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HSBC BANK USA, N.A., Plaintiff, v. John ADAGO, Board of Directors of the Hampton Point Association, Inc., National City Bank, “John Doe #1” to “John Doe #10”, the last ten names being fictitious and unknown to plaintiff, the persons or parties intended being the persons or parties, if any, having or claiming an interest in or lien upon the mortgaged premises described in the verified complaint, Defendants.
Upon the E-file document list numbered 100 to 140 on the motion by plaintiff for an order granting it summary judgment, striking the affirmative defenses and dismissing the counterclaims asserted by defendant John Adago, appointing a referee to compute the amount alleged to be owed plaintiff and on the cross-motion of defendant John Adago for an order granting him summary judgment dismissing plaintiff's complaint; it is
ORDERED that the cross-motion by defendant John Adago for an order granting him summary judgment dismissing the complaint is granted, for the reasons set forth herein; and it is further
ORDERED that the motion by plaintiff for an order granting summary judgment in its favor, striking the affirmative defenses and dismissing the counterclaims in the answer of defendant John Adago, appointing a referee to compute the amounts owed to plaintiff, is granted, only to the extent that the counterclaims asserted in the answer are dismissed, and is otherwise denied, as academic.
This is an action to foreclose a mortgage on property located at 8 Hallock Road, East Quogue, in the County of Suffolk and State of New York (the “subject property”). This is the second foreclosure action involving this property, the first action having been commenced on October 23, 2008 bearing index number 38801/2008 (the “first action”) and thereafter dismissed by order dated December 21, 2011 for lack of personal jurisdiction over the defendant John Adago (“defendant”).
This second foreclosure action was commenced by the filing of a summons and complaint on December 16, 2014, six years and approximately two months after the commencement of the first action. The complaint alleges that on March 22, 2006, plaintiff's predecessor in interest HSBC Mortgage Corporation (USA) (“HSBC Mortgage”) loaned defendant $178,500.00 in exchange for which defendant executed a promissory note in that amount bearing the same date. As security for the note, defendant simultaneously executed and delivered a mortgage, which operated as a lien on the subject property. The mortgage was recorded in the Suffolk County Clerk's Office on April 19, 2006. The complaint further alleges that plaintiff served defendant with a notice of default dated August 25, 2008, advising him that he was required to cure his default within thirty (30) days. The complaint further alleges that defendant failed to cure his default resulting in the commencement of the first action. The first action was dismissed for lack of personal jurisdiction due to improper service of process upon defendant. The complaint alleges that defendant's default persisted thereafter and by letter dated December 28, 2012, plaintiff notified defendant that he was in default under the terms of the note and mortgage and advised defendant that foreclosure proceedings would be commenced unless the default was cured. This second foreclosure action thereafter ensued.
In response to the complaint, defendant served and filed an answer dated January 6, 2015, asserting fourteen affirmative defenses and three counterclaims. Plaintiff served and filed a reply to the counterclaims on January 13, 2015. Thereafter, plaintiff and defendant engaged in mandatory settlement conferences on June 10, 2015 and December 7, 2015. Following the last settlement conference, this matter was released from the foreclosure settlement part.
Plaintiff now moves for an order granting it summary judgment on its complaint, striking the defendant's affirmative defenses, dismissing the counterclaims, and appointing a referee. In support of its motion plaintiff submits, inter alia, an attorney affirmation, a statement of material facts, the sworn affidavit of Ann M. Kennedy, assistant vice president of plaintiff, and various exhibits. Plaintiff argues that it has demonstrated its entitlement to summary judgment and that defendant's fourteen affirmative defenses and counterclaims fail to raise a triable issue of fact, are barred by ratification, and are otherwise without merit. Defendant opposes plaintiff's motion and cross-moves for summary judgment dismissing the complaint arguing that this action is barred by the applicable statute of limitations and that plaintiff failed to comply with the notice requirements set forth in paragraph 22 of the subject mortgage. In support of his motion, defendant submits, inter alia, an attorney affirmation, a sworn affidavit, a cross-statement of material facts, and various exhibits. Plaintiff opposes the cross-motion and replies and defendant replies.
