SUCCESORS BY MERGER TO FLEET NATIONAL BANK DECISION AND ORDER v. JAMES MADSEN SOMER HILL CAMP LLC 10 (2025)

On June 13, 2005, the defendant James E. Madsen executed a Home Equity Line of Credit Agreement (hereinafter "HELOC") in favor of Fleet National Bank, a Bank of America Company, with a credit limit of $150,000.00. To secure payment of sums due under the HELOC, defendant executed a mortgage on the real property known as 1018 High Street in the Town of Athol, Warren County, New York (hereinafter "Property").

Plaintiff commenced this foreclosure action on May 1, 2018 and alleges defendants defaulted on November 25, 2017 by failing to make monthly payments under the HELOC and mortgage. Defendants filed a Verified Answer generally denying the allegations set forth in the complaint and asserting ten affirmative defenses. In December 2022, plaintiff moved for summary judgment and defendants cross moved for dismissal of the complaint for failure to state a cause of action upon which relief may be granted and failure to comply with the 90-day notice of default required under RPAPL§ 1304.

In a Decision and Order dated April 10, 2023, the Honorable Felix J. Catena denied both motions. The Court held that the plaintiff established its prima facie entitlement to a judgment as a matter of law through the submission of "the mortgage, HELOC agreement, which would take the place of a note, as well as affidavits and affirmation in their motion papers stating there has been a default". [Bank of America, N.A. v James Madsen, et al, Warren County Supreme Court, April 10, 2023; NYSCEF Doc. Nos. 45, 46]. The Court further held that defendants raised sufficient triable issues of fact as to whether funds were disbursed and distributed to the defendant pursuant to the HELOC. (id.) After entry of that decision and order, the parties exchanged discovery and defendant James Madsen was deposed. [NYSCEF Doc. No. 99]

Presently before the Court is defendants' motion for summary judgment and dismissal of the complaint (Motion Seq. #6).  ¹ Defendants assert plaintiff's prior submissions demonstrate that no amounts are owed by defendants under the HELOC agreement. (NYSCEF Doc. No. 63 ¶19) Specifically, defendants assert plaintiff's business records (NYSCEF Doc. No. 44/88) themselves contradict the affidavit of Tramelle Martise Thomas, Assistant Vice President of plaintiff mortgagee, sworn to on March 1, 2023 (hereinafter Thomas Affidavit; NYSCEF Doc. No. 43) stating there is a principal balance of $132,332.60 due. Because of the discrepancy, defendants argue, the issue should be resolved in favor of the business record.

Also before the Court is plaintiff=s cross motion seeking (1) summary judgment; (2) appointment of a referee; (3) permission to reform the legal description of the vesting and prior deed; (4) determination that the deed recorded on February 28, 1975 in Liber 587, at Page 245, in the Warren County Clerk's Office, be valid and properly acknowledged in the notarial section; and (5) amendment of the caption to remove "John Doe" and "Jane Doe".

Motions for summary judgment are governed by CPLR § 3212, where the proponent must establish the absence of a question of material fact which would preclude such an award. [see §CPLR 3212; Zuckerman v. City of New York, 49 NY2d 557 (Ct. App. 1980); St Claire v. Empire General Contracting & Painting Corp., 33 AD3d 611 (2nd Dep't 2006)]. A movant has the initial burden of showing that no genuine issue of material fact exists. [Ayotte v. Gervasio, 81 NY2d 1062, 1063 (1993); Alvarez v. Prospect Hospital, 68 NY2d 320 (1986)] If this burden is met, the burden shifts to the opponent of the motion to demonstrate that a triable issue of fact exists. (see DiBartolomeo v St. Peter's Hosp. of City of Albany, 73 Ad3d 1326, 1326 [3d Dept 2010]).

In the Court's prior decision, the court found defendants raised a triable issue of fact as to whether the funds were disbursed and distributed to the defendants based upon defendant Madsen's affidavit which stated, "On June 13, 2005, a closing did occur, but it only opened a line of credit which did not disburse any funds at the closing." (NYSCEF Doc. No 33 ¶2) It is not lost on the Court the carefully crafted wording of defendant Madsen's affidavit which states no funds were distributed "at the time of closing", but the Court recognizes that Madsen does not affirmatively deny disbursements were ever made to defendants.

