Key Takeaway
Court rules that valid assignment of mortgage note after lawsuit commencement creates proper basis for plaintiff substitution and caption amendment under CPLR rules.
Assignment During Pending Litigation: A Valid Legal Strategy
In complex litigation involving mortgages, notes, and other financial instruments, parties often face questions about the timing of assignments. Can a chose in action or property interest be validly assigned after a lawsuit has already begun? This issue frequently arises in foreclosure cases and commercial disputes where standing not expressly pleaded becomes a central concern.
The New York courts have provided clear guidance on this matter, establishing that post-commencement assignments are not only permissible but can form the basis for proper plaintiff substitution. This principle is particularly important in today’s complex financial landscape, where mortgage notes and other instruments may change hands multiple times during the course of litigation.
Understanding the procedural requirements for such assignments is crucial for practitioners handling these cases, as proper documentation and court procedures must be followed to effectuate the change in real party in interest.
Jason Tenenbaum’s Analysis:
Citibank, N.A. v Van Brunt Props., LLC, 2012 NY Slip Op 03974 (2d Dept. 2012)
In the world of multiple assignments, it is sometimes asked whether you can assign a chose of action or an interest in something after the commencement of a lawsuit? The answer is “yes” and an order concomitantly amending the caption is also deemed proper:
“Finally, contrary to the defendant mortgagor’s contention, the documents submitted by the plaintiff established that the subject note and mortgage were validly assigned to Wells Fargo Bank, N.A., after the commencement of this action, and that Wells Fargo Bank, N.A., is therefore now the real plaintiff in interest. Under these circumstances, the Supreme Court should have granted the plaintiff’s motion to substitute Wells Fargo Bank, N.A., as the plaintiff in this action, and to amend the caption accordingly (see CPLR 1018, 3025; Deutsche Bank Trust Co., Americas v Stathakis, 90 AD3d 983; Maspeth Federal Savings and Loan Ass’n v Simon-Erdan, 67 AD3d 750, 751; East Coast Props. v Galang, 308 AD2d 431).”
Key Takeaway
Post-lawsuit assignments of notes and mortgages are legally valid and create grounds for plaintiff substitution. Courts must grant motions to substitute the assignee as the new plaintiff when proper documentation establishes the assignment occurred after litigation commenced, provided the procedural requirements under CPLR 1018 and 3025 are met.
Legal Update (February 2026): Since this 2012 post, CPLR provisions governing assignments and substitution of parties may have been amended, and appellate courts may have refined the procedural requirements for post-commencement assignments in foreclosure and commercial litigation. Practitioners should verify current CPLR 1018 requirements and recent case law developments regarding standing and assignment timing in ongoing litigation.
