Summary
finding that pursuant to the plain language in FAPA a voluntary discontinuance does not reset the applicable six-year statute of limitations
Summary of this case from Article 13, LLC v. Ponce De Leon Fed. BankOpinion
Index No. 703563/2018
04-12-2023
DEUTSCHE BANK NATIONAL TRUST COMPANY, AS TRUSTEE, in Trust FOR the REGISTERED HOLDERS OF MORGAN STANLEY ABS CAPITAL I INC. TRUST 2006-HE5, Plaintiff, v. Frantz DAGRIN, Daniella Dagrin, New York City Environmental Control Board, New York City Parking Violations Bureau, New York City Transit Adjudication Bureau, John Does (Said name being fictitious, it being the Intention of Plaintiff to designate any and all Occupants, if any, having or claiming an interest In, or lien upon the mortgaged premises.), Defendants.
The following papers numbered 1 to 13 read on this motion by plaintiff for leave to reargue the June 16, 2022 and September 15, 2022 Court Orders, and this cross-motion by defendants Frantz Dagrin and Daniella Dagrin to dismiss plaintiff's Complaint pursuant to CPLR § 3211(a)(5), § 213(4), 203(h), and § 3217(e).
Papers Numbered
Notice of Motion, Memorandum, Affirmation, Exhibits 1-5
Affirmation in Opposition 6-7
Notice of Cross-Motion, Memorandum, Affirmation 8-11
Reply Affirmation 12-13 Upon the foregoing papers, it is ordered that these motions are determined as follows:
Plaintiff's motion for leave to reargue the June 16, 2022 and September 15, 2022 Court Orders is denied, as plaintiff failed to present evidence that the Court overlooked or misapprehended the facts or law presented in its motions for summary judgment. Defendants Frantz Dagrin and Daniella Dagrin's cross-motion to dismiss plaintiff's Complaint pursuant to CPLR § 3211(a)(5), § 213(4), § 203(h), and § 3217(e) is granted, as defendants demonstrated that the instant foreclosure action is time-barred by the six-year Statute of Limitations. (See 2022 NY ALS 821, 2022 NY Laws 821, 2022 NY Ch. 821, 2022 NY AB 7737; see also GMAT Legal Title Trust 2014-1 v. Kator , 213 A.D.3d 915, 184 N.Y.S.3d 805 [2d Dept. 2023].)
Plaintiff commenced this action on March 8, 2018 to foreclose on real property located at 2240 New Haven Avenue, Far Rockaway, New York. Plaintiff's Summons and Complaint indicated that on May 19, 2006, defendant Frantz Dagrin executed and delivered a note to New Century Mortgage Corporation secured by a mortgage on the above stated real property. A deed was executed on May 19, 2006 and recorded on August 3, 2006 transferring the title of the property from defendant Dagrin to co-defendants Dagrin and Daniella Dagrin. Plaintiff alleged defendant Frantz Dagrin defaulted on the note and mortgage as of July 1, 2012. Plaintiff further alleged that a prior foreclosure action was filed on March 28, 2008 under Queens Supreme Court Index No.7995/2008, but was discontinued on July 10, 2013. Defendants filed an Answer on May 30, 2018 with affirmative defendants including but not limited to the defense of statute of limitations.
A motion to reargue pursuant to CPLR § 2221 shall be based upon matters of fact or law allegedly overlooked or misapprehended by the court in determining the prior motion but shall not include any matters of fact not previously offered on the prior motion. ( Ahmed v. Pannone , 116 A.D.3d 802, 984 N.Y.S.2d 104 [2d Dept. 2014], leave to appeal denied 26 N.Y.3d 944, 17 N.Y.S.3d 61, 38 N.E.3d 804 [2015].) While the determination to grant a motion to reargue rests within the sound discretion of the trial court, a motion to reargue is not designed to grant an unsuccessful party successive opportunities to reargue issues previously decided, or to present arguments different from those presented in the initial papers. ( Id. ; see also Williams v. Abiomed, Inc. , 173 A.D.3d 1115, 100 N.Y.S.3d 907 [2d Dept. 2019].)
