18‐1771 (L) Gustavia Home, LLC v. Rutty
UNITED STATES COURT OF APPEALS FOR THE SECOND CIRCUIT
SUMMARY ORDER
RULINGS BY SUMMARY ORDER DO NOT HAVE PRECEDENTIAL EFFECT. CITATION TO A SUMMARY ORDER FILED ON OR AFTER JANUARY 1, 2007, IS PERMITTED AND IS GOVERNED BY FEDERAL RULE OF APPELLATE PROCEDURE 32.1 AND THIS COURT'S LOCAL RULE 32.1.1. WHEN CITING A SUMMARY ORDER IN A DOCUMENT FILED WITH THIS COURT, A PARTY MUST CITE EITHER THE FEDERAL APPENDIX OR AN ELECTRONIC DATABASE (WITH THE NOTATION "SUMMARY ORDER"). A PARTY CITING A SUMMARY ORDER MUST SERVE A COPY OF IT ON ANY PARTY NOT REPRESENTED BY COUNSEL.
At a stated term of the United States Court of Appeals for the Second Circuit, held at the Thurgood Marshall United States Courthouse, 40 Foley Square, in the City of New York, on the 16th day of September, two thousand nineteen.
PRESENT: RICHARD C. WESLEY, DENNY CHIN, RICHARD J. SULLIVAN, Circuit Judges.
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GUSTAVIA HOME, LLC, Plaintiff‐Appellee,
v. 18‐1771 (L); 18‐1772 (Con)
ROBERT R. RUTTY, Defendant‐Appellant,
JOHN DOE, 1 through 12, said persons or parties having or claimed to have the right, title or interest in the mortgaged premises herein, their respective names are presently unknown to Plaintiff, Defendants, SLF NEW YORK HOLDINGS, LLC, HAMPTON PARTNERS LLC, Intervenors‐Defendants.
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FOR PLAINTIFF‐APPELLEE: Alan H. Weinreb, The Margolin & Weinreb Law Group, LLP, Syosset, New York.
FOR DEFENDANT‐APPELLANT: Robert R. Rutty, pro se, Wadsworth, Illinois.
Appeal from a judgment of the United States District Court for the Eastern
District of New York (Cogan, J.).
UPON DUE CONSIDERATION, IT IS HEREBY ORDERED,
ADJUDGED, AND DECREED that the judgment of the district court is AFFIRMED.
Defendant‐appellant Robert R. Rutty, proceeding pro se, appeals from a
judgment entered June 7, 2018, ordering that his property be foreclosed pursuant to a
May 14, 2018 decision and order granting summary judgment in favor of plaintiff‐
appellee Gustavia Home, LLC (ʺGustaviaʺ) and a May 15, 2018 order denying as moot
his motion to cancel and expunge the deeds. On appeal Rutty argues that the district
court erred in granting summary judgment in favor of Gustavia. We assume the
partiesʹ familiarity with the underlying facts, procedural history, and issues on appeal.
In 2006, Rutty obtained a $134,000 loan from Peopleʹs Choice Home Loan,
Inc. (ʺPeopleʹs Choiceʺ) on a property he owned in New York City. He then executed
and delivered a promissory note to Peopleʹs Choice, its successors, and assigns. Rutty
2 executed a mortgage granting Mortgage Electronic Registration Systems Inc. (ʺMERSʺ),
as nominee for Peopleʹs Choice, a second mortgage on the Property. MERS was given
the right to foreclose on and sell the Property and to discharge the mortgage. Peopleʹs
Choice filed for bankruptcy in 2007 and was dissolved in 2008. Gustavia was assigned
the mortgage in March 2016 and the note was transferred simultaneously. After Rutty
failed to pay his mortgage, Gustavia brought this diversity action against Rutty to
foreclose on the New York property.
Gustavia moved for summary judgment in December 2016. In support of
its motion it provided an affidavit, also dated December 2016, from its managing
member who attested that Gustavia was the owner and holder of the relevant note and
mortgage and had been in physical possession of the note since November 2015. Rutty
opposed the motion and the district court granted Gustavia summary judgment.
