Opinion
No. 704067–2013.
05-09-2016
21st MORTGAGE CORPORATION, As Mortgage Loan Servicer to Willmington Savings Fund Society, FSB, a Federal Savings Bank d/b/a Christiana Trust, A Division of Wilmington Savings Fund Society, FSB Solely in its Capacity as Trustee for and on behalf of the Knoxville 2012 Trust, Plaintiff, v. Michelle Napier OSORIO, et., al., Defendants.
Upon the following papers E-file numbered as below read on this motion by defendant Hudson City Savings Bank (Hudson City Savings) pursuant to CPLR §§ 3211(a)(4) and (5) to dismiss the complaint against it; the cross motion by defendant Mesias Arias pursuant to CPLR 3211(a)(4) and (5) dismissing the complaint against him; and this cross motion by defendant Mario Cueva pursuant to CPLR §§ 3211(a)(4) and (5) to dismiss the complaint against him:
| Papers | E–File | Numbered |
|---|---|---|
| Notice of Motion | Affidavits–Exhibits | 46–71 |
| Notices of Cross Motion | Affidavits–Exhibits | 72–101 |
| Answering | Affidavits–Exhibits | 115–124 |
| Reply | Affidavits | 125–127 |
Marion Napier gave a 30–year mortgage dated March 23, 1998 to Saxon National Mortgage Bankers, Ltd. (the Saxon Mortgage), on the real property known as 2922 Curtis Street, East Elmhurst, New York to secure a note in the principal amount of $56,600.00, plus interest. The Saxon Mortgage provides for repayment of the mortgage in monthly payments and also includes an optional acceleration clause. Marion Napier died on February 1, 2001. On March 27, 2003, Bank One National Association (Bank One) commenced an action entitled Bank One Natl. Assn. v. Osorio, (Supreme Court, Queens County, Index No. 7780/2003) (the Bank One Action), seeking to foreclose the Saxon Mortgage. In the complaint in the Bank One action, Bank One alleged it was the owner of the Saxon Mortgage and underlying note, and that a default had occurred under the terms of the mortgage and note in payment of the monthly mortgage installments. Bank One exercised its option to accelerate all sums due under the mortgage by making demand in the complaint.
Bank One obtained a default judgment of foreclosure and sale dated September 5, 2003, and a foreclosure sale was held. The judgment, however, was subsequently vacated as against Michelle Napier Osorio, and the foreclosure sale was set aside (Bank One Natl. Assn. v. Osorio, 26 AD3d 452 [2d Dept 2006] ). The Appellate Division, Second Department determined that service of process had not been properly made upon Michelle Napier Osorio and that no basis existed to estop her from denying the validity of the service (id. ). The Appellate Court therefore determined the judgment of foreclosure and sale had to be vacated as against Michelle Napier Osorio for lack of personal jurisdiction. The Appellate Court noted that to grant full relief to Michelle Napier Osorio, it had to grant relief to nonappealing parties, i.e. Mark Napier and Aaron Napier, by also setting aside the foreclosure sale (id. ).
Plaintiff 21st Mortgage Corporation (21st Mortgage) commenced this action to foreclose the Saxon Mortgage on April 22, 2015, in its capacity as a mortgage loan servicer for Wilmington Savings Fund Society, FSB (d/b/a Christiana Trust, a division of Wilmington Savings Fund, FSB), as Trustee for Knoxville 2012 Trust (the Trustee). In the body of the complaint, however, plaintiff 21st Mortgage does not identify itself as the mortgage loan servicer for the Trustee, but rather as the owner and holder of the note and mortgage. Plaintiff 21st Mortgage alleges that a default occurred under the terms of the mortgage and note in payment of the monthly mortgage installment due on December 1, 2002 and thereafter. It also alleges that it elects to accelerate the mortgage debt.
Defendants Arias and Cueva served answers, including affirmative defenses based upon the expiration of the statute of limitations and the pendency of a prior action. It appears that in lieu of answering, defendant Hudson City Savings moves pursuant to CPLR §§ 3211(a)(4) and (5) to dismiss the complaint insofar as asserted against it. Defendant Cueva cross moves pursuant to CPLR 3211(a)(4) and (5) to dismiss the complaint insofar as asserted against him. Defendant Arias likewise cross moves pursuant to CPLR §§ 3211(a)(4) and (5) to dismiss the complaint insofar as asserted against him. Plaintiff 21st Mortgage opposes the motion and cross motions. The remaining defendants have not appeared in relation to the motion or cross motions.