Presently, having abandoned the position that no funds were disbursed, defendants now contend there is a zero-balance owed to plaintiff. For example, plaintiff's attorney asserts that "Madsen establishes unequivocally that he has not drawn any credit on the Line of Credit at issue herein since October 27, 2017" (emphasis added, see NYSCEF Doc. No. 63 ¶21). During his deposition, Madsen further admitted he could have borrowed money when questioned as follows:

Q. And you definitely don't remember ever borrowing money on this credit line?

A. I just don't remember. I'm not saying I did or I didn't. I don't remember.

Q. Right. So you could have, you just don't remember, correct?

A. Yeah.

(Madsen Transcript -NYSCEF Document No. 90 pg. 25 line 2)

No longer denying funds were disbursed to them, defendants now claim the plaintiff's business records show a zero-balance and therefore there is no unpaid balance, they are not in default and dismissal of the action is warranted. (NYSCEF Doc. No. 92 ¶14) Defendants' argument rests upon Thomas' Affidavit and plaintiff's statements of transaction history (NYSCEF Doc. Nos. 44, 86, 87, 88, 89). Thomas' Affidavit states in part:

"Defendants defaulted under the terms of the Note and Mortgage by omitting and failing to make monthly payments of principal and interest. A true copy of BANA's Payment History, a business record maintained in accordance with the allegations set forth in Paragraph 2, reflects that the balance of $132,332.60, at the contractual rate of interest, from October 25, 2017, remains due and owing. See Exhibit A."² [NYSCEF No. 43 ¶4]

Defendants claim this affirmation is in contravention with Exhibit A labeled, "Previous System History — All Transactions Transactions" (sic), because that exhibit shows a zero-balance due beginning on October 27, 2017. Defendants further assert the subsequent affirmation of Kimberly Brown, Assistant Vice President of plaintiff mortgagee, sworn to on December 18, 2023 (hereinafter "Brown Affidavit" — NYSCEF No. 84), "once again attests the zero-dollar balance records are an accurate, albeit this time for the period between June 9, 2016 through July 31, 2020.³ (see Affirmation in Opposition to Reply - NYSCEF No. 92; ¶7)

Defendants disregard that portion of Brown's Affidavit which explains that the purported "zero balances" in some of the columns are caused by the issuance of new loan number(s) and limitations of the record keeping system:

"On April 27, 2006, [the original] Loan #7799 transferred to a Fixed Rate Loan Option ("FRLO") under Loan #7701. The reference to "payoff" merely reflects a system limitation that does not translate the transaction to state "balance transfer." The transfer had the effect of zeroing out the balance on the payment history." (NYSCEF No. 84, ¶5).

Brown's Affidavit further explained that due to defendants' default under the FRLO, the account reverted back to the variable interest rate and was transferred back to the same variable rate Loan #7799, on March 2, 2009. From that point on, the loan has remained at a variable interest rate. On June 9, 2016, Loan #7799 was transferred to a different system of record with a new loan number ending in #0881. Exhibit C shows the transfer to Loan #0881 (See, NYSCEF 88, Page 35). According to Brown, "At the time of the transfer, the unpaid principal balance was $132,332.60 and [a]t no time was the loan 'satisfied' or 'paid in full', the balance was merely transferred. This is clear because the Transaction Histories do not reflect corresponding payments to principal and interest; merely transfers between the variable and fixed-rate loan option(s)". (NYSCEF Doc. No. 84, ¶5-8)

The ledgers contradict defendants' perfunctory conclusion that they are not in default because the records show a zero-balance is owed. While plaintiff's statements of transactions contain columns which reflect a zero principal balance, they also contain columns which reflect a principal balance of $132,332.60 due as alleged and affirmed. As relevant here, the records indicate this balance is owed on October 3, 2017 (NYSCEF No. 44/88, pg. 28, 4th column) through November 25, 2017 (NYSEF Doc. No. 89, pg. 4, 5th column; pg. 7, 7th column; and pg. 16, 5th column) as alleged in the complaint. (see NYSCEF No. 44/88 pgs. 1-26)

Contrary to defendants' assertion, the business records do not conflict with plaintiff's assertion that defendants owe a principal balance of $132,332.60 from October 25, 2017. Furthermore, plaintiff's records do not reflect any payment of the principal after this time which resulted in a zero-balance nor do defendants offer any evidence demonstrating that balance was paid.

