                          State of New York
                   Supreme Court, Appellate Division
                      Third Judicial Department
Decided and Entered: June 23, 2016                     521625
________________________________

CITIMORTGAGE, INC.,
                      Respondent,
     v
                                            MEMORANDUM AND ORDER
SHELLY A. JAMESON, Also Known
   as SHELLY A. BRENENSTUHL,
   et al.,
                    Appellants,
                    et al.,
                    Defendants.
________________________________


Calendar Date:   April 21, 2016

Before:   McCarthy, J.P., Egan Jr., Lynch, Devine and Mulvey, JJ.

                             __________


     Susan J. Civic, Saratoga Springs, for appellants.

      Akerman LLP, New York City (Jordan Smith of counsel), for
respondent.

                             __________


McCarthy, J.P.

      Appeal from an order of the Supreme Court (Crowell, J.),
entered March 3, 2015 in Saratoga County, which, among other
things, granted plaintiff's motion for a default judgment.

      After defendants Shelly A. Jameson and Danny J. Jameson
(hereinafter collectively referred to as defendants) defaulted on
a note secured by a mortgage on real property, plaintiff
commenced this foreclosure action, alleging that it was the
holder of the note and mortgage. Defendants failed to answer and
then plaintiff moved for a default judgment. Defendants
cross-moved for, among other things, dismissal of the complaint
                              -2-                521625

or, alternatively, an order permitting them to serve a proposed
answer. Supreme Court granted plaintiff's motion and denied
defendants' cross motion. Defendants now appeal, and we affirm.

      In opposing a default judgment, defendants bore the burden
of proving, among other things, that they had a meritorious
defense (see Kostun v Gower, 61 AD3d 1307, 1307 [2009]; Drucker v
Ward, 293 AD2d 891, 891 [2002]). It is well-settled law that
this burden required defendants to put forth nonspeculative
evidence that constitutes a prima facie defense (see Garcea v
Battista, 53 AD3d 1068, 1070 [2008]; New York Hosp. Med. Ctr. of
Queens v Insurance Co. of State of Pa., 16 AD3d 391, 392 [2005];
Peacock v Kalikow, 239 AD2d 188, 190 [1997]; Cooper v Badruddin,
192 AD2d 997, 997 [1993]; Matter of State of New York v Wiley,
117 AD2d 856, 498 [1986]).1 As is relevant to defendants'
alleged standing defense, a plaintiff lacks standing in a
foreclosure action if it did not possess the note at the time of
the commencement of the action (see Aurora Loan Servs., LLC v
Taylor, 25 NY3d 355, 361 [2015]).

      Defendants failed to submit proof that could support a
reasonable conclusion that plaintiff did not possess the note at
the time of the commencement of the action so as to present a
prima facie defense based on standing (compare Dodge v Commander,
18 AD3d 943, 946 [2005]).2 Further, regardless of the merit of


    1
        Defendants' contention that plaintiff had the burden of
disproving that defendants had a meritorious standing defense is
contrary to the law of the four Departments of the Appellate
Division.
    2
        Our dissenting colleague disagrees based on the fact that
the note indorsed to plaintiff has an attached allonge, indorsed
in blank and signed by plaintiff's representative. As we
understand it, the dissent relies on the rule that such an
indorsement in blank paired with the transfer of the note to a
different entity would prove plaintiff's lack of possession of
the note (see generally UCC 3-204 [2]). The problem, however, is
that the dissent conflates the two parts of this rule; it treats
proof of the indorsement in blank as proof of a transfer of the
                                 -3-                 521625

defendants' contention that plaintiff violated the Fair Debt
Collection Practices Act, such a violation invokes a borrower's
rights to monetary damages but is not a defense to a mortgage
foreclosure (see 15 USC § 1692k). Thus, defendants failed to
present proof sufficient to establish a prima facie defense (see
Garcea v Battista, 53 AD3d at 1070).3 Accordingly, Supreme Court
properly granted plaintiff's motion for a default judgment.

         Egan Jr., Devine and Mulvey, JJ., concur.


Lynch, J. (dissenting).

