Monday, June 20, 2011

JUDGE SCHACK: DEUTSCHE BANK HAS NO STANDING -- NO REASON TO

CONTINUE NEGOTIATIONS WITH IT
2011 NY Slip Op 50423
Deutsche Bank National !ust "o#pany as !ustee unde! the $oolin%
and Se!&icin% '%!ee#ent Dated as o( )e*!ua!y 1, 200+,
,S'M$ -.S 200+/)M2, $lainti((,
&0
1alte! )!ancis a2k2a 1alte! J0 )!ancis, et0 al0, De(endants
10441203
Sup!e#e "ou!t O( he State O( Ne4 Yo!k
5in%s "ounty
Decided on Ma!ch 25, 2011
Plaintiff
Jordan S. Katz, PC
Melville NY
schack, J.
In this residential mortgage foreclosure action, for the remises located at !"## $ro% &venue,
'rookl%n, Ne(York )'lock *+,!, -ot "", Count% of Kings. laintiff, /01$SC20 '&NK N&$I3N&- $41S$ C3MP&NY &S
$41S$00 1N/04 $20 P33-IN5 &N/ S046ICIN5 &5400M0N$ /&$0/ &S 37 70'41&4Y ", !88*, 5S&MP
$41S$ !88*97M!
Page !
)/01$SC20 '&NK. moved for an order of reference alleging that defendant :&-$04 $. 74&NCIS )74&NCIS. failed to
file a timel% ans(er. Plaintiff /01$SC20 '&NK and defendant 74&NCIS aeared for oral argument on /01$SC20
'&NK;S motion on Setem<er !", !8"8. In a short form order issued that da% I held that 74&NCIS filed a timel% ans(er
and also denied laintiff;s motion for an order of reference <ecause laintiff /01$SC20 '&NK failed to serve defendant
74&NCIS (ith its motion for an order of reference. I ordered the arties to aear <efore me on 3cto<er !=, !8"8 for a
reliminar% conference.
$he arties aeared on 3cto<er !=, !8"8. Plaintiff;s counsel agreed to tr% to (ork (ith defendant 74&NCIS on a
loan modification agreement if defendant 74&NCIS rovided /01$SC20 '&NK (ith numerous documents. /efendant
74&NCIS rovided laintiff (ith the re>uired documentation. $he Court conducted several settlement conferences. $he
last settlement conference (as scheduled for March ",, !8"". Plaintiff /01$SC20 '&NK defaulted in aearing, (hile
defendant 74&NCIS (as resent. Plaintiff;s counsel did not contact m% Part or file an affirmation of actual engagement. I
then checked the file for this case maintained <% the Kings Count% Clerk and the &utomated Cit% 4egister Information
S%stem )&C4IS.. I discovered that there is no record of laintiff /01$SC20 '&NK ever o(ning the su<?ect mortgage and
note. $herefore, (ith laintiff /01$SC20 '&NK lacking standing, the instant action is dismissed (ith re?udice and the
notice of endenc% cancelled.
Back%!ound
&ccording to the verified comlaint and confirmed <% m% &C4IS check, defendant 74&NCIS <orro(ed @,,#,#88.88
from 740M3N$ IN60S$M0N$ &N/ -3&N )740M3N$. on 3cto<er !8, !88A. $he mortgage to secure the note (as
recorded <% M34$5&50 0-0C$43NIC 405IS$4&$I3N SYS$0MS, INC. )M04S., Bacting solel% as a nominee for
-ender C740M3N$DB and B734 P14P3S0S 37 40C34/IN5 $2IS M34$5&50, M04S IS $20 M34$5&500 37
40C34/,B in the 3ffice of the Cit% 4egister of the Cit% of Ne( York, Ne( York Cit% /eartment of 7inance, on Novem<er
!", !88A, at Cit% 4egister 7ile Num<er )C47N. !88A888A,#,,+.
Plaintiff alleges in its verified comlaint that 74&NCIS eEecuted a loan modification agreement on 7e<ruar% !!, !88+
(ith 740M3N$. $his (as never recorded (ith &C4IS. 7urther, the verified comlaint alleges, in F A, that M04S, as
nominee for 740M3N$ assigned the mortgage and note to laintiff B<% (a% of an assignment dated &ril !", !88= to <e
recorded in the 3ffice of the Clerk of the Count% of Kings.B It is almost t(o %ears since &ril !", !88= and this alleged
assignment has not <een recorded in &C4IS. Plaintiff should learn that mortgage assignments are not recorded in the
3ffice of the Clerk of the Count% of Kings, <ut (ith the Cit% 4egister of the Ne( York Cit% /eartment of 7inance.
