[*2]The following papers numbered 1 to 12 read herein:

Papers Numbered

Notice of Motion/Order to Show Cause/

Petition/Cross Motion and

Affidavits (Affirmations) Annexed1-67-9

Opposing Affidavits (Affirmations)

Reply Affidavits (Affirmations)10

Memoranda of Law11-12

In this action to foreclose a mortgage on commercial real property, plaintiff FTBK Investor II LLC, as Trustee for NY Brooklyn Investor II Trust 3 (plaintiff) moves for an order granting it: (1) summary judgment in its favor pursuant to CPLR 3212, (2) striking and dismissing the answer of defendants-mortgagors Mercy Holding LLC, Tiffany Holding LLC, and Leah Holding LLC (collectively, defendants) and entering a default judgment against non-appearing defendant El Brillante Restaurant, and (3) appointing a referee to compute the sums due and owing to it.^[FN1] Defendants cross-move for an order granting them: (1) leave to amend their answer, (2) summary judgment dismissing plaintiff's complaint for lack of standing, and (3) an award of the costs and disbursements related to this matter.

On October 7, 2004, defendants, as mortgagors, executed a Mortgage, Security Agreement, Assignment of Leases and Rents, and Fixture Filing (the mortgage) in favor of Washington Mutual Bank, F.A. (WaMu), as mortgagee, encumbering three apartment buildings located at 1408 Bushwick Avenue, 414 Melrose Street, and 145 Montrose Avenue a/k/a 159 Graham Avenue, in Brooklyn, New York (the properties). The mortgage secured a promissory note (the note), also executed by defendants on October 7, 2004, in the principal amount of $1,275,000. The mortgage was recorded with the Office of the City Register on January 4, 2005.

On September 25, 2008, the Office of Thrift Supervision closed WaMu and [*3]appointed the Federal Deposit Insurance Corporation (the FDIC) as the Receiver pursuant to section 11 (c) (2) (A) (ii) of the Federal Deposit Insurance Act (12 USC § 1821 [c] [2] [A] [ii]). On that same date, the bulk of WaMu's assets, including all loans and loan commitments of WaMu, were transferred to JP Morgan Chase Bank (Chase) pursuant to a Purchase and Assumption Agreement (the PAA) entered into between the FDIC as the Receiver, the FDIC in its corporate capacity, and Chase (see Dipaola v JPMorgan Chase Bank, 2011 WL 3501756, *3 [ND Cal, Aug. 10, 2011, No. C 11-2605 (SI)]). Section 11 (d) (2) (G) (i) (II) of the Federal Deposit Insurance Act authorized the FDIC, as the Receiver of WaMu, to "transfer any asset or liability" of WaMu "without any approval, assignment, or consent with respect to such transfer" (12 USC § 1821 [d] [2] [G] [i] [II]). Consistent with this statutory provision, the FDIC transferred all of WaMu's loans and loan commitments to Chase pursuant to the September 25, 2008 PAA.

Section 2.1 of the PAA provided that "[Chase] specifically assume[d] all mortgage servicing rights and obligations of [WaMu]." Section 3.1 of the PAA provided that "[Chase] specifically purchase[d] all mortgage servicing rights and obligations of [WaMu]." In addition, Robert C. Schoppe (Schoppe), the Receiver in Charge for the FDIC as the Receiver of WaMu, as an authorized representative of the FDIC, attests, in an affidavit by him annexed by plaintiff, that on September 25, 2008, Chase became the owner of the loans and loan commitments of WaMu by operation of law pursuant to the terms of the PAA and as authorized by section 11 (d) (2) (G) (i) (II) of the Federal Deposit Insurance Act (12 USC § 1821 [d] [2] [G] [i] [II]).

According to an affidavit by Lowell Bacchus (Bacchus), a Special Credits Asset Manager II for Chase, which is based upon his personal knowledge and his review of the business records of Chase, including the loan records relating to the loan to defendants, Chase acquired the note from the FDIC, acting as the Receiver for WaMu. Bacchus also annexes the note, which was subsequently formally endorsed via an allonge by Chase, acting as the attorney-in-fact for the FDIC, as the Receiver for WaMu, pursuant to a Limited Power of Attorney executed on August 29, 2012. The allonge states that it was executed on October 3, 2012 and effective as of September 25, 2008, the date that all of the mortgages then held by WaMu were transferred to Chase by operation of law under the PAA.

