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Byrd v. MorEQUITY, INC., Ala: Court of Civil Appeals | “The conflict as to the date of (MERS) assignment materially impacts the standing issue”

Byrd v. MorEQUITY, INC., Ala: Court of Civil Appeals | “The conflict as to the date of (MERS) assignment materially impacts the standing issue”


 

Stephen A. Byrd and Cynthia B. Byrd,
v.
MorEquity, Inc.

No. 2100734.
Court of Civil Appeals of Alabama.
Decided March 16, 2012.
MOORE, Judge.

Stephen A. Byrd and Cynthia B. Byrd appeal from a summary judgment entered by the Mobile Circuit Court (“the trial court”) in an ejectment action filed by MorEquity, Inc. We reverse.

Procedural History

On April 20, 2010, MorEquity filed an action seeking possession of certain real property that was in the possession of the Byrds, who were using it as their residence. MorEquity alleged that it had acquired title to the real property through a foreclosure sale and that the Byrds had unlawfully detained the real property following the termination of their possessory interest in the property and a written demand to vacate the premises. The Byrds filed a pro se answer generally denying the allegations in the complaint and asserting that “we can show that our property was foreclosed on without just cause.”

On June 8, 2010, MorEquity filed a motion for a summary judgment with supporting materials. The Byrds thereafter retained attorneys, who filed an amended answer on the Byrds’ behalf on August 25, 2010. In the amended answer, the Byrds denied that MorEquity had a right to possession of the property, asserting, among other affirmative defenses, that MorEquity had conducted a foreclosure sale without first acquiring any ownership interest in the mortgage covering the property. The Byrds’ attorneys subsequently filed documents in opposition to MorEquity’s summary-judgment motion, to which MorEquity replied, attaching supplemental materials.

On December 9, 2010, the Byrds moved to strike some of the evidence submitted by MorEquity in support of its motion for a summary judgment. The trial court conducted a hearing on the motions on December 10, 2010. Following the hearing, MorEquity filed a supplemental evidentiary submission. On December 17, 2010, the trial court denied the motion to strike and entered a summary judgment in favor of MorEquity. The trial court entered a writ of possession in favor of MorEquity on January 5, 2011. The Byrds filed a timely motion to alter, amend, or vacate the summary judgment, which the trial court denied on March 15, 2011. The trial court stayed enforcement of its judgment on April 6, 2011, and the Byrds appealed on April 22, 2011.

Analysis

The threshold and dispositive issue on appeal is whether MorEquity had standing to prosecute the ejectment action. See Sturdivant v. BAC Home Loans Servicing, LP, [Ms. 2100245, Dec. 16, 2011] ___ So. 3d ___ (Ala. Civ. App. 2011); see also Cadle Co. v. Shabani, 950 So. 2d 277, 279 (Ala. 2006) (accord). MorEquity filed its action under the authority of § 6-6-280(b), Ala. Code 1975. See EB Invs., L.L.C. v. Atlantis Dev., Inc., 930 So. 2d 502 (Ala. 2005) (holding that § 6-6-280(b) applied when the complainant alleged that it was entitled to possession of land through foreclosure deed and that the defendant was unlawfully detaining the land); Muller v. Seeds, 919 So. 2d 1174 (Ala. 2005) (same), overruled on other grounds by Steele v. Federal Nat’l Mortg. Ass’n, 69 So. 3d 89 (Ala. 2010); and Earnest v. First Fed. Sav. & Loan Ass’n of Alabama, 494 So. 2d 80 (Ala. Civ. App. 1986) (same). Under § 6-6-280(b), a complaint in an ejectment action must be “commenced in the name of the real owner of the land or in the name of the person entitled to the possession thereof,” and a complaint is sufficient if, among other things, it alleges “that the plaintiff was possessed of the premises or has the legal title thereto.”

Like any other fact essential to recovery, the plaintiff has the burden of proving standing. See Lujan v. Defenders of Wildlife, 504 U.S. 555, 561 (1992). At the summary-judgment stage, a plaintiff asserting standing cannot rest on mere allegations in the complaint, see Dover Historical Soc’y v. City of Dover Planning Comm’n, 838 A.2d 1103 (Del. 2003), but must prove standing through specific facts set forth by affidavit or other evidence. Grayson v. AT & T Corp., 15 A.3d 219 (D.C. 2011). To prevail on a motion for a summary judgment, the plaintiff must present a prima facie case that there is no genuine issue of material fact and that the plaintiff is entitled to a judgment as a matter of law. Armstrong v. McGee, 579 So. 2d 1310, 1312 (Ala. 1991). In making a determination whether the plaintiff has satisfied that burden, this court, de novo, reviews the evidence in a light most favorable to the nonmovant, Robinson v. Alabama Cent. Credit Union, 964 So. 2d 1225, 1228 (Ala. 2007), and “entertains such reasonable inferences as the jury would have been free to draw.” Bell v. T.R. Miller Mill Co., 768 So. 2d 953, 956 (Ala. 2000). “`”The burden does not shift to the opposing party to establish a genuine issue of material fact until the moving party has made a prima facie showing that there is no such issue of material fact.”‘” McClendon v. Mountain Top Indoor Flea Market, Inc., 601 So. 2d 957, 958 (Ala. 1992) (quoting Berner v. Caldwell, 543 So. 2d 686, 688 (Ala. 1988), quoting in turn Schoen v. Gulledge, 481 So. 2d 1094, 1096 (Ala. 1985)).

