Opinion
Index No. 901595-19 NYSCEF Doc. No. 78
03-05-2024
U.S. BANK NATIONAL ASSOCIATION, NOT IN ITS INDIVIDUAL CAPACITY, BUT SOLELY AS TRUSTEE FOR THE RMAC TRUST, SERIES 2016-CTT, Plaintiff, v. MICHAEL G. CRAFT, JR., AS ADMINISTRATOR AND AS HEIR OF THE ESTATE OF ELIZABETH CRAFT, WHO WAS THE SURVIVING SPOUSE OF WILLIAM A. CRAFT, PEOPLE OF THE STATE OF NEW YORK, STATE DEPARTMENT OF TAXATION AND FINANCE JOHN DOE (Those unknow tenants, occupants, persons or Corporations, or their heirs, distributees, executors, administrators, Trustees, guardians, assignees, creditors or successors claiming an Interest in the mortgaged premises, Defendants.
GROSS POLOWY, LLC Attorneys for Plaintiff (Amber A. Jurek, Esq., of Counsel) 1775 Wehrle Drive, Suite 100 Williamsville, New York 14221 SANDRA S. POLAND DEMARS, ESQ. Attorney for Defendant Michael G. Craft, Jr.
Unpublished Opinion
(Supreme Court, Albany County, All Purpose Term)
(Justice Kimberly A. O'Connor, Presiding)
GROSS POLOWY, LLC
Attorneys for Plaintiff
(Amber A. Jurek, Esq., of Counsel)
1775 Wehrle Drive, Suite 100
McCarter & English, LLP (Adam M. Swanson, Esq., of Counsel) filed a notice of appearance on March 10 2023 as co-counsel for plaintiff. However, that firm did not technically appear on the motion.
SANDRA S. POLAND DEMARS, ESQ.
Attorney for Defendant Michael G. Craft, Jr.
DECISION AND ORDER
HON. KIMBERLY A. O'CONNOR, ACTING SUPREME COURT JUSTICE
Plaintiff, U.S. Bank, N.A., (hereinafter "U.S. Bank") commenced this mortgage foreclosure action on March 19, 2019. The suspension and stays of all residential foreclosure proceedings as a result of the COVID-19 pandemic applied to this action, so the case was suspended for a period of time. On August 27, 2021, plaintiff filed a motion seeking an order extending plaintiff s time to serve the summons and complaint and the motion was granted on April 26, 2022. Defendant Michael G. Craft, Jr. (hereinafter "Craft") was served on May 2, 2022. On May 11, 2022, Craft interposed an answer including counterclaims and U.S. Bank served a reply on May 31, 2022. Foreclosure Settlement conferences were held in September of 2022 and no settlement was reached.
On November 21, 2021, Craft filed a motion for summary judgment requesting that this Court dismiss the summons and complaint, and grant Craft's counterclaims. U.S. Bank opposed the motion. On December 16, 2022, U.S. Bank filed a motion for summary' judgment. Craft opposed the motion.
On February' 23, 2023, the Court posted a Court Notice on NYSCEF directing the parties to submit additional briefs to address the impact that the newly enacted Foreclosure Abuse Prevention Act (hereinafter "FAPA") has on the filed motions. The parties submitted the additional briefs on that issue.
Factual Background
Mortgagor Elizabeth Craft executed a note and mortgage regarding the subject property in 2003, She died on April 17, 2007. Default on the mortgage initially occurred in 2007. A foreclosure action was commenced by plaintiffs predecessor in interest, Bank of America, in conjunction with that default, and the action was voluntarily discontinued on November 1, 2012 following a Decision and Order issued by Hon. Michael C. Lynch which determined that the Estate of Elizabeth Craft had to be added as a defendant in the action. U.S. Bank filed the instant mortgage foreclosure action on March 19, 2019 claiming that it is based upon default for the April 25, 2013 payment, and for payments thereafter. U.S. Bank accelerated the entire principal balance based upon the 2013 default.
Arguments
Defendant contends in its motion for summary judgment that: (1) the complaint is barred by the statute of limitations; (2) plaintiff lacks standing; (3) plaintiff did not comply with the provisions of RPAPL §1304; (4) his first counterclaim alleging that the complaint was without basis in law or fact should be granted and he should be awarded reasonable attorney's fees and sanctions should be imposed; (5) his second counterclaim requesting an order discharging the mortgage should be granted; and (6) his third counterclaim requesting damages for intentional infliction of emotional distress should be granted. Plaintiff opposes the motion and contends that: (1) the action was commenced within the statute of limitations; (2) plaintiff has standing; (3) defendant is not entitled to notice pursuant to RPAPL §1304; (4) defendant is not entitled to attorney's fees or sanctions; (5) since the case was properly commenced, defendant's request to discharge the mortgage should be denied; and (6) defendant's request for damages related to intentional infliction of emotional distress should be denied.