Bacchus, in his affidavit, further asserts that the assignment of the mortgage to Chase is evidenced by an Assignment of Security Instrument and Loan Documents, executed on October 3, 2012 and made effective as of September 25, 2008 (the WaMu Assignment). The WaMu Assignment states that "[t]his Assignment is intended to further memorialize the transfer that occurred by operation of law on September 25, 2008 as authorized by section 11 (d) (2) (G) (i) (II) of the Federal Deposit Insurance Act, 12 USC § 1821 (d) (2) (G) (i) (II)." The WaMu Assignment was recorded with the Office of the City Register on December 18, 2012.

Section 2 of the note, captioned "Monthly Payments," stated that defendants were [*4]required to make monthly payments of principal and interest to the holder of the note beginning on December 1, 2004 in the amount of $6,953.98 up to the initial payment adjustment date of December 1, 2011. Section 9 of the note, captioned "Default; Remedies," provided that if a default were made "in the payment of any amount payable [under the note] when due or in the keeping of any covenant of the Security Documents, then, at the option of [the] holder, the entire indebtedness evidenced [t]hereby [would] become immediately due and payable." It further provided that "[u]pon default, and without notice or demand, all amounts owed under this [n]ote, including all accrued by unpaid interest," would bear interest at a default rate until the default was cured.

Section 5 of the mortgage, captioned "Default," in subsection 5.1, defined an "Event of Default," as occurring when the mortgagor "fail[ed] to pay when due any indebtedness secured [t]hereby." Section 5.3 of the mortgage, captioned "Remedies on Default," provided that "[u]pon the occurrence of any Event of Default, all sums secured [t]hereby [would] become immediately due and payable, without notice or demand," and that the mortgagee may foreclose the mortgage upon the properties.

Bacchus, who, in his affidavit, attests that he reviewed the loan records for defendants, including computerized records indicating the sums loaned to, and the payments made by defendants, asserts that under the terms of the note, defendants defaulted by failing to tender the monthly payment due on account of the note on December 1, 2010, and that they failed to thereafter make any subsequent payments. Bacchus has also annexed a copy of the payment history of the loan, which indicates defendants' default in payment.

Although not required pursuant to the terms of the note and mortgage, Chase's counsel, via certified mail return receipt requested and first class mail, sent a letter, dated April 21, 2011, to defendants, advising them that they had failed to make the monthly payments due on the loan since the payment due on December 1, 2010, and as a result of their failure to cure the default, Chase was accelerating the indebtedness evidenced by the loan and declaring the entire principal amount of the loan, together with all accrued and unpaid interest and additional interest and all other sums and indebtedness due and payable, to be immediately due and payable.

On May 18, 2011, Chase filed this action against defendants, seeking to foreclose the mortgage. It also filed a notice of pendency on May 24, 2011. All of the named defendants were served with the summons and complaint. On May 26, 2011, defendant New York City Department of Finance interposed a notice of appearance and waiver in foreclosure, demanding service of all papers. On July 11, 2011, the City of New York, on behalf of defendant New York City Department of Housing Preservation and Development, interposed a notice of appearance and claim for surplus monies waiver. Defendants New York State Department of Finance and New York City Environmental Control Board failed to interpose an answer or otherwise respond to the complaint, and they have been held in default by a prior order of the court. El Brillante Restaurant has [*5]failed to answer or otherwise respond to the complaint and its time to do so has not been extended by stipulation or by court order.

Defendants interposed an answer, dated July 12, 2011, which contains general denials and seven affirmative defenses. Defendants' first affirmative defense alleged that plaintiff fails to state a cause of action upon which relief may be granted. Defendants' second affirmative defense alleged that plaintiff is not entitled to any relief based on plaintiff's allegedly unclean hands, claiming that plaintiff "wrongfully coaxed and induced [them] not to worry about payment on the loan while discussing a potential modification, and then after delaying a response on such request, commenced this action." Defendants' third affirmative defense alleged that "there is no and has never been a default in payment with respect to the loan transaction," and that the default claimed by plaintiff "was wrongfully induced" by plaintiff. Defendants' fourth affirmative defense alleged that there "is no current non-monetary default with respect to the loan transaction." Defendants' fifth affirmative defense alleged that plaintiff "failed to properly notice [them] with respect to any alleged defaults claimed and provide a cure period." Defendants' sixth affirmative defense alleged that they were thereby "giving notice" that they intended to rely upon any other defense that may become available or appear during the proceedings in this case and that they were reserving their right to amend their answer to assert any such defense. Defendants' seventh affirmative defense alleged that they were "not knowingly or intentionally waiving any affirmative defense" and that they were "reserv[ing] the right to amend th[eir a]nswer to specifically plead any additional matters constituting an avoidance of affirmative defense which discovery in this matter may show to be applicable." This original July 12, 2011 answer by defendants did not contain any affirmative defense alleging that plaintiff or Chase lacked standing with respect to the commencement of this action.

