BANK NATIONAL ASSOCIATION v. MEZRAHI (2019)

DECISION & ORDER

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

In December 2004, the defendants Michelle F. Mezrahi and Joseph Mezrahi (hereinafter together the appellants) borrowed the sum of $ 596,581 from Washington Mutual Bank, FA (hereinafter Washington Mutual).  The loan was consolidated with a prior consolidated loan, as evidenced by a consolidated note in the principal sum of $ 800,000, and a consolidation, extension, and modification agreement (hereinafter CEMA), both in favor of Washington Mutual.

In February 2014, the plaintiff commenced this action against the appellants, among others, to foreclose the consolidated mortgage.  The appellants interposed an answer asserting various affirmative defenses, including lack of standing and failure to comply with conditions precedent to foreclosure including RPAPL 1304.  Thereafter, the plaintiff moved, inter alia, for summary judgment on the complaint insofar as asserted against the appellants and for an order of reference.  The appellants opposed the motion and cross-moved pursuant to CPLR 3211(a)(3) to dismiss the complaint insofar as asserted against them for lack of standing.  In an order dated April 20, 2016, the Supreme Court granted the plaintiff's motion and denied the appellants' cross motion.

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 Natl. Trust Co. v. Abdan, 131 A.D.3d 1001, 16 N.Y.S.3d 459;  HSBC Bank, USA v. Hagerman, 130 A.D.3d 683, 683–684, 11 N.Y.S.3d 865;  Plaza Equities, LLC v. Lamberti, 118 A.D.3d 688, 689, 986 N.Y.S.2d 843).  Additionally, where, as here, a defendant places standing in issue, the plaintiff must prove its standing in order to be entitled to relief (see Deutsche Bank Natl. Trust Co. v. Brewton, 142 A.D.3d 683, 684, 37 N.Y.S.3d 25;  Aurora Loan Servs., LLC v. Taylor, 114 A.D.3d 627, 628, 980 N.Y.S.2d 475, affd 25 N.Y.3d 355, 12 N.Y.S.3d 612, 34 N.E.3d 363;  Wells Fargo Bank Minn., N.A. v. Mastropaolo, 42 A.D.3d 239, 242, 837 N.Y.S.2d 247).  A plaintiff has standing in a mortgage foreclosure action when it is the holder or assignee of the underlying note at the time the action is commenced (see Aurora Loan Servs., LLC v. Taylor, 25 N.Y.3d at 361, 12 N.Y.S.3d 612, 34 N.E.3d 363;  Deutsche Bank Natl. Trust Co. v. Brewton, 142 A.D.3d at 684, 37 N.Y.S.3d 25).  “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 Aurora Loan Servs., LLC v. Taylor, 25 N.Y.3d at 361–362, 12 N.Y.S.3d 612, 34 N.E.3d 363;  Dyer Trust 2012–1 v. Global World Realty, Inc., 140 A.D.3d 827, 828, 33 N.Y.S.3d 414).

Here, the note, indorsed in blank, was annexed to the complaint as Exhibit K at the time the action was commenced, which was sufficient to establish standing (see U.S. Bank N.A. v. Coppola, 156 A.D.3d 934, 68 N.Y.S.3d 120;  Deutsche Bank Natl. Trust Co. v. Carlin, 152 A.D.3d 491, 492, 61 N.Y.S.3d 16;  U.S. Bank N.A. v. Saravanan, 146 A.D.3d 1010, 1011, 45 N.Y.S.3d 547;  JPMorgan Chase Bank, N.A. v. Weinberger, 142 A.D.3d 643, 645, 37 N.Y.S.3d 286).  Contrary to the appellants' contention, the plaintiff's specific argument that it established its standing by annexing the note to the complaint, although raised for the first time on appeal, involves a question of law that appears on the face of the record, and could not have been avoided if brought to the attention of the Supreme Court (see U.S. Bank N.A. v. Bassett, 137 A.D.3d 1109, 28 N.Y.S.3d 109;  Loiacono v. Goldberg, 240 A.D.2d 476, 658 N.Y.S.2d 138).

In opposition to the plaintiff's motion, the appellants failed to raise a triable issue of fact and, in support of their cross motion, failed to establish, prima facie, the plaintiff's lack of standing as a matter of law (see U.S. Bank N.A. v. Coppola, 156 A.D.3d at 935, 68 N.Y.S.3d 120;  HSBC Bank USA, N.A. v. Roumiantseva, 130 A.D.3d 983, 984, 15 N.Y.S.3d 117).  The appellants' contention that the affidavits of two employees of the plaintiff's loan servicer were insufficient to establish standing is without merit, as “[t]here is simply no requirement that an entity in possession of a negotiable instrument that has been endorsed in blank must establish how it came into possession of the instrument in order to be able to enforce it” (JPMorgan Chase Bank, N.A. v. Weinberger, 142 A.D.3d at 645, 37 N.Y.S.3d 286;  see UCC 3–204[2] ).  “Moreover, it is unnecessary to give factual details of the delivery in order to establish that possession was obtained prior to a particular date” (JPMorgan Chase Bank, N.A. v. Weinberger, 142 A.D.3d at 645, 37 N.Y.S.3d 286;  see Aurora Loan Servs., LLC v. Taylor, 25 N.Y.3d at 362, 12 N.Y.S.3d 612, 34 N.E.3d 363).

The appellants' contention that the plaintiff failed to sufficiently demonstrate its compliance with RPAPL 1304 is improperly raised for the first time on appeal (see Bank of Am., N.A. v. Barton, 149 A.D.3d 676, 679, 50 N.Y.S.3d 546;  Emigrant Bank v. Marando, 143 A.D.3d 856, 857, 39 N.Y.S.3d 83;  PHH Mtge. Corp. v. Celestin, 130 A.D.3d 703, 704, 11 N.Y.S.3d 871).

Accordingly, we agree with the Supreme Court's determination granting those branches of the plaintiff's motion which were for summary judgment on the complaint insofar as asserted against the appellants and for an order of reference, and denying the appellants' cross motion to dismiss the complaint insofar as asserted against them.

SCHEINKMAN, P.J., MILLER, BARROS and BRATHWAITE NELSON, JJ., concur.