In this case, MorEquity asserts that it had standing to maintain the ejectment action against the Byrds because, it says, it held a foreclosure deed to the property, which it submitted to the trial court. The Byrds maintain, however, that the foreclosure deed is void because it was procured through foreclosure proceedings that were conducted by MorEquity without authority. In Sturdivant, supra, this court held that a foreclosure deed was void, ___ So. 3d at ___ (quoting § 35-10-9, Ala. Code 1975, which provides that “[a]ll sales of real estate, made under powers contained in mortgages or deeds of trust contrary to the provisions of [statutory law governing the power of sale pursuant to the terms of a mortgage], shall be null and void….”), and would not sustain an ejectment action when the evidence showed that the foreclosure proceedings had been initiated by the plaintiff without a valid assignment of the power of sale. Under Sturdivant, the vendee to a void foreclosure deed would not be considered a “real owner of the land” with “legal title thereto” within the meaning of § 6-6-280(b). ___ So. 3d at ___.

MorEquity submitted evidence indicating that the Byrds executed a promissory note in favor of Wilmington Finance, Inc., in the principal amount of $85,000 on July 19, 2007. That same date, to secure the note, the Byrds entered into a mortgage covering the subject property. Section 22 of that mortgage provides that, in the event of a default and failure to cure, and after appropriate notices are provided to the Byrds,

“Lender at its option may require immediate payment in full of all sums secured by this Security Instrument without further demand and may invoke the power of sale and any other remedies permitted by Applicable Law.”

“Lender” is defined in the mortgage solely as Wilmington Finance, Inc.; however, the mortgage provides that Mortgage Electronic Registration Systems, Inc. (“MERS”), is the nominee for Wilmington Finance, Inc., and that MERS is the designated mortgagee with all legal rights of a mortgagee, including “the right … to foreclose and sell the Property.”

Pursuant to § 35-10-12, Ala. Code 1975,

“[w]here a power to sell lands is given in any mortgage, the power is part of the security and may be executed by any person, or the personal representative of any person who, by assignment or otherwise, becomes entitled to the money thus secured.”

MorEquity submitted evidence indicating that MERS assigned the mortgage, complete with its power of sale,[1] to MorEquity so that it could execute that power under § 35-10-12. We agree with the Byrds, however, that MorEquity’s evidence is conflicting as to the date of the assignment.

MorEquity attached to the affidavit of Kenneth Scheller, an assistant vice president of MorEquity, a document entitled “ASSIGNMENT OF MORTGAGE” (capitalization and italics in original), which states:

“FOR VALUE RECEIVED, Mortgage Electronic Registration Systems, Inc. (`MERS’) as Nominee for WILMINGTON FINANCE, INC., its successors and assigns, hereby assign and transfer to MOREQUITY, INC., 7116 EAGLE CREST BLVD., EVANSVILLE, IN 47715, its successors and assigns, all its right, title and interest in and to a certain MORTGAGE executed by: STEPHEN A. BYRD AND CYNTHIA B. BYRD, in the original principal amount of $85,000.00 and bearing the date of … 07/19/2007 and recorded on 07/25/2007 in the office of the Recorder of MOBILE County, State of ALABAMA in Instrument Number XXXXXXXXXX in BOOK 6227 and PAGE 205.”

(Capitalization and underlining in original.) A notary certified that that document was signed on April 20, 2009. On the other hand, MorEquity attached to the affidavit of Jeff Schutte, its associate director, a document entitled “NOTIFICATION OF SALE, TRANSFER OR ASSIGNMENT OF YOUR MORTGAGE LOAN,” (capitalization and bold typeface in original), indicating that MorEquity had acquired the mortgage via a sale effective December 30, 2009.[2]

