Opinion
31424/2018
01-02-2019
U.S. BANK NATIONAL ASSOCIATION, as Trustee on Behalf of the Holders of the Asset Backed Securities Corporation Home Equity Loan Trust, Series MO 2006-HE6 Asset Backed Pass-Through Certificates, Series MO 2006-HE6, Plaintiff, v. Helen PAPANIKOLAW A/K/A Helen G. Papanikolaw, James G. Papanikolaw A/K/A James Papanikolaw, Midland Funding, LLC, Equable Ascent Financial LLC, Winthrop Capital LLC, Portfolio Recovery Associates LLC, Rockland Woods Inc., Midland Funding LLC A/S/I/I to Chase Account and "John Doe No.1" Through "John Doe #12," the Last Twelve Names Being Fictitious and Unknown to Plaintiff, The Person or Parties Intended Being the Tenants, Occupants, Persons or Corporations, if Any, Having or Claiming an Interest in or Lien Upon the Premises Being Foreclosed Herein, Defendants.
The following papers were read on: (1) this Notice of Motion by defendants Helen Papanikolaw and James Papanikolaw ("the Papanikolaw defendants") for an Order pursuant to CPLR § 3212 granting summary judgment and dismissing plaintiff's complaint, and for an Order pursuant to CPLR § 3211 and RPAPL § 1501(4) granting summary judgment on their counterclaim and discharging the mortgage on the subject property (Motion Sequence # 1); and (2) this Notice of Cross Motion by plaintiff U.S. Bank for an Order pursuant to CPLR § 3212 granting plaintiff summary judgment on the complaint and for an Order pursuant to RPAPL § 1321 appointing a referee to compute (Motion Sequence # 2):
Motion Sequence # 1 :
Notice of Motion, Affirmation of Regularity
Affidavit in Support, Exhs. A-M
Memorandum of Law in Support
Memorandum of Law in Opposition
Memorandum of Law in Reply
Affidavits of Service
Motion Sequence # 2 :
Notice of Cross Motion
Affirmation in Support, Exhs. 1-23
Memorandum of Law in Support
Memorandum of Law in Opposition
Affidavits of Service
Upon the foregoing papers, the motions are consolidated for purposes of decision and are determined as follows:
Background
This residential foreclosure action is the third consecutive action that plaintiff commenced against defendants concerning the real property located at 4 Crescent Court, New City, New York, where defendant Helen Papanikolaw has resided since she purchased the property on January 17, 1972.
Plaintiff U.S. Bank commenced this action by filing a summons and complaint dated March 10, 2018, which were served personally on the Papanikolaw defendants on March 20, 2018 (NYSCEF Docs. 11-12 [affidavits of service] ). Plaintiff alleges that on September 1, 2006, these defendants received from nonparty Argent Mortgage Company LLC (hereinafter "Argent") a loan in the principal amount of $434,000 secured by the real property, and that the Papanikolaw defendants delivered to Argent a note that plaintiff attaches to its complaint (see NYSCEF Doc. 1). The note contains the signatures of both Papanikolaw defendants. Also attached to the summons and complaint is the original mortgage and Argent's recording instrument for the mortgage in the Office of the Rockland County Clerk, effective September 11, 2006 (see id. ).
On or about July 27, 2011, U.S. Bank, alleging that it was then holder in due course of the Argent note and mortgage pursuant to a valid assignment, commenced a foreclosure action against defendants under the caption U.S. Bank v. Papanikolaw (Index No. 31323/2011 [Sup Ct Rockland Co] ) (NYSCEF Doc. 39 [Defs' Exh. A] ) (hereinafter "First Action"). Plaintiff alleged in the First Action that the Argent note and mortgage were assigned to plaintiff on September 8, 2006; that such assignment was recorded in the Office of the Rockland County Clerk on November 24, 2009; and that defendants defaulted on the note and mortgage as of the mortgage payment due March 1, 2011. After the First Action was released from the Foreclosure Settlement Conference Part (hereinafter "FSCP"), the action lay dormant for over three years.
On or about October 7, 2015, U.S. Bank commenced a second foreclosure action against defendants under the caption U.S. Bank v. Papanikolaw (Index No. 34456/2015 [Sup Ct Rockland Co] ) (hereinafter "Second Action"). Plaintiff's complaint in the Second Action sought a declaration as to the validity of the mortgage and to compel defendants to execute a replacement bargain and sale deed ostensibly to clear the title in view of certain alleged pre-2005 mortgages and other transactions relating to the subject property. After serving its complaint in the Second Action, U.S. Bank moved to stay the First Action pursuant to CPLR § 2201, on or about November 4, 2015, seeking to delay proceedings in the First Action until final adjudication of the Second Action. By Decision and Order dated November 23, 2015, this Court (Berliner, J.) denied plaintiff's motion on ground that, by then, plaintiff's foreclosure proceeding against defendants (i.e. the First Action) had languished for almost five years (see NYSCEF Doc. 41). By further Decision and Order dated October 20, 2016, this Court (Christopher, J.) denied plaintiff's motion for partial summary judgment in the Second Action except to the extent of confirming the identity of defendant Helen Papanikolaw. Since then, the record does not indicate that plaintiff took any further steps to prosecute or discontinue the Second Action, which now also has languished for several years.
