Maddox new york article

Justia Legal Resources. Find a Lawyer. Law Students. US Federal Law. US State Law. Other Databases. Marketing Solutions. See R. On December 15, , approximately three months after BNY Mellon had recorded the satisfaction, the Maddoxes brought a class action suit against BNY Mellon for violation of New York's mortgage-satisfaction-recording statutes.

In late , after the Supreme Court issued its decision Spokeo Inc. It argued—among other things—that the Maddoxes lack Article III standing to pursue the stated claim, asserting that the Maddoxes "suffered no actual damages in relation to the alleged failure to record the satisfaction" and therefore "failed to plead a concrete harm" under Spokeo.

Maddox v. Bank of N. Mellon Tr. The Bank did not dispute that the discharge was untimely filed. The Maddoxes countered that the Bank's ten-month period of noncompliance with the statute impaired access to accurate financial information about them and created a false impression about their credit status during this period.

Because the right to be free of these harms was recognized by the state legislature and bears a strong relationship to harms traditionally actionable at common law, the violations cause substantive harms and otherwise create concrete injuries that endow the Maddoxes with standing to seek remedies in federal court, they urged. The Maddoxes further argued that the Bank's violation of the mortgage-satisfaction-recording statutes for an almost eleven-month period ten months later than the statutes permit without penalty caused them a sufficiently real risk of other concrete and particularized harms—failure to obtain financing for other properties and damage to personal credit, for example—that those risks too gave rise to an injury in fact supporting their Article III standing to sue.

A magistrate judge issued a Report and Recommendation suggesting that the district court deny the motion to dismiss. The district court accepted the recommendation and denied BNY Mellon's motion for judgment on the pleadings. July 24, It held that the Bank's violation was a "procedural violation," and because the Bank's violation of the mortgage-satisfaction-recording statutes created a "material risk of harm" to them, 3 the Maddoxes' allegations of noncompliance by the bank satisfied the injury-in-fact requirement for Article III standing.

The district court reasoned that failure to timely record a mortgage satisfaction could cloud title to real property, inhibit sale of the property, and affect the mortgagor's credit. At the same time, the district court took note of the Eleventh Circuit's contrary decision in Nicklaw v. CitiMortgage, Inc. Comenity Bank, F. It accordingly identified the question as a close one and on that basis certified the question for interlocutory appeal. We accepted the certification, and we now address that question.

We review a district court's decision regarding judgment on the pleadings de novo. Lanning v. City of Glens Falls, F. Article III standing requires plaintiffs to show 1 an "injury in fact," 2 a "causal connection" between that injury and the conduct at issue, and 3 a likelihood "that the injury will be redressed by a favorable decision.

The central question on appeal is whether the Maddoxes have met the injury-in-fact requirement. BNY Mellon argues that, although the New York State Legislature may have implicitly recognized that delayed recording can create harms such as clouding title and adversely affecting a mortgagor's credit, the Maddoxes have not alleged, and cannot allege, that they suffered from these harms.

Therefore, BNY Mellon asks us to conclude that the Maddoxes have not shown that the injury alleged was concrete and particularized.

As a result, BNY Mellon contends, the Maddoxes' injury from the discharge's late recordation was neither "concrete" nor "particularized" enough to amount to an injury in fact for purposes of Article III standing. The Maddoxes reject this analysis, urging that where the Legislature has recognized a legal interest or interests and a plaintiff has suffered a harm or risk of real harm to those interests, Article III is satisfied.

According to the Maddoxes, the harms that the Legislature aimed to preclude need not have come to fruition for a plaintiff to have suffered a material risk of real harm sufficient to seek the statutory remedy afforded by the Legislature.

We discuss these arguments below. At the threshold, we must address the general question whether the New York State Legislature has the power to create legal interests whose violation can satisfy Article III.

No party disputes that it may and the judicial consensus so holding is strong, but we have not yet squarely addressed the question. For the reasons surveyed briefly below, we hold that a state legislature, like Congress, may recognize such a legal right.

By so holding, we join the other circuits to have considered the question. The Supreme Court has consistently found Article III's injury-in-fact requirements of concreteness and particularity can be satisfied in cases arising from the violation of federal statutes that confer legal interests on individuals. Election Comm'n v. Akins, U. Dep't of Justice, U. Coleman, U. Metropolitan Life Insurance Co. Spokeo, S. Experian Mktg. We see no basis to conclude that state legislatures lack the power that Congress enjoys to recognize or create legally protectible interests whose invasion gives rise to Article III standing, subject to the same general limitations that the Supreme Court has alluded to with respect to Congress's ability to do so.