/efendant 74&NCIS allegedl% defaulted in his mortgage loan a%ments (ith his Januar% ", !88= a%ment.
Su<se>uentl%, laintiff /01$SC20 '&NK commenced the instant action, on &ril !=, !88=, alleging in F * of the verified
comlaint, that BPlaintiff C/01$SC20 '&NKD is the holder and o(ner of the aforesaid N3$0 and M34$5&50.B
2o(ever, according to &C4IS, laintiff /01$SC20 '&NK (as not the holder of the note and mortgage on the da%
that the instant foreclosure action commenced. $hus, /01$SC20 '&NK lacks standing. $he action is dismissed (ith
re?udice. $he notice of endenc%
Page G
cancelled. Plaintiff;s lack of standing is enough to dismiss this action. $he Court does not need to address M04S;
ro<a<le lack of authorit% to assign the su<?ect mortgage and note to /01$SC20 '&NK, if it (as ever assigned.
Discussion
In the instant action, it is clear that laintiff /01$SC20 '&NK lacks Bstanding.B $herefore, the Court lacks
?urisdiction. BStanding to sue is critical to the roer functioning of the ?udicial s%stem. It is a threshold issue. If standing is
denied, the ath(a% to the courthouse is <locked. $he laintiff (ho has standing, ho(ever, ma% cross the threshold and
seek ?udicial redress.B )Saratoga Count% Cham<er of Commerce, Inc. v Pataki, "88 NY!d +8" +"! C!88GD, cert denied #,8
1S "8"* C!88GD.. Professor Siegel )NY Prac, H "GA, at !G! C,d edD., instructs thatI
CiDt is the la(;s olic% to allo( onl% an aggrieved erson to <ring a la(suit... & (ant of Bstanding to sue,B in other (ords, is
?ust another (a% of sa%ing that this articular laintiff is not involved in a genuine controvers%, and a simle s%llogism
takes us from there to a B?urisdictionalB dismissalI
)". the courts have ?urisdiction onl% over controversiesJ
)!. a laintiff found to lack BstandingB is not involved in a controvers%J and
)G. the courts therefore have no ?urisdiction of the case (hen such a laintiff urorts to <ring it.
BStanding to sue re>uires an interest in the claim at issue in the la(suit that the la( (ill recognize as a sufficient redicate
for determining the issue at the litigant;s re>uest.B )Carer v Nuss<aum )GA &/Gd "*A, "+" C!d /et !88AD.. If a laintiff
lacks standing to sue, the laintiff ma% not roceed in the action. )Stark v 5old<erg, !=* &/!d !8G C"st /et !88!D..
Plaintiff /01$SC20 '&NK lacked standing to foreclose on the instant mortgage and note (hen this action
commenced on &ril !=, !88=, the da% that /01$SC20 '&NK filed the summons, verified comlaint and notice of
endenc% (ith the Kings Count% Clerk, <ecause it can not demonstrate that it o(ned the mortgage and note that da%.
Plaintiff alleges that the &ril !", !88= assignment from M04S, as nominee for 740M3N$, to laintiff /01$SC20 '&NK
(as to <e recorded. &s of toda% it has not <een recorded. $he Court, in Camaign v 'ar<a )!G &/Gd G!* C!d /et !88#D.,
instructed that BCtDo esta<lish a rima facie case in an action to foreclose a mortgage, the laintiff must esta<lish the
eEistence of the mortgage and the mortgage note, o4ne!ship o( the #o!t%a%e, and the defendant;s default in a%ment
C6#phasis addedD.B )See :itelson v Jamaica 0states 2olding Cor. I, ,8 &/Gd !+, C"st /et !88*DJ 2ousehold 7inance
4ealt% Cor. of Ne( York v :%nn, "= &/Gd #,# C!d /et !88#DJ Sears Mortgage Cor. v Yahho<i, "= &/Gd ,8! C!d /et
!88#DJ 3c(en 7ederal 'ank 7S' v Miller, "+ &/Gd #!* C!d /et !88#DJ 1.S. 'ank $rust Nat. &ss;n $rustee v 'utti, "A
&/Gd ,8+ C!d /et !88#DJ 7irst 1nion Mortgage Cor. v 7ern, !=+ &/!d ,=8C!d /et !88!DJ 6illage 'ank v :ild 3aks,
2olding, Inc., "=A &/!d +"! C!d /et "==GD..