Meanwhile, in the First Action, defendants moved on April 25, 2016, to dismiss plaintiff's complaint for failure to prosecute, and plaintiff cross moved on June 1, 2006, for summary judgment and appointment of a referee to compute. By Decision and Order dated November 17, 2016, this Court (Alfieri, J.) denied plaintiff's cross motion and granted defendants' dismissal motion (see NYSCEF Doc. 45). The Decision and Order narrated that plaintiff had let the First Action lay "virtually dormant for nearly three years" after release from the FSCP; that plaintiff did not proceed even after defendants properly served a 90-day demand to resume prosecution pursuant to CPLR § 3216 ; and that plaintiff interposed no cognizable excuse for failing to proceed (see id. ). By then, plaintiff's First Action had been pending for nearly five and one half years.
Plaintiff immediately served a Notice of Appeal in the First Action and filed it on December 29, 2016, only to later move to withdraw the appeal. On June 7, 2017, the Appellate Division granted plaintiff's motion to withdraw its appeal. (see U.S. Bank v. Papanikolaw , ––– AD3d ––––, Mot. M-232409 [2nd Dept 2017] ) (NYSCEF Doc. 46). Rather than prosecute its appeal in the First Action or proceed in the Second Action, on or about March 14, 2018, plaintiff commenced the instant (i.e. third) action. By then, the Papanikolaw defendants' alleged default on the underlying mortgage was over seven years old.
The Papanikolaw defendants answered plaintiff's complaint in this action on March 23, 2018, interposing affirmative defenses and counterclaiming to discharge the mortgage. The Papanikolaw defendants' pleadings alleged that plaintiff's current action is untimely under the applicable limitations period because plaintiff failed to bring this action within six years of the alleged default. Plaintiff replied to the counterclaim on April 11, 2018. The Papanikolaw defendants then brought the instant motion for summary judgment on its counterclaim and to dismiss plaintiff's complaint on April 30, 2018, and plaintiff cross moved for summary judgment on the complaint and to appoint a referee to compute - substantially the same relief that plaintiff had sought in the First Action.
Party Contentions
In support of their motion to dismiss plaintiff's complaint and for summary judgment on their own counterclaim to discharge the mortgage, defendants plead and prove the foregoing procedural recitation. The gravamen of their argument is that plaintiff's July 2011 commencement of the First Action accelerated the mortgage and total amount due, and that plaintiff has not rescinded this acceleration. Accordingly, under the six-year limitation period applicable under CPLR § 213(4), plaintiff's current action is time barred (see Wells Fargo Bank, N.A. v. Burke , 94 AD3d 980, 982 [2nd Dept 2012] ["With respect to a mortgage payable in installments, separate causes of action accrued for each installment that is not paid, and the statute of limitations begins to run, on the date each installment becomes due.... However, 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"] ).
In further support of the foregoing, defendants adduce the complaint in the First Action, in which plaintiff alleged that defendants had paid no amount of the then-principal balance of $476,906.01 with interest from February 1, 2011, at a then-variable interest rate of three percent. By serving the complaint in the First Action, the Papanikolaw defendants aver, plaintiff thereby accelerated the full mortgage debt (see EMC Mortgage Corp. v. Patella , 279 AD2d 604, 605-606 [2nd Dept 2001] ). As the full amount became due and payable as of day on which plaintiff commenced the First Action (i.e. July 27, 2011), the Papanikolaw defendants reiterate that plaintiff's current action seeking to foreclose for failure to make their payments or to fully pay the mortgage as accelerated is untimely. The Papanikolaw defendants also aver that plaintiff never revoked the acceleration, that the limitations period was not tolled by any means, and that defendants did not waive the limitations period by acknowledging the debt and promising to repay it. Accordingly, the Papanikolaw defendants assert that they met their prima facie burden to show entitlement to summary judgment and discharge of the mortgage pursuant to RPAPL § 1501(4).
