Court Opinion

ID: 3198789
Source: CourtListenerOpinion
Date Created: 2016-04-28 15:08:19.265384+00
Date Added: 2024-06-11T13:31:25.010112
License: Public Domain

State of New York
                   Supreme Court, Appellate Division
                      Third Judicial Department
Decided and Entered: April 28, 2016                    521494
________________________________

THE BANK OF NEW YORK MELLON,
   Formerly Known as
   THE BANK OF NEW YORK, as
   Trustee for the
   CERTIFICATEHOLDERS CWALT,
   INC., ALTERNATIVE LOAN TRUST
   2006-16CB MORTGAGE
   PASS-THROUGH CERTIFICATES,
   SERIES 2006-16CB,                        MEMORANDUM AND ORDER
                    Respondent,
      v

JUDITH McCLINTOCK, Also Known
   as JUDY McCLINTOCK,
                    Appellant,
                    et al.,
                    Defendants.
________________________________

Calendar Date:   February 16, 2016

Before:   McCarthy, J.P., Egan Jr., Lynch, Devine and Clark, JJ.

                             __________

      Rusk Wadlin Heppner & Martuscello, LLP, Kingston (Jason J.
Kovacs of counsel), for appellant.

      Bond, Schoeneck & King PLLC, Syracuse (Suzanne M. Messer of
counsel), for respondent.

                             __________

Clark, J.

      Appeal from an order of the Supreme Court (Gilpatric, J.),
entered October 22, 2013 in Ulster County, which, among other
things, granted plaintiff's motion for summary judgment.
                              -2-                521494

      In March 2006, defendant Judith McClintock (hereinafter
defendant) executed a note in favor of Cliffco Inc., doing
business as Cliffco Mortgage Bankers, which was secured by a
mortgage on certain real property in Ulster County. Cliffco
endorsed the note without recourse to Countrywide Bank, N.A.,
which, in turn, endorsed the note without recourse to Countrywide
Home Loans, Inc. Countrywide Home Loans, Inc. subsequently
endorsed the note in blank without recourse. Plaintiff alleges
that, in accordance with the terms of a pooling and servicing
agreement (hereinafter PSA), it took physical possession of the
note on April 1, 2006. Mortgage Electronic Registration Systems,
Inc., which acted as a nominee for Cliffco and its successors and
assigns, assigned the mortgage to plaintiff in February 2010.

      After defendant defaulted on her obligations under the
mortgage, plaintiff commenced this mortgage foreclosure action in
March 2010. Defendant joined issue and asserted various
affirmative defenses, including lack of standing. Thereafter,
plaintiff moved for, as relevant here, summary judgment striking
defendant's answer and appointing a referee to compute the amount
owed.1 Defendant cross-moved for dismissal of the complaint.
Supreme Court, among other things, granted plaintiff's motion and
denied defendant's cross motion. Defendant appeals, and we
affirm.

      Initially, plaintiff established its prima facie
entitlement to summary judgment by submitting proof of the
mortgage, the unpaid note and defendant's default (see Wells
Fargo Bank, NA v Ostiguy, 127 AD3d 1375, 1376 [2015]; HSBC Bank
USA, N.A. v Sage, 112 AD3d 1126, 1127 [2013], lvs dismissed 22
NY3d 1172 [2014], 23 NY3d 1015 [2014]). However, because
defendant raised the issue of standing in her answer, plaintiff
bore the additional burden of demonstrating that, "at the time
the action was commenced, [it] was the holder or assignee of the
mortgage and the holder or assignee of the underlying note"
(Deutsche Bank Natl. Trust Co. v Monica, 131 AD3d 737, 738

    1
        Plaintiff moved for the same relief on two prior
occasions. Plaintiff withdrew its first motion, and Supreme
Court denied the second motion without prejudice.
                              -3-                521494

[2015]; see Chase Home Fin., LLC v Miciotta, 101 AD3d 1307, 1307
[2012]). "Either a written assignment of the underlying note or
the physical delivery of the note prior to the commencement of
the foreclosure action is sufficient to transfer the obligation"
(Chase Home Fin., LLC v Miciotta, 101 AD3d at 1307, quoting U.S.
Bank, N.A. v Collymore, 68 AD3d 752, 754 [2009]).

