Opinion
502846/2018
01-03-2019
Yelena SHAROVA, Plaintiff, v. WELLS FARGO BANK, NATIONAL ASSOCIATION AS TRUSTEE FOR the STRUCTURED ADJUSTABLE RATE MORTGAGE LOAN TRUST, Mortgage Pass-Through Certificates Series 2007-6 ; and Nationstar Mortgage, LLC d/b/a Mr. Cooper, Defendants.
Plaintiff's Attorney: Charles W. Marino, Esq., 2314 Poe CT, Seaford, NY 11783-2922, (516) 459-0009 Defendant's Attorney: CAROLINE WEAVER LENCI, Esq., Sandelands Eyet, LLP, 1545 US Highway 206 Ste. 304, Bedminster, NJ 07921-2560, (908) 470-1200
Plaintiff's Attorney: Charles W. Marino, Esq., 2314 Poe CT, Seaford, NY 11783-2922, (516) 459-0009
Defendant's Attorney: CAROLINE WEAVER LENCI, Esq., Sandelands Eyet, LLP, 1545 US Highway 206 Ste. 304, Bedminster, NJ 07921-2560, (908) 470-1200
Debra Silber, J. This is an action for a declaratory judgment pursuant to RPAPL § 1501(4) declaring that the mortgage on the property, 1349 East 54th Street, Brooklyn, NY, Block 7834 Lot 23, is unenforceable due to the time bar of the six-year statute of limitations, and should be cancelled, discharged and stricken from the records of the City Register. Plaintiff moves for summary judgment seeking said declaratory judgment, on the basis that there are no issues of fact in dispute that require a trial. Defendants cross-move for summary judgment dismissing the complaint or, in the alternative, permitting defendants to file and serve the proposed amended answer and counterclaim annexed to their motion (e-file doc 114).
Statement of Facts
On March 30, 2007, plaintiff Yelena Sharova and another individual who is not a party herein, Andrew Gayott, purchased the property, a two-family home in Brooklyn, as tenants in common. At the same time, they were given two mortgages by Gateway Funding Diversified Mortgage Services L.P., ("Gateway") a first mortgage for $412,500 and a second mortgage for $110,000. The deed and mortgages were recorded. The first mortgage was subsequently assigned several times and is now held by plaintiff Wells Fargo. The second mortgage has not been assigned by a recorded assignment. This action is solely addressed to the first mortgage, and the holder of the second mortgage has not been named or served as a party defendant.
On April 16, 2009, a foreclosure action was commenced by Aurora Loan Services LLC (one of the entities in the chain of assignments, whose assignment was recorded on 6/16/08) against plaintiff and the co-borrower Andrew Gayott under Ind. No. 9289/2009. Sharova answered the complaint but Gayott did not. Sharova included one affirmative defense in her answer, filed June 26, 2009, that she had discharged the debt in Bankruptcy Court in 2008 under Docket 08-70703 [EDNY]. However, Aurora had brought a motion and obtained an order from the Bankruptcy Court on August 1, 2008 which lifted the automatic stay and permitted Aurora to proceed with a foreclosure action. Thus, the mortgage was not discharged in the Bankruptcy proceeding.
In the 2009 foreclosure action, Aurora brought a motion in this court for summary judgment against Sharova and a default judgment against Gayott and the other named defendants in October of 2009. This motion was withdrawn by the office of Steven J. Baum, then plaintiff's attorney. Another law firm was substituted and a second motion for this relief, which also sought, inter alia, to amend the caption to reflect that the loan had been assigned to Nationstar Mortgage LLC, was filed in January 2014, which was denied by another justice of this court, despite it being unopposed, and the action was dismissed, sua sponte, by order dated June 12, 2015 and entered July 1, 2015. There was no opposition filed to the lender's motion by Sharova or anyone else. The order concluded that, as to Sharova, she had not been served with a 90-day notice as required by RPAPL § 1304, which was a condition precedent to commencing the action, and as to Gayott and the other defendants, that the time to move pursuant to CPLR § 3215 (d) had expired and plaintiff did not provide any excuse for its delay in seeking a default judgment. No motion to reargue was made and no notice of appeal was filed. On May 17, 2016, the lender's counsel filed a substitution of attorneys. Sharova then served the court's order which dismissed the action, with notice of entry, on the lender's new attorneys, on May 24, 2016. Nothing further transpired in the action. A second foreclosure action against Sharova and Gayott was not commenced prior to the commencement of this action, although the lender had six months to do so, pursuant to CPLR § 205(a). Neither side alleges that any action is currently pending or that any appeal is currently pending.
A RPAPL § 1304 notice has been held not to be jurisdictional, and thus is waivable, as it is a defense that must be asserted by the borrower. (see U.S. Bank N.A. v. Carey , 137 A.D.3d 894, 28 N.Y.S.3d 68 [2d Dept. 2016].)
