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Zuniga v. BAC Home Loans Servicing, L.P.

Supreme Court of New York, Second Department

February 8, 2017

Jonathan Zuniga, et al., respondents,
v.
BAC Home Loans Servicing, L.P., etc., appellant. Index No. 3999/13

          Bryan Cave, LLP, New York, NY (Suzanne M. Berger and Catherine E. Welker of counsel), for appellant.

          David J. Broderick, P.C., Forest Hills, NY (Kenneth R. Berman of counsel), for respondents.

          CHERYL E. CHAMBERS, J.P., JOSEPH J. MALTESE, BETSY BARROS, FRANCESCA E. CONNOLLY, JJ.

          DECISION & ORDER

         In an action, inter alia, pursuant to RPAPL article 15 to quiet title to real property, the defendant appeals from an order of the Supreme Court, Nassau County (Brown, J.), dated September 2, 2014, which denied its motion pursuant to CPLR 3211(a)(7) or, in the alternative, pursuant to CPLR 3212, to dismiss the complaint and for leave to enter a default judgment on its counterclaim for sanctions.

         ORDERED that the order is modified, on the law, by deleting the provision thereof denying that branch of the defendant's motion which was pursuant to CPLR 3211(a)(7) to dismiss the complaint, and substituting therefor a provision granting that branch of the motion to the extent of dismissing the plaintiff's sole cause of action except insofar as it is predicated on the allegation that the subject promissory note has been satisfied, and otherwise denying that branch of the motion; as so modified, the order is affirmed, with costs to the defendant.

         In this action pursuant to RPAPL article 15, the plaintiffs seek to cancel a mortgage against their premises, alleging, inter alia, that the trading of the mortgage independent of the promissory note "voided and nullified" the mortgage, that a 2010 assignment of the mortgage, independent of the note, was a nullity, and that the promissory note has been satisfied. The defendant moved, inter alia, pursuant to CPLR 3211(a)(7) to dismiss the complaint.

         In considering a motion to dismiss pursuant to CPLR 3211(a)(7), the court is required to accept the facts as alleged in the complaint as true, accord the plaintiffs the benefit of every favorable inference, and determine only whether the facts as alleged fit within any cognizable legal theory (see Leon v Martinez, 84 N.Y.2d 83, 87-88; Acocella v Wells Fargo Bank, N.A., 139 A.D.3d 647; Bayview Loan Servicing, LLC v White, 134 A.D.3d 755; Pirrelli v OCWEN Loan Servicing, LLC, 129 A.D.3d 689; Jahan v U.S. Bank N.A., 127 A.D.3d 926; Benson v Deutsche Bank Natl. Trust, Inc., 109 A.D.3d 495). Although the facts pleaded are presumed to be true and are to be accorded every favorable inference, "bare legal conclusions as well as factual claims flatly contradicted by the record are not entitled to any such consideration" (Everett v Eastchester Police Dept., 127 A.D.3d 1131, 1132).

         To maintain a cause of action to quiet title, a plaintiff must allege actual or constructive possession of the property and the existence of a removable cloud on the property, which is an apparent title to the property, such as in a deed or other instrument, that is actually invalid or inoperative (see RPAPL 1515; Acocella v Wells Fargo Bank, N.A., 139 A.D.3d at 649; Acocella v Bank of N.Y. Mellon, 127 A.D.3d 891; Barberan v Nationpoint, 706 F.Supp.2d 408, 418 [US Dist Ct, S.D. NY]).

         Here, the documentary evidence conclusively established the existence of the subject mortgage and note. The vast majority of the allegations in the complaint fail to set forth the existence of any bona fide justiciable controversy as to whether the subject property is wrongfully encumbered (see CPLR 3211[a][7]; RPAPL 1515; Jahan v U.S. Bank N.A., 127 A.D.3d 926; Acocella v Bank of N.Y. Mellon, 127 A.D.3d 891; Benson v Deutsche Bank Natl. Trust, Inc., 109 A.D.3d 495; see also Ruiz v Mortgage Elec. Registration Sys., Inc., 130 A.D.3d 1000). The plaintiffs' bare legal assertion that the "trading" of the mortgage separate and apart from the underlying note rendered the security interest null and void is without merit (see Ruiz v Mortgage Elec. Registration Sys., Inc., 130 A.D.3d at 1002). Insofar as the plaintiffs, in effect, challenge the defendant's standing to commence an action to foreclose the subject mortgage, that contention is misplaced, as this is not an action to foreclose a mortgage, and standing is not an issue herein (see Jahan v U.S. Bank N.A., 127 A.D.3d at 927; Acocella v Bank of N.Y. Mellon, 127 A.D.3d at 893).

         To the extent, however, that the complaint alleges that the subject promissory note "was satisfied, " we find that this sufficiently states a cause of action under RPAPL article 15 (see e.g. Guccione v Estate of Guccione, 84 A.D.3d 867).

         Accordingly, the Supreme Court should have granted the defendant's motion pursuant to CPLR 3211(a)(7) to the extent of dismissing the plaintiff's sole cause of action, except insofar as it is predicated on the allegation that the subject promissory note has been satisfied.

         While the defendant also moved, in the alternative, for summary judgment pursuant to CPLR 3212, it failed to demonstrate the admissibility of the records relied upon by its affiant under the business records exception to the hearsay rule (see CPLR 4518[a]) and, therefore, failed to establish, prima facie, that the promissory note remained unpaid (see HSBC Mtge. Servs., Inc. v Royal, 142 A.D.3d 952). Accordingly, the defendant was not entitled to summary judgment dismissing the only surviving portion of the plaintiffs' cause of action, which was predicated on the allegation that the subject promissory note has been satisfied, regardless of the sufficiency of the papers submitted in opposition (see U.S. Bank N.A. v Madero, 125 A.D.3d 757).

         That branch of the defendant's motion which was for leave to enter a default judgment on its counterclaim for sanctions was properly denied. New York does not recognize an independent cause of action for the imposition of sanctions relating to frivolous actions (see Lewis, Brisbois, Bisgaard & Smith, LLP v Law Firm of Howard Mann, 141 A.D.3d 574). Where a valid cause of action is not stated, the pleading party moving for judgment on that cause of action is not entitled to the requested relief, even on default (see LIUS Group Intl. Endwell, LLC v HFS Intl., Inc.,92 A.D.3d 918, 920; Churc ...


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