We reach this decision due to two general considerations embedded in Article III standing jurisprudence and highlighted by the Supreme Court in Spokeo: first, the long history of the adjudication in federal courts of state-created rights, under the courts' diversity jurisdiction, and second, the significant absence of the separation of powers concerns that arise when federal courts are called on to adjudicate congressionally created rights.

As to the first: The Supreme Court has regularly turned to "history and tradition" as "a meaningful guide to the types of cases that Article III empowers federal courts to consider. The suggestion is therefore unsurprising that a state legislature's power to create rights whose invasion is cognizable as an Article III cases or controversy is virtually self-evident. Charles, U. Indeed, state-created or state-recognized legal interests—both those with statutory and common law roots—provide the basis for Article III standing in cases invoking a federal court's diversity jurisdiction and supplemental jurisdiction over state-law claims.

Second, as we note above, our holding is supported by the observation that a state legislature's power to create rights whose invasion gives rise to injuries-in-fact does not raise federal separation-of-powers concerns.

Wright, U. Here, although other dynamics beyond Article III standing doctrine might be relevant, the adjudication by federal courts of rights created by state legislative action poses no obvious threat to the executive and legislative branches of the federal government. Consequently, we treat the rights created by acts of Congress and those created by acts of state legislatures in parallel for purposes of determining whether a plaintiff has suffered an actionable intrusion on a legally protected interest as a "case" or "controversy.

We turn now to examining the private legal interests that are created by the state laws at issue in the Maddoxes' suit. The New York mortgage-satisfaction-recording statutes require that the mortgagee "present a certificate of discharge for recording" to the applicable county clerk within thirty days of the mortgage loan's discharge.

In this way, the New York State Legislature statutorily conferred certain legal rights on mortgagors: the right to the mortgagee's timely recording of a discharge and the liability of the mortgagee to the mortgagor for monetary penalties in cases of delayed recording.

The judgment of the Legislature confirms as much. See Spokeo, S. As revealed by the mortgage-satisfaction-recording statutes' legislative history, the New York Legislature viewed lenders' failure to timely record mortgage satisfactions as a "serious" problem. Joint App'x "The measure is a response to the serious issues that can arise when a certificate of discharge is not filed for a mortgage that has been paid off. Although the record is sparse, it is not difficult to imagine that the Legislature would be interested in forestalling widespread practice in the state of untimely recording by providing incentives against untimely recording.

Its interest might have had manifold sources—for example, ensuring the reliability of the state land recording system— but the record supports the view that state representatives enacting this legislation were concerned with traditionally actionable harms to mortgagors that arise from late recordings of discharge.

We thus conclude that the New York Legislature intended to create legally protected interests that, if violated, would permit individuals to seek judicial redress. To support standing, an injury must be "real, and not abstract"—it must be "concrete.

Further, such intangible harms need not be particularly burdensome, as we recognized just recently. See Melito, F. Navigating the vocabulary of standing-related injuries can be treacherous, as illustrated by the language quoted just above. To determine whether statutorily created rights protecting against intangible harms satisfy the "concreteness" requirement, Spokeo suggests that courts consider whether the rights at issue are substantive or procedural in nature.

Informed by Spokeo 's model, we examine the historical roots of the harms protected against by the mortgage-satisfaction-recording statutes to assess whether the rights are better characterized as one or the other, recognizing still that legislative rights are not reliably subject to the dichotomy.

See Strubel, F. Evaluating the rights to timely recording that are conferred by these state statutes, however, we conclude that the rights and the injuries arising from their alleged violation are better characterized as substantive than procedural, and that their violation satisfies the "concrete injury" requirement. Under the injury-in-fact inquiry, a statutory right is said to be "substantive" if it protects against an "alleged intangible harm [that] has a close relationship to a harm that has traditionally been regarded as providing a basis for a lawsuit in English or American courts.

If a statute protects against a harm bearing a "close relationship" to a harm traditionally recognized at common law, the harm alleged due to a violation of that statute constitutes a concrete injury in fact sufficient to establish Article III without any additional showing.

As described above, in R. As the Maddoxes persuasively argue, the intangible rights that the mortgage-satisfaction-recording statutes seek to protect and the concurrent injury from the Bank's violation of the statutes— i. First, a lender's delay in recording the satisfaction of a mortgage typically creates a cloud on title of real estate. Schwartz, 73 N. As such, Spokeo instructs that New York's satisfaction-of-mortgage statutes create a substantive legal right, the violation of which creates an injury in fact.

In addition, the right to timely recordation of discharge has close ties to traditional reputation-based harms actionable at common law. A mortgage recorded with the county clerk conveys to the world that the borrower owes a debt secured by a property. Correspondingly, a lender's delay in recording a mortgage satisfaction creates the false appearance that the borrower has not paid his debt. This harms the borrower's reputation by, among other things, making him look less creditworthy than he is.

