HSBC Bank, USA, N.A. v Islam 2024 NY Slip Op 30570(U) February 20, 2024 Supreme Court, Kings County Docket Number: Index No. 26142/2007 Judge: Francois A. Rivera Cases posted with a "30000" identifier, i.e., 2013 NY Slip

Op 30001(U), are republished from various New York State and local government sources, including the New

York State Unified Court System's eCourts Service. This opinion is uncorrected and not selected for official publication.

### FILED: KINGS COUNTY CLERK 02/23/2024 04:34 PM INDEX NO. 26142/2007 NYSCEF DOC. NO. 54 RECEIVED NYSCEF: 02/23/2024

1 of 10 HONORABLE FRANCOIS A. RIVERA At an IAS Term, Part 52 ofthe Supreme Court oftheState of New York, heldin and for the Cou:nty ofKings, atthe Courthous.e, at Civic Center, Brooklyn; New York, ort the 20th day ofFebruary 2024

----------. --. -- .-. --------- .----------- .--------. ----------- .-- ·X. H.SBCBank, IJSA, National Association as Trustee for NomuraAsset Acceptance Corporation,.Mortgage Passe.Through Certificates, Series 2006-API,· Plaintiff

- against
- Tahajul Islam, Mortgage Electronic Registration Systems, Inc. as nominee for Fairmont Funding, LTD, New York City Environmental Control Board, NewYork City Transit AdjudicationBureau,. People ofthe State ofNew York, LizaLewis, Richard Chase, Unlimited Assets Inc., New YorkState Depctrtnwnt ofFinance, Criminal Court ofthe City ofNewYork, New York City Parking Violations Bureau, Departni.ent ofHousing Preservation and Development, Defendants.

------------------------- · ...--- .-------- .. - ..______________ .-X 

### DECISION AND ORDER Index No. 26142/2007

The following js the decision and order after a non-jury trial in the above cc1ptioned hi.after.



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### FILED: KINGS COUNTY CLERK 02/23/2024 04:34 PM INDEX NO. 26142/2007 NYSCEF DOC. NO. 54 RECEIVED NYSCEF: 02/23/2024

2 of 10 

### THE 

### PARTIES PlaintiffHSBC Bank, USA, Natio11al Association as Trustee forNomuraAsset Acceptance Corporation, Mortgage Pass.,Through Certificates, Series 2006-AP 

### L

. . (hereinafter HSBC) is the note holder (the subject hote}artd mortgagee ofthe tnortgage (hereinafter the subject mortgage) thatis the subject ofthe instant mortgage foreclosure action. The subject mortgage secured an indebtedness of$500,000.00 encumbering a certain real property known as 722 News Lots Avenue, Brooklyn, New York (hereinafter the subject premises). On September 7, 2005; Tahajul Islam (hereinafter Islam) executed a note in favor ofFairmont Funding Ltd. to secure the$500,000,00 loan. Themortgage wasrecorded on October 19, 2005. DefendantUnlimited Assets Inc. (hereinafterUAI) is the· current owner the subject premises. 

### BACKGROUND On)uly 17, 2007, HSBC commenced the instant action to foreclose the subject mortgage andto reform said mortgage by filing 

### a smrnnons, complaint and notice of pendency with the Kings County Clerk's office (KCCO). The foreclosure action was asserted against Islam, among others. UAI was not a p,uty in the action when it was commenced 

### in 2007, havingno 

### interest in th.e pre1nises when the 

### act19n was. commericed. By deed <lated May 16, 2014, and flied withthe Department.ofFinance Office of

### the City Register on May 29, 

### 2014, Islam ·conveyed the premises to 

### tJAI. At the time. ofthe conveyance, the instant action was pending, and a defaultjudg1nent had been entered against defendant Islam.
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### FILED: KINGS COUNTY CLERK 02/23/2024 04:34 PM INDEX NO. 26142/2007 NYSCEF DOC. NO. 54 RECEIVED NYSCEF: 02/23/2024

3 of 10 On January 3, 2008, HSBC filed a motion for a defaultjudgment and orderof reference. The motion was granted 

### by order dated January 

### 10, 2008, and entered on January 14, 2008. On Febmary 23, 2009; HSBC filed 

### a motion forjudgment of foreclosure and sale. On May 25, 2010, HSBC withdrew the motion. On January 27, 2017, HSBCfiled a motion to vacate the prior order ofreference, for a defaultjudgmentagainst the non-appearingparties; and for a new order of reference. On October 10, 2017, Defendantfiled 

