Endurance Rewarded: The Burke’s Overcome 14-Year Foreclosure Battle Against Nazi Deutsche Bank

Robert F. Quinlan, J.

LEOPOLD & ASSOCIATES, PLLC, Attorneys for Plaintiff, 80 Business Park Drive, Suite I l0, Armonk, NY 10504

DARRIN BERGER, ESQ., Attorney for Defendants Susan Burke and Jeffrey Burke, 83 Prospect Street, Huntington, NY I 1743

Robert F. Quinlan, J.

PRIOR HISTORY

This is an action to foreclose a mortgage on residential real property known as 550 Main Street, Northport, Suffolk County, New York.

The prior history of this action is set forth in the decision placed on the record on August 11, 2016 after oral argument of plaintiff’s initial motion for summary judgment (Mot. Seq. #005) and the court’s decision of February 22, 2019 upon plaintiff’s successive motion for summary (Mot. Seq. #003).

Both decisions denied plaintiff summary judgment as issues of fact remained as to defendant’s 4th, 5th and 6th affirmative defenses which raised plaintiff’s proof of its standing to prosecute the action, as well as their 7th affirmative defense which raised the issue of plaintiff’s proof of mailing of the notice of default required by the mortgage.

Both decisions set those issues for a limited issue trial pursuant to CPLR 3212 (g) and 2218.

As plaintiff had filed a note of issue, the action was tried on February 28, 2020, after which the court reserved decision and the attorneys for the parties were given an opportunity to submit simultaneous post trial briefs on March 27, 2020.

As a result of the Covid-19 crisis, the closing of the courts for operations on March 16, 2020, the administrative and executive orders relating to foreclosure actions, and when papers in such actions could be filed, it appears that counsel for the parties were confused as to when they could file their post trial briefs.

Plaintiff’s brief, dated March 24, 2020 was received by the court on April 21, 2020, and defendant’s brief, dated April 3, 2020, was received by the court on April 23, 2020.

When AO/157/20 of the Chief Administrative Judge allowed the court to issue a decision after trial, the court could not do so until the phone conference held today, October 15, 2020. As the provisions of AO/157/20 have now been complied with, the court issues its decision after trial.

DECISION AFTER TRIAL

Judgment in favor of a foreclosing plaintiff is established, prima facie, by plaintiff’s production of the mortgage and the unpaid note, and evidence of the default in payment (see Wells Fargo, NA v. Erobobo , 127 AD3d 1176 [2d Dept 2015] ; Wells Fargo Bank, NA v. Morgan , 139 AD3d 1046 [2d Dept 2016] ).

These basic elements were noted to have been established in the court’s decision placed on the record on August 11, 2016.

Where plaintiff’s standing has been placed in issue, as here, plaintiff must establish its standing to obtain a judgment

(see Aurora Loan Servs., LLC v. Taylor , 25 NY3d 355 [2015] ;

Bank of New York Mellon v. Gordon, 171 AD3d 197 [2d Dept 2019] ;

Deutsche Bank Natl. Trust Co. v. Conrado , 179 AD3d 639 [2d Dept 2020] ).

Plaintiff has standing where it is the holder or assignee of both the subject mortgage and of the underlying note at the time the action is commenced

(see Aurora Loan Servs., LLC v. Taylor , 25 NY3d 355 ;

Wells Fargo Bank, NA v. Rooney 132 AD3d 980 [2d Dept 2015] ),

and establishes its lawful status as assignee, either by written assignment or physical delivery, prior to the filing of the complaint

(see Aurora Loan Services, LLC v. Weisblum , 85 AD3d 95 [2d Dept 2011] ;

Bank of New York Mellon v. Lopes , 158 AD3d 662 [2d Dept 2018] ).

Similarly, again as here, where defendants raise plaintiff’s failure to comply with the contractual condition precedent of the mailing of a notice of default under the terms of the mortgage, plaintiff must prove compliance in order to obtain a judgment

(see GE Capital Mtg. Services, Inc. v. Mittelman , 238 AD2d 471 [2d Dept 1997] ;

Norwest Bank Minn. v. Sabloff, 297 AD2d 722 [2d Dept 2002] ;

Wells Fargo Bank, N.A. v. Osias , 156 AD3d 942 [2d Dept 2017] ).

An additional issue as to proof of standing, if raised as here, is that if there is an allonge to the note, to prove its standing plaintiff must establish by admissible, credible evidence that the allonge was firmly attached to the note

( UCC 3-202 [2] ;

see Slutsky v. Blooming Grove Inn , 147 AD2d 208 [2d Dept 1989] ;

HSBC Bank USA, N.A. v. Roumiantseva , 130 AD3d 983 [2d Dept 2015] ).

