Opinion
Index No. 502097/2019
06-23-2023
US BANK NATIONAL ASSOCIATION, AS TRUSTEE, Successor in Interest TO WACHOVIA BANK, NATIONAL ASSOCIATION, as Trustee for Wells Fargo Asset Securities Corporation, Mortgage Asset-Backed Pass-Through Certificates, Series 2003-1, Plaintiff, v. John WILLIAMS a/k/a John H. Williams and "John Doe #1" through "John Doe #10," the last ten names being fictitious and unknown to the plaintiff, the person or parties intended being the person or parties, if any, having or claiming an interest in or lien upon the mortgaged premises described in the complaint, Defendants.
Plaintiff: Frenkel, Lambert, Weiss, Weisman & Gordon Defendant Williams: Clair Gjertsen & Weathers PLLC
Plaintiff: Frenkel, Lambert, Weiss, Weisman & Gordon
Defendant Williams: Clair Gjertsen & Weathers PLLC
Gina C. Capone, J. The facts of this residential mortgage foreclosure case are largely undisputed. The Defendant John H. Williams executed a note, on or about March 28, 2003, in favor of Wells Fargo Home Mortgage, Inc., in the sum of $329,600 (NYSCEF Doc 3). The Note was endorsed by Wells Fargo to Wachovia Bank, National Association, as Trustee under the pooling and servicing agreement dated as of August 28, 2003 (NYSCEF Doc 3). By a firmly affixed Allonge, Wachovia, by Wells Fargo, NA, its Attorney in Fact, endorsed the Note in blank (NYSCEF Doc 3). The Note was secured by a Mortgage, executed the same date, against properly known as 21 Westgate Terrace, Carmel, New York 10512. The mortgage was thereafter duly recorded with the Putnam County Clerk's Office on or about September 24, 2003 (NYSCEF Doc 52). According to the Plaintiff's Statement of Undisputed Material Facts, the loan is "currently due for the March 1, 2008, payment and all subsequent payments" (NYSCEF Doc 66, ¶5).
PRIOR LITIGATION
On February 6, 2008, Wells Fargo Bank, NA, commenced a foreclosure action in Putnam County Supreme Court against the Defendant (Index No. 311/2008). That litigation was "discontinued pursuant to an Order to Vacate Judgment of Foreclosure and Sale and to Discontinue the Action and Cancel Lis Pendens" entered on January 19, 2012 (Nicolai, J.) (NYSCEF Doc 73). A second foreclosure action was commenced by US Bank National Association, as Trustee, successor in interest to Wachovia Bank, National Association as Trustee for Wells Fargo Asset Securities Corporation, Mortgage Asset-Backed Pass-Through Certificates, Series 2003-1 (hereinafter the Plaintiff) against the Defendant on December 26, 2013 (Index No. 2841/2013) (NYSCEF Doc 74).
A third foreclosure action was commenced by the Plaintiff against the Defendant on July 31, 2014 (Index No. 1644/2014) (NYSCEF Doc 75). By Decision and Order of this Court (Grossman, J.), filed August 12, 2015, the two pending foreclosure actions were consolidated (NYSCEF Doc 76). The Plaintiff filed a motion for summary judgment and order of reference, which was granted, unopposed, by Decision and Order dated March 31, 2017. The Plaintiff thereafter filed a motion to confirm the Referee's Report and for a Judgment of Foreclosure and Sale. The Defendant cross-moved to vacate the order granting summary judgment and an order of reference and for summary judgment dismissing the complaint insofar as asserted against the Defendant. The Court (Grossman, J.), in deciding both pending motions, granted the Defendant's motion to the extent of vacating the earlier order granting summary judgment and an order of reference to the Plaintiff and denied the Plaintiff's motion for, inter alia, Judgment of Foreclosure and Sale (NYSCEF Doc 77). The Plaintiff moved for leave to renew the two motions. By Decision and Order dated October 17, 2018, the Court denied the Plaintiff's motion for leave to renew with prejudice, directed the Plaintiff to file a Note of Issue by a specified date, and put the matter over for a Pre-Trial Conference (NYSCEF Doc 78).
