Bank of America, N.A. v Edouard
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Attorneys and Parties
Brief Summary
Mortgage foreclosure standing, proof of default, default judgment requirements, substitution of a successor plaintiff after an alleged post-commencement assignment, and payment of a guardian ad litem fee.
The Supreme Court, Nassau County, denied the lender's motion for summary judgment against the answering defendants and Whitney Edouard, denied a default judgment against the nonappearing defendants, denied an order of reference, denied substitution of U.S. Bank Trust National Association as plaintiff, and denied the guardian ad litem fee request.
The Appellate Division reversed the denial of summary judgment, the default judgment request, the order of reference, and the guardian ad litem fee award, but it upheld the denial of leave to amend the caption to substitute U.S. Bank Trust National Association as plaintiff.
The plaintiff proved standing by attaching the endorsed note to the complaint at commencement, proved the mortgage, unpaid note, and default through competent evidence, and satisfied the requirements for a default judgment. But it did not prove a valid post-commencement transfer to U.S. Bank because the affiant's statement about the assignment was unsupported by the underlying business records and was therefore inadmissible hearsay.
Background
In 2006, Jean Edouard executed a $401,250 note in favor of GreenPoint Mortgage Funding, Inc., secured by a mortgage on Nassau County property. After the borrower died in 2011, Bank of America, N.A., described as GreenPoint's successor in interest, commenced this foreclosure action in 2013 against the estate and related parties. The plaintiff later obtained leave to add the borrower's heirs as defendants, and the court appointed a guardian ad litem for Whitney Edouard, with a $250 fee to be paid upon filing a notice of appearance. Jocelyn Edouard and Shirley Gauthier answered and asserted, among other defenses, lack of standing. The guardian ad litem later filed the required appearance papers and requested the fee. The plaintiff then moved for summary judgment, a default judgment against nonappearing defendants, substitution of U.S. Bank Trust National Association as plaintiff based on an alleged later transfer, an order of reference, and payment of the guardian ad litem fee.
Lower Court Decision
The Supreme Court denied the plaintiff's motion in its entirety, including the requests for summary judgment, default judgment, substitution of U.S. Bank Trust National Association as plaintiff, an order of reference, and payment of the guardian ad litem fee.
Appellate Division Reversal
The Appellate Division modified the order by granting the plaintiff summary judgment against Jocelyn Edouard, individually and as administrator of the estate, Shirley Gauthier, and Whitney Edouard; granting leave to enter a default judgment against all nonappearing and nonanswering defendants; granting an order of reference; and awarding the guardian ad litem the previously authorized $250 fee. The court otherwise affirmed, holding that the plaintiff had not established entitlement to substitute U.S. Bank Trust National Association as plaintiff because the claimed transfer was supported only by inadmissible hearsay rather than the underlying business records or other competent proof of assignment.
Legal Significance
This decision reinforces that in a New York mortgage foreclosure action, standing is established by possession or assignment of the note at the time the action is commenced, and attaching an endorsed note to the complaint is sufficient proof. It also confirms that an assignment of the mortgage alone does not determine standing, because the note is the controlling instrument. In addition, the case shows that a plaintiff seeking substitution after an alleged transfer of interest must provide competent evidence of the assignment, and unsupported statements based on unproduced records will not suffice. The ruling also reiterates the relatively modest proof needed for a default judgment where defendants have not appeared, and that a guardian ad litem is entitled to a fee when the conditions of the appointment order have been met.
A foreclosure plaintiff can win summary judgment by showing the mortgage, the unpaid endorsed note, and default, but if it wants to substitute a new plaintiff after filing suit, it must prove the later assignment with admissible evidence, not just an affiant's unsupported statement.