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.
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HONORABLE FRANCOIS A. RIVERA 

At an IAS Term, Part 52 of the 

Supreme Court ofthe State of 

New York, held in and for the 

Cou:nty of Kings, at the 

Courthous.e, at Civic Center, 

Brooklyn; New York, ort the 20th 

day of February 2024 

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

H.SBCBank, IJSA, National Association as Trustee 

for Nomura Asset 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, 

New York City Transit Adjudication Bureau,. 

People ofthe State of New York, Liza Lewis, 

Richard Chase, Unlimited Assets Inc., 

New York State Depctrtnwnt of Finance, 

Criminal Court of the City ofNewYork, 

New York City Parking Violations Bureau, 

Departni.ent of Housing 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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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 of the tnortgage 

(hereinafter the subject mortgage) thatis the subject of the 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 of Fairmont Funding Ltd. to secure the$500,000,00 loan. The mortgage 

wasrecorded on October 19, 2005. Defendant Unlimited 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 and to 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, having no 

interest in th.e pre1nises when the act19n was. commericed. By deed <lated May 16, 2014, 

and flied with the Department.of Finance Office of the City Register on May 29, 2014, 

Islam ·conveyed the premises to tJ AI. At the time. of the conveyance, the instant action 

was pending, and a defaultjudg1nent had been entered against defendant Islam. 

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On January 3, 2008, HSBC filed a motion for a default judgment and order of 

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 for judgment of 

foreclosure and sale. On May 25, 2010, HSBC withdrew the motion. 

On January 27, 2017, HSBC filed a motion to vacate the prior order of reference, 

for a default judgment against the non-appearing parties; and for a new order of 

reference. 

On October 10, 2017, Defendant filed a motion for leave to intervene in plaintiff's 

action, which was returnable October 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 default judgment against the non...,appearing parties and for a new order of 

reference; to the following extent. The order of reference dated J ahuary 14, 2008 was 

vacated and HSBC was granted a default judgment against all non-appearing parties and 

the caption was amended to the extent that the "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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entered on April 22, 2019, the Court granted HSBC' s motion to the extent of amending . . 

the caption to includeUAI as a party defendant. 

By motion dated July 23, 2019, HSBC moved for surnmary judgment, to strike 

UAI's proposed answer that 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 April 26, 201 8, UAI filed an answer with the KCCO. The answer asserted six 

affinnative defenses. As relevant here, the first affirmative defense asserted that HSBC 

lacked standing; and the sixth affirmative defense alleged that the action was time barred. 

HSBC's motionJor summary judgment was opposed by the UAI and denied by 

order, dated February 18, 2022, based on HSBC's failure to establish standing. 

THETRIAL 

A benchjury trial was conducted on November 17, 2022, February 161 2023, and 

October 11., 2023. HSBC admitted nine exhibits into evidence. 'The first exhibit was the 

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 of action is time barred as asserted 

against it. UAI also moved for an order dismissing the second cause of action for 

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reformation ofamortgage. On February 16, 2023, the Court granted UAI's motion to 

dismiss the second cause of action based on HSBC's failurnto make prima facie showing 

of entitlement to reformation. By decisjon and order dated August 24, 2023, the Court 

denied UAI's motion seeking dismissal of the foreclosure action as time barred. The 

parties, thereafter, submitted a request for findings of fact 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 of the subject note 

-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 subject mortgage. Through Shanabrook's testimony and business 

records, HSBC also established Islam's default in making the mortgage payments due 

and owing effective March 1, 2007. 

