U.S. Bank v. Hazan

1

2023 NY Slip Op 31086(U)

U.S. BANK NATIONAL ASSOCIATION, AS TRUSTEE, ON BEHALF OF THE HOLDERS OF THE HARBORVIEW MORTGAGE LOAN TRUST 2006-1 MORTGAGE LOAN PASS-THROUGH CERTIFICATES, SERIES 2006-1, Plaintiff, v. ELIZABETH HAZAN, REAL ESTATE HOLDINGS GROUP, L.D.C., MORTGAGE ELECTRONIC REGISTRATION SYSTEMS, INC..ACTING SOLELY AS A NOMINEE FOR AMERICA'S WHOLESALE LENDER, THE BOARD OF MANAGERS OF THE SPENCER CONDOMINIUM, NLG, LLC,NEW YORK CITY DEPARTMENT OF FINANCE, NEW YORK STATE DEPARTMENT OF TAXATION AND FINANCE, THE BANK OF NEW YORK MELLON FKA THE BANK OF NEW YORK, AS SUCCESSOR TO JPMORGAN CHASE BANK, N.A., AS TRUSTEE FOR THE CERTIFICATEHOLDERS OF CWHEQ REVOLVING HOME EQUITY LOAN TRUST, SERIES 2005-M, 1 EAST62ND STREET APT 1A LLC,AARONSON SCHANTZ BEILEY P.A., NEW YORK CITY ENVIRONMENTAL CONTROL BOARD, UNITED STATES OF AMERICA O/B/O INTERNAL REVENUE SERVICE, JOHN DOE #1 THROUGH JOHN DOE #10, THE LAST TEN NAMES BEING FICTITIOUS AND UNKNOWN TO THE PLAINTIFF, THE PERSON OR PARTIES INTENDED BEING THE PERSONS OR PARTIES, IF ANY, HAVING OR CLAIMING AN INTEREST IN OR LIEN UPON THE MORTGAGED PREMISES DESCRIBED IN THE, Defendant.

Index No. 850240/2014

Supreme Court, New York County

April 4, 2023

Unpublished Opinion

PRESENT: HON. FRANCIS A. KAHN, III Justice.

DECISION + ORDER ON MOTION

FRANCIS A. KAHN, III, A.J.S.C.

The following e-filed documents, listed by NYSCEF document number (Motion 007) 272, 273, 274, 275, 276, 277, 278, 279, 280 281, 282, 283, 284, 285, 286, 287, 288, 289, 290, 291, 292 293, 294, 295, 296, 297, 298, 299, 300, 302, 303, 304, 305, 306, 307, 308, 309, 310, 311, 312, 313, 314, 315, 316, 317, 318, 319, 320, 321, 322, 323, 324, 325, 326, 327, 328, 329, 330 were read on this motion to/for JUDGMENT - SUMMARY.

Upon the foregoing documents, the motion and cross-motion are determined as follows:

The within action is to foreclose on a mortgage encumbering a parcel of residential real property located at 1 East 62^nd Street, Unit 1A, New York, New York. The mortgage secures a loan with an original principal amount of $1,500,000.00 memorialized by an adjustable-rate note. The note and mortgage, both dated December 22, 2005, were given by Defendant Elizabeth Hazan ("Hazan") to non- party Countrywide Bank, NA. By deed dated August 15, 2011, Hazan transferred her entire interest in the premises to non-party Raymond Houle ("Houle"). On December 9, 2011, Houle deeded his interest in the premises to non-party 9221-0228 Quebec, Inc. ("Quebec"). On July 13, 2013, Quebec deeded its interest in the premises to Defendant Real Estate Holdings Group LDC ("Holdings"). On January 2, 2018, Holdings deeded the premises to non-party 1 East 62nd Street Apt 1A NYC New York LLC ("NYC"). Finally, NYC deeded the property to Defendant 1 East 62nd Street Apt 1A LLC ("1 East") on' March 7, 2019.

Plaintiff commenced its first action to foreclose on the mortgage at issue in 2008 (US Bank NA v Hazan, NY Cty Index No 104990/2008). By order dated November 4, 2010, Justice Carol E. Huff dismissed the action for failure to satisfy the pre-foreclosure notice provisions in the mortgage. Plaintiff j commenced this action on July 1, 2014. Justice Judith R. McMahon dismissed this action on May 8, 2018, via an oral decision on the record order finding this action was time barred. The Appellate Division, First Department reversed Justice McMahon holding that the commencement of the 2008 action never validly accelerated the mortgage debt based upon Plaintiffs failure to serve a contractual pre-foreclosure notice (see U.S. Bank N.A. v Hazan, 176 A.D.3d 637 [1^st Dept 2019]).

By order of this Court dated January 24, 2022, Plaintiffs motion to file an amended complaint was granted and Plaintiff filed an amended pleading which included a third cause of action to reform the condominium rider to the mortgage. Defendants Hazan and Holdings answered jointly and pled forty-two [42] affirmative defenses, including lack of standing, failure to satisfy contractual conditions precedent and statute of limitations. Defendant 1 East answered and pled six [6] affirmative defenses, including statute of limitations.

Now, Plaintiff moves for, inter alia, summary judgment against all appearing Defendants, striking their answers and affirmative defenses, a default judgment against all non-appearing parties, to appoint a Referee to compute and to amend the caption. Defendants Hazan and Holdings oppose the motion. Defendant 1 East also files opposition.