The Trial on the Consolidated Foreclosure Actions was held on January 24 and 25th, 2019 (Transcripts at NYSCEF Doc 79). At the close of the Plaintiff's case in chief, the Defendant orally moved for a directed verdict, which the Justice presiding reserved on. Following the completion of the trial, and submission of post-trial memorandums (NYSCEF Doc 80), the Court (Grossman, J.), issued a Decision, Order and Judgment after Trial, dated August 22, 2019, wherein the Court dismissed the Plaintiff's action on the grounds that the Plaintiff had failed to establish due diligence in serving the required notices pursuant to RPAPL § 1303 and 1304 (NYSCEF Doc 40, 81).
The Current Foreclosure Litigation
The current foreclosure action was commenced by the Plaintiff against the Defendant on December 16, 2019 (NYSCEF Doc 1). The Defendant filed an Answer with Counterclaims on February 14, 2020 (NYSCEF Doc 11). As is relevant to the pending motions, the Defendant asserted three counterclaims. The first counterclaim was pursuant to Article 15 of the RPAPL and sought to cancel and discharge the mortgage allegedly held by the Plaintiff as enforcement of same is barred by the statute of limitations. The second counterclaim asserts that the matter must be dismissed as the action is barred by the doctrine of res judicata. The third counterclaim asserted that the matter must be dismissed as barred by the doctrine of collateral estoppel (NYSCEF Doc 11).
The Court has before it two motions for summary judgment, filed by both the Plaintiff and the Defendant John Williams respectively. The Plaintiff seeks, inter alia, summary judgment on its complaint, an order striking the answer and counterclaims of Defendant Williams, and the appointment of a referee to compute the amount due and owing (NYSCEF Doc 35). The Defendant seeks an order dismissing the Plaintiff's complaint and granting summary judgment in the Defendant's favor pursuant to CPLR 3212 and RPAPL Article 15 on his counterclaims (NYSCEF Doc 68). Each side has filed opposition to the others’ respective motion. On December 30, 2022, Gov. Hochul signed the Foreclosure Abuse Prevention Act (L 2022, ch 821, § 8 [eff Dec. 30, 2022]; hereinafter FAPA). Counsel for both sides requested leave to supplement their submissions relative to the respective motions to address the new law, and specifically the effect of the law relative to the issue of whether this action was timely commenced, which request was granted by the Court.
The Defendant's Motion for Summary Judgment on its Counterclaims
By Notice of Motion filed November 10, 2022, the Defendant moved to dismiss the complaint insofar as asserted against him and for summary judgment on his counterclaims seeking to cancel and discharge the Plaintiff's mortgage against the property on the grounds that the action is barred, inter alia, by the statute of limitations (see RPAPL § 1501[4] ). Specifically, the Defendant contends that the commencement of the 2008 foreclosure action began the running of the statute of limitations, which expired in 2014, rendering this matter untimely commenced.
Statute of Limitations/ FAPA
The Defendant contends that the Plaintiff's mortgage of record must be discharged pursuant to RPAPL § 1501[4], on the grounds that the applicable statute of limitations has expired. The Foreclosure Abuse Prevention Act (FAPA), signed into law on December 30, 2022, amended, inter alia, CPLR § 3217 to add a new subdivision which provides:
(e) Effect of discontinuance upon certain instruments. In any action on an instrument described under subdivision four of section two hundred thirteen of this chapter, 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.
