Opinion
No. 10841–2013.
06-29-2015
HSBC BANK USA, NATIONAL ASSOCIATION as Trustee for Wells Fargo Asset Securities Corporation, Mortgage Pass–Through Certificates, Series 2007–14, Plaintiff, v. Sabba K. SALEEMI, Defendant.
Upon the following papers read on this motion by plaintiff to strike the answer of defendant Sabba K. Saleemi and for summary judgment against defendant Saleemi; and the cross motion by defendant Saleemi to adjourn the motion by plaintiff for summary judgment until plaintiff responds to his discovery requests, or in the alternative, to dismiss the complaint asserted against her pursuant to CPLR § 3211 and § 3212 based upon lack of standing, the expiration of the applicable statute of limitations, and failure to comply with RPAPL § 1304, and to bar plaintiff from collecting interest:
| Papers | Numbered |
|---|---|
| Notice of Motion—Affidavits—Exhibits | 1–5 |
| Notice of Cross Motion—Affidavits—Exhibits | 12 |
| Answering Affidavits—Exhibits | 13–16 |
| Reply Affidavits | 17–22 |
IT IS ORDERED that the motion by plaintiff and the cross motion by defendant are denied.
Plaintiff commenced this action on June 5, 2013, seeking to cancel and vacate of record a discharge of mortgage and to adjudge the mortgage dated May 10, 2005 and recorded on May 27, 2005, to be a valid and subsisting mortgage as part of the mortgages consolidated by the Consolidation, Extension and Modification Agreement (the CEMA), dated April 27, 2007 and recorded on August 27, 2007. In its complaint, plaintiff alleges that the mortgage dated May 10, 2005 was given by defendant Saleemi on the real property known as 147–21 217th Street, Whitestone, New York a/k/a 147–21 14th Avenue, Whitestone, New York and 217th Street, Whitestone, New York to secure a note dated May 10, 2005, evidencing a loan from American Home Mortgage Acceptance, Inc. (American Home) in the principal amount of $1,000,000.00. Plaintiff also alleges the CEMA modified the terms of the American Home mortgage and restated the principal balance to be the amount of $1,000,000.00. Plaintiff further alleges defendant Saleemi executed and delivered the CEMA to American Home, and that Mortgage Electronic Registration Systems, Inc. (MERS), as the nominee for American Home, subsequently assigned the American Home mortgage to plaintiff by assignment dated July 31, 2012 and recorded on August 13, 2012. Plaintiff additionally alleges through inadvertence and error, the discharge of mortgage, was executed by MERS, as nominee for American Home, on May 15, 2007 and recorded on June 19, 2007. It is alleged that the American Home mortgage has not been satisfied.
Plaintiff acknowledges that the CEMA does not consolidate the American Home mortgage with any other mortgage. It alleges in its complaint that the CEMA simply modifies the terms of the American Home mortgage and restates the principal balance to be in the amount of $1,000,000.00. An affidavit dated April 25, 2007 under Tax Law § 255 by counsel for American Home Mortgage was recorded, indicating that the CEMA did not create any new lien or indebtedness other than the amount of the original mortgage and no re-loans or re-advances had been made under the CEMA.
Defendant Saleemi served an answer with various affirmative defenses, including failure to comply with RPAPL § 1304, lack of standing and the expiration of the applicable statute of limitations.
It is well established that the proponent of a summary judgment motion "must make a prima facie showing of entitlement to judgment as a matter of law, tendering sufficient evidence to demonstrate the absence of any material issues of fact" (Alvarez v. Prospect Hosp ., 68 N.Y.2d 320, 324 [1986] ; Zuckerman v. City of New York, 49 N.Y.2d 557 [1980] ). Where standing is put into issue by a defendant, a plaintiff must prove its standing in order to be entitled to relief (see Deer Park Associates v. Town of Babylon, 121 AD3d 738 [2d Dept 2014] ; U.S. Bank, N.A. v. Adrian Collymore, 68 AD3d 752, 753 [2d Dept 2009] ; see also Society of Plastics Indus. v. County of Suffolk, 77 N.Y.2d 761, 769 [1991] ).
