Wilmington Sav. Fund Socy., FSB v. Hilario

Opinion

Wilmington Sav. Fund Socy., FSB v Hilario

2026 NY Slip Op 05351

September 16, 2026

Appellate Division, Second Department

Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431.

This decision is uncorrected and subject to revision before publication in the Official Reports.

Wilmington Savings Fund Society, FSB, etc., appellant,

v

Jesus Hilario, et al., respondents, et al., defendants.

Supreme Court of the State of New York, Appellate Division, Second Judicial Department

Decided on September 16, 2026

2024-12423, (Index No. 34869/22)

Betsy Barros, J.P.

Lara J. Genovesi

Helen Voutsinas

Carl J. Landicino, JJ.

Knuckles & Manfro, LLP, Tarrytown, NY (Louis A. Levithan of counsel), for appellant.

Charles A. Higgs, Bedford Hills, NY, for respondents.

[*1]

DECISION & ORDER

In an action to foreclose a mortgage, the plaintiff appeals from an order of the Supreme Court, Rockland County (Hal B. Greenwald, J.), dated November 19, 2024. The order, insofar as appealed from, denied those branches of the plaintiff's motion which were for summary judgment on the complaint insofar as asserted against the defendants Jesus Hilario and Juan Hilario, to strike those defendants' answers, and for an order of reference, and, sua sponte, directed dismissal of the complaint.

ORDERED that on the Court's own motion, the notice of appeal from so much of the order as, sua sponte, directed dismissal of the complaint is deemed to be an application for leave to appeal from that portion of the order, and leave to appeal is granted (see CPLR 5701[c]); and it is further,

ORDERED that the order is modified, on the law, by deleting the provision thereof, sua sponte, directing dismissal of the complaint; as so modified, the order is affirmed insofar as appealed from, without costs or disbursements.

The defendants Jesus Hilario and Juan Hilario (hereinafter together the defendants) executed a home equity line of credit (hereinafter HELOC) agreement in favor of Bank of America, N.A. (hereinafter BANA). The HELOC was secured by a mortgage on certain real property located in Sloatsburg, and BANA assigned the mortgage to the plaintiff. In November 2022, the plaintiff commenced this action against the defendants, among others, to foreclose the mortgage. The defendants separately interposed answers in which they each asserted lack of standing as an affirmative defense. The plaintiff moved, inter alia, for summary judgment on the complaint insofar as asserted against the defendants, to strike the defendants' answers, and for an order of reference. In an order dated November 19, 2024, the Supreme Court, among other things, denied those branches of the motion and, sua sponte, directed dismissal of the complaint for lack of standing. The plaintiff appeals.

Where, as here, a defendant challenges the plaintiff's standing in a foreclosure action, the plaintiff must demonstrate that it was the holder or assignee of the note at the time the action was [*2]commenced (see DBI/ASG Mtge. Holdings, LLC v Tachtchouk, 241 AD3d 870, 871). "Either a written assignment of the underlying note or the physical 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" (U.S. Bank, N.A. v Collymore, 68 AD3d 752, 754). Pursuant to UCC 3-804, "[t]he owner of an instrument which is lost, whether by destruction, theft or otherwise, may maintain an action in his [or her] own name and recover from any party liable thereon upon due proof of his [or her] ownership, the facts which prevent his [or her] production of the instrument and its terms" (see Bank of Am., N.A. v Sebrow, 180 AD3d 982, 984).

Here, the plaintiff, which admitted that the original HELOC agreement is lost, failed to establish, prima facie, its standing pursuant to UCC 3-804. The plaintiff failed to demonstrate that it was the owner and holder of the HELOC agreement. The plaintiff submitted an assignment of mortgage dated August 8, 2017. In the assignment, BANA purported to assign the mortgage, together with the note "described therein," to the plaintiff. The assignment was executed on BANA's behalf by Pretium Mortgage Credit Partners I Loan Acquisition, LP (hereinafter Pretium Mortgage Credit Partners), as attorney-in-fact. However, the plaintiff failed to demonstrate the validity of the assignment, as the plaintiff produced no evidence that Pretium Mortgage Credit Partners had authority to execute the assignment on BANA's behalf (see U.S. Bank Trust, N.A. v Rose, 176 AD3d 1012, 1015; Deutsche Bank Natl. Trust Co. v Haller, 100 AD3d 680, 682-683). The record did not demonstrate that a purported allonge to the HELOC agreement, which was annexed to an affirmation submitted by the plaintiff and contained an undated endorsement by BANA to the plaintiff, was "so firmly affixed [to the HELOC agreement] as to become a part thereof" (U.S. Bank N.A. v Muroff, 234 AD3d 1010, 1013 [internal quotation marks omitted]). Moreover, an affidavit from an assistant vice president of BANA, the plaintiff's purported predecessor in interest, failed to establish that the plaintiff was ever in physical possession of the HELOC agreement (see U.S. Bank Trust, N.A. v Rose, 176 AD3d at 1015).

The plaintiff also failed to set forth the facts that prevented the production of the original HELOC agreement (see Capital One, N.A. v Gokhberg, 189 AD3d 978, 980). In the affidavit from BANA's assistant vice president, the affiant failed to state when the alleged search for the HELOC agreement occurred, who conducted the search, and when and how the HELOC agreement was lost (see JP Morgan Chase Bank, N.A. v Morton, 226 AD3d 665, 668; LaSalle Bank N.A. v Carlton, 204 AD3d 985, 987).

Accordingly, the Supreme Court properly denied those branches of the plaintiff's motion which were for summary judgment on the complaint insofar as asserted against the defendants, to strike the defendants' answers, and for an order of reference.

However, the Supreme Court erred in, sua sponte, directing dismissal of the complaint. "'A court's power to dismiss a complaint, sua sponte, is to be used sparingly and only when extraordinary circumstances exist to warrant dismissal'" (Wells Fargo Bank, N.A. v Cascarano, 208 AD3d 729, 731, quoting U.S. Bank, N.A. v Emmanuel, 83 AD3d 1047, 1048). No extraordinary circumstances were present in this case, as a party's lack of standing does not constitute a jurisdictional defect, the defendants did not present any proof as to the plaintiff's lack of standing, and the defendants did not cross-move for summary judgment dismissing the complaint insofar as asserted against them (see id.; Countrywide Home Loans, Inc. v Campbell, 164 AD3d 646, 647).

BARROS, J.P., GENOVESI, VOUTSINAS and LANDICINO, JJ., concur.

ENTER:

Darrell M. Joseph

Clerk of the Court