On June 6, 2016, the mortgage was assigned to Wells Fargo, a defendant herein, by Nationstar Mortgage LLC, the other defendant herein, which was recorded on June 28, 2016. The assignment to Nationstar had been recorded in 2012. Nationstar is currently listed on the NY State Department of State Division of Corporations website as a Delaware limited liability company which is authorized to do business in New York. The court has no idea why the caption lists Nationstar as "d/b/a Mr. Cooper." Defendants state that "Mr. Cooper" is the loan servicer.
Plaintiff's Motion
Plaintiff moves for summary judgment on her complaint and an order that can be recorded with the New York City Register which declares that the mortgage is unenforceable, is discharged, and that any claims under it are barred by the statute of limitations. Plaintiff avers that the mortgage was accelerated on April 16, 2009, when the foreclosure action was commenced, and was not de-accelerated by the order "granting plaintiff reverse summary judgment and dismissing the complaint" in 2015. Therefore, plaintiff herein reasons, as the lender's assignee has not taken any action to enforce the mortgage after the issuance of the dismissal order, and the date of acceleration was in 2009, the statute of limitations has run, and she is entitled to an order discharging the mortgage. Plaintiff proceeds to analyze each of the numerous affirmative defenses asserted in the answer to her complaint herein, and finds each of them to be irrelevant, inapplicable, meritless or erroneous. Finally, plaintiff asserts that, as the boilerplate provision at Paragraph 19 of the mortgage, which provides that the borrower has the right to reinstate the mortgage up to the point that the judgment is entered, was expressly deleted in the 1-4 Family Rider to the mortgage, the " MacPherson " decision is inapplicable. Plaintiff also asserts that the court cannot apply this decision to the matter at hand because it is not asserted as an affirmative defense in defendants' answer and because the decision "is incorrect as a matter of law."
Nationstar Mtge., LLC v. MacPherson , 56 Misc.3d 339, 54 N.Y.S.3d 825 [Sup. Ct., Suffolk County 2017].
Defendants' Cross Motion
Defendants oppose plaintiff's motion, claiming it is premature as discovery has not been completed, and cross-move to dismiss the complaint, or, in the alternative, for leave to amend their answer to add a counterclaim against plaintiff for the payments they have made on her behalf for real estate taxes and insurance.
Defendants claim the complaint should be dismissed because plaintiff has failed to name a necessary party to the action, that is, co-borrower Andrew Gayott. Counsel claims that the failure to name him as a co-plaintiff results in the failure to state a claim under RPAPL Article 15. They also aver that there are "genuine issues of material fact as to the effectiveness of the alleged acceleration of the mortgage." Next, defendants claim that their "Macpherson " argument is property before the court. Finally, defendants argue that they should be permitted to amend their answer in the form annexed to their motion, which, inter alia , adds a counterclaim.
Plaintiff's Opposition to the Cross Motion
Plaintiff claims that defendants waived their right to move to dismiss under CPLR § 3211 by answering the complaint and not raising as an affirmative defense that the plaintiff failed to join an indispensable party. Plaintiff further claims that defendants have waived all of their affirmative defenses by not raising any of them in opposition to plaintiff's motion for summary judgment. Plaintiff also claims that the cross motion is a motion for summary judgment under CPLR § 3212 and, as such, fails to provide any evidence in admissible form to support summary judgment, as defendants only include legal argument. Plaintiff also avers that Andrew Gayott is not an indispensable party, as he transferred his interest in the mortgaged property to plaintiff in 2016, before this action was commenced, and that only the parties with an interest in the premises need to be named. Plaintiff states the Second Department has so held, and attaches the court's decision in 53 PL Realty, LLC v. U.S. Bank National Association .
153 A.D.3d 894, 61 N.Y.S.3d 120 [2d Dept. 2017].
Defendants' Reply
Defendants reply by disputing plaintiff's claim that their motion is untimely, and that they waived their affirmative defenses. They aver that their MacPherson argument is persuasive, that they should be permitted to amend their answer, and that there are genuine issues of material fact as to whether there was a valid acceleration, due to the 2015 order finding that the lender's predecessor in interest failed to comply with a condition precedent, that is, RPAPL § 1304.
Discussion
The first issue that must be addressed is whether the absence of plaintiff's co-borrower is a failure to name either a necessary or an indispensable party so this action under RPAPL § 1501(4) may not proceed.
Plaintiff claims this branch of defendants' motion is untimely and was waived as a result of defendants' not moving for this relief pre-answer and then answering the complaint and not including it as an affirmative defense. Plaintiff is incorrect. The court notes that CPLR § 3211 contains a long list of reasons a defendant may move to dismiss either a complaint or a cause of action. Some of the reasons must be asserted within a specified time, but others may be asserted at any time. While defendants conflate section (a)(7), "that the pleading fails to state a cause of action", with (a)(10), "the court should not proceed in the absence of a person who should be a party", CPLR § 3211 (e) states that a motion based upon either subdivision seven or ten of section (a) may be made at any time, and neither section is included in the list of grounds that are waived unless raised in a responsive pleading.