&ssignments of mortgages and notes are made <% either (ritten instrument or the assignor h%sicall% delivering the
mortgage and note to the assignee. B3ur courts have reeatedl% held that a <ond and mortgage ma% <e transferred <%
deliver% (ithout a (ritten instrument of assignment.B )7l%er v Sullivan, !+, &/ A=*, A== C"d /et "=#,D.. Plaintiff
/01$SC20 '&NK has no evidence that it had h%sical ossession of the note and mortgage on
Page ,
&ril !=, !88= and admitted, in F A of the instant verified comlaint comlaint, that the &ril !", !88= assignment is Bto <e
recorded.B
$he &ellate /ivision, 7irst /eartment, citing Kluge v 7ugaz%, in Katz v 0ast96ille 4ealt% Co., )!,= &/!d !,GC"d
/et "==+D., instructed that BCDlaintiff;s attemt to foreclose uon a mortgage in (hich he had no legal or e>uita<le
interest (as (ithout foundation in la( or fact.B $herefore, laintiff /01$SC20 '&NK lacks standing and the Court lacks
?urisdiction in this foreclosure action. $he instant action is dismissed (ith re?udice.
$he dismissal (ith re?udice of the instant foreclosure action re>uires the cancellation of the notice of endenc%.
CP-4 H A#8" rovides that the filing of a notice of endenc% against a roert% is to give constructive notice to an%
urchaser of real roert% or encum<rancer against real roert% of an action that B(ould affect the title to, or the
ossession, use or en?o%ment of real roert%, eEcet in a summar% roceeding <rought to recover the ossession of real
roert%.B $he Court of &eals, in #G8+ 4ealt% Cor. v 3 K Y 0>uit% Cor. )A, NY!d G"G, G"=C"=+,D., commented that
BCtDhe urose of the doctrine (as to assure that a court retained its a<ilit% to effect ?ustice <% reserving its o(er over the
roert%, regardless of (hether a urchaser had an% notice of the ending suit,B and, at G!8, that Bthe statutor% scheme
ermits a art% to effectivel% retard the aliena<ilit% of real roert% (ithout an% rior ?udicial revie(.B
CP-4 H A#", )a. rovides for the mandator% cancellation of a notice of endenc% <%I
he "ou!t, upon #otion of an% erson aggrieved and uon such notice as it ma% re>uire, shall di!ect any county
cle!k to cancel a notice o( pendency, if service of a summons has not <een comleted (ithin the time limited <% section
A#"!J or i( the action has *een settled, discontinued or a*atedJ or if the time to aeal from a final ?udgment against the
laintiff has eEiredJ or if enforcement of a final ?udgment against the laintiff has not <een sta%ed ursuant to section ##".
Ce#phasis addedD
$he lain meaning of the (ord Ba<ated,B as used in CP-4 H A#", )a. is the ending of an action. B&<atementB is
defined as Bthe act of eliminating or nullif%ing.B )'lack;s -a( /ictionar% G C*th ed "===D.. B&n action (hich has <een a<ated
is dead, and an% further enforcement of the cause of action re>uires the <ringing of a ne( action, rovided that a cause of
action remains )!& Carmod%9:ait !d H ""."..B )Nastasi v Natassi, !A &/Gd G!, ,8 C!d /et !88#D.. 7urther, Nastasi at GA,
held that the BCcDancellation of a notice of endenc% can <e granted in the eEercise of the inherent o(er of the court
(here its filing fails to coml% (ith CP-4 H A#8" )see #G8G 4ealt% Cor. v 3 K Y 0>uit% Cor., sura at G!89G!"J 4ose v
Montt &ssets, !#8 &/!d ,#", ,#"9,#! C"d /et "==+DJ Siegel, NY Prac H GGA C,th edD..B $hus, the dismissal of the instant
comlaint must result in the mandator% cancellation of laintiff /01$SC20 '&NKS;s notice of endenc% against the
roert% Bin the eEercise of the inherent o(er of the court.B
"onclusion
&ccordingl%, it is
34/040/, that the instant action, IndeE Num<er "8,,"L8=, is dismissed (ith re?udiceJ and it is further
Page #
34/040/ that the Notice of Pendenc% in this action, filed (ith the Kings
Count% Clerk on &ril !=, !88=, <% laintiff, /01$SC20 '&NK N&$I3N&- $41S$ C3MP&NY &S $41S$00
1N/04 $20 P33-IN5 &N/ S046ICIN5 &5400M0N$ /&$0/ &S 37 70'41&4Y ", !88*, 5S&MP $41S$ !88*9
7M!, to foreclose on a mortgagefor real roert% located at !"## $ro% &venue, 'rookl%n, Ne( York )'lock *+,!, -ot "",
Count% of Kings., is cancelled.
$his constitutes the /ecision and 3rder of the Court.
0N$04
MMMMMMMMMMMMMMMMMMMMMMMMMMMMMMMM
23N. &4$214 M. SC2&CK
J. S. C.
Posted <% &ttorne% 5regor% 'r%l at AI"* PM