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Beata PERSAUD, Plaintiff, v. U.S. BANK NATIONAL, et al., Defendants.
The plaintiff, Beata Persaud, commenced this action, pursuant to RPAPL section 1501(4), to cancel an encumbrance with respect to property located at 94-43 113th Street, Richmond Hill, Queens County, 11419. Specifically, the plaintiff seeks an order granting summary judgment under CPLR 3212, and for an order discharging the consolidate mortgage, which is currently recorded with the Queens County Clerk, and extinguishing the underlying promissory note that was executed in connection with that property. Inasmuch as issue has been joined in this case, the plaintiff's motion is timely within the meaning of Brill v. City of New York, 2 N.Y.3d 648, 781 N.Y.S.2d 261, 814 N.E.2d 431 (2004). The defendant, U.S. Bank National Association (“U.S. Bank”), opposes the instant application. The plaintiff's motion is granted in all respects. The following opinion constitutes the decision and order of this Court.
The Court finds that the plaintiff has met its prima facie burden of showing her entitlement to judgment as a matter of law by establishing that the underlying foreclosure actions commenced by U.S. Bank in December, 2009 and, again, in March 2011, were dismissed by two different Justices of this Court and that the commencement of this new foreclosure action on July 21, 2017 would be time-barred by the applicable six-year statute of limitations.1 See, CPLR 213 (4); see also JMD Holding Corp. v. Cong. Fin. Corp., 4 N.Y.3d 373, 384, 795 N.Y.S.2d 502, 828 N.E.2d 604 (2005). see also, JBR Constr. Corp. v. Staples, 71 A.D.3d 952, 953, 897 N.Y.S.2d 223 (2nd Dept. 2010); see also, Pulver v. Dougherty, 58 A.D.3d 978, 871 N.Y.S.2d 495 (3rd Dept. 2009); see also, Plaia v. Safonte, 45 A.D.3d 747, 847 N.Y.S.2d 101 (2nd Dept. 2007); LePore v. Shaheen, 32 A.D.3d 1330, 821 N.Y.S.2d 532 (4th Dept. 2006); Zinker v. Makler, 298 A.D.2d 516, 748 N.Y.S.2d 780 (2nd Dept. 2002); compare Caliguri v. JPMorgan Chase Bank, N.A., 121 A.D.3d 1030, 996 N.Y.S.2d 73 (2nd Dept. 2014) with Landau, P.C. v. LaRossa, Mitchell & Ross, 11 N.Y.3d 8, 13 n. 3, 862 N.Y.S.2d 316, 892 N.E.2d 380 (2008); see Mr. Villanti's cogent moving and reply affirmations. The burden then shifted to the defendant to submit proof sufficient to raise a genuine question of fact rebutting the plaintiff's prima facie showing. See Zuckerman v. New York, 49 N.Y.2d 557, 562, 427 N.Y.S.2d 595, 404 N.E.2d 718 (1980); see also Kosson v. Algaze, 84 N.Y.2d 1019, 622 N.Y.S.2d 674, 646 N.E.2d 1101 (1995). As explained in this opinion, the defendant, U.S. Bank, has failed to rebut that prima facie showing. See Alvarez v. Prospect Hosp., 68 N.Y.2d 320, 324-325, 508 N.Y.S.2d 923, 501 N.E.2d 572 (1986); JMD Holding Corp. v. Cong. Fin. Corp., 4 N.Y.3d 373, 384, 795 N.Y.S.2d 502, 828 N.E.2d 604 (2005). Where no material issues of fact exists, a court shall grant a moving party summary judgment. See Winegrad v. New York University Medical Center, 64 N.Y.2d 851, 853, 487 N.Y.S.2d 316, 476 N.E.2d 642 (1985).
To begin, pursuant to RPAPL section 1501(4), a mortgagee is entitled to have a mortgage cancelled as an encumbrance on real property if “the applicable statute of limitation for the commencement of an action to foreclose a mortgage ․ has expired․” Thus, for purposes of RPAPL section 1501(4), the statute of limitations has expired. The defendant bank failed to meet its burden, in its opposition papers, of raising a triable issue of fact that the statute of limitations has either been tolled or revived. Given that the statute of limitations has expired on the defendant's right to bring another foreclosure action against the plaintiff, the motion to cancel, discharge and remove the consolidated mortgage that the defendant, U.S. Bank, holds on Persaud's property is granted.
In reaching this decision, the Court first concludes that the language of paragraph 19 of the Consolidated Mortgage is irrelevant in this matter. See discussion in paragraph 11 of Mr. Villanti's reply affirmation. Second, this Court disagrees with the decision relied upon by the defendant in Nationstar Mortg., LLC v. MacPherson, 56 Misc. 3d 339, 54 N.Y.S.3d 825 (Sup. Ct. Suffolk County 2017). MacPherson is contrary to Appellate Division, Second Department precedents in Beneficial Homeowner Serv. Corp. v. Tovar, 150 A.D.3d 657, 55 N.Y.S.3d 59 (2nd Dept. 2017), and Ward v. Walkley, 143 A.D.2d 415, 417, 532 N.Y.S.2d 426 (2nd Dept. 1988). In Beneficial Homeowner Service Corp. v. Tovar, a decision issued after MacPherson, the Appellate Division ruled that commencement of a mortgage foreclosure proceeding constituted a valid election to accelerate the maturity of a debt. See, 839 Cliffside Ave. LLC v. Deutsche Bank Nat'l Tr. Co. for First Franklin Mortg. Loan Tr. 2006-FF3, Mortg. Pass-Through Certificates, Series 2006-FF3, 2018 WL 4259867, at *6 (E.D.N.Y. Sept. 5, 2018).
