Apex Bank v. Fasulo-Brancaleone
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Attorneys and Parties
Brief Summary
Mortgage foreclosure standing and proof of contractual notice of default in a residential lending dispute.
The Supreme Court, Nassau County, denied the bank's motion for summary judgment on the complaint and for an order of reference, and granted the defendants' cross-motion for summary judgment dismissing the complaint insofar as asserted against them and for attorneys' fees.
The Appellate Division reversed the denial of the bank's summary judgment and order of reference requests and reversed the grant of summary judgment dismissing the complaint against the defendants. The appeal from the attorneys' fees portion was dismissed as superseded by a later judgment.
The bank made a prima facie showing of standing by demonstrating that a copy of the note endorsed in blank was annexed to the certificate of merit filed with the complaint, and it also established compliance with paragraph 22 of the mortgage concerning notice of default. The defendants failed to raise a triable issue of fact.
Background
In October 2005, Theresa D. Fasulo-Brancaleone executed a $513,000 note in favor of The New York Mortgage Company, LLC, secured by a mortgage on residential property in Nassau County. Apex Bank commenced a foreclosure action in October 2018. The defendants answered and asserted lack of standing as an affirmative defense. In May 2020, the bank moved for summary judgment on the complaint and for an order of reference, while the defendants cross-moved for summary judgment dismissing the complaint against them and for attorneys' fees.
Lower Court Decision
The Supreme Court, Nassau County, held that the bank had not sufficiently established its entitlement to summary judgment, denied summary judgment on the complaint and an order of reference, and granted the defendants summary judgment dismissing the complaint insofar as asserted against them. It also granted attorneys' fees to the defendants.
Appellate Division Reversal
The Appellate Division held that the bank established its prima facie entitlement to judgment as a matter of law by producing the mortgage, the unpaid note, evidence of default, proof of standing, and proof of compliance with paragraph 22 of the mortgage agreement concerning notice of default. Because standing had been placed in issue, the bank was required to prove it, and it did so by showing that a copy of the note bearing an endorsement in blank was annexed to the certificate of merit filed with the complaint. The defendants failed to raise a triable issue of fact as to standing or notice. The court therefore granted the bank summary judgment on the complaint and an order of reference, denied the defendants' dismissal request, and dismissed the appeal from the attorneys' fees portion because that part of the order had been superseded by a judgment dated January 19, 2023.
Legal Significance
This decision reinforces that in a New York mortgage foreclosure action, when standing is challenged, a plaintiff may establish standing through evidence that it possessed the note at commencement, including by attaching a copy of a note endorsed in blank to the certificate of merit filed with the complaint. It also confirms that prima facie proof of compliance with the mortgage's contractual notice-of-default provision can support summary judgment when unrefuted.
A foreclosure plaintiff that files the complaint with a copy of the note endorsed in blank and proves default and compliance with the mortgage's notice provisions can obtain summary judgment even where standing is contested, unless the borrower raises a genuine factual dispute.