### amotion for leave to intervene in plaintiff's action, which was returnableOctober 31, 2017. On April 23, 2018, HSBC and UAI executed a stipulation in which UAI agreed to withdraw its inotion 

### for leave

### to intervene~ and HSBC agreed to file 

### a motion to amend the caption to include 

### UAL On June 

### 27, 2018, the Court granted HSBC's motion to vacate the prior order of refr:rence, for a defaultjudgment against the non...,appearing parties and for a new order of reference; to the following extent. The order ofreference dated 

### Jahuary 14, 2008 was vacated and HSBC was granted a defaultjudgment against all non-appearing parties and the caption was amended to the extent thatthe "John Does" were excised. 

### On August 1, 2018, 

### HSBC, moved 

### for 

### an order granting 

### leave 

### to serve a supplemental sumrnons and 

### a1nended complaint pursuantto 

### CPLR § 

### 3025(b) 

### and to ainertd 

### the pleadings. 

### UAI·filed opposition to 

### the·motiort. 

## By or(ler dated 

### April 10, 2019,



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### FILED: KINGS COUNTY CLERK 02/23/2024 04:34 PM INDEX NO. 26142/2007 NYSCEF DOC. NO. 54 RECEIVED NYSCEF: 02/23/2024

4 of 10 enteredon April 

### 22, 2019, the Court granted HSBC's motion to the extent ofamending

. . the caption to includeUAI as a party defendant. By motion datedJuly 23, 

### 2019, HSBC moved for surnmaryjudgment, to strike UAI's proposed answerthat had been filed by UAI with its motion for leave to interve11e. The motion to intervene was subsequently withdrawn pursuantto a stipulation between HSBC and UAL On April26, 201 

### 8, UAI filed 

### an answer with the KCCO. The answer asserted six affinnative defenses. As relevant here, the first affirmativedefense asserted that HSBC lacked standing; and the sixth affirmative defense alleged that the action was time barred. HSBC's motionJor summaryjudgmentwas opposed by the UAI and deniedby order, datedFebruary 18, 2022, based on HSBC's failure to establish standing. 

### THETRIAL A benchjurytrial was conducted on November 17, 2022, February 

### 161 2023, and October 

### 11., 2023. HSBC admitted nine exhibits into evidence. 'The first exhibitwasthe Pooling Service Agreement or PSA. The second exhibit was a mortgage loan schedule. The third exhibit was the subject'note. Exhibit four was the subject mortgage. Exhibits five 

### and six: were screenshots. Exhibit nine was the 

### deed to 

### UAL Exhibit ten was a 

### loari payrnent history, 

### At the close 

### ofHSBC's ctise in chiefUAl moved.fora directed verdict on its sixth affirmative 

### defense alleging that the cause ofaction is time barred as asserted against it. 

### UAI also moved for an order dismissing the second cause of

### action for

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### FILED: KINGS COUNTY CLERK 02/23/2024 04:34 PM INDEX NO. 26142/2007 NYSCEF DOC. NO. 54 RECEIVED NYSCEF: 02/23/2024

5 of 10 reformation ofamortgage. On February 16, 2023, the Court granted UAI's motionto dismiss the second cause ofaction based on HSBC's failurnto make prima facie showing ofentitlement to reformation. By decisjon and order dated August 24, 2023, the Court denied UAI's motion seeking dismissal ofthe foreclosure action as time barred. The parties, thereafter, submitted a request for findings offact in accordance with CPLR 4213, 

### FINDINGS OF FACT HSBC called Cindy Teresa Shanabrook{hereinafter Shariabrook), a senior loan documentation specialist for Wells Fargo Bank, the se1'vicer for the subject loan, to testify, Shanabrook's testimbny established HSBC's possession ofthe subjectnote -before the action was commenced. The subjectnote was endorsed in blank. HSBC also admitted the PSA which was accompanied by aloan schedule thatincluded the subject note. By Shanabrook's credible testimony and admitted documents HSBC established it had standing to cmmnence the instant action. HSBC also produced and established its possession ofthe subjectmortgage. Through Shanabrook's testimony and business records, HSBC also establishedIslam's default in making the mortgage payments due and owing effective March 1, 2007. UAI called Maniral Haq (hereinafter 