In opposition to the Papanikolaw defendants' motion and in support of its own cross motion for summary judgment, plaintiff argues that the First Action did not accelerate the mortgage; that in any event plaintiff revoked any election to accelerate prior to the expiration of the limitations period, which plaintiff concedes lapsed on July 27, 2017 (i.e. six years after plaintiff commenced the First Action); and that regardless the mortgage still secures sums owed by defendants and thus may be foreclosed (Pl's Aff, at 5, ¶ 28). Plaintiff asserts that, based on the plain language of the mortgage instrument and defendants' contractual right to reinstate, only a judgment adverse to defendants would have the effect of accelerating this mortgage (see Pls' Mem of Law [NYSCEF Doc. 84], at 9-10).
Plaintiff's papers also request that Brookside Homeowners Association, Inc. (hereinafter "Brookside") be substituted for John Doe # 1, and that the other "John Doe" defendants be dropped from the caption of this action (Pl's Aff, at 4 ¶¶ 24-25). In support thereof, plaintiff avers and shows that Brookside was served with copies of the summons and complaint in this action.
Plaintiff further argues that even if commencement of the First Action accelerated the mortgage, plaintiff sent the Papanikolaw defendants a de-acceleration letter [NYSCEF Doc. 70] dated April 10, 2017 (see id. , at 6, ¶ 30; Syphus Aff. at ¶ 32). This de-acceleration letter, plaintiff asserts, creates a triable issue of material fact as to whether plaintiff revoked its election to accelerate such that the limitation period did not run. Accordingly, plaintiff concludes, the de-acceleration letter necessarily defeats the Papanikolaw defendants' motion for summary judgment and to discharge the mortgage (see Pl's Mem of Law, at 10; NMNT Realty Corp. v. Knoxville , 151 AD3d 1069 [2nd Dept 2017] [revocation of mortgage acceleration] ).
Plaintiff further argues that even if plaintiff did not timely revoke its election to accelerate the mortgage prior to the six-year deadline of July 27, 2017, additional sums became due and owing including interest on the principal debt, tax payments that plaintiff allegedly made to the Town of Clarkstown on the property, and property insurance premiums that plaintiff allegedly paid to insure the property. Plaintiff concludes that on the basis primarily of decisional authority arising from Depression-era contexts (see e.g. Ernst v. Schaack , 271 App Div 1012 [2nd Dept 1947], affd 297 NY 566 [1947] ; Jackson Heights Apartment Corp. v. Staats , 272 App Div 780 [2nd Dept 1947], these sums remaining due and payable by defendants, that plaintiff therefore properly can foreclose on the property, and therefore defendants' dismissal motion should be denied (see Pl's Mem of Law, at 12-13).
In further support of its own cross motion, plaintiff avers that defendants' only affirmative defense relates to the limitations period, and that defendants did not dispute owing the debt secured by the note and mortgage. As noted above, plaintiff attached to its complaint the note and mortgage, and also submits copies of its 90-day notices under RPAPL § 1304 and their registration with the New York State Department of Financial Services pursuant to RPAPL § 1306. Plaintiff also adduces an affidavit from Mark Syphus, who attests that he reviewed plaintiff's records of the subject mortgage and loan kept in the regular course of plaintiff's business; that the subject note and mortgage was transmitted to plaintiff prior to its commencement of this action; and that defendants have defaulted by "failing to pay the installment of principal and interest due on September 1, 2012, and each and every installment of principal and interest thereafter" (Syphus Aff., at ¶ 28). He also attests that SPS, as plaintiff's servicer and agent, sent defendants the de-acceleration notice by first-class mail to the address of the mortgaged property on April 10, 2017 (see id. at 11, ¶ 32), and that he personally reviewed the SPS business records and office mailing procedures to confirm that the de-acceleration letter was sent in that manner (see id. at 11, ¶ 36). He also attests that each file note for the loan has a unique alphanumeric identifier, and that he reviewed the note in SPS's "contact history report" confirming that the de-acceleration letter was sent. Plaintiff attaches a copy of that report (see Pl's Exh 13).
The Court notes that the purported de-acceleration letter was addressed to the Papanikolaw defendants at "4 Cres Ct", not "4 Crescent Court", the address of the mortgaged property. Paragraph 15 of the mortgage requires all notices to be sent to the mortgaged property address, not some abbreviation of it.
The Papanikolaw defendants, in opposition to plaintiff's cross motion for summary judgment and to appoint a referee to compute, and in further support of their own motion for summary judgment to dismiss and discharge the mortgage, assert that the notice of de-acceleration is facially invalid for instant purposes because plaintiff failed to establish in the letter any proof of authority, that it was not served on defendants' attorneys of record, and because plaintiff failed to demonstrate service of such letter. Moreover, defendants aver that plaintiff allegedly sent the de-acceleration letter on April 10, 2017, while prosecuting the appeal of this Court's dismissal of the First Action. Defendants argue that this "duplicity and inconsistency cannot be tolerated in an equitable action" to foreclose on a mortgage (Defs' Reply Mem [NYSCEF Doc 867], at 4, citing Norstar Bank v. Morabito , 201 AD2d 545, 546 [2nd Dept 1994] ). Defendants argue that this alleged "duplicity" — prosecuting the appeal to obtain a foreclosure on the full amount due, on the one hand, while purportedly revoking the acceleration that would undergird plaintiff's entitlement to that result, on the other — constitutes unclean hands by plaintiff that equitably precludes plaintiff from prevailing on this action (see id. , citing National Distillers & Chemical Corp. v. Seyopp Corp. , 17 NY2d 12, 15-16 [1966] ).
