Aurora Loan Services v Sattar n Mers Opinion

8/7/2019 Aurora Loan Services v Sattar n Mers Opinion

1/16

P R E S E N T :HON. ARTHUR M. SCHACK

At an IA S Term, Part 27 ofthe Supreme Court of theState of New York, held inand for the County ofKings, at the Courthouse,at Civic Center, Brooklyn,New York, on the 9th dayof October 2007

AURORA LOAN SERVICES, LLC,Plaintiff,- against - DECISION & ORDER

IABDUL SATTAR; MORTGAG E ELECTRON1CREGISTRATION SYSTEMS, INC. AS N O M m !EFOR FIRST MAGN US FINANCIAL CORPOR ITION;LOURDES BELTRE; et. al.,Defendants.

Index No. 15208/07

The following papers numbered 1 read on this 11lotion: Papers Numbered:Proposed Order of Publication and Appoiniment of aGuardian Ad Litem (Affidavits and Exhib it,, Ani iexed)- 1

Aurora Loan Services, LLC, (A uro ri) all cges to be the plaintiff in this ex parte

-1-


2/16

.-e

-application for an order for service by publication pursuant to CPL R 6 3 16, ondefendants Abdul Sattar and Lourdes Belte, and 'i1.1appoint a guardian ad litem on behalfof defendants served by publication, in an action 1 0 foreclose a mortgage for real propertylocated at 564 Lafayette Avenue, Brooklyn, New York (Block 1788, Lot 44, County ofKings). The plaintiff lacks standing to bring this &on. Aurora is not now nor has everbeen the creditor for the Sattar mortgage and note. The instant application is denied.Further, the underlying complaint in this action is dismissed, and the Kings County Clerkis directed to cancel Aurora 's April 24, 2007 notice of pendency against Block 1788, Lot

Additionally, the Court is troubled that Au ora's counsel, Druckm an & Sinel, LLP,and Robert S . Aronin, Esq., of counsel to Druckm n & Sinel, appears to be w astingjudicial resources in an action that could be const1ed as frivolous conduct. Druckman &44, County of Kings.Sinel, at the home page of their website, ww w.cal thebestlawyer.com, has a headline,"Lawyering is a Difficult Business." It certainly is, if your client lacks standing and yourfirm engages in wasting o f judic ial resources.

t

Backpry f t < rl 1 ~ l i ~ h 1 - 1 ~S i i i t i i r lxm-iniclf S-5h.lllbO.1 111h.cu i i I . I r c i M; I~ I I L I~I ~ ~ I I A I I L * ~ ~ I II ' k v p (C I ! I {! I )

I i ~ I Y I~ ' I ~ I Y I I O S ) ( 1 1 1 k r t i h c r 2 5 . 211O0. > ; ~ I I ; I I ' c ' \cclllc ' i l ii Il i ir i! ->'ci)1-k i i l i ~ i < ~ , t l > l ci - ; l i c . 11t11; ' I , ~T -[ l i i >J I ~ ~W I I I:itid ;I I I I O I - ~ ~ ; I ~ L ~(1 ) s c c ' i i r ~ ~~ l i cI t u i i firr 11ic 5h4 I , J ! ~ I , v ~~~ I c: ! ~ i ~ t i ~ ~I NL * I I I ~ - . L - ~M~wiy;.agcI . I c . c + t i ~ i i i i c *l


3/16

IFirst Magnus nominee and m ortgagee of record. The instant mortgage and note wererecorded in the Office of the City Register, New York City Depa rtment of Finance, onJanuary 1 1,20 07, with City Register File Num bcr (CRF N) 2007000022742 [AttorneyAronins September 1 9,2 00 7 affirmation of regularity; April 24 ,2 00 7 Notice ofPendency, April 24, 20 07 summ ons, and April 24,2 00 7 verified complaint - exhibit A ofapplication]. I

I checked the Autom ated C ity Register lnl ormation System (A CRIS ) website ofthe Office of the C ity Register, New York C ity Dzpartment o f Finance, and verified thatthe Sattar Note and M ortgage were recorded on Jm uar y 11, 2007, as stated by counsel forAurora. However, as of today, October 9,2007, K R I S shows there has never been anassignment of the First M agnus m ortgage and noi e by ME RS. Even if the assignmenttook place and was not recorded, Mr . Aronin has Failed to present the court with anydocumentary evidence of an unrecorded assignrnm t. Without any shred of evidence of an

II

assignment from ME RS to Aurora, the Court m u d conclude that Aurora is not the ownerof the mortgage and note.

