In Wells Fargo Bank, NA. v. Zolotnitsky, Supreme Court, Appellate Division, Second Department, New York, 6/2/2021, 2021 WL 2214014, 2021 NY Slip Op 03482, a mortgage brought an action seeking foreclosure of a residential mortgage and to reform the mortgage to correct the description. Mortgagor asserted varied affirmative defenses including lack of standing. The mortgagee then assigned the mortgage. The Appellate Division held that the assignee failed to establish ownership of the promissory note and failed to establish that reformation of the mortgage to the correct legal description was warranted based on mutual mistake.
By assignment of mortgage dated October 9, 2015, Wells Fargo assigned the mortgage to Wilmington Savings Fund Society, FSB. In November 2016, Wilmington, successor in interest to Wells Fargo, moved for summary judgment on the complaint and asserted against defendant, to strike answer, reform mortgage, amend caption and correct legal description. A lost note affidavit was included alleging that the note had been “inadvertently lost, misplaced, or destroyed.” Defendant moved to renew her opposition to the summary judgment and plaintiff Wilmington moved to confirm oath and report and judgment. The Court entered the Judgment of foreclosure and sale and defendant appealed.
UCC 3-804 provides a method of recovery for instruments that are lost, destroyed, or stolen, and plaintiff is required to submit “due proof of ownership, the facts that prevent production of the note, and its terms. (Deutsche Bank Natl. Trust Co. v. Anderson, 161 A.D.3d 1043, 1044, 79 N.Y.S.3d 42, quoting UCC 3–804). Based upon same, the Court found that the affidavit “failed to establish when the note was acquired and failed to provide sufficient facts as to when the search for the note occupied, who conducted the search, and how or when it was lost.
Further, the Court the standard to correct the legal description of the premises. A party seeking reformation of a contract by reason of mistake must establish, with clear and convincing evidence, that the contract was executed under mutual mistake or a unilateral mistake induced by the other party’s fraudulent misrepresentation” (Yu Han Young v. Chiu, 49 A.D.3d 535, 536, 853 N.Y.S.2d 575; see Chimart Assoc. v. Paul, 66 N.Y.2d 570, 573, 498 N.Y.S.2d 344, 489 N.E.2d 231; Gunther v. Vilceus, 142 A.D.3d 639, 640, 36 N.Y.S.3d 723.
Based upon the above, the Appellate Division held that the assignee failed to establish ownership of the promissory note and failed to establish that reformation of the mortgage to the correct legal description was warranted based on mutual mistake. If you have any question, please contact Deborah Gallo, Esq. at email@example.com.