Affirmed
The Second Circuit affirmed the district court's
order denying the Bank's motion for judgment on
the pleadings. The court held that state
legislatures may create legally protected
interests whose violation supports Article III
standing, subject to certain federal limitations.
The court also decided that the New York law
violations alleged here constitute a concrete and
particularized harm to plaintiffs in the form of
both reputational injury and limitations in
borrowing capacity over the nearly ten-month
period during which their mortgage discharge was
unlawfully not recorded and in which the Bank
allowed the public record to reflect, falsely,
that plaintiffs had an outstanding debt of over
$50,000. The court further concluded that the
Bank's failure to record plaintiffs' mortgage
discharge created a material risk of concrete and
particularized harm to plaintiffs by providing a
basis for an unfavorable credit rating and reduced
borrowing capacity. The court explained that these
risks and interests, in addition to that of
clouded title, which an ordinary mortgagor would
have suffered (but plaintiffs did not), are
similar to those protected by traditional actions
at law. Therefore, plaintiffs have Article III
standing and they may pursue their claims for the
statutory penalties imposed by the New York
Legislature, as well as other relief.