Aurora, at its website, m .a ls er v ic es .c oi ii , states that it is a Lehman BrothersCom pany. At the page entitled about, it slates ,Ihat, At Aurora , w e shine a light on

innovation in everything we do - - products, relaiionships, solution^." It is quiteinnovative to claim to be a plaintiff, when not a plaintiff.

If the Sattar mortgage and note have Iiot yiat been assigned to Aurora, A urora faces

-3-


4/16

Ia major complication in having the instant mortgCJge and note assigned. Cathy LuebkeIreported in the August 17,20 07-e dition of The Bisin ess Journal of Phoenix, in herbylined article, Tucsons First Magnus Financial cuts off loan funding, sends workershome:

First Magnus Financial Corp., onk of the nations largestprivately held m ortgage companies has fa1 len victim to the m ortgageindustry m eltdown.

The Tucson companys Web site and Dhone service say FirstIMagnus will not fund any future mortgage loans. Em ployees and

customers are asked to leave a message w -t hany questions. TheAssociated Press reports that the majorityif the companys workerswere sent hom e Thursday and that an official said a bankruptcy filing

I

is possible.First Magnus, at its website, www.f i rm_enus .com,has the following

announcement on the home page:Notice of Filing Chapter 1 I Bankruptcy Petition

On Augu st 2 1, 2007, First Magnus filed a voluntary petition for reliefunder Chapter 11 of the U.S. Bankriiptcy Cod e in the U.S. Bankruptcy

-4-
http://www.firm_enus.com/http://www.firm_enus.com/


5/16

Court for the District of Arizona, Case N o .I 4-07-bk-01578. GreenbergTraurig, LLP is acting as legal counsel to Jirst Magnu s with respectto the bankruptcy. First Magnus will post additional information about the Chapter11 case on this website as it becomes available.Mr. Aronin, in 7 1 of his affirmation of regularity, state s I am of-counsel to theIlaw firm of DRUCKMAN & SINEL, LLP, attorneys for the plaintiff in the within

foreclosure action. I am fully familiar with the silbject matter o f this action . . . Stuart L.Druckm an, Esq., in his April 24, 2007 verification o f the instant com plaint, claims thatthe summ ons and com plaint is true to affirmants own knowledge, except as to thematters therein stated to be alleged on information and belief. Th e April 24, 2007complaint, in unequivocal language recites in 7s 2 and 3 the details about the executionand recording of the First Magnuss mortgage and note to defendant Sattar. Thecomplaint then states:

I

3A. The note and mortgage were there afi a duly assigned to plaintiffby an assignment to be recorded, if ripplicable.The plaintiff [Aurora] is still the OR Tier and holder of the noteand mortgage.

More than five months (168 days to be exact) h;ive elapsed from April 2 4,2 00 7 toOctober 9,2 00 7. Yet, there is no evidence of thc alleged assignment from MERS toAurora. This Court must conclude that Aurora i - not now, and has never been, the

4.

-5 -


6/16

lawsuit. . .A w ant o f "standing to sue," in other words, is jus t another


7/16

plaintiff lacks standing to sue, the plaintiff may not proceed in the action . Stark vGoldberq, 297 AD2d 203 (1st Dept 2002).

It is clear that plaintiff Aurora lacks stantfing to fo reclose on the instant Sattarmortgage and note. Aurora has never established ownership o f the m ortgage and note.Despite alleging in 7 3A of the complaint, that the note and mo rtgage were thereafterduly assigned to plaintiff by an assignm ent to bc recorded, no evidence has beenpresented to the Court of this alleged assigi!menl. The Court, in Campaign v Barba, 23AD3d 327 (2d Dept 2005), instructed that [ tlo establish a prima facie case in an action toforeclose a mortgage, the plaintiff m ust estiiblisli the ex istence of the m ortgage and themortgage note, ownership of the mortgage, and fhedefendants default in payment [Emphasis added]. See Witelson v Jamaica Es th es Holding Corp I, 40 AD3d 284 (1Dept 2007); Household Finance Realty Coip. olN ew York v Wynn, 19 AD3d 545 (2dDept 2005); Sears Mortgage C o p . v Yahliobi, la-)AD3d 402 (2d Dept 2005); OcwenFederal Bank FSB v Miller, 18 AD3d 527 (2d P cp t 2005); U.S. Bank Trust Nat. AssnTrustee v Butti, 16 AD3d 408 (2d Dept 2005); First Union M ortgage Corp. v Fern, 298AD2d 490 (2d Dept 2 002); Village Bank v Wild Oaks, Holding., Inc., 196 AD2d 8 12 (2dDept 1993).

