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HSBC BANK USA, NATIONAL ASSOCIATION AS TRUSTEE FOR DEUTSCHE ALT-A SECURITIES, INC. MORTGAGE LOAN TRUST, Series 2006-AR6, Mortgage Pass Through Certificates, Plaintiff, v. MD A. ISLAM, a/k/a MD Islam, a/k/a MDA Islam. Mizanur Rahman, Deutsche Bank National Trust Company, as Certificate Trustee on behalf of Bosco Credit II Trust Series 2010-1, JPMorgan Chase Bank, N.A., Bank of America, NA, Atlantic Credit and Finance Inc. as successor in interest to Metris Bank, New York State Department of Taxation and Finance, NYC Department of Finance, United States of America - Internal Revenue Service, New York City Environmental Control Board, New York City Parking Violations Bureau, New York City Transit Adjudication Bureau, The United States of America, Palisades Collection, L.L.C., AAO AT & T, People's Alliance Federal Credit Union, Webster Bank, N.A., The City of New York Department of Housing Preservation and Development, Capital One Bank (USA) NA f/k/a Capital One Bank, Citibank (South Dakota), NA, Collins Financial Services Inc., Midland Funding LLC DBA in New York as Midland Funding of Delaware, LLC APO Citibank, Tulia Iriarte, Metropolitan Leasing, Inc., Chicago Title Insurance Company, Criminal Court of the City of New York, Commissioner of Labor of the State of New York, Defendants.
It is ordered that the motion by defendant MD A. Islam to dismiss the complaint pursuant to CPLR 3211 (a) (5) is decided as follows:
This action for foreclosure was commenced on or about July 18, 2017, to recover on a debt secured by a mortgage on real property located at 33-25 72nd Street, Jackson Heights, NY 11372. Plaintiff's predecessor in interest Mortgage Electronic Registration Systems, Inc., (hereinafter “MERS”) had previously brought an action, under Index Number 11713/2008, on the same mortgage and note in 2008, in which it had accelerated the debt. As Plaintiff's predecessor in interest, MERS as mortgagee of record, was designated by the original lender MortgageIt, Inc only as nominee for purposes of recording the agreement. In the prior action, on or about June 2, 2009, Hon. James Golia ordered a Judgment of Foreclosure of Sale and appointed Jodi Orlow, Esq., to serve as Referee. On or about May 15, 2014, MERS as Plaintiff's predecessor in interest, discontinued the prior action requesting the Court to vacate the Judgment of Foreclosure and Sale and cancel the notice of pendency. In an Order dated August 18, 2014, and filed with the Queens County Clerk on August 27, 2014, Hon. Valerie Brathwaite Nelson ordered that the action under Index Number 11713-2008 be discontinued.
Defendant MD A. Islam has now moved to dismiss the complaint pursuant to CPLR 3211 (a) (5), and plaintiff has opposed.
“On a motion to dismiss a cause of action pursuant to CPLR 3211(a)(5) on the ground that it is barred by the statute of limitations, a defendant bears the initial burden of establishing, prima facie, that the time in which to sue has expired” Wells Fargo Bank, N.A. v. Burke, 155 A.D.3d 668, 669, 64 N.Y.S.3d 228 (2d Dept. 2017.) Once this showing has been made, the burden shifts to the plaintiff to “aver evidentiary facts establishing that the action was timely or to raise a question of fact as to whether the action was timely” Lessoff v. 26 Ct. St. Assoc., LLC, 58 A.D.3d 610, 611, 872 N.Y.S.2d 144 (2d Dept. 2009.) An action to foreclose a mortgage is subject to a six-year statute of limitations (see CPLR 213 ). With respect to a mortgage payable in installments, separate causes of action accrue for each installment that is not paid, and the statute of limitations begins to run on the date each installment becomes due. See Nationstar Mtge., LLC v. Weisblum, 143 A.D.3d 866, 867, 39 N.Y.S.3d 491 (2d Dept. 2016.) 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”. EMC Mtge. Corp. v. Patella, 279 A.D.2d 604, 605, 720 N.Y.S.2d 161 (2d Dept. 2001.) See, Kashipour v. Wilmington Sav. Fund Socy., FSB, 144 A.D.3d 985, 986, 41 N.Y.S.3d 738 (2d Dept. 2016.) “A lender may revoke its election to accelerate the mortgage, but 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”. NMNT Realty Corp. v. Knoxville 2012 Trust, 151 A.D.3d 1068, 1069-1070, 58 N.Y.S.3d 118 (2d Dept. 2017.)
