Opinion
Index No. 56766/2023
05-03-2024
Pacific Western Bank, Plaintiff, v. Julio A. Salazar, Jr., FELICIA SALAZAR, WACHOVIA BANK, N.A., and "JOHN DOE #1" through "JOHN DOE #5" inclusive, the names of the five last name, Defendants being fictitious, real names unknown to the Plaintiff, the parties intended being persons or corporations having an interest in, or tenants or persons in possession of, portions of the mortgaged premises described in the Complaint, Defendants.
Keane & Beane, PC - counsel for Plaintiff. Robert Hiltzik, Esq. - counsel for Defts Salazar.
Unpublished Opinion
Keane & Beane, PC - counsel for Plaintiff.
Robert Hiltzik, Esq. - counsel for Defts Salazar.
HON. ROBERT S. ONDROVIC, J.S.C.
In a residential foreclosure action, the plaintiff moves for an order amending the caption, granting summary judgment on the complaint insofar as asserted against the defendants Julio A. Salazar, Jr. and Felicia Salazar , striking those defendants' answer and affirmative defenses, dismissing those defendants' counterclaims, and for an order of reference. The following papers were considered in connection with the plaintiff's motion:
The defendant Wachovia Bank, N.A. (hereinafter Wachovia), did not serve an answer to the complaint and, therefore, summary relief pursuant to CPLR § 3212(a) is not an appropriate form of relief against that defendant (see Onewest Bank v Bernstein, 196 A.D.3d 591, 591 [2d Dept. 2021]).
PAPERS NUMBERED
Notice of Motion, Catmull Affidavit, 1 - 33
Weber Affidavit, Affirmation, Statement of Material Facts, Exhibits 1 - 27, Memo of Law
Affidavit in Opposition, Affirmation in 34 - 44
Opposition, Exhibits A - G, Memo of Law in Opposition
Reply Affirmation, Exhibit 28, Reply Memo 45 - 47 of Law
Discussion
On April 20, 2006, the defendants Julio A. Salazar, Jr. and Felicia Salazar (hereinafter the defendants) executed a note in the sum of $1,500,000 in favor of America's Wholesale Lender. The note was secured by a mortgage on certain residential property located at 10 Leisure Farm Drive in Armonk, New York (hereinafter the subject property). By an assignment of mortgage dated June 5, 2006, Mortgage Electronic Registration Systems, Inc. (hereinafter MERS), as nominee for Countrywide Home Loans, Inc., assigned the mortgage to Affinity Bank "together with the note or notes therein described." By an assignment of mortgage dated October 20, 2011, Federal Deposit Insurance Company (hereinafter FDIC), as receiver of Affinity Bank, assigned the mortgage to the plaintiff Pacific Western Bank (hereinafter PacWest), "together with the note or notes therein described." Both assignments of mortgage were recorded on March 12, 2012.
The note was endorsed by Countrywide Home Loans, Inc., a New York Corporation doing business as America's Wholesale Lender, without recourse.
NYSCEF Doc No 41
NYSCEF Doc No. 42
On February 14, 2023, PacWest commenced this action against the defendants and Wachovia, among others, to foreclose the mortgage, alleging, inter alia, that the defendants had defaulted in making the mortgage payment due August 8, 2022, and all payments due thereafter. The defendants interposed an answer in which they asserted various affirmative defenses - including that PacWest lacked standing to commence this action and that it failed to comply with RPAPL § 1304 - and counterclaims. PacWest served a reply to the defendants' counterclaims on April 17, 2023. A notice of appearance was filed on behalf of Wachovia, however Wachovia did not interpose an answer to the complaint.
In a response to interrogatories, the defendants withdrew the following affirmative defenses: fourth, eighth, ninth, tenth, thirteenth, fifteenth, sixteenth, seventeenth, eighteenth, twentieth, twenty-first, twenty-fourth, twenty-sixth and first counterclaim, twenty-seventh and second counterclaim, and twenty-eighth and third counterclaim (see NYSCEF Doc No 52).
PacWest now moves, inter alia, for an order amending the caption to substitute Banc of California (hereinafter BoC) as the plaintiff, for summary judgment on the complaint insofar as asserted against the defendants, to strike the defendants' answer and affirmative defenses, to dismiss the defendants' counterclaims, and for an order of reference.
In support of the motion, PacWest submitted an affidavit of Joseph Catmull, a senior vice president and senior associate general counsel of BoC and former employee of PacWest. Attached as exhibits to Catmull's affidavit is an amended and restated agreement and plan of merger dated November 7, 2023, and a certificate of merger indicating that BoC merged into PacWest effective December 1, 2023, and PacWest's name was changed to BoC. Catmull stated that since the merger, BoC possessed and continues to possess the note, mortgage, and other loan documents executed by the defendants.