I

Since Aurora d oes not have ow nership o:f the Sattar mortgage and note, the Courtmust not only deny the instant application f1)r set-viceby publication and appo intment of aguardian ad litem, but dism iss the underlyirig foreclosure action.

-7-


8/16

--I

With dismissal o f the com plaint, the notice of pendency filed by Aurora must becancelled. CPLR 6 65 0 1 provides that the filing of a notice of pendency against aproperty is to g ive constructive notice to any purchaser of real property or encumbranceragainst real property of an action that would 2-1 tfect the titl e to, o r the possession , use orenjoyment of real property, except in a sum m ap proceeding brought to recover thepossession of real property. Professor David S iegel, in NY Prac, 0 334, at 535 [4th ed]observes about a notice o f pendency that:

The plaintiff files it with the county clerk of the real property county,putting the world on notice of the plaintiffs potential rights in theaction and thereby warning all comers thi!t if they then buy the

I

Iproperty or lend on the strength of it or otbenvise rely on thedefendants right, they do so subject to whatever the ac tion mayestablish as the pla intiffs right.The Court of Appeals, in 5303 Realtv C o ~ p .v 0 & Y Equity Corp, 64 NY2d 3 13,

3 15 (1 984), comm ented that [a] notice of pendsncy, comm only know n as a lispendens, can be a potent shield to litigants claiiiiing an interest in real property. TheCourt, at 3 18-320, outlined the history of the doctrine of lis pendens back to 17hcenturyEngland . It was formally recognized in New Y ork courts in 1815 and first codified in theCode of Procedure [Field Code] enacted in 1848. At 3 19, the C ourt stated that [tlhe

-8 -


9/16

purpose o f the doctrine was to assure that a court retained its ability to effect justice bypreserving its power ove r the property, regardless of whether a purchase r had any noticeof the pending suit, and, at 320, the statutory schem e permits a party to effectivelyretard the alienability of real property without ai i y prior judicial review.

In Israelson v Bradley, 308 NY 5 11 , 5 16 11 1955), the Court observed that with anotice of pendency a plaintiff who has an interesr in real property has received from theState:

an extraordinary privilege which . . . up \m the mere filing of thenotice of a pendency of action, a summons and a complaint andstrict compliance w ith the requirements 0 1 section 120 [of the C ivilPractice Act; now codified in CPLR 5 5 6501,65 11 and 65 121 isrequired. Proper adm inistration of tl ie latv by the courts requ ires

1I

promptness on the part of a litigant so fa w re d and that he acceptthe shield which has been given him upon the terms imposed andthat he not be permitted to so use the privilege granted that itbecomes a sword usable against the ownor or possessor of realty.If the terms imposed are not met, ilre priiileg e is at an end.[Emphasis added]

-9-


10/16

Article 65 of the CPL R outlines notice O:I pendency procedu res. Th e Court, in DaSilva v Musso, 76 NY2d 43 6,4 42 (1990) held that the specific statutorily prescribedmechanisms for implem enting this provisional remedy . . .were designed with a viewtoward balancing the interests of the claim a lit in me preservation of the status quo againstthe equally legitimate interests o f the property o\vner in the m arketability of his title. InIn Re Sakow , 97 NY2d 4 36 ,4 41 (2002), the Coiirt of Appeals, quoted Professor Siegel,in holding that [tlhe ability to file a notice of peridency is a privile ge that can be lost ifabused (Siegel, New York Prac tice 0 336, at 513 .

