CAPITAL ONE v. LUDDEN (2021)

DECISION & ORDER

In an action to foreclose a mortgage, the defendant Joseph Ludden appeals from an order of the Supreme Court, Nassau County (Thomas A. Adams, J.), entered March 12, 2018.  The order denied that defendant's motion for summary judgment dismissing the complaint insofar as asserted against him as time-barred, or, in the alternative, pursuant to CPLR 3211(a)(3) to dismiss the complaint insofar as asserted against him on the ground that the plaintiff lacked standing.

ORDERED that the order is affirmed, with costs.

The defendant Joseph Ludden (hereinafter the defendant) executed a note promising to repay a loan that was secured by a mortgage.  The defendant allegedly defaulted on his monthly mortgage payments beginning in December 2010.  By letter dated December 29, 2010, the plaintiff's predecessor in interest notified the defendant that, “[i]f the default is not cured on or before February 2, 2011, the mortgage payments will be accelerated with the full amount remaining accelerated and becoming due and payable in full, and foreclosure proceedings will be initiated at that time.”

On March 22, 2017, the plaintiff commenced this action to foreclose the mortgage, annexing, inter alia, a lost note affidavit as an exhibit to its complaint.  The defendant answered and asserted, among other things, affirmative defenses that the action was time-barred and that the plaintiff lacked standing.  Thereafter, the defendant moved for summary judgment dismissing the complaint insofar as asserted against him as time-barred or, in the alternative, pursuant to CPLR 3211(a)(3) to dismiss the complaint insofar as asserted against him on the ground that the plaintiff lacked standing.  The plaintiff opposed the motion.  In an order entered March 12, 2018, the Supreme Court denied the defendant's motion.  The defendant appeals.

Actions to foreclose a mortgage are governed by a six-year statute of limitations (see CPLR 213[4];  U.S. Bank N.A. v. Vitolo, 182 A.D.3d 627, 628, 120 N.Y.S.3d 791;  Milone v. U.S. Bank N.A., 164 A.D.3d 145, 151, 83 N.Y.S.3d 524).  “ ‘The law is well settled that, 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’ ” (Kashipour v. Wilmington Sav. Fund Socy., FSB, 144 A.D.3d 985, 986, 41 N.Y.S.3d 738, quoting EMC Mtge. Corp. v. Patella, 279 A.D.2d 604, 605, 720 N.Y.S.2d 161).

Where, as here, the acceleration of the maturity of a mortgage debt is made optional with the holder of the note and mortgage, “some affirmative action must be taken evidencing the holder's election to take advantage of the accelerating provision, and until such action has been taken the provision has no operation” (Wells Fargo Bank, N.A. v. Burke, 94 A.D.3d 980, 982–983, 943 N.Y.S.2d 540;  see U.S. Bank N.A. v. Gordon, 158 A.D.3d 832, 835, 72 N.Y.S.3d 156).  “To be effective, the acceleration notice to the borrower must be clear and unequivocal” (Milone v. U.S. Bank N.A., 164 A.D.3d at 152, 83 N.Y.S.3d 524;  see U.S. Bank N.A. v. Vitolo, 182 A.D.3d at 628, 120 N.Y.S.3d 791).  A “letter discussing acceleration as a possible future event ․ does not constitute an exercise of the mortgage's optional acceleration clause” (21st Mtge. Corp. v. Adames, 153 A.D.3d 474, 475, 60 N.Y.S.3d 198).

Contrary to the defendant's contention, the December 29, 2010 letter did not accelerate the mortgage debt (see U.S. Bank N.A. v. Gordon, 176 A.D.3d 1006, 1008, 111 N.Y.S.3d 30).  Rather, the language in the letter “was merely an expression of future intent that fell short of an actual acceleration” (Milone v. U.S. Bank N.A., 164 A.D.3d at 152, 83 N.Y.S.3d 524;  see Freedom Mtge. Corp. v. Engel, 37 N.Y.3d 1, 146 N.Y.S.3d 542, 169 N.E.3d 912;  U.S. Bank N.A. v. Vitolo, 182 A.D.3d at 628, 120 N.Y.S.3d 791;  Bank of N.Y. Mellon v. Morris, 172 A.D.3d 1150, 1151, 98 N.Y.S.3d 875;  U.S. Bank N.A. v. Sopp, 170 A.D.3d 776, 778, 95 N.Y.S.3d 261;  North Shore Invs. Realty Group, LLC v. Traina, 170 A.D.3d 737, 738, 95 N.Y.S.3d 277).  Therefore, the defendant failed to satisfy his initial burden of demonstrating, prima facie, that the time within which to commence the action had expired (see U.S. Bank N.A. v. Vitolo, 182 A.D.3d at 628–629, 120 N.Y.S.3d 791;  U.S. Bank N.A. v. Greenberg, 170 A.D.3d 1237, 1239, 97 N.Y.S.3d 133).

“On a defendant's motion to dismiss the complaint based upon the plaintiff's alleged lack of standing, the burden is on the moving defendant to establish, prima facie, the plaintiff's lack of standing as a matter of law” (New York Community Bank v. McClendon, 138 A.D.3d 805, 806, 29 N.Y.S.3d 507;  see U.S. Bank N.A. v. Clement, 163 A.D.3d 742, 743, 81 N.Y.S.3d 116).  Pursuant to UCC 3–804, which is intended to provide a method of recovery on instruments that are lost, destroyed, or stolen, a plaintiff is required to submit “due proof of [the plaintiff's] ownership, the facts which prevent [its] production of [the note,] and its terms” (see Deutsche Bank Natl. Trust Co. v. Anderson, 161 A.D.3d 1043, 1044, 79 N.Y.S.3d 42).  Here, the defendant failed to demonstrate that the plaintiff was not the owner of the lost note at the time the action was commenced (see id. at 1044, 79 N.Y.S.3d 42).

DILLON, J.P., LASALLE, BARROS and CONNOLLY, JJ., concur.