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Deutsche Bank Natl. Trust Co. v Seidlin

2011 NY Slip Op 31551(U)

June 6, 2011

Sup Ct, NY County

Docket Number: 105162/2009

Judge: Saliann Scarpulla

Republished from New York State Unified CourtSystem's E-Courts Service.

Search E-Courts (http://www.nycourts.gov/ecourts) forany additional information on this case.

This opinion is uncorrected and not selected for officialpublication.

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SUPREME COURT OF THE STATE OF NEW YORK - NEW YORK COUNTY

DEUTSCHE BANK NATIONAL TRUSTSEIDLIN, MARTINSequence Number : 002VACATE NOTE OF ISSUE/ READINESS

vs

PART / 9INDEX NO.

MOTION DATEMOTION SEQ. NO.MOTION C A L. NO .

The following papers, numbered 1 to were read on this motion tolforFAPER$ LUMBERED

Notice of Motion/ Order to Show Cauae - Affldavlts - Exhibits ...Answering A ffidavits - ExhibhnReplyingAffldavltsCross-Motion: fa es [7 NoUpon the foregoing papora, It is ordered that this motion

F I L E D

Iated: f /{ kCheck one: FINAL DISPOSITIONCheck if appropriate: D O NOT POST 0 EFERENCE

J .S.C.

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SUPREME COURT OF TH E STATE OF NEW 40RKCOUNTY OF NEW YORK: CIVIL TERM: PART 19__________________"________________II___-"---- - - - - -- - - - - -- - - - -- - - - - XDEUTSCHE BANK NATIONAL TRUST COMPANY,AS TRUSTEE FOR AMERICAN HOM E MORTGAGEASSETS TRUST 2006-5 MORTGAGE-BACKED PASS-T m O U G H C E RT IF IC A TE S, SERIES 2006-54600 Regents BoulevardSuite 200Irving, TX 75063-1730

Index Number 105162/2009Submission Date 2/16/11Mot. Seq. No. Qo2DECISION and ORDER

Plaintiff,-against-

MARTIN SEIDLIN, JUNGKIL HAN, INA ZALOOM, F I L E DJOHN DOE (Said name being fictitious, it being the JUIJ 08 2011intention of Plaintiff to designate any and all occupants,tenants, persons or corporations, if any, having or claimingan interest in or lien upon the premises), NEW YORKCLERK'S OFFICE

- .Appearances: For Plaint i ff : For Defend ant Tna Zaloom:Stein Simpson & Rosen, P.A.By David B. Simpson, Esq.Rockefeller PlazaI270 Avenue of the Americas, Suite 220New York, New York 10020

Steven J. Baum, P.C.By Jill Anderson, Esq.220 Northpointe Parkway Suite GAmherst, N Y 142287 16-204-2400 2 12-557-1520Papers considere d in review of this motion for summary j u d p e n t :Pap e r s NumberedIAC's Notice of Mot. and Affirm in Supp with Exhib. Attached ................................. 1Turner's Affirm. in Opp with Exhib. Attached .......................................................... LIAC's Reply Affirm. in Further Supp an d Op p ......................................................................... 3

HON SALIANN SCARPULLA, J.:In this foreclosure action, plaintiff (hereinafter "Deutsche Bank") moves for leave

to voluntarily discontinue w ithout prejudice pursuant to CPLR 3217(b) "due to the1

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assignm ent of the mortgag e being incorrectly and/or incompletely ackn owled ged.(Anderson Affirm., 7 6). Defen dant Ina Zaloom (Zaloom), on behalf of herself and co-defendant M artin B. Seidlin (Seidlin), cross-moves for summary judg me nt, seekingdismissal of the plai nti ffs com plaint with prejudice and an order (a) that no amounts areowed by Zaloom to D eutsche Bank under the mortgage note; (b) that plaintiff may notforeclose the subject mortgage; (c) that bars D eutsche Bank from seeking a deficiencyjudgment against Zaloom; an d (d) that aw ards sanctions against Deutsche Ban k pursuantto 22 NYCRR 5 130-1.1, including rea sonable attorneys fees.

Zaloom argues that De utsche Bank should not be permitted to withdraw thisforeclosure action, because De utsche Bank has been caught in acts o f fraud in theprosecution of this action. Zaloom attests that for tw o years following commencementof this foreclosu re action, De utsch e Bank provided allegedly insufficient, contradictoryand false information in resp onse to discovery requests se eking the original note andproo f of assignm ent before finally adm itting that it did not possess requisite documents.In suppo rt, Zaloom cites a few lower court decisions, pursuant to which withoutpossessing the original note an d proof of assignment, one has no standing to bring anapplication of foreclosure, and su ch an action may be frivolous. See e . g . ,ResurgentCapitalServs., LLC v Mackey, 201 1 N.Y. Slip. Op. 21 159, *2-3 (Sup .Ct., Nassau County,May 2 , 2 0 11); see also Deutsche Bank Natl. Trust Co. v Campbell, 2 1 Misc.3d 1145A(Sup.Ct., Kings County, December 16,20 08). As a result of the ex penses incurred in two

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years of defending an allegedly b aseless proceeding and suffering damaged credit and acloud on the propertys title, Zaloom seeks dismissal with prejudice.

