Opinion
Index No. 135238/2019 Motion Nos. 003 004 005 006
03-12-2024
THE BANK OF NEW YORK MELLON FKA THE BANK OF NEW YORK AS TRUSTEE FOR THE CERTIFICATEHOLDERS OF THE CWABS, INC., ASSET-BACKED CERTIFICATES, SERIES 2005-1 Plaintiffs, v. SCOTT COHEN, HOUSEHOLD FINANCE REALTY CORPORATION OF NEW YORK, THE BOARD OF DIRECTORS OF VILLAGE GREENS RESIDENTS ASSOCIATION, INC. (VILLAGE GREENS RESIDENTS' ASSOCIATION, GMAC, CITY OF NEW YORK DEPARTMENT OF FINANCE PARKING VIOLATIONS BUREAU, CITY OF NEW YORK ENVIRONMENTAL § CONTROL BOARD and JOHN DOE, Defendants.
Unpublished Opinion
Present: Hon. Desmond A. Green, Justice.
DECISION AND ORDER
HON. DESMOND A. GREEN, JUSTICE.
The papers e-filed as NYSCEF Documents "89" through "190" were marked fully submitted on the 11th day of January, 2024
Upon the foregoing papers, the motion of defendant Scott Cohen (Seq. No. 006) for leave to renew his motion for summary judgment (Seq. No. 001) and plaintiff's cross motion (Seq. No. 002) for summary judgment and an Order of Reference is granted. Upon renewal, the Court's Decision and Order dated October 4, 2022, and the Order of Reference entered on November 16, 2022, are vacated; the complaint is dismissed, and the mortgage is discharged and cancelled of record pursuant to RPAPL §1501(4). Defendant's remaining motions (Seq. Nos. 003 and 005), and plaintiff's cross motion (Seq. No. 004), inter alia, to confirm the Referee's Report and for a Judgment of Foreclosure and Sale are denied.
BACKGROND
Plaintiff Bank of New York Mellon (hereinafter, "Bank of NY") commenced this action to foreclosure a mortgage on residential property located at 28 Princeton Lane, Staten Island, New York 10306. Defendant Scott Cohen executed the mortgage on January 26, 2005, in favor of plaintiff's predecessor-in-interest, Countrywide Home Loans, Inc., to secure a loan in the amount of $241,680.00. The mortgage was transferred to Bank of NY pursuant to an Assignment of Mortgage dated February 16, 2007.
The present action was brought on April 30, 2019, due to Mr. Cohen's alleged default on May 1, 2013. He answered the complaint, asserting, inter alia, a defense pursuant to the statute of limitations. Defendant maintains that the pending 2019 action is time-barred because it was brought more than six years after the mortgage was accelerated upon commencement of the 2008 action. Mr. Cohen raised a counterclaim alleging that Bank of NY's mortgage lien is rendered invalid and unenforceable, therefore, it should be cancelled and discharged of record pursuant to RPAPL § 1501(4).
Pertinently, two prior foreclosure actions were brought against defendant. The first, was filed on February 16, 2007. The matter was discontinued pursuant to a Stipulation of Discontinuance dated May 30, 2008. The second action was commenced on April 28, 2008, due to Mr. Cohen's alleged default on November 1, 2007; he failed to answer or appear. During the pendency of the foregoing matters, the parties engaged in loss mitigation. Mr. Cohen was approved fora Loan Modification in July of 2007; subsequently, he was offered a Repayment Plan. Both settlement options were unsuccessful. Eventually, on February 25, 2010, Mr. Cohen was approved for a Home Affordable Modification Plan ("HAMP"), however, he failed to complete the required installments. The loan was never reinstated or permanently modified. As such, on or about March 1, 2013, Bank of NY moved to discontinue the 2008 action, alleging "a restart was necessary as payments were accepted after commencement without a written agreement in place". The Honorable Thomas P. Aliotta issued an Order on May 30, 2013, discontinuing the 2008 action.
Defendant's Motion for Leave to Renew Pursuant to CPLR §2221(e)(2) (Motion Seq. 006)
A motion for leave to renew pursuant to CPLR §2221(e)(2) is predicated on a demonstration that there has been a change in the law that would change the Court's prior determination.
