INDEX NO.

09-3 1067

SUPREME COURT - STATE OF NEW YORK

I.A.S. PART 21 - SUFFOLK COUNTY

PRESENT:
Hon. JEFFREY ARLEN SPINNER MOTION DATE 1-19-10
Justice of the Supreme Court ADJ. DATE 5-1 2-10
Mot. Seq. # 001 - MD
# 002 - XMD

X
MORTGAGE ELECTRONIC REGISTRATION : SOLOMON & SIRIS, P.C.
SYSTEMS, INC., its Successors and/or Assigns, : Attorney for Plaintiff
50 Charles Lindbergh Boulevard
Plaintiff, Uniondale, New York 11553

- against - KAUFMAN ENGLETT & LYND, LLC

Attorney for Defendant
DONALD J. TORR, 15 1 Wymore Road, STE 1000
Altamonte Springs, FL 32714
Defendant. :

Upon the following papers numbered 1 to 1 5read on this motion to dismiss and cross motion for a default judgment;
Notice of Motion/ Order to Show Cause and supporting papers 1 - 3 ; Notice of Cross Motion and supporting papers 4 - 15
;Answering Affidavits and supporting papers -; Replying Affidavits and supporting papers -; Other -; -(
g it is, )

ORDERED that this motion by defendant pursuant to CPLR 321 1 dismissing the plaintiffs
complaint for failure to state a cause of action, is denied; and it is further

ORDERED that this cross motion by the plaintiff for a default judgment on its complaint seeking
a declaration quieting title and establishing its mortgage of record, is denied without prejudice.

The plaintiff, Mortgage Electronic Registration Systems, Inc., its Successors and/or Assigns
(“MERS”), commenced this action pursuant to Article 15 of the RPAPL for the establishment of record
of its alleged mortgage interest in a parcel of real property located at 18 Winterberry Lane, East
Hampton, New York. MERS alleges that defendant Donald J. Torr (“Torr”) acquired title to this
property by deed dated May 24, 2003, and that on or about November 17,2006, Torr obtained a
mortgage loan from its nominor, Mortgage Lenders Network USA, Inc. (“MLN”) in the amount of
$695,000.00, thereby encumbering the premises. MERS alleges that the mortgage was never recorded,
and upon information and belief, has been lost or inadvertantly destroyed. MERS commenced this action
on August 1 1, 2009, with the filing of the summons, verified complaint, and notice of pendency. Torr
has not served an answer.
MERS v Torr
Index No. 09-3 1067
Page No. 2

Torr now moves pursuant to CPLR 321 1 for an order dismissing the complaint for failure to state
a cause of action. Torr alleges that MERS is not in possession of any evidence of the alleged mortgage.
In addition, alleges Torr, the plaintiff has no proof of the original note which would evidence a right to
enforce the mortgage. Torr states that without the note and mortgage, it is impossible to determine if the
plaintiff named in the caption is even a proper party. As such, Torr asserts that there may be
indispensable parties who are not known. Torr concludes that without the above-referenced instruments,
the plaintiffs complaint fails to state a cause of action.

MERS opposes Torr’s motion and cross-moves for a declaratory judgment, on default, pursuant
to CPLR 3001 and RPAPL 1501 quieting title and establishing its mortgage of record. MERS contends
that Torr is seeking to avoid his obligation and obtain a windfall. In opposition to Torr’s motion, MERS
submits affidavits of service and alleges that Torr was served with process in this action on September 2,
2009. MERS alleges that rather than respond to the summons and complaint within the time prescribed
by law, Torr did nothing until this motion, which is made three months after his default. It contends that
Torr does not deny that he was served with process, nor does he deny signing and delivering the subject
mortgage. Thus, argues MERS, Torr, who is in default, has brought a pre-answer motion to dismiss the
complaint without demonstrating a reasonable excuse for his default or a meritorious defense. In short,
alleges MERS, Torr’s motion is untimely and lacking in merit.