On August 19, 2011, the mortgage was assigned and the note was endorsed by Chase to NY Brooklyn Investor II, LLC (NY Brooklyn). Jake Bade (Bade), who is the Special Credits Senior Asset Manager and Head of Commercial Term Lending Note Sales for the Commercial Bank Division of Chase, in a sworn affidavit by him, attests, based upon his personal knowledge and his review of Chase's business records, including Chase's records relating to defendants' loan, that Chase assigned the note and mortgage to NY Brooklyn. Bade annexes an Assignment of Mortgage from Chase to NY Brooklyn, effective as of August 19, 2011, and executed on September 8, 2011 by an authorized officer of Chase. A copy of the allonge dated August 19, 2011, evidencing the transfer of the note by Chase to NY Brooklyn is also annexed. On September 12, 2011, as evidenced by an Assignment of Mortgage, the mortgage was further assigned by NY Brooklyn to plaintiff, and, as evidenced by an allonge dated September 12, 2011, the note was further endorsed over to plaintiff. Both of the Assignments of Mortgage were recorded in the Office of the City Register on October 11, 2011. Upon a motion by plaintiff, the court, on November 9, 2011 amended the caption in this action to substitute plaintiff, as the [*6]plaintiff herein, in place and in stead of Chase.

On November 29, 2011, plaintiff moved for summary judgment and other relief, seeking to foreclose the mortgage based upon defendants' default in making payments pursuant to the note. In support of its motion, plaintiff provided an affidavit by Brian Schatz (Schatz), its managing member, in which he stated that he possessed personal knowledge of the facts of this case by virtue of his review of the files maintained by plaintiff and plaintiff's predecessors-in-interest with respect to the loan. In opposition to the motion, defendants argued that summary judgment could not be granted because plaintiff failed to provide proof that the mortgage and the note were transferred from the FDIC, as the Receiver for WaMu, to Chase, so as to render the eventual transfer to plaintiff valid, and, that it, therefore, failed to demonstrate that it had standing to foreclose the mortgage.

The court, in its decision and order dated July 24, 2012, found that, contrary to an argument raised by defendants, the note did not have to be individually negotiated and physically indorsed to Chase through an allonge pursuant to UCC 3-202 because the FDIC had the authority to transfer any and all of WaMu's loans with or without formal assignment pursuant to 12 USC § 1821 (d) (2) (G) (i) (II). However, since the possibility existed that the mortgage could have been transferred to another lender prior to Chase's acquisition of WaMu's assets, the court determined that plaintiff was required to provide proof of its ownership of the note and mortgage beyond the PAA alone.

Specifically, the court, in its July 24, 2012 decision and order, held that plaintiff was required to provide a competent affidavit stating that WaMu was still the holder of the note at the time of the transfer to Chase under the PAA and that Chase received the note and mortgage, pursuant to the PAA, as one of the many loans then held by WaMu. The court found that plaintiff's submission of Schatz's affidavit was insufficient to constitute such proof because Schatz's only involvement with the loan began after the transfer of the note and mortgage from Chase to NY Brooklyn and later to plaintiff, after defendants had already allegedly defaulted on the note and Chase had already filed this action. It ruled that Schatz, therefore, lacked personal knowledge of the record-keeping procedures of its predecessors-in-interest and the facts of the case prior to the transfer of the note and mortgage to NY Brooklyn, and, as a result, he could not testify that Chase received the note and mortgage pursuant to the PAA or that WaMu was still the holder of the note at the time of the transfer to Chase. It held that plaintiff, thus, had not provided proof of its standing to foreclose on the mortgage.

The court, in its July 24, 2012 decision and order, further found that due to the fact that Schatz had no involvement with the loan and mortgage at the time of defendants' purported default, he lacked personal knowledge of such default, and that, consequently, plaintiff failed to meet its burden to demonstrate defendants' default on the note. The court, therefore, denied plaintiff's motion for summary judgment, without prejudice, permitting it to renew its motion upon the submission of proper evidentiary proof to [*7]satisfy its burden of showing that it had standing and that defendants, in fact, were in default on the loan.

Thereafter, plaintiff subpoenaed Chase for documents and information to enable it to satisfy its evidentiary burden as set forth by the court in its July 24, 2012 decision and order. As a result, plaintiff obtained Bacchus' affidavit and Bade's affidavit, who, as discussed above, are representatives of Chase and have personal knowledge of Chase's business records, including the loan. On May 10, 2013, plaintiff filed its instant motion for summary judgment, submitting the sworn affidavits of Bacchus and Bade. Plaintiff has additionally submitted the sworn affidavit of Josh Zegen (Zegen), its managing member, who has personal knowledge of the business records of NY Brooklyn and plaintiff with respect to the loan. Plaintiff has also submitted relevant documents, including the mortgage, the note, and the allonges and assignments discussed above. In response, defendants, on July 24, 2013, filed their cross motion to amend their answer and for summary judgment dismissing plaintiff's complaint against them for lack of standing. Following the onset of plaintiff's motion and defendants' cross motion, negotiations continued between the parties, which was followed by mediation. However, on November 13, 2013, mediation proved to be unsuccessful, and plaintiff's motion and defendants' cross motion, therefore, must now be determined by the court.

