Wilmington Savings Fund Society, FSB v Hilario
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Attorneys and Parties
Brief Summary
Mortgage foreclosure standing, including what a plaintiff must prove when the original home equity line of credit agreement is lost.
The Supreme Court denied the plaintiff's motion for summary judgment, to strike the defendants' answers, and for an order of reference, and sua sponte dismissed the complaint for lack of standing.
The Appellate Division reversed only the sua sponte dismissal of the complaint and otherwise affirmed.
The plaintiff failed to establish standing under UCC 3-804 [owner of a lost instrument may maintain an action upon due proof of ownership, the facts preventing production, and the instrument's terms] because it did not adequately prove a valid assignment of the note, physical possession of the home equity line of credit agreement, or the circumstances of the loss. But dismissal was improper because lack of standing is not jurisdictional, the defendants did not prove lack of standing, and they did not cross-move for summary judgment, so no extraordinary circumstances justified sua sponte dismissal.
Background
Jesus Hilario and Juan Hilario executed a home equity line of credit (HELOC) agreement in favor of Bank of America, N.A. (BANA), secured by a mortgage on property in Sloatsburg. BANA later assigned the mortgage to Wilmington Savings Fund Society, FSB. In November 2022, the plaintiff commenced a foreclosure action. The defendants answered separately and each asserted lack of standing as an affirmative defense. The plaintiff then moved for summary judgment against those defendants, to strike their answers, and for an order of reference.
Lower Court Decision
The Supreme Court, Rockland County, denied the plaintiff's requested foreclosure relief and, on its own initiative, dismissed the complaint for lack of standing.
Appellate Division Reversal
The Appellate Division held that the plaintiff had not made a prima facie showing of standing because the original HELOC agreement was lost and the plaintiff's proof was insufficient. The assignment was executed by Pretium Mortgage Credit Partners I Loan Acquisition, LP as purported attorney-in-fact for BANA, but the plaintiff offered no evidence of that entity's authority. The purported allonge was not shown to be firmly affixed to the HELOC agreement, the affidavit from BANA's assistant vice president did not establish the plaintiff's physical possession of the HELOC agreement, and the affidavit did not adequately explain when, how, or by whom the note search was conducted or how the instrument was lost. Even so, the appellate court deleted the provision dismissing the complaint because the record did not present the extraordinary circumstances required for sua sponte dismissal.
Legal Significance
This decision reinforces that in a New York foreclosure case, when standing is challenged and the original note or HELOC agreement is lost, the plaintiff must strictly satisfy UCC 3-804 [owner of a lost instrument may maintain an action upon due proof of ownership, the facts preventing production, and the instrument's terms]. It also confirms that a court should use sua sponte dismissal sparingly, especially where standing is nonjurisdictional and the defendant has not affirmatively sought summary judgment.
A foreclosure plaintiff cannot win summary judgment on a lost-note theory without detailed proof of ownership, possession, assignment authority, and the circumstances of the loss, but a court generally still cannot dismiss the complaint on its own for lack of standing absent extraordinary circumstances.