In his first appeal, Rutty argued, in relevant part, that Gustavia lacked
standing to pursue the foreclosure action. He contended that the assignment of the
mortgage to Gustavia was invalid because Peopleʹs Choice had filed for bankruptcy;
any assignment of its interest in the promissory note or mortgage would have required
approval from the bankruptcy court; and Gustavia had provided no evidence in that
regard. We vacated the district courtʹs judgment and remanded for further
proceedings, reasoning that it was ʺnot apparent from the record whether [Peopleʹs
3 Choiceʹs] bankruptcy impacted the purported transfers of the debt.ʺ Gustavia Home,
LLC v. Rutty, 720 F. Appʹx 27, 29 (2d Cir. 2017) (summary order). We specified that we
did not hold that ʺGustavia lacked standing as a matter of law, but simply that on this
record it is not clear, considering [Peopleʹs Choiceʹs] bankruptcy, that Gustavia has
standing.ʺ Id.
On remand, Gustavia produced an order from the bankruptcy court dated
April 19, 2007, authorizing Peopleʹs Choice ʺto sell in one or more bulk sales in the
ordinary course of business, mortgage loans owned by the Debtors [(Peopleʹs Choice)].ʺ
Thereafter, Gustavia again moved for summary judgment, which the district court
granted. Ruttyʹs appeal of that order is before us now.1
I. Applicable Law
We review a district courtʹs grant of summary judgment de novo,
ʺresolv[ing] all ambiguities and draw[ing] all inferences against the moving party.ʺ
Garcia v. Hartford Police Depʹt, 706 F.3d 120, 126‐27 (2d Cir. 2013) (per curiam).
ʺSummary judgment is proper only when, construing the evidence in the light most
favorable to the non‐movant, ʹthere is no genuine dispute as to any material fact and the
1 Additionally, although Rutty appealed the order denying his motion to cancel and expunge the deeds, he failed to raise any argument in his appeal brief concerning that issue. Consequently, he has waived any challenge to that order. See Moates v. Barkley, 147 F.3d 207, 209 (2d Cir. 1998) (ʺ[W]e . . . normally will not [] decide issues that a party fails to raise in his . . . appellate brief.ʺ).
4 movant is entitled to judgment as a matter of law.ʹʺ Doninger v. Niehoff, 642 F.3d 334,
344 (2d Cir. 2011) (quoting Fed. R. Civ. P. 56(a)).
In a foreclosure action, under New York law, a plaintiff establishes its
prima facie entitlement to summary judgment by producing evidence of the mortgage,
the note, and the defendantʹs default. See, e.g., Wells Fargo Bank, N.A. v. Walker, 141
A.D.3d 986, 987 (3d Depʹt 2016); see also R.B. Ventures, Ltd. v. Shane, 112 F.3d 54, 59 n.2
(2d Cir. 1997). Where, as here, the defendant contests standing to foreclose, ʺthe
plaintiff must prove its standing as part of its prima facie showing.ʺ JPMorgan Chase
Natʹl Assʹn v. Weinberger, 142 A.D.3d 643, 644 (2d Depʹt 2016). ʺA plaintiff establishes
its standing in a mortgage foreclosure action by demonstrating that, when the action
was commenced, it was either the holder or assignee of the underlying note.ʺ Id.
(internal quotation marks omitted). ʺ[U]nless the parties agree that the transferor is to
retain the mortgage,ʺ the transfer of the promissory note to the plaintiff before the
action has commenced is sufficient to demonstrate standing because the mortgage
passes incident to the note.
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18‐1771 (L) Gustavia Home, LLC v. Rutty
UNITED STATES COURT OF APPEALS FOR THE SECOND CIRCUIT
SUMMARY ORDER
RULINGS BY SUMMARY ORDER DO NOT HAVE PRECEDENTIAL EFFECT. CITATION TO A SUMMARY ORDER FILED ON OR AFTER JANUARY 1, 2007, IS PERMITTED AND IS GOVERNED BY FEDERAL RULE OF APPELLATE PROCEDURE 32.1 AND THIS COURT'S LOCAL RULE 32.1.1. WHEN CITING A SUMMARY ORDER IN A DOCUMENT FILED WITH THIS COURT, A PARTY MUST CITE EITHER THE FEDERAL APPENDIX OR AN ELECTRONIC DATABASE (WITH THE NOTATION "SUMMARY ORDER"). A PARTY CITING A SUMMARY ORDER MUST SERVE A COPY OF IT ON ANY PARTY NOT REPRESENTED BY COUNSEL.
At a stated term of the United States Court of Appeals for the Second Circuit, held at the Thurgood Marshall United States Courthouse, 40 Foley Square, in the City of New York, on the 16th day of September, two thousand nineteen.
PRESENT: RICHARD C. WESLEY, DENNY CHIN, RICHARD J. SULLIVAN, Circuit Judges.