STANDING

On the issues surrounding its standing, plaintiff Deutsche Bank National Trust Comapny (“plaintiff”) presented Ronaldo Reyes, a vice president of plaintiff. Mr. Reyes established his ability to testify as to plaintiff’s business records pursuant to CPLR 4518 (a), and produced copies of the plaintiff’s records, including computer records, maintained by plaintiff upon which his testimony was based.

Those records were admitted into evidence through his testimony.

The admissible, credible evidence established to the court as trier of fact through those records and Mr. Reyes’ testimony that plaintiff had the note and an allonge endorsed in blank, in its possession on November 4, 2006 and released both to its then servicer, Home Eq Servicing (“Home Eq”) on November 14, 2006 for the purpose of Home Eq drafting and filing the complaint in this action.

This action was subsequently filed on behalf of plaintiff by Home Eq with the Suffolk County Clerk on November 24, 2006, thereby commencing the action.

The court finds the testimony of Mr. Reyes, as well as plaintiff’s evidence presented through his testimony, credible and believable and establishes plaintiff’s possession of the note and allonge at the time the action was commenced.

The fact that Home Eq possessed the note and allonge at the time it filed the action on plaintiff’s behalf is of no moment.

It is clearly and credibly established to the satisfaction of the court as trier of the facts, by both Mr. Reyes testimony and plaintiff’s records admitted into evidence, that Home Eq merely acted as agent on behalf of plaintiff in possessing those documents.

Defendants’ counsel’s claims to the contrary are unsupported by fact or law.

But, in order to establish plaintiff’s standing and effective possession of the note at the time the action was filed, the evidence must have established that the allonge was firmly affixed to the note at that time

( UCC 3-202 [2] ;

see Slutsky v. Blooming Grove Inn , 147 AD2d 208 ;

HSBC Bank USA, N.A. v. Roumiantseva , 130 AD3d 983 ).

Here the honest and credible testimony offered by Mr. Reyes, as well as the records admitted by plaintiff, failed to establish that the allonge was attached to the note at the time it was transferred to Home Eq or when the action was filed.

Defendants apparently had not viewed the note and allonge until the day of the trial, but upon that viewing pointed out that there were a number of holes in the note and allonge, which were affixed together by a staple at the time of the trial.

The holes appeared to have been made by other staples.

Mr. Reyes testified that he did not know when the allonge was affixed to the note, did not know when any original staples were removed, did not know if the allonge was affixed to the note at the time that both documents were transferred to the custody of Home Eq, and did not know if the they were affixed at the time the action was filed.

None of the records produced by plaintiff established those facts.

Failing to establish that the allonge was affixed to the note during the times referred to above, plaintiff has not met the requirements of UCC 3-202 (2) and thereby has failed to prove its standing to prosecute this action

(see also Bayview Loan Servicing, LLC v. Kelly , 166 AD3d 843 [2d Dept 2018] ).

Accordingly, plaintiff having failed to establish its standing at trial, the action is dismissed.

The court notes that as the action is dismissed for lack of standing, the underlying note was not accelerated for purposes of the statute of limitations

(see EMC Mortg. Corp v. Smith , 18 AD3d 602 [2d Dept 2005] ;

Wells Fargo Bank, N.A. v. Burke , 94 AD3d 980 [2d Dept 2012] ;

US Bank, N.A. v. Gordon , 158 AD3d 832, [2d Dept 2018] ;

US Bank Trust, N.A. v. Williams , 168 AD3d 1122 [2d Dept 2019] ;

US Bank, N.A. v. Auguste , 173 AD3d 930 [2d Dept 2020] ).

NOTICE OF DEFAULT

Additionally, plaintiff’s proof failed to establish the mailing of the notice of default required by the mortgage.

In an attempt to prove the mailing of the notice to defendant, plaintiff presented Louise Plasse, a senior loan analyst for its present servicer Ocwen Loan Servicing (“Ocwen”).

Although Ms. Plasse established her ability to testify to Ocwen’s business records pursuant to CPLR 4518 (a), as well as the boarding process performed by Ocwen of records of prior servicers, this alone is insufficent to establish the mailing of the required notice to defendants by Home Eq. Although Ocwen’s boarding process may have been sufficient to make Home Eq’s records admissible

(see Bank of New York, Mellon v. Gordon , 171 AD3d 197 (2d Dept 2019), plaintiff’s witness is still required to establish her familiarity with the mailing process and procedures of prior servicers, such as Home Eq, in order to establish the mailing of the notices

(see LNV Corp. v. Sofer , 171 AD3d 1033 [2d Dept 2019] ;

CitiBank, N.A. v. Conti-Scheurer , 172 AD3d 17 [2d Dept 2019] ;

Nationstar Mtge, LLC v. Tamargo , 177 AD3d 750 [2d Dept 2019] ).