Defendant asserts that the action is barred by the statute of limitations insofar as the action was brought more than six years after the execution of the discharge of mortgage. Plaintiff argues that the action is not barred by the statute of limitations because it is brought within six years of the recording of the discharge of mortgage.
To the degree plaintiff's claim is based upon a mistaken execution and recording of the discharge of mortgage, it is governed by the six-year period of statute of limitations provided in CPLR § 213(6). The general rule is that the limitation period governing actions based on a mistake begins to run upon the occurrence of the actionable mistake (see Nichols v. Regent Props. Inc., 49 A.D.2d 847 [1st Dept 1975] ). Nevertheless, it has been held that the statute of limitations for a cause of action based upon mistake does not commence running until delivery of the disputed instrument (see Matter of Allen [First Wallstreet Settlement Corp.], 130 A.D.2d 824 [1st Dept 1987] ; Nichols v. Regent Props., Inc., 49 A.D.2d 847 ; Northerly Corp. v. Hermett Realty Corp., 15 A.D.2d 888 [1st Dept 1962] ). In this instance, the alleged mistake was made when the discharge of mortgage was executed, but no actionable harm occurred merely from this mistake. Defendant makes no claim that the discharge of mortgage was delivered to her, and consequently, the discharge could have been destroyed without notice to defendant or harm to any party (see Matter of Allen [First Wallstreet Settlement Corp.], 130 A.D.2d at 826 ). However, once the discharge was recorded, an actionable mistake occurred, requiring legal action to nullify its effect. Plaintiff's claim therefore accrued on June 19, 2007, the date of recording of the discharge of mortgage. Accordingly, the action is timely commenced, having been brought within the six-year statute of limitations period.
With respect to the claim by defendant that plaintiff failed to comply with RPAPL § 1304, RPAPL § 1304 requires a lender to notify a borrower of an impending legal action at least 90 days before commencing "an action against the borrower, including mortgage foreclosure," using specific statutory language printed in 14—point type (see RPAPL § 1304[1] ). Contrary to the assertion of defendant, RPAPL § 1304 is inapplicable to this action. Although the statute's language indicates it is applicable to actions commenced against a borrower who has taken out a "home loan," the mandated notice warns of the risk of the loss of the borrower's home, and the need to cure a default of the home loan. As long as a discharge of mortgage upon full payment appears of record, there is no risk to the borrower of the loss of his or her home, since the discharge serves as notice to the world that the borrower has full equity in the property (cf. Cadelrock Joint Venture, L.P. v. Callender, 41 Misc.3d 903 [Sup Ct, Kings County2013] [action to recover on mortgage note securing loan that mortgagor used toward purchase of his home was "legal action"] ). Service of a RPAPL § 1304 notice in advance of an action brought by the lender against a borrower to cancel a discharge of mortgage would incorrectly warn of the risk of loss of the home.
Defendant contends that plaintiff lacks standing to bring this action.
In an action pursuant to RPAPL article 15 to compel the determination of a claim to real property, a plaintiff must establish an estate or interest in the property at the time of commencement (see RPAPL § 1501 ; Soscia v. Soscia, 35 AD3d 841 [2d Dept 2006] ). Here, plaintiff's claimed interest is the American Home mortgage lien, certified to have been paid by virtue of the discharge of mortgage.
Plaintiff asserts it has standing to seek to set aside the discharge of mortgage, by virtue of the physical delivery of the May 10, 2005 note to it prior to the commencement of the action. The affidavit of Amelia Winters, the vice president of loan documentation of Wells Fargo, N.A. (Wells Fargo), however, does not establish that plaintiff was vested with standing to bring this action. Ms. Winters asserts Wells Fargo is the "holder and/or servicer of the loan," and that she reviewed the Wells Fargo records related to the American Home mortgage loan which were maintained by Wells Fargo "in the course of its regularly conducted business activities." She also asserts the note dated May 10, 2005 was endorsed in blank and physically delivered on September 28, 2007 to plaintiff.