However, the court finds that there is no merit to defendants' motion to dismiss. As is explicitly stated in 53 PL Realty, LLC v. U.S. Bank National Association, 153 A.D.3d 894, 895, 61 N.Y.S.3d 120 [2d Dept. 2017], an action brought by a subsequent purchaser of the property, who took title subject to the lien of the mortgage:
"with respect to an action pursuant to RPAPL 1501(4), a person having an estate or an interest in real property subject to a mortgage can seek to cancel and discharge that encumbrance where the period allowed by the applicable statute of limitations for
the commencement of an action to foreclose the mortgage has expired, provided that the mortgagee or its successor was not in possession of the subject real property at the time the action to cancel and discharge the mortgage was commenced (see RPAPL 1501[4] ; Kashipour v. Wilmington Sav. Fund Socy., FSB , 144 A.D.3d 985, 986, 41 N.Y.S.3d 738 [2016] )."
In another decision, MSMJ Realty, LLC v. DLJ Mtge. Capital, Inc. , 157 A.D.3d 885, 886, 69 N.Y.S.3d 870 [2d Dept. 2018] the court states:
" RPAPL 1501 provides that "[w]here the period allowed by the applicable statute of limitation for the commencement of an action to foreclose a mortgage ... has expired," any person with an estate or interest in the property may maintain an action "to secure the cancellation and discharge of record of such encumbrance, and to adjudge the estate or interest of the plaintiff in such real property to be free therefrom" ( RPAPL 1501[4] ; see JBR Constr. Corp. v. Staples , 71 A.D.3d 952, 953, 897 N.Y.S.2d 223 )."
Thus, there is no merit to defendants' claim that the complaint must be dismissed for failing to include Andrew Gayott as a co-plaintiff. As this is the only reason asserted for dismissal, the branch of the defendants' motion which seeks to dismiss the complaint is denied.
The next issue, and the crux of the matter, is whether there has been an acceleration of the mortgage, a de-acceleration of the mortgage, both, or neither. It is now, in the Second Department, unequivocal that unless the terms of the mortgage provide otherwise, the filing of the summons and complaint in a foreclosure action is sufficient to accelerate the mortgage ( MSMJ Realty, LLC v. DLJ Mtge. Capital, Inc. , 157 A.D.3d 885, 887, 69 N.Y.S.3d 870 [2d Dept. 2018].) This is true even if the borrower is never served with the summons and complaint and the action is dismissed after a traverse hearing on the issue of service, where the terms of the mortgage state that the borrower is entitled to a notice of default but not to notice of the acceleration of the debt. (see MSMJ Realty, LLC v. DLJ Mtge. Capital, Inc. , 157 A.D.3d 885, 887, 69 N.Y.S.3d 870 [2d Dept. 2018], citing Beneficial Homeowner Serv. Corp. v. Tovar , 150 A.D.3d 657, 658, 55 N.Y.S.3d 59 [2d Dept. 2017] ).
To be clear, the terms of the mortgage and note may alter the lender's obligations if they deviate from applicable statutory requirements and impose additional obligations on the lender than are required by New York law. For example, in one case, where the defendant borrower "raised the issue of compliance with paragraph 7, subsection C, of the note in her affirmative defenses and counterclaim," the plaintiff's submission for the first time of a copy of the requisite default notice as an exhibit in its reply to the defendant's opposition to the summary judgment motion was not sufficient to establish its prima facie compliance with the requirements in the note, which had to be in the motion papers. ( Wells Fargo Bank, N.A. v. Osias , 156 A.D.3d 942, 944, 68 N.Y.S.3d 115 [2d Dept. 2017].)
The court declines to follow the MacPherson case , which counsel for defendants urges the court to follow. This court is bound to follow the precedents issued by the Appellate Division, Second Department, but is not bound to follow decisions issued by justices of the State Supreme Court in other counties of the Second Department. Not only has that decision not been cited by any decision issued by the Second Department, it has been specifically mentioned and not followed by two Federal District Court Judges.
Nationstar Mtge., LLC v. MacPherson , 56 Misc.3d 339, 54 N.Y.S.3d 825 [Sup. Ct., Suffolk County 2017].
Cortes-Goolcharran v. Rosicki, Rosicki & Assoc., P.C. , 2018 WL 3748154, 2018 US Dist LEXIS 132524 [EDNY Aug. 7, 2018, No. 17-CV-3976 (FB) (SJB) ] ; 839Cliffside Ave. LLC v. Deutsche Bank Natl. Trust Co. , 2018 WL 4259867, at *6, 2018 US Dist LEXIS 151030, at *17 [EDNY Sep. 5, 2018, No. 15-CV-4516 (SIL) ].