As Ms. Plasse failed to establish any familiarity with Home Eq’s mailing practices and procedures, plaintiff has failed to prove the mailing of notice of default required by the mortgage.

Accordingly, this failure forms a separate and distinct basis for dismissal of plaintiff’s action after trial.

Plaintiff’s action is dismissed.

This constitutes the decision and order of the Court after trial.

An “allonge” and a “note” are terms commonly used in the context of negotiable instruments, often associated with promissory notes.

Here’s an explanation of each term and their relationship:

Promissory Note

A promissory note is a written promise to pay a specific sum of money to a designated person or entity at a specified future date.

In the context of loans, it represents the borrower’s commitment to repay the borrowed amount.

The promissory note typically includes essential details such as the principal amount, interest rate, repayment terms, and the names of the parties involved.

Allonge

An allonge is a separate sheet of paper that is attached to a negotiable instrument, such as a promissory note.

It is used when there is insufficient space on the original instrument to write additional endorsements or when endorsements are added after the document has been created.

Allonges are commonly used in the endorsement process, allowing for the continuation of endorsements without altering the main body of the original document.

Relationship and Attachment:

In the context of the legal statement you provided, the relationship between an allonge and a note is that the allonge is an attachment to the note, serving as a means to include additional endorsements or information related to the note. An allonge is firmly attached to the note to become a seamless extension of the original document.
Proof of Standing:

In legal proceedings, particularly in cases involving promissory notes and foreclosure, the issue of standing often arises. Standing refers to the legal right of a party to bring a lawsuit. The statement you provided suggests that if there is an allonge to the note, the plaintiff (the party bringing the lawsuit) must prove, through admissible and credible evidence, that the allonge was firmly attached to the note. This is important because the attachment of the allonge is part of the proper endorsement process, and establishing this connection is crucial for the plaintiff to demonstrate ownership or the right to enforce the note.

In summary, an allonge is an attachment to a negotiable instrument, like a promissory note, and it is used to facilitate additional endorsements or information. The attachment of an allonge is relevant in legal proceedings, particularly in proving standing, and it must be demonstrated through admissible and credible evidence.

An endorsement, in the context of a negotiable instrument like a promissory note, is a written indication or signature on the instrument that signifies the transfer of the rights to the instrument from one party to another.

Endorsements are crucial for the negotiation and transfer of negotiable instruments, providing a way for parties to convey ownership or the right to collect on the instrument.

Key points about endorsements include:

Purpose

The primary purpose of an endorsement is to transfer the ownership or rights associated with a negotiable instrument.

In the case of a promissory note, it allows the holder of the note to transfer or assign their interest in the note to another party.

Types of Endorsements

There are different types of endorsements, each with its own implications for the transfer of rights.

The three main types are blank endorsements, special (or full) endorsements, and restrictive endorsements.

Blank Endorsement

The endorser simply signs the back of the instrument without specifying a particular endorsee.

This turns the instrument into a bearer instrument, meaning it can be transferred by delivery alone.

Special (or Full) Endorsement

The endorser not only signs the instrument but also specifies the person to whom the instrument is being transferred.

This restricts further negotiation to the specified person.

Restrictive Endorsement

The endorser includes specific instructions on how the instrument is to be handled or what conditions must be met for further negotiation.

Effect on Ownership

An endorsement effectively transfers the rights associated with the instrument to the endorsee. The person or entity in possession of the endorsed instrument is considered the rightful owner or holder of the rights it represents.

Role in Negotiation

Negotiable instruments, such as promissory notes, often change hands multiple times. Each time an instrument is endorsed, it signifies a new phase of ownership or transfer. The chain of endorsements establishes the lineage of ownership.

Connection to Allonge

As mentioned above, an allonge is a separate sheet of paper sometimes used for endorsements when there is insufficient space on the original instrument.

The allonge becomes a part of the instrument when firmly attached, serving as a continuation of the endorsements.

In summary, an endorsement is a written indication on a negotiable instrument that facilitates the transfer of ownership or rights associated with the instrument from one party to another.

It plays a crucial role in the negotiation and transfer of these instruments.