In its motion for summary judgment, plaintiff contends that it has established that it is the holder of the note and mortgage and that a default occurred which permits plaintiff to accelerate the principal balance being due and owing and that supports a finding of summary' judgment in its favor. For the reasons outlined in his motion for summary judgment, defendant opposes plaintiffs motion.
Discussion
I. Statute of Limitations
Defendant contends that because the initial default was in 2007, not 2013, the case was filed after the six-year statute of limitations had expired. In addition, defendant argues that the voluntary discontinuance was in 2012, and even if that discontinuance unaccelerated the debt, the case was not fded within the six-year statute of limitations because it was filed on March 19, 2019. Additionally, defendant argues that CPLR §3217(e) should be applied retroactively and precludes plaintiff from pursuing this claim based upon the prior discontinuance.
Plaintiff argues that since there is technically a separate cause of action related to each missed payment, the action was timely commenced since monthly payments have not been made since 2007. Plaintiff claims it is entitled to recover for payments that became due within six years of commencement of the action. In addition, plaintiff contends that despite the discontinuance of the prior foreclosure action, CPLR §3217(e) does not preclude plaintiff from bringing this second action because that new section of law became effective December 30, 2022 and cannot be applied retroactively. Plaintiff bases this argument on the fact that prior to the enactment of CPLR 3217(e), a voluntary discontinuance had the effect of revoking the previous acceleration of the mortgage, and retroactive application of the statute would violate plaintiffs due process rights.
CPLR 3217(e) states:
Effect of discontinuance upon certain instruments. In any action on an instrument described under subdivision four of section two hundred thirteen of this chapter, the voluntary discontinuance of such action, whether on motion, order, stipulation or by notice, shall not, in form or effect, waive, postpone, cancel, toll, extend, revive or reset
the limitations period to commence an action and to interpose a claim, unless expressly prescribed by statute.
The effective date of the law is stated as follows:
This act shall take effect immediately and shall apply to all actions commenced on an instrument described under subdivision four of section two hundred thirteen of the civil practice law and rules in which a final judgment of foreclosure and sale has not been enforced (Ch.821,§10, L.2022).
Prior to the enactment of CPLR §3217(e), the Court of Appeals determined that "when a bank effectuated an acceleration via the commencement of a foreclosure action, a voluntary discontinuance of that action-i.e., the withdrawal of the complaint-constitutes a revocation of that acceleration (Freedom Mtge. Corp. v. Engel, 37 N.Y.3d 1, 31 [2021]). Thus, when a plaintiff in a foreclosure action voluntarily discontinued the action, the acceleration was revoked and another foreclosure action could be commenced. The Legislature passed CPLR 3217(e) in response to the Court of Appeals ruling in Engel, and the statute makes clear that the voluntary discontinuance does not in any way extend or revive the statute of limitations.
However, at issue in this case is whether this can be applied retroactively. This Court determines that it cannot be applied retroactively. The Court agrees with plaintiff that" . . application of a new statute to conduct that has already occurred may upset reliance interests and trigger fundamental concerns about fairness (citations omitted)" (Plaintiffs Supplemental Memorandum, dated March 24, 2023, paragraph 15). First, the language of the statute and its effective date do not demonstrate an intention of the legislature to apply the provisions retroactively. Second, retroactive application would inappropriately divest plaintiff of actions it took in reliance on the then-existing law that permitted the plaintiff to revoke the acceleration, which at the time, reserved its rights in the future. Years later, plaintiff took action based upon the continued default, recognizing that it would only be entitled to recoup those payments that were missed within the statute of limitations period. For these reasons, the statute cannot be applied retroactively, and plaintiff commenced its action within the statute of limitations.
II. Standing
Defendant contends that plaintiff does not have standing to bring this action because it has not substantiated the claim that it was the holder of the note at the time of commencement of the action. This claim is without merit. Plaintiffs affidavit in support of the application, the copy of the Complaint which included a copy of the note that contains a proper endorsement, and the certificate of merit, all support and substantiate plaintiffs claim that it was and is the holder of the note, with which the mortgage travels. This gives plaintiff standing to prosecute the action.
III. Compliance with RPAPL §1304
Defendant alleges that plaintiff failed to comply with RPAPL §1304 by failing to send the required notices. Plaintiff contends that RPAPL §1304 does not apply because the loan at issue is not considered a "home loan" due to the fact that the property is not the borrower's principal place of residence. Plaintiff notes that the borrower is deceased and thus, the property cannot be her principal place of residence. In addition, plaintiff notes that the purpose behind the notice required by RPAPL §1304 is to afford the borrower an opportunity for loss mitigation, which is not an issue here, The Court agrees and finds that the notices required by RPAPL § 1304 are not applicable in this case.