Zaloom a lso wishes t o pursue her counterclaim for fraud in the execution of abait-and-switch tactic at the closing on the purchase of the subjec t property by theoriginal lending entity, non -party Am erican Brokers Conduit, and the broker, non-partyCutaia Mortgage G roup, Inc.

DiscussionThe determination of a motion for leave to voluntarily discontinue an action,

without prejudice, pursuant to CPLR 32 17(b), rests w ithin the sound discretion of thecourt. See Expedite Video Conferencing Services, Inc. v Botello, 67 A.D.3d 961, 961 (2ndDept 2009). In the absence of special circumstances, such as prejudice to a substantialright of the defendant, or other improper consequences, a motion for a voluntarydiscontinuance shou ld be granted. Id. The mere delay, frustration a nd expense inpreparation of a contem plated defense do not constitute prejudice warranting denial of amotion for a voluntary discontinuance under CPLR 32 17(b), where plaintiff presents areasonable explanation for withdrawing its complaint Eugenia VI VentureHoldings, id ,v MapleWoodEquit;yPartners,L.P., 38 A.D.3d 264, 265 (lStDept007).

Here, defend ants have not established requisite proof of special circumstancesjustifying dismissal of Deutsche Banks com plaint with prejudice. Defendants have notestablished that Deutsche Banks litigation was frivolous. While some lower court

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decisions maintain th a tt h e forec losure action under similar circumstanc es is invalid, theFirst Department recently held to the contrary in CWCapitaZ Asset Mgt. v Charney-FPG114 4 P S t . , LLC (201 1 N.Y. Slip. Op. 03907 (1 Dept 2011)) that [allthough a plaintiffin a forec losure action must gene rally establish ownership of the mortgage and mortgagenote [citation omitted], an d the pla intif f in this action does not hold the mortgage, it hasstanding to bring the foreclosure action and seek appointm ent of a receiver. The FirstDepartment also held that there is no requirement that the age nts authority to foreclosebe granted in any loan document. Id . Therefo re, because of the current uncertaintiesamong New York courts as to the nature of documents required to commence an action offoreclosure on a securitzed m ortgage pooled in a trust, the Court finds that thisproceeding has not been frivolous.

Further, Zalooms a rgum ent that the present action has had a negative effect ondefendants credit standing an d property title, is unpersuasive, becau se it is undisputed

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that the defendants defaulted on their mortgage. See Great WesternBank v Terio, 200A.D.2d 608, 608 (Znd Dept 1994). Therefo re, there is no justification to forecloseDeutsche Bank from disco ntinu ing this action without prejudice pursuant to CPLR32 17(b) .

However, D eutsche Bank s pleading against defendant Jungkil Han, previousowner of the subject apartment, is dismissed with prejudice, because D eutsche Bank hasnot alleged any basis of claim against him.

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With respect to Zalooms counterclaim, it must also be dismissed without -prejudice. Because both parties agre e that plaintiff canno t currently establish byadmissible documentation assignment of the note and therefore may not foreclose ondefendants mortgage, Zaloom cannot currently establish that De utsche Ba nk at any timeassumed liability for the actions of non-parties A merican Brokers Conduit and C utaiaMortgage Group, Inc.

In accordance w ith the foregoing, it is herebyORDERED that pla intif fs motion brought pursuant to CPLR 3217(b) for leave to

discontinue its application of foreclosure is granted in part and denied in part; and it isfurther

ORDERED that pl ain tiff s plead ing is dismissed without prejudice as againstdefendants Ina Zaloom and Martin Seidlin; and it is further

ORDERED that pla int iff s pleading is dismissed with prejudice as againstdefendant Jungkil Wan; an d it is further

ORDERED that the Clerk of th e County o f New York shall cancel and dischargethe Notice of Pendency filed in this a ction in the Office of the Clerk of the County ofNew York on the 13* day of April, 2009; and it is further

ORDERED that defendant Ina Zalooms cross-motion is denied in its entirety; andit is further

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ORDERED that defendant Ina Zalooms counterclaim is dismissed w ithoutprejudice.

This constitutes the decision and order of the Court.Dated: New York, New YorkJune 6,2011

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NEW YORKCOUNTY CLERKSOFFICE

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