As to plaintiff's argument that lapse of the limitation period would not preclude foreclosure based on after-accrued tax and insurance payments, defendants retort that plaintiff's Depression-era authorities are limited to the circumstances of that era's state mortgage moratorium and are no longer are binding (see Defs' Reply Mem of Law, at 7). Defendants also reject plaintiff's argument that this Court should distinguish between an election to accelerate and an actual acceleration, asserting that the Second Department plainly and repeatedly held that acceleration — not mere election to accelerate — is achieved upon commencement of a prior foreclosure action (see NMNT Realty Corp. , 151 AD3d at 1068 ; EMC Mortgage Corp., 27 AD2d at 605-606; see also Lavin v. Elmakiss , 302 AD2d 638, 639 [3d Dept 2003] ["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"] ).
Analysis
A plaintiff in a mortgage foreclosure proceeding may establish its prima facie entitlement to judgment as a matter of law by presenting the mortgage, the unpaid note and evidence of the defendant's default (see Washington Mut. Bank, F.A. v. O'Connor , 63 AD3d 832, 833 [2nd Dept 2009] ). Unlike many foreclosure actions in which a borrower challenges a plaintiff's standing (cf. e.g. Nationstar Mortgage, LLC v. Catizone , 127 AD3d 1151, 1152 [2nd Dept 2015] ; Homecomings Fin., LLC v. Guldi , 108 AD3d 506, 507 [2nd Dept 2013] ) — and, for a non-original loan, also the validity of an assignment of mortgage (see e.g. Wells Fargo Bank, N.A. v. Ali , 122 AD3d 726, 726 [2nd Dept 2014] ; Deutsche Bank Natl. Trust Co. v. Whalen , 107 AD3d 931, 932 [2nd Dept 2013] ) — here defendants do not dispute the validity of the loan, their default, or plaintiff's standing as a holder in due course under a valid assignment. Indeed, defendants concede the same.
Especially given the foregoing predicates, this Court cannot help but echo the observations from 2015 (Berliner, J.) and 2016 (Alfieri, J.) that the underlying default — which defendants do not dispute — has now extended fully seven and a half years beyond plaintiff's commencement of the First Action in July 2011. Plaintiff does not offer even a scintilla of explanation, much less availing justification, for why this foreclosure dispute has persisted for so long, or why plaintiff abandoned the First Action and failed to further prosecute the Second Action. Plaintiff's silence is notable, as is the corresponding expenditure of judicial resources, and party resources, on this protracted dispute.
Also notable is the protracted uncertainty that plaintiff's serial proceedings have entailed for defendants. As defendants correctly observe, the Court of Appeals long ago couched the limitations periods of CPLR article 2 as "embody[ing] an important policy of giving repose to human affairs. The primary consideration underlying such legislation is undoubtedly one of fairness to the defendant. There comes a time when [a defendant] ought to be secure in his [or her] reasonable expectation that the slate has been wiped clean of ancient obligations" ( Flanagan v. Mt. Egan Gen. Hosp. , 24 NY2d 427, 429 [1969] ). As narrated below, and especially given the equitable context of foreclosure proceedings, this "fairness" consideration to defendants weighs on this Court's determination of the instant motions, albeit not determinatively.
The Papanikolaw defendants, as initial movants, bear the burden of proof to establish their entitlement to dismissal of plaintiff's complaint and discharge of the mortgage (see U.S. Bank Trust, N.A. v. Carter , 164 AD3d 539 [2nd Dept 2018] ; HSBC Mortgage Corp. v. MacPherson , 89 AD3d 1061, 1062 [2nd Dept 2011] ). Only if defendants' motion to dismiss and discharge fails does plaintiff's cross motion for summary judgment and to appoint a referee to compute present a live controversy.
