Bank of New York Mellon v. Knowles
151 A.D.3d 596
| N.Y. App. Div. | 2017Background
- Plaintiff Bank of New York Mellon (Bank) moved for summary judgment to foreclose a mortgage; defendant Harold D. Knowles cross-moved to dismiss.
- Bank attached to its summons and complaint the indorsed promissory note, the mortgage, and an assignment of the mortgage; the summons and complaint were served and filed the same day.
- Bank also submitted affidavits from two mortgage loan servicer employees attesting to plaintiff’s possession of the indorsed note and to the location/attachment of the indorsement.
- Defendant challenged plaintiff’s standing, disputed the location/attachment of the indorsement on the note, and argued alleged violations of federal disclosure law (15 U.S.C. § 1641(g)).
- Supreme Court ordered supplemental affidavits to clarify the indorsement location and granted plaintiff’s summary judgment; the Appellate Division affirmed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Standing to foreclose | Bank had the indorsed note attached to the summons and complaint and servicer affidavits showing possession before suit | Bank lacked standing because delivery/possession details were insufficient and indorsement location was unclear; alleged federal disclosure violation voids standing | Bank established standing by attaching the indorsed note to the filed/served pleadings; servicer affidavits further supported possession; §1641(g) dispute did not defeat standing |
| Sufficiency/location of indorsement | Servicer affidavits showed the indorsement was firmly affixed to the back of the note satisfying UCC 3-202 | Indorsement might be on a separate page or not properly affixed, undermining negotiability/possession proof | Court found affidavits and supplemental submissions adequately showed the indorsement was firmly affixed on the note |
| Court’s discretionary use of supplemental affidavits | Supplemental affidavits were appropriate to clarify material facts before decision | Ordering supplemental affidavits showed bias or improper procedure | Ordering clarifying affidavits was a proper exercise of discretion and not biased |
| Effect of alleged 15 U.S.C. § 1641(g) violation on foreclosure standing | Not raised as a bar; possession and attachment suffice | §1641(g) violation prevents plaintiff from having standing | Court: possible §1641(g) violation does not clearly negate standing and defendant cited no controlling precedent to that effect |
Key Cases Cited
- HSBC Bank USA, N.A. v. Baptiste, 128 A.D.3d 773 (App. Div. 2d Dep’t 2015) (servicer affidavit with personal knowledge can establish default and entitlement to foreclose)
- U.S. Bank N.A. v. Askew, 138 A.D.3d 402 (App. Div. 1st Dep’t 2016) (standing may be shown by assignment or possession of the note)
- Deutsche Bank Natl. Trust Co. v. Logan, 146 A.D.3d 861 (App. Div. 2d Dep’t 2017) (attaching the note to the summons and complaint dispenses with detailed proof of prior delivery)
- JPMorgan Chase Bank, N.A. v. Weinberger, 142 A.D.3d 643 (App. Div. 2d Dep’t 2016) (same principle regarding attachment of note to commence action)
- Nationstar Mtge., LLC v. Catizone, 127 A.D.3d 1151 (App. Div. 2d Dep’t 2015) (attachment of note to pleadings establishes possession for standing)
- Ostrov v. Rozbruch, 91 A.D.3d 147 (App. Div. 1st Dep’t 2012) (trial court has discretion to require supplemental affidavits)
- Orsini v. Postel, 267 A.D.2d 18 (App. Div. 1st Dep’t 1999) (same on exercise of discretion to seek clarification before decision)