                          State of New York
                   Supreme Court, Appellate Division
                      Third Judicial Department
Decided and Entered: November 19, 2015                   519429
________________________________

JP MORGAN CHASE BANK, NATIONAL
   ASSOCIATION,
                    Respondent,
      v                                     MEMORANDUM AND ORDER

BARBARA A. HILL et al.,
                    Appellants,
                    et al.,
                    Defendants.
________________________________


Calendar Date:   September 10, 2015

Before:   Lahtinen, J.P., Garry, Lynch and Devine, JJ.;
          Egan Jr., J., vouched in.

                             __________


      Barbara A. Hill and Robert W. Hill, Coral Gables, Florida,
appellants pro se.

      Buckley Madole, PC, Rochester (Michael T. Ansaldi of
counsel), for respondent.

                             __________


Lynch, J.

      Appeal from an order of the Supreme Court (LaBuda, J.),
entered April 14, 2014 in Sullivan County, which, among other
things, granted plaintiff's motion for summary judgment.

      In October 2004, defendants Barbara A. Hill and Robert W.
Hill (hereinafter collectively referred to as defendants)
executed a note in favor of BNY Mortgage Company, LLC to borrow
the sum of $132,664 to purchase property located in the Village
of Monticello, Sullivan County. The debt was secured by a
mortgage on the property. When defendants stopped making monthly
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payments, plaintiff commenced this action in February 2013 to
foreclose on the mortgage. Supreme Court scheduled a settlement
conference (see CPLR 3408; 22 NYCRR 202.12-a), but defendants did
not appear. Thereafter, with the court's permission, plaintiff
moved for summary judgment and defendants cross-moved for, among
other things, an order directing plaintiff to produce the "wet-
ink" note. The court granted plaintiff's motion, denied
defendants' cross motion and defendants now appeal.

      In a foreclosure action, a plaintiff seeking summary
judgment "must produce evidence of the mortage and unpaid note
along with proof of the mortgagor's default" (Wells Fargo Bank,
NA v Ostiguy, 127 AD3d 1375, 1376 [2015]; see HSBC Bank USA, N.A.
v Sage, 112 AD3d 1126, 1127 [2013], lvs dismissed 22 NY3d 1172
[2014], 23 NY3d 1015 [2014]). Plaintiff supported its motion
with the required documentation, but because the self-represented
defendants raised the issue of standing in their answer,
plaintiff was also obligated to demonstrate that it was a holder
or assignee of the note and subject mortgage at the time the
action was commenced (see Wells Fargo Bank, NA v Ostiguy, 127
AD3d at 1376; Chase Home Fin., LLC v Miciotta, 101 AD3d 1307,
1307 [2012]). It is the note, not the mortgage, that is the
dispositive instrument that conveys standing to foreclose under
New York law (see Aurora Loan Servs., LLC v Taylor, 25 NY3d 355,
361 [2015]).

      Here, plaintiff maintains that it has standing because it
obtained physical possession of the note prior to commencement of
the action. "Since the note has only an undated indorsement in
blank from the original lender, it does not evidence plaintiff's
possessory interest" (Deutsche Bank Natl. Trust Co. v Monica, 131
AD3d 737, 738-739 [2015] [citation omitted]; see Bank of Am.,
N.A. v Kyle, 129 AD3d 1168, 1169 [2015]), nor, for that matter,
does the June 2012 assignment of the mortgage from the Mortgage
Electronic Registration Systems, Inc. confer standing (see id.).
To establish physical possession, plaintiff produced an affidavit
by an assistant secretary, who stated that plaintiff's "custodial
system of record" showed that plaintiff "received the original
[n]ote on February 16, 2007" and that plaintiff maintained
"possession of the [n]ote at its storage facility" in Monroe,
Louisiana. Noticeably absent is any representation by the
                              -3-                519429

assistant secretary that she examined the original note and,
contrary to the dissent, the affidavit is devoid of any detail as
to how plaintiff actually acquired possession of the original
note (compare Aurora Loan Servs., LLC v Taylor, 25 NY3d at 362;
Deutsche Bank Natl. Trust Co. v Monica, 131 AD2d at 739).
Moreover, the dissent's reliance on HSBC Bank USA, N.A. v Sage
(supra) is misplaced, for the question here is not, as it was in
that case, whether plaintiff's representative had personal
knowledge as to the creation of the original loan documents, but
whether any direct evidence was presented detailing how plaintiff
came into actual possession of the original note. The plaintiff
in HSBC Bank USA had already established that the custodian of
the trust had actual possession of the note for over two years
prior to commencement of the action (id. at 1127-1128). Even
accepting that plaintiff met its burden of proving physical
possession of the note through the assistant secretary's review
of plaintiff's custodial records, in opposition, defendants
cross-moved for an order directing plaintiff to produce the
original or "wet-ink" note, as described by defendants.
Defendants made the same demand in their answer.