In support of its motion, plaintiff has submitted proof of the existence of the mortgage and underlying note and of a default by defendants. This constitutes a prima facie showing of its entitlement to summary judgment in this foreclosure action (see JP Morgan Chase Bank, N.A. v Shapiro, 104 AD3d 411, 412 [1st Dept 2013] GRP Loan, LLC v Taylor, 95 AD3d 1172, 1173-1174 [2d Dept 2012] Deutsche Bank Natl. Trust Co. v Posner, 89 AD3d 674, 674-675 [2d Dept 2011] Horizon Bancorp v Pompee, 82 AD3d 935, 936 [2d Dept 2011] Wells Fargo Bank, N.A. v Cohen, 80 AD3d 753, 755 [2d Dept 2011]).

It, therefore, became incumbent upon defendants to submit proof sufficient to raise a genuine question of fact rebutting plaintiff's prima facie showing or supporting any of their affirmative defenses (see Grogg v South Rd. Assoc., L.P., 74 AD3d 1021, 1021 [2d Dept 2010] Washington Mut. Bank, F.A. v O'Connor, 63 AD3d 832, 833 [2d Dept 2009]). A defense not properly stated or one which has no merit may be the target of a motion for summary judgment by a plaintiff seeking dismissal of any affirmative defense after the joinder of issue. In order for a defendant to successfully oppose such a motion, the defendant must show his or her possession of a bona fide defense, i.e., one having a plausible ground or basis which is fairly arguable and of substantial character (see Feinstein v Levy, 121 AD2d 499, 500 [2d Dept 1986]).

Plaintiff argues that the affirmative defenses raised in defendants' original answer fail to constitute any genuine defense and do not raise any triable issue of fact sufficient to defeat its motion. Defendants assert that they have defenses to plaintiff's action, and [*8]they have now annexed a proposed amended answer, which is the subject of their cross motion for leave to amend. Defendants' proposed amended answer, dated July 17, 2013, contains general denials, and seeks to assert 11 affirmative defenses. Defendants, in their proposed amended answer, retain the same first, third, fourth, and fifth affirmative defenses as were alleged in their original July 12, 2011 answer, and they have renumbered their sixth and seventh affirmative defenses and set them forth as their tenth and eleventh affirmative defenses. Defendants have expanded upon their original second affirmative defense, and have added new sixth, seventh, eighth and ninth affirmative defenses.

In examining defendants' proposed amended answer, the court notes that although pursuant to CPLR 3025 (b), leave to amend a pleading should generally be freely granted absent prejudice to the opposing party (see CPLR 3025 [b] Edenwald Contr. Co. v City of New York, 60 NY2d 957, 959 [1983] Charleson v City of Long Beach, 297 AD2d 777, 778 [2002]), such leave should be denied where the proposed amendment is palpably insufficient as a matter of law or is totally devoid of merit (see Mortgage Elec. Registration Sys., Inc. v Reid, 85 AD3d 880, 881 [2d Dept 2011] Scofield v DeGroodt, 54 AD3d 1017, 1018 [2d Dept 2008] Lucido v Mancuso, 49 AD3d 220, 229 [2d Dept 2008], appeal withdrawn 12 NY3d 804 [2009] Buckholz v Maple Garden Apts., LLC, 38 AD3d 584, 585 [2d Dept 2007] Morton v Brookhaven Mem. Hosp., 32 AD3d 381, 381 [2d Dept 2006] Ruddock v Boland Rentals, 5 AD3d 368, 370 [2d Dept 2004] AYW Networks v Teleport Communications Group, 309 AD2d 724, 725 [2d Dept 2003], lv dismissed 1 NY3d 566 [2003]). Plaintiff contends that each of defendants' affirmative defenses which they seek to add to their answer by their cross motion to amend it, are palpably insufficient as a matter of law and totally devoid of merit.

Defendants' proposed answer, similarly to its original answer, contains bare denials, which mostly allege a lack of knowledge or information sufficient to form a belief with respect to the truth of plaintiff's allegations. Such general denials in an answer are "insufficient to raise a triable issue of fact" (Stern v Stern, 87 AD2d 887, 887 [2d Dept 1982]).