Against that backdrop, defendants demonstrated their prima facie entitlement to summary judgment and discharge of the mortgage pursuant to RPAPL § 1501(4). As recently as December 2018, multiple Second Department panels separately reaffirmed the gravamen of defendants' argument that the six-year limitation period of CPLR § 213(4) for an action to foreclose on a mortgage debt begins to run on the entire mortgage upon commencement of a foreclosure action (see e.g. 21st Mortgage Corp. v. Osorio , ––– AD3d ––––, 2018 NY Slip Op 8618 [2nd Dept 2018] ; U.S. Bank Trust, N.A. v. Aorta , ––– AD3d ––––, 2018 NY Slip Op 8528 [2nd Dept 2018] ). Indeed, Aorta is particularly relevant to the instant proceeding: Aorta concerned a foreclosure plaintiff's predecessor in interest, which commenced a prior foreclosure action more than six years before commencing a new foreclosure action, and which prior action was dismissed. The Aorta Court calculated the limitation period for the entire mortgage debt from the day that the first foreclosure action was commenced to collect on any part of such debt.
In this case, it is not plaintiff's predecessor in interest but rather plaintiff itself which commenced the First Action in 2011, then the Second Action, and then the instant action. Thus, a fortiori , Aorta governs the instant action for the purpose of calculating the limitation period for foreclosing on defendants' mortgage debt. On this basis, defendants are correct that the limitations period presumptively expired six years after plaintiff commenced the First Action in July 2011. By that measure, this action, commenced in March 2018, is presumptively time-barred pursuant to CPLR § 213(4). Defendants therefore met their prima facie burden to demonstrate entitlement to summary judgment and discharge of the mortgage, and the burden shifts to plaintiff to demonstrate otherwise (see Aorta , ––– AD3d ––––, 2018 Slip Op 08528 at *2; Freedom Mortgage Corp. v. Engel , 163 AD3d 631, 633 [2nd Dept 2018] ; NMNT Realty Corp. , 151 AD3d at 1070 ; Kashipour v. Wilmington Sav. Fund Socy., 144 AD3d 985, 987 [2nd Dept 2016], lv denied 29 NY3d 919 [2017] ; see also Burke , 94 AD3d at 982-983 ).
To be sure, plaintiff is correct that the foregoing time calculations are presumptive and subject to rebuttal. Just as the Court in Aorta, supra, reaffirmed that commencement of a foreclosure action accelerates the entirety of the mortgage debt for purposes of calculating the limitation period, these same authorities also restated the well-settled principle that once a foreclosure plaintiff accelerates the mortgage debt (whether by commencing a foreclosure action or otherwise), the plaintiff may revoke such acceleration — albeit only "by an affirmative act of revocation occurring during the six-year statute of limitations period subsequent to the initiation of the prior foreclosure action" (Osorio , ––– AD3d ––––, 2018 Slip Op 08618, at *1, quoting NMNT Realty Corp. , 151 AD3d at 1069-1070 ; Aorta , ––– AD3d ––––, 2018 Slip Op 08528 at *1 [same] ). Once a foreclosure defendant has pleaded and proved a CPLR § 213(4) defense, the plaintiff can avoid dismissal and cancellation pursuant to RPAPL § 1501(4) only by pleading and proving affirmative and timely revocation of the prior acceleration (see id. ).
Unlike the foregoing cases in which the lender failed to offer proof of some affirmative act of revocation, plaintiff submits its purported de-acceleration letter of April 10, 2017, and its servicer's affidavit of regularity concerning this de-acceleration letter. This de-acceleration letter is dated within six years of plaintiff's July 2011 commencement of the First Action, and therefore would appear to constitute a timely "affirmative act" of revocation within the meaning of Osorio , Aorta and the cases on which they rely. Thus, at minimum — and much unlike Kashipour — the instant action does not suggest that the "record is barren of any affirmative act of any revocation" ( Kashipour , 144 AD3d at 987, lv denied 29 NY3d at 919 ). Rather, plaintiff's submission of its de-acceleration letter would appear minimally sufficient to rebut defendants' prima facie showing, so long as the de-acceleration or plaintiff's record of it is not facially invalid.
Such, however, is what defendants argue and, to the extent explained below, this Court agrees.
To be sure, certain of defendants' arguments do not bear scrutiny. Defendants argue that plaintiff's de-acceleration is void ab initio because the letter ostensibly failed to recite and prove its authority to de-accelerate. Defendants offer no binding authority for the proposition that the validity of a de-acceleration letter turns on the same "authority" requirement as a landlord's notice of termination or a lender's notice of default (cf. e.g. Siegel v. Kentucky Fried Chicken of Long Island, Inc. , 108 AD2d 218, 220 [2nd Dept 1985] [landlord notice of termination], affd 67 NY2d 792 [1986] ; Mfrs. & Traders Trust Co. v. Korngold , 162 Misc 2d 669 [Sup Ct Rockland Co 1994] [lender notice of default] ). These contexts also are legally distinguishable in that a notice of termination and notice of default each triggers imminent legal jeopardy and a time-bound duty to act, for which the law accords the tenant or borrower the protection of some notice that the sender of such legal instrument has legal authority to do so. By contrast, de-acceleration does not trigger imminent legal jeopardy or a time-bound duty to act, and thus this Court finds no basis to conclude that the underlying objective of the "authority" requirement should apply.
