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Neither Plaintiff Nor Intervenor Bank Had Standing to Determine Validity of Mortgage

The Second Department determined neither the original plaintiff, nor the bank which attempted to intervene in the action, had standing in an action to determine the validity of a mortgage.  Plaintiff was not the mortgagee and the bank submitted no proof that the note was physically delivered to it, a necessary element of a valid assignment:

The plaintiff failed to establish that either it, or the party it wished to substitute as the plaintiff, had standing to maintain the action. Standing requires an inquiry into whether a litigant has “an interest . . . in the lawsuit that the law will recognize as a sufficient predicate for determining the issue at the litigant’s request” … . “In a mortgage foreclosure action, a plaintiff has standing where it is both the holder or assignee of the subject mortgage and the holder or assignee of the underlying note at the time the action is commenced” … . The instant action, although not an action to foreclose the subject mortgage, was brought on behalf of the purported mortgagee, inter alia, for a judgment declaring the validity of the subject mortgage. The documentary evidence submitted by the appellant in support of her motion to dismiss the complaint established conclusively that the plaintiff was not the mortgagee, a fact which the plaintiff conceded. …

The plaintiff sought to defeat the appellant’s motion to dismiss the complaint by cross-moving, in effect, to amend the complaint to substitute U.S. Bank as the plaintiff. “[A]n amendment which would shift a claim from a party without standing to another party who could have asserted that claim in the first instance is proper since such an amendment, by its nature, does not result in surprise or prejudice to the defendants who had prior knowledge of the claim and an opportunity to prepare a proper defense” (…CPLR 1002[a], 3025[b]). Here, however, the plaintiff failed to show that U.S. Bank had standing and could have asserted the claim in the first instance. The plaintiff submitted only a document executed by MERS, as nominee for the lender Opteum, purporting to assign the mortgage and note to U.S. Bank. To establish the validity of such an assignment, evidence must be submitted establishing that the note was either physically delivered to MERS or assigned to MERS by the lender prior to the commencement of the action … . The plaintiff failed to submit any such evidence. Midland Mtge Co v Imtiax, 2013 NY Slip Op 06550, 2nd Dept 10-9-13

 

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