Opinion
Index No. 509700/2021 Mot. Seq. (s): 1 Calendar (s): 28
06-14-2024
HSBC Bank USA, National Association, as Trustee for SG Mortgage Securities Trust 2006-OPT2, Asset Backed Certificates, Series 2006-OPT2, Plaintiff(s), v. Hajara A. Rahim, Solar Mosaic, Inc., et al., Defendant(s).
Unpublished Opinion
ORDER
HON. CENCERIA P. EDWARDS, C.P.A., JUSTICE.
The following e-filed papers read herein: NYSCEF Doc. Nos.:
Notice of Motion, Affidavits (Affirmations) and Exhibits _______ ___33-46__________
Opposing Affidavits (Affirmations) and Exhibits ______________ ___52-60__________
Reply Affidavits (Affirmations) and Exhibits _________________ ___61-69__________
In this action to foreclose on a mortgage encumbering the real property known as 395 Madison Street, Brooklyn, New York, and owned by defendant-mortgagor Hajara A. Rahim (“Defendant”), it is alleged that in June of 2006, Defendant executed a note in favor of Plaintiff in the amount of $562,637.50 but breached her obligation to make the required monthly installment payments. Defendant now moves, pre-answer, to dismiss the complaint.
Although Defendant proffers multiple grounds for dismissal, her statute of limitations defense is dispositive of this motion. The following principles govern:
“A defendant who seeks dismissal of a complaint pursuant to CPLR 3211 (a) (5) on the ground that it is barred by the statute of limitations bears the initial burden of proving, prima facie, that the time in which to sue has expired. The burden then shifts to the plaintiff to aver evidentiary facts establishing that his or her cause of action falls within an exception to the statute of limitations, or raising a question of fact as to whether such an exception applies, or as to whether the cause of action was interposed within the
applicable statute of limitations" (Listwon v 500 Metro. Owner, LLC, 188 A.D.3d 1028, 1029 [2d Dept 2020] [internal quotation marks, brackets, and citations omitted]).
"As a general matter, an action to foreclose a mortgage may be brought to recover unpaid sums which were due within the six-year period immediately preceding the commencement of the action" (Wells Fargo Bank, N.A. v Burke, 94 A.D.3d 980, 982 [2d Dept 2012], citing CPLR 213 [4]). In addition, "'even 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'" (id, quoting EMC Mtge. Corp, v Patella, 279 A.D.2d 604, 605 [2d Dept [2001]). "An acceleration of a mortgage debt occurs, inter alia, when a creditor commences an action to foreclose upon a note and mortgage and seeks, in the complaint, payment of the full balance due" (Deutsche Bank Natl. Trust Co. v Ebanks, 189 A.D.3d 1535, 1536-1537 [2d Dept 2020]). It may also be communicated "by a letter to the borrower clearly and unambiguously advising that because of a default in payment the full loan balance was being called due" (Christiana Trust v Barua, 184 A.D.3d 140, 150 [2d Dept 2020]). Prior to the December 30, 2022, enactment of the Foreclosure Abuse Prevention Act ("FAPA"), precedent instructed that an acceleration could be revoked by "an affirmative act occurring within six years of the earlier acceleration" (id. at 145).
The parties seem to agree that the subject mortgage debt was accelerated in 2009, albeit at different times. Defendant argues the acceleration took effect on March 2, 2009, pursuant to the terms of a previous default letter, and it was never revoked. Plaintiff rejects this conclusion, stating, "[h]ere, the only 'affirmative action' that occurred was the filing of the 2009 Complaint, which Defendant admits was voluntarily discontinued by stipulation approximately one year after the 2009 action was commenced" (NYSCEF doc. #52, pp. 4-5). Plaintiff argues that any acceleration effectuated by that action's commencement was timely revoked.
Although the 2009 action was discontinued by a purported ''stipulation" filed on or about August 24, 2010 (see NYSCEF doc. #s 37 and 39 [Exhibits "B" and "D" to Defendant's Motion]), this is inaccurate. As the document was executed only by Plaintiffs then-attorney and expressly indicates that no defendants appeared in the action, it may be deemed, at most, to be a unilateral notice of discontinuance (see CPLR 3217 [a]).