For a plaintiff to establish prima facie entitlement to judgment as a matter of law in an action to foreclose a residential mortgage, plaintiff must produce, inter alia, the mortgage, the unpaid note, and evidence of defendant's default in making required payments (see HSBC Bank USA, N.A. v Bhatti,186 AD3d 817, 130 NYS3d 474[2d Dept 2020]; KeyBank N.A. v Barrett, 178 AD3d 800, 114 NYS3d 451 [2d Dept 2019]). Where, as here, an answer includes the defense of standing, the plaintiff must prove its standing in order to be entitled to relief (see U.S. Bank, N.A. v Bochicchio, 179 AD3d 1133, 118 NYS3d 191 [2d Dept 2020]; Wells Fargo Bank, N.A. v Gonzalez, 174 AD3d 555, 104 NYS3d 167 [2d Dept 2019]; Bank of New York v Aiello, 164 AD3d 632, 83 NYS3d 135 [2d Dept 2018]). The standing of a plaintiff in a mortgage foreclosure action is measured by its ownership, holder status or possession of the note at the time of the commencement of the action (see HSBC Bank USA, N.A. v Chabot,191 AD3d 648, 140 NYS3d 584 [2d Dept 2021]; Bank of NY v Silverberg, 86 AD3d 274, 926 NYS2d 532 [2d Dept 2011]; U.S. Bank, N.A. v Collymore, 68 AD3d 752, 890 NYS2d 578 [2d Dept 2009]). “Either a written assignment of the underlying note or the physical delivery of the note prior to the commencement of the foreclosure action is sufficient to transfer the obligation, and the mortgage passes with the debt as an inseparable incident” (U.S. Bank, N.A. v Collymore, supra, 68 AD3d at 754 [internal quotation marks and citations omitted]); see also Bank of America, N.A. v Barton, 149 AD3d 676, 50 NYS3d 546 [2d Dept 2017]). The plaintiff also can demonstrate that the original note was physically delivered to it prior to the commencement of the action by attaching a copy of the original note, endorsed in blank, to the summons and complaint in the action (see HSBC Bank USA, N.A. v Chabot,191 AD3d 648, 649-50, 140 NYS3d 584 [2d Dept 2021] Deutsche Bank Natl. Trust Co. v Cardona, 172 AD3d 1313, 99 NYS3d 668 [2d Dept 2019]; U.S. Bank, N.A. v Nathan, 173 AD3d 1112, 104 NYS3d 144 [2d Dept 2019]) or by submitting an affidavit of its representative which establishes the factual details of the delivery of the note and complies with CPLR 4518 (see Citimortgage v Laupot, 190 AD3d 680, 135 NYS3d 889 [2d Dept 2021]; U.S. Bank Trust N.A. v Auxila, 189 AD3d 1514, 139 NYS3d 236 [2d Dept 2020]; HSBC USA, N.A. v Campbell-Antoine, 179 AD3d 1043, 118 NYS3d 134 [2d Dept 2020]).
Here, plaintiff established, prima facie, its standing by demonstrating that it had physical possession of the note at the time it commenced the action, as evidenced by its attachment to the complaint of the note, endorsed in blank (see U.S. Bank, N.A. v Nathan, 173 AD3d 1112, 104 NYS3d 144 [2d Dept 2019]; U.S. Bank N.A. v Mezrahi, 169 AD3d 952, 94 NYS3d 611 [2d Dept 2019]); see also Wells Fargo Bank, N.A. v Ballard, 172 AD3d 1440, 102 NYS3d 229 [2d Dept 2019]; Wells Fargo Bank v Thomas, 150 AD3d 1312, 52 NYS3d 894 [2d Dept 2017]; Aurora Loan Servs., LLC v Taylor, 25 NY3d 355, 362, 12 NYS3d 612, 614 ; U.S. Bank, N.A. v Saravanan, 146 AD3d 1010, 45 NYS3d 547 [2d Dept 2017]; Nationstar Mtge., LLC v Catizone, 127 AD3d 1151, 1152, 9 NYS3d 315 [2d Dept 2015]). Defendant does not raise a triable issue of fact in response.
While defendant does not dispute that he executed the subject note and mortgage and defaulted in making the monthly payments due and owing, he asserts fourteen affirmative defenses and three counterclaims. In opposition to plaintiff's motion and in support of his cross-motion for summary judgment, defendant relies upon only two defenses, those being that the action is barred by the statute of limitations and that plaintiff has not demonstrated that the requisite notice was provided to defendant under paragraph 22 of the mortgage prior to the commencement of this action.
