The United States District Court for the Southern District of New York recently held that plaintiffs in a putative class action alleging violations of New York state statutes requiring mortgagees to file timely mortgage satisfactions do not have Article III in light of Spokeo, Inc. v. Robins, 136 S.Ct. 1540 (2016). See Villanueva v. Wells Fargo Bank, N.A., 2016 WL 5220065 (S.D.N.Y. Sept. 14, 2016). In the action, which is one of a series of putative class actions arising under New York’s RPL § 275 and RPAPL § 1921 (together, the “Statutes”), the plaintiffs alleged that the defendant mortgagee had not recorded their mortgage satisfactions within 30 days, as required by the Statutes. The court stayed the action while the United States Supreme Court decided Spokeo. After Spokeo was decided, the court asked the parties to brief the standing issue raised in the Spokeo decision. The court then held that the plaintiffs lacked standing to bring this action because they did not allege anything more than “bare procedural violations[.]” Specifically, the court reviewed the legislative history behind the Statutes, finding that the harm that the legislators sought to address was both the paying of duplicative fees to discharge a mortgage and impediments to the sale of property. Although the court acknowledged two other New York federal decisions in which the courts held the plaintiffs had standing in similar cases, it stated that it was not bound by either decision. See Jaffe v. Bank of Am., N.A., 2016 WL 3944753 (S.D.N.Y. July 15, 2016); Zink v. First Niagara Bank, N.A., 2016 WL 3950957 (W.D.N.Y. July 1, 2016). It further noted that the Jaffe court discussed the cloud on title as being enough to give standing to the plaintiffs in that case, but that the plaintiffs in the instant case did not allege the same. Nonetheless, the court allowed the plaintiffs to replead their claims in light of Spokeo.
For an analysis on the Jaffe decision, click here.
For an analysis of another decision interpreting the Statutes, click here.