Opinion
256173
04-12-2019
U.S. BANK NATIONAL ASSOCIATION, not in Its Individual Capacity but Solely AS TRUSTEE FOR the RMAC TRUST, SERIES 2016-CTT, Plaintiff, v. CREATIVE ENCOUNTERS, LLC, Paula Jo Tufano and The People of the State of New York, Defendants.
Gross Polowy, LLC, (Douglas C. Weinert, Esq., of Counsel) 1775 Wehrle Drive, Suite 100, Williamsville, New York, 14221, Attorneys for Plaintiff. The Law Offices of Christian P. Morris, Esq., P.O. Box 1, Schuylerville, New York, 12871, Attorneys for Defendants Creative Encounters, LLC and Paula Jo Tufano.
Gross Polowy, LLC, (Douglas C. Weinert, Esq., of Counsel) 1775 Wehrle Drive, Suite 100, Williamsville, New York, 14221, Attorneys for Plaintiff.
The Law Offices of Christian P. Morris, Esq., P.O. Box 1, Schuylerville, New York, 12871, Attorneys for Defendants Creative Encounters, LLC and Paula Jo Tufano.
Michael H. Melkonian, J.
In this mortgage foreclosure action, plaintiff U.S. Bank National Association, not in its Individual Capacity but solely as Trustee for the RMAC Trust, Series 2016-CTT ("plaintiff") moves to confirm the Referee's Report made in accordance with RPAPL § 1321 and for a judgment of foreclosure and sale. Defendants Creative Encounters, LLC and Paula Jo Tufano (collectively referred to herein as "defendants") oppose and move for summary judgment to dismiss the complaint.
The underlying facts are that, on or about June 25, 2008, defendant Paula Jo Tufano ("Paula Jo") executed a Consolidation, Extension and Modification Agreement ("CEMA") and note in the amount of $ 182,000.00, consolidating a note of that date in the amount of $ 32,256.08, with a note executed and delivered by Paula Jo and Jody Tufano to the original lender, Homestead Funding Corporation d/b/a First Niagara Mortgage, in the principal sum of $ 155,000.00, which was secured by a mortgage on the subject property, located at 24 Eva Road, East Greenbush, New York (the "property"). The CEMA was recorded on August 12, 2008 in the Rensselaer County Clerk's office. By a series of assignments ending with an assignment dated July 7, 2016, plaintiff came into possession of the secured, consolidated note. That assignment was recorded in the Rensselaer County Clerk's Office on August 11, 2016.
Less than sixteen months after executing the note on June 25, 2008, Paula Jo defaulted under the terms of the note and mortgage by failing to make the installment payment due October 1, 2009, or at any time thereafter.
On August 9, 2010, BAC Home Loans Servicing, LP f/k/a Countrywide Home Loans Servicing, LP, plaintiff's predecessor-in-interest, commenced a foreclosure action against Paula Jo to foreclosure on the mortgage, by filing a summons, complaint and notice of pendency with the Rensselaer County Clerk's Office (the "first action") (Index No.234021-10). Plaintiff's predecessor-in-interest asserted in that action that Paula Jo defaulted on the note and mortgage by failing to make the monthly installment payments which became due and payable as of October 1, 2009, and for each and every month thereafter. The principal balance due as of the filing of that complaint was $ 179,379.35, plus interest from September 1, 2009.
Counsel for plaintiff's predecessor-in-interest, Steven J. Baum, P.C., moved to voluntarily discontinue the action, which was granted by this Court (Ceresia, J.) by Order dated September 12, 2013.
On October 1, 2014, Nationstar Mortgage, LLC, who had come into possession of the consolidated note by assignment dated January 16, 2013, commenced a second foreclosure action against Paula Jo to foreclosure on the mortgage, by filing a summons, complaint and notice of pendency with the Rensselaer County Clerk's Office (the "second action") (Index # 248053-14). Counsel for plaintiff's predecessor-in-interest, Fein, Such & Crane, LLP, moved to voluntarily discontinue the second action without prejudice, which was granted by this Court (McGrath, J.) by Order dated March 2, 2016.
Plaintiff commenced the instant action to foreclose by filing a summons and complaint and notice of pendency on April 28, 2017. In its complaint, the plaintiff alleges, inter alia , that on May 1, 2011, Paula Jo defaulted in making payments due under the terms of the consolidated note and mortgage. Defendants joined issue by filing an answer with counterclaims on June 15, 2017.
