THE BANK DID NOT PRESENT SUFFICIENT EVIDENCE OF STANDING TO FORECLOSE; THE EVIDENCE DID NOT DEMONSTRATE THE ALLONGE WAS FIRMLY ATTACHED TO THE NOTE; EVIDENCE FIRST OFFERED IN REPLY SHOULD NOT HAVE BEEN CONSIDERED (SECOND DEPT).

The Second Department, reversing Supreme Court, determined the bank did not demonstrate it had standing to foreclose because the evidence the allonge was firmly attached to the note was insufficient. The court noted Supreme Court should not have considered evidence first submitted in reply:

Although the vice president of loan documentation attested in her affidavit, based on her review of the plaintiff’s business records, that an allonge containing an endorsement in blank by “Federal Deposit Insurance Corporation As Receiver of AmTrust Bank fka Ohio Savings Bank” was attached to the consolidated note, she did not aver that the allonge was “firmly affixed” to the consolidated note within the meaning of UCC 3-202(2). “Although the foundation for the admission of a business record may be provided by the testimony of the custodian, it is the business record itself, not the foundational affidavit, that serves as proof of the matter asserted” … . Moreover, the affidavit was sworn to on January 9, 2020, subsequent to the commencement of this action, and the affiant did not state when she reviewed the copy of the note and the allonge. Thus, her affidavit was insufficient to establish, prima facie, that the allonge was “so firmly affixed [to the consolidated note] as to become a part thereof” (UCC 3-202[2]) at the time of commencement of either the 2014 action or the 2015 action … . Nor did the affidavit of the employee of the plaintiff’s attorneys establish compliance with the requirements of UCC 3-202(2), as it made no reference to an allonge to the consolidated note.

Affidavits submitted by the plaintiff with its reply papers, asserting that the allonge was attached to the consolidated note at the time of commencement of the 2015 action, should not have been considered by the Supreme Court, since a party moving for summary judgment “cannot meet its prima facie burden by submitting evidence for the first time in reply” … . Wells Fargo Bank, N.A. v Mitselmakher, 2023 NY Slip Op 02709, Second Dept 5-17-23

Practice Point: To demonstrate standing to foreclose the bank must show the allonge was “firmly attached” to the note within the meaning of UCC 3-303(2). The bank’s evidence here was insufficient.

Practice Point: Evidence first submitted in reply should not be considered in support of the prima facie burden for summary judgment.