### Haq); its .corporate secretary, to te&tify. 

### Haq testified that 

### DAI bought the·ptemises·from Islam about ten years ago. 

### He initially testified that he did not know

### what UAl paid for the premises. He then confinned that DAI had, indted paid $10.00 for the prop~rty as reflected on the deed ofconveyanc~. He



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### FILED: KINGS COUNTY CLERK 02/23/2024 04:34 PM INDEX NO. 26142/2007 NYSCEF DOC. NO. 54 RECEIVED NYSCEF: 02/23/2024

6 of 10 professed no memory ofpaying anything other than $10.00. Haq also stated that he did not know whether 

### UAI did a title search, He had

## tm ktiowledge or memory ofdoing any research or making any inquiry on whether there were any Hens, lawsuit or claims on the premises before 

### UAI purchased
- it LAW AND APPLICATION 

### UAI has claimed that the subject foreclosure action istime barred as asserted againstitbased on the following facts and arguments. On July 17, 2007, HSBC commencedthe action and cotnmittedthe ove1t unequivocal act ofaccelerating the maturity date ofthe subjectmortgage loan. Theparties do not dispute that under_CPLR 213 (4), a mortgage foreclosure claimis governed by a six,-year statute of limitations 

### {Lubonty v US BankNA., 34 NY3d 250,261 [2019]) 

### UAI .argues thaton July 17, 2013, thetimeto sue anyone not already named in the action expired. It further argues that 

### ithadno knowledge ofthe instant foreclosure· action or ofthe subjectmortgage on the subject premises when it took title. on May 

### 16,2014. It also atgues that there was no notice 

### ofpendency on the subjectpremises whenit purchased the subject premises. 

### UAI contends thatbased ort these facts, they took title to the subjectpremises free ofthe subject mortgage; "Purst1arit

### to Real Property Law §

### 29J, an unrecorded 

### 111ortgage is valid as 

### between the 

### ntortgagcH' and mortgagee, 

### but is otherwise.void as against·a bona fide 

### good faith purchaser forvalue who first records its interest, and such a bona fide .good faith

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### FILED: KINGS COUNTY CLERK 02/23/2024 04:34 PM INDEX NO. 26142/2007 NYSCEF DOC. NO. 54 RECEIVED NYSCEF: 02/23/2024

7 of 10 purchaser for value ofthe re£Jlpropetty will, upon the recording ofits conveyance, take title to property free ofany such unrecorded interest" 

### (Sasidharan vPiverger, 43 Misc3d 1231[A], 2014 NY

### Slip Op 50890]U], * 11 [Sup Ct, Kings County 2014]). It is noted that UAI's answer did not assert the affirmative defense that it is a bona fide purchaser for value, nor did it make a motion pursuantto CPLR 3025 (c)to amend its answer to add this defense to its answer. However, since a pleadingmaybe liberally amended before or afterjudgmentto conform to the evidence (CPLR 3025 [c]); 

### UAI's claims will be addressed under 

### RPL§ 291. "The New York RecordingAct(Real Property Law§ 290 et seq,), inter alia, protects a good faith purchaserforvalue froman unrecorded interestin a property, provided such a purchaser's interest is first to be duly recorded" 

### (Yen.,Te Hsueh Chen v 

### Geranium Dev; Corp;, 243 AD2d 708, 709 [2d Dept 1997]; 

### see Real Property Law 

### § 291; 

### Gregg vM&TBank Corp., 160 AD3d 936, 940(2d Dept20f8]), A bona fidepurchaser for value is one who purchases real property in good faith, for valuable consideration, without actual or record notice ofanotherparty's adverse interests in the property and is the first to record the deed or conveyance 

### (Panther 

### Mtn Water Park, Inc. v County 

### of Essex, 40 AD3d 1336; 1338 [3d Dept 20071). 

### "The status ofgood faith purchas¢t for value cannot be1naii1tairted by a purchaser with either notice or know 

### ledge ofa prior interestor equity in the 

### property, or one. with· knowledge ofracts that would lead a reasonably prudent purchaser 

### to make inquiries

. . .



