MTGLQ INVESTORS LP v. CARMODY (2025)

MEMORANDUM AND ORDER

Appeal from an order of the Supreme Court (Laura Jordan, J.), entered December 12, 2023, in Rensselaer County, which, among other things, granted plaintiff's cross-motion for summary judgment.

Thomas Carmody executed a promissory note in May 2000 that was payable to Homestead Funding Corporation and secured by a mortgage on real property in the City of Rensselaer, Rensselaer County (hereinafter the subject property).  Defendant Kathleen Carmody (hereinafter defendant) inherited the subject property when Thomas Carmody died in 2004, and she stopped making scheduled payments on the loan in 2009.  In April 2010, the purported successor in interest to Homestead, OneWest Bank, FSB, commenced an action to foreclose upon the mortgage.  Supreme Court (Ceresia, J.) issued an order in 2020 that denied a motion by plaintiff to, among other things, be substituted as the party plaintiff in that action.  Supreme Court specifically determined that the chain of assignments before it reflected that the note and mortgage had not been assigned to OneWest at the time of commencement and that OneWest had lacked standing to commence the action as a result.  The court reasoned that, under those circumstances, the later assignment of the note and mortgage to plaintiff would not vest it with standing to maintain an action that had not been properly commenced to begin with.  Supreme Court subsequently issued an order in 2021 that, in relevant part, granted defendant's motion for summary judgment dismissing the complaint on standing grounds.

Plaintiff commenced this foreclosure action in January 2023.  Defendant answered and asserted several affirmative defenses and counterclaims, including that plaintiff lacked standing to bring the action and that the action was, in any event, time-barred.  Defendant moved for summary judgment dismissing the complaint on those grounds;  plaintiff, in turn, cross-moved for summary judgment upon the complaint and for dismissal of the counterclaims against it.  Supreme Court (Jordan, J.) issued an order that, as is relevant here, determined that plaintiff established both that the action was not time-barred and that it was entitled to judgment as a matter of law on the complaint.  Supreme Court accordingly denied defendant's motion and granted plaintiff's cross-motion.  Defendant appeals.

We affirm.  Initially, although plaintiff's cross-motion was made after the parties’ agreed-upon deadline for dispositive motions, Supreme Court remained free to consider it, “even in the absence of good cause, where a timely motion for summary judgment was made seeking relief nearly identical to that sought by the cross[-]motion” (Reutzel v. Hunter Yes, Inc., 135 A.D.3d 1123, 1124, 25 N.Y.S.3d 370 [3d Dept. 2016] [internal quotation marks and citations omitted];  see Ianello v. O'Connor, 58 A.D.3d 684, 685–686, 871 N.Y.S.2d 667 [2d Dept. 2009]).  A review of defendant's motion papers reflects that she primarily contended that she was entitled to summary judgment because plaintiff's claim was time-barred.  Plaintiff argued in its cross-motion that its claim was timely and, moreover, meritorious.  In view of the substantial overlap between the issues advanced in the two motions, and noting defendant's failure to articulate any prejudice arising from plaintiff's delay in filing the cross-motion, Supreme Court providently exercised its discretion in considering the cross-motion (see Old Crompond Rd., LLC v. County of Westchester, 201 A.D.3d 806, 808, 162 N.Y.S.3d 71 [2d Dept. 2022];  Reutzel v. Hunter Yes, Inc., 135 A.D.3d at 1124, 25 N.Y.S.3d 370).

