarzcyki v Lan Metal Products, Corp., 62 AD3d 788, 789 [2d Dept 2009]).

Therefore, the “living dead” INDYMAC FED was unable to be named a party in litigation and obtain personal jurisdiction over defendant MEISELS. Thus, it follows that plaintiff INDYMAC FED clearly lacks standing. “Standing to sue is critical to the proper functioning of the judicial system. It is a threshold issue. If standing is denied, the pathway to the courthouse is blocked. The plaintiff who has standing, however, may cross the threshold and seek judicial redress.” (Saratoga County Chamber of Commerce, Inc. v Pataki, 100 NY2d 801 812 [2003], cert denied 540 US 1017 [2003]). Professor David Siegel (NY Prac, § 136, at 232 [4d ed]), instructs that:

[i]t is the law’s policy to allow only an aggrieved person to bring a

lawsuit . . . A want of “standing to sue,” in other words, is just another

way of saying that this particular plaintiff is not involved in a genuine

controversy, and a simple syllogism takes us from there to a “jurisdictional” [*6]

dismissal: (1) the courts have jurisdiction only over controversies; (2) a

plaintiff found to lack “standing”is not involved in a controversy; and

(3) the courts therefore have no jurisdiction of the case when such a

plaintiff purports to bring it.

“Standing to sue requires an interest in the claim at issue in the lawsuit that the law will

recognize as a sufficient predicate for determining the issue at the litigant’s request.” (Caprer v Nussbaum (36 AD3d 176, 181 [2d Dept 2006]). If a plaintiff lacks standing to

sue, the plaintiff may not proceed in the action. (Stark v Goldberg, 297 AD2d 203 [1st Dept 2002]).

The Appellate Division, Second Department instructed, in Aurora Loan Services, LLC v Weisblum (85 AD3d 95, 108 [2d Dept 2011]), that:

In order to commence a foreclosure action, the plaintiff must

have a legal or equitable interest in the mortgage ( see Wells Fargo

Bank, N.A. v Marchione, 69 AD3d, 204, 207 [2d Dept 2009]). A

plaintiff has standing where it is both (1) the holder or assignee of

the subject mortgage and (2) the holder or assignee of the underlying

note, either by physical delivery or execution of a written assignment

prior to the commencement of the action with the filing of the complaint

(see Wells Fargo Bank, N.A. v Marchione, 69 AD3d at 207-209; U.S. v Collymore, 68 AD3d 752, 754 [2d Dept 2009].)

With the lack of jurisdiction by the “living dead” plaintiff INDYMAC FED, the Court does not have to address the numerous defects in the alleged assignments of the subject MEISELS mortgage and note. However, in the instant action, even if MERS had authority to transfer the mortgage to INDYMAC FED, the “living dead” INDYMAC, at the time of the Erica Johnson-Seck assignment, not MERS, was the note holder. MERS cannot transfer something it never proved it possessed. A “foreclosure of a mortgage may not be brought by one who has no title to it and absent transfer of the debt, the assignment of the mortgage is a nullity [Emphasis added].” (Kluge v Fugazy (145 AD2d 537, 538 [2d Dept 1988]). Moreover, “a mortgage is but an incident to the debt which it is intended to secure . . . the logical conclusion is that a transfer of the mortgage without the debt is a nullity, and no interest is assigned by it. The security cannot be separated from the debt, and exist independently of it. This is the necessary legal conclusion.” (Merritt v Bartholick, 36 NY 44, 45 [1867]. The Appellate Division, First Department, citing Kluge v Fugazy in Katz v East-Ville Realty Co. ( 249 AD2d 243 [1d Dept 1998]), instructed that “[p]laintiff’s attempt to foreclose upon a mortgage in which he had no

legal or equitable interest was without foundation in law or fact.” (See U.S. Bank, N.A. v Collymore, 68 AD3d at 754). [*7]

Moreover, MERS had no authority to assign the subject mortgage and note. Erica

Johnson-Seck, for MERS as assignor, did not have specific authority to sign the MEISELS mortgage. Under the terms of the mortgage, MERS is “acting solely as a nominee for Lender [INDYMAC],” which ceased to exist prior to the assignment. Even if INDYMAC existed at the time of assignment, there is no power of attorney authorizing

the assignment. In the subject MEISELS mortgage MERS was “acting solely as a nominee for Lender,” which was the deceased INDYMAC. The term “nominee” is

defined as “[a] person designated to act in place of another, usu. in a very limited way” or “[a] party who holds bare legal title for the benefit of others.” (Black’s Law Dictionary 1076 [8th ed 2004]). “This definition suggests that a nominee possesses few or no legally enforceable rights beyond those of a principal whom the nominee serves.” (Landmark National Bank v Kesler, 289 Kan 528, 538 [2009])

The New York Court of Appeals in MERSCORP, Inc. v Romaine (8 NY3d 90 [2006]), explained how MERS acts as the agent of mortgagees, holding at 96:

In 1993, the MERS system was created by several large

participants in the real estate mortgage industry to track ownership

interests in residential mortgages. Mortgage lenders and other entities,

known as MERS members, subscribe to the MERS system and pay

annual fees for the electronic processing and tracking of ownership

and transfers of mortgages. Members contractually agree to appoint

MERS to act as their common agent on all mortgages they register

in the MERS system. [Emphasis added]

Thus, it is clear that MERS’s relationship with its member lenders is that of agent with the lender-principal. This is a fiduciary relationship, resulting from the manifestation of consent by one person to another, allowing the other to act on his behalf, subject to his

control and consent. The principal is the one for whom action is to be taken, and the agent is the one who acts.It has been held that the agent, who has a fiduciary relationship with the principal, “is a party who acts on behalf of the principal with the latter’s express, implied, or apparent authority.” (Maurillo v Park Slope U-Haul, 194 AD2d 142, 146 [2d Dept 1992]). “Agents are bound at all times to exercise the utmost good faith toward their principals. They must act in accordance with the highest and truest principles of morality.” (Elco Shoe Mfrs. v Sisk, 260 NY 100, 103 [1932]). (See Sokoloff v Harriman Estates Development Corp., 96 NY 409 [2001]); Wechsler v Bowman, 285 NY 284 [1941]; Lamdin v Broadway Surface Advertising Corp., 272 NY 133 [1936]). An agent “is prohibited from acting in any manner inconsistent with his agency or trust and is at all times bound to exercise the utmost good faith and loyalty in the performance of his duties.” (Lamdin, at 136).

Thus, in the instant action, MERS, as nominee for INDYMAC, was INDYMAC’S agent [*8]for limited purposes. It only has those powers given to it and authorized by INDYMAC, its principal. Even if plaintiff INDYMAC FED existed and had jurisdiction, its counsel, FS & C, failed to submit documents authorizing MERS, as nominee for the then deceased INDYMAC, to assign the subject mortgage and note to the “living dead”

plaintiff, INDYMAC FED. MERS lacked authority to assign the MEISELS mortgage, making the assignment defective.

The Appellate Division, Second Department in Bank of New York v Silverberg, (86

AD3d 274, 275 [2d Dept 2011]), confronted the issue of “whether a party has standing to

commence a foreclosure action when that party’s assignor—in this case, Mortgage Electronic Registration Systems, Inc. (hereinafter MERS)—was listed in the underlying mortgage instruments as a nominee and mortgagee for the purpose of recording, but was never the actual holder or assignee of the underlying notes.” The Court held, at 275, “[w]e answer this question in the negative.” MERS, in the Silverberg case and in the instant MEISELS’ action, never had title or possession of the note. The Silverberg Court instructed, at 281-282:

the assignment of the notes was thus beyond MERS’s authority as

nominee or agent of the lender (see Aurora Loan Servs., LLC v

Weisblum, AD3d, 2011 NY Slip Op 04184, *6-7 [2d Dept 2011];

HSBC Bank USA v Squitteri, 29 Misc 3d 1225 [A] [Sup Ct, Kings

County, F. Rivera, J.]; ; LNV Corp. v Madison Real Estate, LLC,

2010 NY Slip Op 33376 [U] [Sup Ct, New York County 2010,

York, J.]; LPP Mtge. Ltd. v Sabine Props., LLC, 2010 NY Slip Op

32367 [U] [Sup Ct, New York County 2010, Madden, J.]; Bank of

NY v Mulligan, 28 Misc 3d 1226 [A] [Sup Ct, Kings County 2010,

Schack, J.]; One West Bank, F.S.B., v Drayton, 29 Misc 3d 1021

[Sup Ct, Kings County 2010, Schack, J.]; Bank of NY v Alderazi,

28 Misc 3d 376, 379-380 [Sup Ct, Kings County 2010, Saitta, J.]

[the “party who claims to be the agent of another bears the burden

of proving the agency relationship by a preponderance of the evidence”];

HSBC Bank USA v Yeasmin, 24 Misc 3d 1239 [A] [Sup Ct, Kings

County 2010, Schack, J.]; HSBC Bank USA, N.A. v Vasquez, 24

Misc 3d 1239 [A], [Sup Ct, Kings County 2009, Schack, J.]; Bank of

NY v Trezza, 14 Misc 3d 1201 [A] [Sup Ct, Suffolk County 2006,

Mayer, J.]; La Salle Bank Natl. Assn. v Lamy, 12 Misc 3d 1191 [A]

[Sup Ct, Suffolk County, 2006, Burke, J.]; Matter of Agard, 444 BR [*9]

231 [Bankruptcy Court, ED NY 2011, Grossman, J.]; but see U.S.

Bank N.A. v Flynn, 27 Misc 3d 802 [Sup Ct, Suffolk County 2011,

Whelan, J.]).

Moreover, the Silverberg Court concluded, at 283, “because MERS was never the

lawful holder or assignee of the notes described and identified in the consolidation agreement, the . . . assignment of mortgage is a nullity, and MERS was without authority

to assign the power to foreclose to the plaintiff. Consequently, the plaintiff failed to show that it had standing to foreclose.” Further, Silverberg the Court observed, at 283, “the law must not yield to expediency and the convenience of lending institutions. Proper procedures must be followed to ensure the reliability of the chain of ownership, to secure the dependable transfer of property, and to assure the enforcement of the rules that govern real property [emphasis added].”

To further muddy the waters of the instant action, there is the issue of the March 30, 2011 assignment of the subject mortgage by Wendy Traxler, as attorney in fact for FDIC as Receiver for INDYMAC FED, more than two years after INDYMAC FED ceased to exist and the FDIC sold its assets to One West Bank, F.S.B. Even if the FDIC as Receiver could assign the subject mortgage, this assignment is defective because it lacks a power of attorney to Ms. Traxler. To have a proper assignment of a mortgage by an authorized agent, a power of attorney is necessary to demonstrate how the agent is vested with the authority to assign the mortgage. “No special form or language is necessary to effect an assignment as long as the language shows the intention of the owner of a right to transfer it [Emphasis added].” (Tawil v Finkelstein Bruckman Wohl Most & Rothman, 223 AD2d 52, 55 [1d Dept 1996]). (See Real Property Law § 254 (9); Suraleb, Inc. v International Trade Club, Inc., 13 AD3d 612 [2d Dept 2004]).

Further, preprinted at the bottom of both the defective Johnson-Seck and the defective Traxler assignments, under the notary public’s jurat, is the same language, “When recorded mail to: Fein, Such and Crane, LLP, 28 East Main St. Ste.1800, Rochester, NY 14614.”

The chain of events in this action by the “living dead” plaintiff INDYMAC FED, with its failure to have personal jurisdiction, mandates dismissal of the instant action with prejudice. “A court’s power to dismiss a complaint, sua sponte, is to be used sparingly and only when extraordinary circumstances exist to warrant dismissal.” (U.S. Bank, N. A. v Emmanuel, 83 AD3d 1047, 1048 [2d Dept 2011]). The term “extraordinary circumstances” is defined as “[a] highly unusual set of facts that are not commonly associated with a particular thing or event.” (Black’s Law Dictionary 236 [7th ed 1999]).

It certainly is “a highly unusual set of facts” for a deceased plaintiff to not only commence an action and but to continue to prosecute the action. The events in the instant action are “not commonly associated with a” foreclosure action.

However, the Court is not precluding the correct owner of the subject MEISELS mortgage, whomever it might be, from commencing a new action, with a new index number, to foreclose on the MEISELS mortgage. The July 27, 2010 order of reference is vacated, pursuant to CPLR Rule 5015 (a) (4), for lack of jurisdiction by a non-existent plaintiff, INDYMAC FED. The Court’s dismissal with prejudice is not on the merits of the action.

The dismissal with prejudice of the instant foreclosure action requires the

cancellation of the notices of pendency. CPLR § 6501 provides that the filing of a notice

of pendency against a property is to give constructive notice to any purchaser of real property or encumbrancer against real property of an action that “would affect the title to, or the possession, use or enjoyment of real property, except in a summary proceeding brought to recover the possession of real property.” The Court of Appeals, in 5308 Realty Corp. v O & Y Equity Corp.(64 NY2d 313, 319 [1984]), commented that “[t]he purpose of the doctrine was to assure that a court retained its ability to effect justice by preserving its power over the property, regardless of whether a purchaser had any notice of the pending suit,” and, at 320, that “the statutory scheme permits a party to effectively retard the alienability of real property without any prior judicial review.”

CPLR § 6514 (a) provides for the mandatory cancellation of a notice of pendency by:

The Court, upon motion of any person aggrieved and upon such

notice as it may require, shall direct any county clerk to cancel

a notice of pendency, if service of a summons has not been completed

within the time limited by section 6512; or if the action has been

settled, discontinued or abated; or if the time to appeal from a final

judgment against the plaintiff has expired; or if enforcement of a

final judgment against the plaintiff has not been stayed pursuant

to section 551. [emphasis added]

The plain meaning of the word “abated,” as used in CPLR § 6514 (a) is the ending of an action. “Abatement” is defined as “the act of eliminating or nullifying.” (Black’s Law Dictionary 3 [7th ed 1999]). “An action which has been abated is dead, and any further enforcement of the cause of action requires the bringing of a new action, provided that a cause of action remains (2A Carmody-Wait 2d § 11.1).” (Nastasi v Natassi, 26 AD3d 32, 40 [2d Dept 2005]). Further, Nastasi at 36, held that the “[c]ancellation of a notice of pendency can be granted in the exercise of the inherent power of the court where its filing fails to comply with CPLR § 6501 (see 5303 Realty Corp. v O & Y Equity Corp., supra at 320-321; Rose v Montt Assets, 250 AD2d 451, 451-452 [1d Dept 1998]; Siegel, NY Prac § 336 [4th ed]).” Thus, the dismissal of the instant complaint must result in the mandatory cancellation of the “living dead” plaintiff INDYMAC FED’s notices of pendency against the property “in the exercise of the inherent power of the court.”

