Opinion
No. 2763/2008.
2012-07-25
HSBC BANK USA, etc., Plaintiff, v. Maryann PICARELLI, Margaret Rappold, et al., Defendants.
Frenkel, Lambert, Weiss, Weisman & Gordon, LLP, by Joseph F. Battista, Esq., Bay Shore, for the Plaintiff. David M. Harrison, Esq., Brooklyn, for Defendants Maryann Picarelli and Margaret Rappold.
Frenkel, Lambert, Weiss, Weisman & Gordon, LLP, by Joseph F. Battista, Esq., Bay Shore, for the Plaintiff. David M. Harrison, Esq., Brooklyn, for Defendants Maryann Picarelli and Margaret Rappold.
CHARLES J. MARKEY, J.
The following papers numbered 1 to 13 read on this motion by plaintiff HSBC Bank USA, National Association, as Trustee for the Holders of Deutsche ALT–A Securities Mortgage Loan Trust, Series 2007–OA4 Mortgage Pass–Through Certificates (“HSBC Bank USA”), pursuant to CPLR 2221(e), for leave to renew its prior motion for summary judgment resulting in the order dated May 6, 2009, and upon renewal, for summary judgment in its favor against defendants Maryann Picarelli and Margaret Rappold; and this cross motion by defendants Picarelli and Rappold pursuant to CPLR 2221(e) for leave to renew the May 6, 2009 order, and, pursuant to CPLR 3025(b), for leave to amend their answer as proposed.
+-----------------------------------------------------+ ¦Papers ¦Numbered ¦ +------------------------------------------+----------¦ ¦Notice of Motion–Affidavits–Exhibits ¦1–4 ¦ +------------------------------------------+----------¦ ¦Notice of Cross Motion–Affidavits–Exhibits¦5–8 ¦ +------------------------------------------+----------¦ ¦Answering Affidavits–Exhibits ¦9–11 ¦ +------------------------------------------+----------¦ ¦Reply Affidavits ¦12–13 ¦ +-----------------------------------------------------+
In HSBC Bank USA v. Picarelli, 23 Misc.3d 1135(A), 2009 WL 1585773, 2009 N.Y. Slip Op 51107(U) [Sup Ct Queens County 2009] [decision by the undersigned], the plaintiff HSBC Bank USA previously moved for summary judgment in its favor as against defendants Picarelli and Rappold, to strike the answer of those defendants, for leave to appoint a referee to compute the total sums due and owing plaintiff, and for leave to amend the caption as proposed. By order dated May 6, 2009, those branches of the motion by plaintiff HSBC Bank USA for summary judgment against defendants Picarelli and Rappold and for leave to appoint a referee were denied. That branch of the motion for leave to amend the caption as proposed was granted, and that branch of the motion to strike the answer of defendants Picarelli and Rappold was granted only to the extent of striking the fifth, sixth, seventh, eighth, and ninth affirmative defenses, and that portion of the first and second affirmative defenses which was based upon the claim of defendants Picarelli and Rappold that they were not given preliminary disclosures pursuant to the Federal Truth in Lending Act (15 USC § 1601 et seq., hereinafter “TILA”). This Court determined that defendants Picarelli and Rappold raised triable issues of fact in connection with their third and fourth affirmative defenses based upon fraudulent inducement and violation of section 349 of the General Business Law, respectively, and that portion of their first and second affirmative defenses based upon violation of the disclosure requirements of section 1638(a)(4) of TILA.
Plaintiff HSBC Bank USA moves, in effect, for leave to renew those branches of its prior motion to strike the third and fourth affirmative defenses, and so much of the first and second affirmative defenses as is based upon alleged violation of the requirements of TILA for disclosures at closing, and for summary judgment, and upon renewal, to strike those affirmative defenses and for summary judgment in its favor as against defendants Picarelli and Rappold.
Defendants Picarelli and Rappold do not oppose the instant motion by plaintiff HSBC Bank USA, but rather, cross move, in effect, for leave to renew their opposition to the prior motion by plaintiff HSBC Bank USA resulting in the May 6, 2009 order striking their fifth affirmative defense, and upon renewal, to deny that branch of the motion by plaintiff to strike their fifth affirmative defense based upon failure to state a cause of action. Defendants Picarelli and Rappold also cross move, pursuant to CPLR 3025, for leave to amend their answer to assert an affirmative defense based upon lack of standing. Plaintiff HSBC Bank USA opposes the cross motion.
