Federal Home Loan Mtge. Corp. v Raia – Foreclosure Fraud, False Allegations, Assignment of Bid Sets Up Steven J. Baum, P.C Foreclosure Mill for Sanction Hearing
District Court of Nassau County, First District
Federal Home Loan Mortgage Corp., Petitioner(s)
Paul Raia, “John Doe” Through “Jane Doe”, Respondent(s)
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Steven J. Baum, P.C., Attorneys for Petitioner, 200 Northpointe Parkway, Suite G, Amherst, New York 14228, 716-204-2400; Jeffrey A. Seigel, by: Rudolph de Winter, of Counsel to Volunteer Lawyers Project, Attorneys for Respondent, One Helen Keller Way, Hempstead, New York 11550, 516-292-8100.
Scott Fairgrieve, J.
Respondent Paul Raia moved for an order on June 1, 2010 pursuant to CPLR § 3211(a)(1), (3) and (7), dismissing the holdover petition brought against him by Petitioner Federal Home Loan Mortgage Corporation (“FHLMC”). If the motion is denied, Respondent requests permission to serve and file an answer within five days after service of the order with notice of entry pursuant to CPLR § 404(a). FHLMC opposes.
Petitioner Federal Home Loan Mortgage Corporation has commenced this summary proceeding as owner and landlord of the premises located at 360 Stewart Avenue, Unit 1E, Garden City, New York to recover possession from respondent Paul Raia.
Petitioner alleges the following in its petition:
3.The Petitioner FEDERAL HOME LOAN MORTGAGE CORPORATION was the lender of monies to Respondent, the owner and/or occupant of the premises known as 360 STEWART AVENUE – UNIT 1E, GARDEN CITY, NY 11530.
4.The aforesaid loan, made to the aforesaid Respondent was secured by a security agreement pledging the proprietary lease to the aforesaid premises and the associated stock certificate for 220 shares in said corporation to the Petitioner.
5.The aforesaid premises was and is an Apartment/Unit in a cooperative residence. [*2]
6.The Respondents defaulted in their obligations to Petitioner, and as a result thereof, Petitioner caused a sale of the aforesaid stock and proprietary lease to occur pursuant to the provisions of article 9[NYCLS] of the Uniform Commercial Code. At said sale, Petitioner was the successful bidder and the aforesaid proprietary lease and associated stock certificate were transferred to Petitioner.
7.As a result thereof, Petitioner is the rightful occupant of the aforesaid cooperative Apartment/Unit and Respondent, and any person or entity occupying same under him has no right to remain in possession thereof.
The above sworn allegations asserted in the petition are false.
An examination of the documents attached to the petition reveal that Wells Fargo Home Mortgage Inc. was the actual lender who acquired a security interest from respondent Paul Raia on October 23, 2002, with respect to Apartment 1E.
This court will hold a hearing to determine what sanctions, if any, that may be imposed upon Steven J. Baum, P.C., for the false representations made in the petition.
On January 5, 2010, Wells Fargo Home Mortgage, Inc. (“Wells Fargo”) was the successful bidder at the foreclosure sale of the subject premises located at 360 Stewart Avenue, Unit 1E, Garden City NY. Wells Fargo received 220 shares of Stewart Franklin Owners Corp. and the proprietary lease previously owned by Paul Raia.
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On March 12, 2010, Wells Fargo purportedly assigned its January 5, 2010 bid to Petitioner FHLMC. However, the “Assignment of Bid” exhibited by FHLMC contains only the signature of Steven J. Baum, P.C. and there is no indication for which party the signature was made. Mr. Baum’s office claims to have the authority to execute the document on behalf of FHLMC by way of a power of attorney attached to the petition. Baum’s office also claims to have the same authority for Wells Fargo but provides no evidence in support of that allegation. Steven J. Baum, P.C. represents Petitioner FHLMC in the instant action.