At the outset, the court notes that plaintiff 21st Mortgage provided working copies of the affirmation dated September 28, 2015 of its counsel and the exhibits annexed thereto, which it had filed and served electronically in support of its motion to appoint a temporary administrator (motion seq. No. 4). The affirmation also included plaintiff's opposition to the instant motion (motion seq. No. 1) and cross motions. Although plaintiff 21st Mortgage did not separately file and serve electronically opposition papers to the instant motion and cross motions (22 NYCRR § 202.5 —b [d][1][I] ), the other parties were not prejudiced thereby since they had the opportunity to reply to the September 28, 2015 affirmation and exhibits in relation to the instant motion and cross motions. Thus, the procedural defect shall be overlooked in an exercise of this court's discretion, and the court shall consider the September 28, 2015 affirmation of plaintiff's counsel and annexed exhibits in opposition to the motion and cross motions.
By order dated January 4, 2016, the motion to appoint a temporary administrator was denied without prejudice to the bringing of a petition to appoint a fiduciary for the Estate of Marion Napier in the Surrogate's Court in the county in which the decedent was domiciled.
To the extent defendants Arias and Cueva cross move to dismiss the complaint pursuant to CPLR §§ 3211(a)(4) and (5), issue has been joined, and therefore, their cross motions should have been framed as ones made for summary judgment (see CPLR § 3212 ) premised upon CPLR § 3211(a) grounds that were asserted in their answers (see Rich v. Lefkovits, 56 N.Y.2d 276 [1982] ; Piro v. Macura, 92 AD3d 658 [2d Dept 2012] ; see also Murray Bresky Consultants, Ltd. v. New York Compensation Manager's Inc., 106 AD3d 1255, n. 1 [3d Dept 2013] ). The CPLR requires the court to give “adequate notice to the parties” that it will treat a defendant's motion to dismiss as one for summary judgment (CPLR 3211[c] ). Here, however, an exception to the notice requirement is applicable, since the cross motions exclusively involve “a purely legal question rather than any issues of fact” (Mihlovan v. Grozavu, 72 N.Y.2d 506, 508 [1988] ; Four Seasons Hotels v. Vinnik, 127 A.D.2d 310, 320 [1st Dept 1987] ). In this case, the cross motions by defendants Arias and Cueva also relate to the same legal questions raised on the motion to dismiss by defendant Hudson City Savings. As a result, the court shall treat the cross motions to dismiss by defendants Arias and Cueva as ones for summary judgment without the necessity of giving notice of its intention to do so.
Defendants Hudson City Savings, Arias and Cueva have the initial burden of establishing prima facie that the time in which plaintiff 21st Mortgage had to sue for foreclosure had expired.
An action to foreclose a mortgage is governed by a six-year statute of limitations (CPLR § 213[4] ). With respect to a mortgage payable in installments, separate causes of action accrue for each installment that is not paid and the statute of limitations begins to run on the date each installment becomes due (Wells Fargo Bank, N.A. v. Cohen, 80 AD3d 753 [2d Dept 2010] ; Loiacono v. Goldberg, 240 A.D.2d 476 [2d Dept 1997] ). Once a mortgage debt is accelerated, however, the entire amount is due and the statute of limitations begins to run on the entire debt (Wells Fargo Bank, N.A. v. Burke, 94 AD3d 980 [2d Dept 2012] ; EMC Mtge. Corp. v. Patella, 279 A.D.2d 604 [2d Dept 2001] ). Where, as here, the acceleration of the debt is made optional to the holder of the note and mortgage, the holder's exercise of the election to take advantage of the acceleration provision must be clear, unequivocal and overt for the provision to be operational (see Wells Fargo v. Burke, 94 AD3d at 982–983 ). Furthermore, the borrower must have notice of the election (see id. at 983 ; 446 West 44th St. v. Riverland Holding Corp., 267 App.Div. 135, 137 [1st Dept 1943] ). A debt may be accelerated by a demand, or commencement of an action in which the election is within the body of the complaint (see Loiacono v. Goldberg, 240 A.D.2d 476, 477 [2d Dept 1997] ; see also Saini v. Cinelli Enters., 289 A.D.2d 770, 771 [3d Dept 2001], lv denied 98 N.Y.2d 602 [2002] ).
