NOMINEE?

NO POWER NO
AUTHORITY
Lane Houk | May 19, 2010 | Comments (0)
There’s more than one way to attack the prima facie case though—here’s a good
example of a nice result from attacking the assignment…

This NY decision lays out the legal reasoning for dismissing cases for
problematic assignments:

Decided on April 19, 2010Supreme Court, Kings CountyThe Bank of New York,
as trustee for the benefit of theCertificateholders, CWABS, Inc., Asset Backed
Certificates, Series 2007-2, Plaintiff,againstSameeh Alderazi, Bank of America,
NA, New York City Environmental ControlBoard, .Plaintiff submits anet al

Upon reading the Affirmation of Linda P. Manfredi, Esq., counsel for thePlaintiff,
dated November 20, 2008, together with Plaintiff’s Memorandum ofLaw, dated
November 19th, 2008, together with the proposed Ex Parte OrderAppointing a
Referee to Compute, and all exhibits annexed thereto, theapplication is denied
without prejudice, with leave to renew upon providing theCourt with proof of the
grant of authority from the original mortgagee toMERS specifically to act in its
interest as related to the secured loanwhich is the subject of this action.Plaintiff
seeks summary judgment to foreclose upon the property located at639 East 91st
Street, (Block 4751, Lot 31), in Kings County.In order to establish prima facie
entitlement to summary judgment in aforeclosure action, a plaintiff must submit
the mortgage and unpaid note,along with evidence of default. Capstone Business
Credit, LLC v. ImperialFamily Realty, LLC, 70 AD3d 882, 895 NYS2d 199 (2nd
Dept 2010). The SecondDepartment has also required a showing that the
mortgage was valid. Washington Mut.Bank, FA v. Peak Health Club, Inc., 48
AD3d 793, 853 NYS2d 112 (2ndDept.2008).In this case, Defendant Sameeh
Alderazi borrowed $408,000.00 from“America’s Wholesale Lender” on January
25, 2007. The mortgage was recorded in theOffice of the City Register, New York
City Department of Finance onFebruary 14, 2007. MERS was referred to in the
mortgage as nominee of themortgagee, America’s Wholesale Lender, for the
purpose of recording the mortgage.MERS purported to assign the mortgage to
Plaintiff BANK OF NEW YORK onJuly 23, 2008. The assignment was recorded
on September 19, 2008. Theassignment was executed by “Keri Selman,
Assistant Vice President of MERS, as“authorized agent pursuant to Board of
Resolutions and/or appointment”. However,no resolution nor other proof of
authority was recorded with theassignment or submitted to the Court.A party
cannot foreclose on a mortgage without having title, giving itstanding to bring the
action. (See Kluge v. Fugazy, 145 AD2d 537, 538 (2ndDept 1988 ), holding that a
“foreclosure of a mortgage may not be brought byone who has no title to it and
absent transfer of the debt, the assignment ofthe mortgage is a nullity”. Katz v.
East-Ville Realty Co., 249 AD2d 243(1st Dept 1998), holding that “[p]laintiff’s
attempt to foreclose upon amortgage in which he had no legal or equitable
interest was without foundationin law or fact”.“To have a proper assignment of a
mortgage by an authorized agent, a powerof attorney is necessary to
demonstrate how the agent is vested with theauthority to assign the mortgage.”
[*2]HSBC BANK USA, NA v. Yeasmin, 19 Misc3d 1127(A), 866 NYS2d 92 (Table)
N.Y.Sup.,2008. “No special form orlanguage is necessary to effect an assignment
as long as the language shows theintention of the owner of a right to transfer it”.
Emphasis added, Id.,citing Tawil v. Finkelstein Bruckman Wohl Most & Rothman,
223 AD2d 52, 55 (1stDept 1996); Suraleb, Inc. v. International Trade Club, Inc.,
13 AD3d 612(2ndDept 2004).The claim in this case is that the mortgage was
assigned by MERS, as thenominee, to the Plaintiff. However Plaintiff submits no
evidence thatAmerica’s Wholesale Lender authorized MERS to make the
assignment. MERS submitsonly its own statement that it is the nominee for
America’s WholesaleLender, and that it has authority to effect an assignment on
America’s Wholesale Lender’s behalf.The mortgage states that MERS is solely a
nominee. The Plaintiff, in itsMemorandum of Law, admits that MERS is solely a
nominee, acting in anadministrative capacity.In its Memoranda, Plaintiff quotes
the Court in Schuh Trading Co., v.Commisioner of Internal Revenue, 95 F.2d 404,
411 (7th Cir. 1938), whichdefined a nominee as follows:The word nominee