Mr. Cohen seeks an order granting leave to renew his motion for summary judgment and plaintiff's cross motionfor summary judgment, and upon renewal, vacating the Court's Decision and Order dated October 4, 2022 based on a change in the law that would change the prior determination.
The Court found that the present [2019] foreclosure action falls within the purview of the Court of Appeals holding in Freedom Mtge. Corp. v. Engel (37 N.Y.3d 1 [2021]), which provides, in pertinent part, "[w]hen acceleration of a mortgage occurs by virtue of the filing of a complaint in a foreclosure action, the noteholder's voluntary discontinuance within six years of the filing constitutes a valid de-acceleration, as a matter of law, absent an express, contemporaneous statement to the contrary by the noteholder" (Freedom Mtge. Corp. v. Engel, 31 N.Y.3d at 4). In accordance with Engel, the Court held that Judge Thomas Aliotta's Order discontinuing the 2008 foreclosure action on May 30, 2013 constituted a valid revocation of Bank of NY's election to accelerate Mr. Cohen's mortgage. In the Decision and Order dated October 4, 2022, the Court held that the present action is not time-barred because it was commenced on April 30, 2019, within six years of the Order of Discontinuance in the 2008 action.
Foreclosure Abuse Protection Act
In support of Mr. Cohen's motion for leave to renew, he maintains that the newly enacted Foreclosure Abuse Prevention Act (FAPA), effective December 30, 2022, constitutes a change in the law. The Act is a direct response to Freedom Mtge. Corp. v. Engel. It expressly overrules the Court of Appeals decision.
The Foreclosure Abuse Prevention Act. FAPA amends CPLR Rule 3217 by adding a new subdivision (e) entitled "Effect of Discontinuance upon Certain Instruments". It provides, in pertinent part, that in an action upon a bond or note, the payment of which is secured by a mortgage on real property, "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." (FAPA, Section 8).
Furthermore, FAPA amends CPLR §213(4) by adding paragraph (b) which provides, in pertinent part, "[i]n any action seeking cancellation and discharge of record of an instrument described under subsection four of section fifteen hundred one of the Real Property Actions and Proceedings Law, a defendant shall be estopped from asserting that the period allowed by the applicable statute of limitations for the commencement of an action upon the instrument has not expired because the instrument was not validly accelerated prior to, or by way of commencement of a prior action, unless the prior action was dismissed based on an express judicial determination, made upon a timely interposed defense that the instrument was not validly accelerated" (FAPA, Section 7; see GMAT Legal Title Trust 2014-1 v. Kator, 213 A.D.3d 915, 917 [2d Dept 2021).
In the Court's opinion, there is a clear legislative intent to apply FAPA retroactively, as evinced in section 10 which unequivocally states that the legislation takes effect immediately and applies to all pending foreclosure actions where, as in the instant matter, a final judgment of foreclosure and sale has not been enforced (see Deutsche Bank National Trust Company v. Dagrin, 79 Misc.3d 393, 398 [Supreme Court, Queens County, 2023]).
In opposition to defendant's motion, the plaintiff/mortgagees vehemently argue that FAPA's retroactive application and amendments to the provisions of the Civil Practice Law and Rules do not comport with the Due Process Clause and Contract Clause of the United States and the New York Constitutions. The Court rejects the proposition that FAPA constitutes a deprivation of the lender's contractual and property rights pursuant to the mortgage. As expressed in Deutsche Bank National Trust Company v. Dagrin (79 Misc.3d at 399), "[t]he 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." It is the Court's opinion that the present foreclosure action involves the "intersection of two areas of law, i.e., contracts pertaining to the ownership of real property and the application of the statute of limitations" (id.). Thus, plaintiff's contention that FAPA violates due process is rejected.
Moreover, "legislative enactments [such as FAPA] are entitled to an exceedingly strong presumption of constitutionality" (see Matter of Calverton Manor, LLC v. Town of Riverhead, 160 A.D.3d 829 [2d Dept 2018]; Nicholson v. Incorporated Vil. of Garden City, 112 A.D.3d 893, 894 [2d Dept 2013]). Similarly, "whether a rational basis for legislative enactments exists is a determination subject to a strong presumption of constitutionality" (Matter of Calverton Manor, LLC v. Town of Riverhead, 160 A.D.3d 829 [2d Dept 2018]). Plaintiff fails to overcome the strong presumption of constitutionality to convince the Court that a rational basis for the enactment of FAPA does not exist.