Defendants have failed to submit competent evidence sufficient to demonstrate the absence of all material issues of fact relative to their claim that they are not in default and there is a zero-balance due. Defendant Madsen's evasive and non-responsive answers during his deposition regarding any withdrawals or payments (NYSCEF Doc. No. 90) combined with his "belief" that a zero balance is owed (NYSCEF Doc. No. ) is without probative value and inadequate to establish defendants' prima facie entitlement to a judgment as a matter of law. (Oswald v Oswald, 107 AD3d 45, 49 [3d Dept 2013]) Likewise, defense attorney's affirmation lacks personal knowledge that no amounts are due under the HELOC and thus has no probative value. (See Currie v. Wilhouski, 93 AD3d 816, [2d Dept. 2012]). Defendants' motion for summary judgment dismissing the foreclosure action is denied.

Turning next turns to plaintiff's cross-motion for summary judgment, in a foreclosure action, A[a] plaintiff can establish entitlement to summary judgment by producing evidence of the mortgage, the unpaid note and the defendant=s default@ (Wells Fargo Bank, N.A. v Walker, 141 AD3d 986, 987 [2016]; see Deutsche Bank Natl. Trust Co. v Monica, 131 AD3d 737, 738 [2015]; Wells Fargo Bank, NA v Ostiguy, 127 AD3d 1375, 1376 [2015]).

As noted above, the Court previously held in its April 10, 2023 decision, that the plaintiff established its prima facie entitlement to a judgment as a matter of law. [Bank of America, N.A. v James Madsen, et al, Warren County Supreme Court, April 10, 2023; NYSCEF Doc. Nos. 45, 46]. In support of this motion, plaintiff resubmitted the Affidavit of Nichole Renee Williams, Assistant Vice President of Bank of America (Williams Affidavit) that shows plaintiff had possession of the note before the commencement of this action and attached a copy of the endorsed HELOC to the summons and complaint. Plaintiff alleges defendants' loan was deemed in default on November 25, 2017 through their verified complaint, attorney affirmation and Williams' Affidavit. In support of the present motion, in addition to those documents, plaintiff also submits the Brown Affidavit which also states defendants have defaulted and further explains the transactional history of defendants' account as described above.

Viewing the evidence in the light most favorable to the opposing party, the Court finds through plaintiff's submission of the mortgage, HELOC agreement, and affidavits in their motion papers which evidences the unpaid HELOC and defendants default, plaintiff has sustained its burden of proof and established its prima facie entitlement to a judgment as a matter of law. (Wells Fargo Bank, N.A. v Walker, 141 AD3d at 987; Deutsche Bank Natl. Trust Co. v Monica, 131 AD3d at 738; Wells Fargo Bank, NA v Ostiguy, 127 AD3d at 1376).

The Court now turns to whether defendants have raised a viable defense or raised a triable issue of material fact to defeat the motion. Having previously found defendants did not meet their prima facie burden in establishing they were not in default and there was a zero balance, the issue then becomes the amount due. However, in a "challenge only [to] the amount of the mortgage debt," the proper procedure is for an order of reference, to determine the "amount due and owing to the plaintiff" (Johnson v Gaughan, 128 AD2d 756, 757, 513 NYS2d 244 [2d Dept 1987]). Defendants have raised no other triable issue of fact or defense relative to the foreclosure of the mortgage and therefore plaintiff's motion for summary judgment is granted.

Next, plaintiff's cross-motion for summary judgment seeks the relief of reformation of the legal description of the property in the mortgage asserting an error in that description was a mutual mistake and its correction would properly express the intention of the parties. "A party seeking reformation of a contract by reason of mistake must establish, with clear and convincing evidence, that the contract was executed under mutual mistake or a unilateral mistake induced by the other party's fraudulent misrepresentation" (Yu Han Young v Chiu, 49 AD3d 535, 536, 853 NYS2d 575 [2008]; see Chimart Assoc. v Paul, 66 NY2d 570, 573, 489 NE2d 231, 498 NYS2d 344 [1986]; Gunther v Vilceus, 142 AD3d 639, 640, 36 NYS3d 723 [2016]). Here, plaintiff has offered no evidence outside of conclusory statements of counsel in the verified complaint and statement of facts. The affidavits offered in support of the foreclosure of the mortgage are silent as to any purported mistake. Plaintiff has failed to sustain its burden of proof and establish its prima facie entitlement to a judgment as a matter of law that reformation of the mortgage to correct the legal description of the property is warranted based on mistake. (Wells Fargo Bank, N.A. v Zolotnitsky, 195 AD3d 659, 661-662 [2d Dept 2021]) Accordingly, summary judgment on plaintiff's second cause of action is denied.