The amendment, inter alia, to CPLR § 3217 by FAPA was specifically designed to address and overrule the Court of Appeals holding in Freedom Mortgage Corp. v. Engel , 37 N.Y.3d 1, 146 N.Y.S.3d 542, 169 N.E.3d 912 (2021), that a voluntary discontinuance constituted an affirmative revocation of acceleration for statute of limitations purposes. At the time the Plaintiff and the Defendant filed their respective motions for summary judgment in this case, Engel was still controlling law. However, now that FAPA has amended CPLR § 3217, the Defendant contends that the law as it currently stands warrants a finding by this Court that this foreclosure action is barred by the expiration of the six-year statute of limitations. In this case, when the first foreclosure action was commenced on or about February 6, 2008, the filing of the summons, complaint, and notice of pendency constituted a valid election to accelerate the debt and triggering the running of the statute of limitations. While that action was subsequently voluntarily discontinued on January 17, 2012 (NYSCEF Doc 89), under the amended CPLR § 3217, that voluntary discontinuance did not "waive, postpone, cancel, toll, extend, revive or reset the limitations period" ( CPLR § 3217[e] ; see also CPLR 203[h] ["(h) Claim and action upon certain instruments. Once a cause of action upon an instrument described in subdivision four of section two hundred thirteen of this article has accrued, no party may, in form or effect, unilaterally waive, postpone, cancel, toll, revive, or reset the accrual thereof, or otherwise purport to effect a unilateral extension of the limitations period prescribed by law to commence an action and to interpose the claim, unless expressly prescribed by statute"]). According to the Defendant, the six-year statute of limitations on this matter expired on or about February 6, 2014, more than five years before the current action was commenced and, therefore, the Plaintiff is barred from bringing the instant action, summary judgment in the Defendant's favor is warranted on his counterclaim pursuant to RPAPL § 1501[4] and the complaint, insofar as asserted against him, must be dismissed.
In opposition, the Plaintiff submitted an attorney affirmation in opposition to the Defendant's motion (NYSCEF Doc 93) as well as an attorney affirmation in reply on its motion for summary judgment (NYSCEF Doc 98). Counsel acknowledges at the outset that FAPA "makes an enormous change regarding the statute of limitations in foreclosure actions" (NYSCEF Doc 93 at ¶ 12). Counsel further contends that applying FAPA to this action as the Defendant suggests, i.e., to retroactively declare an otherwise timely foreclosure action untimely, is unconstitutional. Not only is retroactive application in the manner argued by the Defendant not supported by the plain language of the law ("effective immediately"), construing the law in such a manner would violate the Plaintiff's rights under the Due Process Clause of the US Constitution, constitute an unlawful taking, and violate the Contract Clause. While the Legislature intended to reverse Engel , nothing in the language of the statute itself provides for the retroactive enforcement of the statute in the manner requested by the Defendant here.
In Reply, the Defendant's counsel provides copies of, and adopts the arguments set forth in, two briefs filed by the Attorney General for the State of New York in two matters pending before the Appellate Division, Second Department, addressing the retroactivity of FAPA and whether it comports with the New York State and US Constitutions. For the sake of brevity, the Attorney General takes the position that FAPA comports with both the State and Federal Constitutions, its application "retroactively" was plainly intended by the Legislature and does not impinge upon the Plaintiff's Due Process rights, and that FAPA comports with the Takings Clause and does not violate the Contract Clause. As such, the Attorney Generals asks that the Court reject the Plaintiff's constitutional challenges to FAPA.
