Opinion
Index No. 653483/2022
01-03-2024
CHICAGO TITLE INSURANCE COMPANY, Plaintiff, v. Charles VALEMBRUN, Defendant.
This action arises from a mortgage foreclosure and a title-insurance policy. Defendant, Charles Valembrun, mortgaged his real property in 2004 and again in 2005. (NYSCEF No. 50, 55.) The first mortgage on the property went into foreclosure in 2016. As part of the foreclosure action, the first mortgagee, Sabadell United Bank, named the second mortgagee, Wells Fargo & Company, as a defendant. (NYSCEF No. 57.)
In 2018, plaintiff, Chicago Title Insurance Company, issued a title-insurance policy to Wells Fargo. (NYSCEF No. 59.) Plaintiff proceeded to defend Wells Fargo in the foreclosure action as part of its obligations under the policy. Plaintiff obtained a settlement on Wells Fargo's behalf in May 2021 under which plaintiff paid Sabadell's counsel $131,500 in exchange for an assignment of the first mortgage and note. (NYSCEF Nos. 64, 68.) In December 2021, plaintiff accelerated defendant's obligations under the first note for defaulting on required payments. (NYSCEF No. 69.)
Plaintiff brought this action against defendant in September 2022. Plaintiff asserts causes of action for (i) breach of contract, based on defendant's failure to make payments on the first note; and (ii) common-law indemnification to recover the $131,500 plaintiff paid to settle the foreclosure action.
In motion sequence 001, plaintiff moved for default judgment on both causes of action. In April 2023, this court denied the motion on the ground that plaintiff had failed to prove the facts constituting its claim. ( Chicago Title Ins. Co. v Valembrun , 2023 NY Slip Op 50326 [U], *1 [Sup Ct, NY County 2023].) Plaintiff now moves without opposition to renew its request for default judgment. The motion is granted in part and denied in part.
DISCUSSION
Under CPLR 3215 (f), a plaintiff moving for default judgment must provide proof of proper service, defendant's default, and the facts constituting the claim. Plaintiff properly served defendant. Defendant has not appeared. The question is whether plaintiff has provided proof of the facts constituting its claim on each cause of action.
I. Plaintiff's Breach-of-Contract Claim
This court denied plaintiff's initial request for default judgment on its contract claim in part because plaintiff did not address the timeliness of its claim. ( Chicago Title Ins. , 2023 NY Slip Op 50326 [U], at *1.) Plaintiff now explains how its claim is timely.
The court also acknowledges that it is not plaintiff's burden to demonstrate its claim is timely: A "statute of limitations must be pleaded as an affirmative defense and cannot be asserted sua sponte by the court as a basis for denying an unopposed motion for a default judgment." (D'Arata v NY Post , 214 AD3d 449, 450 [1st Dept 2023] [internal quotation marks omitted].)
Plaintiff explains that it reaccelerated defendant's mortgage and, thus, jumpstarted a new limitations period. (NYSCEF No. 38 at 7; Freedom Mtge. Corp. v Engel , 37 NY3d 1, 21 [2021] ["[A] cause of action to recover the entire balance of the debt accrues at the time the loan is accelerated, triggering the six-year statute of limitations to commence a foreclosure action."].)
The court agrees. Plaintiff establishes that the mortgage was accelerated by the prior assignor of the mortgage and then deaccelerated and converted back into an installment loan by stipulation. (NYSCEF No. 68.) Plaintiff then took assignment of the mortgage in 2021. (NYSCEF No. 47 at 5; NYSCEF No. 65.) It re-accelerated the loan by letter to defendant demanding payment of the entire sum in December 2021. (NYSCEF No. 69.) Upon the reacceleration of the loan, a new six-year statute-of-limitations period began. (See U.S. Bank Trust, N.A. v Boktor , 193 AD3d 474, 475 [1st Dept 2021] [holding that the acceleration of a loan by foreclosure action triggers a new limitations period notwithstanding previous accelerations and discontinuances].) Plaintiff's claim, filed in September 2022, is timely.
The court also held in motion sequence 001 that plaintiff did not establish the accuracy or admissibility of the evidence upon which it relied. ( Chicago Title Ins. , 2023 NY Slip Op 50326 [U], at *1.) Plaintiff now rectifies this shortcoming.
Plaintiff submits a loan file and payoff statement. (NYSCEF Nos. 62, 63.) Plaintiff contends that the documents are accurate reproductions of the originals. (See CPLR 4539 [allowing for reproduction of original documents].) And plaintiff, through the affidavit of its vice president, Matthew Nygaard, demonstrates that the documents are admissible as business records. Nygaard represents that it is in plaintiff's regular course of business to obtain loan files and payoff statements from lenders, incorporate them into plaintiff's own records, and rely upon those records in the regular course of its business. (See NYSCEF No. 47 at 6-7; State of New York v 158th St. & Riverside Dr. Hous. Co., Inc. , 100 AD3d 1293, 1296 [3d Dept 2012] ["[Although] the mere filing of papers received from other entities is insufficient to qualify the documents as business records, such records may be admitted into evidence if the recipient can establish personal knowledge of the maker's business practices and procedures, or that the records provided by the maker were incorporated into the recipient's own records or routinely relied upon by the recipient in its business."].)
The loan file and payoff statement establish, in turn, that defendant's unpaid principal balance was $49,142.26. (See NYSCEF No. 62, 63.) And the payoff statement tallies additional sums owed by defendant: previously-accrued interest, escrow/impound overdraft, recoverable balance, recording fees, and default fees. (NYSCEF No. 63 at 4.)
Plaintiff's motion for default judgment on its first cause of action for breach of contract is granted.