Also, in support of its cross motion, MERS submits, inter alia, copies of the alleged note and
mortgage, and the affidavit of John Burnett ( “Burnett”), a Vice President of Deutsche Bank National
Trust Company as Trustee for the MLMI Trust Series 2007-MLNI (“Deutsche Bank”) who alleges that
Deutsche Bank is the current owner and holder of the mortgage that is the subject of this action. Burnett
claims that MERS’ mortgage has been assigned to Deutsche Bank by an unrecorded assignment of the
mortgage acknowledged on September 4,2009, a copy of which has been submitted to the court. Burnett
states that the assignment will be recorded once the mortgage has been established of record. Further,
Burnett alleges that out of the loan proceeds that were secured by the mortgage, $641,441.54 was paid to
Downey Savings and Loan to satisfy a prior mortgage Torr had given on the property, and the amount of
$34,833.22 was paid directly to Torr. Burnett submits a copy of the alleged HUD- 1A Settlement
Statement from Torr’s closing.

Additionally, Burnett asserts that it has been discovered that the original mortgage was never
recorded, cannot be located, and is presumed to be lost or inadvertantly destroyed. He claims that the
original mortgage is not in Deutsche Bank’s files, and only a copy has been located. Burnett states that
Interactive Abstract (“Interactive”) a title abstract company, presided over the November 17, 2006
closing of the mortgage and took the executed original for the purpose of recording it in the Suffolk
County Clerk’s Office. He states that, upon information and belief, the mortgage was lost, misplace or
destroyed while in Interactive‘s possession or after it had been submitted to the Clerk’s Office for
recording. Burnett alleges that he has been advised that Interactive has ceased operating as a title abstract
company and is out of business.

MERS alleges that by submitting the affidavit of Burnett, and copies of the affidavits of service,
together with the relevant documentary evidence, it has satisfied the proof required by CPLR 321 5
setting forth the facts constituting the claim against Torr and establishing his default. Moreover, MERS
MERS v Torr
Index No. 09-3 1067
Page No. 3

alleges that the relief sought herein, a declaratory judgment, is necessary to enable it to realize the
security interest in the property that was bargained for when MLN made its $695,000.00 loan to Torr and
Torr gave the mortgage to secure the loan. MERS requests that the court render a judgment declaring
that the plaintiff is the holder of a mortgage encumbering the premises under the terms and conditions
set forth in the unrecorded plaintiffs mortgage, and directing the Suffolk County Clerk’s Office to
record such a declaratory judgment, together with a copy of the plaintiffs mortgage.

As to Torr’s motion to dismiss the complaint for failure to state a cause of action, MERS has
established that such motion is untimely. Torr was served by two different methods of service. One of
the affidavits of service submitted indicates that Torr was served pursuant to CPLR 308(2) on September
2, 2009, by leaving the summons and verified complaint with a person of suitable age and discretion;
mailing them to Torr’s residence on September 8,2009; and then filing proof of service with the Suffolk
County Clerk’s Office on September 18, 2009. Therefore, under this method of service, Torr would have
had to have served an answer or a notice of appearance by October 28,2009 (see CPLR 308[2]; CPLR
320; and CPLR 3012). The other affidavit of service submitted indicates that Torr was served pursuant
to CPLR 308( 1) on September 2,2009, by personal delivery of the summons and verified complaint, and
then fiIing proof of service with the Suffolk County Clerk’s Office on September 10, 2009. Thus, under
this method of service, Torr would have had to have served an answer or a notice of appearance by
September 22, 2009 (see CPLR 320 and CPLR 30 12). Furthermore, this motion to dismiss the complaint
was made by Torr on December 2 1,2009, the date upon which it was served (see CPLR 221 1).
Inasmuch as this motion was not interposed within the time required for service of responsive pleadings
(see CPLR 32 1 1 [e]), no matter which of the two afl’ldavits of service submitted herein is used, the
motion is untimely. Therefore, Torr’s motion to dismiss is denied.

As to MERS’ cross motion, it is well settledl that when applying for a default judgment, a
plaintiff must submit evidence sufficient to demonstrate a prima facie case (see CPLR 32 lS[fl;
Silberstein v Presbyterinn Hosp. in the City of New York, 96 AD2d 1096,463 NYS2d 254 [1983]).
Thus, if a court finds that the allegations in a complaint or affidavit of facts fail to establish a prima facie
case, a movant is not entitled to the requested relief; even on default (Dyno v Rose, 260 AD2d 694,687
NYS2d 497 [1999]; Green v Dolplzy Construction Co., Inc., 187 AD2d 635, 590 NYS2d 238 [1992]).
Consistent with the foregoing, and upon review of t.he papers submitted, the court finds MERS’
application for a default judgment to be deficient.

