[*1]
Deutsche Bank Natl. Trust Co. v Bess
2015 NY Slip Op 50551(U) [47 Misc 3d 1211(A)]
Decided on April 6, 2015
Supreme Court, Queens County
McDonald, J.
Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431.
This opinion is uncorrected and will not be published in the printed Official Reports.


Decided on April 6, 2015
Supreme Court, Queens County


Deutsche Bank National Trust Company, AS INDENTURE TRUSTEE, ON BEHALF OF THE HOLDERS OF THE ACCREDITED MORTGAGE LOAN TRUST 2006-2 ASSET BACKED NOTES, Plaintiff,

against

Liza Bess, if living, or if either or all be dead, their wives, husbands, heirs-at-law, next of kin, distributees, executors, administrators, assignees, lienors and generally all persons having or claiming under, by or through said LIZA BESS, by purchase, inheritance, lien or otherwise, of any right, title or interest in and to the premises described in the complaint herein, and the respective husbands, wives, widow or widowers of them, if any, all of whose names are unknown to plaintiff; NEW YORK CITY ENVIRONMENTAL CONTROL BOARD; NEW YORK CITY PARKING VIOLATIONS BUREAU; NEW YORK CITY TRANSIT ADJUDICATION BUREAU; STATE OF NEW YORK; UNITED STATES OF AMERICA; "JOHN DOES" and "JANE DOES," said names being fictitious, parties intended being possible tenants or occupants of premises, and corporations, other entities or persons who claim, or may claim, a lien the premises, Defendants.




13115/2011
Robert J. McDonald, J.

In this mortgage foreclosure action, plaintiff moves for an order granting a default judgment against all non-answering defendants including Liza Bess; appointing a referee to compute the sum due and owing to plaintiff; and amending the caption.



Defendant, Liza Bess, opposes the motion and cross-moves for an order relieving Ned Kassman, Esq. as Guardian Ad Litem over defendant Liza Bess; for leave to serve an amended answer to assert various affirmative defenses including lack of standing and violation of RPAPL §§ 1301, 1302, 1303, 1304, 1305 and 1306; for an order dismissing the action against defendant Liza Bess for lack of standing and failure to properly serve a 90 day pre-foreclosure notice pursuant to RPAPL § 1304.



This foreclosure action pertains to the property located at 1516 Dunbar Street, Far Rockaway, New York, 11691. Based upon the record before this court, the defendant, Liza Bess, entered into a "New York Balloon Note" with Accredited Home Lenders Inc. on June 23, 2006 in the original principal amount of $375,000.00. The indorsed note, made payable in blank, contains an allonge signed by Accredited Home Lenders Inc. The Note was secured by a mortgage signed by Liza Bess. The mortgage was assigned by Accredited Home Lenders, Inc to plaintiff Deutsche Bank National Trust Company by assignment dated March 10, 2011 and recorded on November 16, 2011. The plaintiff asserts that defendant defaulted [*2]on the mortgage when she failed to make her monthly mortgage payments beginning February 1, 2010.



The plaintiff subsequently accelerated payment of the defendant's note and mortgage and brought an action to foreclose its mortgage by filing a lis pendens and summons and complaint on June 1, 2011. A Supplemental Summons and Amended Complaint were filed with the Queens County Clerk on July 26, 2012. The plaintiff submits affidavits of service on all of the named defendants.



By order dated July 3, 2012, this Court granted plaintiff leave to serve defendant Liza Bess by publication and appointed Ned Kassman, Esq. as Guardian Ad Litem. The plaintiff filed proof of service by publication dated August 24, 2012. Mr. Kassman filed an answer and a report stating that he examined the various mortgage instruments and he is satisfied from his review of the records that the defendant failed to pay plaintiff the monthly installments of principal and interest and that the defendant is in default. He states that he believes the plaintiff is entitled to bring the within foreclosure action and that Liza Bess has no defense thereto. He states he has no objection to the appointment of a referee to compute the amounts due and owing and to entry of a Judgment of Foreclosure and Sale.