II. Plaintiff's Common-Law Indemnification Claim
Plaintiff also seeks default-judgment on its common-law indemnification. On motion sequence 001, this court held that plaintiff did not explain why defendant would owe a duty under the senior mortgage to the title insurer of the junior mortgage, such that defendant's failure to make payment on the senior mortgage would require defendant to indemnify plaintiff. ( Chicago Title Ins. , 2023 NY Slip Op 50326 [U], at *2.) Plaintiff now contends that the common-law indemnification claim does not require that defendant owe a duty to plaintiff. Instead, according to plaintiff, it is sufficient that defendant owe a duty to the senior mortgagee and that defendant's failure to fulfill that duty caused plaintiff injury. (NYSCEF No. 38 at 11.) The court disagrees.
To make out a claim for indemnification, an indemnitee must establish that it paid damages to an injured party for wrongs committed by the indemnitor against the injured party. ( Arrendal v. Trizechahn Corp. , 98 AD3d 699, 700 [2d Dept 2012].) The indemnitor thereby incurs a duty to reimburse the indemnitee. (See Raquet v Braun , 90 NY2d 177, 183 [1997] ["The duty that forms the basis for the liability arises from the principle that every one is responsible for the consequences of his own negligence, and if another person has been compelled ... to pay the damages which ought to have been paid by the wrongdoer, they may be recovered from him."] [internal quotation marks omitted]; Ponce v Miao Ling Liu , 123 AD3d 786, 786—787 [2d Dept 2014] ["[T]he key element of a common-law cause of action for indemnification is not a duty running from the indemnitor to the injured party, but rather is a separate duty owed the indemnitee by the indemnitor."] [internal quotation marks omitted].) A claim for common-law indemnification is "actionable only where a party has been found to be vicariously liable, without proof of any negligence on its own part." ( Shivers v City Smiles Dental , 215 AD3d 410, 411 [1st Dept 2023].) It "permits the shifting of a loss because failure to do so would result in the unjust enrichment of one party at the expense of another." (Matter of Part 60 RMBS Put-Back Litig. , 195 AD3d 40, 54 [1st Dept 2021].)
Here, plaintiff asserts it is the injured party, rather than a party that paid damages to an injured party. (See NYSCEF No. 38 at 11.) It tries to hinge its entitlement to indemnification on the duty that defendant owed to the senior mortgagor to make the mortgage payments. (See id. ) But this argument emphasizes the duty owed by defendant, the proposed indemnitor to the senior mortgagee, not to plaintiff, the proposed indemnitee.
Moreover, plaintiff does not explain how fulfilling its contractual obligations to Wells Fargo constitutes an injury or how paying for the assignment of the prior mortgage to settle the foreclosure action and protect Wells Fargo's interest constitutes a payment of damages to an injured party.
Plaintiff also does not explain how plaintiff's fulfillment of its policy obligations to Wells Fargo led to defendant's unjust enrichment. Plaintiff contends that by taking on the assignment, it discharged defendant's duty to pay off his mortgage, thus enriching defendant. (Id. at 12-13.) But when plaintiff paid for the assignment of the senior mortgage, defendant remained responsible for that mortgage, as plaintiff contends in its breach-of-contract claim. And again, this argument emphasizes the wrong duty. The question is whether defendant owed a duty to plaintiff for wrongdoings committed by defendant, not whether defendant owed a duty to the senior mortgagee to make mortgage payments.
Plaintiff has also failed to show that it was "was free from negligence" in issuing the loan policy after the foreclosure action was commenced. ( Martins v Little 40 Worth Assocs., Inc. , 72 AD3d 483, 484 [1st Dept 2010].) Plaintiff argues that it was not negligent because it was solely an underwriter of the policy and relied on Service Link, LLC, the purported issuer, to perform title searches and examinations. (NYSCEF No. 38 at 13.) Yet, although Nygaard refers to plaintiff as an underwriter, the title-insurance policy itself contains statements indicating that plaintiff is the issuer. (See NYSCEF No. 59 at 10 ["Loan Policy of Title Insurance Issued By Chicago Title Insurance Company" and "Chicago Insurance Company ... insures ... against loss or damage...."].) Plaintiff has not conclusively established that it was the underwriter as opposed to the issuer.
Further, even assuming that plaintiff were solely the underwriter, plaintiff does not otherwise explain how it incurred the obligation to defend Wells Fargo in the foreclosure action. And plaintiff does not provide support for its contention that, as an underwriter, it would have had no knowledge of the foreclosure action, even if the title searches and examinations were performed by Service Link. (See NYSCEF No. 38 at 13.)
Plaintiff's motion for default judgment on its second cause of action for common-law indemnification is denied.
Accordingly, it is
ORDERED that plaintiff's default-judgment motion is granted with respect to plaintiff's first cause of action and denied with respect to plaintiff's second cause of action, and plaintiff is awarded a judgment against defendant for $49,142.26, with interest running at 3.2% from January 16, 2021; previously-accrued interest of $18,824.50; escrow/impound overdraft of $60,842.48; a recoverable balance of $14,670.76; a recording fee of $42.00; default fees of $10,900.06; attorney fees upon the submission of appropriate attorney-fee invoices; plus costs and disbursements as taxed by the Clerk upon the submission of an appropriate bill of costs; and it is further
ORDERED that plaintiff shall serve a copy of this order with notice of its entry on defendant by certified mail, return receipt requested, directed to defendant's last-known address; and on the office of the County Clerk (by the means set forth in the court's e-filing protocol, available on the e-filing page of the court's website, https://ww2.nycourts.gov/courts/1jd/supctmanh/E-Filing.shtml), which shall enter judgment accordingly.