PacWest also submitted an affidavit of Steen Weber, a senior vice president, special assets group, credit administration at BoC. Weber averred that prior to the merger, he was a senior vice president, special assets of PacWest - a position he had held since October 1, 2010. He stated that he has access to PacWest's business records, including those related to the defendants, and that those records are now maintained by BoC. Weber noted that "[i]t is the regular practice of [BoC] to integrate the prior servicer's records into its business records, and to rely upon the accuracy of those [] records in providing its loan servicing functions." He asserted that after the mortgage was assigned by FDIC to PacWest in October 2011, the business records of FDIC, as receiver for Affinity, were integrated into PacWest's system. Weber stated that "[t]he original note and mortgage were delivered to [PacWest] on or about October 26, 2011."
NYSCEF Doc No 29, ¶ 5
Id. at ¶ 21
Weber also averred that he is personally familiar with the mailing practices and procedures of PacWest, now known as BoC. He stated that on August 8, 2022, PacWest sent a default notice letter by first class mail to the defendants at the subject property indicating that the amount of $31,983.73 was 60 days or more past due, and requesting that payment be made by August 18, 2022. Weber stated that the defendants did not remit payment. He asserted that in accordance with PacWest's standard mailing procedures, 90-day notices were served on the defendants via certified and first class mail at the subject premises on November 7, 2022, and that it was PacWest's regular business practice to maintain copies of the 90-day notices with the certified mail numbers. Weber further averred that the 90-day notices were filed by PacWest with the New York State Department of Financial Services in accordance with RPAPL § 1306. Attached as exhibits to Weber's affidavits are, among other things, copies of the default notice letter and 90-day notices.
In a memorandum of law, PacWest argued, inter alia, that it demonstrated its prima facie entitlement to summary judgment on the complaint by submitting the mortgage, the unpaid note, and evidence of the default. PacWest further argued that the defendants' remaining affirmative defenses must be dismissed since they are either without merit or conclusory in nature. With respect to the issue of standing, PacWest asserted that it demonstrated through the affidavit of Weber that it is the assignee and present holder of the note and mortgage.
In an affidavit in opposition, the defendant Julio A. Salazar averred that a triable issue of fact exists as to PacWest's standing and failure to comply with condition precedent. In a memorandum of law in opposition, the defendants contended that PacWest failed to establish its standing as assignee of the note, arguing that the chain of assignments was defective because MERS did not have the authority to assign the note. The defendants further argued that PacWest's motion should be denied because the mortgage submitted in support of the motion is not in admissible form since the pages are out of order and is missing a page.
In a reply affirmation, PacWest argued that it has standing to commence the action because it was in physical possession of the note at the time the action was commenced and attached a copy of the note, endorsed in blank, to the summons and complaint. PacWest also asserted that a copy of the mortgage was inadvertently printed in "letter" format instead of "legal" format and requested that the Court overlook this defect and permit it to substitute a complete copy of the mortgage attached as exhibit 28 in place of exhibit 8.
Analysis
"Generally, in moving for summary judgment in an action to foreclose a mortgage, a plaintiff establishes its prima facie case through the production of the mortgage, the unpaid note, and evidence of default" (U.S. Bank N.A. v Bochicchio, 179 A.D.3d 1133, 1134 [2d Dept. 2020] [internal quotation marks omitted]; see U.S. Bank N.A. v Sabharwal, 175 A.D.3d 1454, 1455 [2d Dept. 2019]). "Where, as here, 'the issue of standing is raised by a defendant in a mortgage foreclosure action, a plaintiff must prove its standing in order to be entitled to relief against that defendant'" (U.S. Bank N.A. v Bochicchio, 179 A.D.3d at 1134, quoting Bank of NY Mellon v Gordon, 171 A.D.3d 197, 203 [2d Dept. 2019]).
"To have standing to commence a foreclosure action, a plaintiff must have been the holder or assignee of the note at the time the action was commenced, and 'the note is the dispositive instrument that conveys standing to foreclose under New York law'" (21st Mtge. Corp. v Rudman, 201 A.D.3d 618, 620-621 [2d Dept. 2022], quoting Aurora Loan Servs., LLC v Taylor, 25 N.Y.3d 355, 361 [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 Collymore, 68 A.D.3d 752, 754 [2d Dept. 2009]; see Aurora Loan Servs., LLC v Taylor, 25 N.Y.3d at 361-362).
