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CIT Bank N.A. v. Conroy

United States District Court, E.D. New York

May 3, 2017

CIT BANK N.A., Plaintiff,
v.
TARA CONROY a/k/a TARA DONOVAN, JAMES DONOVAN, TOTAL DENTAL CARE OF MIDDLE ISLAND, P.C., ASTORIA FEDERAL SAVINGS AND LOAN ASSOCIATION, NEW YORK STATE DEPARTMENT OF TAXATION AND FINANCE, ANNMARIE CLARKE, FASTINA BLACK, and "JOHN DOE No. 1" through "JOHN DOE No. 10" inclusive, the names of the last 10 defendants being fictitious, the true names of said defendants being unknown to Plaintiff, it being intended to designate fee owners, tenants or occupants of the mortgaged premises and/or persons or parties having or claiming an interest in or a lien upon the mortgaged premises, if the aforesaid individual defendants are living, and if any or all of said individual defendants be dead, their heirs at law, next of kin, distributees, executors, administrators, trustees, committees, devisees, legatees, and the assignees, lienors, creditors and successors in interest of them, and generally all persons having or claiming under, by, through, or against the said defendants named as a class, of any right, title, or interest in or lien upon the premises described in the complaint herein, Defendants.

          WINDELS MARX LANE & MITTENDORF, LLP BY: Andrew L. Jacobson, Esq. Attorney for Plaintiff

          HOGAN LOVELLS U.S. LLP BY: Allison J. Schoenthal, Esq. and Nicole E. Schiavo, Esq. Attorneys for Plaintiff

          LAW OFFICES OF CHRISTOPHER THOMPSON BY: Christopher Thompson, Esq. Attorneys for Defendant Tara Conroy a/k/a Tara Donovan

          James Donovan, defendant pro se

          MEMORANDUM AND ORDER

          LEONARD D. WEXLER UNITED STATES DISTRICT JUDGE

         In this diversity case, Plaintiff CIT Bank, N.A. ("CIT Bank" or "Plaintiff) seeks to foreclose on a mortgage encumbering real property and to sell that property. Discovery has been completed, and motions for summary judgment have been submitted. Defendants Tara Conroy a/k/a Tara Donovan ("Conroy") and James Donovan ("Donovan, " collectively "Defendants") have submitted separate motions for summary judgment. See Docket Entry ("DE") [135] and [136], respectively. Plaintiff has cross-moved for summary judgment on its claim and to dismiss Defendants' counterclaims. DE [135-12].[1] For the reasons set forth herein, Defendants' motions are granted, Plaintiffs cross-motion is granted in part and denied in part, and the case is dismissed.

         I. BACKGROUND

         A. The Parties and the Underlying Mortgage Loan

         The facts are taken from the amended complaint and the parties' Rule 56.1 statements and are undisputed unless otherwise indicated. CIT Bank is a national banking association. Defendants Conroy and Donovan are New York residents and reside at 11 Waverly Court, Wading River, New York ("the Property"). Plaintiff claims that both Conroy and Donovan own the Property, but Donovan disputes his ownership interest. There appears to be no dispute as to Conroy's ownership.

         On April 25, 2007, Defendants obtained a loan ("Loan") from IndyMac Bank, F.S.B. ("IndyMac") in the principal amount of $600, 000, which loan was memorialized in a note (the "Note") and secured by a mortgage (the "Mortgage") on the Property. Donovan characterizes the loan as a "construction to permanent financing agreement." The actual loan documents are entitled "Fixed/Adjustable Rate Note" and "Mortgage, " and the Note includes a "Residential Construction Loan Addendum." See Declaration of James Donovan ("Donovan Decl."), Ex. A and B, DE [137]. While Defendants do not generally dispute the initial facts regarding the Loan and its documentation, Donovan raises numerous issues regarding the authenticity of the Note.

         The Loan was the subject of two modification agreements. IndyMac, Conroy, and Donovan executed a Modification Agreement on October 28, 2007. See Donovan Decl., Ex. C ("2007 Modification"). Under the 2007 Modification, the construction period was extended 60 days to January 1, 2008, a prepayment penalty was added, and the interest rate lock commitment was released and instead would float "until the Permanent Loan is signed." Id. ¶3(e). On or about June 1, 2008, IndyMac, Conroy, and Donovan executed a second Modification Agreement subtitled "Roll-to-Perm." See Affidavit of Rebecca Marks, ("Marks Aff"), Ex.C ("2008 Modification"), DE [135-21]. This agreement sets forth the parties' agreement regarding the "conversion from the Construction Phase to the Permanent Phase of the loan" and purports to modify the Note to change the interest rate and monthly payment. Despite the 2008 Modification, Donovan claims that IndyMac failed to convert the loan and that the loan was rescinded.

         Plaintiff claims that Conroy and Donovan failed to make the monthly payment due February 1, 2009 and have failed to make all subsequent monthly payments.

         The purported holder of the note and mortgage has changed since the original execution by IndyMac. On July 11, 2008, IndyMac was closed by the Office of Thrift Supervision and the Federal Deposit Insurance Corporation ("FDIC") was appointed as receiver. IndyMac's assets were transferred to IndyMac Federal Bank ("IndyMac Federal"). On March 19, 2009, One West Bank N. A. ("OneWest") acquired "substantially all" the assets of IndyMac Federal. Donovan claims that Plaintiff has not proven that One West acquired this specific Mortgage Loan.

         In 2014, One West changed its name to CIT Bank, N.A. as the result of the acquisition of One West's parent by CIT Group Inc. Plaintiffs motion to change the corporate name from One West to CIT Bank in this litigation was granted on September 15, 2016. Order, DE ...


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