Turning to the merits of that cross-motion, “[t]he statute of limitations for a foreclosure claim is six years” and begins to run when the entire debt becomes due and payable, such as when it is accelerated and called due by the commencement of a mortgage foreclosure action by the creditor (Lubonty v. U.S. Bank N.A., 34 N.Y.3d 250, 261, 116 N.Y.S.3d 642, 139 N.E.3d 1222 [2019];  see CPLR 213[4];  U.S. Bank N.A. v. Craft, 240 A.D.3d 1140, 1142, ––– N.Y.S.3d –––– [3d Dept. 2025];  Caprotti v. Deutsche Bank Natl. Trust Co., 220 A.D.3d 1126, 1127, 199 N.Y.S.3d 258 [3d Dept. 2023]).  “An acceleration of a mortgaged debt is only valid if the party making the acceleration had standing to do so at that time,” however, and the statute of limitations does not begin to run if the plaintiff in a mortgage foreclosure action was not the holder or assignee of the underlying note at the time of commencement (U.S. Bank N.A. v. Marrero, 221 A.D.3d 631, 632, 199 N.Y.S.3d 553 [2d Dept. 2023] [citation omitted];  see Caprotti v. Deutsche Bank Natl. Trust Co., 220 A.D.3d at 1127, 199 N.Y.S.3d 258;  U.S. Bank N.A. v. Pearl–Nwabueze, 218 A.D.3d 824, 826, 193 N.Y.S.3d 263 [2d Dept. 2023]).  Having said that, the Legislature recently amended CPLR 213(4), via the Foreclosure Abuse Prevention Act (hereinafter FAPA), to provide that where a defendant in a mortgage foreclosure action raises a statute of limitations defense “based on a claim that the instrument at issue was accelerated prior to, or by way of commencement of a prior action, a plaintiff shall be estopped from asserting that the instrument was not validly accelerated, unless the prior action was dismissed based on an expressed judicial determination ․ that the instrument was not validly accelerated” (CPLR 213[4][a], as added by L 2022, ch 821, § 7;  see HSBC Bank USA, N.A. v. Vesely, ––– A.D.3d ––––, ––––, 239 N.Y.S.3d 355, 3583[3d Dept. 2025];  CV XXVIII, LLC v. Williams, 236 A.D.3d 753, 754, 229 N.Y.S.3d 496 [2d Dept. 2025], appeal dismissed 44 N.Y.3d 946, ––– N.Y.S.3d ––––, ––– N.E.3d –––– [2025]).¹

Defendant here asserted that the six-year statute of limitations began to run upon the commencement of the prior mortgage foreclosure action by OneWest in 2010.  Supreme Court (Ceresia, J.) determined in its 2020 order, however, that OneWest did not have standing to commence the 2010 action because that “the chain of assignments reflect[ed] that the mortgage and underlying note were not assigned to [OneWest] until ․ after commencement.”  In its 2021 order dismissing the 2010 action, Supreme Court reiterated that OneWest lacked standing because “the subject note and mortgage were not assigned to [OneWest] until after commencement.”  Those holdings that OneWest lacked standing to commence the 2010 action because it had no interest in the note and mortgage at that time constituted, as required by CPLR 213(4)(a), express judicial determinations that “the purported acceleration through commencement of [the 2010] action was a nullity and the statute of limitations did not begin to run at that time” (Bank of N.Y. Mellon v. Treitel, 217 A.D.3d 911, 913, 192 N.Y.S.3d 184 [2d Dept. 2023];  see Bank of N.Y. Mellon v. Levinson, 230 A.D.3d 548, 551, 218 N.Y.S.3d 352 [2d Dept. 2024];  Caprotti v. Deutsche Bank Natl. Tr. Co., 220 A.D.3d at 1128–1129, 199 N.Y.S.3d 258;  U.S. Bank N.A. v. Pearl–Nwabueze, 218 A.D.3d at 826–827, 193 N.Y.S.3d 263;  cf.  HSBC Bank, N.A. v. Vesely, ––– A.D.3d at ––––, 239 N.Y.S.3d 355, 358).  It follows, therefore, that the present action is not barred by the statute of limitations.  We reject defendant's argument that FAPA mandates a different result.  Although Supreme Court, in dismissing the first action, did not specifically state that “the instrument was not validly accelerated” (CPLR 213[4][a]), its dismissal of that action for lack of standing is substantively the same thing (see Cohen v. Deutsche Bank Natl. Trust Co., 229 A.D.3d 758, 760–761, 217 N.Y.S.3d 106 [2d Dept. 2024];  Reinman v. Deutsche Bank Natl. Trust Co., 215 A.D.3d 704, 707, 187 N.Y.S.3d 666 [2d Dept. 2023]) and defendant's argument concerning the precise words used by Supreme Court amounts to little more than semantics.  Accordingly, we find that Supreme Court (Jordan, J.) properly granted plaintiff summary judgment dismissing defendant's statute of limitations defense and the counterclaims that were premised upon it.