With this established, defendant correctly maintains the new legislation affects the outcome of his prior motion for summary judgment dismissing the complaint on the ground that the pending foreclosure proceedings are time-barred. Plaintiff's discontinuance of the 2008 action on May 30, 2013 was not based on "an express judicial determination that the instrument was not validly accelerated" (FAPA, Section 7). In accordance with the plain language of FAPA's new subdivision (e) of CPLR Rule 3217, the lender's election to accelerate the mortgage was not revoked, therefore the statute of limitations expired on April 27, 2014, six years after the 2008 proceeding was commenced on April 28, 2008. The present 2019 foreclosure was brought more than eleven years after the mortgage was accelerated.
Mr. Cohen has demonstrated that leave to renew his motion for summary judgment dismissing the complaint and plaintiff's cross motion for, inter alia, a Judgment of Foreclosure and Sale is warranted based on a change in the law that would change the Court's prior determination (CPLR §2221 [e][2]).
Defendant's Counterclaim Pursuant to RPAPL §1501(4)
RPAPL §1501(4) provides, in pertinent part, that "[w]here the period allowed by the applicable statute of limitations for the commencement of an action to foreclose a mortgage.. .has expired, any person with an estate or interest in the real property may maintain an action "to secure the cancellation and discharge of the encumbrance, and to adjudge the estate or interest of the plaintiff in such real property to be free therefrom" (RPAPL §1501 [4]; see Milone v. U.S. Bank National Association, 164 A.D.3d 145, 151 [2d Dept 2018]; NMNT Realty Corp v. Knoxville 2012 Trust, 151 A.D.3d 1068, 1069 [2d Dept 2017]).
Defendant has established that his motion for summary judgment on his counterclaim to discharge the mortgage of record pursuant to RPAPL § 1501(4) must be renewed because the Court's previous denial of themotion contravenes the newly enacted CPLR §213(4)(b) and CPLR Rule 3217. The instant foreclosure action is time-barred pursuant to FAPA, therefore, the subject mortgage is rendered invalid and unenforceable. Under the circumstances, defendant is entitled to "secure the cancellation and discharge of the encumbrance" (RPAPL §1501 [4]).
Defendant's Counterclaim for an Award of Attorney's Fees Pursuant to Real Property Law §282.
The mortgage at issue contains an express provision enabling the lender to recover reasonable attorneys' fees incurred as a result of the mortgagor's failure to perform any covenant or agreement contained in the mortgage. Real Property Law §282 requires a reciprocal implied covenant that entitles the mortgagor to recover attorneys' fees when he or she prevails on the merits (see U.S. Bank Natl. Assn. v. Onuoha, 216 A.D.3d 1069,1073 [2d Dept 2023]; Nationstar Mortgage LLC v. Dorsin, 180 A.D.3d 1054, 1056 [2d Dept 2020]; 21st Mortgage Corp. v. Nweke, 165 A.D.3d 616, 616 [2d Dept 2018]). Defendant, as the prevailing party, is entitled to seek an award of attorney's fees and expenses as permitted by Real Property Law §282.
The matter shall be remitted to the Supreme Court, Richmond County, for a hearing to be held forthwith, to determine the attorney's fees and expenses to be awarded to the defendant pursuant to Real Property Law §282.
Accordingly, it is
ORDERED, the motion of defendant Scott Cohen for leave to renew his motion for summary judgment and plaintiff's cross motion for summary judgment and an Order of Reference is granted; and it is further
ORDERED, upon renewal, the Court's Decision and Order dated October 4, 2022, and the Order of Reference dated November 10, 2022 are hereby vacated; and it is further
ORDERED, upon renewal, defendant'smotion for summary judgment dismissing the complaint and cancelling the Notice of Pendency, and for summary judgment on his counterclaim discharging the mortgage of record is granted; and it is further
ORDERED, upon renewal, plaintiff's cross motion, inter alia, to confirm the Referee's Report and for a Judgment of Foreclosure and Sale is denied; and it is further
ORDERED, defendant is awarded reasonable attorney's fees and costs pursuant to Real Property Law §282, in an amount to be determined at a hearing to be held forthwith,
ORDERED, the Clerk shall enter judgment accordingly.