Generally, a mortgage foreclose action may be brought to recover unpaid amounts due within the six-year period immediately preceding the action (see CPLR § 213; Everhome Mtge. Co. v Aber, 195 AD3d 682, 151 NYS3d 55 [2d Dept 2021]; Bank of New York Mellon v Dieudonne, 171 AD3d 34, 96 NYS3d 354 [2d Dept 2019]). Where an installment payment mortgage is properly accelerated, the entire amount is due and the six year statute of limitations begins to run on the entire mortgage debt (see CPLR US Bank N.A. v. Papnikolaw 197 Ad3d 767, 150 NYS3d 584 [2d Dept 2021]; Emigrant Bank v McDonald 197 AD3d 453, 153 NYS3d 30 [2d Dept 2021]).
The filing of a foreclosure summons and complaint and lis pendens may constitute an acceleration of a debt, thereby triggering the limitations period (see HSBC Bank USA, N.A. v Hochstrasser 193 AD3d 915, 147 NYS3d 600 [2d Dept 2021]; Federal National Mortgage Association v. Woolstone, 196 Ad3d 548, 147 NYS3d 458 [2d Dept 2021]). A lender, however, may revoke its election to accelerate the mortgage by an affirmative act of revocation occurring during the six-year statute of limitations period after the initiation of the prior foreclosure action (see Deutsche Bank Natl. Tr. Co. v Blank, 189 AD3d 1678, 140 NYS3d 52 [2d Dept 2020]; Deutsche Bank Natl. Trust Co. v Limtcher, 193 AD3d 686, 141 NYS3d 686 [2d Dept 2021]; Freedom Mtge. Corp. v Engel, 163 AD3d 631, 81 NYS3d 156 [2d Dept 2018]). As recently held by the Court of Appeals, where acceleration occurs by the filing of a complaint in a foreclosure action, the plaintiff's voluntary discontinuance of that action constitutes an affirmative act of revocation of the acceleration as a matter of law, absent an express, contemporaneous statement to the contrary by the plaintiff (see Freedom Mtge. Corp. v Engel, 37 NY3d 1, 146 NYS3d 542 rearg denied, 37 NY3d 926 ; Hart 230, Inc. v PennyMac Corp., 194 AD3d 789, 149 NYS3d 134 [2d Dept 2021]; Persaud v U.S. Bank N.A., 197AD3d 1120, 150 NYS3d 615 [2d Dept 2021]; Wells Fargo Bank, N.A. v Islam, 193 AD3d 1016, 142 NYS3d 819 [2d Dept 2021]; Pryce v Nationstar Mtge., LLC, 193 AD3d 999, 142 NYS3d 827 [2d Dept 2021]).
Here, the commencement of the first action resulted in an acceleration of the entire indebtedness. The debt was “accelerated when the verified complaint and lis pendens were filed, even though the papers had not yet been served on the borrower” (Freedom Mtge. Corp. v Engel, 37 NY3d at 23, 146 NYS3d at 549-550 citing Albertina Realty Co. v Rosbro Realty Corp., 258 NY 472 ; see also MSMJ Realty, LLC v DLJ Mtge. Capital, Inc., 157 AD3d 885, 886-87, 69 NYS3d 870[2d Dept 2018]). Because plaintiff commenced this action more than six years after the loan was accelerated, defendant sustained his prima facie burden that this action is time-barred (see Everhome Mtge. Co. v Aber, 195 AD3d 682, 151 NYS3d 55 [2d Dept 2021]). The burden then shifted to plaintiff “to present admissible evidence to raise a question of fact as to whether the statute of limitations was tolled or otherwise inapplicable, or whether the plaintiff actually commenced this action within the applicable limitations period” (id. at 685, 151 NYS3d at 59). Plaintiff's argues that its own alleged failure to provide proper notice of the default to defendant under paragraph 22 of the mortgage prior to commencing the first action did not result in an acceleration of the loan. This argument is unavailing. As was stated by the Second Department in Everhome Mtge. Co. v Aber:
The requirement in paragraph 22 (b) of the mortgage that the lender first send the borrower a written notice of default, within at least 30 days’ notice of acceleration, is a contractual condition precedent inserted in the contract solely for the benefit of the borrower, as it gives the borrower additional time to make installment payments before the lender may accelerate the mortgage debt. As such, compliance with paragraph 22 (b) is enforceable and waivable only by the borrower. Thus, the plaintiff's belated attempt to take advantage of its own potential breach of paragraph 22 (b) ․ must not be condoned ․ Thus, given that the [April 30,] 2009 acceleration of the mortgage debt was neither invalidated by the court nor revoked by the plaintiff ․ the [June 24, 2015] action is time barred. (195 AD3d at 686, 151 NYS3d at 61) (citations omitted; emphasis added).
