Supporting, Informing & Connecting People in Foreclosure
Article Published by Fox Rothschild, LLP Attorneys at Law
PLAINTIFF IN FORECLOSURE CASE CANNOT SUBSEQUENTLY CURE LACK OF STANDING ON DAY COMPLAINT IS FILED
POSTED BY ROBERT ROHRBERGER ON AUGUST 16, 2011
In Deutsche Bank National Trust Company v. Mitchell, the Appellate Division ruled
that, when a plaintiff files a mortgage foreclosure action, it must have either an assignment or possession of the Note on the day that the complaint is filed, and the a lack of standing cannot be cured after the fact.
In Deutsche Bank National Trust Company v. Mitchell, the Appellate Division ruled that, when a plaintiff files a mortgage foreclosure action, it must have either an assignment or possession of the Note on the day that the complaint is filed, and the a lack of standing cannot be cured after the fact.
In Deutsche Bank National Trust Company, the plaintiff filed its original complaint before the mortgage was assigned to it, but the plaintiff obtained an assignment on the next day and immediately afterward filed an amended complaint reflecting the assignment. The trial court concluded that the plaintiff had cured the standing defect and granted summary judgment for the plaintiff. Subsequently the plaintiff purchased the property at a sheriff's sale.
The Appellate Division reversed. The court rejected plaintiff argument that the appeal was moot because defendant did not seek a stay of the sheriff's sale and the sale had been completed. The court noted that the merits of an issue should be considered notwithstanding mootness if significant issues of public import appear. The court considered the issues in this case to be important and choose to address the underlying merits.
The court noted that as a general proposition, a party seeking to foreclose a mortgage must own or control the underlying debt. Absent ownership or control, the plaintiff lacks standing to proceed with the foreclosure action and the complaint must be dismissed. The court held that either an assignment or possession of the note prior to the filing of the complaint is required to obtain standing to foreclose and that any defect in standing at the time that the complaint is filed cannot be cured subsequently.
The plaintiff did not have an assignment as of the day it filed the complaint and it had not did demonstrated that it possessed the note. The Appellate Division remanded to the trial court to allow plaintiff to submit proof that it had possession of the note before filing the original complaint.
The court also noted that the proofs presented by plaintiff in support of summary judgment were inadequate because the certifications were not based on personal knowledge. The plaintiff provided an attorney certification stating that his knowledge was based on his custody and review of the plaintiff ‘s computerized records which were made in the ordinary course of business as part of plaintiff's regular practice to create and maintain said records and which were recorded contemporaneously with the underlying transactions. The Court held that this attorney certification did not meet the requirement of personal knowledge and noted that attorney’s should not certify to facts within the primary knowledge of their clients.
The court also noted that recent amendments to the Court Rules require a plaintiff's attorney in all residential foreclosure actions must verify that the plaintiff's attorney spoke directly to an employee of the client or loan servicer to ensure that the information provided in the documents is accurate. The Court's order of June 9, 2011, applied this requirement to all pending residential foreclosures where there has not been a sheriff's sale.