While this Court recognizes that at least one trial court recently held to the contrary and required that a de-acceleration letter bear some reasonable indicia of the sender's authority (see Deutsche Bank Natl. Trust Co. Americas v. Bernal , 56 Misc 3d 915 [Sup Ct Westchester Co 2017] [Scheinkman, J.] ), the instant circumstances are distinguishable. In Bernal , the plaintiff failed to demonstrate standing to accelerate, the Court explicitly relied on plaintiff's failure to prove such standing (see Bernal , 56 Misc 3d at 920 ), and such appellate traction as Bernal has received to date applied Bernal only for the proposition that a valid de-acceleration requires standing at the time of the de-acceleration (see Milone v. U.S. Bank Natl Assn. , 164 AD3d 145, 153 [2nd Dept 2018] ). Here, by contrast, defendants do not dispute that plaintiff had standing to de-accelerate in April 2017 much less commence this action in March 2018 and prosecute this action now. Indeed, defendants expressly concede plaintiff's standing. Accordingly, this Court finds no basis to apply Bernal to the instant dispute, and defendants' argument concerning the de-acceleration letter's facial invalidity is without merit.
Also without merit is defendants' argument that plaintiff's proffer of de-acceleration fails for lack of sufficient proof of mailing. Even though the Papanikolaw defendants do not argue the fact that the letter was not mailed to the property address, they argue that the proof of mailing is inadequate to create a question of fact. The Court rejects this argument given plaintiff's extensive and detailed affidavit of regularity — which is sufficient, at minimum, to raise a triable issue of fact as to whether plaintiff did, in fact, timely tender to defendants such de-acceleration letter. (Of course, whether the proof would survive a hearing is another matter.) In this regard, this Court also notes that the Papanikolaw defendants have not submitted affidavits from either defendant asserting that they did not receive the de-acceleration letter. Accordingly, there exists no basis in the record, at this time, to dispute whether plaintiff sent such letter much less defeat plaintiff's showing that it did.
Defendants also assert that plaintiff's de-acceleration letter is facially invalid because plaintiff allegedly failed to send it also to defendants' attorney of record pursuant to CPLR § 2103(b). Even if the premise is factually accurate, defendants offer no availing authority for this proposition. CPLR § 2103(b) provides for the manner of serving legal papers on an attorney, but does not require that a de-acceleration letter, or papers not directly bearing on pending litigation, be sent to a borrower's attorney. Even given that defendants' current attorneys (Legal Aid Society of Rockland County, Inc.) had represented defendants in the First Action whose dismissal was pending on appeal at the time of the de-acceleration letter, defendants offer this Court no authority for the proposition that the de-acceleration letter therefore had to be served on defendants' attorneys as well as defendants in order to be valid. CPLR § 2103(b) does not so require, and defendants offer no other authority for this proposition.
However, this Court concludes that the de-acceleration letter is facially invalid as a mere pretext to avoid the six-year limitation period to collect on defendants' mortgage debt that plaintiff itself triggered by commencing the First Action. As the Milone Court narrated in 2018:
"Courts must, of course, be mindful of the circumstance where a bank may issue a de-acceleration letter to avoid the onerous effect of an approaching statute of limitations and to defeat the property owner's right pursuant to RPAPL 1501 to cancel and discharge a mortgage and note.... Specifically, a de-acceleration letter is not pretextual if... it contains an express demand for monthly payments on the note, or, in the absence of such express demand, it is accompanied by copies of monthly invoices transmitted to the homeowner for installment payments, or, is supported by other forms of evidence demonstrating that the lender was truly seeking to de-accelerate and not attempting to achieve another purpose under the guise of de-acceleration. In contrast, a "bare" and conclusory de-acceleration letter, without a demand for monthly payments toward the note, or copies of invoices, or other evidence, may raise legitimate questions about whether or not the letter was sent as a mere pretext to avoid the statute of limitations"
( Milone , 164 AD3d at 154 [internal citations omitted] ). A de-acceleration instrument that a Court finds to be merely pretextual is insufficient to constitute an affirmative and timely revocation of acceleration, with implications for interposing any subsequent action within the CPLR § 213(4) limitations period (see id. ).
This Court concludes that, on the facts and circumstances of this case, plaintiff's de-acceleration letter fails under Milone . The letter provided, in its entirety, as follows:
"Dear Customer(s):
"Select Portfolio Servicing, Inc. (SPS), the mortgage servicer on the above referenced account, is committed to assisting you with your home mortgage account.