At some point Paula Jo transferred the property to defendant Creative Encounters, LLC, which is the current owner of the property.
The Court first considers defendants' argument in their motion for summary judgment the action should be dismissed because it is barred by the statute of limitations since the Court's determination thereof may render the plaintiff's motion academic.
It is well settled that in a motion for summary judgment the moving party bears the burden of making a prima facie showing that he or she is entitled to summary judgment as a matter of law, submitting sufficient evidence to demonstrate the absence of a material issue of fact (see , Sillman v. Twentieth Century Fox Film Corp. , 3 NY2d 395 ; Friends of Animals, Inc. v. Associates Fur Mfrs. , 46 NY2d 1065 ; Zuckerman v. City of New York , 49 NY2d 557 ; Alvarez v. Prospect Hospital , 68 NY2d 320 ).
The failure to make such a showing requires denial of the motion, regardless of the sufficiency of the opposing papers (see , Winegard v. New York University Medical Center , 64 NY2d 851 ). Once this showing has been made, however, the burden shifts to the party opposing the motion for summary judgment to produce evidentiary proof in admissible form sufficient to establish the existence of material issues of fact which require a trial of the action (see , Zuckerman v. City of New York , 49 NY2d 5557).
In their motion, defendants state that the applicable statute of limitations for a mortgage foreclosure action is six (6) years and that even though a mortgage is payable in installments once a mortgage debt is accelerated the entire amount comes due and the statute of limitations begins to run on the entire debt ( CPLR § 213[4] ; EMC Mortgage Corporation v. Patella , 279 AD2d 604, 605 ). Defendants argue that the first action accelerated the mortgage in the instant action and that the statute of limitations began to run at that time.
In opposition, however, plaintiff submits that both the first and second actions were voluntarily discontinued by plaintiff's predecessors-in-interest and those actions revoked the election to accelerate made at the time of the commencement of those actions. Plaintiff states that a voluntary discontinuance, as was done in 2010 in the first foreclosure action and in 2014 in the second action, is an affirmative act that is sufficient to revoke acceleration, citing NMNT Realty Corp. v. Knoxville 2012 Trust , 151 AD3d 1068.
The six year statute of limitations in a mortgage foreclosure action begins to run from the due date of each unpaid installment unless the debt has been accelerated; once the debt has been accelerated by a demand or commencement of an action, the entire sum becomes due and the statute of limitations begins to run on the entire mortgage ( CPLR § 213[4] ; Loicano v. Goldberg , 240 AD2d 476, 477 ; Saini v. Cinelli Enterprises , 289 AD2d 770, 771 ; Kashipour v. Wilmington Sav. Fun Socy, FSB , 144 AD3d 985, 986 ; EMC Mtge. Corp v. Patella , 279 AD2d 604, 605 ). A lender can revoke its election to accelerate a mortgage by an affirmative act of revocation which is made within the statute of limitations period ( Federal Natl. Mtge. Assn. v. Mebane , 208 AD2d 892, 894 ; Kashipour v. Wilmington Sav. Fund. Socy, FSB , 144 AD3d at 987 ; EMC Mtge. Corp v. Patella , 279 AD2d at 606 ).
In the instant case, the debt was accelerated when the first action was commenced in 2010. Plaintiff's predecessor-in-interest then voluntarily discontinued said action, which action was discontinued pursuant to the Order of Hon. George Ceresia dated September 12, 2013. The Court finds that plaintiff's predecessor-in-interest's distinct intention to voluntarily discontinue the first (and the second) action was an affirmative act of revocation of the election to accelerate and, as such, the statute of limitations has not run (see , Wells Fargo Bank, N.A. as Trustee Carrington Mortg. Loan Tr. v. Rodriguez , 62 Misc 3d 1211(A) (NY Sup. Ct. 2019) ; U.S. Bank N.A. v. Wongsonadi , 55 Misc 3d 1207 [A] [Sup Ct Queens Co 2017]; U.S. Bank Nat. Ass'n v. Deochand , 2017 NY Slip Op 30472[U] [Sup. Ct., Queens Cnty. 2017] ; Assyag v. Wells Fargo Bank, N.A. , 2016 WL 6138269 [Sup.Ct., Queens Cnty. 2016] ; 4 Cosgrove 950 Corp. v. Deutsche Bank Nat. Trust Co. , 2016 WL 2839341 [Sup.Ct., New York Cnty. 2016] ). To be sure, "when an action is discontinued, it is as if had never been; everything done in the action is annulled and all prior orders in the case are nullified" ( Newman v. Newaman , 245 AD2d 353, 354 ). Moreover, plaintiff's subsequent actions of sending several default notices to Paula Jo between 2012 and 2017 are consistent with the Court's finding that there was a clear intention to revoke acceleration with both the 2010 and 2014 voluntary discontinuances. These letters are attached to plaintiff's opposition to defendants' motion for summary judgment as Exhibit "L."