      Here, plaintiff sought to establish its standing by proving
that it had physical possession of the note at the time that this
action was commenced. The note was most recently endorsed in
blank without recourse and, therefore, did not evidence
plaintiff's possessory interest (see Deutsche Bank Natl. Trust
Co. v Monica, 131 AD3d at 738-739; Bank of Am., N.A. v Kyle, 129
AD3d 1168, 1169 [2015]). To establish its standing as holder of
the note, plaintiff proffered, among other things, the affidavit
of Kevin Kerestes, an assistant vice-president of Bank of
America, N.A. (hereinafter BANA), who averred that BANA was the
loan servicing agent for plaintiff, that he reviewed records kept
and maintained by BANA in its ordinary course of business and
that plaintiff held the note at the time of his affidavit in
November 2011. In addition, plaintiff produced the affidavit of
David Richard, a vice-president of Resurgent Capital Services,
L.P., BANA's loan subservicer, who, upon his review of records
kept and maintained by his employer in the regular course of
business, asserted that plaintiff was the holder of the note at
the time of his affidavit in June 2013, and that "[p]laintiff
took possession of [the] note and mortgage in accordance with the
[PSA], dated April 1, 2006, and took physical possession of the
note on April 1, 2006."2 Richard's affidavit was sufficient to
establish, prima facie, that plaintiff had physical possession of
the note at the time that this action was commenced in March 2010
(see Aurora Loan Servs., LLC v Taylor, 25 NY3d 355, 361-362
[2015]; U.S. Bank N.A. v Carnivale, ___ AD3d ___, ___, 2016 NY
Slip Op 02701, *2 [2016]; Everhome Mtge. Co. v Pettit, 135 AD3d

    2
        As the dissent points out, plaintiff produced Richard's
affidavit in reply to defendant's opposition to its motion for
summary judgment. We note that defendant had an opportunity to
respond to the contents of Richard's affidavit in her reply to
plaintiff's opposition to her cross motion.
                               -4-                521494

1054, 1055 [2016]; YMJ Meserole, LLC v 98 Meserole St., LLC, 133
AD3d 848, 849 [2015]; compare JP Morgan Chase Bank, N.A. v Hill,
133 AD3d 1057, 1058-1059 [2015]). Although the dissent asserts
that Richard "provided no explanation as to how plaintiff came
into possession," we are of the view that Richard did, in fact,
provide such information when he stated that plaintiff took
possession of the note "in accordance with the [PSA]" and took
physical possession of the note on April 1, 2006, the same date
as the PSA.

      In opposition to plaintiff's motion and in support of her
cross motion, defendant did not produce any evidence to
contradict the affidavits of Kerestes or Richard or otherwise
establish that plaintiff was not in possession of the note at the
commencement of this foreclosure action.3 Defendant produced,
among other things, the affidavit of Gail Stein, an assistant
secretary of BAC Home Loans Servicing, LP.4 In that affidavit,
Stein states, "The [m]ortgage and note . . . have been in
continuous possession since March 1, 2009." Although inartfully
worded, we do not find her statement to be at odds with Richard's
assertion that plaintiff "took physical possession of the note on
April 1, 2006." Additionally, contrary to the dissent's
conclusion, the mere fact that Stein and Kerestes did not include
the date of possession in their affidavits does not necessarily
lead to the conclusion that they were unable to determine the
date of possession.5

     3
        Unlike in JP Morgan Chase Bank, N.A. v Hill (133 AD3d at
1059), defendant did not submit evidence of any prior mortgage
foreclosure action commenced by a different entity in between the
date on which plaintiff took physical possession of the note and
the date of commencement. Nor did defendant request that
plaintiff produce the "original 'wet-ink' note" (id.).
     4
        BAC Home Loans Servicing was plaintiff's attorney-in-
fact. BANA is the successor by merger to BAC Home Loans
Servicing.
     5
        We also note that, although the "better practice" is to
explain how it came into possession of the note, a plaintiff's
                              -5-                521494

      Finally, although defendant challenged plaintiff's status
as the holder of the note by alleging that plaintiff did not
comply with certain provisions of the PSA, she lacked standing to
make such a challenge (see Bank of Am. N.A. v Patino, 128 AD3d
994, 994-995 [2015], lv dismissed 26 NY3d 975 [2015]; Wells Fargo
Bank, N.A. v Erobobo, 127 AD3d 1176, 1178 [2015], lv dismissed 25
NY3d 1221 [2015]; Bank of N.Y. Mellon v Gales, 116 AD3d 723, 725
[2014]). In view of the foregoing, Supreme Court properly
granted plaintiff's motion for summary judgment.

     McCarthy, J.P., Egan Jr. and Devine, JJ., concur.

Lynch, J. (dissenting).

