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MERE DENIAL OF THE ALLEGATIONS IN A FORECLOSURE COMPLAINT THAT THE PLAINTIFF IS THE OWNER AND HOLDER OF THE NOTE AND MORTGAGE IS NOT SUFFICIENT TO ASSERT THE DEFENSE THAT THE PLAINTIFF LACKS STANDING, PRECEDENT TO THE CONTRARY OVERRULED (SECOND DEPT).

The Second Department, in a full-fledged opinion by Justice Castro, over an extensive dissenting opinion, determined that a denial of the allegations in a foreclosure complaint that the plaintiff is the owner and holder of the note and mortgage is not sufficient to assert that plaintiff lacks standing, a defense that is waived if not asserted:

… [T]he issue of standing is waived absent some affirmative statement on the part of a mortgage foreclosure defendant, which need not invoke magic words or strictly adhere to any ritualistic formulation, but which must clearly, unequivocally, and expressly place the defense of lack of standing in issue by specifically identifying it in the answer or in a pre-answer motion to dismiss. A mere denial of factual allegations will not suffice for this purpose. * * *

Taken to its logical conclusion, the … defendants’ position would mean that their denials preserve all conceivable affirmative defenses that can be parsed from reading the factual allegations of the complaint in conjunction with their corresponding and conclusory denials, so that these defenses may be raised at some subsequent point in the case. Such a result would render the obligation under CPLR 3018(b) to specifically plead affirmative defenses in the answer meaningless, delay the legislatively favored prompt adjudication of the defenses at an early point in the litigation, and cause prejudice and surprise to plaintiffs. Moreover, the practical realities of mortgage foreclosure litigation are that foreclosure complaints invariably allege that the plaintiff is the holder and/or assignee of the note, and answering defendants reflexively deny (or deny knowledge as to the truth of) most or all of the allegations in their responsive pleadings. Were such denials by themselves sufficient to place standing in issue, then standing would effectively become a prima facie element of the plaintiffs’ claims in all contested foreclosure actions, an unwarranted consequence. Rather, if a defendant in a foreclosure action genuinely believes that she or he has a basis upon which to contest standing, it is not too much to ask her or him to specifically and affirmatively assert that position in the answer as the CPLR requires.

To the extent that some decisions of our Court have strayed from the foregoing principles by indicating that a mere denial in the answer of factual allegations set forth in the complaint will suffice to place standing in issue, thereby injecting uncertainty into this formerly settled area … . US Bank N.A. v Nelson, 2019 NY Slip Op 00494, Second Dept 1-23-19

 

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