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The Bank of New York Mellon v. Dougherty

Supreme Court, Suffolk County

January 14, 2019

The Bank of New York Mellon FKA THE BANK OF NEW YORK AS TRUSTEE FOR THE CERTIFICATEHOLDERS CWABS, INC. ASSET-BACKED CERTIFICATES, SERIES 2005-14, Plaintiff,
v.
Ronald Dougherty; CYNTHIA DOUGHERTY; JP MORGAN CHASE BANK N.A.; CLERK OF THE SUFFOLK COUNTY DISTRICT COURT; CAPITAL ONE BANK U.S.A. N.A.; MSW FLORIDA CAPITAL LLC MSW CAPITAL LLC; MIDLAND FUNDING LLC, Defendants.

          DAVIDSON FINK LLP Attorneys for Plaintiff

          THE RANALLI LAW GROUP, PLLC Attorneys for Defendant Cynthia Dougherty

          HON. ROBERT F. QUINLAN, JSC

         This is an action to foreclose a mortgage on premises known as 3113th Street, Bohemia, Suffolk County, New York ("the property") given by defendants Ronald Dougherty and Cynthia Dougherty ("defendants") to Countrywide Home Loans ("Countrywide") a predecessor in interest to plaintiff The Bank of New York Mellon fka The Bank of New York as Trustee for the Certificate holders CWABS, Inc. Asset-backed Certificates, Series 2005-14 ("plaintiff") to secure a note given to Countrywide. Only defendant Cynthia Dougherty ("defendant") filed an answer to plaintiff's complaint. The prior history of this action is set forth in the decision of the court placed on the record on March 2, 2017 after oral argument of plaintiff's motion (Mot. Seq. No.002) seeking summary judgment dismissing defendant's answer, appointing of a referee pursuant to RPAPL § 1321, fixing the default of the non-appearing, non-answering defendants including defendant Ronald Dougherty and to amend the caption. The court granted plaintiff partial summary judgment pursuant to CPLR 3212 (g), which fixed and set the default of the non-answering, non-appearing defendants including defendant Ronald Dougherty, amended the caption and dismissed defendant's second affirmative defense. As there remained questions of fact as to plaintiff's proof of its standing to bring the action (defendant's first, fifth and sixth affirmative defenses), and its compliance with the mailing requirements of the notices required by RPAPL § 1304 and of the filing required by RPAPL § 1306 (defendant's third and fourth affirmative defenses), the court set the action for a limited issue trial pursuant to CPLR § 2218 on those issues, issuing a written discovery and scheduling order, which authorized discovery limited to those issues. The order also authorized the submission of successive summary judgment motions by the parties upon the completion of discovery, within thirty day of filing of a note of issue.

         Only defendant moved for summary judgment upon the completion of discovery, seeking dismissal upon a claim that plaintiff had failed to comply with the mailing requirements RPAPL § 1304 and the filing requirements of RPAPL § 1306 (Mot. Seq. #003). Defendant's motion was denied by the written decision dated January 18, 2018, which set the limited issue trial for February 23, 2018. By way of letter dated February 16, 2018 plaintiff asked the court to extend its time to move for summary judgment, but by order dated February 16, 2018 the court denied the request, as the note of issue had been filed September 6, 2017, the 30 days set by the order of to make such a motion had long passed, as well as the 120 day statutory period set by CPLR 3212 (a) for a summary judgment motion and plaintiff had not established good cause for not timely filing such a motion. The order reaffirmed the trial date of February 23, 2018.

         TRIAL

         At trial plaintiff presented one witness, Mr. Chuck Parks, an employee of Carrington Mortgage Services, LLC ("Carrington"), the present servicer for plaintiff. Through Mr. Park's testimony plaintiff offered into evidence the Limited Power of Attorney executed between plaintiff and Carrington (Plaintiff's Exhibit "1"). The court admitted the document into evidence as it related to the relationship between Mr. Park's employer and plaintiff. Mr. Parks testified as to Carrington's business relationship with plaintiff pursuant to the Limited Power of Attorney and the duties, responsibilities and actions Carrington took thereunder. Without objection, Mr. Parks testified that Carrington maintained plaintiff's records, that he had personal knowledge of how plaintiff's and Carrington's records were made and kept in the regular course of business, and established from his testimony the admissibility of Carrington and plaintiff's business records pursuant to CPLR 4518 (a). He also testified, without objection, that the records of prior servicers were incorporated into Carrington's records and relied upon by Carrington in its business. Through Mr. Parks, without objection, a copy of the original note to Countrywide dated October 24, 2005 and signed by both defendants (Plaintiff' Exhibit "2") was admitted into evidence, which contained an indorsement in blank from Countrywide. A copy of the original mortgage on the property (Plaintiff's Exhibit "3"), also dated October 24, 2005 and signed by defendants was also admitted into evidence without objection.

         Plaintiff then marked for identification Plaintiff's Exhibit "4," which Mr. Parks testified was an electronically stored business record of plaintiff maintained by Carrington. He testified, without objection, that this exhibit established that plaintiff had possession of the note as of October 29, 2005 and that the note was held by plaintiff or plaintiff's agent on August 2, 2011, the date the action was filed. When offered into evidence, defendant's objection to Plaintiff's Exhibit "4" was that the servicer who had produced the document, Green Tree Lending, was not the servicer in 2011, and by records which defendant had, but did not attempt to admit into evidence, became plaintiff's servicer after 2011 and remained so until Carrington became servicer. Based on that sole objection, Plaintiff's Exhibit "4" was admitted into evidence as plaintiff's business record as the witness had already established his ability to testify to plaintiff's and Carrington's business records without objection, and in fact had already testified as indicated above.