This Court finds that the Defendant has met his prima facie burden of establishing his entitlement to summary judgment on his counterclaim to discharge the Plaintiff's mortgage of record pursuant to RPAPL § 1501[4], on the grounds that the applicable statute of limitations has expired. An action to foreclose a mortgage is governed by a six-year statute of limitations (see CPLR 213[4] ; Lubonty v. U.S. Bank N.A. , 34 N.Y.3d 250, 261, 116 N.Y.S.3d 642, 139 N.E.3d 1222 [2019] ; MTGLQ Investors, L.P. v. Singh , 216 A.D.3d 1087, 190 N.Y.S.3d 415 [2d Dept., 2023] ; U.S. Bank N.A. v. Dallas , 212 A.D.3d 680, 682, 182 N.Y.S.3d 707 [2d Dept. 2023] ). "[E]ven if a mortgage is payable in installments, once a mortgage debt is accelerated, the entire amount is due and the Statute of Limitations begins to run on the entire debt" ( BHMPW Funding, LLC v. Lloyd-Lewis , 194 A.D.3d 780, 782, 149 N.Y.S.3d 141 [2d Dept. 2021] [internal quotation marks omitted]; see MTGLQ Investors, L.P. v. Singh , 216 A.D.3d 1087, 190 N.Y.S.3d 415 ; GMAT Legal Title Trust 2014-1 v. Kator , 213 A.D.3d 915, 916, 184 N.Y.S.3d 805 [2d Dept. 2023] ). Acceleration occurs, inter alia, by the commencement of a foreclosure action wherein the holder of the note elects in the complaint to call due the entire amount secured by the mortgage (see Freedom Mtge. Corp. v. Engel , 37 N.Y.3d 1, 22, 146 N.Y.S.3d 542, 169 N.E.3d 912 [2021] ; MTGLQ Investors, L.P. v. Singh , 216 A.D.3d 1087, 190 N.Y.S.3d 415 ; GMAT Legal Title Trust 2014-1 v. Kator , 213 A.D.3d at 916, 184 N.Y.S.3d 805 ; Ditech Fin., LLC v. Connors , 206 A.D.3d 694, 697, 170 N.Y.S.3d 560 [2d Dept. 2022] ). Here, the Defendant demonstrated, prima facie, that the six-year statute of limitations began to run on or about February 6, 2008, when Wells Fargo commenced the 2008 action and elected to call due the entire amount secured by the mortgage (see MTGLQ Investors, L.P. v. Singh , 216 A.D.3d 1087, 190 N.Y.S.3d 415 ; U.S. Bank N.A. v. Doura , 204 A.D.3d 721, 723, 166 N.Y.S.3d 51 [2d Dept. 2022] ; Wilmington Sav. Fund Socy., FSB v. Iqbal , 195 A.D.3d 772, 773, 145 N.Y.S.3d 372 [2d Dept. 2021] ). The Defendant further demonstrated that the instant action was commenced in 2019, more than six years later (see MTGLQ Investors, L.P. v. Singh , 216 A.D.3d 1087, 190 N.Y.S.3d 415 ; U.S. Bank N.A. v. Doura , 204 A.D.3d at 723, 166 N.Y.S.3d 51 ).
In opposition, the Plaintiff failed to raise a triable issue of fact. Under the recently enacted Foreclosure Abuse Prevention Act (L 2022, ch 821) and specifically the amendment to CPLR § 3217, the voluntary discontinuance of the 2008 action did not serve to reset the statute of limitations (see CPLR 3217[e] ; MTGLQ Investors, L.P. v. Singh , 216 A.D.3d 1087, 190 N.Y.S.3d 415 ).
The Plaintiff's contentions, that FAPA may not be applied "retroactively" to this matter and to do so violates the Plaintiff's Due Process rights, the Takings Clause and the Contracts Clause, are without merit. While the Plaintiff has suggested that the use of the phrase "effective immediately" by the Legislature has historically been interpreted by Courts as evidence that the Legislature did not intend for the legislation to be applied retroactively, the Legislation further directs that the law "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" (FAPA § 10). By the plain language of the legislation, the Legislature clearly intended for, inter alia, the newly amended CPLR § 3217[e] to apply to pending foreclosure actions, like the one here, where a judgment of foreclosure and sale has not yet been enforced. Moreover, as recited in more detail in the Attorney General's brief (NYSCEF Doc 105, p. 19-22; 109-112), review of the Sponsors’ Memoranda and Statements in Floor Debates relative to the question of retroactivity make clear that the Legislature intended to have FAPA apply retroactively, immediately, and to all pending actions. Since all of the factors a Court must consider in determining "whether a statute should be given retroactive effect" ( Matter of Gleason [Michael Vee, Ltd.] , 96 N.Y.2d 117, 122, 726 N.Y.S.2d 45, 749 N.E.2d 724 [2001] ), establish that the amendments constitute "remedial legislation," the Plaintiff's contention that the law cannot be applied retroactively to the matter at bar is without merit.
