ONE WESTBANK FSB v. Mortgage Electronic Registration System Inc., etc., et al., Defendants. (2018)

Order, Supreme Court, Bronx County (Lizbeth Gonzalez, J.), entered on or about May 27, 2016, which denied plaintiff's motion for summary judgment and transferred the matter to the foreclosure settlement part, unanimously affirmed, with costs.

Supreme Court properly held that summary judgment was precluded by a triable issue as to whether plaintiff was holder of the note and mortgage at the time it commenced foreclosure proceedings, and hence whether it had standing to bring this action (see Bank of N.Y. Mellon Trust Co. NA v. Sachar, 95 A.D.3d 695, 943 N.Y.S.2d 893 [1st Dept. 2012] ).  The indorsement which plaintiff purports effected a transfer of the note to it was not written on the note itself;  rather, it was written on a separate sheet of paper, was written in blank, was undated, and does not reference the note.  Further, there is no indication in the record that the blank indorsement was ever attached to the note, much less “so firmly affixed thereto as to become a part thereof,” as required under N.Y. UCC § 3–202(2).  Accordingly, there is a triable issue as to whether the purported indorsement constituted a valid transfer of the underlying note to plaintiff (see HSBC Bank USA N.A. v. Roumiantseva, 130 A.D.3d 983, 15 N.Y.S.3d 117 [2d Dept. 2015] ).

Plaintiff's argument that its standing is established by its physical possession of the note is unpreserved;  before Supreme Court, it only claimed to be a valid holder due to the note's assignment.

Under the circumstances here, Supreme Court providently exercised discretion by relying upon its interest of justice jurisdiction to treat defendants' opposition papers as a cross motion, and refer the matter to the settlement conference part.  Plaintiff cannot claim surprise, as both defendants' answer and their opposition papers asked that the case be transferred for settlement conference.