Defendant MD A. Islam now moves to dismiss plaintiff's cause of action for foreclosure and sale of the subject property as being barred by the applicable statute of limitations, pursuant to CPLR § 3211 (a) (5). He claims that MERS, commenced its prior action on or about May 9, 2008, at which time MERS accelerated the debt and demanded payment in its entirety. As such, the six year statute of limitations began to run not later than May 9, 2008 and the expiration date of the statute of limitations could occur not later than May 9, 2014. Therefore, any subsequent action to recover on the mortgage after May 9, 2014 would be barred by the statute of limitations pursuant to CPLR § 213(4). Since MERS moved to voluntarily discontinue its action, dated May 8, 2014, and entered by the Queens County Clerk on May 15, 2014, this was after the expiration of the statute of limitations. Consequently, MERS' attempt to revoke its right to elect acceleration occurred beyond the expiration of the 6-year statute of limitations. Defendant MD Islam also argues that MERS' act of voluntarily discontinuing the prior action was not a sufficiently affirmative act to constitute a revocation of its acceleration of debt. As such, there was no tolling of the statute of limitations clock, and the current action was filed more than three years after the expiration of the six year statute of limitations.
Plaintiff opposes the motion and states that the Summons and Complaint in the 2008 Action was discontinued because it incorrectly recited that MERS is a party to the Note and provides that MERS commenced the 2008 Action as the owner and holder of the Note and Mortgage. Rather, the Note was executed in favor of MortgageIt, Inc., and MERS had no standing to commence or maintain the 2008 foreclosure. Subsequent to discovering this error, plaintiff claims that, by Notice of Motion dated May 8, 2014, Plaintiff in the 2008 Action moved for an Order discontinuing the 2008 Action without prejudice, vacating the judgment and dismissing any counterclaims and crossclaims due to title insurability issues. Thereafter, on July 18, 2017, plaintiff commenced the instant action and in its affirmation in opposition states that, “insofar as Plaintiff is time-barred from collecting arrears aged more than six years prior to the commencement of the foreclosure, Plaintiff has waived the arrears from November 1, 2007 through July 1, 2011 and seeks to foreclose upon Defendant's default in making the August 1, 2011 payment and all subsequent mortgage payments.:
Plaintiff claims that the purported acceleration by the 2008 Action was a nullity since MERS had no standing to commence this Action. This being due to MERS having never been assigned the Note and Mortgage nor having possession of the Note at the time of the commencement of the 2008 Action. Plaintiff claims that since the acceleration of the note was a nullity, the statute of limitations did not begin to run and the current action is not time barred. Plaintiff also claims since the 2008 action resulted in a voluntary discontinuance pursuant to MERS motion, that was granted in an Order of the Court, entered on August 27, 2014, the 2008 acceleration was rescinded. This affirmative act of rescission was within six years of the instant action, thus rendering the instant action timely filed.