Here, it appears that plaintiff is merely seeking to relitigate the same arguments that were presented in its prior papers and did not present sufficient evidence that the Court misapprehended or overlooked the facts or law. (See id. ) Plaintiff herein makes the same arguments that defendants’ affidavit was insufficient to raise a material issue of fact in dispute. As plaintiff is relitigating the same arguments, plaintiff's motion for leave to reargue the June 16, 2022 and September 15, 2022 Court Orders is denied.
Defendants cross-move to dismiss plaintiff's Complaint arguing that it is time-barred. They argue that plaintiff filed a prior action on March 28, 2008, which was discontinued on July 3, 2013. Defendants further argue that pursuant to recent legislation, the discontinuance does not constitute a de-acceleration of the note and mortgage as it did not include an expressed judicial determination, and therefore the statutory six-year time frame expired on March 28, 2014. As the applicable Statute of Limitations has expired, defendants argue their cross-motion should be granted and the Complaint must be dismissed.
Plaintiff opposes defendants’ cross-motion and argues that a retroactive application of the foreclosure legislation known as the Foreclosure Abuse Prevention Act is unfair and unconstitutional. Plaintiff acknowledges that under the new foreclosure legislation, it would be time-barred from proceeding in this case. However, plaintiff argues this Court should invalidate the law because the legislature failed to express a clear intent for the law to apply retroactively, retroactive application is not justified by a rational legislative purpose, and retroactive application violates Due Process, the Contracts Clause, and the Bill of Attainder Clause. Plaintiff argues that the legislature failed to consider and acknowledge the severe impact the legislation would have on lenders, and the longstanding history that permitted lenders to de-accelerate by express statement. By removing plaintiff's ability to de-accelerate the note and mortgage, the legislature violated its constitutional rights and argues this Court should hold the legislation as unconstitutional and void.
Pursuant to CPLR § 213(4), an action to foreclose a mortgage is subject to a six-year Statute of Limitations. (See Federal Natl. Mtge. Assn. v. Bandhu , 214 A.D.3d 705, 185 N.Y.S.3d 223 [2d Dept. 2023].) Even if the mortgage is payable in installments, once a mortgage debt is accelerated, the entire amount is due and payable, and the Statute of Limitations begins to run on the entire debt. (See Federal National Mortgage Association v. Metz , 214 A.D.3d 709, 184 N.Y.S.3d 836 [2d Dept. 2023].) Acceleration may occur by the commencement of a foreclosure action wherein the plaintiff elects in the complaint to call due the entire amount secured by the mortgage. (See Ditech Fin., LLC v. Connors , 206 A.D.3d 694, 170 N.Y.S.3d 560 [2d Dept. 2022].)
The issue in question is the validity of a de-acceleration by voluntary discontinuance of a foreclosure action. Defendants argue that pursuant to new state legislation, the discontinuance filed on July 3, 2013 did not constitute a proper de-acceleration, and therefore the commencement of this action on March 8, 2018 was time-barred. Plaintiff argues that the Court of Appeals determined a voluntary discontinuance constitutes a de-acceleration, which permitted plaintiff to timely recommence the action on March 8, 2018, and the recent legislation is unconstitutional and should be rejected by this Court. It is undisputed that the 2013 voluntary discontinuance was not based upon an expressed judicial determination, made upon a timely interposed defense, that the instrument was not validly accelerated. Therefore, the only question is whether the discontinuance, as it exists, was a proper de-acceleration of the mortgage loan.