Th commencement and continuation of the instant action by the “living dead” plaintiff INDYMAC FED, with its false statements of facts, the use of a robosigner and the disingenuous statements by Roger Stotts, Mr. Broyles and his firm, FS & C, appears to be frivolous. 22 NYCRR § 130-1.1 (a) states that “the Court, in its discretion may impose financial sanctions upon any party or attorney in a civil action or proceeding who engages in frivolous conduct as defined in this Part, which shall be payable as provided in section 130-1.3 of this Subpart.” Further, it states in 22 NYCRR § 130-1.1 (b), that “sanctions may be imposed upon any attorney appearing in the action or upon a partnership, firm or corporation with which the attorney is associated.” [*11]

22 NYCRR § 130-1.1 (c) states that:

For purposes of this part, conduct is frivolous if:

(1) it is completely without merit in law and cannot be supported

by a reasonable argument for an extension, modification or

reversal of existing law;

(2) it is undertaken primarily to delay or prolong the resolution of

the litigation, or to harass or maliciously injure another; or

(3) it asserts material factual statements that are false.

It is clear that the instant foreclosure action “is completely without merit in law” and “asserts material factual statements that are false.” Further, Mr. Broyles’ false and defective statements in the April 8, 2009 complaint and the June 2, 2009 certificate of conformity may be a cause for sanctions.

Several years before the drafting and implementation of the Part 130 Rules for

costs and sanctions, the Court of Appeals (A.G. Ship Maintenance Corp. v Lezak, 69 NY2d 1, 6 [1986]) observed that “frivolous litigation is so serious a problem affecting the

proper administration of justice, the courts may proscribe such conduct and impose sanctions in this exercise of their rule-making powers, in the absence of legislation to the contrary (see NY Const, art VI, § 30, Judiciary Law § 211 [1] [b] ).”

Part 130 Rules were subsequently created, effective January 1, 1989, to give the

courts an additional remedy to deal with frivolous conduct. These stand beside Appellate Division disciplinary case law against attorneys for abuse of process or malicious prosecution. The Court, in Gordon v Marrone (202 AD2d 104, 110 [2d Dept 1994], lv denied 84 NY2d 813 [1995]), instructed that:

Conduct is frivolous and can be sanctioned under the court rule if

“it is completely without merit . . . and cannot be supported by a

reasonable argument for an extension, modification or reversal of

existing law; or . . . it is undertaken primarily to delay or prolong

the resolution of the litigation, or to harass or maliciously injure

another” (22 NYCRR 130-1.1[c] [1], [2] . . . ).

In Levy v Carol Management Corporation (260 AD2d 27, 33 [1st Dept 1999]) the Court stated that in determining if sanctions are appropriate the Court must look at the broad pattern of conduct by the offending attorneys or parties. Further, “22 NYCRR

130-1.1 allows us to exercise our discretion to impose costs and sanctions on an errant party . . .” Levy at 34, held that “[s]anctions are retributive, in that they punish past conduct. They also are goal oriented, in that they are useful in deterring future frivolous conduct not only by the particular parties, but also by the Bar at large.”

The Court, in Kernisan, M.D. v Taylor (171 AD2d 869 [2d Dept 1991]), noted that the intent of the Part 130 Rules “is to prevent the waste of judicial resources and to deter vexatious litigation and dilatory or malicious litigation tactics (cf. Minister, Elders & Deacons of Refm. Prot. Church of City of New York v 198 Broadway, 76 NY2d 411; see Steiner v Bonhamer, 146 Misc 2d 10) [Emphasis added].” The instant action, with the “living dead” plaintiff INDYMAC FED: lacking personal jurisdiction and standing; using a robosigner; and, making false statements, is “a waste of judicial resources.” This conduct, as noted in Levy, must be deterred. [*12]In Weinstock v Weinstock (253 AD2d 873 [2d Dept 1998]) the Court ordered the maximum sanction of $10,000.00 for an attorney who pursued an appeal “completely without merit,” and holding, at 874, that “[w]e therefore award the maximum authorized amount as a sanction for this conduct (see, 22 NYCRR 130-1.1) calling to mind that frivolous litigation causes a substantial waste of judicial resources to the detriment of those litigants who come to the Court with real grievances [Emphasis added].” Citing Weinstock, the Appellate Division, Second Department, in Bernadette Panzella, P.C. v De Santis (36 AD3d 734 [2d Dept 2007]) affirmed a Supreme Court, Richmond County $2,500.00 sanction, at 736, as “appropriate in view of the plaintiff’s waste of judicial resources [Emphasis added].”

In Navin v Mosquera (30 AD3d 883 [3d Dept 2006]) the Court instructed that when considering if specific conduct is sanctionable as frivolous, “courts are required to

examine whether or not the conduct was continued when its lack of legal or factual basis was apparent [or] should have been apparent’ (22 NYCRR 130-1.1 [c]).” The Court, in Sakow ex rel. Columbia Bagel, Inc. v Columbia Bagel, Inc. (6 Misc 3d 939, 943 [Sup Ct,

New York County 2004]), held that “[i]n assessing whether to award sanctions, the Court must consider whether the attorney adhered to the standards of a reasonable attorney (Principe v Assay Partners, 154 Misc 2d 702 [Sup Ct, NY County 1992]).” In the instant action, counsel for the “living dead” plaintiff INDYMAC FED, Mr. Broyles and his firm, FS & C, bear a measure of responsibility for commencing and proceeding with an action on behalf of a non-existent plaintiff.

Therefore, the Court will examine the conduct of counsel for the “living dead” plaintiff INDYMAC FED, in a hearing, pursuant to 22 NYCRR § 130-1.1, to determine if plaintiff’s counsel Mark K, Broyles, Esq. and his firm, Fein Such & Crane, LLP, engaged in frivolous conduct, and to allow Mark K. Broyles, Esq. and his firm, Fein, Such & Crane, LLP, a reasonable opportunity to be heard.

Accordingly, it is

ORDERED, that the motion of defendant MENDEL MEISELS to vacate the July 27, 2010 order of reference, pursuant to CPLR Rule 5015 (a) (4), for the premises located at 2062 61st Street, Brooklyn, New York (Block 5528, Lot 33, County of Kings), for lack of personal jurisdiction by plaintiff INDYMAC FEDERAL BANK, FSB, is granted; and it is further

ORDERED, that because plaintiff INDYMAC FEDERAL BANK, FSB ceased to exist prior to the commencement of the instant action, the instant complaint, Index No. 8752/09 is dismissed with prejudice; and it is further

ORDERED, that the notices of pendency filed with the Kings County Clerk on April 9, 2009 and March 9, 2012, by plaintiff, INDYMAC FEDERAL BANK, FSB, in an action to foreclose a mortgage for real property located at 2062 61st Street, Brooklyn, New York (Block 5528, Lot 33, County of Kings), is cancelled and discharged; and it is further

ORDERED, that it appearing that counsel for plaintiff INDYMAC FEDERAL BANK, FSB, Mark K. Broyles, Esq. and his firm, Fein, Such & Crane, LLP engaged in “frivolous conduct,” as defined in the Rules of the Chief Administrator, 22 NYCRR

§ 130-1 (c), and that pursuant to the Rules of the Chief Administrator, 22 NYCRR [*13]

§ 130.1.1 (d), “[a]n award of costs or the imposition of sanctions may be made . . . upon the court’s own initiative, after a reasonable opportunity to be heard,” this Court will conduct a hearing affording: plaintiff’s counsel Mark K. Broyles, Esq.; and, his firm, Fein, Such & Crane, LLP; “a reasonable opportunity to be heard” before me in Part 27, on Monday, November 5, 2012, at 2:30 P.M., in Room 479, 360 Adams Street, Brooklyn, NY 11201; and it is further

ORDERED, that Ronald David Bratt, Esq., my Principal Law Clerk, is directed to serve this order by first-class mail, upon: Mark K. Broyles, Esq., Fein, Such & Crane, LLP, 28 East Main Street, Suite 1800, Rochester, New York 14614; and, Fein, Such & Crane, LLP, 28 East Main Street, Suite 1800, Rochester, New York 14614.

This constitutes the Decision and Order of the Court.

ENTER

___________________________

HON. ARTHUR M. SCHACKJ. S. C.

Two sides to every story. This also took place outside the presence of opposing counsel — to sign trial transcripts.

NY Daily News-

Supreme Court Justice Arthur Schack — who has been hailed nationwide as a hero for standing up for the little guy in foreclosure cases — drew a red bull’s eye on McDonough’s photo and told the lawyer to give it to his partner.

A quirky Brooklyn judge lambasted a lawyer as a “piece of s—” and hung “Wanted” posters featuring the man’s photo — then drew a bull’s eye in red ink on the face, court papers allege.

Supreme Court Justice Arthur Schack — who has been hailed nationwide as a hero for standing up for the little guy in foreclosure cases — is in the crosshairs of lawyers trying to boot him off their case.

[NEW YORK DAILY NEWS]

UPDATE: Case is showing up as Settled: Loan Modified on 3/15/2012 – Thanks J for this info!

Wonder how this panned out? This after he dismissed the case with Prejudice!

What does Dismissed with Prejudice mean? Unfortunately not much. You see after New York Supreme Court Judge Schack dismissed Deutsche Bank’s case against Walter Francis with Prejudice for the inability to demonstrate it owns the mortgage or the note and for an unrecorded mortgage assignment back on March 25, 2011, on December 30, 2011 Deutsche Bank filed the unrecorded assignment of mortgage on what appears to be 9 months later. The assignment is EXECUTED by Denise Bailey who I’m almost certain Judge Schack knows quite well.

Does anyone have the latest info on this case? H/T to Dan H for this info below.

[ipaper docId=101664896 access_key=key-1iahzvhzmdpusqgaxx21 height=600 width=600 /]

Statement of the Hon. Arthur M. Schack, Meghan Faux, Edward Pinto

“FAILURE TO RECOVER: The State OF Housing Markets, Mortgage Servicing Practices and Foreclosures”

March 19, 2012

On behalf of SFF and the millions of homeowners whom were illegally foreclosed upon, we sincerely thank you Judge Schack for taking your time to care and present yourself on this day to speak of your many experiences first hand.

You sir are owed an enormous thank you from across the U.S.A.

Thank you!

.

Statement of the Hon. Arthur M. Schack,

New York State Supreme Court

“FAILURE TO RECOVER: The State OF Housing Markets, Mortgage Servicing Practices and Foreclosures”

March 19, 2012

[ipaper docId=85950017 access_key=key-1ku9e98dn5vbvcod7s50 height=600 width=600 /]

© 2010-19 FORECLOSURE FRAUD | by DinSFLA. All rights reserved.

For Part 1 go here: HSBC v TAHER | Judge SCHACK Grand SLAM!! MERS, Plaintiff’s Counsel, Ocwen Robo-Signers Christina Carter, Scott Anderson, Margery Rotundo Dismissed w/ PREJUDICE

Decided on December 22, 2011

Sup Court, Kings County

HSBC Bank USA, N.A., AS INDENTURE TRUSTEE FOR THE REGISTERED NOTEHOLDERS OF RENAISSANCE HOME EQUITY LOAN TRUST 2007-2, Plaintiff,

Decided on December 12, 2011

Supreme Court, Kings County

U.S. Bank, N.A., Plaintiff,

against

Wayne Ramjit et al., Defendants.

Judge Schack is pretty remarkable not only because he questions all the suspect documents that are in the files, but because he also understands the 1st Amendment.

via Brooklyn Eagle–

Reports Thursday afternoon said that nine people were arrested for disrupting the auction, led out in plastic zip-tie handcuffs by NYPD officers and Brooklyn court officers.

The judges at the Kings County Supreme Court Civil Term didn’t seem too ruffled by the protest outside their offices overlooking Court Street.

“They have a right to express themselves,” said Brooklyn Supreme Court Justice Arthur Schack when asked whether he thought the protesters were misguided. “I have no problem with the First Amendment and the Bill of Rights.”

Decided on August 12, 2011

Supreme Court, Kings County

.

Downey Savings and Loan Association, F.A., Plaintiff,

Decided on July 6, 2011

Supreme Court, Kings County

Citifinancial Mortgage Company, Inc., Plaintiff,

against

Nigel Williams, et al., Defendants.

1946/09

Plaintiff

Peter T. Roach and Associates

Jericho NY

K & L Gates LLP

NY NY

Defendant

Auciello Law Group, PC

Brooklyn NY

Arthur M. Schack, J.

The Court, on August 23, 2010, in this foreclosure action, granted to plaintiff,

CITIFINANCIAL MORTGAGE COMPANY, INC. (CITI), an order of reference for the premises located at 1170 Halsey Street, Brooklyn, New York (Block 3411, Lot 20, County of Kings). Then, on May 20, 2011, plaintiff CITI moved to vacate the August 23, 2010 order of reference. The motion is scheduled for oral argument on August 15, 2011.Yesterday, July 5, 2011, the Court received from plaintiff’s co-counsel, Peter T. Roach & Associates, P.C., a fax of [*2]a letter, dated July 5, 2011, addressed to my chambers and to the attention of my principal law clerk, Ronald D. Bratt, Esq. The letter states:

An application to vacate the Order of Reference Appointing

Referee to Compute was inadvertently submitted to his Court.

Please take this letter as our formal request to vacate the Order

of Reference Appointing Referee to Compute, without prejudice.

A motion to discontinue the action and cancel the notice of

pendency of record will be submitted shortly. Thank you for your

courtesies.

No reason is given by plaintiff’s co-counsel for the request to vacate the August 23, 2010 order of reference.