In support of her proffered acceleration date, Defendant submits a letter from Plaintiffs prior servicer, advising Defendant that she had failed to make any monthly payments since the payment due November 1, 2008, and if she did not cure the default within 30 days of the January 30, 2009 date of the letter, the servicer "will accelerate the Loan balance and proceed with foreclosure" (see NYSCEF doc. #36 [Exhibit "A" to Defendant's Motion]). Defendant argues that since she never cured her default by the servicer's deadline, i.e., March 1, 2009, acceleration automatically occurred the next day, pursuant to the default letter's purported mandatory terms. However, despite previously conflicting authority on this issue (compare Deutsche Bank Natl. Trust Co. v Royal Blue Realty Holdings, Inc., 148 A.D.3d 529, 530 [1st Dept 2017], Iv denied 30 N.Y.3d 960 [2017]; Milone v USBank NA., 164 A.D.3d 145, 152 [2d Dept 2018]), it is now settled that the type of language used in the default letter describing a potential future event does not constitute a clear and unequivocal act or statement so as to qualify as an effective acceleration (see Freedom Mtge. Corp, v Engel, 37 N.Y.3d 1, 27 [2021], legislatively overruled on other grounds, as stated in Bank cf NY Mellon v Stewart, 216 A.D.3d 720, 723 [2d Dept 2023]). The Court, thus, agrees with Plaintiff that the mortgage debt was not accelerated on March 2, 2009.
The Court also finds that Plaintiff is correct that the mortgage debt was accelerated later in 2009 when the prior foreclosure action was commenced. Defendant's submissions include a copy of the complaint from a prior action to foreclose on the subject mortgage, filed on or about May 29, 2009, wherein Plaintiff elected to call due the entire amount of the loan balance (see NYSCEF doc. #38 [Exhibit "C" to Defendant's Motion]). Plaintiff does not dispute the accuracy or veracity of this evidence. The Court, thus, finds that that the debt was accelerated no later than May 29, 2009, when Plaintiff commenced the prior action (see Ebanks, 189 A.D.3d at 1536-1537). As the instant action was commenced more than six years later, on April 26, 2021, the record establishes, prima facie, that this action is time-barred.
In opposition to this prima facie showing, Plaintiff argues that the statute of limitations "reset" when it voluntarily discontinued the 2009 action in or about August of 2010. Plaintiff relies on Engel, supra, in which the Court of Appeals held that "where acceleration occurred by virtue of the filing of a complaint in a foreclosure action, the noteholder's voluntary discontinuance of that action constitutes an affirmative act of revocation of that acceleration as a matter of law, absent an express, contemporaneous statement to the contrary by the noteholder" (37 N.Y.3d at 32). However, "FAPA had the effect of nullifying this particular holding in Enge!' (Stewart, 216 A.D.3d at 723). As amended by FAPA, CPLR 3217 (e) now provides, inter alia, that in an action to foreclose on a mortgage upon 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 and to interpose a claim, unless expressly prescribed by statute." Similarly, CPLR § 203 (h) now expressly provides that "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."
It is noted that the parties do not discuss FAPA, as their motion papers were drafted before it went into effect. Notwithstanding the legislative reversal of Engel upon which Plaintiffs objection to the statute of limitations defense is based, the Court perceives no need to request additional briefing on FAPA's applicability because Plaintiff discontinued the 2009 foreclosure action in August 2010, whereas Engel was issued in February 2021. As such, Plaintiff could not reasonably contend that its discontinuance of the prior action bore any connection to the bright-line rule enunciated for the first time more than a decade later in Engel. To the contrary, before Engel it was well-established in the Second Department that "a lender's mere act of discontinuing an action, without more, does not constitute, in and of itself, an affirmative act revoking an earlier acceleration of the debt" (see Christiana Trust v Barua, 184 A.D.3d at 146-147 [collecting cases]). As Plaintiff has failed to raise a question of fact as to whether this action was timely commenced, the Court finds that this action is barred by the statute of limitations.
Accordingly, the above-referenced motion by defendant Hajara A. Rahim for an order, inter alia, dismissing the complaint is GRANTED solely to the extent that it is:
ORDERED that the complaint is dismissed in its entirety as against defendant Hajara A. Rahim.
The foregoing constitutes the Decision and Order of this Court.