A survey of many of the most recent Second Department cases on the issues of acceleration and de-acceleration follows. In chronological order, excluding those discussed elsewhere herein, they hold:
1. An action to foreclose a mortgage is subject to a six-year statute of limitations pursuant to CPLR § 213[4]. Even if a mortgage is payable in installments, once a mortgage debt is accelerated, the entire amount becomes due and the statute of limitations begins to run on the entire debt. ( NMNT Realty Corp. v. Knoxville 2012 Trust, 151 A.D.3d 1068, 58 N.Y.S.3d 118 [2d Dept. 2017].)
2. The "savings" provision of CPLR § 205(a) is applicable in a second foreclosure action if the first action was timely commenced and then dismissed, for example, for abandonment, without prejudice, as this is a dismissal based on grounds other than a voluntary discontinuance, lack of personal jurisdiction, neglect to prosecute, or a final judgment on the merits. Therefore, the lender has six months after the dismissal to
commence
the second action, even if the statute of limitations has run, and this provision is applicable even where the second action is brought by an assignee of the mortgage and not the same plaintiff, as it is a successor in interest and has the same rights as the assignor. ( Wells Fargo Bank, N.A. v. Eitani , 148 A.D.3d 193, 195, 47 N.Y.S.3d 80 [2d Dept. 2017].)
3. The fact that the action was dismissed as against the defendant homeowner for failure to effectuate personal service does not invalidate the plaintiff's election to exercise its right to accelerate the maturity of the debt. The fact of plaintiff's election to accelerate should not be confused with the notice or manifestation of such election where nothing in the parties' [mortgage] agreement provides that the plaintiff's election is not valid until the defendant homeowner receives notice thereof. Thus, the failure to properly serve the summons and complaint upon the defendant homeowner did not, as a matter of law, destroy the effect of the sworn statement [in the complaint] that the plaintiff had elected to accelerate the maturity of the debt. ( Beneficial Homeowner Serv. Corp. v. Tovar , 150 A.D.3d 657, 658, 55 N.Y.S.3d 59 [2d Dept. 2017].)
4. If the plaintiff in a prior foreclosure action lacked standing to commence it, there was no acceleration, as the commencement of that action did not constitute an affirmative action evidencing the exercise of the option to accelerate the maturity of the loan. ( DLJ Mtge. Capital, Inc. v. Pittman , 150 A.D.3d 818, 819, 56 N.Y.S.3d 120 [2d Dept. 2017].)
5. A lender may revoke its election to accelerate the mortgage by an affirmative act of revocation occurring during the six-year limitations period subsequent to the initiation of the foreclosure action. ( U.S. Bank N.A. v. Barnett , 151 A.D.3d 791, 793, 56 N.Y.S.3d 255 [2d Dept. 2017].)
6. Where the lender makes a motion to discontinue a foreclosure action and obtains an order granting the motion, this is distinguishable from the cases in which the foreclosure action was never discontinued by the lender, but rather, was dismissed by the court. Making such a motion is an affirmative act to revoke the lender's election to accelerate, while the dismissal by the court does not constitute an affirmative act by the lender to revoke its election to accelerate. ( NMNT Realty Corp. v. Knoxville 2012 Trust , 151 A.D.3d 1068, 1070, 58 N.Y.S.3d 118 [2d Dept. 2017].)
7. Where a plaintiff's standing has been placed in issue by a defendant's answer, the plaintiff must prove its standing as part of its prima facie showing on a motion for summary judgment.
( 21st Mtge. Corp. v. Adames , 153 A.D.3d 474, 474, 60 N.Y.S.3d 198 [2d Dept. 2017].)
8. Where the foreclosure action was administratively dismissed, and the lender did not challenge the propriety of the dismissal or seek to restore the action to the court's calendar, the acceleration of the debt is not revoked. ( Deutsche Bank Natl. Trust Co. v. Gambino , 153 A.D.3d 1232, 1234, 61 N.Y.S.3d 299 [2d Dept. 2017].)
9. Where the complaint states that it had given the borrower the required notice of default, that the period to cure "has elapsed," and that the lender "has elected and hereby elects to declare immediately due and payable the entire unpaid balance of principal," the lender accelerated the mortgage in the complaint, and not earlier than the date, of the commencement of the foreclosure action. (
Stewart Tit. Ins. Co. v. Bank of NY Mellon , 154 A.D.3d 656, 660, 61 N.Y.S.3d 634 [2d Dept. 2017].)