I

The instant case , with Au rora nev er 11avin2 been a plaintiff, and the com plaintdismissed, meets the criteria for losing a privilese that can be lost if abused. CPLR 665 14 (a) provides for the mandatory cancellation ofa notice o f pendency by:

[tlhe court, upon motion o f any person aggrieved and upon suc hnotice as it may require, shall direct m y c( lunty clerk to cancel anotice of pendency, if se rvice of a suInmolis has not been completedwithin the time limited by section 65 12; 01 ijthe action has beensettled, discontinued or abated;or if .the time to appea l from a fina ljudgm ent against the plaintiff has expired; or if enforcement of afinal judg ment against the plaintiff hl!s not been stayed pursu ant tosection 55 19 . [Emphasis added]

-10-


11/16

IThe plain meaning of the word abated, as u.ed in CPL R 0 65 14 (a) is the ending of anaction. Abatement is defined in Blacks Law Dictionary 3 [7thed 19991 as the act ofeliminating or nullifying. The Court, in Nast;i.ji v Nastasi, 26 AD 3d 3 2 ,4 0 (2d D ept2005) notes that [aln action which has abated is dead, and any furth er enforcement ofthe cause of action requires the bringing o f a nrremains (2A Carmody-Wait 2d 9 11.I). Thc

w action, provided that a cause of actionistasi Court, at 36, held that

[c]ancellation of a notice of pendency can be granted in the exercise of the inherentpower of the court where its filing fails to comply with CPLR 6501 (see 5303 RealtyIC o y . v 0 & Y Equity C o y . , supra at 320-321; .Rosev Mon tt Assets, 250 AD2d 45 1,45 1-452[ 1st Dep t 19981; Siegel, NY P rac 9 336 (4thed]). As Au rora never owned theinstant mortgage and note, and lacked standing to sue, the dism issal of Aurorascomplaint must result in the m andatory cancellatipn of Auroras no tice of pendencyIagainst the property in the exercise of the inherclit power of the Court. The Court willnotify the Kings C ounty C lerk of the cancellation of the notice of pendency

The prosecution of this action by Mr. AronIn and Druckman & Sine1 on behalf ofAurora appears to be frivolous. 22 NYCR R 9 110-1.I (a) states that the Court, in itsdiscretion may impose financial sanctions upon any party or attorney in a civil action orproceeding who engages in frivolous conduct as dsfined in this Part, which shall bepayable as provided in section 130-1.3 of this Subp-lrt. Further, it states in 22 NYCRR tj130-1.1 (2) that sanctions may be imposed upon u y attorney appearing in the action or

-1 1-


12/16

Iupon a partnership, firm or corporation with which the attorney is associated."

22 NYCRR 6 130- 1.1(c) states that:For purposes of this part, conduct is frivolous if:(1) it is completely without merit in law irnd cannot be sup ported

by a reasonab le argument for an exten13ion,modification orreversal of existing law;

(2) it is undertaken prim arily to delay or prolong the resolution o f

the litigation, or to harass or maliciously injure another; or(3) it asserts material factual statements tl!at are false.

IIt is clear that Auro ra's instant application forof the underlying foreclosure action is

by publication and the prosecutionmerit in law" and "asserts

material factual statemen ts that are false."

Part 130 Rules were created, effective Jairuary 1 , 1989, to give thecourts a remedy to deal with frivolous conduc t. 'I'hese stand beside Appellate Divisiondisciplinary case law against attorneys for a h s e of process or malicious prosecution. TheCourt, in Gordon v Marrone, 202 AD2d 104, 11 I) (2d Dept 1994), Zv denied 84 NY2d 8 13(19 9 9 , instructed that:

Conduct is frivolous and can be sanclionc.(lunder the cou rt rule if"it is completely without merit . . . and cannot be supported by areasonable argument for an extensiov, modification or reversal of

-12-


13/16

Iexisting law; or . . . it is undertaken PIimarily to delay o r prolongthe resolution of the litigation, or to harass or maliciously in jureanother" (22 NYCRR 130-1.1[c] [13, 21 . . . ).In L e w v Carol Management Corp oraria , 260 AD2d 27 ,3 3 (1st Dept 1999),

the C urt stated that in determining if sanctiorL re appropriate the Court must look at 1broad pattern of conduct by the offending attcme ys or parties. Further, "22 NYCRR130-1.1 allows us to exercise ou r discretion to impose costs and sanctions on an errant

I he

party . . .I' The Levy C ourt held, at 34, thilt "[s-lanctionsare retributive, in that they punishpast conduct. They also are goal oriented, in that they are useful in deterring futurefrivolous conduct not only by the particular pa n ies, but also by the Bar at large."