The recently enacted Foreclosure Abuse Prevention Act (hereinafter referred to as "FAPA") amended CPLR § 213(4) by adding, among other things, paragraph (a), which provides that "in any action on an instrument described under this subdivision, if the statute of limitations is raised as a defense, and if that defense is based on a claim that the instrument at issue was accelerated prior to, or by way of commencement of a prior action, a plaintiff shall be estopped from asserting that the instrument was not validly accelerated, unless the prior action was dismissed based on an expressed judicial determination, made upon a timely interposed defense, that the instrument was not validly accelerated." ( GMAT Legal Title Trust 2014-1 v. Kator , supra at 3-4.)
Prior to FAPA's enactment, the Court of Appeals held that the noteholder's voluntary discontinuance of a foreclosure action constituted an affirmative act of revocation of acceleration as a matter of law. (See Freedom Mtge. Corp. v. Engel , 37 N.Y.3d 1, 146 N.Y.S.3d 542, 169 N.E.3d 912 [2021].) The Court of Appeals in Engel effectively overruled the Second Department decisions which found that discontinuance of an action did not constitute a de-acceleration as it was not a clear and unequivocal de-acceleration of the note and mortgage. (See Trust v. Barua , 184 A.D.3d 140, 146, 125 N.Y.S.3d 420 [2d Dept. 2020] ["this Court has repeatedly held that a lender's mere act of discontinuing an action, without more, does not constitute, in and of itself, an affirmative act revoking an earlier acceleration of the debt"]; see also Milone v. US Bank N.A. , 164 A.D.3d 145, 154, 83 N.Y.S.3d 524 [2d Dept. 2018] ["To the extent this Court has held that acceleration notices must be clear and unambiguous to be valid and enforceable, we likewise hold here that de-acceleration notices must also be clear and unambiguous to be valid and enforceable"].) Instead, the Court in Engel held that a voluntary discontinuance may constitute a revocation of the acceleration of the note and mortgage, absent the noteholder's contemporaneous statement to the contrary. (See Engel , 37 N.Y.3d at 2, 146 N.Y.S.3d 542, 169 N.E.3d 912.)
However, FAPA effectively nullified the holding in Engel by amending CPLR § 3217 to add paragraph (e) that provides "in any action on an instrument described under CPLR § 213(4), 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." ( Id. at 5, 146 N.Y.S.3d 542, 169 N.E.3d 912.) Further, the legislation was enacted to apply retroactively to some pending foreclosure cases, as pursuant to Section 10 of the Act, FAPA "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. (See 2022 NY ALS 821, 2022 NY Laws 821, 2022 NY Ch. 821, 2022 NY AB 7737.)
Defendants’ cross-motion to dismiss plaintiff's Complaint is granted, as defendants demonstrated prima facie that the action is time-barred. Defendants demonstrated that plaintiff commenced a prior action in 2008 that was discontinued in 2013, and not recommenced until 2018. Pursuant to the plain language in FAPA, defendants demonstrated that plaintiff's 2013 voluntary discontinuance of a foreclosure action did not reset the applicable Statute of Limitations, as it did not comport with CPLR § 213(4) to qualify as a de-acceleration.
Plaintiff failed to present sufficient evidence to rebut defendants’ prima facie case. Plaintiff acknowledged that application of FAPA would render the instant action time-barred, but argues that FAPA is unconstitutional and should be void. However, plaintiff failed to present sufficient evidence to hold FAPA as unconstitutional, as its claims are conclusory and unsubstantiated and the legislature had a rational basis in protecting homeowners from dilatory tactics in foreclosure litigation.