10. The filing of the summons and complaint seeking the entire unpaid balance in the prior foreclosure action constituted a valid election by the plaintiff lender to accelerate the maturity of the debt. This established that the mortgage debt was accelerated on April 11, 2008, and that the applicable six-year statute of limitations had expired by the time the plaintiff commenced the second foreclosure action on July 8, 2014. The plaintiff had voluntarily discontinued the prior foreclosure action on April 23, 2014, after the statute of limitations had expired, and its April 8, 2014, 90-day notice pursuant to RPAPL § 1304 did not, as a matter of law, "destroy the effect of the sworn statement in the first complaint that the plaintiff had elected to accelerate the maturity of the debt." ( Deutsche Bank Natl. Trust Co. v. Adrian , 157 A.D.3d 934, 935-936, 69 N.Y.S.3d 706 [2d Dept. 2018].)
11. The court dismissed the prior foreclosure action, finding that the plaintiff did not have standing to commence that action, because it was not the holder of the note and mortgage at the time that the action was commenced. Accordingly, the complaint in the first action was ineffective to constitute a valid exercise of the option to accelerate the debt, since the prior plaintiff did not have the authority to accelerate the debt or to sue to foreclose at that time. Thus, the mortgage was not accelerated by the prior foreclosure action. ( U.S. Bank N.A. v. Gordon , 158 A.D.3d 832, 836, 72 N.Y.S.3d 156 [2d Dept. 2018]. See also DLJ Mtge. Capital, Inc. v. Hirsh , 161 A.D.3d 944, 78 N.Y.S.3d 160 [2d Dept. 2018].)
12. The court held that a "purported loan modification application submitted by the plaintiff in opposition to the motion
was not an acknowledgment of the debt and an unconditional promise to repay the debt sufficient to reset the running of the statute of limitations." ( U.S. Bank, N.A. v. Kess , 159 A.D.3d 767, 768-769, 71 N.Y.S.3d 635 [2d Dept. 2018].)
13. Pursuant to CPLR § 204(a), the Bankruptcy Code's automatic stay of 11 U.S.C.S. § 362(c) tolls the limitations period for foreclosure actions. ( Lubonty v. U.S. Bank N.A., 159 A.D.3d 962, 962, 74 N.Y.S.3d 279 [2d Dept. 2018].)
14. The Supreme Court dismissed a foreclosure action commenced on March 17, 2009 for lack of personal jurisdiction. In June 2015, the plaintiff borrower commenced an action pursuant to RPAPL § 1501(4) to cancel and discharge the subject mortgage, alleging that the applicable six-year statute of limitations to foreclose the mortgage had expired on March 17, 2015. Lender moved pre-answer to dismiss, and submitted a letter dated March 13, 2015, addressed to the borrower, stating that "[t]he maturity of the Loan is hereby de-accelerated, immediate payment of all sums owed is hereby withdrawn, and the Loan is re-instituted as an installment loan." The court found this to be insufficient to support the motion to dismiss, stating "the Supreme Court should have denied [lender's] motion pursuant to CPLR § 3211(a)(1) to dismiss the complaint insofar as asserted against it, on the ground that the evidence it submitted did not constitute documentary evidence within the meaning of CPLR § 3211(a)(1) and did not utterly refute the factual allegations of the complaint and conclusively establish a defense to the claims as a matter of law... nothing on the face of the letter establishes when it was actually mailed, and no independent evidence of the mailing date
was submitted. Accordingly, for the purposes of this CPLR § 3211(a) motion, the letter does not demonstrate that [lender's] claimed affirmative act of revocation was timely interposed, and thus does not conclusively establish a defense to the plaintiff's claims under RPAPL § 1501(4) as a matter of law. ( Soroush v. Citimortgage, Inc. , 161 A.D.3d 1124, 1127, 77 N.Y.S.3d 691 [2d Dept. 2018].)
15. A 2008 foreclosure action was discontinued by a stipulation dated January 23, 2013, which was so-ordered by the Supreme Court, wherein the parties agreed, inter alia, that: (1)
the defendant was served with a copy of the summons and complaint; (2) the defendant would withdraw his motion; (3) the action would be discontinued without prejudice and the notice of pendency would be cancelled; and (4) they "desire to amicably resolve this dispute and the issues raised in the [defendant's motion] without further delay, expense or uncertainty." In 2015, the lender commenced a second foreclosure action, which borrower moved to dismiss, claiming the action was time-barred, as the loan was accelerated in 2008. The lender claimed the stipulation revoked the acceleration. The Appellate Division disagreed, stating "the stipulation did not, in itself, constitute an affirmative act to revoke its election to accelerate, since, inter alia, the stipulation was silent on the issue of the revocation of the election to accelerate, and did not otherwise indicate that the plaintiff would accept installment payments from the defendant." ( Freedom Mtge. Corp. v. Engel , 163 A.D.3d 631, 633, 81 N.Y.S.3d 156 [2d Dept. 2018].)