The conflict as to the date of assignment materially impacts the standing issue. In Sturdivant, this court held that, in order to conduct a foreclosure sale, a party must have the power to foreclose and sell the property as of the date of the initiation of the foreclosure proceedings, ___ So. 3d at ___, which is the date the party “accelerates the maturity date of the indebtedness and publishes notice of a foreclosure sale,” Perry v. Federal Nat’l Mortg. Ass’n, [Ms. 2100235, Dec. 30, 2011] ___ So. 3d ___, ___ (Ala. Civ. App. 2011), impliedly overruled on other grounds by Ex parte Secretary of Veterans Affairs, [Ms. 1101171, Feb. 10, 2012] ___ So. 3d ___ (Ala. 2012). The undisputed evidence in this case shows that the debt had been accelerated as of December 11, 2009, and that the notice of the foreclosure sale was first published on December 15, 2009, which was long after the alleged April 20, 2009, assignment date but over two weeks before the alleged December 30, 2009, assignment date. If the latter date is accurate, MorEquity would not have had authority to initiate the foreclosure proceedings; only Wilmington Finance, Inc., or MERS could have started foreclosure proceedings at that time. Pointedly, two December 11, 2009, letters submitted by MorEquity, notifying the Byrds individually of the acceleration of the debt,[3] and the notices of foreclosure sale published beginning on December 15, 2009,[4] all indicate that Wilmington Finance, Inc., had invoked the foreclosure process, implying that the assignment had not yet occurred by mid-December, as the document attached to Schutte’s affidavit reflects.

MorEquity did not present a prima facie case of standing because its own evidence creates a genuine issue of material fact as to whether it had the power to foreclose and sell the property when the foreclosure proceedings were initiated on December 15, 2009.

The Byrds seek reversal of the summary judgment on numerous other grounds, including the alleged failure of MorEquity to provide notice of default and acceleration of the debt, see Jackson v. Wells Fargo Bank, N.A., [Ms.1100594, Feb. 17, 2012] ___ So. 3d ___, ___ (Ala. 2012) (holding that failure of notice of default and acceleration of debt may invalidate foreclosure sale); the alleged failure of MorEquity to prove that it provided contractual notice of the foreclosure sale, see Thompson v. Wachovia Bank, Nat’l Ass’n, 39 So. 3d 1153 (Ala. Civ. App. 2009), overruled on other grounds by Steele v. Federal Nat’l Mortg. Ass’n, 69 So. 3d 89 (Ala. 2010) (genuine issue of material fact existed where borrowers denied receipt of notice of the foreclosure sale and mortgagee failed to submit admissible evidence indicating that it sent required notice), and Kennedy v. Wells Fargo Home Mtg., 853 So. 2d 1009 (Ala. Civ. App. 2003) (accord); the existence of alleged irregularities in the published notice of the foreclosure sale, see § 35-10-8, Ala. Code 1975 (establishing contents of notice of foreclosure sale); the alleged agreement of MorEquity to forego foreclosure while the Byrds participated in its loss-mitigation program, but see Coleman v. BAC Servicing, [Ms. 2100453, Feb. 3, 2012] ___ So. 3d ___, ___ (Ala. Civ. App. 2012) (holding that oral agreements to forebear foreclosure are not valid under the Statute of Frauds); the alleged failure of MorEquity to comply with the loss-mitigation regulations of the National Housing Act, 12 U.S.C. § 1701x(c)(5); and MorEquity’s alleged breach of its fiduciary duty by underbidding on the property at the foreclosure sale. See Berry v. Deutsche Bank Nat’l Trust Co., 57 So. 3d 142, 147-48 (Ala. Civ. App. 2010). Without commenting on the merits of those grounds, we note that they all may be characterized as affirmative defenses to an ejectment action pertaining to the proper exercise of the power of sale or irregularities in the manner of the sale itself, which errors may render a foreclosure deed voidable. See Sturdivant, ___ So. 3d at ___ (Moore, J., concurring specially). Because we are reversing the trial court’s judgment on a more fundamental issue — a genuine dispute as to the lack of MorEquity’s authority to initiate the foreclosure proceedings, which would render the foreclosure deed void — we pretermit discussion of those issues.

For the foregoing reasons, the summary judgment entered by the trial court in favor of MorEquity is reversed, and the cause is remanded for further proceedings consistent with this opinion.

REVERSED AND REMANDED.

Thomas, J., concurs.

Pittman and Bryan, JJ., concur in the rationale in part and concur in the result, with writings.

Thompson, P.J., concurs in the result, without writing.

PITTMAN, Judge, concurring in the rationale in part and concurring in the result.

I agree that the summary judgment in favor of MorEquity, Inc., is due to be reversed and the cause remanded because MorEquity failed to establish that there was no factual dispute as to whether it was the assignee of the mortgage before it initiated the foreclosure proceedings against the Byrds. In my judgment, that failure simply means that MorEquity did not make a prima facie showing that it could satisfy one of the elements of its ejectment claim, not that MorEquity failed to demonstrate that it had standing to sue.

I believe that this case and others like it, see, e.g., Ex parte McKinney, [Ms. 1090904, May 27, 2011] ___ So. 3d ___ (Ala. 2011); Cadle Co. v. Shabani, 950 So. 2d 277 (Ala. 2006); and Sturdivant v. BAC Home Loans Servicing, LP, [Ms. 2100245, Dec. 16, 2011] ___ So. 3d ___ (Ala. Civ. App. 2011), present questions of an ejectment plaintiff’s inability to prove the allegations of its complaint rather than questions of standing. See Ex parte McKinney, ___ So. 3d at ___ (Murdock, J., dissenting); and Sturdivant, ___ So. 3d at ___ (Pittman, J., dissenting).

