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Deutsche Bank National Trust Co. v. Benson

Supreme Court of New York, Second Department

January 15, 2020

Deutsche Bank National Trust Company, etc., appellant,
v.
Andrew Benson, etc., respondent, et al., defendants.

          Sandelands Eyet LLP, New York, NY (Mindy L. Kallus of counsel), for appellant.

          Garvey, Cushner & Associates, PLLC (Larkin Farrell, LLC, New York, NY [William R. Larkin], of counsel), for respondent.

          MARK C. DILLON, J.P., LEONARD B. AUSTIN, SYLVIA O. HINDS-RADIX, LINDA CHRISTOPHER, PAUL WOOTEN, JJ.

          DECISION & ORDER

         In an action to foreclose a mortgage, the plaintiff appeals from an order of the Supreme Court, Westchester County (William J. Giacomo, J.), dated April 10, 2018. The order granted that branch of the motion of the defendant Andrew Benson which was pursuant to CPLR 3211(a)(3) to dismiss the complaint insofar as asserted against him for lack of standing.

         ORDERED that the order is reversed, on the law, with costs, and that branch of the motion of the defendant Andrew Benson which was pursuant to CPLR 3211(a)(3) to dismiss the complaint insofar as asserted against him for lack of standing is denied.

         In February 2007, the defendant Andrew Benson (hereinafter the defendant) executed and delivered to Countrywide Bank, N.A., a consolidation, extension, and modification agreement and consolidated note and mortgage combining two previous notes and mortgages to form a single lien against the defendant's property. The plaintiff commenced this action against the defendant, among others, to foreclose the mortgage. The defendant filed a pre-answer motion pursuant to CPLR 3211(a)(1) and (3) to dismiss the complaint insofar as asserted against him for lack of standing. The Supreme Court granted that branch of the defendant's motion which was pursuant to CPLR 3211(a)(3), and the plaintiff appeals.

         A plaintiff has standing in a mortgage foreclosure action when it is 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 Aurora Loan Servs., LLC v Taylor, 25 N.Y.3d 355, 361; U.S. Bank N.A. v Clement, 163 A.D.3d 742, 743; Deutsche Bank Natl. Trust Co. v Brewton, 142 A.D.3d 683, 684). "A holder' is the person in possession of a negotiable instrument that is payable either to bearer or to an identified person that is the person in possession'" (Deutsche Bank Natl. Trust Co. v Brewton, 142 A.D.3d at 684, quoting UCC 1-201[b][21]; see U.S. Bank N.A. v Clement, 163 A.D.3d at 743; Deutsche Bank Natl. Trust Co. v Webster, 142 A.D.3d 636, 638). "Where the instrument is endorsed in blank, it may be negotiated by delivery" (U.S. Bank N.A. v Clement, 163 A.D.3d at 743; see UCC 3-202[1]; 3-204[2]).

         In a mortgage foreclosure action, on a defendant's pre-answer motion to dismiss a complaint on the ground that the plaintiff lacked standing to commence the action, "the burden is on the moving defendant to establish, prima facie, the plaintiff's lack of standing, rather than on the plaintiff to affirmatively establish its standing in order for the motion to be denied" (Deutsche Bank Trust Co. Ams. v Vitellas, 131 A.D.3d 52, 59-60; see U.S. Bank N.A. v Clement, 163 A.D.3d at 743; New York Community Bank v McClendon, 138 A.D.3d 805, 806). "The attachment of an endorsed note to the complaint in a foreclosure action is sufficient to demonstrate, prima facie, that the plaintiff was the holder of the note when the action was commenced" (Bank of N.Y. Mellon v Chamoula, 170 A.D.3d 788, 791; see CitiMortgage, Inc. v McKenzie, 161 A.D.3d 1040, 1041; Nationstar Mtge., LLC v Catizone, 127 A.D.3d 1151, 1152).

         Here, the defendant, as the moving party, failed to make a prima facie showing that the plaintiff lacked standing to commence this action. In support of his motion, the defendant submitted a copy of the complaint, to which was annexed, among other things, a copy of the consolidated note. The consolidated note was endorsed by Countrywide Bank, N.A., to Countrywide Home Loans, Inc., and, in turn, by Countrywide Home Loans, Inc., in blank. This evidence established that the plaintiff was in physical possession of the consolidated note at the time this action was commenced (see U.S. Bank N.A. v Clement, 163 A.D.3d at 743-744; cf. U.S. Bank N.A. v Coppola, 156 A.D.3d 934; Deutsche Bank Natl. Trust Co. v Carlin, 152 A.D.3d 491, 492). Under these circumstances, the validity of the purported assignments of the note and mortgage is irrelevant to the issue of the plaintiff's standing (see Aurora Loan Servs., LLC v Taylor, 25 N.Y.3d at 362). Accordingly, the Supreme Court should have denied that branch of the defendant's motion which was pursuant to CPLR ...


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