This type of reputational harm— i. See Weldy v. Piedmont Airlines, Inc. History therefore weighs in favor of treating violations of the satisfaction-of-mortgage statutes as concrete Article III injuries. The penalty payment required of the mortgagee to the mortgagor is a meaningful substantive feature of the state law. The mortgagee's failure to timely file a certificate of discharge does not create an obligation owed to the public fisc.

We understand this component to signal the Legislature's intention to compensate the mortgagor for the harms it presumes may be suffered by a delay in recording the discharge of the mortgage debt: as identified by the district court, the cloud on title and the adverse effects on the borrower's credit reputation as well as on its ability to obtain financing.

If the reliability of state records alone were at issue, one might expect the Legislature to have made the penalty payable directly to the state.

Instead, the Legislature chose to make the penalty payable to the mortgagor. It also chose to provide a modest incentive to the lender to file discharges in a timely way. In light of these considerations, we view the satisfaction-of-mortgage statutes as substantive provisions that protect concrete interests of a type traditionally recognized and protected at common law—not mere "procedural" rights which, if violated, must be accompanied by further allegations of harm before a concrete injury is established.

For this reason, the Maddoxes need allege no harm greater than that their discharge was untimely recorded—the invasion of their statutory right under New York law—to establish a concrete, intangible injury of the sort that gives them Article III standing to sue for the statutory penalty in federal court, if other aspects of their asserted action, brought in part under the Class Action Fairness Act, Pub.

Even were we to characterize the satisfaction-of-mortgage statutes as "procedural" as the district court did rather than substantive, we would still hold that the Maddoxes have established a concrete injury for Article III purposes. Although under Spokeo 's teachings "a bare procedural violation, divorced from any concrete harm" does not satisfy the injury-in-fact requirement of Article III, "the violation of a procedural right granted by statute can be sufficient in some circumstances to constitute injury in fact," such as when the violation presents a "material risk of [concrete] harm.

Tellingly here, the Supreme Court has instructed that "a plaintiff in such a case"— that is, where a material risk of concrete harm is presented—"need not allege any additional harm beyond the one [the legislature] has identified.

The threatened harm here satisfies Article III, even if the threat did not eventuate. In particular, the inference is reasonable that the delay adversely affected the Maddoxes' credit during that time, making it difficult to obtain financing had they needed it in an emergency, and even if they did not attempt to borrow, leaving a false public record of indebtedness.

If more is needed, and as discussed in the margin, they risked not being able to borrow during that time in the event of an emergency or for a new home. The Maddoxes' financial reputation even apart from their ability to borrow was also impaired during the ten-month delay because public records erroneously showed the discharged debt as unpaid. And, although they themselves did not suffer this harm, the ordinary mortgagor would have suffered a cloud on the title to his property from the Bank's failure, thereby causing a material risk of impeding any transaction concerning the subject property.

Factual objections. BNY Mellon does not challenge the district court's conclusion that violation of the New York mortgage-satisfaction-recording statutes exposes a mortgagor to harms such as clouding title, which can encumber the property or hinder the mortgagor's ability to sell it, or by adversely affecting the mortgagor's credit, which can make it difficult for the mortgagor to obtain financing. Rather, BNY Mellon contends that the Maddoxes neither suffered actual harm nor faced a material risk of harm because the procedural violations at issue were remedied months before the Maddoxes brought suit and the Maddoxes sold their property while the mortgage still encumbered it.

As such, BNY Mellon argues that the Maddoxes have alleged nothing more than a bare procedural violation, which is insufficient on its own. Its arguments fail to persuade us. First, as to the facts alleged. Even though the Maddoxes were able to sell the Property without the Bank having recorded the discharge, the Property remained burdened by the undischarged lien and the Maddoxes remained potentially exposed to liability to their buyers for that encumbrance during the lien's near eleven-month wrongful pendency.

In addition, the Maddoxes bore the liability for the loan on their credit report during those eleven months. Their ability to borrow could reasonably be expected to have been limited by that perceived liability. Further, apart from the practical effects of such a limitation, as discussed above, their reputation for creditworthiness was affected adversely by the Bank's failure to record the discharge until ten months after the statutory deadline.

As we have posited and as the State Legislature seemed to acknowledge by its actions, these are not mere procedural harms; they are substantive, and actionable, regardless of whether the Maddoxes in fact lost a house purchase or loan as a result.

See Donoghue v. Bulldog Inv'rs Gen. P'ship, F. In keeping with this observation, the statute does not excuse the noncompliant lender from paying the borrower the statutory penalty if the borrower does not lose a loan or a sale as a result of the delay.

The penalty is due if the filing is tardy. The import of Strubel. BNY Mellon points to our decision in Strubel v. I kept the school for profit so I would be guaranteed an income as a single parent.

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