         Without objection, Mr. Parks went on to identify Plaintiff's Exhibits "5" and "6," which he stated were "print screens" from plaintiff's electronic business records that showed the RPAPL § 1304 notices were mailed to defendant by a prior servicer. Defendant objected, stating that the mailings did not come from the prior servicer, but from a company called "Walz" which was retained to mail the notices on behalf of plaintiff and that the witness was not familiar with Walz records. On voir dire by defendant's counsel, Mr. Parks established his familiarity with Walz and its mailing practices and procedures, as Carrington also uses Walz for mailing, that he has reviewed Walz records that establish the mailings of RPAPL § 1304 notices and that these records were the business records of plaintiff and the prior servicer (Bank of America) which had been incorporated into Carrington's records, based on this the court admitted Plaintiff's Exhibit "5." Then, without objection, Mr. Parks not only testified to the information contained in Plaintiff's Exhibit "5," but also to the information contained in Plaintiff's Exhibit "6," not yet in evidence, establishing the content of both documents and establishing that the notices were sent by both regular and certified mail to defendant at the property. When plaintiff moved Plaintiff's Exhibit "6" into evidence, defendant's voir dire and objection were to the fact that no return receipt on the certified mailing was contained in the records and that there were no affidavits of service, therefore the exhibit was inadmissible. Based upon that objection, which the court felt went to the weight to be given to the evidence but not it's admissibility, and as the information contained therein had already been testified to, the court admitted Plaintiff's Exhibit "6" into evidence. The testimony and exhibits established that Plaintiff's Exhibit "5" was mailed on March 28, 2011 by regular first class mail and Plaintiff's Exhibit "6" was mailed on March 29, 2011 by certified mail.

         Mr. Parks then testified to the content of Plaintiff's Exhibit "7," the certificate of filing with the Department of Financial Services ("DFS") required by RPAPL § 1306, which defendant consented to admit into evidence. The certificate was filed March 28, 2011 at 12:00 AM, with the "first step mailing" indicated as mailed on March 25, 2011. As pointed out by defendant and the court, the "first step mailing" date listed by DFS was at variance with the proof of mailing of the RPAPL § 1304 notices presented by defendant, being three days before the first class mailing and four days before the certified mailing, and that as the DFS filing indicated it was at "12:00 AM" (midnight), the filing appeared to have been made before either mailing. No explanation for this discrepancy, or possible error, was offered by Mr. Parks, although possible reasons were given by plaintiff's counsel.

         At the conclusion of Mr. Parks, testimony plaintiff rested and as defendant called no witnesses, defendant rested. The court asked the parties to submit simultaneous memorandums of law on the issue raised by the apparent conflict in plaintiff's proof of mailing of the notices required by RPAPL § 1304 and the DFS filing required by RPAPL § 1306. Although the court noted that based upon the evidence admitted it felt that plaintiff had sustained its burden of establishing the mailing of the RPAPL § 1304 notices, the court advised defendant that she could submit on that issue also if she wished. As plaintiff's counsel had just had a death in the family and defendant had just filed a renewed attempt at a loan modification, the court, with the consent of the parties, adjourned the case for a conference on July 11, 2018. As the loan modification application had not yet been resolved by that date, the court, again with consent of the parties, adjourned the case for a further conference on September 26, 2018. As of that date it was learned that the loan modification and negotiations had been unsuccessful, therefore the court issued a written directive to the parties to simultaneously file memorandums of law on November 2, 2018.

         DECISION AFTER TRIAL

         PLAINTIFF HAS STANDING

         After considering the evidence at trial and the parties memorandums of law, the court finds that the preponderance of evidence established that plaintiff had possession of the note, indorsed in blank, at the time the action was filed and thereby proved its standing to bring the action (see Aurora Loan Servs., LLC v. Taylor, 25 N.Y.3d 355');">25 N.Y.3d 355 [2015]; Emigrant Bank v Larizza, 129 A.D.3d 904');">129 A.D.3d 904 [2d Dept 2015]; M & T Bank v Cliffside Prop. Mgt., LLC, 137 A.D.3d 876');">137 A.D.3d 876 [2d Dept 2016]). A "holder" of the note is a person in possession of the negotiable instrument that is payable either to bearer, or an identified person, that is the person in possession of the note (UCC 1-201 [b] [21], 3-202 [1], 3-204 [2]; see Deutsche Bank Natl. Trust Co. v Brewton, 142 A.D.3d 683');">142 A.D.3d 683 [2d Dept 2016]; US Bank Natl. Assoc. v Cruz, 147 A.D.3d 1103');">147 A.D.3d 1103 [2d Dept 2017]). Testimony of a witness, such as presented by plaintiff here, based upon personal knowledge and review of books and business records maintained by plaintiff in the ordinary course of business that establishes facts of plaintiff's possession of the note indorsed in blank at the time the action was commenced is sufficient to establish ...


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