Moreover, despite the thanks “for your courtesies” at the bottom of the letter addressed to my chambers and to the attention of Mr. Bratt, the letter discourteously states, on the letterhead of Peter T. Roach & Associates, P.C., in boldface and capital letters, “THIS COMMUNICATION IS FROM A DEBT COLLECTOR AND IS AN ATTEMPT TO COLLECT A DEBT. ANY INFORMATION OBTAINED WILL BE USED FOR THAT PURPOSE.” The Court would like to know what debt either Mr. Bratt or myself owes to Peter T. Roach & Associates, P.C. or CITI? Mr. Bratt and I do not owe any debt to Peter T. Roach & Associates, P.C. or CITI. This boldfaced and capitalized statement borders upon frivolous conduct, in violation of 22 NYCRR § 130-1.1. Was it made to cause annoyance or alarm to the Court or Mr. Bratt? Was it made to waste judicial resources? Rather than answer the above rhetorical questions, counsel for plaintiff is directed never to place such a foolish statement in a letter to this Court. If this occurs again, the firm of Peter T. Roach & Associates, P.C. is on notice that this Court will have the firm appear to explain why the firm should not be sanctioned for frivolous conduct.

With respect to the request of plaintiff’s counsel to vacate the order of reference, the Court grants the request to vacate the August 23, 2010 order of reference. Further, the Court, to prevent the waste of judicial resources, for procedural reasons and not upon the merits, dismisses the instant foreclosure action with prejudice.

Real Property Actions and Proceedings Law (RPAPL) § 1321 allows the Court in a foreclosure action, upon the default of the defendant or defendant’s admission of mortgage payment arrears, to appoint a referee “to compute the amount due to the plaintiff.” In the instant action, the Court appointed a referee to compute. Subsequently, plaintiff CITI requested that the Court vacate the order of reference, without prejudice. The Court grants plaintiff’s request to vacate the order of reference. However, to allow the instant action to continue without seeking the ultimate purpose of a foreclosure action, to obtain a judgment of foreclosure and sale, without any valid reason, is a mockery and waste of judicial resources. Continuing the instant action without moving for a judgment of foreclosure and sale is the judicial equivalent of a “timeout,” and granting a “timeout” to plaintiff CITI to move to discontinue without prejudice is a waste of judicial resources. Therefore, the instant action, for these procedural reasons, is dismissed with prejudice.

Moreover, the dismissal of the instant foreclosure action requires the cancellation of the [*3]notice of pendency. CPLR § 6501 provides that the filing of a notice of pendency against a property is to give constructive notice to any purchaser of real property or encumbrancer against real property of an action that “would affect the title to, or the possession, use or enjoyment of real property, except in a summary proceeding brought to recover the possession of real property.” The Court of Appeals, in 5308 Realty Corp. v O & Y Equity Corp. (64 NY2d 313, 319 [1984]), commented that “[t]he purpose of the doctrine was to assure that a court retained its ability to effect justice by preserving its power over the property, regardless of whether a purchaser had any notice of the pending suit,” and, at 320, that “the statutory scheme permits a party to effectively retard the alienability of real property without any prior judicial review.”

CPLR § 6514 (a) provides for the mandatory cancellation of a notice of pendency by:

The Court,upon motion of any person aggrieved and upon such

notice as it may require, shall direct any county clerk to cancel

a notice of pendency, if service of a summons has not been completed

within the time limited by section 6512; or if the action has been

settled, discontinued or abated; or if the time to appeal from a final

judgment against the plaintiff has expired; or if enforcement of a

final judgment against the plaintiff has not been stayed pursuant

to section 551. [emphasis added]

The plain meaning of the word “abated,” as used in CPLR § 6514 (a) is the ending of an action. “Abatement” is defined as “the act of eliminating or nullifying.” (Black’s Law Dictionary 3 [7th ed 1999]). “An action which has been abated is dead, and any further enforcement of the cause of action requires the bringing of a new action, provided that a cause of action remains (2A Carmody-Wait 2d § 11.1).” (Nastasi v Nastasi, 26 AD3d 32, 40 [2d Dept 2005]). Further, Nastasi at 36, held that the “[c]ancellation of a notice of pendency can be granted in the exercise of the inherent power of the court where its filing fails to comply with CPLR § 6501 (see 5303 Realty Corp. v O & Y Equity Corp., supra at 320-321; Rose v Montt Assets, 250 AD2d 451, 451-452 [1d Dept 1998]; Siegel, NY Prac § 336 [4th ed]).” Thus, the dismissal of the instant complaint must result in the mandatory cancellation of CITI’s notice of pendency against the subject property “in the exercise of the inherent power of the court.”

Accordingly, it is

ORDERED, that the request of plaintiff, CITIFINANCIAL MORTGAGE COMPANY, INC., to vacate the order of reference issued by this Court on August 23, 2010, for the premises located at 1170 Halsey Street, Brooklyn, New York (Block 3411, Lot 20, County of Kings), is granted; and it is further

ORDERED, that the instant action, Index Number 1946/09, is dismissed with prejudice; and it is further

ORDERED, that the notice of pendency in the instant action, filed with the Kings County Clerk on January 27, 2009, by plaintiff, CITIFINANCIAL MORTGAGE COMPANY, INC., to foreclose on real property located at 1170 Halsey Street, Brooklyn, New York (Block 3411, Lot 20, County of Kings), is cancelled and discharged; and it is further

ORDERED, that Peter T. Roach & Associates, P.C. is on notice that if any of its attorneys or staff sends any communication to this Court stating “THIS COMMUNICATION IS [*4]FROM A DEBT COLLECTOR AND IS AN ATTEMPT TO COLLECT A DEBT. ANY INFORMATION OBTAINED WILL BE USED FOR THAT PURPOSE,” or something similar, it may be subject to civil contempt and/or sanctions for frivolous conduct, pursuant to 22 NYCRR § 130-1.1.

This constitutes the Decision and Order of the Court.

ENTER

________________________________HON. ARTHUR M. SCHACK

J. S. C.

[ipaper docId=59836764 access_key=key-knkh2svsru1k8fqvir5 height=600 width=600 /]

coup de gras

Decided on July 1, 2011

Supreme Court, Kings County

HSBC Bank USA, N.A., AS INDENTURE TRUSTEE FOR THE REGISTERED NOTEHOLDERS OF RENAISSANCE HOME EQUITY LOAN TRUST 2007-2

against

Ellen N. Taher, et. al.

EXCERPT:

On plaintiff HSBC’s deadline day, January 7, 2011, the 60th day after issuing my November 8, 2010 decision and order, plaintiff’s counsel, Frank M. Cassara, Esq., of Shapiro, DiCaro & Barak, LLC, submitted to my chambers the required affirmation, pursuant to Chief Administrative Judge Pfau’s Administrative Order 548/10. Mr. Cassara, affirmed “under the penalties of perjury”:

[…]

The assignment of the subject mortgage and note to HSBC, by MORTGAGE ELECTRONIC REGISTRATION SYSTEMS, INC. (MERS), in the instant foreclosure action is without legal authority. MERS never possessed the TAHER note it allegedly assigned to plaintiff HSBC. Thus, plaintiff HSBC lacked standing to commence the instant foreclosure action. Therefore, the assignment is defective and the instant action is dismissed with prejudice.

Mr. Cassara’s affirmation, affirmed “under the penalties of perjury,” that to the best of Mr. Cassara’s “knowledge, information, and belief, the Summons and Complaint, and other papers filed or submitted to the [*4]Court in this matter contain no false statements of fact or law,” is patently false. Moreover, the Court is troubled that: the alleged representative of plaintiff HSBC, Christina Carter, who according to Mr. Cassara, “confirmed the factual accuracy and allegations set forth in the Complaint and any supporting affirmations filed with the Court, as well as the accuracy of the notarizations contained in the supporting documents filed therewith,” is not an employee of HSBC, but a robosigner employed by OCWEN LOAN SERVICING, LLC [OCWEN], whose signature on legal documents has at least three variations; the MERS to plaintiff HSBC assignment of the subject mortgage and note was executed by Scott W. Anderson, a known robosigner and OCWEN employee, whose signature is reported to have appeared in at least four different variations on mortgage assignments; and, the instant affidavit of merit was executed by Margery Rotundo, another robosigner, OCWEN employee and self-alleged employee of various other banking entities.

Last month, on May 19, 2011, in a case involving a defective MERS to HSBC assignment by a robosigner, Maine’s highest court, the Supreme Judicial Court, found that HSBC’s affidavits and the assignment of the note and mortgage by MERS to HSBC contained serious defects. The Maine Court held “that the affidavits submitted by HSBC contain serious irregularities that make them inherently untrustworthy.” (HSBC Mortg. Services, Inc. v Murphy, 19 A3d 815, 2011 ME 59, * 3). HSBC has a history of foreclosure actions before me with affidavits of merit executed by Margery Rotundo and MERS to HSBC assignments executed by Scott Anderson that “contain serious irregularities that make them inherently untrustworthy.” Moreover, Mr. Cassara was put on notice, in my November 8, 2010 decision and order, that “[t]he wrongful filing and prosecution of foreclosure proceedings which are discovered to suffer from these defects may be cause for disciplinary and other sanctions upon participating counsel.”

[…]

Robosigner Scott W. Anderson

While I have never personally met Mr. Anderson, his signatures have appeared in many foreclosure documents in this Court. His claims of wearing different corporate hats and the variations in the scrawls of initials used for his signature on mortgage documents has earned Mr. Anderson notoriety as a robosigner. Kimberly Miller, in her January 5, 2011-Palm Beach Post article, “State details foreclosure crisis,” wrote:

Sweeping evidence of the case the state attorney general’s office

has built in its pursuit of foreclosure justice for Florida homeowners is

outlined in a 98-page presentation complete with copies of allegedly

forged signatures, false notarizations, bogus witnesses and improper

mortgage assignments.

The presentation, titled “Unfair, Deceptive and Unconscionable

Acts in Foreclosure Cases,” was given during an early December

conference of the Florida Association of Court Clerks and Comptrollers

by the attorney general’s economic crimes division.

It is one of the first examples of what the state has compiled in

its exploration of foreclosure malpractice, condemning banks, mortgage

servicers and law firms for contributing to the crisis by cutting corners . . .

In page after page of copied records, the presentation meticulously

documents cases of questionable signatures, notarizations that could not

have occurred when they are said to have because of when the notary

stamp expires, and foreclosures filed by entities that might not have

had legal ability to foreclose.

It also focuses largely on assignments of mortgage [sic],

documents that transfer ownership of mortgages from one bank to

another. Mortgage assignments became an issue after the real estate

boom, when mortgages were sold and resold, packaged into securities

trusts and otherwise transferred in a labyrinthine fashion that made

tracking difficult.

As foreclosures mounted, the banks appointed people to create

assignments, “thousands and thousands and thousands” of which were signed weekly by people who may not [*6]have known what they were signing . . .

In another example, the signature of Scott Anderson, an employee

of West Palm Beach-based Ocwen Financial Corp., appears in four

styles on mortgage assignments . . .

Paul Koches, executive vice president of Ocwen, acknowledged

Tuesday that the signatures were not all Anderson’s, but that doesn’t mean

they were forged, he said. Certain employees were given authorization

to sign for Anderson on mortgage assignments, which Koches noted

do not need to be notarized.

Still, Ocwen has since stopped allowing other people to sign for

Anderson, Koches said.

Last September, the Ohio Court of Appeals, Second District, Montgomery County

(2010 WL 3451130, 2010-Ohio-4158, lv denied 17 Ohio St.3d 1532 [2011]), affirmed the denial of a foreclosure, sought by plaintiff HSBC, because of numerous irregularities. The Ohio Court, in citing four decisions by this Court [three of the four involved Scott Anderson as assignor] summarized some of this Court’s prior concerns with HSBC and Mr. Anderson, in observing, at * 11:

recent decisions in the State of New York have noted numerous

irregularities in HSBC’s mortgage documentation and corporate

relationships with Ocwen, MERS, and Delta. See, e.g., HSBC Bank

USA, N.A. v Cherry (2007), 18 Misc 3d 1102 (A) [Scott Anderson

assignor] and HSBC Bank USA, N.A. v Yeasmin (2010), 27 Misc 3d

1227 (A) (dismissing HSBC’s requests for orders of reference in

mortgage foreclosure actions, due to HSBC’s failure to provide proper

affidavits). See, also, e.g., HSBC Bank USA, N.A. v Charlevagne (2008),

20 Misc 3d 1128 (A) [Scott Anderson assignor] and HSBC Bank USA,

N.A. v Antrobus (2008), 20 Misc 3d 1127 (A) [Scott Anderson assignor]

(describing “possible incestuous relationship” between HSBC Bank,

Ocwen Loan Servicing, Delta Funding Corporation, and Mortgage

Electronic Registration Systems, Inc., due to the fact that the entities

all share the same office space at 1661 Worthington Road, Suite 100,

West Palm Beach, Florida. HSBC also supplied affidavits in support

of foreclosure from individuals who claimed simultaneously to be

officers of more than one of these corporations.).This Court reviewed Scott Anderson’s signature on the instant MERS to HSBC assignment of the TAHER mortgage and note and using ACRIS compared his signature with that used in assignments in the five prior Scott Anderson assignment foreclosure cases decided by this Court. Similar to the Florida Attorney General’s Economic Crimes Division findings, as reported above in the Kimberly Miller Palm Beach Post article, I also found four variations of Mr. Anderson’s signature in these six assignments. Each signature is actually a variation of Mr. Anderson’s initials, “SA.” The Court concludes that it must be a herculean task for Mr. Anderson to sign “Scott Anderson” or “Scott W. Anderson” in full.

Mr. Anderson’s first signature variation is found in: the January 19, 2007 assignment of the 48 Van Siclen Avenue (Block 3932, Lot 45, County of Kings) mortgage and note from DEUTSCHE BANK NATIONAL TRUST COMPANY AS TRUSTEE TO MTGLQ INVESTORS LP, by Scott W. Anderson as Senor Vice President of OCWEN, attorney-in-fact for DEUTSCHE BANK (Deutsche Bank Nat Trust Co. v Castellanos, 18 Misc 3d 1115 [A] [Sup Ct, Kings County 2007]), recorded on February 7, 2007 at CRFN 2007000073000; and, the June 13, 2007 assignment of the 3570 Canal Avenue (Block 6978, Lot 20, County of Kings) mortgage and note from MERS to HSBC, by Scott Anderson as Vice President of MERS, acting as nominee for DELTA (HSBC Bank USA, N.A. v Cherry, 18 Misc 3d 1102 (A) [Sup Ct, Kings County 2007]), recorded on August 13, 2007 at CRFN 2007000416732. In this signature variation the letter “S” is a cursive bell-shaped curve overlapping with the cursive letter “A.”