“As [our supreme court] recently observed: `[O]ur courts too often have fallen into the trap of treating as an issue of “standing” that which is merely a failure to state a cognizable cause of action or legal theory, or a failure to satisfy [an] element of a cause of action.’ Wyeth, Inc. v. Blue Cross & Blue Shield of Alabama, 42 So. 3d 1216, 1219 (Ala. 2010). Compare Steele v. Federal Nat’l Mortg. Ass’n, 69 So. 3d 89, 91 n.2 (Ala. 2010) (citing Wyeth as authority for rejecting the appellant’s suggestion that a plaintiff’s failure to have made a demand for possession before bringing an ejectment action presented an issue of standing).”

Ex parte McKinney, ___ So. 3d at ___ (Murdock, J., dissenting).

Our supreme court has determined that standing “implicates [a trial court’s] subject-matter jurisdiction.” Ex parte Howell Eng’g & Surveying, Inc., 981 So. 2d 413, 418 (Ala. 2006); see also Hamm v. Norfolk Southern Ry Co., 52 So. 3d 484, 499 (Ala. 2010) (Lyons, J., concurring specially) (citing Riley v. Pate, 3 So. 3d 835, 838 (Ala. 2008), and State v. Property at ` Rainbow Drive, 740 So. 2d 1025, 1028 (Ala. 1999)). That court has also explained that subject-matter jurisdiction “concerns a court’s power to decide certain types of cases,” Ex parte Seymour, 946 So. 2d 536, 538 (Ala. 2006), which power is derived from the constitution and statutes of Alabama. Id. Can it seriously be doubted that a circuit court derives its power to decide an ejectment case from § 6-6-280, Ala. Code 1975, rather than from the allegations of the plaintiff who seeks relief pursuant to that statute?

BRYAN, Judge, concurring in the rationale in part and concurring in the result.

I agree that the summary judgment in favor of MorEquity, Inc. (“MorEquity”), is due to be reversed and the cause remanded because there was evidence establishing a genuine issue of material fact regarding whether MorEquity had been assigned the mortgage before it initiated the foreclosure proceedings. However, I disagree with the main opinion’s conclusion regarding the significance of that disputed factual issue. As indicated by my dissent in Sturdivant v. BAC Home Loans Servicing, LP, [Ms. 2100245, Dec. 16, 2011] ___ So. 3d ___ (Ala. Civ. App. 2011), I am of the opinion that, when an ejectment-action plaintiff bases his or her claim to legal title to the property on a foreclosure deed, evidence tending to prove that the foreclosing party had not been assigned the mortgage before he or she initiated the foreclosure proceedings does not implicate the ejectment-action plaintiff’s standing to bring the ejectment action. Rather, such evidence tends to prove an affirmative defense to the ejectment-action plaintiff’s claim. See Berry v. Deutsche Bank Nat’l Trust Co., 57 So. 3d 142, 149-50 (Ala. Civ. App. 2010) (holding that, when an ejectment-action plaintiff bases his or her claim to legal title on a foreclosure deed, evidence tending to prove that the foreclosure sale and resulting foreclosure deed were invalid tends to prove an affirmative defense to the ejectment claim rather than tending to prove that the ejectment-action plaintiff lacked standing to bring the ejectment action). Thus, in the present case, I am of the opinion that the evidence tending to prove that MorEquity had not been assigned the mortgage before it initiated the foreclosure proceedings established the existence of a genuine issue of material fact with respect to Stephen A. Byrd and Cynthia B. Byrd’s affirmative defense asserting that MorEquity was not entitled to prevail on its ejectment claim because, they said, the foreclosure was invalid, but it did not establish a genuine issue of material fact with respect to MorEquity’s standing to bring the ejectment action.

[1] The Byrds contend in their brief to this court that any assignment of the mortgage did not convey the underlying note, which serves as the basis for the power of sale. See Coleman v. BAC Servicing, [Ms. 2100453, Feb. 3, 2012] ___ So. 3d ___, ___ (Ala. Civ. App. 2012) (holding that, under § 35-10-12, Ala. Code 1975, power of sale resides in the party with the right to the money secured by the mortgage, which would be the note holder). However, the Byrds did not raise that issue at or before the summary-judgment hearing, instead asserting it for the first time in one sentence in their postjudgment motion. Because a trial court need not consider a legal argument raised for the first time in a postjudgment motion, Green Tree Acceptance, Inc. v. Blalock, 525 So. 2d 1366, 1369-70 (Ala. 1988), and considering further the sparse nature of the argument below, we decline to address the Byrds’ now fully formed legal argument on appeal.