Defendants' first affirmative defense alleges that plaintiff fails to state a cause of action upon which relief can be granted. Plaintiff's complaint, however, alleges a claim for mortgage foreclosure based upon the mortgage documents and defendants' default. Thus, defendants' first affirmative defense is entirely unsupported and refuted, and must be dismissed.

Defendants' proposed second affirmative defense alleges that plaintiff is not entitled to any equitable relief in this action based on its own unclean hands and the unclean hands of its predecessor-in-interest, Chase. Specifically, defendants, in such second affirmative defense, set forth that Chase allegedly purchased the note and mortgage from the FDIC, which had taken over, as the Receiver, the operations of WaMu, for pennies on the dollar and did not obtain any allonge of the note or assignment of the mortgage from the FDIC. They allege that Chase began collecting mortgage [*9]payments from them in 2010, and invited them to take part in their loan modification process, in which Chase collected "voluminous amounts of financial information on the[m] and their operations." They further allege that Chase "dragged the loan modification process on for months and advised [them] not to worry about making payments in the interim," and "induced [them] to stop making payments in order to make their modification request stronger." They assert that Chase then denied the loan modification and immediately commenced this foreclosure action, and, "armed with" their financial information, quickly sold the note and mortgage.

Defendants, in their proposed second affirmative defense, claim that Chase did not have legal title when it commenced this action or when it transferred the note and mortgage to plaintiff, but plaintiff nevertheless continued to prosecute this action. They further claim that plaintiff and Chase "conspired to attempt to paper' the various transfers" after the FDIC took over the note and mortgage from WaMu "with back-dated and improper documents," in an attempt to give the appearance of standing at the time of the commencement of this action, and that these allegedly improper actions bar plaintiff from equitable relief.

In support of their second affirmative defense, Emmanuel Ku (Ku), the managing member of defendants, in a sworn affidavit, asserts that this defense is that Chase "caused the alleged default by inducing . . . [d]efendants into a loan modification process through which they encouraged non-payment of amounts due." Ku claims that in addition to the subject loan, Chase was allegedly holding mortgages on four other properties owned by entities of which he is the managing member, and that each of these entities, through Chase's inducement, went through the loan modification process. He asserts that after supplying Chase with required financial backup for the loan modification with respect to the subject loan and these four other loans and waiting months for Chase to review and obtain appraisals, while being encouraged not to make any payments, Chase denied all of the requests by letters dated April 15, 2011.

Ku has annexed the letter with respect to the instant loan, dated April 15, 2011, from Randy Duran (Duran), Chase's vice-president of Special Credits Group, which states that Chase had received and evaluated his request for a loan modification for the loan, and that the request to modify the terms of the loan was carefully considered, and it was unable to accommodate the modification request. Ku states that he, thereafter, met with Duran to obtain an explanation, and was advised that the loan modification was denied as to some of his loans because he did not have equity in the property and that the loan modification was denied as to his other loans because he had equity in the property. He claims that only one month later, on May 12, 2011, Chase commenced this foreclosure action, and, in August 2011, Chase sold the loan. He contends that Chase never intended to modify the loans, but only invited defendants into the modification process to induce the default and gather all of the financial records related to the property to package these loans for sale. [*10]

However, aside from Ku's self-serving conclusory statement in his affidavit that he was encouraged and induced by Chase not to make payments, defendants fail to offer a single piece of documentary evidence to support this claim. Defendants have not submitted any writing in which Chase directed them not to make any payments. Defendants offer only vague, conclusory, and unsubstantiated allegations regarding the purported oral assurances that the loan would be modified. Notably, defendants also do not claim that they had the funds to make the required payments when they defaulted on December 1, 2010 or at any time thereafter.

Moreover, paragraph 18.3 of the mortgage expressly provided that "[t]he Loan Documents may not be amended or modified except by means of a written document executed by the party sought to be charged with such amendment or modification." Thus, defendants could not have reasonably relied on any oral statement by someone at Chase not to make payments since the requirement to make mortgage payments could not be modified without a writing pursuant to the terms of the mortgage which explicitly prohibited any oral modification. Indeed, the parol evidence rule bars defendants from proffering oral evidence to alter the express terms of the loan documents (see European Am. Bank v Village Sq. Assoc. Ltd. Partnership, 212 AD2d 754, 755 [2d Dept 1995]).

In addition, paragraph 5.6 of the mortgage provided that "[t]he failure on the part of Mortgagee to promptly enforce any right hereunder shall not operate as a waiver of such right and the waiver of any default shall not constitute a waiver of any subsequent or other default." Thus, the mere fact that Chase offered defendants the option of applying for a loan modification which it later denied, did not operate to waive its right to declare a default based upon defendants' undisputed failure to make the required payments under the note and mortgage. Chase was not required to grant defendants a loan modification. Furthermore, defendants do not claim that they attempted to tender any payment after their loan modification request was denied on April 15, 2011. Thus, dismissal of defendants' second affirmative defense must be granted and leave to further amend this defense to add the proposed additional allegations must be denied as the proposed additional allegations are patently lacking in merit and insufficient to defeat summary judgment.