In support of the motion for summary judgment, the plaintiff submits the affirmation of counsel, Anthony Pitnell, Esq. the affidavit of Jennifer L Hoisington, a Document Control Officer for Select Portfolio Servicing Inc., Attorney in Fact for Deutsche Bank National Trust Company; a copy of the mortgage and New York Balloon Note with attached allonge; copies of the affidavits of service on all the defendants; a copy of the pleadings including the report of Guardian Ad Litem, Ned Kassman, Esq; a copy of the assignment of the mortgage from Accredited Mortgage Lenders to plaintiff; a copy of the 90 day notice of intent to foreclose; a copy of the RPAPL § 1304 notices sent to the defendant with the summons and complaint; and a copy of the attorney affidavit pursuant to the Administrative Order of the Chief Administrative Judge under AO/431/11, executed by Virginia C. Grapensteter, Esq.



In her affidavit, dated June 12, 2014, Jennifer L. Hoisington, Document Control Officer of Select Portfolio Servicing, states that based upon her review of the records the defendant breached her obligation by failing to tender the installment due and payable on February 1, 2010 and by failing to tender subsequent installments. She states that there is due and owing to the plaintiff as of May 30, 2014 the total amount of [*3]$514,667.91 which includes a principal balance of $368,998.78, interest from January 2010 of $120,411.62 and other costs including escrow advances. She states that a demand letter/notice of default was mailed to the borrower on December 27, 2010 pursuant to the terms of the mortgage with a notice to cure. In addition, she states that a 90-day pre-foreclosure notice was sent to the defendant by certified and first class mail.



Plaintiff contends, based upon the evidence submitted, that plaintiff has made a prima facie showing that it is entitled to summary judgment against the defaulting defendants and an Order of Reference. Plaintiff asserts that the defendants were all lawfully served with a summons and complaint and that the Court, therefore, has personal jurisdiction. In addition, the plaintiff asserts that it has standing to bring the action by presenting sufficient evidence of the written assignment and physical transfer of the note and mortgage to the plaintiff prior to the commencement of the action. Plaintiff asserts that it has established, prima facie, entitlement to summary judgment based upon its submission of the note with allonge, the mortgage, the notice of default, and the affidavit of Ms. Hoisington evidencing the defendant's failure to make the contractually required loan payments.



Defendant, Ms. Bess by attorney, Richard H. Rubin, Esq., opposes the motion for summary judgment and cross-moves for an order granting leave to serve a late answer, for an order dismissing the complaint for lack of standing and for an order relieving Ned Kassman as Guardian Ad Litem. Counsel asserts that the plaintiff has failed to comply with CPLR § 1304 by mailing a 90 day pre-foreclosure notice to the defendant by certified and first-class mail together with a list of dive counseling agencies located in Queens County (citing Deutsche Bank Natl Trust Co v Spanos, 102 AD3d 909 [2d Dept. 2013]; HSBC Mortg. Corp. V Gerber, 100 AD3d 966 [2d Dept. 2012]). Counsel asserts that the affidavit of Ms. Hoisington concludes that the plaintiff served the 90 day notice but does not provide sufficient first hand knowledge as to facts regarding the service of the notice. In addition, counsel asserts that the plaintiff did not demonstrate compliance with RPAPL § 1306 which requires the plaintiff to file the 90 day notice with the superintendent of financial services within three business days of the mailing of the notice. Further, the defendant asserts that the plaintiff has failed to demonstrate that it had standing to commence the action. Counsel asserts that the plaintiff failed to establish how or when it became the lawful holder of the note either by valid assignment or physical delivery (citing U.S. Bank v Collymore, 68 AD3d 752 [2d Dept. 2009]). Counsel claims that neither in the complaint, amended [*4]complaint nor in the moving papers does plaintiff allege to have been in physical possession of the note prior to commencement of the action.



In the alternative, defendant requests that as she has appeared in the action by counsel, the court relieve Ned Kassman as Guardian Ad Litem for the plaintiff and grant the defendant leave to interpose an amended answer. Counsel claims that Mr. Kassman did not contact the defendant nor did he serve an answer or assert any affirmative defenses on behalf of the defendant.