[2] The Byrds raise issues regarding the admissibility of both the alleged April 20, 2009, assignment and Schutte’s affidavit testimony relating to the alleged December 30, 2009, assignment. The Byrds also argue that the trial court erred in considering new evidence regarding the notarization of the alleged April, 20, 2009, assignment submitted by MorEquity after the summary-judgment hearing. Because of our disposition of the standing issue, we find no need to address those issues.

[3] Those letters both state: “Re: Wilmington Finance, Inc. v. Stephen A. Byrd and Cynthia B. Byrd, Husband and Wife.” The letters also state “cc: MorEquity Inc.” MorEquity does not explain why the caption indicates Wilmington Finance, Inc., is pursuing the Byrds for the mortgage debt, but the letter is copied to MorEquity.

[4] The notice of foreclosure sale states:

“Default having been made in the payment of the indebtedness secured by that certain mortgage executed to [MERS], acting solely as Nominee for Wilmington Finance Inc. on July 19, 2007, by Stephen A. Byrd and Cynthia B. Byrd, Husband and Wife, and recorded in Book 6227 Page 205; said mortgage transferred and assigned to Wilmington Finance Inc. et seq., in the Office of the Judge of Probate of Mobile County, Alabama, the undersigned, as Mortgagee or Transferee, under and by virtue of the power of sale contained in the said mortgage will sell at public outcry to the highest bidder for cash in front of the main entrance of the Mobile County, Alabama, Courthouse in the City of Mobile, Mobile County, Alabama, on January 14, 2010 ….”

The “undersigned” is designated as “Wilmington Finance, Inc., its successors and assigns, Mortgagee or Transferee.” MorEquity is not mentioned.

[ipaper docId=86297249 access_key=key-c53f7tfvjcm5x9z78kh height=600 width=600 /]

 

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NEW YORK CONTINUES ASSAULT ON MERS

NEW YORK CONTINUES ASSAULT ON MERS


By Jonathan C. Cross and Stacey Trimmer

New York government officials are continuing their assault against foreclosure actions where Mortgage Electronic Registration Systems, Inc. (“MERS”) was the assignee of the mortgage, and challenges to foreclosures involving MERS are increasingly gaining traction in New York courts. Recently, the New York State Attorney General filed a complaint against MERS and several banks alleging fraud and deception in foreclosure proceedings. People v. JPMorgan Chase Bank N.A., No. 2012/2768 (N.Y. Sup. Ct. Feb. 3, 2012). In addition, three New York trial courts have decided motions involving standing and other issues in such actions. CIT Group/Consumer Fin., Inc. v. Platt, 33 Misc. 3d 1231(A) (N.Y. Sup. Ct. 2011); U.S. Bank N.A. v. Bressler, 33 Misc. 3d 1231(A) (N.Y. Sup. Ct. 2011); Bank of New York Mellon v. Martinez, 33 Misc. 3d 1215(A) (N.Y. Sup. Ct. 2011). Two courts ruled against the foreclosing banks, finding they did not have standing to foreclose where MERS assigned a mortgage without express authority to do so or sufficient documentation evidencing that the note was also transferred. Although the third court dismissed a lack of standing defense, it did so solely for procedural reasons.

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CIT GROUP CONS. FIN., INC. v. Platt | NYSC “failed to demonstrate that MERS initially physically possessed the note or had the authority from Wilmington to assign it”

CIT GROUP CONS. FIN., INC. v. Platt | NYSC “failed to demonstrate that MERS initially physically possessed the note or had the authority from Wilmington to assign it”


2011 NY Slip Op 52185(U)

THE CIT GROUP/CONSUMER FINANCE, INC., Plaintiff,
v.
BRUCE W. PLATT, SOLE HEIR AT LAW OF DORSEY PLATT AND MARY PLATT, AND “JOHN DOE NO. 1” THROUGH “JOHN DOE #10,” THE LAST 10 NAMES BEING FICTITIOUS AND UNKNOWN TO THE PLAINTIFF, THE PERSONS OR PARTIES INTENDED BEING THE PERSONS OR PARTIES, IF ANY, HAVING OR CLAIMING AN INTEREST IN OR LIEN UPON THE MORTGAGED PREMISES DESCRIBED IN THE VERIFIED COMPLAINT, Defendants.

 

 

 

11410/08.
Supreme Court, Queens County. 