An action to compel the determination of a claim to real property may be maintained where a
plaintiff claims an estate or interest in real property (RPAPL § 150 I [ 11). Although the interest had by a
mortgagee of real property or its successor in interest is an “interest in real property”(RPAPL tj 150 1 [ 5 ] ) ,
here MERS has failed to meet its burden by demonstrating that it has standing to maintain this action to
quiet title (see Soscin v Soscin, 35 AD3d 841, 829 NYS2d 543 [2006]). MERS has failed to make a
prima facie showing that it was the owner or holder of the note and the mortgage at the time this action
was commenced (cc Mortgnge Elec. Registration Sys., Inc. v Conkley, 41 AD3d 674, 838 NYS2d 622
[2007]). In addition, the purported mortgage describes MERS as the nominee of MLN, and that for
purposes of recording the mortgage, MERS is the mortgagee of record. Thus, MERS as nominee, is the
agent of MLN, for limited purposes, “and has only those powers which are conferred to it and authorized
by” MLN (Bank ofNew York v Aldernzi, 201 0 NE’ Slip Op. 20 167,900 NYS2d 82 1, 823 [Sup Ct,
MERS v Torr
Index No. 09-3 1067
Page No. 4

Kings County, 20101). There is no evidence that MLN, who is not a party herein, authorized MERS to
bring this action’.

Moreover, the effectiveness of the assignment dated September 4, 2009, is unclear as there is no
evidence that MLN ever directly assigned the note to MERS or expressly gave MERS the authority to
act as MLN’s authorized agent to assign the subject note to Deutsche Bank (see In re Stralern, 303
AD2d 120, 758 NYS2d 345 [2003]; Teitz v Goettler, 191 AD 924, 181 NYS 956 [1920]).Without an
effective transfer of MLN’s interest in the note to MERS or express authorization from MLN for MERS
to assign the note on its behalf, the assignment of the mortgage is a nullity (see Kluge v Fugazy, 145
AD2d 537, 536 NYS2d 92 [1988]). Thus, it is also iinclear whether Deutche Bank’s Vice President had
the authority to act in terms of satisfying the proof of facts constituting this claim (see CPLR 3215[fl;
Wells Fargo Barzk, NA v Davilmar, 16 Misc3d 1 133A, 847 NYS2d 906 [2007]).

Furthermore, even assuming arguendo that Ileutche Bank’s Vice President had the authority to
satisfy the proof required by CPLR 321 5(f), the Burnett affidavit is insufficient. To establish a claim of a
lien by a lost mortgage there must be certain evidence demonstrating that the mortgage was properly
executed with all the formalities required by law and proof of the contents of such instrument (Saduw v
Poskin Realty Corp., 63 Misc.2d 499,312 NYS2d 901 [1970]; see also Edwards v Noyes, 65 NY 125
[ 18751). Here, Burnett’s affidavit simply states that the original mortgage is not in Deutche Bank’s files,
and that he is advised that the title company is out of business. Burnett gives no specifics as to what
efforts were made to locate the lost mortgage (see Alversorz v Marslzall, 159 AD 637, 145 NYS 96
[ 19 13]), and fails to disclose the sources of his information (see Harvey v Guaranty Trust Company of
New Yovk, 134 Misc 417,236 NYS 37 [1929], affa‘229 AD 774 [1930], affd 256 NY 526 [1931]). More
importantly, there is no affidavit from MLN by an individual with personal knowledge of the facts that
the complete file concerning this mortgage was transferred to Deutche Bank and that the copy of the
mortgage submitted to the court is an authentic copy of Torr’s mortgage.

Accordingly, the motion by defendant to dismiss the

/-
by plaintiff for a default judgment is denied without

FINAL DISPOSlTION X NON-FiNAL DISPOSITION

‘Although there is also reference to MERS in the mortgage under the section entitled
“Borrowers Transfer to Lender of Rights in the Property,” the language therein is “an
acknowledgment by the borrower. The fact that the borrower acknowledged and consented to
MERS acting as nominee of the lender has no bearing on what specific powers and authority the
lender granted MERS” (Bank ofNew Yovk v AIderazi, 201 0 NY Slip Op. 201 67, 900 NYS2d
82 1, 824 [Sup Ct, Kings County, 201 01).