Here, the defendants are correct that PacWest failed to establish its standing based upon the chain of assignments beginning with MERS to Affinity Bank, and then from FDIC, as receiver of Affinity Bank, to PacWest. There is no evidence submitted in support of PacWest's motion demonstrating that MERS, as nominee of the original lender, ever became a lawful holder of the note, or had authority to assign the note to Affinity Bank (see Central Mtge Co. v Resheff, 200 A.D.3d 640, 645-646 [2d Dept. 2021]; Wilmington Sav. Fund Socy., FSB v Matamoro, 200 A.D.3d 79, 102 [2d Dept. 2021]; Bank of NY v Silverberg, 86 A.D.3d 274, 274 [2d Dept. 2011]).
Nevertheless, PacWest established its standing as the holder of the note by attaching a copy of the note endorsed in blank to both the summons and complaint and the certificate of merit filed therewith (see Deutsche Bank Trust Co. Ams. v McDonald, 216 A.D.3d 735, 737 [2d Dept. 2023]; 31st St. Funding, LLC v Majostan Corp., 213 A.D.3d 886, 887 [2d Dept. 2023]; Bank of NY Mellon v McCaffrey, 207 A.D.3d 614, 616 [2d Dept. 2022]), and through the affidavit of Weber, who averred based upon his review of PacWest's business records, that the note was transferred to PacWest on or about October 26, 2011, more than 10 years prior to the commencement of this action, and remained in PacWest's possession after being transferred to it (see JPMorgan Chase Bank, N.A. v Rodriguez, 201 A.D.3d 903, 905 [2d Dept. 2022]; Nationstar Mtge. v Tabick, 193 A.D.3d 950, 951 [2d Dept. 2021]; U.S. Bank N.A. v Ehrenfeld, 144 A.D.3d 893, 894 [2d Dept. 2016]). In opposition, the defendants failed to raise a triable issue of fact (see HSBC Bank USA, N.A. v Blair-Walker, 202 A.D.3d 1065, 1067-1068 [2d Dept. 2022]; United States Bank Trust, N.A. v Mehl, 195 A.D.3d 1054, 1055 [2d Dept. 2021]).
Even if Weber's affidavit is insufficient to demonstrate that the plaintiff possessed the note at the time of the commencement of the action, "'[t]here is simply no requirement that an entity in possession of a negotiable instrument that has been endorsed in blank must establish how it came into possession of the instrument in order to be able to enforce it.'" (Citimortgage, Inc. v Doomes, 202 A.D.3d 752, 754 [2d Dept. 2022], quoting JPMorgan Chase Bank, N.A. v Weinberger, 142 A.D.3d 643, 645 [2d Dept. 2016]; see Federal Natl. Mtge. Assn. v Raja, 211 A.D.3d 692, 694 [2d Dept. 2022]).
In addition, PacWest established its prima facie entitlement to judgment as a matter of law by producing the underlying mortgage, the unpaid note, and evidence of the default. In opposition the defendants failed to raise a triable issue of fact (see Deutsche Bank Natl. Trust Co. v Kavoit, 220 A.D.3d 842, 843 [2d Dept. 2023]). Although the copy of the mortgage submitted by PacWest in support of its motion appears to be missing one page, the Court exercises its discretion under CPLR § 2001 to overlook this mistake and permit PacWest to substitute, nunc pro tunc, a complete copy of the mortgage, which was submitted in reply as exhibit 28 (see generally J.P. Morgan Mtge. Acquisition Corp. v. Tamaklo, 221 A.D.3d 873, 874-875 [2d Dept. 2023]). No substantial right of the defendants is prejudiced by the substitution of the complete copy of the mortgage under the circumstances of this case. In the defendants' response to PacWest's statement of undisputed facts, the defendants do not dispute that the copy of the mortgage attached as exhibit 8 to the Weber affidavit is genuine. In fact, the defendants indicated that it is undisputed that the mortgage encumbers the subject property, the mortgage was recorded in the Office of the Westchester County Clerk on July 10, 2006, the mortgage was given by the defendants as security for the repayment of the note in the original principal amount of $1,500,00 dated April 20, 2006, and the defendants defaulted on the loan by failing to make the monthly payment due on August 8, 2022.