Decided December 7, 2011.
ROBERT J. McDONALD, J.Upon the foregoing papers it is ordered that the motion is determined as follows:Plaintiff commenced this action on May 6, 2008, seeking to foreclose on a mortgage given by defendant Bruce W. Platt, “as sole heir at law of Dorsey Platt and Mary Platt,” to secure his indebtedness in the principal amount of $484,000.00 plus interest, pursuant to a promissory note, with respect to the real property known as 224-19 143rd Avenue, Laurelton, New York. The mortgage lists Mortgage Electronic Registration Systems, Inc. (MERS) as the nominee of Wilmington Finance, Inc. (Wilmington) and its assignees, refers to MERS as the mortgagee for the purpose of recording, and provides that the underlying promissory note is in favor of Wilmington. Further, the mortgage provides that “MERS holds only legal title to the rights granted by [defendant Platt] …, but, if necessary to comply with law or custom,” MERS has the right to foreclose and “to take any action required of [Wilmington].” In its complaint, plaintiff alleged that it was the holder of the subject mortgage pursuant to an assignment dated April 1, 2008, and that defendant Platt defaulted under the terms of the mortgage and note by failing to make the monthly installment payment of interest due on November 1, 2007 and thereafter, and as a consequence, it elected to accelerate the entire mortgage debt.Defendant Platt, appearing pro se, served a verified answer, asserting affirmative defenses based upon lack of standing, failure by plaintiff to serve him with notices pursuant to RPAPL 1303 and 1304, and fraud. Defendant Platt claims that the mortgage is a subprime mortgage loan and that he did not receive the requisite statutory notices. He further claims that the lender and mortgage broker conspired to obtain an inflated appraisal of the subject premises and falsified his income, to induce him to enter into a mortgage loan beyond that which he could afford.

A residential foreclosure conference was held on March 8, 2011, but did not result in a settlement. By order of the same date, it was determined that the action could proceed by motion.

With respect to that branch of the motion by plaintiff for summary judgment as against defendant Platt, it is well established that the proponent of a summary judgment motion “must make a prima facie showing of entitlement to judgment as a matter of law, tendering sufficient evidence to demonstrate the absence of any material issues of fact” (Alvarez v Prospect Hosp., 68 NY2d 320, 324 [1986]). The failure to make such a prima facie showing requires the denial of the motion regardless of the sufficiency of the opposing papers (see Winegrad v New York Univ. Med. Ctr., 64 NY2d 851 [1985]). In support of its motion, plaintiff offers a copy of the pleadings, affidavits of service, an affirmation by its counsel, a copy of the subject mortgage, underlying note and allonge, assignments, and an affidavit of Paul Laird, a vice president of Vericrest Financial, Inc., the attorney in fact for plaintiff, attesting to defendant Platt’s default under the mortgage and note.

Plaintiff has failed to establish its prima facie entitlement to judgment as a matter of law. “CPLR 3212 (b) provides that a summary judgment motion shall be supported by affidavit’ of a person having knowledge of the facts’ as well as other admissible evidence (see GTF Mktg. v Colonial Aluminum Sales, 66 NY2d 965, 967 [1985])” (JMD Holding Corp. v Congress Fin. Corp., 4 NY3d 373, 384 [2005]). The affidavit of Paul Laird is without evidentiary value insofar as the basis of his knowledge and representations regarding the mortgage documents and defendant Platt’s default in payment are not revealed or inferable (see Zuckerman v City of New York, 49 NY2d 557, 562-563 [1980]). In addition, because the complaint is verified by counsel, who lacks personal knowledge of the facts, it also does not constitute competent evidence to stand in the place of a proper affidavit of merit (see Alvarez v Prospect Hosp., 68 NY2d at 327 [1986]). That branch of the motion by plaintiff for summary judgment against defendant Platt is denied.

With respect to that branch of plaintiff’s motion to strike the affirmative defense asserted by defendant Platt based upon lack of standing,

“[w]here, as here, standing is put into issue by the defendant, the plaintiff must prove its standing in order to be entitled to relief (see Wells Fargo Bank Minn., N.A. v Mastropaolo, 42 AD3d 239, 242 [2007]; TPZ Corp. v Dabbs, 25 AD3d 787, 789 [2006]; see also Society of Plastics Indus. v County of Suffolk, 77 NY2d 761, 769 [1991]). In a mortgage foreclosure action, a plaintiff has standing where it is both the holder or assignee of the subject mortgage and the holder or assignee of the underlying note at the time the action is commenced (see Mortgage Elec. Registration Sys., Inc. v Coakley, 41 AD3d 674 [2007]; Federal Natl. Mtge. Assn. v Youkelsone, 303 AD2d 546, 546-547 [2003]; First Trust Natl. Assn. v Meisels, 234 AD2d 414 [1996])”

(U.S. Bank, N.A. v Adrian Collymore, 68 AD3d 752, 753-754 [2009]).

Plaintiff offers a copy of an assignment executed by Bonnie McGinnis, “ASST. SECRETARY,” which purports to show the subject mortgage, together with the note, were assigned by MERS to plaintiff on April 1, 2008.