ordinarily indicates one designated to act for another ashis representative in a
rather limited sense. It is used sometimes tosignify an agent or trustee. It has no
connotation, however, other than that ofacting for another, or as the grantee of
another.. Id. Emphasis added.Black’s Law Dictionary defines a nominee as “[a]
person designated to actin place of another, usually in a very limited way”.
Agency is a fiduciaryrelationship which results from the manifestation of consent
by one personto another that the other shall act on his behalf and subject to his
control, and consent by the other so to act. Hatton v. Quad Realty Corp., 100
AD2d 609, 473 NYS2d 827, (2nd Dept 1984). “[A]n agent constituted for a
particular purpose, and under a limited and circumscribed power, cannot bind his
principal by an act beyond his authority.” Andrews v. Kneeland, 6 Cow. 354
N.Y.Sup. 1826.MERS, as nominee, is an agent of the principal, for limited
purposes, andhas only those powers which are conferred to it and authorized by
itsprincipal.In the mortgage in this case, MERS claims, as nominee, that it was
grantedthe right “(A) to exercise any or all of those rights, including, but notlimited
to the right to foreclose and sell the Property, and (B) to takeany action required
of the Lender including, but not limited to, releasingand canceling this Security
Instrument.” However, this language quoted byMERS is found in the mortgage
under the section “BORROWER’S TRANSFER TO LENDEROF RIGHTS IN THE
PROPERTY” and therefore is facially an acknowledgment bythe borrower. The
fact that the borrower acknowledged and consented to MERSacting as nominee
of the lender has no bearing on what specific powers andauthority the lender
granted MERS. The problem is not whether the borrowercan object to the
assignees’ standing, but whether the original lender,who is not before the Court,
actually transferred its rights to thePlaintiff. To allow a purported assignee to
foreclosure in the absence of some proofthat the original lender authorized the
assignment would throw into doubtthe validity of title of subsequent purchasers,
should the original lenderchallenge the assignment at some future date.
Furthermore, even accepting MERS’ position that the lender acknowledges
MERS’ authority exercise any or all of the lenders’ rights under themortgage, the
mortgage does not convey the specific right to assign the mortgage.The only
specific rights enumerated in the [*3]mortgage is the right toforeclose and sell the
Property. The general language “to take any actionrequired of the Lender
including, but not limited to, releasing and cancelingthis Security Instrument” is
not sufficient to give the nominee authority toalienate or assign a mortgage
without getting the mortgagee’s explicitauthority for the particular assignment.
Alienating a mortgage absent specificauthorization is not an administrative act.
Plaintiff submitted no other documents which purport to authorize MERS toassign
or otherwise convey the right of the mortgagor to assign themortgage to another
party.A party who claims to be the agent of another bears the burden of proving
the agency relationship by a preponderance of the evidence, Lippincot v.East
River Mill & Lumber Co., 79 Misc. 559, 141 NYS 220 (1913), and “[t]he
declarations of an alleged agent may not be shown for the purpose of provingthe
fact of agency”. Lexow & Jenkins, P.C. v. Hertz Commercial LeasingCorp., 122
AD2d 25, 504 NYS2d 192 (2nd Dept 1986). See also Siegel v. KentuckyFried
Chicken of Long Island, Inc., 108 AD2d 218, 488 NYS2d 744 (2nd Dept1985),
Moore v. Leaseway Transp. Corp., 65 AD2d 697, 409 NYS2d 746 (1st Dept
1978). “The acts of a person assuming to be the representative of anotherare not
competent to prove the agency in the absence of evidence tending toshow the
principal’s knowledge of such acts or assent to them”. (2 NY Jur2d, Agency and
Independent Contractors, 26).Plaintiff has submitted no evidence to demonstrate
that the originallender, the mortgagee America’s Wholesale Lender, authorized
MERS to assign thesecured debt to Plaintiff.Thus, Plaintiff has not made out a
prima facie case that it is entitled toforeclose on the mortgage in
question.WHEREFORE, it is ORDERED that thePlaintiff’s application for an
Order appointing referee to compute amountsdue to the Plaintiff is denied with
leave to renew upon proof of authority.This shall constitute the decision and order
of this Court.