The second signature variation used for Mr. Anderson is in the May 1, 2007 assignment of the 572 Riverdale Avenue (Block 3838, Lot 39, County of Kings) mortgage and note from MERS to HSBC, by Scott Anderson as Vice President of MERS, acting as nominee for DELTA (HSBC Bank USA, N.A. v Valentin, 18 Misc 3d 1123 [A] [Sup [*7]Ct, Kings County 2008]) and HSBC Bank USA, N.A. v Valentin, 21 Misc 3d 1124 [A] [Sup Ct, Kings County 2008], affd as modified 72 AD3d 1027 [2010]), recorded on June 13, 2007 at CRFN 2007000306260. These decisions will be referred to as Valentin I and Valentin II. In this signature variation the letter “S” is a cursive circle around a cursive letter “A” with various loops.

The third signature variation used for Mr. Anderson is in the November 30, 2007 assignment of the 680 Decauter Street (Block 1506, Lot 2, County of Kings) mortgage and note from MERS to HSBC, by Scott Anderson as Vice President of MERS, acting as nominee for DELTA (HSBC Bank USA, N.A. v Antrobus, 20 Misc 3d 1127 [A] [Sup Ct, Kings County [2008]), recorded on January 16, 2008 at CRFN 2008000021186. In this signature variation, the initials are illegible. One cursive letter looks almost like the letter “O.” It is a circle sitting in a valley created by something that looks like the cursive letter “M.”

In the fourth signature variation, used for Mr. Anderson in the February 16, 2009 assignment in the instant case, the cursive letter “S,” which is circular with a loop on the lower left side abuts the cursive letter “A” to its right.

Moreover, in HSBC Bank USA, N.A. v Cherry, Mr. Anderson acted both as assignor of the mortgage and note to HSBC and then as servicing agent for assignee HSBC by executing the “affidavit of merit”for a default judgment. Because of this, in Valentin I, I required him to provide me with an affidavit about his employment history. In Valentin II the Court was provided with an affidavit by Mr. Anderson, sworn on March 14, 2008. Mr. Anderson, in his affidavit, admitted he was conflicted. I noted, at * 2, in Valentin II that:

The Court is troubled that Mr. Anderson acted as both assignor

of the instant mortgage loan, and then as the Vice President of Ocwen,

assignee HSBC’s servicing agent. He admits to this conflict, in ¶ 13,

stating that “[w]hen the loan went into default and then foreclosure in

2007, Ocwen, in it capacity as servicer, elected to remove the loan

from the MERS system and transfer title to HSBC.”

The stockholders of HSBC and the noteholders of the Trust [the

owner of the mortgage] probably are not aware that Mr. Anderson,

on behalf of the servicer, Ocwen, claims to have the right to assign

“toxic” nonperforming mortgage loans to them. It could well be that

Ocwen’s transfer of the instant nonperforming loan, as well as others, is

part of what former Federal Reserve Board Chairman Alan Greenspan

referred to in his October 23, 2008 testimony, before the House

Oversight Committee, as “a once in a century credit tsunami.”

Interestingly, the purported signature of Mr. Anderson in the March 14, 2008-Valentin II affidavit is a fifth signature variation. The Court is perplexed that in response to my order for Mr. Anderson to submit an affidavit with respect to his employment, Mr. Anderson was unable to sign either “Scott Anderson” or “Scott W. Anderson.” Instead, there is a fifth variation of scrawled initials. There is a big loop for the cursive letter “S,” which contains within it something that looks like the cursive letter “M” going into lines that look like the cursive letter “V,” with a wiggly line going to the right of the page.

Robosigner Margery Rotundo

In the instant action, Margery Rotundo executed the April 27, 2009 affidavit of merit and amount due. Ms. Rotundo has, in prior foreclosure cases before me, a history of alleging to be the Senior Vice President of various entities, including plaintiff HSBC, Nomura Credit & Capital, Inc. and an unnamed servicing agent for HSBC. In the instant action she claims to be the Senior Vice President of Residential Loss Mitigation of OCWEN, HSBC’s servicing agent.

In HSBC Bank USA, N.A. v Charlevagne (20 Misc 3d 1128 (A) [Sup Ct, Kings County 2008]), one of the cases in which Scott Anderson as Vice President of MERS assigned the mortgage and note to HSBC, I commented about Ms. Rotundo’s self-allegations of multiple employers, at * 1:

The renewed application of plaintiff, HSBC . . . for an order of

reference and related relief in this foreclosure action, in which all

defendants defaulted, for the premises located at 455 Crescent Street,

Brooklyn, New York (Block 4216, Lot 20, County of Kings) is again [*8]

denied without prejudice, with leave to renew upon providing the

Court with a satisfactory explanation to four concerns.

First, the original application for an order of reference and

related relief was denied with leave to renew, in my unpublished

decision and order of November 15, 2007, because the “affidavit of

merit” was not made by a party but by Margery Rotundo, who swore

that [she] was “Senior Vice President Residential Loss Mitigation of

OCWEN LOAN SERVICING, LLC [OCWEN], Attorney in Fact for

HSBC,”and the “Limited Power of Attorney” from HSBC to OCWEN

was defective. In the renewed application, Ms. Rotundo claims in her

January 9, 2008-“affidavit of merit and amount due,” that she “is the

Senior Vice President of Residential Loss Mitigation of HSBC BANK

USA, N.A., AS INDENTURE TRUSTEE FOR THE REGISTERED NOTEHOLDERS OF RENAISSANCE HOME EQUITY LOAN

TRUST 2005-3, RENAISSANCE HOME EQUITY LOAN ASSET-

BACKED NOTES, SERIES 2005-3.” In prior decisions, I found that

Ms. Rotundo swore: on October 5, 2007 to be Senior Vice President

of Loss Mitigation for Nomura Credit & Capital, Inc. (Nomura Credit

& Capital, Inc., 19 Misc 3d 1126 (A) [April 30, 2008]); and, on

December 12, 2007 to be Senior Vice President of an unnamed

servicing agent for HSBC (HSBC Bank USA, NA v Antrobus, 20

Misc 3d 1127 (A) [July 31, 2008]).

The late gossip columnist Hedda Hopper and the late United

States Representative Bella Abzug were famous for wearing many

colorful hats. With all the corporate hats Ms. Rotundo has recently

worn, she might become the contemporary millinery rival to both

Ms. Hopper and Ms. Abzug. The Court needs to know the employment

history of the peripatetic Ms. Rotundo. Did she truly switch employers

or did plaintiff have her sign the “affidavit of merit and amount due”

as its Senior Vice President solely to satisfy the Court?

In my Charlevagne decision and order I denied an order of reference without prejudice and granted leave to plaintiff HSBC to renew its application for an order of reference for the premises by providing the Court with several documents, including, at * 4, “an affidavit from Margery Rotundo describing her employment history for the past three years.” Subsequently, plaintiff HSBC’s counsel in Charlevagne, Steven J. Baum, P.C., never provided me with an affidavit from Margery Rotundo, but filed with the Kings County Clerk, on October 27, 2008, a stipulation of discontinuance and cancellation of the notice of pendency.

Robosigner Christina Carter

Mr. Cassara, plaintiff’s counsel affirmed that “On January 4, 2011 and January 5, 2011, I communicated with the following representative . . . of Plaintiff . . . Christina Carter . . . Manager of Account Management.” This is disingenuous. Ms. Carter is not employed by plaintiff, but by OCWEN. She executed documents as an officer of MERS and as an employee of OCWEN. Ms. Carter’s signature on documents is suspect because of the variations of her signature used.

This Court examined eight recent documents that exhibit three different variations of Christina Carter’s signature. The first signature variation is on her May 24, 2010 application with the Florida Department of State for a notary public commission. In this application she lists as her business address that of OCWEN, “1661 Worthington Road, West Palm Beach, FL 33409.” In her full signature the capital letters “C” in her first and last names are signed differently than in other recent documents reviewed by this Court.

In five other documents reviewed by the Court, Ms. Carter signs her initials with the second letter “C” looking like a cursive letter “L,” with a circular loop on the second letter “C.” Three of these documents are deeds of release to acknowledge mortgage satisfactions, filed with the Clerk of Court for Middlesex County, South District, State of Massachusetts. In the first document, signed on July 2, 2010, Ms. Carter signed as “Account Management, Manager” for OCWEN, for the premises at 158 Algonquin Trail, Ashland, Massachusetts, with the deed of release [*9]recorded on September 9, 2010, at document number 2010 00156681. In the second document, signed on July 7, 2010, Ms. Carter signed as “Account Management, Manager” for US BANK NATIONAL ASSOCIATION, AS TRUSTEE BY ITS ATTORNEY-IN-FACT OCWEN LOAN SERVICING, LLC, for the premises at 30 Kenilworth Street, Malden, Massachusetts, with the deed of release recorded on September 3, 2010, at document number 2010 01542078. In the third Middlesex County, Massachusetts document, signed on July 19, 2010, she signed as “Account Management, Manager” for OCWEN, for the premises at 10 Johnson Farm Road, Lexington, Massachusetts, with the deed of release recorded on September 9, 2010, at document number 2010 00156684. In the fourth document, signed on July 12, 2010, for the assignment of a mortgage for 1201 Pine Sage Circle, West Palm Beach, Florida, Ms. Carter signed as “Account Management, Manager” for NEW CENTURY MORTGAGE CORPORATION BY ITS ATTORNEY-IN-FACT OCWEN LOAN SERVICING, LLC (NEW CENTURY). This mortgage was assigned to DEUTSCHE BANK NATIONAL TRUST COMPANY, AS TRUSTEE FOR IXIS REAL ESTATE CAPITAL TRUST 2005-HE3 MORTGAGE PASS THROUGH CERTIFICATES, SERIES 2005-HE3 (DEUTSCHE BANK) and recorded on August 23, 2010 with the Palm Beach County Clerk at CFN 20100314054. Interestingly, both assignor NEW CENTURY and assignee DEUTSCHE BANK have the same address, c/o OCWEN, “1661 Worthington Road, Suite 100, West Palm Beach, FL 33409.” In the fifth document, Ms. Carter changes corporate hats. She signed, on September 8, 2010, an Oregon assignment of a mortgage deed of trust, for 20673 Honeysuckle Lane, Bend Oregon, as Vice President of MERS “ACTING SOLELY AS NOMINEE FOR CHAPEL MORTGAGE CORPORATION.” The assignment is to DEUTSCHE BANK NATIONAL TRUST COMPANY, AS TRUSTEE FOR IXIS REAL ESTATE CAPITAL TRUST 2006-HE2 MORTGAGE PASS THROUGH CERTIFICATES, SERIES 2006-HE2, whose address is c/o OCWEN, “1661 Worthington Road, Suite 100, West Palm Beach, FL 33409.” This was recorded on September 20, 2010 with the Clerk of Deschutes County, Oregon.

Ms. Carter, in the third variation of her signature, again only uses her initials, but the second letter “C” looks like the cursive letter “C,” not the cursive letter “L” with a circular loop. The Court examined two of these documents. The first document is a mortgage satisfaction, signed on June 15, 2010, and filed with the Clerk of Court for Middlesex County, South District, State of Massachusetts. Ms. Carter signed as “Account Management, Manager” for OCWEN, for the premises at 4 Mellon Road, Billerica, Massachusetts. The deed of release was recorded on July 19, 2010, at document number 2010 00031211. In the second document, a mortgage satisfaction for the premises at 13352 Bedford Meadows Court, Wellington, Florida, Ms. Carter signed on July 22, 2010, as “Account Management, Manager” for “HSBC BANK USA, NATIONAL ASSOCIATION AS TRUSTEE BY ITS ATTORNEY-IN FACT OCWEN LOAN SERVICING, LLC.” The document never states for whom HSBC is the Trustee.

This was recorded on September 10, 2010 with the Palm Beach County Clerk at CFN 20100339935.

Real Property Actions and Proceedings Law (RPAPL) § 1321 allows the Court in a foreclosure action, upon the default of defendant or defendant’s admission of mortgage payment arrears, to appoint a referee “to compute the amount due to the plaintiff.” Plaintiff HSBC’s application for an order of reference is a preliminary step to obtaining a default judgment of foreclosure and sale. (Home Sav. Of Am., F.A. v Gkanios, 230 AD2d 770 [2d Dept 1996]).

However, the instant action must be dismissed because plaintiff HSBC lacks standing to bring this action. MERS lacked the authority to assign the subject TAHER mortgage to HSBC and there is no evidence that MERS physically possessed the TAHER notes. Under the terms of the TAHER consolidation, extension and modification agreement, DELTA, not MERS, is the “Note Holder.” As described above, the consolidation, extension and modification agreement defines the “Note Holder” as the “Lender or anyone who succeeds to Lender’s rights under this Agreement and who is entitled to receive the payments.”

“Standing to sue is critical to the proper functioning of the judicial system. It is a threshold issue. If standing is denied, the pathway to the courthouse is blocked. The plaintiff who has standing, however, may cross the threshold and seek judicial redress.” (Saratoga County Chamber of Commerce, Inc. v Pataki, 100 NY2d 801 812 [2003], cert denied 540 US 1017 [2003]). Professor David Siegel (NY Prac, § 136, at 232 [4d ed]), instructs that:

[i]t is the law’s policy to allow only an aggrieved person to bring a

lawsuit . . . A want of “standing to sue,” in other words, is just another

way of saying that this particular plaintiff is not involved in a genuine

controversy, and a simple syllogism takes us from there to a “jurisdictional” [*10]

dismissal: (1) the courts have jurisdiction only over controversies; (2) a

plaintiff found to lack “standing”is not involved in a controversy; and

(3) the courts therefore have no jurisdiction of the case when such a

plaintiff purports to bring it.

“Standing to sue requires an interest in the claim at issue in the lawsuit that the law will recognize as a sufficient predicate for determining the issue at the litigant’s request.” (Caprer v Nussbaum (36 AD3d 176, 181 [2d Dept 2006]). If a plaintiff lacks standing to sue, the plaintiff may not proceed in the action. (Stark v Goldberg, 297 AD2d 203 [1st Dept 2002]).

The Appellate Division, Second Department recently instructed, with respect to standing in a foreclosure action, in Aurora Loan Services, LLC v Weisblum (___ AD3d ___, 2011 NY Slip Op 04184 [May 17, 2011]), at * 6-7, that:

In order to commence a foreclosure action, the plaintiff must

have a legal or equitable interest in the mortgage ( see Wells Fargo

Bank, N.A. v Marchione, 69 AD3d, 204, 207 [2d Dept 2009]). A

plaintiff has standing where it is both (1) the holder or assignee of

the subject mortgage and (2) the holder or assignee of the underlying

note, either by physical delivery or execution of a written assignment

prior to the commencement of the action with the filing of the complaint

(see Wells Fargo Bank, N.A. v Marchione, 69 AD3d at 207-209; U.S.