The Court, in Kernisan. M.D . v Taylor, i 1 AD2d 869 (2d Dep t 1991), noted thatthe intent of the Part 130 Rules l'is to prevent th e waste of judicial resources and to detervexatious litigation and dilatory or malicious litigation tactics (cf Minister, Elders &Deacons of Refm. Prot. Church of City o f New t ork v 198 Broadway, 76 NY2d 41 1; seeSteiner v Bonhamer, 146 Misc 2d 10) [Emphasis addedJ." Th e instant action by a partythat never had any sta nding is ''a waste of judicial resources." This conduct, as noted inLevy, must be deterred. In Weinstock v Weinstock, 253 AD2d 873 (2d Dept 1998), theCourt ordered the maximum sanction of $ 1 0 , 9 0 0 . ~ ~ 0for an attorney w ho pursued anappeal "com pletely without merit," and holdilrg, at 87, that "[wle therefore award themaximum au thorized amount as a sanction for this conduct (see, 22 NYCRR 13-1)

\

-13-


14/16

calling to mind that frivolo us litigation causes 11 substantial waste of judicial resourcesto the detriment o f those litigants who com e to the Court with real grievance s [Emphasisadded)." Citing Weinstock, the A ppella le Division, Second Department, in BernadettePanzella, P.C. v De Santis, 36 AD3d 734 (2d L-9 t 2007), affirmed a Supreme Court,Richmond County $2,500.00 sanction, at 736, a.; "appropriate in view of the plai nti ffswaste of judic ial resources [Em phasis added]

In Navin v M osquera, 30 AD3d 883 (3d Ilep t 2006), the Court instructed thatwhen considering if specific conduct is sanction,ible as frivolous, 'kou rts are required toexamine 'whether or not the conduct was continued when its lack o f legal or factual basiswas apparent [or] should have been apparent' (2 2 NYCRR 130-1.1 [c])." In Sakow exrel. Columbia Bagel, Inc. v Columbia Bagel, Inc., 6 Misc 3d 939, 943 (Sup C t, New Y orkCounty 2004), the C ourt held that "[i]n assessing whether to a ward sanction s, the Courtmust consider whether the attorney adhered to th c standards of a reasonable attorney(Principe v Assay Partners, 154 Misc 2d 702 [Sup Ct, NY County 1992])." In the instantaction, pla int iffs attorney should have determincd if ME RS ever assigned the Sattarmortgage and note to Aurora. A "reasonable attwney" can easily perform an ACRISsearch before commencing a foreclosure action to determine if his client actually ownsthe mortgage and note in question.

I

Since Mr. Aronin and the firm of Dr uck mm & Sine1 have not previously engagedin any frivolous conduct before this Court, alid t h y must explain this decision and order

-14-


15/16

Ito their client, Aurora, a Lehm an Brothers subsidiary, this Court will not pursue sanctionsand costs against Mr. Aronin and Druckman & Sinel. This Court issues the strongest

warning possible t o both M r. Aronin and Druchinan & Sinel that any future waste ofjudicial resources w ill not be tolerated ant1 will result in hearing pursuant to 22 NY CRR3 130- 1.1, to determ ine if they engaged in rrivo 1ous conduct.

ConclusionAccordingly, it is

ORDERED that the application of allegt ?laintiff Auro ra Loan Services, LLC,for an order of service by publication, pursuant to CPLR 6 3 16, on defendants AbdulSattar and Lourdes B elte, and to appoint il guarldianad litem on behalf of defendantsserved by publication, in an action to foreclose ;/ mortgage for real property located at 564Lafayette Avenue, Brooklyn, New York (Block 1788, Lot 44, County o f Kings), is

I

denied; and it is furtherORDERED , that since alleged plai niiff Aurora Loan Services, LLC, lacks standing

and is not the mortgagee in this foreclosure actit In, this action, Index # 15208/07, isdismissed; and it is further

ORDERED, that the April 24, 20 07 Notice of Pendency, docketed by the KingsCounty Clerk on M ay 2, 2007, filed by a lle3ed jllaintiff Aurora Loan Services, LLC, in anaction to foreclose a mortgage for real property located at 564 Lafayette Avenue,Brooklyn, New York (Block 1788, Lot 44, illouiity of Kings) is cancelled; and it is hr th er

-15-


16/16

IORDERED, that Mr. Ronald D. Iiratt, r r i ~ rPrincipal Law Clerk, shall personally

serve the Kings County Clerk with a copy of this decision and o rder.This constitutes the Decision and OI*der( lf the Court.I

E N T E R

HON.~ ARTHUR M. SCHACKJ. S. C.

-16-

Documents

Aurora Loan Services v Sattar n Mers Opinion