State of New York

Supreme Court, Appellate Division

Third Judicial Department

Decided and Entered: April 9, 2015 519410 

________________________________

WELLS FARGO BANK, NA,

Appellant,

v

PIERRE N. OSTIGUY, Also Known MEMORANDUM AND ORDER

as PIERRE OSTIGUY, et al.,

Respondents,

et al.,

Defendants.

________________________________

Calendar Date: February 19, 2015

Before: Peters, P.J., McCarthy, Rose and Clark, JJ.

__________

Hogan Lovells US LLP, New York City (Robin L. Muir of

counsel), for appellant.

Kim Dsouza, Newburgh, for respondents.

__________

Peters, P.J.

Appeal from an order of the Supreme Court (Zwack, J.),

entered September 27, 2013 in Columbia County, which, among other

things, granted a cross motion by defendants Pierre N. Ostiguy

and Elaine R. Thomas for summary judgment dismissing the

complaint against them.

In 2009, defendants Pierre N. Ostiguy and Elaine R. Thomas

(hereinafter collectively referred to as defendants) executed a

note in favor of plaintiff that was secured by a mortgage on real

property located in Columbia County. Shortly thereafter,

plaintiff sold defendants' loan to Freddie Mac but continued to

service the loan. Defendants defaulted on the note in 2011, and
-2- 519410 

plaintiff commenced this foreclosure action in 2012. Following

joinder of issue, plaintiff moved for summary judgment striking

the answer and appointing a referee to compute the amount due and

owing. Defendants cross-moved for summary judgment dismissing

the complaint on the basis of, among other things, lack of

standing. Finding that plaintiff failed to prove that it

physically possessed the note or was otherwise entitled to

enforce it at the time this action was commenced, Supreme Court

concluded that plaintiff lacked standing and granted defendants'

cross motion dismissing the complaint. Plaintiff now appeals. 

To establish entitlement to summary judgment in a

foreclosure action, a plaintiff must produce evidence of the

mortgage and unpaid note along with proof of the mortgagor's

default (see HSBC Bank USA, N.A. v Sage, 112 AD3d 1126, 1127

[2013], lvs dismissed 22 NY3d 1172 [2014], 23 NY3d 1015 [2014];

PHH Mtge. Corp. v Davis, 111 AD3d 1110, 1111 [2013], lv dismissed

23 NY3d 940 [2014]). Where, as here, the issue of standing is

raised as an affirmative defense, the plaintiff must also prove

its standing in order to be entitled to relief (see MLCFC 2007-9

Mixed Astoria, LLC v 36-02 35th Ave. Dev., LLC, 116 AD3d 745, 746

[2014]; CitiMortgage, Inc. v Rosenthal, 88 AD3d 759, 761 [2011]). 

"A plaintiff has standing in a mortgage foreclosure action 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" (Chase Home Fin., LLC v Miciotta, 101 AD3d 1307,

1307 [2012] [internal quotation marks and citations omitted]; see

Wells Fargo Bank, N.A. v Wine, 90 AD3d 1216, 1217 [2011]).

In support of its cross motion and in opposition to

defendants' motion, plaintiff produced the mortgage, the unpaid

note, the notice of default sent to defendants and the affidavit

of Shae E. Herman, its vice-president of loan documentation,

attesting to defendants' default and failure to cure. Despite

this proof, Supreme Court found that, as to standing, plaintiff's

admitted sale of the loan to Freddie Mac was fatal to its claim

that it was the lawful holder of the note and mortgage at the

time this action was commenced. We cannot agree. Holder status

is established where the plaintiff possesses a note that, on its

face or by allonge, contains an indorsement in blank or bears a

special indorsement payable to the order of the plaintiff (see
-3- 519410 

UCC 1-201 [former (20)]; 3-202; 3-204; Hartford Acc. & Indem. Co.

v American Express Co., 74 NY2d 153, 159 [1989]; DH Cattle

Holdings Co. v Smith, 195 AD2d 202, 208 [1994]; see also

Nationstar Mtge., LLC v Davidson, 116 AD3d 1294, 1296 [2014], lv

denied 24 NY3d 905 [2014]; Deutsche Bank Trust Co. Ams. v Codio,

94 AD3d 1040, 1041 [2012]; Mortgage Elec. Registration Sys., Inc.

v Coakley, 41 AD3d 674, 674 [2007]). Notably, "[t]he holder of

an instrument whether or not he [or she] is the owner may

transfer or negotiate it[, and] discharge it or enforce payment

in his [or her] own name" (UCC 3-301 [emphasis added]; see

generally Glens Falls Indem. Co. v Chase Natl. Bank, 257 NY 441,

445 [1931]; Gates v Manufacturers Hanover Trust Co./Capital

Region, 98 AD2d 829, 829 [1983], abrogated on other grounds

Golden v Citibank, N.A., 23 NY3d 935, 936 [2014]). Here, the

note was originated by plaintiff and a copy submitted on the

motion, alleged to be in plaintiff's possession at the time it

commenced this action, is endorsed in blank. Thus,

notwithstanding the sale of the beneficial interests of the note

to Freddie Mac, plaintiff has the right to enforce the note as

its lawful holder so long as it can prove that it physically

possessed the note at the time the action was commenced.

In that regard, Herman averred that, upon her review of the

books and records maintained by plaintiff in the ordinary course

of business, plaintiff has remained the holder of the note and

mortgage at all times since the loan's origination, including the

date that this action was commenced. Yet, at another point in

her affidavit, she states that "[plaintiff], directly or through

an agent, has possession of the Promissory Note and Mortgage." 

She further equivocates that plaintiff "is either the original

payee of the Promissory Note or the Promissory Note [h]as been

duly endorsed." Herman's varying, and potentially inconsistent,

statements do not definitively establish that plaintiff

maintained physical possession of the note at the relevant time,

and her affidavit fails to disclose who plaintiff's purported

"agent" could be or establish that any such agency relationship

does, in fact, exist (cf. Bank of N.Y. v Silverberg, 86 AD3d 274,

281 [2011]). Because the issue of standing cannot be resolved as

a matter of law on this record, summary judgment was not

warranted in favor of either party (see Bank of Am., N.A. v

Paulsen, 125 AD3d 909, 911 [2015]; US Bank N.A. v Faruque, 120
-4- 519410 

AD3d 575, 578 [2014]; Deutsche Bank Natl. Trust Co. v Rivas, 95

AD3d 1061, 1061-1062 [2012]; U.S. Bank, N.A. v Collymore, 68 AD3d

752, 754 [2009]).

McCarthy, Rose and Clark, JJ., concur.

ORDERED that the order is modified, on the law, without

costs, by reversing so much thereof as granted the cross motion

of defendants Pierre N. Ostiguy and Elaine R. Thomas for summary

judgment dismissing the complaint against them; cross motion

denied; and, as so modified, affirmed.

ENTER:

Robert D. Mayberger

Clerk of the Court