NATIONSTAR MORTGAGE LLC v. MEDLEY (2019)

DECISION & ORDER

In an action to foreclose a mortgage, the defendants Donald A. Medley and Sharon Y. Medley appeal, as limited by their brief, from so much of an order of the Supreme Court, Queens County (Raffaele, J.), entered February 5, 2016, as granted those branches of the plaintiff's motion which were for summary judgment on the complaint insofar as asserted against them, to strike their answer, and for an order of reference.

ORDERED that the order is affirmed insofar as appealed from, with costs.

To establish prima facie entitlement to judgment as a matter of law in an action to foreclose a mortgage, a plaintiff must produce the mortgage, the unpaid note, and evidence of default (see Deutsche Bank Trust Co. Ams. v. Garrison, 147 A.D.3d 725, 726, 46 N.Y.S.3d 185;  Deutsche Bank Natl. Trust Co. v. Abdan, 131 A.D.3d 1001, 1002, 16 N.Y.S.3d 459;  Plaza Equities, LLC v. Lamberti, 118 A.D.3d 688, 689, 986 N.Y.S.2d 843).  However, where, as here, the issue of standing is raised by a defendant, a plaintiff must also establish its standing as part of its prima facie case (see Deutsche Bank Trust Co. Ams. v. Garrison, 147 A.D.3d at 726, 46 N.Y.S.3d 185;  Security Lending, Ltd. v. New Realty Corp., 142 A.D.3d 986, 987, 37 N.Y.S.3d 327;  LGF Holdings, LLC v. Skydel, 139 A.D.3d 814, 32 N.Y.S.3d 243;  MLCFC 2007–9 Mixed Astoria, LLC v. 36–02 35th Ave. Dev., LLC, 116 A.D.3d 745, 746, 983 N.Y.S.2d 604).

A plaintiff establishes its standing in a mortgage foreclosure action by demonstrating that, when the action was commenced, it was either the holder of, or the assignee of, the underlying note (see Aurora Loan Servs., LLC v. Taylor, 25 N.Y.3d 355, 361–362, 12 N.Y.S.3d 612, 34 N.E.3d 363;  Security Lending, Ltd. v. New Realty Corp., 142 A.D.3d at 987, 37 N.Y.S.3d 327;  LGF Holdings, LLC v. Skydel, 139 A.D.3d at 814, 32 N.Y.S.3d 243;  Wells Fargo Bank, N.A. v. Rooney, 132 A.D.3d 980, 981, 19 N.Y.S.3d 543).  “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, and the mortgage passes with the debt as an inseparable incident” (U.S. Bank, N.A. v. Collymore, 68 A.D.3d 752, 754, 890 N.Y.S.2d 578;  see Security Lending, Ltd. v. New Realty Corp., 142 A.D.3d at 987, 37 N.Y.S.3d 327;  LGF Holdings, LLC v. Skydel, 139 A.D.3d at 814, 32 N.Y.S.3d 243).

Here, the plaintiff demonstrated, prima facie, its standing as the holder of the note by submitting the affidavit of one of its employees, a document execution specialist.  The affidavit established, prima facie, that the plaintiff had standing to prosecute this action by virtue of its possession of the note, endorsed in blank, at the time of commencement of the action (see Aurora Loan Servs., LLC v. Taylor, 25 N.Y.3d at 359–361, 12 N.Y.S.3d 612, 34 N.E.3d 363;  DLJ Mtge. Capital, Inc. v. Sosa, 153 A.D.3d 666, 60 N.Y.S.3d 278;  Deutsche Bank Natl. Trust Co. v. Naughton, 137 A.D.3d 1199, 1200, 28 N.Y.S.3d 444;  HSBC Bank USA, N.A. v. Espinal, 137 A.D.3d 1079, 1080, 28 N.Y.S.3d 107;  Bank of N.Y. Mellon v. Visconti, 136 A.D.3d 950, 25 N.Y.S.3d 630;  Deutsche Bank Natl. Trust Co. v. Abdan, 131 A.D.3d 1001, 16 N.Y.S.3d 459).  The same affidavit, which attested to the default of the defendants Donald A. Medley and Sharon Y. Medley (hereinafter together the Medley defendants) in making their monthly mortgage payments, together with the copies of the mortgage and the unpaid note, further established the plaintiff's prima facie entitlement to judgment as a matter of law (see DLJ Mtge. Capital, Inc. v. Sosa, 153 A.D.3d at 668, 60 N.Y.S.3d 278;  Deutsche Bank Trust Co. Ams. v. Garrison, 147 A.D.3d at 726, 46 N.Y.S.3d 185;  Deutsche Bank Natl. Trust Co. v. Abdan, 131 A.D.3d at 1002, 16 N.Y.S.3d 459).

In opposition, the Medley defendants failed to raise a triable issue of fact.  Contrary to the Medley defendants' contention, the affidavit of the plaintiff's employee did not constitute hearsay, as the affidavit established that the records she relied upon were admissible as business records (see CPLR 4518[a];  People v. Cratsley, 86 N.Y.2d 81, 90, 629 N.Y.S.2d 992, 653 N.E.2d 1162;  Corsi v. Town of Bedford, 58 A.D.3d 225, 231–232, 868 N.Y.S.2d 258).

As to the Medley defendants' arguments regarding the validity of the assignment of mortgage, where, as here, the evidence establishes that the plaintiff had physical possession of the note at the time of the commencement of the action, the validity of the assignment of the mortgage is irrelevant to the issue of standing (see Aurora Loan Servs., LLC v. Taylor, 25 N.Y.3d at 362, 12 N.Y.S.3d 612, 34 N.E.3d 363;  Silvergate Bank v. Calkula Props., Inc., 150 A.D.3d 1295, 1296, 56 N.Y.S.3d 189;  New York Community Bank v. McClendon, 138 A.D.3d 805, 807, 29 N.Y.S.3d 507;  Wells Fargo Bank, N.A. v. Charlaff, 134 A.D.3d 1099, 1100, 24 N.Y.S.3d 317).

A plaintiff has “the right to enforce the note as its lawful holder so long as it can prove that it physically possessed the note at the time the action was commenced” (Wells Fargo Bank, NA v. Ostiguy, 127 A.D.3d 1375, 1377, 8 N.Y.S.3d 669;  see UCC 3–301).  Accordingly, notwithstanding that it was the servicer, not the owner, of the loan, the plaintiff had the right to enforce the mortgage (see e.g. Loan Servs., LLC v. Taylor, 25 N.Y.3d at 355, 12 N.Y.S.3d 612, 34 N.E.3d 363).

AUSTIN, J.P., ROMAN, SGROI and BRATHWAITE NELSON, JJ., concur.