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x
GUSTAVIA HOME, LLC, Plaintiff‐Appellee,
v. 18‐1771 (L); 18‐1772 (Con)
ROBERT R. RUTTY, Defendant‐Appellant,
JOHN DOE, 1 through 12, said persons or parties having or claimed to have the right, title or interest in the mortgaged premises herein, their respective names are presently unknown to Plaintiff, Defendants, SLF NEW YORK HOLDINGS, LLC, HAMPTON PARTNERS LLC, Intervenors‐Defendants.
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FOR PLAINTIFF‐APPELLEE: Alan H. Weinreb, The Margolin & Weinreb Law Group, LLP, Syosset, New York.
FOR DEFENDANT‐APPELLANT: Robert R. Rutty, pro se, Wadsworth, Illinois.
Appeal from a judgment of the United States District Court for the Eastern
District of New York (Cogan, J.).
UPON DUE CONSIDERATION, IT IS HEREBY ORDERED,
ADJUDGED, AND DECREED that the judgment of the district court is AFFIRMED.
Defendant‐appellant Robert R. Rutty, proceeding pro se, appeals from a
judgment entered June 7, 2018, ordering that his property be foreclosed pursuant to a
May 14, 2018 decision and order granting summary judgment in favor of plaintiff‐
appellee Gustavia Home, LLC (ʺGustaviaʺ) and a May 15, 2018 order denying as moot
his motion to cancel and expunge the deeds. On appeal Rutty argues that the district
court erred in granting summary judgment in favor of Gustavia. We assume the
partiesʹ familiarity with the underlying facts, procedural history, and issues on appeal.
In 2006, Rutty obtained a $134,000 loan from Peopleʹs Choice Home Loan,
Inc. (ʺPeopleʹs Choiceʺ) on a property he owned in New York City. He then executed
and delivered a promissory note to Peopleʹs Choice, its successors, and assigns. Rutty
2 executed a mortgage granting Mortgage Electronic Registration Systems Inc. (ʺMERSʺ),
as nominee for Peopleʹs Choice, a second mortgage on the Property. MERS was given
the right to foreclose on and sell the Property and to discharge the mortgage. Peopleʹs
Choice filed for bankruptcy in 2007 and was dissolved in 2008. Gustavia was assigned
the mortgage in March 2016 and the note was transferred simultaneously. After Rutty
failed to pay his mortgage, Gustavia brought this diversity action against Rutty to
foreclose on the New York property.
Gustavia moved for summary judgment in December 2016. In support of
its motion it provided an affidavit, also dated December 2016, from its managing
member who attested that Gustavia was the owner and holder of the relevant note and
mortgage and had been in physical possession of the note since November 2015. Rutty
opposed the motion and the district court granted Gustavia summary judgment.
In his first appeal, Rutty argued, in relevant part, that Gustavia lacked
standing to pursue the foreclosure action. He contended that the assignment of the
mortgage to Gustavia was invalid because Peopleʹs Choice had filed for bankruptcy;
any assignment of its interest in the promissory note or mortgage would have required
approval from the bankruptcy court; and Gustavia had provided no evidence in that
regard. We vacated the district courtʹs judgment and remanded for further
proceedings, reasoning that it was ʺnot apparent from the record whether [Peopleʹs
3 Choiceʹs] bankruptcy impacted the purported transfers of the debt.ʺ Gustavia Home,
LLC v. Rutty, 720 F. Appʹx 27, 29 (2d Cir. 2017) (summary order). We specified that we
did not hold that ʺGustavia lacked standing as a matter of law, but simply that on this
record it is not clear, considering [Peopleʹs Choiceʹs] bankruptcy, that Gustavia has
standing.ʺ Id.
On remand, Gustavia produced an order from the bankruptcy court dated
April 19, 2007, authorizing Peopleʹs Choice ʺto sell in one or more bulk sales in the
ordinary course of business, mortgage loans owned by the Debtors [(Peopleʹs Choice)].ʺ
Thereafter, Gustavia again moved for summary judgment, which the district court
granted. Ruttyʹs appeal of that order is before us now.1
I. Applicable Law
We review a district courtʹs grant of summary judgment de novo,
ʺresolv[ing] all ambiguities and draw[ing] all inferences against the moving party.ʺ
Garcia v. Hartford Police Depʹt, 706 F.3d 120, 126‐27 (2d Cir. 2013) (per curiam).