A motion for leave to renew must be supported by new or additional facts “not offered on the prior motion that would change the prior determination or shall demonstrate that there has been a change in the law that would change the prior determination” (CPLR 2221[e][2] ). A motion for leave to renew based upon new or additional facts “shall contain reasonable justification for the failure to present such facts on the prior motion” (CPLR 2221[e][3] ).
Following the institution of this foreclosure action, Maryann Picarelli and Margaret Rappold commenced an action entitled Rappold v. Nationwide Lending Group, Supreme Court, Queens County, Index No. 9424/2008 (“the Rappold action”), to recover damages for alleged acts of fraud, misconduct and misrepresentation committed by various defendants, including HSBC Bank USA, in connection with the execution of the subject mortgage.
Following the entry of the May 6, 2009 order in this action, HSBC Bank USA moved, within the confines of the Rappold action, for summary judgment dismissing the complaint therein asserted against it. Picarelli and Rappold opposed the motion. By order of the Hon. Janice A. Taylor, dated August 12, 2011, HSBC Bank USA's motion for summary judgment dismissing the complaint as against it was granted.
Plaintiff HSBC Bank USA contends that this Court should accord collateral estoppel effect to the August 12, 2011 order and preclude defendants Picarelli and Rappold from litigating their remaining affirmative defenses herein, and grant summary judgment in its favor against them.
Although Picarelli and Rappold filed a notice of appeal of that order, they failed to timely perfect their appeal or make application to enlarge the time to perfect, and as a consequence, the appeal was dismissed by order dated June 25, 2012 of the Appellate Division, Second Department.
The instant motion by plaintiff HSBC Bank USA is supported by a new fact which was unavailable at the time of the making of the prior motion, i.e. the issuance of the order of Justice Taylor in the related Rappold action. That branch of the motion by plaintiff HSBC Bank USA for leave to renew is granted.
With respect to that branch of the motion by plaintiff HSBC Bank USA to strike the third and fourth affirmative defenses and the remaining portion of the first and second affirmative defenses asserted by defendants Picarelli and Rappold in their answer in this action, the doctrine of collateral estoppel precludes a party from relitigating an issue which was previously decided against that party, or those in privity, in a proceeding in which there was a fair opportunity to fully litigate the matter ( see, Ryan v. New York Tel. Co., 62 N.Y.2d 494, 500 [1984] ). To invoke the doctrine of collateral estoppel, the proponent must demonstrate: (1) the identical issue was necessarily decided in the prior action and is decisive in the present action, and (2) the party who is precluded from relitigating the issue, had a full and fair opportunity to contest the matter in the prior action ( see, Schwartz v. Public Adm'r of County of Bronx, 24 N.Y.2d 65, 70 [1969] ).
The court in Rappold determined that Picarelli and Rappold received statements at the closing which contained all information required to be disclosed under TILA. The court in Rappold also determined that Picarelli and Rappold failed to demonstrate (1) Countrywide Bank, F.S.B., the originator of the subject mortgage loan, HSBC Bank USA, Countrywide Home Loans, Inc., and Mortgage Electronic Registration Systems, Inc. (the Countrywide defendants) were responsible for any alleged oral misrepresentations made to Picarelli and Rappold in connection with the subject mortgage loan, and (2) they reasonably relied upon the alleged oral misrepresentations. The court in Rappold additionally determined that Picarelli and Rappold failed to prove any conduct attributable to the Countrywide defendants which was violative of General Business Law section 349.
These determinations are decisive in the present action relative to the continued validity of the third and fourth affirmative defenses and the remaining portion of the first and second affirmative defenses, and it is undisputed that Picarelli and Picarelli had a full and fair opportunity to contest the matter in the Rappold action. Under such circumstances, plaintiff HSBC Bank USA is entitled to preclude defendants Picarelli and Rappold from relying upon the third and fourth affirmative defenses, and the remaining portion of the first and second affirmative defenses in opposition to its prima facie showing of entitlement to summary judgment. That branch of the motion by plaintiff HSBC Bank USA to strike the third and fourth affirmative defenses and the remaining portion of the first and second affirmative defenses asserted by defendants Picarelli and Rappold in their answer is granted.