U AI cal led 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 of conveyanc~. He 

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professed no memory of paying 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 of doing any 

research or making any inquiry on whether there were any Hens, lawsuit or claims on the 

premises before U AI purchased -it 

LAW AND APPLICATION 

UAI has claimed that the subject foreclosure action istime barred as asserted 

against it based on the following facts and arguments. On July 17, 2007, HSBC 

commenced the action and cotnmitted the ove1t unequivocal act of accelerating the 

maturity date of the subject mortgage loan. The parties do not dispute that under_ CPLR 

213 (4), a mortgage foreclosure claimis governed by a six,-year statute of limitations 

{Lubonty v US Bank NA., 34 NY3d 250,261 [2019]) 

UAI .argues that on July 17, 2013, the time to sue anyone not already named in the 

action expired. It further argues that it had no knowledge of the instant foreclosure· action 

or of the subject mortgage on the subject premises when it took title. on May 16,2014. It 

also atgues that there was no notice of pendency on the subject premises when it 

purchased the subject premises. UAI contends thatbased ort these facts, they took title to 

the subject premises 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 for value who first records its interest, and such a bona fide .good faith 

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purchaser for value of the re£Jlpropetty will, upon the recording of its conveyance, take 

title to property free of any such unrecorded interest" (Sasidharan vPiverger, 43 Misc 3d 

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 pursuant to CPLR 3025 (c) to amend 

its answer to add this defense to its answer. However, since a pleading may be liberally 

amended before or after judgment to 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 purchaser for value from an unrecorded interest in 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&T Bank 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 of another party'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 of good faith purchas¢t for value cannot be1naii1tairted by a purchaser 

with either notice or kn ow ledge of a prior interest or equity in the property, or one. with· 

knowledge ofracts that would lead a reasonably prudent purchaser to make inquiries . . . 

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concerning such'1 (see Gregg v M& TBank Corp., 160 AD3d 936, 940 [2d Dept 2018]; 

quoting Yen-Te Hsueh Chen v Geranium Dev. Corp., 243 AD2d 708, 709 [2dDept 

I 9971). The intended purchaser must be presumed to have investigated the title1 and to 

have examined every deed or instrument properly recorded, and to have known every fact 

disclosed or to which an inquiry suggested by the _record would have led (Fairmont 

Funding Ltd v Stefansky, 301 AD2d 562,564 [2d Dept2003]). If the purchaser fails to 

use due diligence in examining the title, he or she is chargeable, as a matter of law, with 

notice of the facts which a proper inquiry would have disclosed (id. at 564). 

Here, Hag's testimony establishes that he did not ask Islam anythingaboutthe 

quality ofhis title to the subject premises. Nor did UAI do a title search ot make any 

inquiry regarding whether the subject premises had any encumbrances. A title search 

would have revealed the existence of the instant foreclosure action and the liens and 

claims asserted against Islam's intetest in tlie subject premises. By not making even the 

most minirnal inquiry regarding the title ofthe subject premises, UAl is not and cannot be 

deemed a bona fide purchaser for value. Moreover, DAI' s purchase of subject premises 

for only $10.00 is nota purchase for value. The fact that the notice of pendency may 

have 'lapsed on the date UAI purchased the subject premis.es wouldnot relieve DAI of the 

obligation to conduct a minimal inquiry regarding the title. A notice ofpertdency does 

not .create a lien on property; instead,. it gives notice to the world.of the rein edy 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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pendency putthe whole world on notice of the claims asserted effectiqg the subject 

premises, the absence or lapse of a notice of pendency does not relieve a subsequent 

purchaser from 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, UAl purchased 

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 that it 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 Islam had at the tithe of the 

conveyance. Inasmuch as the action was timely commenced against Islam, it was timely 

commenced against UAL 

The motion by UAI for an order dismissing the first cause of action to foreclose 

the subject mortgage on the subjectpremises is denied. HSBC established its entitlement 

to a judgment of foreclosure and sale of the 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 subject premises is denied. 

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HSBC B:1nk, USA, National Association asTrustee for Nomura Asset Acceptance 

Corporation, Mortgage Pass.,Through Certificates, Series 2006-AP 1 has established its 

entitlement to a judgment of foreclosure and sale of the subject p.-emises. 

The parties are directed to settle an order of reference on notice within thirty days 

of notice of entry of the instant decision and order. 

The foregoing constitutes the decision and order of this Court 

ENTER: LhA1t=== 

J.S.C. 

Ht'JN. fflANOOIS A.. RIVERA 

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