Therefore, defendants' motion for summary dismissal due to expiration of the statute of limitations is denied.
Turning next to plaintiff's motion for summary judgment, it is well settled that a plaintiff in a mortgage foreclosure action establishes a prima facie case of entitlement to summary judgment through submission of proof of the existence of the underlying note, mortgage, and default in payment after due demand (see , CPLR § 3212 ; United Cos. Lending Corp. v. Hingos , 283 AD2d 764 ; North Bright Capital, LLC v. 705 Flatbush Realty, LLC , 66 AD3d 977 ). Upon such a showing, the burden shifts to the defendant to produce evidence in admissible form sufficient to raise a material issue of fact requiring a trial.
In support of the motion, plaintiff submits, inter alia, the affidavit of Michael Bennett, Assistant Secretary of Rushmore Loan Management Services, LLC, Appointed Attorney in-fact-for plaintiff ("Rushmore"). Mr. Bennett states that based upon a personal review of Rushmore's business records, which include the records from plaintiff:
"[t]he Mortgage has been assigned by an Assignment of Mortgage, dated July 3, 2008 from Homestead Funding Corp. to Countrywide Bank FSB, and recorded August 12, 2008 ... in the Office of the Rensselaer County Clerk. The Mortgage has been subsequently assigned by a Gap Assignment of Mortgage, dated July 12, 2010 from Mortgage Electronic Registration Systems, Inc., as nominee for Homestead Funding Corp. dba First Niagara Mortgage to Homestead Funding Corp., and recorded August 12, 2010 ... Office of the Rensselaer County Clerk. The Mortgage has been subsequently assigned by a Gap Assignment of Mortgage, dated August 2, 2010 from Bank of America, N.A. successor by merger to Countrywide Bank, N.A. formerly known as Countrywide Bank, FSB to Mortgage Electronic Registration Systems, Inc., as nominee for Countrywide Bank, FSB, and recorded ... in the Office of the Rensselaer County Clerk. The Mortgage has been subsequently assigned by an Assignment of Mortgage, dated July 12, 2010 from Mortgage Electronic Registration Systems, Inc., as nominee for Countrywide Bank, FSB to BAC Home Loans Servicing, L.P. fka Countrywide Home Loans Servicing, L.P., and recorded August 12, 2010 ... in the Office of the Rensselaer County Clerk. The Mortgage has been subsequently assigned by an Assignment of Mortgage, dated January 16, 2013 from Bank of America, N.A. to Nationstar Mortgage LLC, and recorded February 22, 2013 ... in the Office of the Rensselaer County Clerk. The Mortgage has been subsequently assigned by an Assignment of Mortgage, dated July 7, 2016 from Nationstar Mortgage LLC to U.S. Bank National Association, not in its individual capacity but solely as Trustee for the RMAC Trust, Series 2016-CTT, and recorded August 11, 2016 ... in the Office of the Rensselaer County Clerk."
Mr. Bennett further states that plaintiff had possession of the note on April 28, 2016 and was in possession of the note prior to April 28, 2017. Mr. Bennett affirms that defendants are in default under the terms and conditions of the note and mortgage because the May 1, 2011 payment and subsequent payments were not made. Mr. Bennett further affirms that a default notice was sent to Paula Jo on January 5, 2017. Additionally, 90 day pre-foreclosure notices were sent by first-class mail and certified mail to Paula Jo on November 2, 2016.
Based upon plaintiff's submission of the notes, mortgages, the CEMA and Mr. Bennett's affidavit evidencing defendants' failure to make the contractually required loan payments, plaintiff has established its prima facie case of entitlement to summary judgment.
In opposition, defendants submit, among other things, an affirmation from counsel, Christian P. Morris. Mr. Morris contends that a question of fact exists with respect to the plaintiff's standing as certain assignments in the chain of possession of the mortgage were defective and that there is no evidence that plaintiff was in physical possession of the note when the action was commenced. Mr. Morris also contends that Mr. Bennett's affidavit is inadmissible and insufficient to establish plaintiff's prima facie case and that the statute of limitations has run.