      I respectfully dissent. As explained by the majority, in
order to establish standing, plaintiff's burden was to show that
it had physical possession of the note prior to commencement of
the action on March 2, 2010. In my view, through a series of
inadequate affidavits presented on three motions for summary
judgment, plaintiff failed to satisfy this burden. On the first
motion made in 2010, plaintiff submitted the affidavit of Gail
Stein, an assistant secretary of BAC Home Loans Servicing, LP,
attorney-in-fact for plaintiff. Stein averred that "[t]he
mortgage and note . . . have been in continuous possession since
March 1, 2009." Notably, she did not say who had possession of
the documents and her representation with respect to the mortgage
was clearly in error, for the mortgage was not assigned to
plaintiff by Mortgage Electric Registration Systems, Inc. until
February 2010. Not surprisingly, that motion was withdrawn. A
second motion, returnable in June 2012, was supported by the
affidavit of Kevin Kerestes, an assistant vice-president of Bank
of America, N.A. (hereinafter BANA), the loan servicing agent.
Pertinent to the issue of physical possession, Kerestes averred
that "plaintiff is the holder of the note and was assigned the

failure to do so does not preclude a court from granting summary
judgment in its favor (Aurora Loan Servs., LLC v Taylor, 25 NY3d
at 362; see U.S. Bank N.A. v Carnivale, 2016 NY Slip Op 02701 at
*2).
                              -6-                521494

mortgage prior to commencement of this action." In denying the
motion, Supreme Court observed that the Kerestes affidavit "fails
to address how or when . . . plaintiff . . . was assigned the
note and mortgage and by whom said note and mortgage was
assigned." The court did not address the issue of physical
delivery of the note to plaintiff, but denied the motion without
prejudice. A third motion was filed, returnable in February
2013, again supported by the Kerestes affidavit. In reply,
however, plaintiff added the affidavit of David Richard, a vice-
president of Resurgent Capital Services, LP, a sub-servicer for
BANA. Based on a review of Resurgent's records, which included
copies of the note and mortgage, Richard averred that plaintiff
"took possession of the note and mortgage in accordance with the
Pooling and Servicing Agreement (PSA), dated April 1, 2006, and
took physical possession of the note on April 1, 2006."

      The majority has determined that the Kerestes and Richard
affidavits, combined, were sufficient to demonstrate that
plaintiff had physical possession of the note prior to commencing
the action. Given the sequence and discrepancies between the
affidavits outlined above, I disagree. To begin, in finally
granting the motion, Supreme Court makes no mention of the
Richard affidavit, while concluding that the Kerestes "affidavit
states that [BANA] holds the note and mortgage, which is now
substantiated by plaintiff's submissions." Of course, the actual
issue here is whether plaintiff, not BANA, took physical
possession of the note prior to commencing the action. Neither
Stein nor Kerestes addressed this operative point in either of
their affidavits. The curious thing is that not until the third
motion, in reply, did plaintiff put forth the affidavit of
Richard. While Richard was entitled to rely on the records
maintained by Resurgent as sub-servicer (see Deutsche Bank Natl.
Trust Co. v Monica, 131 AD3d 737, 739 [2015]), he provided no
explanation as to how plaintiff came into possession, or even how
it was that he could confirm the date plaintiff took possession
while Stein and Kerestes could not, when all were presumably
provided with the same records (see Aurora Loan Servs., LLC v
Taylor, 25 NY3d 355, 362 [2015]). Neither Stein, Kerestes nor
Richard ever indicates that they examined the original note
(compare Deutsch Bank Natl. Trust Co. v Monica, 131 AD3d at 739),
nor can we assume that plaintiff took possession of the note upon
                              -7-                  521494

the signing of the Pooling and Servicing Agreement on April 1,
2006. Under section 2.01 [a] of that agreement, the seller was
required to deliver the note to plaintiff, as trustee, either on
the closing date or within 30 days for any "Delay Delivery
Mortgage Loans" – defined as a mortgage loan for which all or a
portion of the related file was not delivered on the April 1,
2006 closing date. From this record, we have no basis upon which
to determine whether the subject note falls into the delay
category and, if so, nothing to show when the note was actually
delivered. While credibility is not at issue on a summary
judgment motion, it is my view that plaintiff's submissions fall
short in establishing a prima facie case that it has standing to
pursue this action. At the very least, a hearing should have
been held on the issue of physical delivery prior to a
determination on the motion (see CPLR 3212 [c]).

     ORDERED that the order is affirmed, with costs.

                             ENTER:

                             Robert D. Mayberger
                             Clerk of the Court