The defendants' affirmative defenses based on PacWest's alleged failure to comply with RPAPL §§ 1303 and 1304 are dismissed. In the defendants' response to PacWest's statement of undisputed facts, the defendants indicated that it is undisputed that they were each served with the required 90-day notices under RPAPL § 1304, and that PacWest complied with RPAPL § 1303. Furthermore, and in any event, the single-sentence, bare assertion of the defendant Julio A. Salazar in his affidavit that a triable issue of fact exists "with respect to [PacWest's] compliance with notices" is insufficient to defeat PacWest's prima facie showing of compliance with RPAPL §§ 1303 and 1304 (see U.S. Bank Trust, N.A. v Chiramannil, 205 A.D.3d 966, 968 [2d Dept. 2022]).
NYSCEF Doc No 60 at ¶ 10
All remaining affirmative defenses and counterclaims raised in the answer and not addressed by the defendants in opposition to PacWest's motion are dismissed as abandoned (see Wells Fargo Bank, N.A. v Carrington, 221 A.D.3d 746, 749 [2d Dept. 2023]).
Accordingly, those branches of PacWest's motion which were for summary judgment on the complaint insofar as asserted against the defendants, striking the defendants' answer and affirmative defenses, dismissing the defendants' counterclaims, and for an order of reference are granted.
Finally, that branch of PacWest's motion which was to amend the caption to substitute BoC as the plaintiff in this action is granted based on undisputed evidence that BoC merged into PacWest after the commencement of this action, PacWest's name was changed to BoC, and BoC continues to possess the note, mortgage, and other loan documents executed by the defendants in favor of the original lender, America's Wholesale Lender (see CPLR 3025[b]; Bank of Am., N.A. v DeNardo, 151 A.D.3d 1008, 1009 [2d Dept. 2017]).
Accordingly, it is, ORDERED that those branches of PacWest's motion which were to amend the caption to substitute BoC as the plaintiff, for summary judgment on the complaint insofar as asserted against the defendants Julio A. Salazar, Jr. and Felicia Salazar, striking those defendants' answer and affirmative defenses, and dismissing those defendants' counterclaims is GRANTED; and it is further, ORDERED that the caption be amended to substitute Banc of California as the plaintiff; and it is further
ORDERED that the caption is amended to read as follows:
SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF WESTCHESTER
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BANC OF CALIFORNIA, Plaintiff, -against
JULIO A. SALAZAR, JR., FELICIA SALAZAR, WACHOVIA BANK, N.A., and "JOHN DOE #1" through "JOHN DOE #5" inclusive, the names of the five last name Defendants being fictitious, real names unknown to the Plaintiff, the parties intended being persons or corporations having an interest in, or tenants or persons in possession of, portions of the mortgaged premises described in the Complaint, Defendants.
INDEX NO.: 56766/2023
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and it is further, ORDERED that the branch of PacWest's motion which was for an order of reference is GRANTED; and it is further, ORDERED that __________________________________________________________, with an address of _______________________________________________, telephone number; _____________, is hereby appointed Referee to ascertain and compute the amount due to the plaintiff for principal, interest, and other disbursements on the note and mortgage sued upon which this action was brought to foreclose, and to examine and report whether or not the mortgaged premises can be sold in one parcel and that Referee make his/her report to the Court within sixty (60) days of this order and that the plaintiff shall move for judgment within thirty (30) days of the Referee's report, and it is further, ORDERED that pursuant to CPLR § 8003(a), the statutory fee of $350.00, and in the discretion of the Court, a fee of $750.00 upon sale of the property, shall be paid to the Referee for the computation of the amount due and upon the filing of his or her report, and the Referee shall not request or accept additional compensation for the computation unless it has been fixed by the Court in accordance with CPLR § 8003(b), and it is further, ORDERED that no hearing shall be required as the Referee is appointed to hear and report, which is a purely ministerial act; and it is further, ORDERED, that, if required, said Referee take testimony pursuant to RPAPL § 1321; and it is further
ORDERED that by accepting this appointment the said Referee certifies that he or she is in compliance with Part 36 of the Rules of the Chief Administrative Judge, including, but not limited to, 22 NYCRR 36.2(c) and 36.2(d), and if the referee is disqualified from receiving an appointment pursuant to the provisions of that Rule, the Referee shall immediately notify this Court, and it is further, ORDERED that the Referee is prohibited from accepting or retaining any funds for him/herself or paying funds to him/herself without compliance with Part 36 of the Rules of the Chief Administrative Judge; and it is further, ORDERED that plaintiff shall serve a copy of this Decision and Order with notice of entry upon all parties and persons entitled to notice, including the Referee appointed herein, within 10 days of the date of entry hereof. The Referee shall not proceed to take evidence as provided herein without proof of such service, which proof must accompany any application for final judgment of foreclosure and sale.
The foregoing constitutes the Decision and Order of this Court.