      I respectfully dissent. In opposing plaintiff's motion for
a default judgment through their cross motion, defendants Shelly
A. Jameson and Danny J. Jameson (hereinafter collectively
referred to as defendants) were required to show both a
reasonable excuse for the default and a meritorious defense (see
Kostun v Gower, 61 AD3d 1307, 1307 [2009]). Since plaintiff has
conceded that defendants' excuse was reasonable, the issue
distills to whether defendants have demonstrated a meritorious
defense. The focus here is on defendants' claim that plaintiff


note to a different entity. In contrast, we look for evidence
that directly, or by way of reasonable inference, bears on the
issue of possession of the note at the time of the commencement
of the action. On this point, nothing in the record contradicts
the sworn statement of plaintiff's representative, Brittany
Lipscome, that "[a]t the date of [the] commencement of this
action[, plaintiff] was the holder of the note."
     3
        We recognize that the Second Department has squarely held
that parties in defendants' position, having failed to make a
pre-answer motion or to answer, have waived the defense of
standing despite the fact that the they seek a renewed
opportunity to answer (see Deutsche Bank Natl. Trust Co. v
Hussain, 78 AD3d 989, 990 [2010]; HSBC Bank, USA v Dammond, 59
AD3d 679, 680 [2009]; see generally CPLR 3211 [e]). However, we
need not decide that issue given that, in any event, defendants
failed to present a prima facie defense based on standing.
                              -4-                521625

lacks standing. Plaintiff maintains that, through their default,
defendants have waived the standing defense and that, in any
event, the record confirms that plaintiff has standing as the
holder of the note.

      As a threshold matter, I do not agree with plaintiffs that
defendants waived their right to assert standing simply by virtue
of their default. To hold otherwise would deprive defendants of
their right to seek statutory relief from a default pursuant to
CPLR 5015 (a) (1). That is particularly so here where plaintiff
has conceded that the default was excusable (compare Deutsche
Bank Natl. Trust Co. v Hussain, 78 AD3d 989, 989 [2010]; HSBC
Bank, USA v Dammond, 59 AD3d 679, 680 [2009]).

      As the majority points out, the question of standing here
pertains to whether plaintiff had possession of the note at the
time the action was commenced (see Aurora Loan Servs., LLC v
Taylor, 25 NY3d 355, 361 [2015]). A review of the note shows
that it was indorsed over to plaintiff through an allonge dated
January 17, 2008, which I agree established plaintiff as the
holder of the note at that time. The nuance, however, is that
the allonge includes a further undated indorsement in blank
signed by plaintiff's representative. In her opposition
affidavit, defendants' attorney pointed out certain anomalies in
the note, including the fact that plaintiff had signed the blank
indorsement – which counsel suggested was an indication that the
note had been transferred. While that contention may be
speculative, nowhere in plaintiff's response does it explain the
purpose of the blank indorsement. In reply, plaintiff's counsel
simply referred again to the allonge and the affidavit of
plaintiff's representative, Brittany Lipscomb. Based on her
review of plaintiff's business records, Lipscomb averred that
plaintiff was "the holder of the note." While that statement is
certainly accurate by virtue of the allonge, she does not address
the blank indorsement. Plaintiff's only explanation is set forth
in its brief, where it reasons that the indorsement is proof that
plaintiff obtained possession of the note. Fair enough, but that
point in no way explains the purpose of the blank indorsement or
whether plaintiff still retained possession when the action was
commenced in March 2014. Moreover, since the blank indorsement
is undated, we are left uncertain whether it was signed before or
                              -5-                  521625

after the action was commenced (compare CPLR 1018; CitiMortgage,
Inc. v Rosenthal, 88 AD3d 759, 761 [2011]). In my view, the
presence of an undated blank indorsement that plaintiff has
completely failed to explain raises a plausible, factual issue as
to plaintiff's standing. As defendants have raised a meritorious
defense, Supreme Court should have granted their cross motion
authorizing them to serve an answer (see CPLR 5015
[a] [1]).



     ORDERED that the order is affirmed, with costs.




                             ENTER:




                             Robert D. Mayberger
                             Clerk of the Court