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### FILED: KINGS COUNTY CLERK 02/23/2024 04:34 PM INDEX NO. 26142/2007 NYSCEF DOC. NO. 54 RECEIVED NYSCEF: 02/23/2024

8 of 10 concerning such' 1 

### (see Gregg v 

### M&TBank Corp., 

### 160 AD3d 

### 936, 940 [2d Dept 2018]; quoting 

### Yen-Te Hsueh Chen v GeraniumDev. Corp., 243 AD2d 708, 709 [2dDept 

### I9971). The intended purchasermust bepresumed to have investigated the title 1 andto have examined every deedor instrumentproperlyrecorded, and to have known every fact disclosed or to whichaninquiry suggested by the_record would haveled 

### (Fairmont Funding Ltd v

### Stefansky, 301 AD2d 562,564 [2d Dept2003]). 

### Ifthe purchaser fails to use due diligence in examining the title, he or she is chargeable, as a matter oflaw, with notice ofthe facts which a proper inquiry would have disclosed (id. at 564). Here, Hag's testimony establishes thathe did not ask Islam anythingaboutthe quality ofhis title to the subjectpremises. Nor did UAI do a title search 

## otmake any inquiry regarding whetherthesubject premises had any encumbrances. A title search would haverevealed the existence ofthe instant foreclosure action and the liens and claims asserted againstIslam's intetest in tlie subject premises. By not making even the most minirnal inquiry regarding the title ofthe subjectpremises, UAl is not and cannot be deemed 

### a bonafide purchaser for value. Moreover, DAI's purchase ofsubject premises for only $10.00 is nota purchase for value. The fact that the notice ofpendency may have 'lapsed on the date UAIpurchased 

### the subjectpremis.es wouldnot relieve DAI ofthe obligation to conduct a minimal inquiry regardingthe title. A notice ofpertdency does not .create a lien on property; instead,.it gives notice to theworld.ofthe reinedy being sought 

### in the lawsuit (

### Caruso; Caruso 

### & Brands, AC. 

### v 

### Hirsch 2 7 Misc 3

### d 1216[A], 

### 201ONYSlip Op 50768[U], *3 [Sup Ct, Kings County2010l). While a notice of



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### FILED: KINGS COUNTY CLERK 02/23/2024 04:34 PM INDEX NO. 26142/2007 NYSCEF DOC. NO. 54 RECEIVED NYSCEF: 02/23/2024

9 of 10 pendency putthe whole world on notice ofthe claims asserted effectiqg the subject premises, the absence or lapse ofa notice ofpendency does not relieve a subsequent purchaserfrom investigating the title; The lawsuit was still in existence and pending when UAI purchased the.subject premises. Without the protection afforded to a bona fide purchaser for value, UAlpurchased the subject premises from Islam with all the encumbrances that Islam was subject to, including his debt on the subject mortgage. UAI's claim that the foreclosure actioi1 is time-barred as asserted against it is sitnply wrong. UAI stands in the same shoes a$. defendant Islam. The fact thatit interposed its answer on April 26; 2018, does not render the foreclosure action time batted as assertedagainst it. Under these circumstances; UAI purchased the subject premises with the encumbrances Islamhad at the tithe ofthe conveyance. Inasmuch as the action was timely commenced against Islam, it was timely commenced against UAL The motion by UAIfor an order dismissingthe firstcause ofaction to foreclose the subject mortgage onthe subjectpremises is denied. HSBC established its entitlement to ajudgment of foreclosure and sale ofthe subject premises. 

### CONCLUSION The motion by Unlimited Assets foe, forart order dismissing the first cause 

### of action to foreclose 

### the subject mortg/ige on the subjectpremises is denied.



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### FILED: KINGS COUNTY CLERK 02/23/2024 04:34 PM INDEX NO. 26142/2007 NYSCEF DOC. NO. 54 RECEIVED NYSCEF: 02/23/2024

10 of 10 HSBC B:1nk, USA, National Association asTrustee for Nomura Asset Acceptance Corporation, MortgagePass.,Through Certificates, Series 2006-AP 1has established its entitlement to ajudgment offoreclosure and sale ofthe subject p.-emises. The parties are directed to settle an order ofreference on notice within thirty days ofnotice ofentry ofthe instant decision and order. The foregoing constitutesthe decision and order ofthis Court 

### ENTER: 

# LhA1t=== J.S.C. 

### Ht'JN. fflANOOISA.. RIVERA

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