ʺSummary judgment is proper only when, construing the evidence in the light most
favorable to the non‐movant, ʹthere is no genuine dispute as to any material fact and the
1 Additionally, although Rutty appealed the order denying his motion to cancel and expunge the deeds, he failed to raise any argument in his appeal brief concerning that issue. Consequently, he has waived any challenge to that order. See Moates v. Barkley, 147 F.3d 207, 209 (2d Cir. 1998) (ʺ[W]e . . . normally will not [] decide issues that a party fails to raise in his . . . appellate brief.ʺ).
4 movant is entitled to judgment as a matter of law.ʹʺ Doninger v. Niehoff, 642 F.3d 334,
344 (2d Cir. 2011) (quoting Fed. R. Civ. P. 56(a)).
In a foreclosure action, under New York law, a plaintiff establishes its
prima facie entitlement to summary judgment by producing evidence of the mortgage,
the note, and the defendantʹs default. See, e.g., Wells Fargo Bank, N.A. v. Walker, 141
A.D.3d 986, 987 (3d Depʹt 2016); see also R.B. Ventures, Ltd. v. Shane, 112 F.3d 54, 59 n.2
(2d Cir. 1997). Where, as here, the defendant contests standing to foreclose, ʺthe
plaintiff must prove its standing as part of its prima facie showing.ʺ JPMorgan Chase
Natʹl Assʹn v. Weinberger, 142 A.D.3d 643, 644 (2d Depʹt 2016). ʺA plaintiff establishes
its standing in a mortgage foreclosure action by demonstrating that, when the action
was commenced, it was either the holder or assignee of the underlying note.ʺ Id.
(internal quotation marks omitted). ʺ[U]nless the parties agree that the transferor is to
retain the mortgage,ʺ the transfer of the promissory note to the plaintiff before the
action has commenced is sufficient to demonstrate standing because the mortgage
passes incident to the note. Aurora Loan Servs., LLC v. Taylor, 25 N.Y.3d 355, 361‐62
(2015). If the plaintiff establishes a prima facie case, the burden then shifts to the
defendant to demonstrate ʺthe existence of a triable issue of fact as to a bona fide
defense to the action, such as waiver, estoppel, bad faith, fraud, or oppressive or
unconscionable conduct on the part of the plaintiff.ʺ Capstone Bus. Credit, LLC v.
5 Imperia Family Realty, LLC, 70 A.D.3d 882, 883 (2d Depʹt 2010) (internal quotation marks
omitted).
II. Application
Gustavia established its prima facie entitlement to summary judgment by
attaching to its complaint the mortgage, the unpaid note, and evidence of Ruttyʹs
default. See Walker, 141 A.D.3d at 987. It also provided an affidavit demonstrating
that it had possession of the note since November 2015, months before initiating the
action. See Aurora Loan Servs., LLC, 25 N.Y.3d at 361‐62. On remand, Gustavia
provided the 2007 bankruptcy court order authorizing Peopleʹs Choice to transfer the
note prior to its dissolution in 2008. This order conclusively addressed Ruttyʹs
standing argument. As Gustavia provided evidence to support a prima facie
entitlement to summary judgment, which was not countered by any evidence from
Rutty to create ʺa triable issue of fact as to a bona fide defense to the action,ʺ Gustavia
was properly awarded summary judgment. Capstone Bus. Credit, LLC, 70 A.D.3d at
883.
Ruttyʹs principal arguments on appeal ‐‐ that Gustavia lacked standing
because it did not state where the note was stored between 2007 and 2015 and did not
provide evidence that it physically received the note ‐‐ are meritless. Gustavia was not
required to prove where the note was located between 2007 and 2015 because it
6 provided an affidavit stating that it had physical possession of the note since November
2015, prior to initiating the foreclosure action. See U.S. Bank, N.A. v. Collymore, 68
A.D.3d 752, 754 (2d Depʹt 2007) (ʺ[P]hysical delivery of the note prior to the
commencement of the foreclosure action is sufficient to transfer the obligation, and the
mortgage passes with the debt as an inseparable incident.ʺ). Further, ʺ[t]here is simply
no requirement that an entity in possession of a negotiable instrument that has been
endorsed in blank must establish how it came into possession of the instrument in order
to be able to enforce it.ʺ Weinberger, 142 A.D.3d at 645 (citing UCC 3‐204[2]).
* * *
We have considered Ruttyʹs remaining arguments and conclude they are
without merit. Accordingly, we AFFIRM the judgment of the district court.
FOR THE COURT: Catherine O=Hagan Wolfe, Clerk of Court