Here, the defendant established that the six-year statute of limitations began to run on the entire debt on May 9, 2008, the date the MERS accelerated the mortgage debt by commencing the prior action. See, Freedom Mtge. Corp. v. Engel, 163 A.D.3d 631, 632-633, 81 N.Y.S.3d 156 (2d Dept. 2018.) Since the plaintiff did not commence this action until July 18, 2017, more than six years later, the defendant sustained his initial burden of demonstrating, prima facie, that this action was untimely. U.S. Bank N.A. v. Martin, 144 A.D.3d 891, 892, 41 N.Y.S.3d 550 (2d Dept. 2016.) The burden then shifted to the plaintiff to present admissible evidence establishing that the action was timely or to raise a question of fact as to whether the action was timely. Id. at 892, 41 N.Y.S.3d 550.
The plaintiff failed to meet its burden. Contrary to its contention, the plaintiff failed to raise a question of fact as to whether it affirmatively revoked its election to accelerate the mortgage within the six-year limitations period. Its filing of the motion and the Court's Order discontinuing the action, did not, by themselves, constitute an affirmative act to revoke MERS' election to accelerate, since the motion and Order were silent on the issue of the election to accelerate, and did not otherwise indicate that the plaintiff would accept installment payments from the defendant MD A. Islam. See, Bank of NY Mellon v. Craig, 169 A.D.3d 627, 93 N.Y.S.3d 425 (2d Dept. 2019). See, also, Deutsche Bank Trust Co. Ams. v Smith, 170 A.D.3d 660, 93 N.Y.S.3d 613 (2d Dept. 2019.)
Furthermore, the plaintiff's argument that the acceleration of the note was a nullity is without merit. First, the Court Order of discontinuance of the action does not state standing was a basis or consideration in reaching the decision. Second, the motion by MERS did not mention it was based upon any epiphany regarding standing. Rather, it sought vacatur of the Judgment of Foreclosure and Sale and discontinuance of the action “due to title insurability issues.” Therefore, plaintiff's claims to the contrary are belied by MERS' motion.
Third, a facially adequate cause of action to foreclose a mortgage requires allegations regarding the existence of the mortgage, the unpaid note, and the defendant's default thereunder, which, if subsequently proven, will establish a prima facie case for relief. US Bank N.A. v Nelson, 169 A.D.3d 110, 93 N.Y.S.3d 138 (2d Dept. 2019.) (Citations omitted.) In order to place in issue any of these essential elements of the cause of action, a defendant need only deny them in the answer. However, as a general matter, a plaintiff need not establish its standing (i.e., that it held and/or owned the note at the time the action was commenced) as an essential element of the cause of action. Id. (Citations omitted.) Rather, it is only where the plaintiff's standing is placed in issue by the defendant that the plaintiff must shoulder the additional burden of establishing its standing to commence the action, a burden satisfied by evidence that it was the holder or assignee of the underlying note at the time the action was commenced. Id. (Citations omitted.) Consequently, where, as here, standing is not an essential element of the cause of action, under CPLR 3018(b) a defendant must affirmatively plead lack of standing as an affirmative defense in the answer in order to properly raise the issue in its responsive pleading. Id. (Citations omitted.) This was not done in the 2008 action by defendant MD A. Islam, nor any other defendant. Since CPLR 3211 (subd [e] ) provides that such a defense is waived if not raised either by motion or in the responsive pleading, any objection to MERS standing was deemed waived. Clearly, if defendants waived such objections, plaintiff in the instant matter cannot raise an objection to MERS standing and seek to use lack of standing to its advantage. Moreover, in the 2008 action, there was the 2009 Order that granted MERS' motion for a Judgment of Foreclosure and Sale. Thereby, finding MERS made out a sufficient cause of action and, in essence, making a finding of standing based upon there being no objection. To adopt plaintiff's argument regarding standing would twist the well established rules into a means to avoid statute of limitations bars to actions. This Court has not been given any basis to do so.
Based on the above, defendant MD A. Islam's motion to dismiss the complaint, as against him, pursuant to CPLR 3211 (a) (5), is granted.
Robert I. Caloras, J.
Response sent, thank you
Docket No: 709738/17
Decided: March 29, 2019
Court: Supreme Court, Queens County, New York.
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