With respect to that branch of the cross motion by defendants Picarelli and Rappold for leave to renew their prior opposition to the branch of the prior motion by plaintiff to strike their affirmative defense based upon failure to state a cause of action, defendants Picarelli and Rappold contend that the Appellate Division, Second Department's holding in Bank of New York v. Silverberg (86 AD3d 274 [2011] ), in effect, represents a change in law regarding standing. They argue that Silverberg requires a finding that defendants Picarelli and Rappold raised an issue of fact as to whether plaintiff HSBC Bank USA has stated a cause of action for foreclosure in its complaint.
Contrary to defendants Picarelli and Rappold's contention, the Appellate Division, in Silverberg (86 AD3d 274), did not change decisional law ( see, HSBC Bank USA, N.A. v. Abass, 34 Misc.3d 1241(A), 2012 WL 934299, 2012 N.Y. Slip Op 50505(U) [decision by the undersigned] ). In reversing the order of the Supreme Court, Suffolk County, on the law, the appellate court in Silverberg reiterated the longstanding, well-settled rules in New York that (1) an assignment of a mortgage without assignment of the underlying note or bond is a nullity, and no interest is acquired by it, and (2) in the absence of proof that a plaintiff is the holder or assignee of both the subject mortgage and of the underlying note at the time the action is commenced, a plaintiff lacks standing to bring the action.
Where there has been no change in the decisional law, but a party is of the opinion that the motion court overlooked or misapprehended existing law, the proper vehicle is a timely motion to reargue, not a motion to renew (CPLR 2221[d]; see, A.M. Medical Services, P.C. v. Allstate Ins. Co., 16 Misc.3d 130(A), 2007 WL 1890064, 2007 N.Y. Slip Op 51312(U) [App T 2nd Dept.2007] ). Defendants Picarelli and Rappold have not sought leave to reargue. That branch of the cross motion by defendants Picarelli and Rappold for leave to renew is denied.
With respect to that branch of the cross motion by defendants Picarelli and Rappold for leave to amend their answer to assert an affirmative defense based upon lack of standing, they assert that the note is made payable to Countrywide Bank, FSB, and plaintiff HSBC Bank USA, in bringing this action, relies upon an assignment dated January 25, 2008, whereby Mortgage Electronic Registration Systems, Inc. (“MERS”), as the nominee of Countrywide Bank, F.S.B., purportedly assigned the mortgage, together with note to plaintiff. Defendants Picarelli and Rappold assert that MERS, however, never was the owner of the note, and lacked authority to assign the note to plaintiff HSBC Bank USA. They argue, therefore, plaintiff HSBC Bank USA lacks standing to bring this action.
Plaintiff HSBC Bank USA argues that defendants Picarelli and Rappold have waived such proposed defense. Contrary to such argument, they have not ( see, Aurora Loan Services, LLC v. Thomas, 70 AD3d 986 [2nd Dept.2010]; cf. Wells Fargo Bank Minn., N.A. v. Mastropaolo, 42 AD3d 239 [2nd Dept.2007] ).
Plaintiff HSBC Bank USA also argues that defendants Picarelli and Rappold should be estopped, pursuant to the doctrine of judicial estoppel or inconsistent positions, from seeking leave to assert an affirmative defense based upon lack of standing. Plaintiff HSBC Bank USA contends that in their complaint in the Rappold action, Picarelli and Rappold alleged HSBC Bank USA was assigned both the subject note and mortgage, and demanded the bank be held liable in damages for purported TILA violations which were committed at the origination of the loan. Plaintiff HSBC Bank USA's contention that defendants Picarelli and Rappold should not be permitted to assert herein that HSBC Bank USA was not assigned the note by virtue of the assignment dated January 25, 2008.