      In Aurora Loan Servs., LLC v Taylor (25 NY3d at 361-362),
the Court of Appeals recently addressed the degree of proof
necessary to show possession of a note for purposes of standing.
In that case, the plaintiff's representative averred, upon review
of its business records and after examining the original note,
that it had custody of the note prior to the commencement of the
action. The defendants countered that more detail was required
as to how the plaintiff acquired the note. While observing that
"the better practice would have been for [the plaintiff] to state
how it came into possession of the note," the Court determined
that the trial court did not err in granting summary judgment to
the plaintiff without requiring production of the original note,
emphasizing that no such demand had been made (id. at 362). Not
to be overlooked is the fact that the allonge indorsing the note
to the plaintiff in Aurora showed a specific chain of ownership
to the plaintiff (id. at 359). Here, by comparison, the original
note includes only a blank indorsement, the affidavit of the
assistant secretary is based on a review of system records
without an examination of the original note and defendants
demanded production of the original note from the outset.
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Defendants also represent that a prior foreclosure action was
commenced by defendant Bank of New York in 2008 – a year after
plaintiff ostensibly obtained possession of the original note –
and discontinued in 2010, without prejudice. Given this context,
and without any verification as to how plaintiff came into
possession of the note, we conclude that Supreme Court should
have first compelled it to produce the original note prior to
resolving plaintiff's motion for summary judgment. This is
particularly so given the responding affidavit of plaintiff's
representative that it was "ready, wiling (sic) and able to
produce the original 'wet-ink' note for inspection" – a
representation repeated in plaintiff's brief on appeal.

     Garry and Egan Jr., JJ., concur.


Devine, J. (dissenting).

      Our colleagues find that questions of fact exist as to
whether plaintiff actually possesses the note; we do not, and,
therefore, respectfully dissent.

      Plaintiff undoubtedly "produce[d] evidence of the mortgage
and unpaid note along with proof of the mortgagor's default"
(Wells Fargo Bank, NA v Ostiguy, 127 AD3d 1375, 1376 [2015]; see
HSBC Bank USA, N.A. v Sage, 112 AD3d 1126, 1127 [2013], lvs
dismissed 22 NY3d 1172 [2014], 23 NY3d 1015 [2014]). Because
defendants Barbara A. Hill and Robert W. Hill (hereinafter
collectively referred to as defendants) raised standing as an
affirmative defense, plaintiff was further required to show that
it was "both the holder or assignee of the subject mortgage and
the holder or assignee of the underlying note at the time the
action [was] commenced" (Chase Home Fin., LLC v Miciotta, 101
AD3d 1307, 1307 [2012]; see Wells Fargo Bank, NA v Ostiguy, 127
AD3d at 1376). Plaintiff submitted a copy of the mortgage that
was assigned to it and a copy of the promissory note indorsed in
blank, but a blank indorsement "does not evidence plaintiff's
possessory interest" in the note and requires proof of actual
possession (Deutsche Bank Natl. Trust Co. v Monica, 131 AD3d 737,
738-739 [2015]; see UCC 3-204 [2]; Bank of Am., N.A. v Kyle, 129
AD3d 1168, 1169 [2015]).
                              -5-                519429

      In that regard, plaintiff provided an affidavit by an
assistant secretary, who averred that she reviewed plaintiff's
business records regarding the loan in question, that she was
personally familiar with the maintenance of those records and
that they had been created and kept in the regular course of
business. Her affidavit "was adequately based on a review of the
books and records of the company maintained in the ordinary
course of business" under these circumstances and, contrary to
the assertion of my colleagues, her "lack of personal knowledge
as to the creation of the documents is not fatal" (HSBC Bank USA,
N.A. v Sage, 112 AD3d at 1127; see CPLR 4518; compare Deutsche
Bank Natl. Trust Co. v Monica, 131 AD3d at 739 [records made by
another entity]). The majority complains that this affidavit was
deficient in failing to "detail . . . how plaintiff actually
acquired possession of the original note," but that issue is
irrelevant, as "[a]n instrument payable to order and indorsed in
blank becomes payable to bearer and may be negotiated by delivery
alone until specially indorsed" (UCC 3-204 [2]). Possession,
regardless of how that possession came about, is all that is
required to make plaintiff a bearer and holder of a note indorsed
in blank (see UCC 1-201 [b] [5], [21]; UCC 3-204 [2]; Getty
Petroleum Corp. v American Express Travel Related Servs. Co., 90
NY2d 322, 328 [1997]; Bank of Am., N.A. v Kyle, 129 AD3d at 1169;
Wells Fargo Bank, NA v Ostiguy, 127 AD3d at 1376).