Although the default letters addressed to Marion Napier dated November 9, 1999 and January 3, 2003 demanded payment for all past due amounts, they fell short of providing clear and unequivocal notice to her that the entire mortgage debt was being accelerated (compare Chase Mtge. Co. v. Fowler, 280 A.D.2d 892, 893 [4th Dept 2001], with Lavin v. Elmakiss, 302 A.D.2d 638, 638–639 [3d Dept 2003], lv dismissed 100 N.Y.2d 577 [2003], lv denied 2 NY3d 703 [2004], and Colonie Block & Supply Co. v. Overmyer Co., 35 A.D.2d 897, 897 [3d Dept 1970] ). A letter discussing a possible future event does not constitute an exercise of the optional acceleration clause (see Goldman Sachs Mtge. Co. v. Mares, 135 AD3d 1121 [3d Dept 2016] ); Pidwell v. Duval, 28 AD3d 829 [3d Dept 2006] ; Chase Mtge. Co. v. Fowler, 280 A.D.2d 892 ). As a consequence, the November 9, 1999 and January 3, 2003 letters did not commence the running of the statute of limitations.
Since the November 9, 1999 letter makes reference to a default in payment which occurred before such date, and the present action is based upon a December 1, 2002 payment default, the court assumes the earlier default was cured.
To the extent defendants Hudson City Savings, Arias and Cueva claim the debt was accelerated when Bank One commenced the Bank One Action and elected to accelerate the debt to foreclose the mortgage within the body of the complaint therein (see EMC Mtge. Corp. v. Smith, 18 AD3d 602, 603 [2d Dept 2005] ; Clayton Natl. v.. Guldi, 307 A.D.2d 982, 982 [2d Dept 2005] ), plaintiff 21st Mortgage does not deny that Bank One is its predecessor in interest, or claim that Bank One was without authority to accelerate the debt or to sue to foreclose at that time (see Wells Fargo Bank, N.A. v. Burke, 94 AD3d 980 [2d Dept 2012] ; EMC Mtge. Corp. v. Suarez, 49 AD3d 592, 593 [2d Dept 2008] ). Rather, plaintiff 21st Mortgage contends that because Michelle Napier Osorio was not served with the complaint in the Bank One action prior to the institution of this action, the commencement of the Bank One action was ineffective to constitute a valid exercise of the acceleration option.
Although commencement of an action may not be sufficient to constitute a valid election to accelerate due to the failure to put the borrower on notice of such election where the borrower was not served with a copy of the complaint (see Wells Fargo Bank, N.A. v. Burke, 94 AD3d 980 ), it is evident that Michelle Napier Osorio was aware of the Bank One action by 2004 when she sought to vacate the judgment and the sale against her, and thus was on notice that Bank One availed itself of the option to accelerate. Michelle Napier Osorio thus was on notice, by virtue of filing of the complaint in the Bank One action, that Bank One availed itself of the option for acceleration (see Wells Fargo Bank, N.A. v. Burke, 94 AD3d 980 ; Sarva v. Chakravorty, 34 AD3d 438, 439 [2d Dept 2006] ; City Sts. Realty Corp. v. Jan Jay Constr. Enters. Corp., 88 A.D.2d 558 [1st Dept 1982] ). Defendants Aaron Napier and Mark Napier likewise were on notice of the election, insofar as the 2003 service of the process on them in the Bank One action has been sustained (see order dated October 19, 2004 of the Hon. Alan LeVine).
Hence, Bank One's having elected to accelerate the mortgage debt by commencement of the Bank One action, and such election having been effectuated no later than 2004 when defendant Michelle Napier Osorio became aware of that action, the six-year statute of limitations began to run on the entire mortgage debt in 2004 (see Federal Natl. Mtge. Assn. v. Mebane, 208 A.D.2d 982 [2d Dept 2006] ). Plaintiff 21st Mortgage has made no showing that the election was revoked during the period subsequent to 2004. Thus, the instant action, having been brought 11 years thereafter, based upon a payment default in 2002, is time-barred. Accordingly, it is
ORDERED that branch of the motion by defendant Hudson City Savings to dismiss the complaint insofar as asserted against it pursuant to CPLR § 3211(a)(5) is granted; and it is further
ORDERED that branch of the cross motion by defendant Arias for, in effect, summary judgment dismissing the complaint based upon the expiration of the statute of limitations is granted; and it is further
ORDERED that the branch of the cross motion by defendant Cueva for summary judgment dismissing the complaint asserted against him based upon the expiration of the statute of limitations is granted; and it is further
ORDERED that the branch of the motion by defendant Hudson City Savings to dismiss the complaint asserted against it based upon the pendency of the Bank One action is denied as moot; and it is further
ORDERED that the branch of the cross motion by defendant Arias for, in effect, summary judgment dismissing the complaint asserted against him based upon the pendency of the Bank One action is denied as moot; and it is further
ORDERED that the branch of the cross motion by defendant Cueva for, in effect, summary judgment dismissing the complaint insofar as asserted against him based upon the pendency of the Bank One action is denied as moot.