Here, the loan was accelerated when plaintiff commenced the first action on October 23, 2008 (see Ocwen Loan Servicing, LLC v Sirianni, 202 AD3d 702, 163 NYS3d 110 [2d Dept 2022]; Everhome Mtge. Co. v Aber, supra). Indeed, plaintiff brought the first action despite and regardless of the validity of the default notice it provided defendant and thereafter secured a default judgment against defendant, which was later vacated as a result of the dismissal of the first action for lack of jurisdiction. Plaintiff's alleged failure to comply with paragraph 22 of the mortgage could have been raised as a defense by defendant in the first action. As such, this defense, which was available to defendant, cannot be interposed by plaintiff in this action as a means of undoing its own acceleration of the loan which occurred upon commencement of the first action. Plaintiff is seeking to use its own alleged failure to provide proper notice of the default under the terms of the mortgage to defendant prior to the commencement of the first action as a means to render its affirmative act of acceleration of the loan null and void. A defense available to the borrower in the first action cannot be seized by the plaintiff to avoid the statute of limitations in this second action. The fact remains that plaintiff did commence the first action, accelerated the loan, and whether the proper default notice was provided to defendant under the terms of the note prior to the commencement of the first action is of no moment. The Court notes that plaintiff does not assert that it was without authority to accelerate the loan. In that regard, plaintiff does not argue that it lacked standing to commence the first action 1 nor does plaintiff assert any affirmative act of revocation of the acceleration during the six-year limitations period subsequent to the initiation of the first action (see Freedom Mtge. Corp. v Engel, supra; MSMJ Realty, LLC v DLJ Mtge. Capital, Inc., supra). Based upon the foregoing, this foreclosure action, having been brought more than six years from October 23, 2008, is dismissed as untimely. In light of this finding, the Court need not address the remaining defense raised that plaintiff failed to comply with the notice requirements of the mortgage prior to the commencement of this action. The Court has considered the remaining arguments of plaintiff and finds that they lack merit.
Accordingly, the motion by defendant John Adago for summary judgment dismissing the complaint is granted, on the ground that the action was not timely commenced (CPLR § 213; Everhome Mtge. Co. v Aber, 195 AD3d 682, 151 NYS3d 55 [2d Dept 2021]). Plaintiff's motion is granted only to the extent that the counterclaims asserted by defendant are dismissed. In this regard, defendant does not oppose plaintiff's arguments regarding his counterclaims and, as such, defendant waived his opposition to same and is deemed to have abandoned his counterclaims (see e.g. Kuehne & Nagel, Inc. v Baiden, 36 NY2d 539, 369 NYS2d 667 ; Bosco Credit V Trust Series 2012-1 v Johnson, 177 AD3d 561, 135 NYS2d 5 [2d Dept 2019]; U.S. Bank N.A. v Echevarria, 171 AD3d 979, 97 NYS3d 708 [2d Dept 2019]; New York Commercial Bank v J. Realty F Rockaway, Ltd., 108 AD3d 756, 969 NYS2d 796 [2d Dept 2013]; Kronick v L.P. Thebault Co., Inc., 70 AD3d 648, 892 NYS2d 895 [2d Dept 2010]; Genovese v. Gambino, 309 AD2d 832, 766 NYS2d 213 [2d Dept. 2003]; Patel v. American Univ. of Antigua, 104 AD3d 568, 962 NYS2d 107 [1st Dept. 2013]).
The foregoing constitutes the decision and Order of the Court.
1. Where a prior mortgage foreclosure action is dismissed for lack of standing, any purported acceleration of the mortgage debt by the noteholder is a nullity, as it lacked standing to commence the action, and thus the authority to accelerate the mortgage debt (Deutsche Bank Natl. Trust Co. v Limtcher, 193 AD3d 686, 688, 141 NYS3d 907 [2d Dept 2021]; see also EMC Mtge. v Suarez, 49 AD3d 592, 593, 852 NYS2d 791 [2d Dept 2008]). In those instances, a subsequent mortgage foreclosure action is timely “only with respect to those installments that accrued within six years of the date of commencement of the action” (Deutsche Bank v Limtcher, supra at 688; see also EMC Mtge. v Suarez, supra).
Christopher Modelewski, J.
Response sent, thank you
Docket No: Index No. 70638/2014
Decided: April 29, 2022
Court: Supreme Court, Suffolk County, New York.
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