Plaintiff, however, has failed to demonstrate that MERS initially physically possessed the note or had the authority from Wilmington to assign it (see Aurora Loan Servs., LLC v Weisblum, 85 AD3d 95 [2011]). Wilmington is not a party to the assignment, and the mortgage itself does not specifically give MERS the right, as the nominee or agent of the Wilmington, to assign the underlying note (see Bank of New York v Silverberg, 86 AD3d 274 [2011]; Aurora Loan Servs., LLC v Weisblum, 85 AD3d 95 [2011], supra). To the extent plaintiff presents a copy of an undated allonge, executed by one “Don Malabuyo,” on behalf of Wilmington, to demonstrate the note was endorsed to it without recourse, the allonge merely indicates that Malabuyo is the “Designated Signer,” which, without more, is insufficient to show Malabuyo had the requisite authority to act on behalf of Wilmington. Moreover, to the degree plaintiff offers the affidavit of Paul Laird, a vice-president of Vericrest Financial, Inc., to show the allonge was created “[c]oncurrently” with the assignment, Laird does not indicate he had personal knowledge of the date of the execution of such allonge, or of Malabuyo’s authority. The affirmation of Michael H. Cohn, Esq., counsel for plaintiff, dated June 10, 2011, indicating Brian Casey, “Assistant Vice President,” “confirmed” to Cohn the factual accuracy of the allegations set forth in … [the] supporting affirmations filed with the Court,” cannot serve to fill these gaps in evidence. The attorney’s affirmation does not make clear to which entity Casey serves as an assistant vice-president, and in any event, to the degree it relates to when the allonge was executed and the authority of Malabuyo, it constitutes hearsay, and lacks probative value. Plaintiff additionally has failed to establish that the allonge is “so firmly affixed” to the note “as to become part thereof” (UCC 3-202[2]; Slutsky v Blooming Grove Inn, 147 AD2d 208 [1989]). That branch of the motion by plaintiff to dismiss the affirmative defense asserted by defendant Platt based upon lack of standing is denied.

With respect to that branch of the motion by plaintiff to dismiss the affirmative defense asserted by defendant Platt based upon failure to comply with RPAPL 1303, the version of RPAPL 1303 in effect at the time of the commencement of the action (L 2006, c 308, § 4, effective February 1, 2007, amended L 2007, c 154, § 13, effective July 3, 2007), required that “[t]he foreclosing party in a mortgage foreclosure action, which involves residential real property consisting of owner-occupied one-to-four family dwellings” provide notice to the mortgagor, in accordance with the provisions of the section, with regard to information and assistance about the foreclosure process. The statute set forth the specific language and format of the notice, requiring that the notice be “on its own page,” be “in bold, fourteen-point type,” be “printed on colored paper that is other than the color of the summons and complaint,” and have its title be in “bold, twenty-point type.” The statute also required the notice to be “delivered” with the summons and complaint in the foreclosure action (RPAPL 1303[2]). Proper service of the notice pursuant to RPAPL 1303 is a condition precedent to the commencement of the action which is the plaintiff’s burden to meet (see First Natl. Bank of Chicago v Silver, 73 AD3d 162, 169 [2010]; see also Aurora Loan Servs., LLC v Weisblum, 85 AD3d 95, 102 [2011], supra).

Plaintiff offers an affidavit of service dated June 6, 2008 of a licensed process server, which indicates, among other things, that attempts were made at effecting personal delivery of a copy of the summons and complaint, together with a notice required by RPAPL 1303, upon defendant Platt at his dwelling place at the mortgaged premises, on May 23, 2008, May 28, 2008 and June 4, 2008, at various stated times, and an unsuccessful inquiry was made of a neighbor to determine Platt’s place of employment. The affidavit also indicates that on June 4, 2008, at 2:17 P.M., the process server affixed copies of the summons and complaint, and the RPAPL 1303 notice, to the door of the premises, and in addition, mailed, on June 6, 2008, copies of the summons and complaint and the RPAPL 1303 notice to defendant Platt at his last known residence. Plaintiff, however, has failed to present a copy of the notice served with the copy of the summons and complaint. Under such circumstances, this court cannot determine whether plaintiff strictly complied with the requirements of RPAPL 1303. That branch of the motion by plaintiff to strike the affirmative defense based upon failure to comply with RPAPL 1303 is denied.

That branch of the motion by plaintiff to strike the affirmative defense based upon failure to comply with RPAPL 1304 is granted. Defendant Platt asserts that plaintiff failed to serve him with a notice pursuant to RPAPL 1304 prior to commencing the action. That statute was enacted and made effective after the institution of this action (see L 2008, c 472, §§ 2, 28 [approved August 5, 2008, eff. Sept. 1, 2008]). The Legislature made no explicit provision for retroactive application, and the court also is unaware of any case wherein the statute was retroactively applied to any date prior to the statute’s effective date. Thus, plaintiff was not obligated to comply with the requirements found in RPAPL 1304 as a condition precedent to bringing this action, and the affirmative defense based upon noncompliance with RPAPL 1304 is without merit.