Plaintiff's argument that there is no clear legislative intent to apply FAPA retroactively is without merit, as a plain reading of section 10 states that the legislation takes effect immediately and applies to all pending foreclosure actions in which a final judgment of foreclosure and sale has not been enforced. (See id. ) Plaintiff correctly points out that retroactive legislation is frowned upon by courts, due to the potential for unfairness and inequity to unsuspecting citizens, who conduct themselves based upon the laws then existing. (See Eastern Enterprises v. Apfel , 524 U.S. 498, 532, 118 S.Ct. 2131, 141 L.Ed.2d 451 [1998] ["Retroactivity is generally disfavored in the law, in accordance with ‘fundamental notions of justice’ that have been recognized throughout history"].) However, the courts will defer to the legislature when it creates retroactive legislation, ‘unless it reaches so far into the past or so unfairly as to constitute a deprivation of property without due process. ( Varrington Corp. v. City of New York Dep't of Fin. , 85 N.Y.2d 28, 32, 623 N.Y.S.2d 534, 647 N.E.2d 746 [1995].) Plaintiff's next argument that the legislation is unconstitutional is also with merit. "It is well settled that the acts of the Legislature are entitled to a strong presumption of constitutionality." ( American Economy Ins. Co. v. State of New York , 30 N.Y.3d 136, 149, 65 N.Y.S.3d 94, 87 N.E.3d 126 [2017].) Further, plaintiff bears the burden of overcoming this presumption by demonstrating the unconstitutionality of the legislation beyond a reasonable doubt. ( Id. ) Plaintiff claims that the legislation is unconstitutional because it alters the controlling law since 1905 with regard to de-acceleration of a mortgage loan. However, this argument is unavailing, as it is important to note that up until the Engel decision, actions commenced within the Second Department were routinely dismissed due to the failure of the discontinuance to constitute a clear and unequivocal de-acceleration. (See Trust v. Barua, supra . ) Therefore, plaintiff's reliance on historical precedent is misplaced, as it is clear that prior to Engel , this action would have been dismissed as time-barred. (See GMAT Legal Title Trust, supra. at 6.)
Plaintiff's argument that FAPA's retroactivity is not justified by a rational legislative purpose is without merit. Whether a rational basis for legislative enactments exists is a determination subject to a strong presumption of constitutionality. (See Matter of Calverton Manor, LLC v. Town of Riverhead , 160 A.D.3d 829, 76 N.Y.S.3d 75 [2d Dept. 2018] [holding that "legislative enactments are entitled to an exceedingly strong presumption of constitutionality.") Plaintiff's contention that the legislature did not consider the harsh and destabilizing effects on lenders’ settled expectations is without merit, as it is again noted that prior to Engel , lenders did not have a settled expectation that a voluntary discontinuance would constitute de-acceleration. Further, the legislature had a permissible basis to act, as the sponsoring memo clearly states that the bill was enacted to reflect abuses in the judicial foreclosure process that were allegedly exacerbated by court decisions that acted in contrary to legislative intent. Therefore, the legislation was meant to clarify the legislative intent of existing foreclosure legislation to ensure correct judicial application and rectify erroneous judicial interpretation.
Contrary to plaintiff's argument, FAPA's application in this action is constitutional, as it does not impair plaintiff's ability to contract. Rather, the parties’ constitutional right to contract has always been constrained within the context of judicial decisions and legislative determinations, and when these varied interests intersect, that crossroad is one for the courts to consider and determine. (See Engel , supra at 1-2, 146 N.Y.S.3d 542, 169 N.E.3d 912 ["These appeals-each turning on the timeliness of a mortgage foreclosure claim-involve the intersection of two areas of law where the need for clarity and consistency are at their zenith: contracts affecting real property ownership and the application of the statute of limitations"].) Here, defendants clearly established the current law warrants dismissal of this action as time-barred, and plaintiff failed to demonstrate the applicability of the law is unconstitutional.
Accordingly, plaintiff's motion for leave to reargue the June 16, 2022 and September 15, 2022 Court Orders is denied, and defendants’ cross-motion to dismiss plaintiff's Complaint pursuant to CPLR § 3211(a)(5), § 213(4), § 203(h), and § 3217(e) is granted. Plaintiff's Complaint is dismissed against defendants Frantz Dagrin and Daniella Dagrin.
This constitutes the decision and Order of the Court.