1 UNITED STATES COURT OF APPEALS 2 FOR THE SECOND CIRCUIT 3 ____________________ 4 5 August Term, 2019 6 7 (Argued: March 26, 2020 Decided: May 10, 2021) 8 9 Docket No. 19-1774 10 11 ____________________ 12 13 SANDRA MADDOX, TOMETTA MADDOX HOLLEY, on behalf of themselves 14 and all others similarly situated, 15 16 Plaintiffs-Appellees, 17 18 v. 19 20 THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A., 21 22 Defendant-Appellant. 23 24 ____________________ 25 26 Before: JACOBS, POOLER, and CARNEY, Circuit Judges. 27 28 Appeal from an order of the United States District Court for the Western 29 District of New York (Richard Joseph Arcara, J.) denying the motion of the Bank 30 of New York Mellon Trust Company’s (“BNY Mellon” or “the Bank”) for 1 judgment on the pleadings. The district court concluded that plaintiffs have

2 Article III standing to sue BNY Mellon for violating the timely recordation

3 requirements imposed by New York State’s mortgage-satisfaction-recording

4 statutes and certified the question for interlocutory appeal.

5 On review, we hold, first, that state legislatures may create legally

6 protected interests whose violation supports Article III standing, subject to

7 certain federal limitations. We further decide that the New York law violations

8 alleged here constitute a concrete and particularized harm to plaintiffs in the

9 form of both reputational injury and limitations in borrowing capacity over the 10 nearly ten-month period during which their mortgage discharge was unlawfully 11 not recorded and in which the Bank allowed the public record to reflect, falsely, 12 that plaintiffs had an outstanding debt of over $50,000. In addition, the Bank’s 13 failure to record plaintiffs’ mortgage discharge created a material risk of concrete 14 and particularized harm to plaintiffs by providing a basis for an unfavorable 15 credit rating and reduced borrowing capacity. These risks and interests, in 16 addition to that of clouded title, which an ordinary mortgagor would have 17 suffered (but plaintiffs did not), are similar to those protected by traditional 18 actions at law. Whether better characterized as “substantive” or “procedural” 2 1 wrongs, the Bank’s violations of the state statutes are plausibly alleged to have

2 caused actual harm and subjected plaintiffs to a real risk of material harm, the

3 very sort of which the state statutes appear designed to protect mortgagors such

4 as plaintiffs against. As a result, we conclude that the Maddoxes’ allegations

5 support their Article III standing, and that they may pursue their claims for the

6 statutory penalties imposed by the New York Legislature, and other relief, in the

7 federal district court, subject to compliance with other jurisdictional prerequisites

8 and class certification requirements.

9 Order affirmed and case remanded. 10 Judge Jacobs dissents in a separate opinion. 11 ____________________ 12 JONATHAN M. ROBBIN, Blank Rome LLP, New York, 13 NY, for Defendant-Appellant Bank of New York Mellon 14 Trust Company. 15 16 SETH R. LESSER, Klafter Olsen & Lesser LLP, Rye 17 Brook, NY, for Plaintiffs-Appellees Maddox et al. 18 19 ERIC LECHTZIN, Berger & Montague, P.C., 20 Philadelphia, PA (on the brief), for Plaintiffs-Appellees 21