In support of the cross motion, Ms. Bess submits an affidavit dated October 10, 2014, stating that she was never served with the pleadings in this action, that she never received the RPAPL § 1304 notices by certified or first class mail. She states that as soon as she learned on the pendency of the action she contacted the law firm of Rubin & Licatesi P.C. to represent her. She states that she has not spoken to nor heard from the Guardian Ad Litem Mr. Kassman and she has no need or desire to have a guardian appointed for her at this time. Defendant submits a proposed amended answer denying the allegations contained in the complaint and raising certain affirmative defenses such as lack of standing, and violation of RPAPL §§ 1301, 1302, 1303, 1304, 1305 and 1306. The defendant also asserts the affirmative defenses of laches, unclean hands, equitable estoppel, satisfaction novation, violation of Truth in Lending Act and violation of Fair Debt Collection Procedures Act.



Counsel also asserts that the plaintiff's application for a default judgment as against defendant Bess must be denied as Bess interposed an answer in this action through her appointed guardian, Ned Kassman.



In opposition to the cross-motion, counsel for plaintiff, David V. Mignardi, Esq., submits an affidavit from Karter Nelson, Document Control Officer for Select Portfolio Servicing (SPS), the servicing agent for plaintiff Deutsche Bank National Trust. Mr. Nelson annexes a power of attorney authorizing SPS to act on plaintiff's behalf. He also states that he personally reviewed the business records of SPS and has personal knowledge of the facts set forth in his affidavit. He states that on June 23, 2006 defendant executed and delivered to Accredited Home Lenders, Inc.(AHL), a Balloon Note to evidence a loan from AHL to defendant in the principal amount of $375,000. AHL indorsed the note in blank and without recourse. He states that the records indicate that the Note was physically transferred to plaintiff prior to the execution of the assignment of mortgage. Plaintiff, it is stated, remained in possession of the original Note through [*5]its document control agent since the date it was transferred and was in possession of the note on the date the action was commenced on May 24, 2011. Further he states the assignment was duly recorded on November 16, 2011. He states that in addition to mailing the defendant a demand letter on December 27, 2010, the records indicate that SPS also mailed to defendant a 90 day pre-foreclosure notice dated October 22, 2010 in accordance with RPAPL § 1304. The notice together with a list of HUD approved counseling agencies was sent by certified and first class mail on October 25, 2012. Moreover, Mr. Nelson states that pursuant to RPAPL § 1306, a Proof of Filing Statement was filed with the Superintendent of Financial Services on October 26, 2010 within three business days of the mailing of the 90 day Notice.



Plaintiff asserts that it is entitled to judgment as a matter of law in that it has submitted a copy of the mortgage, the note, the complaint setting forth the facts establishing the claim and evidence of the mortgagor's default (see Wells Fargo Bank N.A. v Ambrosov, 120 AD3d 1225 [2d Dept. 2014]; HSBC Bank USA v Taher, 104 AD3d 815 [2d Dept. 2013]). In addition, plaintiff asserts that it has submitted sufficient evidence to prove the 90 day pre-foreclosure notice was mailed to the defendant by certified and first class mail and that pursuant to RPAPL § 1306 the plaintiff filed with the Superintendent of Financial Services a form showing compliance with RPAPL § 1304.



It is well settled that a plaintiff in a mortgage foreclosure action establishes a prima facie case of entitlement to summary judgment through submission of proof of the existence of the underlying note, mortgage and default in payment after due demand (see Valley Natl. Bank v Deutsch, 88 AD3d 691 [2d Dept 2011]; Witelson v Jamaica Estates Holding Corp. I, 40 AD3d 284 [1st Dept. 2007]; Marculescu v Ouanez, 27 AD3d 701 [2d Dept. 2006]; US. Bank Trust National Assoc. v Butti, 16 AD3d 408 [2d Dept. 2005]; Layden v Boccio, 253 AD2d 540 [2d Dept. 1998]; State Mortgage Agency v Lang, 250 AD2d 595(2d Dept.1998]). Upon such a showing, the burden shifts to the defendant to produce evidence in admissible form sufficient to raise a material issue of fact requiring a trial.



