Stop Foreclosure with no legal standing defense in NY

Bank's Foreclosure Case tossed out in NY

Case Law
American Brokers Conduit v Zamalloa
2007 NY Slip Op 32806(U)
Docket Number: 0007206/2007
September 11, 2007

Plaintiff American Brokers Conduit c/o Home Mortgage Servicing brought an application for judgment of foreclosure and sale against defendant involving a Brooklyn property at Kings County. In less than a month from the commencement of the action, Plaintiff assigned the mortgage to American Brokers Conduit. This assignment was duly recorded at the Office of the City Register of the City of New York.

The plaintiff submitted evidence to prove the existence of the mortgage and the note as well as the default of the defendant in payments.

The Court had no choice but to deny the application for judgment of foreclosure and sale considering that the plaintiff lacks standing to continue the action. In explaining its basis, the Court cited the case of Saratoga County Chamber of Commerce. Inc. v Pataki, [540 U.S. 1017 (2003)] where the Court of Appeals defined and explained the legal concept of "legal standing." The courts have the power to resolve controversies and therefore a person who is not involved in a genuine controversy has no standing to bring a lawsuit. Another case cited to explain "standing" is the case of Caprer v Nussbaum (Index No. 22372/03), where the court defined the concept as an interest in the claim recognized by law as a sufficient basis for the plaintiff to bring the action at his instance.

Finally, the Court suggested that considering that the existence of the mortgage and note were established including the defendant’s default on payments, the plaintiff may request for substitution of American Brokers Conduit as party plaintiff pursuant to CPLR Section 1021 provided that there are no changes to material facts.

Lesson Learned: This case was filed before the Supreme Court, Kings County. This case was decided by one of the more prominent justices of Brooklyn, Justice Arthur M. Schack. He consistently denied or dismissed foreclosure cases when the paperwork is not completed. Defective "paperwork" referred to defects in verified complaints, affidavits, power of attorney granted, transfer or assignment of the mortgage after initiating a complaint/action for foreclosure or lack of evidence to prove that the mortgage was indeed assigned. Lawyers are often strongly reminded and even censured should they file complaints for parties without standing to sue which act may be considered frivolous conduct punished under the Rules of New York Law, specifically Rule 130.

In the instant case, although the existence of the mortgage and the note, the default of the defendant were established; the ownership of the mortgage was not. The Court had this occasion to once again reinforce the necessary elements to establish a prima facie foreclosure case, i.e. existence of the mortgage and the note, the default of the defendant and the ownership of the mortgage.

"If standing is denied, the pathway to the courthouse is blocked. The plaintiff who has standing, however, may cross the threshold and seek judicial redress." Saratoga County Chamber of Commerce. Inc. v Pataki, [540 U.S. 1017 (2003)]

Written by Kevin Levonas and Giselle G.