BANK TRUST v. HENDERSON (2025)

DECISION & ORDER

In an action to foreclose a mortgage, the plaintiff appeals from an order of the Supreme Court, Kings County (Richard J. Montelione, J.), dated September 25, 2023.  The order, after a nonjury trial, directed dismissal of the complaint insofar as asserted against the defendant Heather Henderson.

ORDERED that on the Court's own motion, the notice of appeal is deemed to be an application for leave to appeal, and leave to appeal is granted (see CPLR 5701[c]);  and it is further,

ORDERED that the order is reversed, on the law, without costs or disbursements, and the matter is remitted for a new trial on the limited issue of the defendant Heather Henderson's default in payment with respect to the subject mortgage.

OneWest Bank, FSB (hereinafter OneWest), the plaintiff's predecessor-in-interest, commenced this action against the defendant Heather Henderson (hereinafter the defendant), among others, to foreclose a mortgage on certain real property located in Brooklyn.  A nonjury trial was held, at which Janet Gioello, an employee of the plaintiff's loan servicer, was the sole witness.  Gioello testified as to factual issues related to standing, the defendant's default in payment, and notices served on the defendant.  During her testimony, the plaintiff moved various documents into evidence.  With respect to the defendant's default in payment, Gioello testified that the date of default was August 1, 2009, and no payments had been made since that date.  After the plaintiff asserted that it had no more witnesses to call “at this time,” the plaintiff requested a continuance to provide more documents, particularly on the issue of damages.  In response, the defendant moved for a “trial order of dismissal” based on the plaintiff's failure to establish the defendant's default in payment under the terms of the note and mortgage.  The defendant argued that the plaintiff did not submit any business record in admissible form “to show the date of default” or “the amount that's owing and due.”  The Supreme Court reserved decision.

Thereafter, by order dated September 25, 2023, the Supreme Court directed dismissal of the complaint insofar as asserted against the defendant, solely on the ground that the plaintiff failed to prove OneWest's standing to commence the action.  The court did not make any determination on the issue of the defendant's default in payment.  The plaintiff appeals.  Both parties request as an alternative form of relief that the matter be remitted for further proceedings.

To establish a prima facie case in an action to foreclose a mortgage, a plaintiff must produce the mortgage, the unpaid note, and evidence of default (see Christiana Trust v. Rashid, 228 A.D.3d 822, 824, 215 N.Y.S.3d 106;  Bank of Am., N.A. v. Bloom, 202 A.D.3d 736, 736, 162 N.Y.S.3d 136).  Additionally, where, as here, a defendant places standing in issue, the plaintiff must prove its standing in order to be entitled to relief (see Christiana Trust v. Rashid, 228 A.D.3d at 824, 215 N.Y.S.3d 106).

“In reviewing a determination made after a nonjury trial, this Court's power is as broad as that of the trial court, and this Court may render the judgment it finds warranted by the facts, taking into account in a close case that the trial court had the advantage of seeing and hearing the witnesses” (U.S. Bank N.A. v. Sakizada, 235 A.D.3d 800, 801, 228 N.Y.S.3d 248;  see Northern Westchester Professional Park Assoc. v. Town of Bedford, 60 N.Y.2d 492, 499, 470 N.Y.S.2d 350, 458 N.E.2d 809).

Contrary to the Supreme Court's determination, the plaintiff established OneWest's standing to commence this action by demonstrating that a copy of the note bearing an endorsement in blank was annexed to the complaint when the action was commenced (see U.S. Bank Trust, N.A. v. Atedgi, 236 A.D.3d 707, 709, 230 N.Y.S.3d 268;  Christiana Trust v. Rashid, 228 A.D.3d at 824, 215 N.Y.S.3d 106;  Wells Fargo Bank, N.A. v. Smith, 218 A.D.3d 832, 834, 193 N.Y.S.3d 266).  Since the plaintiff established standing through physical possession of the note prior to commencement of the action, “evidence regarding the assignment of the mortgage is irrelevant” (Wells Fargo Bank, NA v. Moussa, 201 A.D.3d 1010, 1011, 157 N.Y.S.3d 767;  see Deutsche Bank Trust Co. Ams. v. Marous, 186 A.D.3d 669, 671, 130 N.Y.S.3d 101).

Contrary to the plaintiff's contention, the notice of default and RPAPL 1304 notice submitted into evidence were insufficient to establish the alleged default in payment (see Bank of N.Y. Mellon v. Mannino, 209 A.D.3d 707, 708, 177 N.Y.S.3d 67;  U.S. Bank N.A. v. Rowe, 194 A.D.3d 978, 980, 149 N.Y.S.3d 197).  However, under the particular circumstances present here, including that the Supreme Court never ruled on the plaintiff's motion for a continuance to supplement the record and made no determination on the issue of the defendant's default in payment, we make no further determination on that issue.  Instead, we remit the matter for a new trial on the limited issue of the defendant's default in payment.

MILLER, J.P., FORD, VOUTSINAS and LOVE, JJ., concur.