With respect to that branch of the motion by plaintiff to dismiss the affirmative defense asserted by defendant Platt based upon alleged fraud, plaintiff offers a copy of the mortgage loan application submitted to Wilmington on behalf of defendant Platt, indicating Platt’s gross monthly income to be $8975.00. The application includes an acknowledgment by defendant Platt that the information provided therein was “true and correct,” as of February 23, 2003, and is executed by defendant Platt. Plaintiff also offers a copy of an appraisal dated February 2, 2007 of the subject premises, prepared by Ronald S. Faltz, of R & D Appraisals, LLC, and relied upon by Wilmington in financing the loan. The appraisal indicates the property had a fair market value of $615,000.00 as of February 2, 2007. Defendant Platt has failed to present any evidence to raise a triable issue of fact as to whether Wilmington, or plaintiff, committed fraud or conspired to commit fraud in the preparation of these documents, or to induce him to enter into the mortgage transaction. That branch of the motion by plaintiff to dismiss the affirmative defense asserted by defendant Platt based upon alleged fraud or conspiracy to commit fraud is granted.

With respect to that branch of the motion for leave to amend the caption deleting reference to the “John Doe” defendants, the only defendants named in the summons and complaint are defendants Platt and “John Doe #1” through “John Doe #10.” Plaintiff asserts it has been determined that defendants “John Doe #1” through “John Doe #10” are not necessary parties to the action. Plaintiff, however, presents two affidavits of service of a licensed process server dated June 6, 2008, indicating service of process upon defendants Platt and “Jane Doe #1-#30” pursuant to CPLR 308(4). Each affidavit indicates that the licensed process server spoke with one “Mr. Graham,” a neighbor, who allegedly stated that “the defendant/respondent lives at the aforementioned address but was unable to divulge the defendant’s/respondent’s place of employment.” It is unclear whether a “Jane Doe” has been joined by plaintiff as a party defendant and the caption should be amended to substitute “Jane Doe #1″” for “John Doe #1” (see Douglas v Kohart, 196 App Div 84 [1921]; Krotchta v Green, 121 Misc 2d 471 [1983]; see also Empire Sav. Bank v Towers Co., 54 AD2d 574 [1976]). Plaintiff notably asserts that “all of the [d]efendants have been served with the summons and verified complaint in this action as appears by the affidavits of service on file in this action” and “[n]one of the [d]efendants have appeared herein except Bruce W. Platt” (emphasis supplied). Under such circumstances, that branch of the motion for leave to amend the caption deleting reference to the “John Doe” defendants is denied without prejudice to renewal upon a proper showing that “Jane Doe” is not a necessary party defendant.

That branch of the motion by plaintiff to substitute BoNY for it, and for leave to amend the cation to reflect the substitution is denied. A question of fact exists as to whether plaintiff has standing to bring this action, and therefore, plaintiff has failed to establish prima facie that it has standing to assign the subject mortgage and note to BoNY.

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Posted in STOP FORECLOSURE FRAUDComments (1)

NY SUPREME COURT DENIES ‘MERS’| NO CRYSTAL CLEAR INVOVEMENT AS “NOMINEE”

NY SUPREME COURT DENIES ‘MERS’| NO CRYSTAL CLEAR INVOVEMENT AS “NOMINEE”


Dated: March 24. 2010
Lyons, New York

Mortgage Electronic Registration Systems (MERS) moves under Article 11 of the Real Property Tax Law (RPTL) and within the limitations period set forth in RPTL § 1137 for an order setting aside a deed issued pursuant to a tax foreclosure proceeding under Article 11. The operative facts are uncomplicated and undisputed.

The central question presented in the instant matter are the rights, if any, Wilmington Finance and/or MERS gained under RPTL §I 125(a) by virtue of these references in the Mortgage.

To accept MERS’ argument would require the County to read every mortgage from A to Z to make sure there are no “Nominees” of the Lender entitled to notice of tax foreclosure in lieu of or in addition to the Lender.

Second, the Mortgage from which MERS derives its claim of right to statutory notice under RPTL § 1125 is by no means crystal clear as to what MERS’ involvement as “Nominee” requires after the recording of the mortgage. Indeed, MERS does not explain what role the “Nominee” plays in the recording of a mortgage, or thereafter, except perhaps as something akin to a power-of-attorney or agent, albeit with independent standing. If the later is the case, it is incumbent upon the “Nominee” to state its status as one due notice in the separate declaration of interest form required under section RPTL §1126, which the County does have a categorical duty to read.

According, the application of MERS shall be, and the same hereby is, denied.

[ipaper docId=37751868 access_key=key-24fih6oxf1j7dp0inp5q height=600 width=600 /]

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Posted in conflict of interest, conspiracy, foreclosure, foreclosure fraud, foreclosures, MERS, MORTGAGE ELECTRONIC REGISTRATION SYSTEMS INC., Supreme Court, TAXES, title companyComments (1)


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