Key Takeaway
New York appellate court ruling shows defendants don't need to explicitly plead lack of standing if their answer denies plaintiff's ownership of foreclosed property.
Defending Against Foreclosure: When Standing Defenses Don’t Need Express Pleading
Standing to sue is a fundamental requirement in any legal proceeding, particularly in foreclosure actions where banks and mortgage servicers must demonstrate their legal right to foreclose on a property. A recent New York appellate decision highlights an important tactical consideration for defendants: sometimes the way you respond to a complaint can raise standing issues without explicitly stating them as a defense.
The Second Department’s ruling in Bank of America, N.A. v. Paulsen demonstrates how careful pleading strategies can preserve crucial defenses, even when they’re not formally labeled as such. This decision has significant implications for both foreclosure defense attorneys and plaintiffs who must ensure their complaints are thoroughly crafted to avoid inadvertently opening doors for standing challenges.
Jason Tenenbaum’s Analysis:
Bank of Am., N.A. v Paulsen, 2015 NY Slip Op 01597 (2d Dept. 2015)
“Here, contrary to the conclusion reached by the Supreme Court, the appellant did not waive the issue of standing. Although the appellant’s answer did not raise standing as a separate defense, a fair reading of his answer reveals that it contained language which denied that the plaintiff was the owner and holder of the note and mortgage being foreclosed. Under such circumstances, the appellant was not required to expressly plead lack of standing as a defense”
This is interesting. The Court held, in essence, that the denial of certain averments in the complaint was sufficient to raise the affirmative defense of lack of standing. So, the more artfully a complaint is pleaded, the better the chance of a de-facto standing defense being proffered.
Key Takeaway
The Paulsen decision establishes that defendants can preserve standing challenges by simply denying the plaintiff’s ownership allegations in their answer, without needing to explicitly plead “lack of standing” as a separate defense. This ruling emphasizes the importance of careful pleading on both sides—defendants should thoughtfully craft their denials, while plaintiffs must ensure their complaints are precisely worded to establish clear ownership claims.