Mr. Bennett properly laid the foundation for the affidavit to qualify the records relied upon as business records. "[A] witness who is familiar with the practices of a company that produced the records at issue, and who generally relies upon such records, may have the requisite knowledge to meet the CPLR requirements for the admission of a business record, provided that the witness can also attest that (1) the record was made in the regular course of business; (2) it was the regular course of business to make such record; and (3) the record was made contemporaneously with the relevant event, thereby assuring its reliability" ( People v. Brown , 13 NY3d 332, 341 ). The factual allegations set forth in Mr. Bennett's affidavit, including a personal review of the records, sufficiently established the admissibility of his statements under the business records exception to the hearsay rule (see , Deutsche Bank Natl. Trust Co. v. Monica , 131 AD3d 737 ; Portfolio Recovery Assoc., LLC v. Lall , 127 AD3d 576 ; Merrill Lynch Bus. Fin. Servs. Inc. v. Trataros Constr., Inc. , 30 AD3d 336 ).
Mr. Bennett affirms that plaintiff had possession of the subject notes prior to and at the time of commencement. A plaintiff has standing where it is both the holder or assignee of the subject mortgage and the underlying note at the time the action is commenced (see , Aurora Loan Services, LLC v. Taylor , 114 AD3d 627 ; Deutsche Bank Natl. Trust Co. v. Whalen , 107 AD3d 931 ; Bank of NY v. Silverberg , 86 AD3d 274 ). "A plaintiff may demonstrate that it is the holder or assignee of the underlying note 'by showing either a written assignment of the underlying note or the physical delivery of the note.’ " Aurora Loan Servs., LLC v. Mercius , 138 AD3d 650, 651, quoting U.S. Bank N.A. v. Guy , 125 AD3d 846. Although Mr. Morris argues that Mr. Bennett's affidavit is insufficient because he merely "looked at a computer maintained by a company he works for," there is no requirement that plaintiff establish how it came into possession of the endorsed in blank note to be able to enforce it (see , PennyMac Corp. v. Chavez , 144 AD3d 1006 ). Moreover, as plaintiff has demonstrated its standing by demonstrating that it was the holder of, and in possession of, the relevant note at the time the instant action was commenced (April 28, 2017), any challenge to the assignments is insufficient to demonstrate that plaintiff lacks standing.
The Court finds that the defendants' conclusory allegations fail to demonstrate the existence of questions of fact on the issue of standing on the part of the plaintiff. Here, plaintiff has dispatched with its burden of proof by submitting a note bearing the endorsement in blank, the duly recorded assignments evidencing a chain of custody of the note and evidencing possession prior to commencement, all corroborated by Mr. Bennett's affidavit which properly constitutes an admissible business record pursuant to CPLR § 4518. Accordingly, plaintiff's standing has been demonstrated. The remaining affirmative defenses have been reviewed and deemed to be without merit.
Notwithstanding the general denials in the answer, absent from the opposition papers are any allegations by the defendants denying their continuous default in payment. Thus, even when viewed in the light most favorable to defendants, the opposition is insufficient to raise any genuine question of fact requiring a trial on the merits of plaintiff's claims for a judgment of foreclosure and sale, and insufficient to demonstrate any bona fide defenses (see , CPLR § 321l [e]; see , Emigrant Mtge. Co., Inc. v. Beckerman , 105 AD3d 895 ).
Inasmuch as defendant has failed to present any question of fact which would require a hearing or to establish any reason why the Court should invoke its equity powers and intercede in this foreclosure action, it is hereby
ORDERED that plaintiff's motion for summary judgment is granted; and it is further ORDERED that the defendants' Answer is stricken and is deemed to be a Notice of Appearance entitling his attorney to notice of all future proceedings herein.
The Court has considered the other arguments raised by the defendants and finds them to be without merit.
The Court simultaneously signs the proposed Judgment submitted by plaintiff, as modified.
This constitutes the Decision and Order of the Court. This Decision and Order is returned to the attorneys for the plaintiff. All other papers are delivered to the County Clerk. The signing of this Decision and Order shall not constitute entry or filing under CPLR 2220. Counsel is not relieved from the applicable provisions of this rule with regard to filing, entry and Notice of Entry.
SO ORDERED.