16. Determining precisely when a mortgage is accelerated is a key aspect in any action or proceeding commenced pursuant to RPAPL § 1501(4). Where the plain language setting forth the contractual right of the lender to accelerate the entire debt is discretionary rather than mandatory, the lender maintains the right to later revoke the acceleration. Just as standing, when raised, is a necessary element to a valid acceleration, it is a necessary element, when raised, to a valid de-acceleration. To the extent the cases have held that acceleration notices must be clear and unambiguous to be valid and enforceable, de-acceleration notices must also be clear and unambiguous to be valid and enforceable. "Courts must, of course, be mindful of the circumstance where a bank may issue a de-acceleration letter as a pretext to avoid the onerous effect of an approaching statute of limitations and to defeat the property owner's right pursuant to RPAPL § 1501 to cancel and discharge a mortgage and note. A de-acceleration letter is not pretextual if it contains an express demand for monthly payments on the note, or, in the absence of such express demand, it is accompanied by copies of monthly invoices transmitted to the homeowner for installment payments, or is supported by other forms of evidence demonstrating that the lender was truly seeking to de-accelerate and not attempting to achieve another purpose under the guise of de-acceleration.
In contrast, a bare and conclusory de-acceleration letter, without a demand for monthly payments toward the note, or copies of invoices, or other evidence, may raise legitimate questions about whether or not the letter was sent as a mere pretext to avoid the statute of limitations." In this case, the court found that a letter that stated that borrower's failure to cure her delinquency within 30 days "will result in the acceleration" of the note, was merely an expression of future intent that fell short of an actual acceleration, as it was not clear and unequivocal, as future intentions may
always be changed in the interim. ( Milone v. U.S. Bank N.A. , 164 A.D.3d 145, 148, 83 N.Y.S.3d 524 [2d Dept. 2018].)
17. General Obligations Law § 17-101 effectively revives a time-barred claim when the debtor has signed a writing which validly acknowledges the debt. To constitute a valid acknowledgment, a writing must be signed, must recognize an existing debt and must contain nothing inconsistent with an intention on the part of the debtor to pay it. In this case, a letter written by the borrower that accompanied his second short sale package submitted to lender's loan servicer did not constitute an unqualified acknowledgment of the debt or manifest a promise to repay the debt sufficient to reset the running of the statute of limitations. ( Karpa Realty Group, LLC v. Deutsche Bank Natl. Trust Co. , 164 A.D.3d 886, 888, 84 N.Y.S.3d 174 [2d Dept. 2018].)
18. The notice of default "was nothing more than a letter discussing acceleration as a possible future event, which does not constitute an exercise of the mortgage's optional acceleration clause." ( FBP 250, LLC v. Wells Fargo Bank, N.A. , 164 A.D.3d 1307, 1309, 85 N.Y.S.3d 177 [2d Dept. 2018].)
19. The plaintiff's letter accompanying her request for the defendant to authorize a short sale of the property, and the other documents relied on by the defendant, did not constitute an unqualified acknowledgment of the debt sufficient to reset the statute of limitations ( Yadegar v. Deutsche Bank Natl. Trust Co. , 164 A.D.3d 945, 947, 83 N.Y.S.3d 173 [2d Dept. 2018].)
20. The defense of statute of limitations is waivable. Where a borrower in a foreclosure action defaulted and did not appear
It should be noted that in this decision, the court states "in making this finding, we respectfully disagree with our colleagues in the Appellate Division, First Department, who addressed similar language and held otherwise in Deutsche Bank Natl. Trust Co. v. Royal Blue Realty Holdings, Inc., 148 A.D.3d 529, 48 N.Y.S.3d 597.
or answer the complaint, then opposed the lender's motion for a default judgment by alleging that the statute of limitations had run, but did not seek to vacate his default and interpose an answer to the complaint, the court held that the borrower had waived the defense. The decision states "borrower waived a statute of limitations defense by failing to raise it in an answer or in a timely pre-answer motion to dismiss." ( 21st Mtge. Corp. v. Palazzotto , 164 A.D.3d 1293, 1294, 81 N.Y.S.3d 752 [2d Dept. 2018].)
21. Where the lender had brought a motion to discontinue the prior foreclosure action, the court found this was still insufficient to constitute a de-acceleration, as "[c]ontrary to the plaintiff's contention, the order dated December 12, 2013, which discontinued the 2008 action upon its motion, was insufficient to evidence an affirmative act to revoke the election to accelerate the mortgage debt. In this case, the plaintiff failed to demonstrate the basis for that motion, since it did not submit the motion papers in opposition to the defendant's cross motion, and nothing in the order itself served to "destroy the effect of the sworn statement that the [plaintiff's predecessor in interest] had elected to accelerate the maturity of the debt.... [t]he plaintiff's further contention that it affirmatively revoked the election to accelerate the mortgage debt by serving the defendant with various notices, including the 90-day notice pursuant to RPAPL § 1304, is also without merit." (
U.S. Bank Trust, N.A. v. Aorta , 167 A.D.3d 807, 2018 N.Y. Slip Op. 08528 [2d Dept. 2018].)
