West Coast Servicing, Inc. v. McCarthy Rogers

Background

Rogers borrowed $66,000 from Federal Standard Mortgage Banking Corp. in 1999 and gave Federal Standard a promissory note and mortgage on her property. Later written modifications reaffirmed her obligations and changed the principal balance and repayment terms. The note and mortgage were transferred through assignments and endorsements to West Coast Servicing, Inc.

Rogers stopped making installment payments on January 1, 2020. West Coast Servicing sent her a contractual demand letter on February 1, 2022, and a ninety-day notice under New York’s Real Property Actions and Proceedings Law on March 3, 2022. Rogers did not cure the default.

West Coast Servicing filed this foreclosure action against Rogers and three New York City entities that it alleged held judgment liens subordinate to its mortgage. After the court allowed Rogers to answer, she asserted defenses based on diversity jurisdiction, standing, failure to state a claim, and allegedly inadequate notices. West Coast Servicing moved for summary judgment under Federal Rule of Civil Procedure 56 and also moved to strike Rogers’s affirmative defenses.

Jurisdiction

Rogers’s opposition focused on whether the parties were citizens of different states, as required for diversity jurisdiction. She submitted a New York corporate record for an entity named West Coast Servicing, Inc. Plaintiff responded that the New York entity was different from the plaintiff in this case. Plaintiff submitted corporate and licensing records identifying the plaintiff as a corporation formed in California, with California addresses and a California designated officer. A Delaware record also described the plaintiff as a foreign corporation from California.

The court concluded that the New York entity with the same name was separate and unrelated to this case. The court stated that whether the plaintiff’s current state of incorporation was Delaware or California did not need to be resolved because, either way, it was not New York. Because Rogers was a New York citizen, the court held that diversity jurisdiction existed.

Merits

Under New York law, a foreclosure plaintiff seeking summary judgment generally must show the mortgage, the unpaid note, the borrower’s default, and—when challenged—the plaintiff’s standing to foreclose. The court found no genuine dispute that Rogers signed the note and mortgage and defaulted. It also found that West Coast Servicing received the note by both written assignment and physical delivery before the action began, either of which was sufficient to establish standing.

The court rejected Rogers’s remaining defenses. It found that West Coast Servicing had established a claim for foreclosure, had standing, and had complied with the contractual demand-notice requirement and the ninety-day notice requirement under New York law. The court also noted that Rogers’s opposition did not address her other defenses and therefore treated them as abandoned; independently, it found those defenses unavailing on their merits.

Disposition

The court granted West Coast Servicing’s motion for summary judgment. It denied as moot the motion to strike Rogers’s affirmative defenses. The court directed West Coast Servicing to submit a proposed judgment of foreclosure providing for sale of the property and for appointment of a referee to calculate the amount due, conduct the sale, and distribute the proceeds.