"As you know, a foreclosure action was filed in connection with the property referenced above. That action has been cancelled and the acceleration of the total amount owed is hereby rescinded. Although the total amount owed on the mortgage is no longer accelerated, the account remains delinquent and it is possible legal action may resume in the future.
"SPS has options to help you avoid foreclosure. These options are offered at no cost to our customers and may include structured repayment plans, modifications, or settlement alternatives. If you are experiencing a financial hardship, please call us as soon as possible to discuss your situation and the options that may be available to you.
"At SPS, any of our trained servicing representatives can assist you with answers to your questions about the status or history of your account, document requirements, or any of our available loan resolution options. If you have any questions or concerns, please contact our Loan Resolution Department. Our toll-free number is [redacted], and representatives are available Monday through Thursday between the hours of 8 a.m. and 11 p.m., Friday from 8 a.m. to 9 p.m., and Saturday from 8 a.m. to 2 p.m. Eastern Time"
(Syphus Aff. & Exh. 10 [NYSCEF Doc. 70], at 1).
Nothing in plaintiff's de-acceleration letter demanded monthly payments, or referred to any attached copies of invoices or any other evidence that the lender was "truly seeking to de-accelerate and not attempting to achieve another purpose under the guise of de-acceleration" ( Milone , 164 AD3d at 154 ). For instance, the letter did not suggest much less offer a workout, or refer to the then-pending First Action and offer to discontinue it, or reasonably suggest any other non-pretextual purpose whatsoever. To the contrary, the de-acceleration letter explicitly recognized that "it is possible legal action may resume in the future," an assertion that appears to be the only substantive meaning fairly attributable to plaintiff's letter. Moreover, nothing in plaintiff's affidavit in support from the loan servicer suggests that plaintiff tendered with the de-acceleration letter any demand for payment, or copies of monthly invoices, or any other documentation of clear intention to de-accelerate the loan other than the language of plaintiff's letter itself (see Syphus Aff. [NYSCEF Doc. 60] ). For his part, plaintiff's counsel also does not assert that the de-acceleration letter was substantive in any respect, but rather argues that its mere existence and mailing constitute affirmative acts of revocation sufficient to survive defendants' dismissal motion (see Pl's Aff. in Support, at 6).
The de-acceleration letter's conclusory language, and plaintiff's failure to plead much less prove simultaneous tender of any demand for payment or other documentation evincing genuine intent to de-accelerate, would be sufficient for this Court to conclude that the de-acceleration letter was pretextual. However, there is far more. As noted above, plaintiff sent the de-acceleration letter in April 2017, just months before the expiration of the six-year limitations period. This timing is notable and suggestive of plaintiff's intent to evade the impending expiration of the limitation period to collect on this debt.
The circumstance that most prevails on the Court to deem plaintiff's de-acceleration letter to be pretextual is the undisputed reality that plaintiff sent the de-acceleration letter while simultaneously prosecuting its appeal from this Court's dismissal of the First Action. For months, plaintiff purported to de-accelerate defendants' mortgage debt while also seeking collection of such debt in its entirety. Only in June 2017 — nearly two months after sending its putative de-accleration letter — did plaintiff move to discontinue its appeal in the First Action. Of course, plaintiff then re-commenced this action months later, in March 2018.
Defendants thus are correct that the timing and litigation context of plaintiff's de-acceleration letter together demonstrate that plaintiff tried to have it both ways — purportedly de-accelerating the very mortgage debt that plaintiff simultaneously was litigating to collect in its entirety. Defendants call this odd coincidence a "duplicity" evincing bad faith. However this odd coincidence might be described, plaintiff does not address it in its papers and, given the facts and circumstances, it seems unlikely that plaintiff could address it satisfactorily. Neither is this case one in which the validity of the de-acceleration is only tangential to the matter or not otherwise properly before the court (cf. Hudson City Savings Bank v. Atanasio , 60 Misc 3d 1223 [Sup Ct Suffolk Co 2018] [mere inference of pretextual de-acceleration under Milone ] ). Here, defendants argue squarely that the de-acceleration letter is invalid as a matter of law and thus cannot constitute a proper and timely act of revocation sufficient to stop the limitations period from expiring on this action.
Given the de-acceleration letter's timing and context, its plain language concerning the prospect of future litigation, the bald and conclusory language of the letter itself, plaintiff's failure to demand payment either in the de-acceleration letter or in a simultaneous accompanying submission, plaintiff's failure to attach invoices or other clear proof of good-faith intent to de-accelerate, and plaintiff's failure to plead much less prove that plaintiff's de-acceleration was in good faith and without pretext, this Court is constrained to conclude that there is no triable issue of material fact as to whether plaintiff's de-acceleration letter of April 2017 was pretextual within the meaning of Milone . As a matter of law, this Court finds no record basis upon which a reasonable finder of fact could find anything other than that plaintiff's de-acceleration letter was pretextual.
