Opinion
Index No. 032706/2023
07-09-2024
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 #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.
Appearances for Plaintiff: Adam M. Swanson and Jessie D. Bonaros with McCarter & English, LLP Appearances for Defendant(s): Benjamin Berns with Legal Aid Society of Rockland County
Unpublished Opinion
Appearances for Plaintiff: Adam M. Swanson and Jessie D. Bonaros with McCarter & English, LLP
Appearances for Defendant(s): Benjamin Berns with Legal Aid Society of Rockland County
THOMAS P. ZUGIBE, JUSTICE
The papers filed electronically as NYSCEF Docs. 21-78 were read and considered on Defendant's Notice of Motion by Defendant for an (i) Order pursuant to CPLR § 3211(a)(5) dismissing the Complaint and discharging the mortgage of the Defendant as barred by the applicable statute of limitations, (ii) granting Defendant Summary Judgment pursuant to CPLR § 3212 on Defendants' counterclaims against Plaintiff, and (iii) for an award of attorney fees (this motion having been designated as motion sequence #1); and on Plaintiff's Cross-Motion for an Order (i) granting Summary Judgment in its favor on its claims as asserted in the Complaint, (ii) dismissing the affirmative defenses, and (iii) appointing a referee to compute (this motion having been designated as motion sequence #2).
Now, upon the foregoing papers, and all prior papers and proceedings in this action, the motions are consolidated for purposes of this decision and are hereby determined as follows:
In this residential foreclosure action concerning real property located at 4 Crescent Court, New City, New York 10956, ("Mortgaged Premises" or "Subject Property"), Plaintiff's Complaint asserts that in 2006, Defendant JAMES PAPANIKOLAW, HELEN PAPANIKOLAW A/K/A HELEN G. PAPANIKOLAW A/K/A ELE GEORGE PAPAS, (hereinafter "Defendants") took out a residential loan (hereinafter the "Note") in the principal amount of $434,000.00 collateralized by the execution and filing of a Mortgage (hereinafter "Mortgage") on the subject property, NYSCEF Doc. 2. A promissory note (hereinafter the "Note") dated September 1, 2006, payable to Argent Mortgage Company, LLC, was duly executed by Defendants (NYSCEF Doc. 33) and the loan was modified by the execution of a Modification Agreement on October 1, 2018 (NYSCEF Doc 35). By Assignment of Mortgage also dated September 1, 2006, all rights and interest in the Mortgage and Note were assigned to Plaintiff. The Note, Mortgage, and Assignment and Modification Agreement are attached to the Complaint as Exhibits 1-4, respectively. NYSCEF Docs. 2-5.
Defendants now move for summary judgment dismissing the Complaint based upon the expiration of the statute of limitations. In moving to dismiss a cause of action as time-barred, a defendant bears the initial burden of demonstrating, prima facie, that the time within which to commence the action has expired. See, Jalayer v Stigliano, 94 A.D.3d 702, 702 (2d Dept. 2012); Fleetwood Agency, Inc. v Verde Elec. Corp., 85 A.D.3d 850, 851 (2d Dept. 2011). To make a prima facie showing, the defendant must establish, inter alia, when the plaintiff's cause of action accrued. See, Swift v New York Med. Coll., 25 A.D.3d 686, 687 (2d Dept. 2006). The burden then shifts to the plaintiff to raise a question of fact as to whether the statute of limitations was tolled or was otherwise inapplicable, or whether the action was actually commenced within the applicable limitations period. See Jalayer, supra, at 703; Williams v New York City Health & Hosps. Corp., 84 A.D.3d 1358, 1359 (2d Dept. 2011). An action to foreclose a mortgage is subject to a six-year statute of limitations. "In the case of an installment loan, a separate cause of action accrues as to each missed payment, but once the debt is accelerated, the limitations period begins to run on the entire debt." Scarso v. Wilmington Sav. Fund Society FSB, 200 A.D.3d 817 (2d Dept. 2021) (internal citations omitted); see also, CPLR § 213(4).