Defendants' third affirmative defense, which alleges that there has never been a default in payment, is not supported by any facts showing any payment of the amounts due since defendants' default on December 1, 2010. In the absence of any evidentiary proof of payment in response to plaintiff's prima facie showing of a default, no triable issue of fact is raised with respect to defendants' default, and this affirmative defense must be stricken and cannot form a basis to deny summary judgment to plaintiff.

Defendants' fourth affirmative defense, which alleges that there is no non-monetary default with respect to the loan transaction, is irrelevant to this action since plaintiff does not seek to foreclose the mortgage due to a non-monetary default. As such, [*11]it is insufficient to defeat plaintiff's motion and must be stricken.

Defendants' fifth affirmative defense, which alleges that plaintiff failed to properly notice them with respect to any alleged default claimed and provide a cure period, fails to constitute a viable defense to this action since neither the note nor the mortgage included the right to a notice to cure. As set forth above, section 9 of the note provided that if there was a default in payment of any amount payable when due, the entire indebtedness would become immediately due and payable, and section 5.3 of the mortgage provided that upon the occurrence of any event of default, all sums secured thereby would become immediately due and payable "without notice or demand." Furthermore (as discussed above), a notice of acceleration was sent on April 21, 2011, and defendants do not claim that they did not receive this letter. Thus, defendants' fifth affirmative defense must be stricken and cannot serve to defeat plaintiff's motion.

Defendants' proposed sixth affirmative defense alleges that to the extent that plaintiff is the holder of the subject instruments, it took subject to their defenses and is not a holder in due course. However, defendants fail to state any viable defenses and, thus, leave to assert this defense must be denied.

Defendants' proposed seventh affirmative defense alleges that plaintiff cannot maintain this action because neither it, nor its alleged predecessor-in-interest, held proper title to the subject instruments as of the commencement date of this action and, as a result, it lacks standing to prosecute the claims. Defendant's proposed eighth affirmative defense alleges that the subject instruments were never transferred to plaintiff and, therefore, plaintiff lacks standing to prosecute this action. Defendants, in their cross motion, also seek summary judgment based upon their proposed seventh and eighth affirmative defenses that plaintiff lacks standing.

As discussed above, defendants did not assert any defense of standing in their original answer. Significantly, defendants have acknowledged Chase's ownership of the loan by the fact that they made debt service payments directly to Chase for in excess of two years after Chase acquired the loan, and, by defendants' own admission, they even sought a loan modification from Chase prior to the commencement of this action. However, although defendants waived the affirmative defense of standing by virtue of their failure to raise it as an affirmative defense in their original answer (see CPLR 3211[e]), a defense of lack of standing can nevertheless be interposed by leave of court, pursuant to CPLR 3025 (b), "provided that the amendment is not palpably insufficient as a matter of law, does not prejudice or surprise the opposing party, and is not patently devoid of merit" (HSBC Bank v Picarelli, 110 AD3d 1031, 1031 [2d Dept 2013]).

Defendants have offered no excuse or explanation for their two-year delay from the time of their original answer in seeking to amend their answer to assert the defense of lack of standing, during which time the loan was acquired by plaintiff, which claims to have relied upon the original answer in acquiring such loan. Plaintiff thus claims to be prejudiced by this delay on the part of defendants in raising this defense. It is noted, [*12]moreover, that the court previously expressly addressed the standing issue in its decision of July 24, 2012, in response to defendants' opposition to plaintiff's prior motion for judgment. Defendants' delay in amending or moving to dismiss is, therefore, inexcusable.

As to the merits of their proposed lack of standing defense, defendants, in support of this defense, claim that there is no evidence that Chase owned or physically held or possessed the note and mortgage as of the date that this action was commenced. Defendants assert that while Bacchus, in his affidavit, attested that Chase acquired the note from the FDIC, acting as the Receiver for WaMu, he does not state when delivery of the note and mortgage was effectuated from the FDIC to Chase. Defendants contend that the evidence that the allonge and the WaMu Assignment were executed by Chase via the Limited Power of Attorney, on October 3, 2012, after Chase commenced this action on May 18, 2011, indicates that Chase did not have physical possession of the note and mortgage prior to the commencement of this action and that Chase, therefore, lacked standing to commence this action against them. Defendants note that the WaMu Assignment and the allonge were stated to be "effective as of September 25, 2008," the date of the transfer of WaMu's loans to Chase pursuant to the PAA. Defendants argue that the Limited Power of Attorney could only have prospective application and could not be used by Chase in executing the allonge and the WaMu Assignment to give these documents retroactive effect.

