Law.com Subscribers SAVE 30%

Call 855-808-4530 or email [email protected] to receive your discount on a new subscription.

Second Circuit Narrows Borrower's Ability to Pursue Class Damages In Federal Court for Failure to Timely Record Mortgage Satisfactions

By Jonathan Robbin
March 01, 2022

If at first you don't succeed, try again. In Maddox v. Bank of N.Y. Mellon Trust Co., N.A., the United States Court of Appeals for the Second Circuit got it right by vacating its prior order in light of the Supreme Court's TransUnion LLC v. Ramirez, 141 S. Ct. 2190 (2021), decision. 2021 U.S. App. LEXIS 34056 (2d Cir. Nov. 17, 2021).

This appeal originated from an order of the United States District Court for the Western District of New York, holding Plaintiffs maintained Article III standing to seek statutory damages for Defendant's purported untimely violation of recordation requirements imposed by New York State's mortgage-satisfaction-recording statues in New York Real Property Law (RPL) §275 and New York Real Property Actions and Procedures Law (RPAPL) §1921. Initially, the Second Circuit held that, despite not having actual damages to title, reputation, or otherwise, Plaintiffs still maintained Article III standing based on alleging a violation of the mortgage-satisfaction-recording statutes because a mortgagee's delay in recording a discharge of mortgage: 1) creates a cloud on title to real estate; and 2) creates the false appearance that the mortgagor has not paid his/her debt, which can harm the mortgagor's reputation and make it difficult for him/her to obtain additional financing. Maddox v. Bank of N.Y. Mellon Trust Co., N.A., 997 F.3d 436, 446-447 (2d Cir. 2021). As a result, the Second Circuit held that Plaintiffs suffered material harm and an injury-in-fact. Id. at 448-449. Thus, the Second Circuit held that the violations of New York statutory law by itself constituted a particularized harm giving rise to Article III standing because the invasion of interests protected by state law support Article III standing and that the plausible inference that Defendant harmed Plaintiffs financial reputation created a material risk of particularized harm by impairing their credit and liming their borrowing capacity. Id. at 439-440.

But following the original Maddox decision, the Supreme Court issued TransUnion. In TransUnion, the Supreme Court held that "concrete harm" requires more than the existence of a risk of harm that never materializes. The Supreme Court distinguished risk that ultimately materialized and the risk of future harm and held that, to have Article III standing, the harm must materialize: "In sum, the 6,332 class members whose internal TransUnion credit files were not disseminated to third-party businesses did not suffer a concrete harm. By contrast, the 1,853 class members (including Ramirez) whose credit reports were disseminated to third-party businesses during the class period suffered a concrete harm." TransUnion LLC, 141 S. Ct. at 2212-2213.

This premium content is locked for Entertainment Law & Finance subscribers only

  • Stay current on the latest information, rulings, regulations, and trends
  • Includes practical, must-have information on copyrights, royalties, AI, and more
  • Tap into expert guidance from top entertainment lawyers and experts

For enterprise-wide or corporate acess, please contact Customer Service at [email protected] or 877-256-2473

Read These Next
Strategy vs. Tactics: Two Sides of a Difficult Coin Image

With each successive large-scale cyber attack, it is slowly becoming clear that ransomware attacks are targeting the critical infrastructure of the most powerful country on the planet. Understanding the strategy, and tactics of our opponents, as well as the strategy and the tactics we implement as a response are vital to victory.

Major Differences In UK, U.S. Copyright Laws Image

This article highlights how copyright law in the United Kingdom differs from U.S. copyright law, and points out differences that may be crucial to entertainment and media businesses familiar with U.S law that are interested in operating in the United Kingdom or under UK law. The article also briefly addresses contrasts in UK and U.S. trademark law.

The Article 8 Opt In Image

The Article 8 opt-in election adds an additional layer of complexity to the already labyrinthine rules governing perfection of security interests under the UCC. A lender that is unaware of the nuances created by the opt in (may find its security interest vulnerable to being primed by another party that has taken steps to perfect in a superior manner under the circumstances.

Role and Responsibilities of Practice Group Leaders Image

Ideally, the objective of defining the role and responsibilities of Practice Group Leaders should be to establish just enough structure and accountability within their respective practice group to maximize the economic potential of the firm, while institutionalizing the principles of leadership and teamwork.

Removing Restrictive Covenants In New York Image

In Rockwell v. Despart, the New York Supreme Court, Third Department, recently revisited a recurring question: When may a landowner seek judicial removal of a covenant restricting use of her land?