Wells Fargo has failed to demonstrate that it has the authority to act on behalf of plaintiff with respect to the discharge of mortgage, the American Home mortgage loan or the consolidated mortgage loan, including by providing an affidavit in this action (see HSBC Bank USA, N.A. v. Betts, 67 AD3d 735 [2d Dept 2009] ). The limited power of attorney, improperly offered for the first time in reply to defendant's "supplemental affirmation" (see L'Aquila Realty, LLC v. Jalyng Food Corp., 103 AD3d 692 [2d Dept 2013] ; GJF Constr. Corp. v. Cosmopolitan Decorating Co., Inc., 35 AD3d 535, 535 [2d Dept 2006] ; Voytek Tech. v. Rapid Access Consulting, 279 A.D.2d 470, 471 [2d Dept 2001] ), purports to appoint Wells Fargo as attorney-in-fact for HSBC Bank USA, N.A., as trustee. The limited power of attorney, however, does not identify the trust for which HSBC Bank USA, N.A. serves as trustee. In addition, it authorizes and empowers Wells Fargo to act in certain specified ways with respect to "loans, mortgages, and properties securitized pursuant to the [Pooling and Servicing Agreements listed in Exhibit A to the limited power of attorney]." The copy of the limited power of attorney provided to the court, however, does not include "Exhibit A" or any relevant portion of the applicable pooling and servicing agreement.
The affirmation of plaintiff's counsel is not based upon personal knowledge and therefore, is of no probative or evidentiary significance regarding the issue of whether plaintiff received physical possession of the note prior to commencement of the action (see Zuckerman v. City of New York, 49 N.Y.2d at 563 ).
Moreover, the copy of the note dated May 10, 2005 annexed to the complaint bears two undated endorsements, i.e. an endorsement by an American Home assistant secretary which was made payable to "American Home Mortgage," and a second endorsement, in blank, by an assistant secretary of American Home Mortgage. Another copy of the May 10, 2005 note, however, also has been submitted, which bears two undated endorsements, i.e. an endorsement by an American Home assistant secretary which was made payable to American Home Mortgage, and a second endorsement by an assistant secretary of American Home Mortgage, which is made payable to Wells Fargo (see Plaintiff's Exhibit A annexed to the affidavit dated December 4, 2013 of Amelia Winters). The second copy of the May 10, 2005 note bears a certification by counsel dated August 29, 2012, indicating the document had been compared with the original "and found to be a true and complete copy." Thus, a question of fact exists as to whether plaintiff had standing at the time of the commencement of this action insofar as the May 10, 2005 note bears a specific endorsement to American Home Mortgage, which appeared on the note prior to the commencement date.
Furthermore, to the extent defendant executed and delivered a consolidated note dated April 27, 2007 in connection with the CEMA, it was made payable to "American Home Mortgage." The certified copy annexed to the motion papers bears an undated endorsement in blank by an assistant secretary of American Home Mortgage, whereas the two copies of the consolidated note dated April 27, 2007 annexed to the complaint bear no endorsements. Again, it is unclear whether plaintiff had standing at the time of the commencement of this action.
In addition, the assignment dated July 31, 2012, to the extent it purports to show the American Home mortgage and underlying debt were assigned by MERS to plaintiff on that date, is insufficient to demonstrate plaintiff has standing to bring this action. Plaintiff has failed to demonstrate that MERS physically possessed the note at the time it assigned it to plaintiff or had the authority from American Home to assign it (see Aurora Loan Servs., LLC v. Weisblum, 85 AD3d 95 ). American Home is not a party to the assignment, and the American Home mortgage and CEMA do not specifically give MERS the right, as the nominee or agent of American Home, to assign the underlying note (see Bank of New York v. Silverberg, 86 AD3d 274 [2d Dept 2011] ; Aurora Loan Servs., LLC v. Weisblum, 85 AD3d at 109 ).