The pretextual character of plaintiff's de-acceleration letter renders it void ab initio under Milone . There being no proper de-acceleration, this Court must conclude that plaintiff failed to demonstrate a valid act of revocation of the First Action's acceleration of defendants' entire mortgage debt before elapse of the ensuing six-year limitation period within the meaning of Aorta and Osorio . Plaintiff having failed to demonstrate that any other toll on the limitation period applies in this action, this Court concludes that plaintiff's foreclosure action is untimely pursuant to CPLR § 213(4). Defendants therefore are entitled to summary judgment on their counterclaim dismissing plaintiff's complaint and cancelling the mortgage pursuant to RPAPL § 1501(4).
Even if plaintiff's de-acceleration letter were not pretextual and thus invalid ab initio , this Court would invoke its equity jurisdiction to determine that to credit plaintiff's putative de-acceleration — on the facts and circumstances of this case — would work substantial prejudice against defendants and should not be allowed (see Golden v. Ramapo Improvement Corp. , 78 AD2d 648 [2nd Dept 1980] ). "It is well settled that an action to foreclose a mortgage is equitable in nature and triggers the equitable powers of this Court" ( PHH Mortgage Corp. v. Hepburn , 128 AD3d 659, 661 [2nd Dept 2015] ; Morabito , 201 AD2d at 546, following Notey v. Darien Constr. Corp. , 41 NY2d 1055 [1977] ). "Once equity is invoked, this Court's power is as broad as equity and justice require" ( Hepburn, 128 AD3d at 661, Morabito, 201 AD2d at 546 ; Ripley v. International Rys. of Central America , 8 AD2d 310, 328 [1st Dept 1959], affd 8 NY2d 430 [1960] ).
Here, as the record overwhelmingly demonstrates, plaintiff commenced its First Action over seven years ago, and let it linger unprosecuted for five years even after defendants served on plaintiff a CPLR § 3216 demand to resume prosecution. Plaintiff then abandoned its appeal from this Court's dismissal of the First Action, while also leaving plaintiff's Second Action to linger without prosecution or discontinuance for years. Under these circumstances, the putative de-acceleration and now this third action work substantial hardship against defendants, in contravention of the "primary consideration ... of fairness to the defendant" that CPLR article 2 seeks to achieve ( Flanagan , 24 NY2d at 429 ). Moreover, this Court agrees with defendants' characterization that plaintiff's simultaneous prosecution of its appeal from this Court's dismissal of the First Action, while purporting to de-accelerate that very same debt, is duplicitous. As such, defendants are correct that plaintiff came to this foreclosure action with unclean hands. Plaintiff's own unclean hands having invoked this Court's equity jurisdiction, this Court is well within its equitable authority to deny plaintiff this Court's cooperation to achieve manifest injustice against defendants.
While the residential real estate market requires that "the stability of contract obligations must not be undermined by judicial sympathy" for residential foreclosure defendants ( Emigrant Mortgage Co., Inc. v. Fisher , 90 AD3d 823, 824 [2nd Dept 2011], quoting First Natl. Stores v. Yellowstone Shopping Ctr. , 21 NY2d 630, 638 [1968] ), neither can this Court ignore plaintiff's unexplained and inexplicable pattern of delay and apparent gaming of both defendants and the Court. This Court reiterates what the Court of Appeals held 50 years ago: "there comes a time when [a defendant] ought to be secure in his [or her] reasonable expectation that the slate has been wiped clean of ancient obligations" ( Flanagan, 24 NY2d at 429 ). Seven and a half years and three actions later, now is that time for defendants.
The Court has considered plaintiff's remaining arguments and finds them to lack merit or to be moot in light of the foregoing. Accordingly it is hereby
ORDERED that defendants' motion for an order pursuant to CPLR § 3212 and RPAPL § 1501(4) granting summary judgment on their counterclaim and cancelling the mortgage, and for an order pursuant to CPLR § 3211 dismissing this action (Motion Sequence # 1), is GRANTED, plaintiff's action is dismissed with prejudice, and the mortgage on the subject property is cancelled and discharged; and it is further
ORDERED that the County Clerk of the County of Rockland is hereby directed to cancel and discharge the mortgage held by plaintiff on the subject property; and it is further
ORDERED that plaintiff's cross motion for an order pursuant to CPLR § 3212 granting summary judgment on its complaint and to appoint a referee to compute (Motion Sequence # 2) is DENIED as moot; and it is further
ORDERED that counsel for defendants shall serve this Decision and Order, with Notice of Entry, on plaintiff within five days hereof.
The foregoing constitutes the Decision and Order of this Court.