It is clear from the above Second Department decisions that plaintiff herein has made a prima facie case for summary judgment. In support of her motion for summary judgment, the plaintiff has submitted, inter alia , a copy of the verified complaint that commenced the foreclosure action against the mortgagors [e-file doc. No. 80], in which lender and plaintiff Aurora specifically states in Paragraph Fifth that it "elects to call due the entire amount secured by the mortgage." This establishes that the mortgage debt was accelerated on or about April 16, 2009, the date on which the foreclosure action was commenced, and thus, that the applicable six-year statute of limitations had expired by the time the plaintiff commenced the instant action on February 10, 2018. ( NMNT Realty Corp. v. Knoxville 2012 Trust , 151 A.D.3d 1068, 1070, 58 N.Y.S.3d 118 [2d Dept. 2017].)
In opposition to the motion, defendants have not raised a triable issue of fact which overcomes the motion and requires a trial (see Alvarez v. Prospect Hosp. , 68 N.Y.2d 320, 324, 508 N.Y.S.2d 923, 501 N.E.2d 572 [1986] ; Zuckerman v. City of New York , 49 N.Y.2d 557, 562, 427 N.Y.S.2d 595, 404 N.E.2d 718 [1980] ). Defendants do not argue that there was a de-acceleration, nor do they argue that there is a provision in the mortgage or note that changes the obligations of the parties from the standard provisions which are interpreted in these decisions. The court notes that the mortgage [e-file doc. No. 122] is a New York Single Family Fannie Mae/Freddie Mac Uniform Instrument, with a 1-4 Family Rider. Defendants only argue that there was no acceleration, which is not supported by the case law. ( Deutsche Bank Natl. Trust Co. v. Gambino , 153 A.D.3d 1232, 1234, 61 N.Y.S.3d 299 [2d Dept. 2017].)
Counsel for the defendants avers that plaintiff seeks a "windfall in the form of a free house." This may be true, but it is not for this court to create the law, but only to follow it. It has long been the case that "sitting on one's rights" has consequences.
Counsel for defendants next states that she "stipulates as to the publicly recorded and/or publicly filed documents and pleadings" included in plaintiff's motion. She then complains that defendants' discovery demands, sent out on July 18, 2018, have not been responded to. However, a motion for summary judgment, which, if granted, ends the case, stays all discovery. CPLR § 3214 (b). Plaintiff's motion was e-filed in June 2018. Defendants should not have expected a response to their discovery demand before the summary judgment motion was decided.
CPLR R 3214 (b) provides:
Stay of Disclosure. Service of a notice of motion under rule 3211, 3212, or section 3213 stays disclosure until determination of the motion unless the court orders otherwise. If the motion is based solely on the defense that the summons and complaint, summons with notice, or notice of petition and petition was not properly served, disclosure shall not be stayed unless the court orders otherwise.
The first legal point raised in defendants' affirmation is the claim that plaintiff has failed to include a necessary party to the action, which is incorrect, as discussed above. Next, defendants allege that there is a "genuine issue of material fact as to whether there was an effective acceleration of the mortgage." Counsel elaborates by averring that the court's denial of its predecessor's unopposed motion for summary judgment and an order of reference, and sua sponte dismissal of the foreclosure action for failing to show compliance with RPAPL § 1304, is proof that "the April 16, 2009 complaint was defective from the onset. Therefore, any claims made in the defective complaint are ineffectual and cannot be relied upon by plaintiff herein to show that there was acceleration of the mortgage." This is not a correct interpretation of the law. The acceleration took place when the summons and complaint was filed in 2009, and the court's decision in 2015 did not hold that the lender did not have standing, or that the borrower was entitled to the automatic stay of 11 U.S.C.S. § 362(c), nor was there any affirmative act of revocation which occurred during the six-year limitations period subsequent to the initiation of the foreclosure action (see ( MSMJ Realty, LLC v. DLJ Mtge. Capital, Inc. , 157 A.D.3d 885, 69 N.Y.S.3d 870 [2d Dept. 2018] ; U.S. Bank N.A. v. Barnett , 151 A.D.3d 791, 793, 56 N.Y.S.3d 255 [2d Dept. 2017], citing Kashipour v. Wilmington Sav. Fund Socy., FSB , 144 A.D.3d 985, 987, 41 N.Y.S.3d 738 [2016] ; Clayton Natl. v. Guldi , 307 A.D.2d 982, 763 N.Y.S.2d 493 [2003] ; EMC Mtge. Corp. v. Patella , 279 A.D.2d 604 at 606, 720 N.Y.S.2d 161 [2001].