      The records detailed as to how the original note came into
plaintiff's possession, and the assistant secretary averred with
no hesitation that plaintiff "received the original [n]ote on"
February 16, 2007 and "maintain[ed] possession of the [n]ote" at
its storage facility in Louisiana. While we agree that "the
better practice would have been for [plaintiff] to state how it
came into possession of the note in its affidavit in order to
clarify the situation completely" (Aurora Loan Servs., LLC v
Taylor, 25 NY3d 355, 362 [2015]), plaintiff nevertheless met its
initial burden by providing admissible proof showing that
"physical delivery of the note was made to . . . [it upon an]
exact delivery date" that predated the commencement of this
action (Aurora Loan Servs., LLC v Taylor, 114 AD3d 627, 629
[2014], affd 25 NY3d 355 [2015]; see Deutsche Bank Natl. Trust
Co. v Monica, 131 AD3d at 738; Deutsche Bank Natl. Trust Co. v
                              -6-                519429

Whalen, 107 AD3d 931, 932 [2013]).

      The burden accordingly shifted to defendants "to produce
evidentiary proof in admissible form sufficient to establish the
existence of material issues of fact which require a trial of the
action," and they failed to do so (Alvarez v Prospect Hosp., 68
NY2d 320, 324 [1986]). Defendants primarily argued that the note
was "altered, edited, [and] redacted," and cross-moved for
production of the original note. They made no specific
allegations as to how the note had been altered, however, and no
obvious changes or material redactions appear in the copy of the
note provided. Their conclusory claims therefore constitute the
type of "unsubstantiated allegations or assertions" that do not
raise a question of fact (Zuckerman v City of New York, 49 NY2d
557, 562 [1980]; see Amatulli v Delhi Constr. Corp., 77 NY2d 525,
533 [1991]). Inasmuch as defendants failed to submit any
evidence to warrant "the requisite showing that [further]
discovery would yield material and relevant evidence sufficient
to defeat the motion" for summary judgment, production of the
original note at this late date is not appropriate (Seton Health
at Schuyler Ridge Residential Health Care v Dziuba, 127 AD3d
1297, 1300 [2015]; see CPLR 3212 [f]; Banque Nationale de Paris v
1567 Broadway Ownership Assoc., 214 AD2d 359, 361 [1995]; see
also Aurora Loan Servs., LLC v Taylor, 25 NY3d at 362).

      We perceive nothing in the other arguments advanced by
defendants that would warrant a denial of summary judgment.
Defendants suggested that something nefarious was afoot because
plaintiff came into possession of the note in 2007, but was not
assigned the mortgage until 2012. This assertion ignores the
role of Mortgage Electronic Registration Systems, Inc., which
previously held the mortgage (see Matter of MERSCORP, Inc. v
Romaine, 8 NY3d 90, 96 [2006]), and also overlooks "that the
note, and not the mortgage, is the dispositive instrument that
conveys standing to foreclose under New York law" (Aurora Loan
Servs., LLC v Taylor, 25 NY3d at 361). Moreover, while a
mortgage foreclosure action had previously been commenced by
defendant Bank of New York, that action was discontinued, and
defendants provided nothing to suggest that the prior action in
any way impaired plaintiff's rights (see e.g. Credit-Based Asset
                                -7-                519429

Servicing & Securitization v Grimmer, 299 AD2d 887, 888 [2002]).
The Bank of New York was served with the summons and complaint in
this action given its status as a lienholder, and its failure to
appear and assert any interest does not speak well of the
insinuation by defendants that it has any rights to the note and
mortgage at issue. Over five years have passed since the default
in payment and, in the absence of any material issues of fact
that would defeat an award of summary judgment, we perceive
nothing to justify a further delay in the resolution of this
matter.

     Lahtinen, J.P., concurs.



      ORDERED that the order is modified, on the law, with costs
to defendants, by reversing so much thereof as granted
plaintiff's motion; said motion denied; and, as so modified,
affirmed.




                             ENTER:




                             Robert D. Mayberger
                             Clerk of the Court
