HSBC Bank USA, Nat'l Ass'n v. Gordon

210 A.D.3d 877

179 N.Y.S.3d 111

HSBC BANK USA, NATIONAL ASSOCIATION, etc., respondent,

v.Mindi GORDON, et al., appellants, et al., defendants.

2017-07331 , 2019-14095, 2019-14096

Index No. 25474/09

Supreme Court, Appellate Division, Second Department, New York.

Submitted—September 30, 2022

November 16, 2022

Law Office of Samuel Katz, PLLC, Brooklyn, NY (Joseph J. Schwartz of counsel), for appellants.

Frenkel Lambert Weiss Weisman & Gordon, LLP (Reed Smith, LLP, New York, NY [Joseph B. Teig and Andrew B. Messite ], of counsel), for respondent.

COLLEEN D. DUFFY, J.P., LINDA CHRISTOPHER, DEBORAH A. DOWLING, BARRY E. WARHIT, JJ.

DECISION & ORDER

In an action to foreclose a mortgage, the defendants Mindi Gordon and Robert Gordon appeal from (1) an order of the Supreme Court, Kings County (Lawrence Knipel, J.), dated March 8, 2017, (2) an order and judgment of foreclosure and sale (one paper) of the same court dated August 8, 2018, and (3) an amended order and judgment of foreclosure and sale (one paper) of the same court dated August 21, 2019. The order, insofar as appealed from, granted those branches of the plaintiff's motion which were for summary judgment on the complaint insofar as asserted against the defendants Mindi Gordon and Robert Gordon, to strike their answer, and for an order of reference. The order and judgment of foreclosure and sale dated August 8, 2018, granted the plaintiff's motion for a judgment of foreclosure and sale, confirmed a referee's report, and directed the sale of the subject property. The amended order and judgment of foreclosure and sale dated August 21, 2019, granted the plaintiff's motion for a judgment of foreclosure and sale, confirmed the referee's report, and directed the sale of the subject property.

Motion by the respondent to dismiss the appeal from the order dated March 8, 2017, on the ground that the right to appeal therefrom terminated with the entry of the amended order and judgment of foreclosure and sale in the action. By decision and order on motion of this Court dated April 21, 2021, the motion was held in abeyance and referred to the panel of Justices hearing the appeal for determination upon the argument or submission thereof.

Upon the papers filed in support of the motion and the papers filed in opposition thereto, and upon the submission of the appeals, it is

ORDERED that the motion to dismiss the appeal from the order dated March 8, 2017, is granted; and it is further,

ORDERED that the appeal from the order dated March 8, 2017, is dismissed; and it is further,

ORDERED that the appeal from the order and judgment of foreclosure and sale dated August 8, 2018, is dismissed on the ground that it was superseded by the amended order and judgment of foreclosure and sale dated August 21, 2019 (see Pacific Carlton Dev. Corp. v. New York State Urban Dev. Corp., 206 A.D.3d 931, 931, 171 N.Y.S.3d 522 ); and it is further,

ORDERED that the amended order and judgment of foreclosure and sale dated August 21, 2019, is reversed, on the law, those branches of the plaintiff's motion which were for summary judgment on the complaint insofar as asserted against the defendants Mindi Gordon and Robert Gordon, to strike their answer, and for an order of reference are denied, the plaintiff's motion for a judgment of foreclosure and sale is denied, the order and judgment of foreclosure and sale dated August 8, 2018, is vacated, and the order dated March 8, 2017, is modified accordingly; and it is further,

ORDERED that one bill of costs is awarded to the appellants.

The appeal from the intermediate order must be dismissed because the right of direct appeal therefrom terminated with the entry of the amended order and judgment of foreclosure and sale in the action (see Matter of Aho, 39 N.Y.2d 241, 248, 383 N.Y.S.2d 285, 347 N.E.2d 647 ). However, the issues raised on the appeal from the order are brought up for review and have been considered on the appeal from the amended order and judgment of foreclosure and sale (see id. at 248, 383 N.Y.S.2d 285, 347 N.E.2d 647 ).

On August 23, 2005, the defendant Mindi Gordon executed a note in the sum of $420,000 in favor of nonparty Fairmont Funding, Ltd. (hereinafter Fairmont). The note was secured by a mortgage on certain real property located in Brooklyn. The mortgage was signed by both the defendant Mindi Gordon and the defendant Robert Gordon (hereinafter together the defendants).

In October 2009, the plaintiff, Fairmont's successor in interest, commenced the instant action to foreclose the mortgage against the defendants, among others. The defendants interposed an answer wherein they asserted various affirmative defenses, none of which alleged lack of standing or failure to comply with RPAPL 1304.

On July 13, 2016, the plaintiff moved, inter alia, for summary judgment on the complaint insofar as asserted against the defendants, to strike their answer, and for an order of reference. The defendants opposed the motion on the grounds that the plaintiff failed to establish standing, and that it failed to comply with RPAPL 1304. In an order dated March 8, 2017, the Supreme Court, inter alia, granted those branches of the plaintiff's motion which were for summary judgment on the complaint insofar as asserted against the defendants, to strike their answer, and for an order of reference. In an amended order and judgment of foreclosure and sale dated August 21, 2019, the court granted the plaintiff's motion for a judgment of foreclosure and sale, confirmed the referee's report, and directed the sale of the subject property. The defendants appeal.

Contrary to the plaintiff's contention, the defendants did not waive the affirmative defense of lack of standing. RPAPL 1302–a provides that, notwithstanding the provisions of CPLR 3211(e), "any objection or defense based on the plaintiff's lack of standing in a foreclosure proceeding related to a home loan ... shall not be waived if a defendant fails to raise the objection or defense in a responsive pleading or pre-answer motion to dismiss" (see U.S. Bank N.A. v. Blake–Hovanec, 191 A.D.3d 821, 825, 142 N.Y.S.3d 556 ; GMAC Mtge., LLC v. Coombs, 191 A.D.3d 37, 46, 136 N.Y.S.3d 439 ).

The plaintiff failed to establish, prima facie, its standing to commence the action. A plaintiff has standing to maintain a mortgage foreclosure action where 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 355, 361–362, 12 N.Y.S.3d 612, 34 N.E.3d 363 ; HSBC Bank USA, N.A. v. Herod, 203 A.D.3d 805, 807, 165 N.Y.S.3d 82 ). Here, in support of its motion, the plaintiff submitted the affidavit of Shamona Marisa Truesdale, a vice president of loan documentation for Wells Fargo Bank, N.A. (hereinafter Wells Fargo), the plaintiff's loan servicer. Truesdale stated that she was familiar with Wells Fargo's records and record-keeping practices. She further stated that the plaintiff was in possession of the note on October 8, 2009, the...