The history of this case has been protracted and tortuous. To briefly summarize, the Note was first accelerated by the filing of a foreclosure action on July 28, 2011 naming the same parties as set forth herein (Rockland County Supreme Court; Index No. 031323/2011) regarding the Mortgaged Premises. By Decision and Order of this Court (Alfieri, J.) dated November 17, 2016, the action was dismissed pursuant to CPLR § 3216 for want of prosecution. Although a Notice of Appeal was filed on December 29, 2016, no appeal was perfected. Instead, Plaintiff commenced a new foreclosure action against the Defendants over six (6) years after the initial acceleration (Rockland County Supreme Court; Index No. 031424/2018), in reliance on a "Notice of De- acceleration" issued on April 10, 2007, that tolled the statute of limitations. A Verified Answer was interposed asserting the statute of limitations as an affirmative defense. Subsequently, the Defendant moved and Plaintiff cross moved for summary judgment. By Decision and Order of this Court (Marx, J.) dated January 2, 2019, and an Order of the same Court dated July 8, 2019 following reargument, Plaintiff's application for summary judgment was denied and Defendant's cross-motion was granted based upon the Court's finding that the de-acceleration notice was "facially invalid as a mere pretext to avoid the six-year statute of limitation period". By Decision and Order dated August 25, 2021, however, the Appellate Division reversed the lower court ruling, opining in relevant part, that the de-acceleration notice properly revoked the acceleration of the mortgage debt. U.S. Bank N.A. v Papanikolaw, 197 A.D.3d 767 (2d Dept. 2021). This Decision out of the Second Department was predicated, in part, on the Court of Appeals holding in Freedom Mortgage Corp. v. Engel, 37 N.Y.3d 1 (2021) that expressly concluded that "when a bank effectuated an acceleration via the commencement of a foreclosure action, a voluntary discontinuance of that action-i.e., the withdrawal of the complaint-constitutes a revocation of that acceleration." Id. at 7. Summary Judgment in favor of Plaintiff and an Order of Reference was thereafter entered by the trial court on March 28, 2022, in accordance therewith.
On July 29, 2022, Plaintiff moved for a Judgment of Foreclosure and Sale, and the Defendant cross-moved for dismissal predicated upon the holding in Bank of America v Kessler, 202 A.D.3d 10 (2d Dept. 2021) that deemed the inclusion of additional information on the statutorily-required 90-day notice as contrary to the mandates of RPAPL § 1304. By Decision and Order dated January 12, 2024, this Court (Marx, J.) denied Plaintiff's motion for a Judgment of Foreclosure and Sale and dismissed the action based upon the failure to comply with Kessler's strict application of RPAPL § 1304. But as we now know, to complicate things further, Kessler was far from a final determination.
Following the Court of Appeals decision in Bank of America, NA v Kessler, 39 N.Y.3d 317 (2023) reversing the Second Department's holding, Plaintiff elected to commence a new action for foreclosure on June 15, 2023 in lieu of filing a motion to renew based upon a change in the law. Following the joinder of issue, Defendant now moves herein for summary judgment dismissing the action and discharging the mortgage of record pursuant to RPAPL § 1501(4) on the grounds that the action is now time-barred due to the enactment of the Foreclosure Abuse Prevention Act ("FAPA"), signed into law on December 30, 2022. FAPA amended CPLR 3217 with the addition of subdivision (e) that states "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". CPLR 3217(e). Although the Appellate Division in U.S. Bank N.A. v Papanikolaw, supra, prior to the enactment of FAPA, expressly upheld the validity of the de-acceleration notice at issue in this case in August, 2021, in reliance on Freedom Mortgage, supra, the enactment of FAPA effectively nullified the legal precepts articulated by the Court of Appeals.
The only remaining issue, therefore, concerns the retroactive applicability of this new statutory prohibition. While this Court and other trial level courts have previously rejected the blanket retroactivity of FAPA, the Appellate Division, First Department, appears to be the first appellate-level determination that articulates unqualified retroactivity. In Genovese v. Nationstar Mortgage, LLC, 223 A.D.3d 37 (1st Dept 2023), the First Department unequivocally pronounced that "[a]lthough the Legislature did not explicitly state that FAPA should apply retroactively, it clearly indicated that it should. After all, given the language itself, FAPA will necessarily have retroactive effect in light of § 10's direction that the Act applies 'to all actions commenced on an instrument described under CPLR 213(4) in which a final judgment of foreclosure and sale has not been enforced[.]'" (emphasis in original).
Unfortunately for trial courts, the laws applicable in foreclosures are ever-changing. This case is essentially a textbook example of the additional litigation that this unsettled landscape has caused. It is beyond peradventure that a final judgment of foreclosure and sale has not been ordered in the instant matter. Although the Appellate Division, Second Department, has not yet weighed in on this nascent issue, and may very well enter a contrary determination, "the doctrine of stare decisis requires trial courts in this department to follow precedents set by the Appellate Division of another department until the Court of Appeals or this court pronounces a contrary rule[.]" Mountain View Coach Lines, Inc. v. Storms, 102 A.D.2d 663 (2d Dept. 1984). The Court is therefore bound by the determination of the First Department, as detailed, supra.
It is therefore, ORDERED, Defendant's motion for Summary Judgment dismissing the Complaint as time-barred, and discharging the Promissory Note and Mortgage is granted, and it is further
ORDERED, Plaintiff's cross-motion for Summary Judgment is denied, and it is further
ORDERED, that, within ten (10) days of the date of entry hereof, Defendant shall serve a copy of this Decision and Order, with notice of entry, on all parties required to receive notice, and shall thereafter file a suitable affirmation of such service with the Court via NYSCEF; and it is further
ORDERED, that Defendant's motion for attorney fees is denied based upon the lack of any factual or legal basis for the relief requested.
The foregoing constitutes the Decision and Order of this Court.