The three gap assignments of mortgage dated January 3, 2013 likewise do not demonstrate standing on the part of plaintiff. They do not purport to assign the note, and transferred only the mortgage and, plaintiff failed to demonstrate that the note had also been assigned at that time (see Flagstar Bank, FSB v. Anderson, –––– AD3d ––––, 2015 WL 3480845, 2015 N.Y.App.Div. LEXIS 4535 [2d Dept 2015] ; Wells Fargo Bank, NA v. Burke, 125 AD3d 765 [2d Dept 2015] ; US Bank N.A. v. Faruque, 120 AD3d 575, 577 [2d Dept 2014] ; Bank of N.Y. v. Silverberg, 86 AD3d at 283 ; cf. Mortgage Elec. Registration Sys., Inc. v. Coakley, 41 AD3d 674 [2d Dept 2007] ). Again, those assignments are given by MERS, and plaintiff has failed to demonstrate that MERS physically possessed the note at the time it made the assignments, or had the authority to assign the underlying note (see Bank of New York v. Silverberg, 86 AD3d 274 ; Aurora Loan Servs., LLC v. Weisblum, 85 AD3d at 109 ).
Defendant, on the other hand, has failed to demonstrate entitlement to summary judgment dismissing the complaint based upon lack of standing. Questions of fact exist as to whether the note was physically delivered to plaintiff prior to the commencement of the action, when the note was endorsed, and whether MERS had the authority to assign the note and mortgage on behalf of American Home (see Deutsche Bank Natl. Trust Co. v. Rivas, 95 AD3d 1061 [2d Dept 2012] ; HSBC Bank USA v. Hernandez, 92 AD3d 843, 844 [2d Dept 2012] ). Defendant has failed to establish that plaintiff was not the holder or assignee of the subject mortgage and the underlying note at the time this action was commenced (see MLCFC 2007–9 Mixed Astoria, LLC v. 36–02 35th Ave. Development, LLC, 116 AD3d 745 [2d Dept 2014] ; US Bank Natl. Assn. v. Madero, 80 AD3d 751 [2d Dept 2011] ; Deutsche Bank Natl. Trust Co. v. Haller, 100 AD3d 680, 683 [2d Dept 2012] ).
Plaintiff additionally has failed to establish, prima facie, that the American Home mortgage debt was not satisfied and whether the restoration of the mortgage does not interfere or affect the rights of others which may have accrued subsequent to the erroneous discharge (see Beltway Capital, LLC v. Soleil, 104 AD3d 628 [2d Dept 2013] ; Regions Bank v. Campbell, 291 A.D.2d 437 [2d Dept 2002] [satisfaction piece issued by mistake]; Matter of Ditta, 221 N.Y.S.2d 34 [Sup Ct, Kings County 1961] ; see also Goldstein v. Gold, 106 A.D.2d 100 [2d Dept 1984], affd 66 N.Y.2d 624 [1985] ). Even assuming Wells Fargo properly submitted the affidavits of merit by Ms. Winters on behalf of plaintiff, her affidavit dated December 4, 2013 does not address the issues of whether the American Home mortgage debt remains unsatisfied, and any prejudice to third parties if the mortgage is restored. The other affidavit of Ms. Winters dated January 26, 2015 was improperly submitted for the first time in reply (see L'Aquila Realty, LLC v. Jalyng Food Corp., 103 AD3d 692 ; GJF Constr. Corp. v. Cosmopolitan Decorating Co., Inc., 35 AD3d 535, 535 ; Voytek Tech. v. Rapid Access Consulting, 279 A.D.2d at 471 ), and likewise does not address the issue of prejudice.