Bank v Collymore, 68 AD3d 752, 754 [2d Dept 2009].)

Assignments of mortgages and notes are made by either written instrument or the

assignor physically delivering the mortgage and note to the assignee. “Our courts have repeatedly held that a bond and mortgage may be transferred by delivery without a written instrument of assignment.” (Flyer v Sullivan, 284 AD 697, 699 [1d Dept 1954]).

In the instant action, even if MERS had authority to transfer the mortgage to HSBC, DELTA, not MERS, is the note holder. Therefore, MERS cannot transfer something it never proved it possessed. A “foreclosure of a mortgage may not be brought by one who has no title to it and absent transfer of the debt, the assignment of the mortgage is a nullity [Emphasis added].” (Kluge v Fugazy (145 AD2d 537, 538 [2d Dept 1988]). Moreover, “a mortgage is but an incident to the debt which it is intended to secure . . . the logical conclusion is that a transfer of the mortgage without the debt is a nullity, and no interest is assigned by it. The security cannot be separated from the debt, and exist independently of it. This is the necessary legal conclusion.” (Merritt v Bartholick, 36 NY 44, 45 [1867]. The Appellate Division, First Department, citing Kluge v Fugazy in Katz v East-Ville Realty Co. ( 249 AD2d 243 [1d Dept 1998]), instructed that “[p]laintiff’s attempt to foreclose upon a mortgage in which he had no legal or equitable interest was without foundation in law or fact.” (See U.S. Bank, N.A. v Collymore, 68 AD3d at 754).

MERS had no authority to assign the subject mortgage and note

Scott Anderson for MERS as assignor, did not have specific authority to sign the TAHER mortgage. Under the terms of the consolidation, extension and modification agreement, MERS is “acting solely as nominee for Lender [DELTA].” The alleged power of attorney cited in the Scott Anderson MERS to HSBC assignment, as described [*11]above, is a limited power of attorney from DELTA to OCWEN for the premises located at 14 Harden Street, Brooklyn, New York, not the subject premises. MERS is not mentioned or involved with this limited power of attorney. In both underlying TAHER mortgages MERS was “acting solely as a nominee for Lender,” which is DELTA. The term “nominee” is defined as “[a] person designated to act in place of another, usu. in a very limited way” or “[a] party who holds bare legal title for the benefit of others.” (Black’s Law Dictionary 1076 [8th ed 2004]). “This definition suggests that a nominee possesses few or no legally enforceable rights beyond those of a principal whom the nominee serves.” (Landmark National Bank v Kesler, 289 Kan 528, 538 [2009]). The Supreme Court of Kansas, in Landmark National Bank, 289 Kan at 539, observed that:

The legal status of a nominee, then, depends on the context of

the relationship of the nominee to its principal. Various courts have

interpreted the relationship of MERS and the lender as an agency

relationship. See In re Sheridan, 2009 WL631355, at *4 (Bankr. D.

Idaho, March 12, 2009) (MERS “acts not on its own account. Its

capacity is representative.”); Mortgage Elec. Registrations Systems,

Inc. v Southwest, 2009 Ark. 152 ___, ___SW3d___, 2009 WL 723182

(March 19, 2009) (“MERS, by the terms of the deed of trust, and its

own stated purposes, was the lender’s agent”); La Salle Nat. Bank v

Lamy, 12 Misc 3d 1191 [A], at *2 [Sup Ct, Suffolk County 2006]) . . .

(“A nominee of the owner of a note and mortgage may not effectively

assign the note and mortgage to another for want of an ownership

interest in said note and mortgage by the nominee.”)

The New York Court of Appeals in MERSCORP, Inc. v Romaine (8 NY3d 90 [2006]), explained how MERS acts as the agent of mortgagees, holding at 96:

In 1993, the MERS system was created by several large

participants in the real estate mortgage industry to track ownership

interests in residential mortgages. Mortgage lenders and other entities,

known as MERS members, subscribe to the MERS system and pay

annual fees for the electronic processing and tracking of ownership

and transfers of mortgages. Members contractually agree to appoint

MERS to act as their common agent on all mortgages they register

in the MERS system. [Emphasis added]

Thus, it is clear that MERS’s relationship with its member lenders is that of agent with the lender-principal. This is a fiduciary relationship, resulting from the manifestation of consent by one person to another, allowing the other to act on his behalf, subject to his control and consent. The principal is the one for whom action is to be taken, and the agent is the one who acts.It has been held that the agent, who has a fiduciary relationship with the principal, “is a party who acts on behalf of the principal with the latter’s express, implied, or apparent authority.” (Maurillo v Park Slope U-Haul, 194 AD2d 142, 146 [2d [*12]Dept 1992]). “Agents are bound at all times to exercise the utmost good faith toward their principals. They must act in accordance with the highest and truest principles of morality.” (Elco Shoe Mfrs. v Sisk, 260 NY 100, 103 [1932]). (See Sokoloff v Harriman Estates Development Corp., 96 NY 409 [2001]); Wechsler v Bowman, 285 NY 284 [1941]; Lamdin v Broadway Surface Advertising Corp., 272 NY 133 [1936]). An agent “is prohibited from acting in any manner inconsistent with his agency or trust and is at all times bound to exercise the utmost good faith and loyalty in the performance of his duties.” (Lamdin, at 136).

Thus, in the instant action, MERS, as nominee for DELTA, is DELTA’s agent for limited purposes. It only has those powers given to it and authorized by DELTA, its principal. Plaintiff HSBC failed to submit documents authorizing MERS, as nominee for DELTA, to assign the subject consolidation extension and modification mortgage to plaintiff HSBC. Therefore, MERS lacked authority to assign the TAHER mortgage, making the assignment defective. In Bank of New York v Alderazi (28 Misc 3d 376, 379-380 [Sup Ct, Kings County 2010]), Justice Wayne Saitta instructed that:

A party who claims to be the agent of another bears the burden

of proving the agency relationship by a preponderance of the evidence

(Lippincott v East River Mill & Lumber Co., 79 Misc 559 [1913])

and “[t]he declarations of an alleged agent may not be shown for

the purpose of proving the fact of agency.” (Lexow & Jenkins, P.C. v

Hertz Commercial Leasing Corp., 122 AD2d 25 [2d Dept 1986]; see

also Siegel v Kentucky Fried Chicken of Long Is. 108 AD2d 218 [2d

Dept 1985]; Moore v Leaseway Transp/ Corp., 65 AD2d 697 [1st Dept

1978].) “[T]he acts of a person assuming to be the representative of

another are not competent to prove the agency in the absence of evidence

tending to show the principal’s knowledge of such acts or assent to them.”

(Lexow & Jenkins, P.C. v Hertz Commercial Leasing Corp., 122 AD2d

at 26, quoting 2 NY Jur 2d, Agency and Independent Contractors § 26).

Further, several weeks ago, the Appellate Division, Second Department in Bank

of New York v Silverberg, (___ AD3d ___, 2011 NY Slip Op 05002 [June 7, 2011]), confronted the issue of “whether a party has standing to commence a foreclosure action when that party’s assignor—in this case, Mortgage Electronic Registration Systems, Inc. (hereinafter MERS)—was listed in the underlying mortgage instruments as a nominee and mortgagee for the purpose of recording, but was never the actual holder or assignee of the underlying notes.” The Court held, “[w]e answer this question in the negative.” Silverberg, similar to the instant TAHER matter, deals with the foreclosure of a mortgage with a consolidation, modification and extension agreement. MERS, in the Silverberg case and the instant TAHER action, never had title or possession of the Note and the definition of “Note Holder” is substantially the same in both consolidation, extension and [*13]modification agreements. The Silverberg Court instructed, at * 4-5:

the assignment of the notes was thus beyond MERS’s authority as

nominee or agent of the lender (see Aurora Loan Servs., LLC v

Weisblum, AD3d, 2011 NY Slip Op 04184, *6-7 [2d Dept 2011];

HSBC Bank USA v Squitteri, 29 Misc 3d 1225 [A] [Sup Ct, Kings

County, F. Rivera, J.]; ; LNV Corp. v Madison Real Estate, LLC,

2010 NY Slip Op 33376 [U] [Sup Ct, New York County 2010,

York, J.]; LPP Mtge. Ltd. v Sabine Props., LLC, 2010 NY Slip Op

32367 [U] [Sup Ct, New York County 2010, Madden, J.]; Bank of

NY v Mulligan, 28 Misc 3d 1226 [A] [Sup Ct, Kings County 2010,

Schack, J.]; One West Bank, F.S.B., v Drayton, 29 Misc 3d 1021

[Sup Ct, Kings County 2010, Schack, J.]; Bank of NY v Alderazi,

28 Misc 3d 376, 379-380 [Sup Ct, Kings County 2010, Saitta, J.]

[the “party who claims to be the agent of another bears the burden

of proving the agency relationship by a preponderance of the evidence”];

HSBC Bank USA v Yeasmin, 24 Misc 3d 1239 [A] [Sup Ct, Kings

County 2010, Schack, J.]; HSBC Bank USA, N.A. v Vasquez, 24

Misc 3d 1239 [A], [Sup Ct, Kings County 2009, Schack, J.]; Bank of

NY v Trezza, 14 Misc 3d 1201 [A] [Sup Ct, Suffolk County 2006,

Mayer, J.]; La Salle Bank Natl. Assn. v Lamy, 12 Misc 3d 1191 [A]

[Sup Ct, Suffolk County, 2006, Burke, J.]; Matter of Agard, 444 BR

231 [Bankruptcy Court, ED NY 2011, Grossman, J.]; but see U.S.

Bank N.A. v Flynn, 27 Misc 3d 802 [Sup Ct, Suffolk County 2011,

Whelan, J.]).

Moreover, the Silverberg Court concluded, at * 5, that “because MERS was never the lawful holder or assignee of the notes described and identified in the consolidation agreement, the . . . assignment of mortgage is a nullity, and MERS was without authority to assign the power to foreclose to the plaintiff. Consequently, the plaintiff failed to show that it had standing to foreclose.” Further, Silverberg the Court observed, at * 6, “the law must not yield to expediency and the convenience of lending institutions. Proper procedures must be followed to ensure the reliability of the chain of ownership, to secure the dependable transfer of property, and to assure the enforcement of the rules that govern real property.” [Emphasis added]

Therefore, the instant action is dismissed with prejudice.

The dismissal with prejudice of the instant foreclosure action requires the

cancellation of the notice of pendency. CPLR § 6501 provides that the filing of a notice of pendency against a property is to give constructive notice to any purchaser of real property or encumbrancer against real property of an action that “would affect the title to, or the possession, use or enjoyment of real property, except in a summary proceeding [*14]brought to recover the possession of real property.” The Court of Appeals, in 5308 Realty Corp. v O & Y Equity Corp. (64 NY2d 313, 319 [1984]), commented that “[t]he purpose of the doctrine was to assure that a court retained its ability to effect justice by preserving its power over the property, regardless of whether a purchaser had any notice of the pending suit,” and, at 320, that “the statutory scheme permits a party to effectively retard the alienability of real property without any prior judicial review.”

CPLR § 6514 (a) provides for the mandatory cancellation of a notice of pendency by:

The Court, upon motion of any person aggrieved and upon such

notice as it may require, shall direct any county clerk to cancel

a notice of pendency, if service of a summons has not been completed

within the time limited by section 6512; or if the action has been

settled, discontinued or abated; or if the time to appeal from a final

judgment against the plaintiff has expired; or if enforcement of a

final judgment against the plaintiff has not been stayed pursuant

to section 551. [emphasis added]

The plain meaning of the word “abated,” as used in CPLR § 6514 (a) is the ending of an action. “Abatement” is defined as “the act of eliminating or nullifying.” (Black’s Law Dictionary 3 [7th ed 1999]). “An action which has been abated is dead, and any further enforcement of the cause of action requires the bringing of a new action, provided that a cause of action remains (2A Carmody-Wait 2d § 11.1).” (Nastasi v Natassi, 26 AD3d 32, 40 [2d Dept 2005]). Further, Nastasi at 36, held that the “[c]ancellation of a notice of pendency can be granted in the exercise of the inherent power of the court where its filing fails to comply with CPLR § 6501 (see 5303 Realty Corp. v O & Y Equity Corp., supra at 320-321; Rose v Montt Assets, 250 AD2d 451, 451-452 [1d Dept 1998]; Siegel, NY Prac § 336 [4th ed]).” Thus, the dismissal of the instant complaint must result in the mandatory cancellation of plaintiff HSBC’s notice of pendency against the property “in the exercise of the inherent power of the court.”

In this Court’s November 8, 2010 decision and order, Mr. Cassara and his firm, as counsel for plaintiff HSBC, were put on notice about the new affirmation required to be submitted by plaintiff’s counsel in foreclosure actions, pursuant to Administrative Order 548/10. In foreclosure cases pending on October 20, 2010, such as the TAHER case, the affirmation is required to be filed with the Court when moving for either an order of reference or a judgment of foreclosure and sale or five business days before a scheduled auction. Chief Judge Lippman, according to the Office of Court Administrations’s October 20, 2010 press release, stated that, “[t]his new filing requirement will play a vital role in ensuring that the documents judges rely on will be thoroughly examined, accurate, and error-free before any judge is asked to take the drastic step of foreclosure.”

Plaintiff’s counsel was warned that defects in foreclosure filings “include failure of plaintiffs and their counsel to review documents and files to establish standing and other [*15]foreclosure requisites; filing of notarized affidavits which falsely attest to such review and to other critical facts in the foreclosure process; and robosigning’ of documents by parties and counsel.” Mr. Cassara affirmed “under the penalties of perjury,” on January 6, 2011, to the factual accuracy of the complaint, the supporting documents and notarizations contained therein and that the complaint and papers filed with the Court in the TAHER matter “contain no false statements of fact or law.” Further, plaintiff’s counsel was informed that “[t]he wrongful filing and prosecution of foreclosure proceedings which are discovered to suffer from these defects may be cause

for disciplinary and other sanctions upon participating counsel [Emphasis added].”