In moving for summary judgment on its foreclosure cause of action, Plaintiff was required to establish prima facie entitlement to judgment as a matter of law though proof of the mortgage, the note, and evidence of Defendants' default in repayment (see U.S. Bank, N.A. v James, 180 A.D.3d 594 [1^stDept 2020]; Bank of NY v Knowles, 151 A.D.3d 596 [1^st Dept 2017]; Fortress Credit Corp, v Hudson' Yards, LLC, 78 A.D.3d 577 [1^st Dept 2010]). Since Defendant Hazan raised lack of standing and failure to provide a contractual pre-foreclosure notice in the answer, Plaintiff was required to demonstrate its standing (see eg Wells Fargo Bank, N.A. v Tricario, 180 A.D.3d 848 [2^nd Dept 2020]) as well as its substantial compliance with the requisites under paragraph 22 of the mortgage (see eg Wells Fargo Bank, N.A. v McKenzie, 186 A.D.3d 1582, 1584 [2d Dept 2020]).

Proof supporting a prima facie case on a motion for summary judgment must be in admissible form (see CPLR §3212[b]; Tri-State Loan Acquisitions III, LLC v Litkowski, 172 A.D.3d 780 [1^st Dept 2019]). A plaintiff may rely on evidence from persons with personal knowledge of the facts, documents in admissible form and/or persons with knowledge derived from produced admissible records (see eg U.S. Bank N.A. v Moulton, 179 A.D.3d 734, 738 [2d Dept 2020]). No particular set of business records must be proffered, as long as the admissibility requirements of CPLR 4518[a] are fulfilled and the they are relied upon (see eg Citigroup v Kopelowitz, 147 A.D.3d 1014, 1015 [2d Dept 2017]).

Plaintiff s motion was supported with an affidavit from Sherry Benight ("Benight"), an officer of Select Portfolio Servicing, Inc. ("SPS"), the alleged servicing agent and attorney-in-fact for Plaintiff. Benight's affidavit laid a proper foundation for the admission of SPS's records into evidence under CPLR §4518 (see Bank of N.Y. Mellon v Gordon, 171 A.D.3d 197 [2d Dept 2019]). The records of other entities were also admissible since Benight sufficiently established that those records were received from the makers and incorporated into the records SPS kept and routinely relied upon such documents in its business (see U.S. Bank N.A. v Kropp-Somoza, 191 A.D.3d 918 [2d Dept 2021]). Further, annexed to the motion were records referenced by Lozano (cf. Deutsche Bank Natl. Trust Co. v Kirschenbaum, 187 A.D.3d 569 [1^st Dept 2020]) as well as a power of attorney, dated December 7, 2011, demonstrating the authority of SPS to act on behalf of Plaintiff (see Deutsche Bank Natl. Trust Co. v Silverman, 178 A.D.3d 898,901 [2d Dept 2019]).

Benight's affidavit and the referenced documents sufficiently evidenced the note and mortgage. As to the Mortgagor's default, it "is established by (1) an admission made in response to a notice to admit, (2) an affidavit from a person having personal knowledge of the facts, or (3) other evidence in admissible form" (Deutsche Bank Natl. Trust Co. v McGann, 183 A.D.3d 700, 702 [2d Dept 2020]). Here, Benight's review of the attached account records demonstrated that the Mortgagor defaulted in repayment under the note (see eg ING Real Estate Fin. (USA) LLC v Park Ave. Hotel Acquisition, LLC, 89 A.D.3d506 [1^st Dept 2011]).

As to standing in a foreclosure action, the note is the dispositive instrument (Aurora Loan Servs., LLC v Taylor, 25 N.Y.3d 355, 361-362 [2015]). "'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 Carnivale, 138 A.D.3d 1220, 1221 [2d Dept 2016], quoting Onewest Bank, F.S.B. v Mazzone, 130 A.D.3d 1399, 1400 [2d Dept 2015]). However, "mere physical possession of a note at the: commencement of a foreclosure action is insufficient to confer standing or to make a plaintiff the lawful holder of a negotiable instrument for the purposes of enforcing the note" (U.S. Bank N.A. v Moulton, 179 A.D.3d 734, 737 [2d Dept 2020]). "Holder status is established where the plaintiff possesses a note that, on its face or by allonge, contains an indorsement in blank or bears a special indorsement payable to the order of the plaintiff' (Wells Fargo Bank, NA v Ostiguy, 127 A.D.3d 1375, 1376 [2d Dept 2015] [citations omitted]). The indorsement must be made either on the face of the note or on an allonge "so firmly affixed thereto as to become a part thereof' (UCC §3-202[2]). "The attachment of a properly endorsed note to the complaint may be sufficient to establish, prima facie, that the plaintiff is the holder of the note at the time of commencement" (Deutsche Bank Natl. Trust Co. v Webster, 142 A.D.3d 636, 638 [2d Dept 2016]; cf JPMorgan Chase Bank, N.A. v Grennan, supra).

In this case, Plaintiff annexed a copy of the note to the complaint which contained two endorsements in on its face. One endorsement transfers the note from Countrywide Bank, NA to Countrywide Home Loans, Inc. The other endorsement is in blank and is executed by Countrywide Home Loans, Inc. This is sufficient to demonstrate that Plaintiff was the holder of the note when the action was commenced (see Bank of NY v Knowles, supra at 597; cf U.S. Bank N.A. v. Rozo-Castellanos, 201 A.D.3d 995, 999 [2d Dept 2022]).

As to the...