Subsequent to Steven J. Baum, P.C. signing the “Assignment of Bid,” Petitioner FHLMC served a notice to quit on Respondent on March 22, 2010 directing Mr. Raia to vacate the apartment on or before April 1, 2010. This holdover proceeding commenced on April 15, 2010 with the filing of the petition and notice of petition.
MOTION TO DISMISS
Respondent asserts that the “Assignment of Bid” is invalid and ineffective because it is [*3]not executed by Wells Fargo, thus FHLMC never acquired title to the bid, the collateral, or the right to the possession of the cooperative apartment, and Petitioner lacks standing to institute this proceeding.
For an assignment to be valid, both parties must intend to make the assignment (New York Jurisprudence, Second Edition, Volume 6A, Assignments § 35). Without Wells Fargo’s signature, the Court cannot determine its intent.
The firm of Steven J. Baum, P.C. alleges to have the authority to assign the bid on behalf of Wells Fargo because the firm represented Wells Fargo in the cooperative foreclosure sale on January 5, 2010. However, neither a power of attorney to Steven J. Baum, P.C. nor a supporting affidavit from Wells Fargo was presented with the “Assignment of Bid.” Therefore, the Court finds the assignment invalid. See HSBC Bank USA, N.A. v. Yeasmin (27 Misc 3d 1227(A), Slip Copy, 2010 WL 2089273 [Sup. Ct., Kings Cty. 2010]). See also Wells Fargo v. Marchione, 63 AD3d , 204, 887 NYS2d 615 (2nd Dept 2009); and Deutsche Bank Nat. Trust Co. v. Abbate, 25 Misc 3d 1216(A), 901 NYS2d 905 (NY Sup. 2009).
FHLMC also opposes the motion on the ground that Mr. Raia’s questioning of the “Assignment of Bid” amounts to seeking a declaratory judgment over which the Supreme Court of Nassau County maintains exclusive jurisdiction. This argument is without merit. As Judge Schack stated in HSBC Bank USA, N.A. v. Yeasmin:
[FHLMC] needed “standing”to proceed in the instant action. The Court of Appeals ( Saratoga County Chamber of Commerce, Inc. v. Pataki, 100 NY2d 801, 912  ), cert denied 540 U.S. 1017  ), held that “[s]tanding to sue is critical to the proper functioning of the judicial system. It is a threshold issue. If standing is denied, the pathway to the courthouse is blocked. The plaintiff who has standing, however, may cross the threshold and seek judicial redress.” In Carper v. Nussbaum, 36 AD3d 176, 181 (2d Dept 2006), the Court held that “[s]tanding to sue requires an interest in the claim at issue in the lawsuit that the law will recognize as a sufficient predicate for determining the issue at the litigant’s request.” If a plaintiff lacks standing to sue, the plaintiff may not proceed in the action. ( Stark v. Goldberg, 297 AD2d 203 [1d Dept 2002] ). “Since standing is jurisdictional and goes to a court’s authority to resolve litigation [the court] can raise this matter sua sponte.” ( Axelrod v. New York State Teachers’ Retirement System, 154 AD2d 827, 828 [3d Dept 1989] ).
The respondent in a lawsuit in the District Court of Nassau County is entitled to a dismissal of the action against him if the petitioner lacks standing. The respondent need not bring a declaratory action in Supreme Court in order to accomplish this. Such a policy would not be in the interest of judicial economy.
Finally, Respondent’s additional argument that the attorney who signed the notice to quit was not authorized to act on behalf of Petitioner is moot. Petitioner lacks a possessory interest in the subject premises and therefore lacks standing to issue the notice to quit.
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This court is setting down this matter for a hearing to determine what sanctions, if any, should be imposed upon the law firm of Steven J. Baum, P.C., for its false statements made in the petition dated April 8, 2010. This hearing shall be held on August 2, 2010 at 9:30 a.m.
/s/ Hon. Scott Fairgrieve
DISTRICT COURT JUDGE
Dated:July 22, 2010