However, plaintiff HSBC did not have standing to bring the instant action and its

complaint is replete with false statements. For example, ¶ 1 alleges that HSBC has an office at “1661 Worthington Road, Suite 100, P.O. Box 24737, West Palm Beach, FL 33415.” This is actually OCWEN’s office. OCWEN’s zip code is 33409, not 33415. Also, how big is P.O. Box 24737? Is it big enough to contain an HSBC office? Further, ¶ 6 alleges that HSBC is the owner of the note, which it is not. MERS had no authority to assign the note owned by DELTA to HSBC. MERS was DELTA’s nominee for recording the TAHER-consolidated mortgage but it never possessed the underlying note. (See Bank of New York v Silverberg at * 4-5).

Three robosigners – Scott Anderson, Margery Rotundo and Christina Carter – are involved in this matter. Scott Anderson, who wears many corporate hats and has at least five variations of his initials scrawled on documents filed in this Court, is the alleged assignor of the subject mortgage and note to HSBC, despite lacking authority from DELTA. Both alleged assignor MERS and alleged assignee HSBC have the same address – 1661 Worthington Road, Suite 100, West Palm Beach, Florida 33409. The milliner’s delight Margery Rotundo executed the affidavit of merit for OCWEN. Then, Mr. Cassara relied upon Christina Carter as the representative of HSBC to confirm the accuracy of HSBC’s documents and their notarizations. However, she is not employed by HSBC. Is Mr. Cassara aware of the robosigning history of Mr. Anderson, Ms. Rotundo and Ms. Carter?

Putting aside HSBC’s lack of standing, MERS allegedly assigned the TAHER- consolidated mortgage and note to HSBC 169 days after defendant TAHER allegedly defaulted in her payments. If HSBC has a duty to make money for its stockholders, why is it purchasing nonperforming loans, and then wasting the Court’s time with defective paperwork and the use of robosigners? The Courts have limited resources, even more so in light of the recent cuts in the budget for fiscal year 2012 and the layoff of several hundred court employees by the Office of Court Administration. The Courts cannot allow itself, as Chief Judge Lippman said in OCA’s October 20, 2010 press release, “to stand by idly and be party to what we know is a deeply flawed process, especially when that process involves basic human needs – such as a family home – during this period of economic crisis.” [*16]

Last year, in HSBC Bank USA v Yeasmin, 24 Misc 3d 1239 [A], for a variety of reasons, I denied plaintiff’s renewed motion for an order of reference and dismissed the foreclosure action with prejudice. Plaintiff’s counsel in YeasminYeasmin, at * 8, that Mr. Westmoreland stated: submitted an affidavit by Thomas Westmoreland, Vice President of Loan Documentation for HSBC, in which he admitted to a lack of due diligence by HSBC. I observed in

in his affidavit, in ¶’s 4 – 7 and part of ¶ 10:

4. The secondary mortgage market is, essentially, the buying and

selling of “pools” of mortgages.

5. A mortgage pools is the packaging of numerous mortgage

loans together so that an investor may purchase a significant

number of loans in one transaction.

6. An investigation of each and every loan included in a particular

mortgage pool, however, is not conducted, nor is it feasible.

7. Rather, the fact that a particular mortgage pool may

include loans that are already in default is an ordinary risk

of participating in the secondary market . . .

10. . . . Indeed, the performance of the mortgage pool is the

measure of success, not any one individual loan contained

therein. [Emphasis added]

The Court can only wonder if . . . the dissemination of this

decision will result in Mr. Westmoreland’s affidavit used as evidence

in future stockholder derivative actions against plaintiff HSBC. It can’t

be comforting to investors to know that an officer of a financial

behemoth such as plaintiff HSBC admits that “[a]n investigation of

each and every loan included in a particular mortgage pool, however,

is not conducted, nor is it feasible” and that “the fact that a particular

mortgage pool may include loans that are already in default is an

ordinary risk of participating in the secondary market.”

Therefore, the continuation of this action by plaintiff HSBC, with its false

statements of facts, the use of robosigners, and the disingenuous affirmation of Mr. Cassara, appears to be frivolous. 22 NYCRR § 130-1.1 (a) states that “the Court, in its discretion may impose financial sanctions upon any party or attorney in a civil action or proceeding who engages in frivolous conduct as defined in this Part, which shall be payable as provided in section 130-1.3 of this Subpart.” Further, it states in 22 NYCRR § 130-1.1 (b), that “sanctions may be imposed upon any attorney appearing in the action or upon a partnership, firm or corporation with which the attorney is associated.”

22 NYCRR § 130-1.1(c) states that:

For purposes of this part, conduct is frivolous if: [*17]

(1) it is completely without merit in law and cannot be supported

by a reasonable argument for an extension, modification or

reversal of existing law;

(2) it is undertaken primarily to delay or prolong the resolution of

the litigation, or to harass or maliciously injure another; or

(3) it asserts material factual statements that are false.

It is clear that the instant motion for an order of reference “is completely without merit in law” and “asserts material factual statements that are false.” Further, Mr. Cassara’s January 6, 2011 affirmation, with its false and defective statements may be a cause for sanctions.

Several years before the drafting and implementation of the Part 130 Rules for

costs and sanctions, the Court of Appeals (A.G. Ship Maintenance Corp. v Lezak, 69 NY2d 1, 6 [1986]) observed that “frivolous litigation is so serious a problem affecting the

proper administration of justice, the courts may proscribe such conduct and impose sanctions in this exercise of their rule-making powers, in the absence of legislation to the contrary (see NY Const, art VI, § 30, Judiciary Law § 211 [1] [b] ).”

Part 130 Rules were subsequently created, effective January 1, 1989, to give the

courts an additional remedy to deal with frivolous conduct. These stand beside Appellate Division disciplinary case law against attorneys for abuse of process or malicious prosecution. The Court, in Gordon v Marrone (202 AD2d 104, 110 [2d Dept 1994], lv denied 84 NY2d 813 [1995]), instructed that:

Conduct is frivolous and can be sanctioned under the court rule if

“it is completely without merit . . . and cannot be supported by a

reasonable argument for an extension, modification or reversal of

existing law; or . . . it is undertaken primarily to delay or prolong

the resolution of the litigation, or to harass or maliciously injure

another” (22 NYCRR 130-1.1[c] [1], [2] . . . ).

In Levy v Carol Management Corporation (260 AD2d 27, 33 [1st Dept 1999]) the Court stated that in determining if sanctions are appropriate the Court must look at the broad pattern of conduct by the offending attorneys or parties. Further, “22 NYCRR

130-1.1 allows us to exercise our discretion to impose costs and sanctions on an errant party . . .” Levy at 34, held that “[s]anctions are retributive, in that they punish past conduct. They also are goal oriented, in that they are useful in deterring future frivolous conduct not only by the particular parties, but also by the Bar at large.”

The Court, in Kernisan, M.D. v Taylor (171 AD2d 869 [2d Dept 1991]), noted that the intent of the Part 130 Rules “is to prevent the waste of judicial resources and to deter vexatious litigation and dilatory or malicious litigation tactics (cf. Minister, Elders & Deacons of Refm. Prot. Church of City of New York v 198 Broadway, 76 NY2d 411; see Steiner v Bonhamer, 146 Misc 2d 10) [Emphasis added].” The instant action, with HSBC lacking standing and using robosigners, is “a waste of judicial resources.” This [*18]conduct, as noted in Levy, must be deterred. In Weinstock v Weinstock (253 AD2d 873 [2d Dept 1998]) the Court ordered the maximum sanction of $10,000.00 for an attorney who pursued an appeal “completely without merit,” and holding, at 874, that “[w]e therefore award the maximum authorized amount as a sanction for this conduct (see, 22 NYCRR 130-1.1) calling to mind that frivolous litigation causes a substantial waste of judicial resources to the detriment of those litigants who come to the Court with real grievances [Emphasis added].” Citing Weinstock, the Appellate Division, Second Department, in Bernadette Panzella, P.C. v De Santis (36 AD3d 734 [2d Dept 2007]) affirmed a Supreme Court, Richmond County $2,500.00 sanction, at 736, as “appropriate in view of the plaintiff’s waste of judicial resources [Emphasis added].”

In Navin v Mosquera (30 AD3d 883 [3d Dept 2006]) the Court instructed that when considering if specific conduct is sanctionable as frivolous, “courts are required to

examine whether or not the conduct was continued when its lack of legal or factual basis was apparent [or] should have been apparent’ (22 NYCRR 130-1.1 [c]).” The Court, in Sakow ex rel. Columbia Bagel, Inc. v Columbia Bagel, Inc. (6 Misc 3d 939, 943 [Sup Ct,

New York County 2004]), held that “[i]n assessing whether to award sanctions, the Court must consider whether the attorney adhered to the standards of a reasonable attorney (Principe v Assay Partners, 154 Misc 2d 702 [Sup Ct, NY County 1992]).”

In the instant action, plaintiff HSBC’s President and Chief Executive Officer (CEO) bears a measure of responsibility for plaintiff’s actions, as well as plaintiff’s counsel. In Sakow at 943, the Court observed that “[a]n attorney cannot safely delegate all duties to others.” Irene M. Dorner, President and CEO of HSBC, is HSBC’s “captain of the ship.” She should not only take credit for the fruits of HSBC’s victories but must bear some responsibility for its defeats and mistakes. According to HSBC’s 2010 Form 10-K, dated December 31, 2010, and filed with the U.S. Securities and Exchange Commission on February 28, 2011, at p. 255, “Ms. Dorner’s insight and particular knowledge of HSBC USA’s operations are critical to an effective Board of Directors” and Ms. Dorner “has many years of experience in leadership positions with HSBC and extensive global experience with HSBC, which is highly relevant as we seek to operate our core businesses in support of HSBC’s global strategy.” HSBC needs to have a “global strategy” of filing truthful documents and not wasting the very limited resources of the Courts. For her responsibility she earns a handsome compensation package. According to the 2010 Form 10-k, at pp. 276-277, she earned in 2010 total compensation of $2,306,723. This included, among other things: a base salary of $566,346; a discretionary bonus of $760,417; and, other compensation such as $560 for financial planning and executive tax services; $40,637 for executive travel allowance, $24,195 for housing and furniture allowance, $39,399 for relocation expenses and $3,754 for executive physical and medical expenses.

Therefore, the Court will examine the conduct of plaintiff HSBC and plaintiff’s counsel, in a hearing, pursuant to 22 NYCRR § 130-1.1, to determine if plaintiff HSBC, [*19]by its President and CEO, Irene M. Dorner, and plaintiff’s counsel Frank M. Cassara, Esq. and his firm Shapiro, DiCaro & Barak, LLC, engaged in frivolous conduct, and to allow plaintiff HSBC, by its President and CEO, Irene M. Dorner, and plaintiff’s counsel Frank M. Cassara, Esq. and his firm Shapiro, DiCaro & Barak, LLC a reasonable opportunity to be heard.

Accordingly, it is

ORDERED, that the motion of plaintiff, HSBC BANK USA, N.A., AS INDENTURE TRUSTEE FOR THE REGISTERED NOTEHOLDERS OF RENAISSANCE HOME EQUITY LOAN TRUST 2007-2, for an order of reference for the premises located at 931 Gates Avenue, Brooklyn, New York (Block 1632, Lot 57, County of Kings), is denied with prejudice; and it is further

ORDERED, that because plaintiff, HSBC BANK USA, N.A., AS INDENTURE TRUSTEE FOR THE REGISTERED NOTEHOLDERS OF RENAISSANCE HOME EQUITY LOAN TRUST 2007-2, lacks standing in this foreclosure action, the instant complaint, Index No. 9320/09 is dismissed with prejudice; and it is further

ORDERED, that the Notice of Pendency filed with the Kings County Clerk on April 16, 2009 by plaintiff, HSBC BANK USA, N.A., AS INDENTURE TRUSTEE FOR THE REGISTERED NOTEHOLDERS OF RENAISSANCE HOME EQUITY LOAN TRUST 2007-2, in an action to foreclose a mortgagefor real property located at 931 Gates Avenue, Brooklyn, New York (Block 1632, Lot 57, County of Kings), is cancelled and discharged; and it is further

ORDERED, that it appearing that plaintiff HSBC BANK USA, N.A., AS INDENTURE TRUSTEE FOR THE REGISTERED NOTEHOLDERS OF RENAISSANCE HOME EQUITY LOAN TRUST 2007-2, plaintiff’s counsel Frank M. Cassara, Esq. and his firm Shapiro, DiCaro & Barak, LLC engaged in “frivolous conduct,” as defined in the Rules of the Chief Administrator, 22 NYCRR § 130-1 (c), and that pursuant to the Rules of the Chief Administrator, 22 NYCRR § 130.1.1 (d), “[a]n award of costs or the imposition of sanctions may be made . . . upon the court’s own initiative, after a reasonable opportunity to be heard,” this Court will conduct a hearing affording: plaintiff HSBC BANK USA, N.A., AS INDENTURE TRUSTEE FOR THE REGISTERED NOTEHOLDERS OF RENAISSANCE HOME EQUITY LOAN TRUST 2007-2, by its President and Chief Executive Officer, Irene M. Dorner; plaintiff’s counsel Frank M. Cassara, Esq.; and, his firm Shapiro, DiCaro & Barak, LLC; “a reasonable opportunity to be heard” before me in Part 27, on Friday, July 15, 2011, at 2:30 P.M., in Room 479, 360 Adams Street, Brooklyn, NY 11201; and it is further

ORDERED, that Ronald David Bratt, Esq., my Principal Law Clerk, is directed to serve this order by first-class mail, upon: Irene M. Dorner, President and Chief Executive Officer of plaintiff, HSBC BANK USA, N.A., AS INDENTURE TRUSTEE FOR THE REGISTERED NOTEHOLDERS OF RENAISSANCE HOME EQUITY LOAN TRUST [*20]2007-2, 452 Fifth Avenue, New York, New York 10018; Frank M. Cassara, Esq., Shapiro DiCaro & Barak, LLC, 250 Mile Crossing Boulevard, Suite One, Rochester, New York 14624; and, Shapiro DiCaro & Barak, LLC, 250 Mile Crossing Boulevard, Suite One, Rochester, New York 14624.

This constitutes the Decision and Order of the Court.

ENTER

___________________________

HON. ARTHUR M. SCHACKJ. S. C.