To the extent the Plaintiff contends that application of FAPA to "shorten[ ] the limitations period retroactively" constitutes a violation of the Plaintiff's substantive due process rights, this Court finds that the Plaintiff's have failed to raise a triable issue of fact as to whether it has been stripped of a vested right by the application of FAPA to this matter. As noted by the Defendant, prior to Engel , the law within the Second Department was that a lender's unilateral discontinuance of a prior foreclosure action was, by itself, insufficient to revoke acceleration and reset the statute of limitations to running with respect to each missed installment payment (see US Bank National Association v. Francis , 189 A.D.3d 1511, 139 N.Y.S.3d 239 [2d Dept. 2020] ; Wells Fargo Bank v. Islam , 188 A.D.3d 1116, 136 N.Y.S.3d 356 [2d Dept. 2020] ; Christiana Trust v. Barua , 184 A.D.3d 140, 146-147, 125 N.Y.S.3d 420 [2d Dept. 2020] ; Bank of NY Mellon v. Yacoob , 182 A.D.3d 566, 123 N.Y.S.3d 145 [2d Dept. 2020] ; HSBC Bank, N.A. v. Vaswani , 174 A.D.3d 514, 515, 101 N.Y.S.3d 852 [2d Dept. 2019] ; Federal Natl. Mtge. Assn. v. Schmitt , 172 A.D.3d 1324, 1326, 99 N.Y.S.3d 717 [2d Dept. 2019] ; Freedom Mtge. Corp. v. Engel , 163 A.D.3d 631, 633, 81 N.Y.S.3d 156 [2d Dept. 2018] ; see also EMC Mortgage Corp. v. Patella , 279 A.D.2d 604, 720 N.Y.S.2d 161 [2d Dept. 2001] ; Federal Nat. Mortg. Ass'n v. Mebane , 208 A.D.2d 892, 618 N.Y.S.2d 88 [2d Dept. 1994] ). Since the amendments here restored, rather than altered, the law as it existed at the time the Plaintiff voluntarily discontinued the 2008 action (in 2012), the Plaintiff cannot claim to have a vested interest in the law as pronounced by the Court of Appeals in Engel , which was handed down over nine years after the Plaintiff had charted its path of voluntarily discontinuing the 2008 foreclosure action. It cannot be reasonably argued that, at that time, the Plaintiff had any reasonable expectation that the statute of limitations was reset by its discontinuance given the legal landscape at that time. Indeed, the Plaintiff moved expeditiously to commence a new foreclosure action before the statute of limitations expired (along with a third foreclosure action which was consolidated with the timely filed second foreclosure action), only to have those consolidated actions proceed to trial and be dismissed when the Plaintiff failed to establish its prima facie case to foreclose at a trial before Justice Grossman (see NYSCEF Doc 81 [Decision, Order and Judgment after Trial dated August 22, 2019]). Having proceeded to trial and sought a determination on the merits of its action, the Plaintiff cannot likewise claim to have a vested right in bringing successive actions upon its failure to prove its case prima facie. Accordingly, the Plaintiff's contentions that the application of FAPA here constituted a due process violation is without merit.
