CAPITAL ONE v. Sterling Recoveries, Inc., et al., Defendants. (2019)

Order, Supreme Court, Bronx County (Ben R. Barbato, J.), entered September 11, 2017, which granted plaintiff's motion for, inter alia, summary judgment on its foreclosure complaint, unanimously reversed, on the law, without costs, and the motion denied.

Defendant contends that this action is time-barred, because the six year statute of limitations was triggered by a prior foreclosure action, in which the lender (plaintiff's assignor) accelerated the mortgage debt, and the instant action was not commenced until after the limitations period expired.

Summary judgment was not precluded by plaintiff's failure to demonstrate that it served defendant with a 30–day notice in compliance with Section 22 of the mortgage, because defendant waived the argument by failing to raise it in her answer with the requisite specificity and particularity required by CPLR 3015(a) (see 1199 Hous. Corp. v. International Fid. Ins. Co., 14 A.D.3d 383, 384, 788 N.Y.S.2d 88 [1st Dept. 2005] ).

However, in this action, Supreme Court erred in nullifying plaintiff's assignor's acceleration in the prior action based on Section 22 of the mortgage which provides that the lender may accelerate the mortgage only if, inter alia, it has served defendant with a proper 30–day notice of default.  Where the acceleration is optional as here, some affirmative action must be taken to evince the note holder's election to accelerate (see Wells Fargo Bank, N.A. v. Burke, 94 A.D.3d 980, 982–983, 943 N.Y.S.2d 540 [2d Dept. 2012] ).  Affirmative action can be in the form of a letter (see Deutsche Bank Natl. Trust Co. v. Royal Blue Realty Holdings, Inc., 148 A.D.3d 529, 530, 48 N.Y.S.3d 597 [1st Dept. 2017], lv denied 30 N.Y.3d 959, 960, 64 N.Y.S.3d 660, 86 N.E.3d 553 [2017] ) or the commencement of a foreclosure action (see Nationstar Mtge. LLC v. Islam, 158 A.D.3d 553, 553, 68 N.Y.S.3d 719 [1st Dept. 2018] ).  Plaintiff's assignor accelerated the mortgage debt by commencing the prior action and stating in its complaint that “plaintiff elects herein to call due the entire amount secured by the mortgage(s).”

Because there was no finding in the prior action that plaintiff's assignor did not have the authority or standing to accelerate the mortgage debt (see Deutsche Bank Natl. Trust Co. v. Board of Mgrs. of the 225 E. 86th St. Condominium, 162 A.D.3d 547, 547, 75 N.Y.S.3d 424 [1st Dept. 2018];  EMC Mtge. Corp. v. Suarez, 49 A.D.3d 592, 593, 852 N.Y.S.2d 791 [2d Dept. 2008] ), Supreme Court had no basis to nullify the prior assignor's acceleration.  In fact, in the prior action, Supreme Court found that plaintiff's assignor had standing to sue, despite defendant's argument to the contrary.  Nor can plaintiff raise plaintiff's assignor's failure to serve a proper 30–day notice to nullify the prior acceleration.  Noncompliance with a condition precedent is an affirmative defense (Azriliant v. Oppenheim, 91 A.D.2d 586, 587, 457 N.Y.S.2d 80 [1st Dept. 1982] [“any condition precedent must be raised by the defendants as an affirmative defense”] ).  Defendant did not raise the affirmative defense of noncompliance with Section 22 of the mortgage in the prior action.

However, an issue of fact exists regarding whether the action is time-barred, which is dependent on whether plaintiff's assignor's voluntary discontinuance of the prior action due to a “defective default notification” de-accelerated the mortgage debt (see NMNT Realty Corp. v. Knoxville 2012 Trust, 151 A.D.3d 1068, 1070, 58 N.Y.S.3d 118 [2d Dept. 2017] ).

Contrary to plaintiff's argument, it is not entitled to a 90 day toll under CPLR 204(a) where it served the 90–day notice under RPAPL 1304 one year before it commenced this action and where nothing in RPAPL 1304 proscribed it from commencing this action earlier (see HSBC Bank USA v. Kirschenbaum, 159 A.D.3d 506, 507, 73 N.Y.S.3d 41 [1st Dept. 2018] ).