Banking and Finance Law Daily ‘Injury in fact’ required for violations of New York mortgage-satisfaction law
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Friday, October 7, 2016

‘Injury in fact’ required for violations of New York mortgage-satisfaction law

By Thomas G. Wolfe, J.D.

The U.S. Court of Appeals for the Eleventh Circuit has decided that a mortgage borrower did not demonstrate an "injury in fact" to establish Article III standing to advance his lawsuit against CitiMortgage, Inc., for the company’s failure to record a satisfaction of his mortgage within 30 days as required by New York law. Emphasizing that CitiMortgage had remedied its tardiness by later filing a certificate of discharge before the mortgage borrower brought his proposed class-action lawsuit, the Eleventh Circuit determined that the borrower failed to allege that he lost money, that his credit suffered, or that he experienced any other material risk of harm a court could remedy (Nicklaw v. CitiMortgage, Inc., Oct. 6, 2016, Pryor, W.).

In contrast, the U.S. District Court for the Southern District Court of New York, under similar facts, recently decided that a mortgage borrower did present an "injury in fact" to establish Article III standing to advance her proposed class-action lawsuit against JPMorgan Chase Bank, N.A., for the bank’s failure to timely record a satisfaction of her mortgage under the same New York laws. Moreover, like CitiMortgage, Chase also filed a certificate of discharge later to rectify the situation (see Bellino v. JPMorgan Chase Bank, NA., as reported in Banking & Finance Law DailySept. 23, 2016).

New York laws. In both federal cases, the mortgage borrowers alleged violations of the New York Real Property Law (§275) and the New York Real Property Actions and Proceedings Law (§1921) because the respective financial institutions did not file a certificate of satisfaction of the pertinent mortgage within 30 days of receipt of the full amount of principal and interest on the mortgage.

Just recently, in an Oct. 3, 2016, opinion, the Bellino court further clarified the statutory language and practical operations of the two New York laws.

Different perspectives. From the Eleventh Circuit’s vantage point, it was not enough that CitiMortgage did not strictly comply with the statutory 30-day period in which to record the satisfaction of the mortgage. The mortgage borrower needed to adequately allege an injury in fact and failed to do so, the court asserted.

Indeed, Chase argued this point in the Bellino case, contending that the borrower lacked Article III standing to bring her claim because she did not sustain any economic injury resulting from the bank’s tardiness and "technical violation." However, that argument did not persuade the Bellino court. Stating that the U.S. Supreme Court "was clear in Spokeo that a concrete harm need not be tangible," the Bellino court determined that the New York statutes created a "substantive right" for the borrower to have the satisfaction of mortgage timely filed. Since Chase did not do so in a timely manner, "[n]othing more is required, here, to demonstrate an injury-in-fact," the court concluded.

The Nicklaw case is No. 15-14216.

Attorneys: Todd S. Garber (Finkelstein, Blankinship, Frei-Pearson & Garber, LLP) for Roger Nicklaw. Lucia Nale (Mayer Brown, LLP), Louis F. Bonacorsi (Bryan Cave, LLP) and April Boyer (K&L Gates, LLP) for CitiMortgage, Inc.

Companies: CitiMortgage, Inc.; JPMorgan Chase Bank, N.A.

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