[ipaper docId=59410573 access_key=key-cs4bqg6pw7e5l15r2he height=600 width=600 /]

Scott Anderson Signature Variance

JPMORGAN CHASE BANK, NATIONAL ASSOCIATION AS PURCHASER OF THE LOANS AND OTHER ASSETS OF WASHINGTON MUTUAL BANK, FORMERLY KNOWN AS WASHINGTON MUTUAL BANK, FA (THE “SAVINGS BANK”) FROM THE FEDERAL DEPOSIT INSURANCE CORPORATION, ACTING AS RECEIVER FOR THE SAVINGS BANK AND PURSUANT TO ITS
AUTHORITY UNDER THE FEDERAL DEPOSIT INSURANCE ACT, 12 U.S.C. 9 1821(D),

-versus-

FREDERICK W. BUTLER,

EXCERPTS:

FURTHER, why an Order should not be entered that plaintiff pursued the Prosecution of this foreclosure action, and participated and engaged in actions,Constituting Settlement Conferences Before the Court in this Matter, when plaintiff had full knowledge, and plaintiffs counsel knew or should have known, that plaintiff had received payment on May 22,20 10 for the amount specified in paragraph SIXTH of its complaint dated on or about January 19,2010, as due and owing (that is, $434,382.89);

FURTHER, why an Order should not be entered that plaintiff and plaintiffs’ Counsels made material misrepresentations to the Court, on April 14,201 1 and May 2, 2011, for example, thereby engaging in misconduct before the Court;

[…]

FURTHER, why plaintiffs counsels, the law offices of Steven J. Baum, and their co counsel Cullen & Dykman LLP, should not be sanctioned pursuant to New York Judiciary Law 487 for misstatements and misrepresentations made to the Court on May 2, 2011, to defendant during the course of 11 settlement conferences over 12 months, and to defendant’s counsel and the Court with respect to the fact and procedural history of this case;

FURTHER, why Judgment should not be entered pursuant to CPLR 32111(a)(l), 321 l(a)(3), 321 l(a)(7) and 321 l(a)(8) dismissing this foreclosure action with prejudice;

FURTHER, why judgment should not be entered imposing sanctions against Plaintiff on the basis that plaintiffs affidavit of facts- namely its verified summons and complaint — contained material misrepresentations about its legal capacity to sue, about which plaintiff had full knowledge from commencement of this;

[…]

[ipaper docId=57973278 access_key=key-1sux49su06my9pi4x6pb height=600 width=600 /]

Supreme Court, Kings County

NYCTL 2005-A Trust AND THE BANK OF NEW YORK, AS COLLATERAL AGENT AND CUSTODIAN, Plaintiff,

against

Dionisio Arias, et al., Defendants.

23043/06

Plaintiff

Philips Lytle, LLP

Rochester NY

Defendant

No Appearance

Arthur M. Schack, J.

In this tax lien certificate foreclosure action, plaintiff, NYCTL 2005-A TRUST AND THE BANK OF NEW YORK, AS COLLATERAL AGENT AND CUSTODIAN (THE TRUST), moved for a judgment of foreclosure and sale for the premises located at 199 Troutman Street, Brooklyn, New York (Block 3173, Lot 37, County of Kings). On March 4, 2011, the Court received from the Kings County Supreme Court Foreclosure Department a notice of withdrawal of the instant motion, dated February 16, 2011, from plaintiff’s counsel, Phillips Lytle LLP. The notice of withdrawal did not state any reason for the request.

Then, on May 23, 2011, plaintiff’s counsel faxed to me a “second request” to withdraw [*2]the instant motion for a judgment of foreclosure and sale. Again, no reason for the request was articulated. Further, at the bottom of the May 23, 2011-letter to me, it states “THIS LAW FIRM IS ATTEMPTING TO COLLECT A DEBT AND ANY INFORMATION OBTAINED WILL BE USED FOR THAT PURPOSE.” Since this statement is in a cover letter addressed to me and does not appear to be preprinted on the letterhead of the Phillips Lytle firm, the Court would like to know what debt I personally owe to the Phillips Lytle firm or THE TRUST. This statement borders upon frivolous conduct, in violation of 22 NYCRR § 130-1.1. Was it made to cause annoyance or alarm to the Court? Was it made to waste judicial resources? Rather than answer the above rhetorical questions, counsel for plaintiff is directed never to place such a foolish statement in a cover letter to this Court. If this occurs again, the firm of Phillips Lytle LLP is on notice that this Court will have the firm appear to explain why the firm should not be sanctioned for frivolous conduct.

With respect to the request of plaintiff’s counsel to withdraw the instant motion for a judgment of foreclosure and sale, the Court grants the request to withdraw the motion. However, since plaintiff, THE TRUST, is not discontinuing the instant foreclosure action, the Court, to prevent the waste of judicial resources, for procedural reasons and not upon the merits, dismisses the instant foreclosure action with prejudice.

Real Property Actions and Proceedings Law (RPAPL) § 1321 allows the Court in a foreclosure action, upon the default of the defendant or defendant’s admission of mortgage payment arrears, to appoint a referee “to compute the amount due to the plaintiff.” In the instant action, the referee computed the amount due. Then, plaintiff, THE TRUST, moved, as required, to obtain a default judgment of foreclosure and sale against defendant ARIAS. Subsequently, plaintiff requested that the Court allow it to withdraw its motion for a judgment of foreclosure and sale. The Court grants plaintiff’s request to withdraw its motion for a judgment of foreclosure and sale. However, to allow the instant action to continue without seeking the ultimate purpose of a foreclosure action, to obtain a judgment of foreclosure and sale, without any valid reason, is a mockery and waste of judicial resources. Continuing the instant action without moving for a judgment of foreclosure and sale is the judicial equivalent of a “timeout,” and granting a “timeout” to plaintiff, THE TRUST, is a waste of judicial resources. Therefore, the instant action, for these procedural reasons, is dismissed with prejudice.

Moreover, the dismissal of the instant foreclosure action requires the cancellation of the notice of pendency. CPLR § 6501 provides that the filing of a notice of pendency against a property is to give constructive notice to any purchaser of real property or encumbrancer against real property of an action that “would affect the title to, or the possession, use or enjoyment of real property, except in a summary proceeding brought to recover the possession of real property.” The Court of Appeals, in 5308 Realty Corp. v O & Y Equity Corp. (64 NY2d 313, 319 [1984]), commented that “[t]he purpose of the doctrine was to assure that a court retained its ability to effect justice by preserving its power over the property, regardless of whether a purchaser had any notice of the pending suit,” and, at 320, that “the statutory scheme permits a party to effectively retard the alienability of real property without any prior judicial review.”

CPLR § 6514 (a) provides for the mandatory cancellation of a notice of pendency by:

The Court,upon motion of any person aggrieved and upon such [*3]

notice as it may require, shall direct any county clerk to cancel

a notice of pendency, if service of a summons has not been completed

within the time limited by section 6512; or if the action has been

settled, discontinued or abated; or if the time to appeal from a final

judgment against the plaintiff has expired; or if enforcement of a

final judgment against the plaintiff has not been stayed pursuant

to section 551. [emphasis added]

The plain meaning of the word “abated,” as used in CPLR § 6514 (a) is the ending of an action. “Abatement” is defined as “the act of eliminating or nullifying.” (Black’s Law Dictionary 3 [7th ed 1999]). “An action which has been abated is dead, and any further enforcement of the cause of action requires the bringing of a new action, provided that a cause of action remains (2A Carmody-Wait 2d § 11.1).” (Nastasi v Nastasi, 26 AD3d 32, 40 [2d Dept 2005]). Further, Nastasi at 36, held that the “[c]ancellation of a notice of pendency can be granted in the exercise of the inherent power of the court where its filing fails to comply with CPLR § 6501 (see 5303 Realty Corp. v O & Y Equity Corp., supra at 320-321; Rose v Montt Assets, 250 AD2d 451, 451-452 [1d Dept 1998]; Siegel, NY Prac § 336 [4th ed]).” Thus, the dismissal of the instant complaint must result in the mandatory cancellation of THE TRUST’s notices of pendency against the subject property “in the exercise of the inherent power of the court.”

Accordingly, it is

ORDERED, that the request of plaintiff, NYCTL 2005-A TRUST AND THE BANK OF NEW YORK, AS COLLATERAL AGENT AND CUSTODIAN, to withdraw its motion for a judgment of foreclosure and sale, for the premises located at 199 Troutman Street, Brooklyn, New York (Block 3173, Lot 37, County of Kings), is granted; and it is further

ORDERED, that the instant action, Index Number 23043/06, is dismissed with prejudice; and it is further

ORDERED, that the notices of pendency in the instant action, filed with the Kings County Clerk on August 2, 2006 and July 16, 2009, by plaintiff, NYCTL 2005-A TRUST AND THE BANK OF NEW YORK, AS COLLATERAL AGENT AND CUSTODIAN, to foreclose on a tax lien certificate for real property located at 199 Troutman Street, Brooklyn, New York (Block 3173, Lot 37, County of Kings), is cancelled and discharged; and it is further

ORDERED, that Phillips Lytle, LLP is on notice that if any of attorneys or staff sends any communication to this Court stating “THIS LAW FIRM IS ATTEMPTING TO COLLECT A DEBT AND ANY INFORMATION OBTAINED WILL BE USED FOR THAT PURPOSE,” it may be subject to civil contempt and/or sanctions for frivolous conduct, pursuant to 22 NYCRR § 130-1.1.

This constitutes the Decision and Order of the Court.

ENTER [*4]

________________________________HON. ARTHUR M. SCHACK

J. S. C.

Dated: May 24, 2011

[ipaper docId=56436285 access_key=key-2exgwemy3l37ojka2id9 height=600 width=600 /]

Deutsche Bank National Trust Company as Trustee under the Pooling and Servicing Agreement Dated as of February 1, 2007, GSAMP TRUST 2007-FM2, Plaintiff,

against

Walter Francis a/k/a Walter J. Francis, et. al., Defendants

Decided on March 25, 2011

Supreme Court, Kings County

NYCTL 2008-A Trust AND THE BANK OF NEW YORK AS COLLATERAL AGENT AND CUSTODIAN, Plaintiffs,

against

Estate of Locksley Holas a/k/a Lockaley Holas, et. al., Defendants

10815/09

Plaintiff

Josef Abt

Windels Marx Lane & Mittendorf, LLP

NY, NY

Arthur M. Schack, J.

In this tax lien certificate foreclosure action, plaintiffs, NYCTL 1998-1 TRUST AND THE BANK OF NEW YORK AS COLLATERAL AGENT AND CUSTODIAN (THE TRUST), moved on September 9, 2009 for an order of reference and related relief for the premises located at 856 Hancock Street, Brooklyn, New York (Block 1490, Lot 33, County of Kings). In my May 3, 2010 decision and order, with respect to the motion for an order of reference and related relief, I held:

The affidavit submitted in support of this application . . . was not

executed by an officer of . . . THE TRUST, or someone with a power

of attorney from plaintiffs. Leave is granted to plaintiffs to renew their

application, within sixty (60) days of this decision and order, for an

order to appoint a referee to compute and amend the caption upon

plaintiffs’ presentation to the Court of its compliance with the statutory requirements of CPLR § 3215 (f), with “an affidavit of facts” executed

by someone who is an officer of THE TRUST or someone who has a

valid power of attorney from THE TRUST. [*2]

Further, I noted that the affidavit of merit was submitted by one Hillary Leonard, who stated that “I am the Authorized Signatory of PLYMOUTH PARK TAX SERVICES, LLC, servicing agent for plaintiffs in the within action.” Plaintiffs failed to provide the Court with any “power of attorney authorizing PLYMOUTH PARK TAX SERVICES, LLC to go forward with the instant foreclosure action. Therefore, the proposed order for the appointment of a referee to compute and amend the caption must be denied without prejudice.”

Moreover, I observed that:

The plaintiffs have failed to meet the clear requirements of

CPLR § 3215 (f) for a default judgment.

On any application for judgment by default, the applicant

shall file proof of service of the summons and the complaint, or

a summons and notice served pursuant to subdivision (b) of rule

305 or subdivision (a) of rule 316 of this chapter, and proof of

the facts constituting the claim, the default and the amount due

by affidavit made by the party . . . Where a verified complaint has

been served, it may be used as the affidavit of the facts constituting

the claim and the amount due; in such case, an affidavit as to the

default shall be made by the party or the party’s attorney. [Emphasis

added].

Plaintiffs’ counsel, Windels Marx Lane & Mittendorf, LLP, never submitted a

renewed motion for an order of reference to the Court. Then, on February 14, 2011, the Court received a letter, dated February 9, 2011, from Windels Marx Lane & Mittendorf, LLP, in which plaintiffs’ counsel stated that the September 9, 2009 motion “for the appointment of a Referee to compute was submitted to the Court and is currently pending before your Honor for determination [Emphasis added]. I respectfully request that Plaintiffs’ ex-parte application be withdrawn at this time without prejudice to renew at a later date.”

Today is two hundred and ninety (290) days, more than three-quarters of a year, since I issued my May 3, 2010 order giving Windels Marx Lane & Mittendorf, LLP sixty (60) days to renew their motion for an order of reference and related relief. I have not yet received a renewed motion for an order of reference with the requested affidavit of merit “by someone who is an officer of THE TRUST or someone who has a valid power of attorney from THE TRUST.”

Further, it is my policy to mail copies of my orders to litigants’ counsel. Even if Windels Marx Lane & Mittendorf, LLP, for whatever reason, did not receive by U.S. Mail a copy of the May 3, 2010 order, it must to be suffering from corporate amnesia. The May 3, 2010 order was properly filed with Kings County Clerk. Plaintiffs’ counsel should have ascertained that I issued my May 3, 2010 order giving them sixty (60) days to renew their motion for an order of reference and related relief with proper documentation. Therefore, I grant the request of Windels Marx Lane & Mittendorf, LLP that their “application be withdrawn at this time.” However, for violation of my May 3, 2010 order, the instant tax lien foreclosure action is dismissed with prejudice and the notice of pendency is cancelled and discharged. The Court cannot countenance utter disregard of a court-ordered deadline.

