If it’s not affixed, your case could be eighty-sixed.
The $44 million foreclosure lawsuit against Morris Moinian’s Hotel Hayden stalled this week when a judge ruled that lender Morgan Stanley hadn’t properly attached the mortgage and the note.
Bastien Broda’s 109Co is trying to foreclose on Fortuna Realty’s 122-room hotel at 127 West 28th Street after buying the debt from Morgan Stanley in February. The issue isn’t whether or not Fortuna defaulted: Moinian had signed a forbearance agreement admitting default.
But when Morgan Stanley refinanced the hotel in 2018, it filed the note and the mortgage separately. The two need to be “so firmly affixed thereto as to become a part thereof,” courts have ruled. A paper clip doesn’t count.
New York Supreme Court Justice Francis Kahn on Wednesday ruled that the paperwork was not properly attached and denied the motion for summary judgment, meaning the case must go to trial.
“No staple, no case,” said attorney Leo Jacobs, who represents Moinian and argued the attachment issue.
Representatives for 190Co and Fortuna could not be immediately reached for comment.
The attachment issue isn’t just some trivial technicality. A lender must prove a legal right to foreclose on a property by showing how and when they acquired the note along with the mortgage. If they didn’t, someone else could come along and try to foreclose again on the same property.
So-called staple cases became prevalent amid the foreclosure crisis following the 2007 housing-bubble burst, and are often seen when one lender assigns a loan to another.
Fortuna bought the Hayden in 1999 and refinanced it with Morgan Stanley Private Bank in 2018. Morgan Stanley filed its foreclosure case in April 2025 and then sold the loan for an undisclosed amount in February to 109Co., which Broda formed in 2023 after leaving 60 Guilders.
Jacobs said the next step is to go to trial to try and prove Broda has standing to bring the case, or to try and go back and correct the attachment issue. That could be difficult, Jacobs added, if he has to track down people involved in the original loan.
At the very least, it gives Moinian more leverage to try and negotiate a settlement, if he chooses.
Jacobs said he successfully argued another staple case in Queens, and said these will become more common as banks continue to offload bad loans.
“There’s now going to be a shitload of these assignments,” he said. “And they need to be tested.”