Defendants' argument, though, is unavailing because the PAA was the instrument by which the loan was assigned. It is well-settled that Chase, pursuant to the PAA, became the owner of all of WaMu's loans and loan commitments by operation of law, and that Chase is entitled to enforce the acquired WaMu loans and has standing to foreclose on mortgages formerly held by WaMu (see JP Morgan Chase Bank, N.A. v Shapiro, 104 AD3d 411, 412 [1st Dept 2013] JP Morgan Chase Bank N.A. v Miodownik, 91 AD3d 546, 547 [1st Dept 2012], lv dismissed 19 NY3d 1017 [2012]). Thus, Chase, by virtue of the PAA, became the assignee of the note and the mortgage on September 25, 2008 (see JP Morgan Chase Bank, N.A., 104 AD3d at 412; JP Morgan Chase Bank N.A., 91 AD3d at 547).

While Chase, using its Limited Power of Attorney to execute the allonge and the WaMu Assignment, documented the earlier transfer of the loan by operation of law pursuant to the PAA, such a retroactive documentation was unnecessary since Chase's rights in the loan were already conferred by the PAA. "[I]t is well established that the loan documents were not required to be individually negotiated or assigned since the FDIC had the authority to transfer any and all of WaMu's loans with or without formal assignment pursuant to 12 USC § 1821 (d) (2) (G) (i) (II) and federal law and regulations preempt state law requiring individual negotiation, which would constitute an onerous burden not contemplated by federal law'" (Beka Realty LLC, 2013 NY Slip Op 51672[U], *5, quoting JP Morgan Chase Bank, N.A. v 1770 Realty Corp., Sup Ct, Kings County, Jan. 29, 2010, Gerges, J., index No. 7655/09; see also FTBK Investor II LLC v Joshua [*13]Mgmt. LLC, Sup Ct, NY County, Feb. 1, 2013, Wooten, J., index No. 810164/11 [agreeing with the plaintiff-mortgagee that Chase's prior ownership of the notes and mortgages obtained from WaMu pursuant to the PAA can be proven without having to show that the loan documents were individually negotiated and assigned] FTBK Inv. II LLC v Mercy Holding LLC, 36 Misc 3d 1219[A], 2012 NY Slip Op 51401[U], *6 [Sup Ct, Kings County 2012] [holding that the defendants were incorrect in their assertion that the note had to have been individually negotiated and physically indorsed to Chase through an allonge pursuant to UCC 3-202] JP Morgan Chase Bank, N.A. v 334 Marcus Garvey Boulevard Corp., Sup Ct, Kings County, Dec. 5, 2011, Rosenberg, J., index No. 26152/09 [holding that a valid transfer from the FDIC to Chase of the assets of WaMu, as a failed bank, occurs even without a formal assignment instrument] Jericho Assets Corp. v RRJ 216 Corp., Sup Ct, Nassau County, Sept. 25, 2012, Murphy, J., index No. 17699/09 [holding that "the FDIC had authority to transfer all assets of WaMu to Chase without individually negotiating or physically endorsing each note"]).The subsequent WaMu Assignment and allonge were merely provided as a means to document and memorialize the earlier September 25, 2008 transfer and assignment to Chase under the PAA.

The Limited Power of Attorney, executed on August 29, 2012, expressly provided that the FDIC "hereby appoints . . . Chase . . ., as represented by its duly appointed officers, to act as Attorney-in-Fact of the FDIC as Receiver of WaMu," and that the FDIC grants to Chase the authority "[t]o execute, acknowledge, and deliver on behalf of the Receiver, all instruments of transfer and conveyance, including but not limited to . . . assignments . . . and transfers, appropriately completed, with all necessary endorsements, acknowledgments, affidavits, and supporting documents as may be necessary or appropriate to evidence the sale or transfer of any asset of [WaMu], including all loans formerly held by [WaMu], to Chase . . . pursuant to th[e PAA], dated as of September 25, 2008 among the FDIC in its corporate capacity, the FDIC as Receiver, and Chase" (emphasis added).

Defendants further argue that the assignment of the note and mortgage could not occur by operation of law because paragraph 9.2 of the PAA stated that the FDIC, as the Receiver, and Chase, as the Assuming Bank, "each agree, at any time, and from time to time, upon the request of any party hereto, to execute and deliver such additional instruments and documents of conveyance as shall be reasonably necessary to vest in the appropriate party its full legal or equitable title in and to the property transferred pursuant to this Agreement," and that Chase "shall prepare such instruments and documents of conveyance . . . as shall be necessary to vest title to the Assets in [it]." They argue that this shows that Chase was not fully vested with title to the loan by operation of law.