Defendants' next argument is that the MacPherson decision is persuasive and should be followed. As discussed above, it is not precedent that this court must follow. The arguments raised as to whether the MacPherson decision is "before the court" is inapposite. All applicable statutes and cases are "before the court." At the present time, there is no authority from the Appellate Division to support the defendants' claim that "where the Fannie Mae/Freddie Mac Uniform Mortgage Instrument is used, the debt is not accelerated by the commencement of a foreclosure action. Rather, the mortgage remains an installment contract until a judgment is entered, and only at that point is the debt accelerated." In fact, there is appellate authority to the contrary. (See MSMJ Realty, LLC v. DLJ Mtge. Capital, Inc. , 157 A.D.3d 885, 69 N.Y.S.3d 870 [2d Dept. 2018].) It is also noted that Paragraph 22 of the Fannie Mae/Freddie Mac Uniform Mortgage Instrument requires the lender to send a notice of default to the borrower, but provides that the borrower waives the sending of a notice of acceleration.
Further, for whatever reason, the 1-4 Family Rider that plaintiff herein signed specifically states that Paragraph 19 of the mortgage, is deleted. This is the paragraph that provides the borrower's right to stop a foreclosure, even after the loan has been accelerated, by paying sums due in full. As the terms of the Rider supersede the terms of the mortgage when they are in conflict, the mortgage documents in this matter specifically provide that once a foreclosure action is started, only the lender may terminate it, even if the borrower wants to pay the sums due in full. This reinforces the principle that the lender had to perform an affirmative act of revocation during the six-year limitations period after the initiation of the foreclosure action.
Defendants next argue (Point D) that the plaintiff's motion is premature as no discovery has been exchanged. The court finds that this motion solely raises a matter of law, based upon the documents in the court file in the foreclosure action and in this action, so discovery would be unavailing.
Defendants next argue that the matter is not ripe for summary judgment as defendants are moving to amend their answer to add a counterclaim. This action was commenced on February 10, 2018. It is not clear why defendants waited until September 2018 to move for leave to amend their answer. Their counterclaim may be brought as a plenary action to the extent that defendants' claims for their payment of real estate taxes and insurance on the homeowner's behalf are not barred by the applicable six-year statute of limitations. Defendants do not make any further arguments. Defendants do not claim, for example, that the terms of the mortgage or note somehow vary from those which have been interpreted by the case decisions described above.
Conclusions of Law
Plaintiff's motion for summary judgment on her first cause of action for a declaratory judgment pursuant to RPAPL § 1501(4) is granted, and her second cause of action, to quiet title, is dismissed as academic. The branch of defendants' motion which seeks summary judgment is denied. The branch of defendants' motion which seeks to amend its complaint is denied as academic. Defendants may bring a plenary action against plaintiff to assert their claims for unjust enrichment and payment of the real estate taxes and property insurance that defendants claim they have advanced on plaintiff's behalf.
Accordingly,
IT IS HEREBY DECLARED, ADJUDGED AND DECREED , that the following mortgage and assignments thereof, now held by defendant Wells Fargo Bank N.A., encumbering the property located at 1349 East 54th Street, Brooklyn, New York 11234, bearing tax map designation Block 7834 Lot 23, are hereby cancelled and discharged of record:
MORTGAGE Mortgagor: Yelena Sharova and Andrew Gayott Mortgagee: MERS as nominee for Gateway Funding Diversified Mortgage Services L.P. Amount: $412,500 Dated: March 30, 2007 Recorded: April 24, 2008 CRFN: 2008000164650 ASSIGNMENT Assignor: Mortgage Electronic Registration Systems, Inc. Assignee: Aurora Loan Services, LLC Dated: May 19, 2008 Recorded: June 16, 2008 CRFN: 2008000240905 ASSIGNMENT Assignor: Aurora Loan Services LLC Assignee: Aurora Bank FSB Dated: May 17, 2016 Recorded: June 10, 2016 CRFN: 2016000196821 ASSIGNMENT Assignor: Aurora Bank, FSB Assignee: Nationstar Mortgage LLC Dated: October 5, 2012 Recorded: November 19, 2012 CRFN: 2012000453340 ASSIGNMENT Assignor: Nationstar Mortgage LLC Assignee: Wells Fargo Bank, N.A. Dated: June 6, 2016 Recorded: June 28, 2016 CRFN: 2016000216974
And it is further ORDERED that the New York City Register, Kings County, is hereby directed to cancel and discharge the above-mentioned mortgage and the assignments thereof and to mark their records accordingly. And it is further ORDERED that Wells Fargo Bank, N.A. and its successors and assigns are forever barred from asserting any claim to or interest in the premises by virtue of the cancelled mortgage.
This shall constitute the decision, order and judgment of the court.