To the extent the Plaintiff contends that the application of FAPA to this matter constitutes an unconstitutional regulatory taking, this Court finds that the Plaintiff has not plausibly alleged a cognizable property interest or vested property right. While the Plaintiff asserts that "it has been the recognized right of mortgagees to unilaterally revoke acceleration of the mortgage debt for over a century" and thus "mortgagees taking a lien holder interest in the debt and real property secured by a mortgage prior to enactment of FAPA had every reasonable expectation to rely on that right" (NYSCEF Doc 98, ¶62), FAPA has not deprived the Plaintiff of the right to unilaterally revoke a prior acceleration. Indeed, Plaintiffs remain free to revoke a prior acceleration. "A lender may revoke its election to accelerate the mortgage, but it must do so by an affirmative act of revocation occurring during the six-year statute of limitations period subsequent to the initiation of the prior foreclosure action" (see NMNT Realty Corp. v. Knoxville 2012 Trust , 151 A.D.3d 1068, 1069-1070, 58 N.Y.S.3d 118 [2d Dept. 2017] ). The amendment of CPLR § 3217 by FAPA merely makes clear that, to the extent Engel held that voluntary discontinuance of an action constitutes an affirmative act of revocation as a matter of law, a voluntary discontinuance of an action does not effect, waive, postpone, cancel, toll, extend, revive or reset the limitations period, effectively disallowing unilateral action to reset the statute of limitations. This Court further rejects the contention that the Plaintiff here has a vested property right to the legal effect of a unilateral revocation by voluntary discontinuance, especially where the alleged "vested property right" (to a reset of the statute of limitations upon voluntary discontinuance under Engel ) only came into existence nine years after the voluntary discontinuance occurred and eighteen months after this foreclosure action was commenced, when the Court of Appeals decision of Engel was handed down. Since, as discussed above, FAPA does not impair a vested property right of the Plaintiff, this contention is without merit.
Finally, to the extent the Plaintiff argues also that FAPA violates the Contract Clause of the United States Constitution which hold that "No State shall ... pass any ... Law impairing the Obligation of Contracts ... (U.S. Const., art 1§ 10), this Court finds that the Plaintiff has failed to establish a substantial impairment of a contractual right. The Plaintiff does not point to any clauses in the mortgage agreement that has been impaired. There exists no contractual right to de-accelerate the loan in either the mortgage or the note. Therefore, this Court finds the Plaintiff's contention that there has been a constitutional violation of contractual rights is without merit (see East Fork Funding LLC v. U.S. Bank, N.A. , 2023 WL 2660645 [E.D.N.Y., Mar. 23, 2023] ; HSBC Bank USA, NA v. IPA Asset Management, LLC , 79 Misc.3d 821, 190 N.Y.S.3d 622 [Sup. Ct., Suffolk Cty, 2023] ).
Accordingly, that branch of the Defendant's motion which was for summary judgment dismissing the complaint insofar as asserted against him and on his counterclaim pursuant to RPAPL § 1501[4] to cancel and discharge of record the mortgage will be granted (see US Bank National Association v. Outlaw , 217 A.D.3d 721, 191 N.Y.S.3d 436 [2d Dept., June 7, 2023] ; MTGLQ Investors, L.P. v. Singh , 216 A.D.3d 1087, 190 N.Y.S.3d 415.
The parties’ remaining contentions either are without merit or need not be reached in light of the Court's determination.
This Court is aware that the Appellate Division, Second Department has before it at least one case where some of the arguments raised by the parties in this matter with respect to the constitutional implications of FAPA are raised and will be considered and decided by the panel of Appellate Division Justices in due course. This Court anticipates that, once the Appellate Division has had an opportunity to issue a determination as to these issues, that determination may be appealed to the Court of Appeals. This Court also anticipates that one or both parties here may seek leave to renew and/or reargue these motions.
Accordingly, it is hereby
ORDERED that the branch of the motion of the Defendant John Williams which was for summary judgment pursuant to CPLR § 3212 dismissing the complaint insofar as asserted against him and on his counterclaim pursuant to RPAPL § 1501(4) to cancel and discharge of record the mortgage is granted; and it is further
ORDERED that the motion of the Plaintiff which was for summary judgment on the complaint and for an order of reference is denied; and it is further
ORDERED that any contentions raised by the parties and not explicitly addressed herein are denied as without merit or need not be reached in light of the Court's determination.
The foregoing constitutes the Decision and Order of the Court.