This Court recognizes that, in MacPherson, that Court, interpreting a virtually identical provision in a mortgage note held that “[u]nder the express wording of the mortgage document, [the lender] has no right to reject the borrower's payment of arrears in order to reinstate the mortgage․[and that]․it is it is a [foreclosure] judgment that triggers the acceleration in full of the entire mortgage debt.” Nationstar Mortg., LLC v. MacPherson, supra, 56 Misc. 3d at 351, 54 N.Y.S.3d 825. As noted above, U.S. Bank has twice initiated foreclosure proceedings against the plaintiff in an attempt to accelerate the debt. Both times, two different Justices of this Court dismissed those actions. The defendant, relying on MacPherson, contends that it has the right to file a foreclosure action at a time when the statute of limitations has clearly expired and that the plaintiff has no recourse under § 1501(4).
The Court disagrees with this interpretation. As an initial matter, the reliance by the Court in MacPherson on the Second Department's decision in Wells Fargo Bank v. Cohen is misplaced. See, Wells Fargo Bank v. Cohen, 80 A.D.3d 753, 915 N.Y.S.2d 569 (2nd Dept. 2011). In Cohen, the bank never filed a prior foreclosure action and there was no other affirmative act by the lender evincing an intent to accelerate the entire debt. Under these circumstances, and, in the absence of language in the mortgage note that “the entire debt represented by the mortgage was to be automatically accelerated upon the borrower's default in an installment payment,” the statute of limitations had not been triggered. Id. at 574, 427 N.Y.S.2d 595, 404 N.E.2d 718. In this case, however, by filing the two foreclosure actions against the plaintiff, first in December, 2009 and then in March 2011, the defendant has twice elected to accelerate the mortgage debt. Thus, the six-year statute contained in CPLR 213(4) expired by the time U.S. Bank filed the third foreclosure action against the plaintiff on July 21, 2017.
In addition, there is a significant degree of difference between the ability of a lender to prevail in a mortgage foreclosure action brought to accelerate a mortgage debt as opposed to the right of such lender to elect to accelerate the debt by filing such a lawsuit (emphasis added). In this case, the defendant affirmatively elected to accelerate the entire debt by filing the foreclosure action. See, Beneficial Homeowner Serv. Corp. v. Tovar, supra, 150 A.D.3d at 657, 55 N.Y.S.3d 59; see also, Ward v. Walkley, supra, 143 A.D.2d at 417, 532 N.Y.S.2d 426. Certainly, Paragraph 19 of the Consolidated Mortgage was not an obstacle to U.S. Bank's right to file a lawsuit to accelerate the debt owed to it.
In the Court's view, the subject language simply provides borrowers with the opportunity to avoid foreclosure. It cannot be reasonably interpreted as empowering a lender with the ability of avoiding the protection afforded to borrowers by RPAPL section 1501(4). As noted, the mortgage note, in no way, limited U.S. Bank's ability to elect to accelerate the instant debt. The provision simply prevented the defendant from succeeding on its election to accelerate. In that respect, Paragraph 19 imposed heavy hurdles on the plaintiff before she could prevent the defendant from foreclosing on her property. Given this important distinction, the Court finds that there is no reason to give Paragraph 19 the strained interpretation proposed by U.S. Bank.
The Court further finds that the language contained in Paragraph 19 is too ambiguous to support the interpretation that only a foreclosure judgment can trigger the acceleration in full of the entire mortgage debt. It is well-settled that ambiguous terms in contracts are to be construed against the drafter, which, in this case, is the defendant. See, Village of Ilion v. County of Herkimer, 23 N.Y.3d 812, 993 N.Y.S.2d 648, 18 N.E.3d 359 (2014). If the defendant intended to circumvent the legal principle that the filing of a foreclosure action constitutes an affirmative election to accelerate mortgage debt, then it should have made it clear and obvious that this was the intended effect of this provision.
In closing, the Court notes that the election to accelerate the debt is what triggers the running of the statute of limitation. That election should not be confused with the rights of the borrower under Paragraph 19 to stop the foreclosure or with the ultimate ability of the lender to foreclose successfully on the property. Here, by filing the two lawsuits, the defendant affirmatively elected to accelerate the instant mortgage. See Beneficial Homeowner Serv. Corp. v. Tovar, supra 150 A.D.3d at 657, 55 N.Y.S.3d 59; see also Ward v. Walkley, supra 143 A.D.2d at 417, 532 N.Y.S.2d 426. Although “a lender may revoke its election to accelerate the mortgage․, it must do so by an affirmative act of revocation occurring during the six-year statute of limitations period subsequent to the initiation of the prior foreclosure action.” Soroush v. Citimortgage, 161 A.D.3d 1124, 1125-1126, 77 N.Y.S.3d 691 (2nd Dept. 2018) (citations omitted). Here, Citimortgage neither argued nor presented any evidence that it revoked its election during that six-year period. See, Beneficial Homeowner Serv. Corp. v. Tovar, supra. The language provided in Paragraph 19 of the Consolidated Mortgage, moreover, does not constitute such a revocation.
For these reasons, the Court grants the instant motion by the plaintiff to cancel or discharge the mortgage that the defendant holds on his property. See RPAPL § 1501(4)
The Court has also signed the accompanying order.
The foregoing constitutes the decision, order, and opinion of the Court.
1. The first foreclosure action was dismissed for abandonment in 2013, pursuant to CPLR 3215(c); and, in 2015, the second action was dismissed for failure to obtain personal jurisdiction over the plaintiff.
Salvatore J. Modica, J.
Response sent, thank you
Docket No: 710060/2017
Decided: October 19, 2018
Court: Supreme Court, Queens County, New York.
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