As for the foreclosure claim itself, “to establish entitlement to summary judgment in a foreclosure action, a plaintiff must produce evidence of the mortgage and unpaid note along with proof of the mortgagor's default” (Wilmington Sav. Fund Socy., FSB v. LaFrate, 215 A.D.3d 1023, 1024, 187 N.Y.S.3d 826 [3d Dept. 2023] [internal quotation marks and citations omitted];  see 1900 Capital Trust II v. Jakobovitz, 239 A.D.3d 1211, 1212, 238 N.Y.S.3d 753 [3d Dept. 2025]).  Where, as here, a defendant raises the affirmative defense of standing, a plaintiff must also establish “standing by submitting proof that it was the holder or assignee of both the mortgage and the note at the time that the action was commenced” (1900 Capital Trust II v. Jakobovitz, 239 A.D.3d at 1212, 238 N.Y.S.3d 753;  see United Wholesale Mtge., LLC v. Smith, 237 A.D.3d 1339, 1340, 232 N.Y.S.3d 282 [3d Dept. 2025]).  “Because the note, rather than the mortgage, is the dispositive instrument that conveys standing to foreclose, written assignment of the note or, alternatively, physical delivery of the note prior to the commencement of the foreclosure action is sufficient to transfer the obligation” (U.S. Bank Trust, N.A. v. Moomey–Stevens, 189 A.D.3d 1790, 1791, 138 N.Y.S.3d 220 [3d Dept.2020] [internal quotation marks and citations omitted];  accord Federal Natl. Mtge. Assn. v. Krell, 231 A.D.3d 1334, 1335, 221 N.Y.S.3d 285 [3d Dept. 2024]).

There is no dispute here that plaintiff came forward with evidence of the mortgage and unpaid note, as well as proof of defendant's default.  Further, although plaintiff did not provide proof that the note was in its possession at the time of commencement, it did submit a chain of assignments that were recorded with the Rensselaer County Clerk and documented how the note and mortgage were assigned to various entities over the years and were eventually assigned to it in May 2018.  Our review of the language of those instruments confirms an intent in all of them to transfer the interest in the note, as well as the mortgage, and the assignments were therefore “sufficient to demonstrate [plaintiff's] status as an assignee of the note as of the date [this] action was commenced” in January 2023 (U.S. Bank N.A. v. Akande, 136 A.D.3d 887, 890, 26 N.Y.S.3d 164 [2d Dept. 2016];  see Emigrant Bank v. Kaufman, 223 A.D.3d 650, 653, 203 N.Y.S.3d 363 [2d Dept. 2024];  Chase Home Fin., LLC v. Miciotta, 101 A.D.3d 1307, 1307–1308, 956 N.Y.S.2d 271 [3d Dept. 2012];  cf.  U.S. Bank Tr., N.A. v. Moomey–Stevens, 168 A.D.3d 1169, 1172, 91 N.Y.S.3d 788 [3d Dept. 2019] [assignment explicitly limited to mortgage]).  Plaintiff accordingly satisfied its initial burden of demonstrating its entitlement to summary judgment upon the complaint and, as defendant failed to raise a material question of fact in response, Supreme Court properly granted plaintiff's motion in its entirety.

ORDERED that the order is affirmed, without costs.

FOOTNOTES

1.   The parties do not dispute that the Legislature made CPLR 213(4)(a) apply “retroactively to cases ‘in which a final judgment of foreclosure and sale has not been enforced’ ” (HSBC Bank, USA, N.A. v. Bresler, 239 A.D.3d 1051, 1053, 236 N.Y.S.3d 757 [3d Dept. 2025], quoting L 2022, ch 821, § 10;  see U.S. Bank N.A. v. Craft, 240 A.D.3d at 1143–1145, ––– N.Y.S.3d ––––).

Mackey, J.

Garry, P.J., Aarons, Fisher and McShan, JJ., concur.