IV. Defendant's Counterclaims
Defendant included three counterclaims in the answer: (1) the plaintiffs complaint is without basis in law or fact and because of that defendant is entitled to attorney's fees and the imposition of sanctions; (2) a request for an order discharging the mortgage based upon the claims in the first counterclaim; and (3) an award of damages for the allegation of intentional infliction of emotional distress.
With regard to defendant's first counterclaim, based upon the foregoing determinations, the defendant has failed to demonstrate entitlement to such relief since the plaintiffs complaint has merit and the action was timely commenced. As such, the relief is denied and the first counterclaim must be dismissed. For the same reasons, the defendant's second counterclaim must fail as well since the plaintiff has established a meritorious action. Therefore, the second counterclaim is dismissed.
With regard to the third counterclaim, the defendant has not demonstrated entitlement to a finding of liability on such a claim. There is no evidence in the record to substantiate a claim of intentional infliction of emotional distress, and, as such, the relief sought in the third counterclaim is denied and the third counterclaim is dismissed.
V. Plaintiffs Motion for Summary Judgment
Plaintiff moved for summary judgment on the basis that it is the holder of the note and Mortgage, and that the defendant has defaulted pursuant to the terms of the loan agreement. The Court has determined above that the action was filed in a timely fashion and that the plaintiff has standing to sue. The record demonstrates that the plaintiff is the holder of the note and mortgage and that the defendant defaulted on the note by failing to make the monthly payments since 2007.
" '[W]here a mortgagee produces the mortgage and unpaid note, together with evidence of the mortgagor's default, the mortgagee demonstrates its entitlement to a judgment of foreclosure as a matter of law, thereby shifting the burden to the mortgagor to assert and demonstrate, by competent and admissible evidence, any defense that could properly raise a question of fact as to his or her default' (citations omitted)" (Marshall v. Alaliewie, 304 A.D.2d 1032 [3d Dep't 2003]). The plaintiff has met its burden based upon the record before the Court. As determined above, the defendant has failed to meet its burden regarding any defenses. As such, the plaintiff's motion must be granted. A separate Order Granting Summary Judgment, Default and Reference to Compute is being issued regarding this relief.
Any remaining arguments not specifically addressed herein have been considered and found to be lacking in merit or need not be reached in light of this determination.
Accordingly, it is hereby
ORDERED, that defendant's motion for summary judgment is denied and the first, second and third counterclaims are dismissed; and it is further
ORDERED, that plaintiffs motion for summary judgment and default judgment is granted for the reasons stated herein.
This memorandum constitutes the Decision and Order of the Court. The original Decision and Order is being uploaded to the NYSCEF system for filing and entry by the Albany County Clerk. The signing of this Decision and Order and uploading to the NYSCEF system shall not constitute filing, entry, service, or notice of entry under CPLR 2220 and § 202.5-b(h)(2) of the Uniform Rules for the New York State Trial Courts. Counsel is not relieved from the applicable provisions of those Rules with respect to filing, entry, service, and notice of entry of the original Decision and Order.
SO ORDERED.
ENTER.
Papers Considered:
1. Notice of Motion, dated November 18, 2022; Statement of Material Facts, dated November 15, 2022; Affidavit of Michael G. Craft, Jr., sworn to November 11, 2022; Affirmation of Sandra S. Poland Demars, Esq., dated November 18, 2022; with Exhibits A-F annexed;
2. Plaintiff s response to Defendant's Statement of Material Facts;
3. Affirmation of Amber Jurek. Esq., dated December 9, 2022; with Exhibits A - F annexed;
4. Affirmation in Reply of Sandra S. Poland Demars. Esq., dated December 12, 2022;
5. Notice of Motion, dated December 15. 2022; Statement of Material Facts; Affidavit of Anthony Younger, swron to September 15, 2022; Memorandum of Law. dated December 15, 2022; Affirmation of Christine L. Fox, Esq., dated December 15, 2022; w ith Exhibits A - K annexed;
6. Defendant's response to Plaintiffs Statement of Material Facts, dated January 2, 2023. with Exhibit A annexed;
7. Affirmation of Sandra S. Poland Demars, Esq., dated January 2, 2023;
8. Reply Affirmation of Amber Jurek, Esq., dated January 6, 2023;
9. Defendant's Memorandum of Law in Support, dated March 2, 2023; and
10. Plaintiff s Memorandum of Law in Opposition, dated March 24, 2023; with Exhibits A -B.