This argument is rejected. This paragraph of the PAA merely authorizes Chase to prepare any necessary documents of conveyance. It specifically provides that "the property," i.e., WaMu's loans, were "transferred pursuant to th[e PAA]." The Limited Power of Attorney evidences the implementation of this intent. [*14]

Thus, the court finds that the affidavits submitted adequately establish that the loan was assigned to Chase well prior to the commencement of this action. Consequently, defendants' seventh and eighth proposed affirmative defenses of lack of standing lack merit and do not provide a basis to defeat plaintiff's motion. Additionally, defendants' cross motion, insofar as it seeks summary judgment dismissing plaintiff's complaint based upon their contention that plaintiff lacks standing, must be denied (see JP Morgan Chase Bank N.A., 91 AD3d at 547).

Defendants' proposed ninth affirmative defense alleges that plaintiff is not entitled to any relief because its alleged purchase of Chase's claim against them is champertous and in violation of Judiciary Law § 489. Judiciary Law § 489 "prohibits a corporation or collection agency from buying or taking an assignment of a bond, promissory note, bill of exchange, book debt, or other thing in action, or any claim or demand, with the intent and for the purpose of bringing an action or proceeding thereon."

However, in order to constitute the offense of champerty, "the primary purpose of the purchase must be to enable [the plaintiff] to bring a suit, and the intent to bring a suit must not be merely incidental and contingent" (Limpar Realty Corp. v Uswiss Realty Holding, 112 AD2d 834, 836 [1st Dept 1985] [internal quotation marks omitted]). There is no merit to a claim of champerty under Judiciary Law § 489 where a mortgage loan has already fallen into default and has been accelerated before its assignment to the plaintiff (see BF Holdings I v South Oak Holding, 251 AD2d 1, 1 [1st Dept 1998] Grid Realty Corp. v Gialousakis, 129 AD2d 768, 768 [2d Dept 1987] Limpar Realty Corp., 112 AD2d at 836). Here, defendants had already defaulted on the mortgage and Chase had already commenced this action before the loan was assigned to plaintiff. Thus, there is no basis for a champerty defense. Consequently, defendants' proposed ninth affirmative defense is patently lacking in merit and leave to assert it must be denied.

Defendants' tenth and eleventh affirmative defenses in their proposed amended answer (which were alleged as defendants' sixth and seventh affirmative defenses in their original answer) attempt to reserve their rights to amend their answer and defenses. Such a reservation does not constitute an affirmative defense. A defense must be actually alleged in the answer and cannot be reserved for the future. Even if a defendant alleges, as defendants have done, that it does not intend to waive future defenses, if such defenses are not actually alleged in the answer which is interposed, they are waived, and may only be added, by leave of the court, upon the granting of a motion to amend made pursuant to CPLR 3025 (b). Thus, these affirmative defenses fail to constitute any genuine defense and must be stricken.

Consequently, inasmuch as all of the affirmative defense set forth in defendants' proposed amended answer are patently lacking in merit, defendants' cross motion seeking leave to amend their answer to assert these defenses must be denied (see Mortgage Elec. Registration Sys., Inc., 85 AD3d at 881). Furthermore, since the court finds that plaintiff, by its submissions, has established its prima facie entitlement to summary judgment, and [*15]defendants have failed to raise a triable issue of fact as to any defense sufficient to defeat the motion for summary judgment, plaintiff's motion for summary judgment must be granted and the affirmative defenses contained in defendants' answer must be stricken and dismissed (see JP Morgan Chase Bank, N.A., 104 AD3d at 412; JP Morgan Chase Bank N.A., 91 AD3d at 547).

Accordingly, plaintiff's motion for summary judgment in its favor, striking and dismissing defendants' answer, and appointing a referee to compute the amounts due under the mortgage to plaintiff, is granted. Since plaintiff has already submitted a proposed order for the appointment of a referee in this mortgage foreclosure action, such order (which is annexed to its motion) will be signed by the court, and a referee will be selected from the list established by the Chief Administrator of the Courts pursuant to the Rules of the Chief Judge (22 NYCRR) Part 36. Plaintiff's motion, insofar as it seeks a default judgment against El Brillante Restaurant, which has not answered or appeared herein, is also granted. Defendants' cross motion for leave to amend their answer and for summary judgment dismissing plaintiff's complaint for lack of standing, plus an award of costs and disbursements, is denied in its entirety.

This constitutes the decision and order of the court.

E N T E R,

J. S. C.