This Court finds that the plaintiff's submissions are sufficient to establish its entitlement to summary judgment against defendant mortgagor, Liza Bess. The moving papers demonstrate, prima facie, that the asserted defenses raised by defendant, to wit, lack of standing and failure to serve the 90 pre-foreclosure notice are without merit and plaintiff is entitled to summary judgment on its claims against Liza Bess (see EMC Mortg. Corp. v Riverdale Assocs., 291 AD2d 370 [2d Dept. [*6]2002]; State of New York v Lang, 250 AD2d 595 [2d Dept. 1998]). As stated above, the complaint herein sufficiently sets forth a valid cause of action for foreclosure. Plaintiff has submitted a copy of the mortgage, note and affidavit from Mr. Karter Nelson establishing defendant's default in payment. Plaintiff has shown by admissible evidence that it had standing to commence the action as it had properly been in physical possession of the note indorsed in blank, the assignment of mortgage and the mortgage as of the date of the commencement of the action. Since the mortgage follows as an incident of the note, when possession of the note changed, the mortgage interest automatically followed (see Deutsche Bank Natl. Trust Co. v Spanos, 102 AD3d 909 [2d Dept 2013]; U.S. Bank Natl. Assn. v Cange, 96 AD3d 8252 [2d Dept 2012]). Therefore, plaintiff's demonstration of possession of the indorsed note at the time of commencement of the action as well as by assignment of mortgage is sufficient to establish plaintiff's standing (see Wells Fargo Bank, N.A. v Parker, 2015 NY Slip Op 01445 [2d Dept. 2015]; Deutsche Bank Natl. Trust Co. v Whalen, 107 AD3d 931 [2d Dept. 2013]).



In addition, the plaintiff has submitted sufficient proof to show that notices were served on the defendant in compliance with RPAPL §§ 1303 and 1304. Plaintiff also showed that it complied with the provisions of RPAPL § 1306. Therefore, the moving papers demonstrated, prima facie, that none of the asserted defenses set forth in the defendant's cross-motion or in its proposed amended complaint are meritorious and plaintiff is therefore entitled to summary judgment on its claims against Liza Bess(see State of New York v Lang, 250 AD2d 595 [2d Dept. 1998]).



The burden then shifted to defendant to establish the existence of a triable issue of fact (see State Bank of Albany v Fioravanti, 51 NY2d 638, 647 [1980]). In opposition to the motion, the defendant failed to submit any evidence which would raise a question of fact. As stated above, plaintiff demonstrated that it had standing to commence the action. In addition, the plaintiff presented sufficient evidence that the 90 day pre-foreclosure notice was set by regular and certified mail and that it complied with the provisions of RPAPL § 1306. (see Wachovia Bank, N.A. v Carcano, 106 AD3d 724[2d Dept 2013]; U.S. Bank, N.A. v Denaro, 98 AD3d 964 [2d Dept 2012]; Capital One, N.A. v Knollwood Props. II, LLC, 98 AD3d 707 [2d Dept 2012]).



Therefore, the branches of the defendant's cross-motion for an order granting leave to serve a late answer to add additional affirmative defenses and for an order denying the motion for summary judgment is denied. Generally, leave to amend a pleading is, in the absence of prejudice or surprise to the opposing [*7]party, freely granted (see CPLR 3025 [b]; Inwood Tower v Fireman's Fund Ins. Co., 290 AD2d 252 [2002]). However, the proposed affirmative defenses other than standing and RPAPL§ 1304 pre-foreclosure notice are conclusory in form and not supported by factual allegations and as such are palpably insufficient and devoid of merit (see Becher v Feller, 64 AD3d 672 [2d Dept. 2009] [affirmative defenses dismissed which were unsubstantiated with factual allegations and conclusory in nature]).



That branch of the plaintiff's motion for an order granting summary judgment in favor of the plaintiff against said defendant is granted. As stated above, the plaintiff established its prima facie entitlement to judgment as a matter of law and defendant failed to raise any triable issues of fact in opposition or in the proposed answer. The submissions further reflect that plaintiff is entitled to amend the caption to delete "John Doe" as a party defendant and substitute Aubrey Mitchell, Jose Lara and Leslyn Mitchell in place and stead of the John Doe defendants. Plaintiff's further application for the appointment of a referee to compute the amounts due under the subject mortgage is also granted.



As defendant Liza Bess is now represented by counsel, the defendant's application for an order relieving Ned Kassman as Guardian Ad Litem is granted.



Settle Order on notice.

Dated: April 6, 2015.

Long Island City, NY

______________________________

ROBERT J. MCDONALD

J.S.C.