The doctrine of judicial estoppel or inconsistent positions precludes a party who assumed a certain position in a prior legal proceeding, and who secured a judgment in his or her favor, from assuming a contrary position in another action simply because his or her interests have changed ( see, Ford Motor Credit Co. v. Colonial Funding Corp., 215 A.D.2d 435 [2nd Dept.1995]; Prudential Home Mtge. Co. v. Neildan Constr. Corp., 209 A.D.2d 394 [2nd Dept.1994]; Piedra v. Vanover, 174 A.D.2d 191, 197 [2nd Dept.1992]; Neumann v. Metropolitan Med. Group, 153 A.D.2d 888, 889 [2nd Dept.1989] ). Contrary to plaintiff's contention, the proposed amendment is not barred by the doctrine of judicial estoppel. Defendants Picarelli and Rappold did not prevail or gain any benefit in the Rappold action based on a position incompatible with this proposed new affirmative defense ( see, Matter of Bianchi v. New York State Div. of Hous. & Community Renewal, 5 AD3d 303 [1st Dept.2004] ).
The Appellate Division, Second Judicial Department, in U.S. Bank, Nat. Assn. v. Sharif (89 AD3d 723, 724 [2011] ) has explained:
After the plaintiff moved for summary judgment, Sharif, with the defendant Nazimah Sharif, cross-moved, inter alia, for leave to serve and file an amended answer to assert a defense based on the plaintiff's lack of standing, and, upon the assertion of that defense, to dismiss the complaint insofar as asserted against them. “Motions for leave to amend pleadings should be freely granted, absent prejudice or surprise directly resulting from the delay in seeking leave, unless the proposed amendment is palpably insufficient or patently devoid of merit” (Aurora Loan Servs., LLC v. Thomas, 70 AD3d [986, 987] [2010];seeCPLR 3025[b]; Lucido v. Mancuso, 49 AD3d 220, 222 [2008] ). “Mere lateness is not a barrier to the amendment. It must be lateness coupled with significant prejudice to the other side, the very elements of the laches doctrine” (Public Adm'r of Kings County v. Hossain Constr. Corp., 27 AD3d 714, 716 [2006], quoting Edenwald Contr. Co. v. City of New York, 60 N.Y.2d 957, 959 [1983];see Abrahamian v. Tak Chan, 33 AD3d 947, 949 [2006] ).”
Plaintiff HSBC Bank USA asserts that the proposed affirmative defense is patently devoid of merit. It claims to have physically possessed the original note and mortgage at the time of the commencement of this action.
Plaintiff HSBC Bank USA, however, has failed to demonstrate that the note is a negotiable instrument. It is not endorsed to HSBC Bank USA or in blank ( see,UCC 3–104[a][1]; Mortgage Elec. Registration Sys., Inc. v. Coakley, 41 AD3d 674 [2nd Dept.2007] ), and plaintiff makes no showing that the note has an allonge affixed to it indorsing it over to HSBC Bank USA ( see,UCC 3–202 [2]; Slutsky v. Blooming Grove Inn, Inc., 147 A.D.2d 208, 212 [2nd Dept.1989] ). Under such circumstances, plaintiff HSBC Bank USA has failed to show that a valid assignment of the note was made by physical delivery to it ( seeUCC 3–202[1] ).
Thus, the proposed amendment is not palpably insufficient or patently devoid of merit ( see, U.S. Bank, N.A. v. Collymore, 68 AD3d 752 [2nd Dept.2009]; Slutsky v. Blooming Grove Inn, 147 A.D.2d 208,supra; see also, Aurora Loan Services, LLC v. Thomas, 70 AD3d 986,supra ). In addition, the documents upon which defendants Picarelli and Rappold rely in making their cross motion were obtained from plaintiff HSBC Bank USA, and there is no showing of prejudice or surprise resulting directly from the delay by defendants Picarelli and Rappold in seeking leave ( see, Aurora Loan Services, LLC v. Thomas, 70 AD3d 986,supra.
That branch of the cross motion by defendants Picarelli and Rappold for leave to amend their answer to add an affirmative defense based upon lack of standing is granted. That branch of the motion by plaintiff HSBC Bank USA for summary judgment in its favor as against defendants Picarelli and Rappold is denied.
The foregoing constitutes the decision, order, and opinion of the Court.