Similarly, plaintiff has failed allege or assert any facts in its cross-motion, supporting affidavits or exhibits which would entitle it to summary judgment on its third cause of action seeking to quiet title under the provisions of Article 15 of the Real Property Actions and Proceedings Law. (see MTGLQ Invs., LP v Neil, 231 AD3d 1150 [2d Dept 2024]) Therefore, plaintiffs cross-motion for summary judgment on its third cause of action is denied.

Having determined that plaintiff has not satisfied its prima facie burden as to the second and third causes of action, the Court need not consider defendants' affirmative defenses that the statute of limitations has run on the second cause of action for reformation or plaintiffs rebuttal that the defense was not adequately pleaded. Furthermore, defendants have not raised the remaining pleaded affirmative defenses in opposition to plaintiff's motion for summary judgment on the foreclosure action which renders those defenses abandoned and thus subject to dismissal for that cause of action. The Court declines to examine the affirmative defenses that were not preserved. (see New York Commercial Bank v J. Realty F. Rockaway, Ltd., 108 AD3d 756, 757 [2d Dept 2013])

To the extent not specifically addressed herein, the parties= remaining contentions have been considered and are either academic or without merit.

Thus, having considered NYSCEF document numbers 43, 44, 45, 62 through 65, and 79 through 96, it is hereby

ORDERED, that defendants' motion for summary judgment dismissing the complaint is denied in its entirety; and it is further

ORDERED, that plaintiff's cross-motion for summary judgment is granted with respect to the first cause of action of foreclosure on the mortgage and denied as to the second (reformation) and third causes of action (quiet title); and it is further,

ORDERED that the caption of the action should be amended by striking the remaining defendants sued as "John Doe" #1-10 and "Jane Doe" #1-10; and it is further

ORDERED, that the caption amended shall read as follows:

_____________________________________________

BANK OF AMERICA, N.A., SUCCESSOR BY

MERGER TO FLEET NATIONAL BANK

INDEX # EF2018-65304

Plaintiff,

against-

JAMES MADSEN; JAMES E. MADSEN;

SOMER HILL CAMP, LLC,

Defendants

______________________________________________

; and it is further

ORDERED, that this action is hereby referred to Stephen Almy, Esq. of 1 Eileen Drive, Rensselaer, New York 12144-3101, telephone number (518)928-9929, email steve.almy87@gmail.com, to ascertain and compute the amount due to the plaintiff herein for principal, interest, water and sewer rents, taxes, insurance premiums and all other charges on the mortgage and mortgage loan note mentioned in the complaint including the cost of preserving and/or protecting the mortgaged premises, and to examine and report whether the mortgaged premises can be sold in parcels, and that the referee make his report no later than 60 days of the date of this Order; and it is further

ORDERED, that the Referee appointed herein is subject to the requirements of Rule 36.2(c) of the Chief Judge, and if the referee is disqualified from receiving an appointment pursuant to the provisions of the Rule, the referee shall notify the Appointing Judge forthwith, and it is further

ORDERED that, by accepting this appointment the Referee certifies that he is in compliance with Part 36 of the Rules of the Chief Judge (22NYCRR Part 36), including but not limited to, Section 36.2(c) ("Disqualifications from appointment"), and Section 36.2(d) ("Limitations on appointments based on compensation").

ORDERED that, pursuant to CPLR 8003(a) the statutory fee of $350.00 shall be paid to the Referee for the computation stage and upon filing of his report; and it is further

ORDERED that the Referee is prohibited from accepting or retaining any funds for himself or paying funds to himself, without compliance with Part 36 of the Rules of the Chief Administrative Judge; and it is further

ORDERED, that a copy of this Decision and Order with notice of entry shall be served upon the owner of the equity of redemption, any tenants named in this action and any other party entitled to notice; and it is further

ORDERED that any relief not specifically addressed has nonetheless been considered and is hereby expressly denied.

The above constitutes the Decision and Order of this Court.

The original of this Decision and Order has been filed by the Court. Counsel for plaintiff is directed to serve all parties with notice of entry.

Date: January 9, 2025

Lake George, New York

ROBERT J. MULLER, J.S.C.

ENTER:

FOOTNOTES

1.   While defendants move to dismiss the complaint in its entirety the moving papers only address plaintiff's first cause of action to foreclose on the mortgage and not the second cause of action for reformation of the mortgage or the third cause of action to quiet title.

2.   Exhibit A is NYSCEF Doc. No. 44.

3.   Defendant incorrectly cites to NYSCEF No. 88, ¶9,11, however, Kimberly Brown's Affirmation is NYSCEF No. 84.

Robert J. Muller, J.