Opinion
Index No. 653483/2022
04-11-2023
Chicago Title Insurance Company, Plaintiff, v. Charles Valembrun, Defendant.
Fidelity National Law Group, Roseland, N.J. (Adam B. Kaplan of counsel), for plaintiff. No appearance for defendant.
Unpublished Opinion
Fidelity National Law Group, Roseland, N.J. (Adam B. Kaplan of counsel), for plaintiff.
No appearance for defendant.
Gerald Lebovits, J.
This is an action arising from the interplay of a mortgage-foreclosure action and a title-insurance policy. Defendant, Charles Valembrun, is alleged to have twice mortgaged real property that he owns, once in 2004 and once in 2005. (See NYSCEF Nos. 12, 17.) Both mortgages were properly recorded. In December 2016, the first mortgage went into foreclosure; the foreclosure complaint of the first mortgagee (Sabadell) named the mortgagee of the second mortgage (Wells Fargo) as a defendant. (See NYSCEF No. 19.) In March 2018, Valembrun modified the loan secured by the second mortgage, effectively increasing the principal amount of that loan. (See NYSCEF No. 20; NYSCEF No. 10 at ¶ 13.) Plaintiff here, Chicago Title Insurance Company, issued a title-insurance policy to Wells Fargo. (See NYSCEF No. 21; NYSCEF No. 10 at ¶ 15.)
In March 2019, Wells Fargo made a claim under the title-insurance policy. (See NYSCEF No. 22.) Consistent with its policy obligations, Chicago Title assumed Wells Fargo's defense in Sabadell's foreclosure action (NYSCEF No. 23) and obtained a settlement of that action in May 2021. In connection with the settlement, Chicago Title paid Sabadell's counsel $131,500 in exchange for an assignment of the first mortgage and the underlying note. (NYSCEF No. 10 at ¶¶ 20-21.) In December 2021, Chicago Title opted to accelerate Valembrun's obligations under the first note, as permitted under that note and mortgage (see NYSCEF No. 12 at 4 ¶ 9 [mortgage]), for asserted defaults in payment. (See NYSCEF No. 29.)
In September 2022, Chicago Title brought this action against Valembrun. Chicago Title has asserted two causes of action: (i) breach of contract for Valembrun's alleged failure to pay the amount owed under the first note; and (ii) common-law indemnification for the $131,500 that Chicago Title had to pay to resolve the foreclosure action on behalf of its insured, Wells Fargo. Chicago Title now moves without opposition for default judgment. The motion is denied.
DISCUSSION
A plaintiff moving for default judgment must establish proper service, defendant's default, and the facts constituting plaintiff's claim. Chicago Title has proven that it served Valembrun properly under CPLR 308 (2) (see NYSCEF No. 2); and Valembrun has not appeared. But Chicago Title has not provided proof of the facts constituting its claim with respect to either asserted cause of action.
Chicago Title's First Cause of Action under the Note
On the first cause of action, Chicago Title has established for default judgment purposes, through a party affidavit and the documents attached to that affidavit, that it is the proper holder of the first note and mortgage. But it appears on the face of the record that a significant part of the first cause of action might well be untimely; and Chicago Title's motion papers do not demonstrate the timeliness of the claim.
An action on a note secured by a mortgage on real property is subject to a six-year statute of limitations. (CPLR 213 [4].) Where, as here, the mortgage is payable in installments (see NYSCEF No. 12 at 2 ¶ 4), "separate causes of action accrue for each installment that is not paid and the statute of limitations begins to run on the date each installment becomes due." (U.S. Bank N.A. v Joseph, 159 A.D.3d 968, 970 [2d Dept 2018].) Chicago Title brought this action in September 2022, on a mortgage first taken out in June 2004. As a result, it would appear that any claim by Chicago Title for mortgage payments due between June 2004 and September 2016 (along with interest and charges assessed on those payments) is time-barred. Chicago Title's motion papers do not address this issue.
If the mortgage debt is accelerated, for example through a foreclosure action, the six-year statute of limitations begins to run on the entire debt. (Wilmington Savings Fund Socy., FSB v Heampstead Prop. Ventures II, LLC, 205 A.D.3d 843, 844 [2d Dept 2022].) But a voluntary discontinuance of the foreclosure action revokes that acceleration (and thus the running of the limitations period on the entire debt). (See id., citing Freedom Mtge. Corp. v Engel, 37 N.Y.3d 1, 31 [2021].)
Even absent any timeliness issues, Chicago Title has not demonstrated its entitlement to the amount that it claims on this motion under its first cause of action, approximately $157,000. Chicago Title bases that claimed amount on a loan-payoff statement that plaintiff obtained in January 2021, during the foreclosure action, from the agent for the then-mortgagee of the first mortgage. (See NYSCEF No. 10 at ¶¶ 19, 32-36 [affidavit]; NYSCEF No. 24 [payoff statement].) But Chicago Title has not established the accuracy-or, for that matter, the admissibility-of the information in the statement on which it relies. Absent that showing, this court lacks a basis to grant Chicago Title judgment for that amount.
Chicago Title's Second Cause of Action in Common-Law Indemnification
On its second cause of action, Chicago Title seeks to collect from Valembrun the $131,500 it paid to resolve the foreclosure action, in fulfillment of its obligations under the title-insurance policy that it issued to Wells Fargo. This cause of action rests on a common-law-indemnity theory: Valembrun "actively, wrongfully, directly and proximately caused Plaintiff's damages sought herein by borrowing money from the Prior Mortgage and failing to repay it," such that "Plaintiff was obligated to pay money to protect its Insured's interests [and] settle the Foreclosure Action." (NYSCEF No. 1 at ¶¶ 36-37 [verified complaint].) These allegations do not establish that Valembrun has a common-law-indemnity obligation to Chicago Title.
The "key element of a common-law cause of action for indemnification... is a separate duty owed the indemnitee by the indemnitor." (Ponce v Liu, 123 A.D.3d 786, 786-787 [2d Dept 2014].) Chicago Title does not explain why a mortgagor on Senior Mortgage 1 would owe a duty arising from that mortgage to the title insurer of the mortgagee on Junior Mortgage 2, such that the mortgagor's failure to make payments on Senior Mortgage 1 would be a breach of duty requiring the mortgagor to indemnify the title insurer on Junior Mortgage 2.
Additionally, "[c]ommon-law indemnification requires proof not only that the proposed indemnitor's negligence contributed to the causation of the accident, but also that the party seeking indemnity was free from negligence." (Martins v Little 40 Worth Assocs., Inc., 72 A.D.3d 483, 484 [1st Dept 2010].) Chicago Title has alleged that it was required to pay out the $131,500 under a title-insurance policy that it issued on a junior mortgage more than a year after the senior mortgagee brought a foreclosure action that named the junior mortgagee/insured as a defendant. (See NYSCEF No. 1 at ¶¶ 11-15; NYSCEF No. 10 at ¶¶ 11-15.) Chicago Title has not shown-indeed, does not attempt to shown-that in these circumstances its actions were free from negligence, as required to recover in common-law indemnity.
Accordingly, it is
ORDERED that Chicago Title's motion for default judgment is denied; and it is further
ORDERED that if Chicago Title does not bring a renewed default-judgment motion within 30 days of entry of this order the action will be dismissed; and it is further
ORDERED that Chicago Title serve a copy of this order with notice of its entry on Valembrun by certified mail, return receipt requested, directed to Valembrun's last-known address.