The failure of plaintiffs’ counsel, Windels Marx Lane & Mittendorf, LLP, to comply [*3]with my May 3, 2010 order demonstrates delinquent conduct by Windels Marx Lane & Mittendorf, LLP. This mandates the dismissal with prejudice of the instant action. Failure to comply with court-ordered time frames must be taken seriously. It cannot be ignored. There are consequences for ignoring court orders. Recently, on December 16, 2010, the Court of Appeals, in Gibbs v St. Barnabas Hosp. (16 NY3d 74; 2010 NY Slip Op 09198), instructed, at *5:

As this Court has repeatedly emphasized, our court system is

dependent on all parties engaged in litigation abiding by the rules of

proper practice (see e.g. Brill v City of New York, 2 NY3d 748 [2004];

Kihl v Pfeffer, 94 NY2d 118 [1999]). The failure to comply with

deadlines not only impairs the efficient functioning of the courts and

the adjudication of claims, but it places jurists unnecessarily in the

position of having to order enforcement remedies to respond to the

delinquent conduct of members of the bar, often to the detriment of

the litigants they represent. Chronic noncompliance with deadlines

breeds disrespect for the dictates of the Civil Practice Law and Rules

and a culture in which cases can linger for years without resolution.

Furthermore, those lawyers who engage their best efforts to comply

with practice rules are also effectively penalized because they must

somehow explain to their clients why they cannot secure timely

responses from recalcitrant adversaries, which leads to the erosion

of their attorney-client relationships as well. For these reasons, it

is important to adhere to the position we declared a decade ago that

“[i]f the credibility of court orders and the integrity of our judicial

system are to be maintained, a litigant cannot ignore court orders

with impunity [Emphasis added].” (Kihl, 94 NY2d at 123).

“Litigation cannot be conducted efficiently if deadlines are not taken seriously, and we make clear again, as we have several times before, that disregard of deadlines should not and will not be tolerated (see Miceli v State Farm Mut. Auto Ins. Co., 3 NY3d 725 [2004]; Brill v City of New York, 2 NY3d 748 [2004]; Kihl v Pfeffer, 94 NY2d 118 [1999]) [Emphasis added].” (Andrea v Arnone, Hedin, Casker, Kennedy and Drake, Architects and Landscape Architects, P.C., 5 NY3d 514, 521 [2005]). “As we made clear in Brill, and underscore here, statutory time frames —like court-order time frames (see Kihl v Pfeffer, 94 NY2d 118 [1999]) — are not options, they are requirements, to be taken seriously by the parties. Too many pages of the Reports, and hours of the courts,

are taken up with deadlines that are simply ignored [Emphasis added].” (Miceli, 3 NY3d at 726-726). [*4]

Further, the dismissal of the instant foreclosure action requires the cancellation of the notice of pendency. CPLR § 6501 provides that the filing of a notice of pendency against a property is to give constructive notice to any purchaser of real property or encumbrancer against real property of an action that “would affect the title to, or the possession, use or enjoyment of real property, except in a summary proceeding brought to recover the possession of real property.” The Court of Appeals, in 5308 Realty Corp. v O & Y Equity Corp. (64 NY2d 313, 319 [1984]), commented that “[t]he purpose of the doctrine was to assure that a court retained its ability to effect justice by preserving its power over the property, regardless of whether a purchaser had any notice of the pending suit,” and, at 320, that “the statutory scheme permits a party to effectively retard the alienability of real property without any prior judicial review.”

CPLR § 6514 (a) provides for the mandatory cancellation of a notice of pendency by:

The Court,upon motion of any person aggrieved and upon such

notice as it may require, shall direct any county clerk to cancel

a notice of pendency, if service of a summons has not been completed

within the time limited by section 6512; or if the action has been

settled, discontinued or abated; or if the time to appeal from a final

judgment against the plaintiff has expired; or if enforcement of a

final judgment against the plaintiff has not been stayed pursuant

to section 551. [emphasis added]

The plain meaning of the word “abated,” as used in CPLR § 6514 (a) is the ending of an action. “Abatement” is defined as “the act of eliminating or nullifying.” (Black’s Law Dictionary 3 [7th ed 1999]). “An action which has been abated is dead, and any further enforcement of the cause of action requires the bringing of a new action, provided that a cause of action remains (2A Carmody-Wait 2d § 11.1).” (Nastasi v Nastasi, 26 AD3d 32, 40 [2d Dept 2005]). Further, Nastasi at 36, held that the “[c]ancellation of a notice of pendency can be granted in the exercise of the inherent power of the court where its filing fails to comply with CPLR § 6501 (see 5303 Realty Corp. v O & Y Equity Corp., supra at 320-321; Rose v Montt Assets, 250 AD2d 451, 451-452 [1d Dept 1998]; Siegel, NY Prac § 336 [4th ed]).” Thus, the dismissal of the instant complaint must result in the mandatory cancellation of plaintiffs’ notice of pendency against the subject property “in the exercise of the inherent power of the court.”

Accordingly, it is

ORDERED, that the instant action, Index Number 10815/09, is dismissed with

prejudice; and it is further

ORDERED that the Notice of Pendency in this action, filed with the Kings

County Clerk on May 1, 2009, by plaintiffs, NYCTL 1998-1 TRUST AND THE BANK OF NEW YORK AS COLLATERAL AGENT AND CUSTODIAN, to foreclose on a tax lien certificate for real property located at 856 Hancock Street, Brooklyn, New York (Block 1490, Lot 33, County of Kings), is cancelled and discharged.

This constitutes the Decision and Order of the Court. [*5]

ENTER

________________________________

HON. ARTHUR M. SCHACK

J. S. C.

[ipaper docId=49548530 access_key=key-ffjul07zknc2z09yub8 height=600 width=600 /]

Wells Fargo Bank, N.A., Plaintiff,

against

David Zelouf, et. al., Defendants.

17524/09

Plaintiff

Michael Joblonski, Esq.

Steven J. Baum, PC

Buffalo, NY

Defendant

The defendant did not answer.

Arthur M. Schack, J.

In this foreclosure action, plaintiff, WELLS FARGO, N.A. (WELLS FARGO), moved for summary judgment and an order of reference and related relief for the premises located at 14 Stockholm Street, Brooklyn, New York (Block 3253, Lot 13, County of Kings). The Court received a notice of withdrawal of the instant motion, dated February 18, 2010, from plaintiff’s counsel. There was no valid explanation or reason given by plaintiff’s counsel for his request to withdraw the motion.

Further, plaintiff’s counsel states in his notice of withdrawal, “[t]he Plaintiff will not be discontinuing the above referenced action.” Moreover, in his cover letter to myself, plaintiff’s counsel states that “[t]he law firm of Steven J. Baum, P.C. and the attorneys whom it employs are debt collectors who are attempting to collect a debt. Any information obtained by them will be used for that purpose.” Since this statement was in a cover letter to me and does not appear to be preprinted on the letterhead of the Baum firm, the Court would like to know what debt it [*2]personally owes to the Baum firm or its clients? This statement borders upon frivolous conduct, in violation of 22 NYCRR § 130-1.1. Was it made to cause annoyance or alarm to the Court? Was it made to waste judicial resources? Rather than answer the above rhetorical questions, counsel for plaintiff is directed never to place such a foolish statement in a cover letter to this Court. If this occurs again, the firm of Steven J. Baum, P.C. is on notice that this Court will have the firm and the attorney who wrote this nonsensical statement appear to explain why the firm and the individual attorney should not be sanctioned for frivolous conduct.

With respect to the request of plaintiff’s counsel to withdraw the instant motion for summary judgment and an order of reference, the Court grants the request to withdraw the motion. However, since plaintiff is not discontinuing the instant foreclosure action, the Court, to prevent the waste of judicial resources, dismisses the instant foreclosure action without prejudice. If plaintiff’s counsel chooses to renew the instant motion and restore the instant case, plaintiff’s counsel must comply with the new Rule, promulgated by the Chief Administrative Judge on October 20, 2010, requiring an affirmation by plaintiff’s counsel that he communicated on a specific date with a named representative of plaintiff WELLS FARGO who informed him that he or she:

(a) has personally reviewed plaintiff’s documents and records relating

to this case for factual accuracy; and (b) confirmed the factual

accuracy of the allegations set forth in the Complaint and any

supporting affirmations filed with the Court as well as the accuracy

of the notarizations contained in the supporting documents filed

therewith.

Further, plaintiff’s counsel, based upon his or her communication with plaintiff’s representative or representatives, “as well as upon my own inspection and reasonable inquiry under the circumstances, . . . affirm that, to the best of my knowledge, information, and belief, the Summons, Complaint and other papers filed or submitted to the Court in this matter contain no false statements of fact or law.”

Counsel is reminded that the new standard Court affirmation form states that “I am aware of my obligations under New York Rules of Professional Conduct (22 NYCRR Part 1200) and 22 NYCRR Part 130.” These Parts deal with disciplinary standards and sanctions for frivolous conduct.

Real Property Actions and Proceedings Law (RPAPL) § 1321 allows the Court in a foreclosure action, upon the default of the defendant or defendant’s admission of mortgage payment arrears, to appoint a referee “to compute the amount due to the plaintiff.” In the instant action, plaintiff WELLS FARGO’s application for an order of reference is a preliminary step to obtaining a default judgment of foreclosure and sale against defendant ZELOUF. (Home Sav. of Am., F.A. v Gkanios, 230 AD2d 770 [2d Dept 1996]). Plaintiff’s request to withdraw its motion is granted. However, to allow this action to continue without seeking the ultimate purpose of a foreclosure action, to obtain a judgment of foreclosure and sale, makes a mockery of and wastes judicial resources. Continuing the instant action without moving for a judgment of foreclosure and sale is the judicial equivalent of a “timeout,” and granting a “timeout” to plaintiff WELLS FARGO is a waste of judicial resources. Therefore, the instant action is dismissed without [*3]prejudice.

Further, the dismissal of the instant foreclosure action requires the cancellation of the notice of pendency. CPLR § 6501 provides that the filing of a notice of pendency against a property is to give constructive notice to any purchaser of real property or encumbrancer against real property of an action that “would affect the title to, or the possession, use or enjoyment of real property, except in a summary proceeding brought to recover the possession of real property.” The Court of Appeals, in 5308 Realty Corp. v O & Y Equity Corp. (64 NY2d 313, 319 [1984]), commented that “[t]he purpose of the doctrine was to assure that a court retained its ability to effect justice by preserving its power over the property, regardless of whether a purchaser had any notice of the pending suit,” and, at 320, that “the statutory scheme permits a party to effectively retard the alienability of real property without any prior judicial review.”

CPLR § 6514 (a) provides for the mandatory cancellation of a notice of pendency by:

The Court,upon motion of any person aggrieved and upon such

notice as it may require, shall direct any county clerk to cancel

a notice of pendency, if service of a summons has not been completed

within the time limited by section 6512; or if the action has been

settled, discontinued or abated; or if the time to appeal from a final

judgment against the plaintiff has expired; or if enforcement of a

final judgment against the plaintiff has not been stayed pursuant

to section 551. [emphasis added]

The plain meaning of the word “abated,” as used in CPLR § 6514 (a) is the ending of an action. “Abatement” is defined as “the act of eliminating or nullifying.” (Black’s Law Dictionary 3 [7th ed 1999]). “An action which has been abated is dead, and any further enforcement of the cause of action requires the bringing of a new action, provided that a cause of action remains (2A Carmody-Wait 2d § 11.1).” (Nastasi v Nastasi, 26 AD3d 32, 40 [2d Dept 2005]). Further, Nastasi at 36, held that the “[c]ancellation of a notice of pendency can be granted in the exercise of the inherent power of the court where its filing fails to comply with CPLR § 6501 (see 5303 Realty Corp. v O & Y Equity Corp., supra at 320-321; Rose v Montt Assets, 250 AD2d 451, 451-452 [1d Dept 1998]; Siegel, NY Prac § 336 [4th ed]).” Thus, the dismissal of the instant complaint must result in the mandatory cancellation of plaintiff WELLS FARGO’s notice of pendency against the subject property “in the exercise of the inherent power of the court.”

Last, if plaintiff WELLS FARGO’s counsel moves to restore the instant action and motion, plaintiff’s counsel must comply with the new filing requirement to submit, under penalties of perjury, an affirmation that he or she has taken reasonable steps, including inquiring of plaintiff WELLS FARGO and reviewing all papers, to verify the accuracy of the submitted documents in support of the instant foreclosure action. According to the October 20, 2010 Office of Court Administration press release about the new filing requirement, Chief Judge Lippman said:

We cannot allow the courts in New York State to stand by idly and

be party to what we now know is a deeply flawed process, especially

when that process involves basic human needs — such as a family home — [*4]

during this period of economic crisis. This new filing requirement will

play a vital role in ensuring that the documents judges rely on will be

thoroughly examined, accurate, and error-free before any judge is asked

to take the drastic step of foreclosure.

(See Gretchen Morgenson and Andrew Martin, Big Legal Clash on Foreclosure is Taking Shape, New York Times, Oct. 21, 2010; Andrew Keshner, New Court Rules Says Attorneys Must Verify Foreclosure Papers, NYLJ, Oct. 21, 2010).

Accordingly, it is

ORDERED, that the request of plaintiff, WELLS FARGO BANK, N. A., to withdraw its motion for an order of reference, for the premises located at 14 Stockholm Street, Brooklyn, New York (Block 3253, Lot 13, County of Kings), is granted; and it is further

ORDERED, that the instant action, Index Number 17524/09, is dismissed without prejudice; and it is further

ORDERED, that the notice of pendency in the instant action, filed with the Kings County Clerk on July 14, 2009, by plaintiff, WELLS FARGO BANK, N. A., to foreclose a mortgage for real property located at 14 Stockholm Street, Brooklyn, New York (Block 3253, Lot 13, County of Kings), is cancelled; and it is further

ORDERED, that if plaintiff, WELLS FARGO BANK, N.A., moves to restore the instant foreclosure action and motion for an order of reference for real property located at 14 Stockholm Street, Brooklyn, New York (Block 3253, Lot 13, County of Kings, counsel for plaintiff must comply with the new Court filing requirement, announced by Chief Judge Jonathan Lippman on October 20, 2010, and ordered by Chief Administrative Judge Ann T. Pfau on October 20, 2010, by submitting an affirmation, using the new standard Court form, pursuant to CPLR Rule 2106 and under the penalties of perjury, that counsel for plaintiff, WELLS FARGO BANK, N. A.: has personally reviewed plaintiff’s documents and records in the instant action; confirms the factual accuracy of plaintiff’s court filings; and, confirms the accuracy of the notarizations in plaintiff’s documents.

This constitutes the Decision and Order of the Court.

ENTER

________________________________
HON. ARTHUR M. SCHACK

J. S. C.

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