RESIDENTIAL MORTGAGE LOAN TRUST 2013 TT2 v. ELSHIEKH (2026)

DECISION & ORDER

In an action to foreclose a mortgage, the plaintiff appeals from an order of the Supreme Court, Nassau County (Rhonda E. Fischer, J.), dated March 6, 2025.  The order, insofar as appealed from, denied those branches of the plaintiff's motion which were for summary judgment on the complaint insofar as asserted against the defendants Moustafa Elshiekh and Lorraine Pavon, to strike the affirmative defenses of those defendants, and for an order of reference and granted those branches of those defendants' cross-motion which were for summary judgment dismissing the complaint insofar as asserted against them as time-barred and on their counterclaim pursuant to RPAPL article 15 to cancel and discharge of record the subject mortgage.

ORDERED that the order is modified, on the law, by deleting the provision thereof granting those branches of the cross-motion of the defendants Moustafa Elshiekh and Lorraine Pavon which were for summary judgment dismissing the complaint insofar as asserted against them as time-barred and on their counterclaim pursuant to RPAPL article 15 to cancel and discharge of record the subject mortgage, and substituting therefor a provision denying those branches of the cross-motion;  as so modified, the order is affirmed insofar as appealed from, without costs or disbursements.

On March 26, 2007, the defendant Lorraine Pavon executed a note in the amount of $402,500 in favor of Castle Point Mortgage, Inc. (hereinafter Castle Point).  The note was secured by a mortgage on certain real property located in Nassau County.  The mortgage was signed by both Pavon and the defendant Moustafa Elshiekh (hereinafter together the defendants).

On March 8, 2012, Deutsche Bank National Trust Company (hereinafter Deutsche Bank), Castle Point's successor in interest, commenced an action to foreclose the mortgage against the defendants, among others (hereinafter the prior action).  The complaint stated that Deutsche Bank has “elected to and hereby accelerate[s] the mortgage and declare[s] the entire mortgage indebtedness immediately due and payable.”

In an order dated October 26, 2022, the Supreme Court, among other things, granted the defendants' cross-motion to dismiss the complaint in the prior action insofar as asserted against them on the ground that Deutsche Bank failed to comply with a notice of default provision in the mortgage agreement.  The court stated that “Plaintiff failed to satisfy a condition precedent to the acceleration of the subject loan as expressly required in the mortgage.”

On October 23, 2023, the plaintiff, Deutsche Bank's successor in interest, commenced the instant action to foreclose the mortgage against the defendants, among others.  The complaint stated that “there is now due and owing to the Plaintiff under said Note and Mortgage the principal sum of $440,882.36, with interest thereon from September 1, 2009.”  The plaintiff noted that it “only seeks to collect those installments which are within 6 years past due as of the date of commencement.”  In a footnote, the plaintiff stated that the amount of $440,882.36 “reflects the unpaid principal balance as of the default date and interest paid through date.”

In their answer, the defendants alleged that the action was time-barred.  The defendants also asserted a counterclaim pursuant to RPAPL article 15 to cancel and discharge of record the mortgage on the ground that any foreclosure action would be time-barred.

On August 23, 2024, the plaintiff moved, inter alia, for summary judgment on the complaint insofar as asserted against the defendants, to strike the defendants' affirmative defenses, and for an order of reference.  In support of the motion, the plaintiff submitted copies of RPAPL 1304 notices sent to the defendants.  The notices stated in relevant part:  “As of 07/05/2023, your home loan is 4954 days and $735,151.56 dollars in default.”

The defendants opposed the plaintiff's motion and cross-moved, among other things, for summary judgment dismissing the complaint insofar as asserted against them as time-barred and on their counterclaim pursuant to RPAPL article 15 to cancel and discharge of record the mortgage.

In an order dated March 6, 2025, the Supreme Court, inter alia, denied those branches of the plaintiff's motion which were for summary judgment on the complaint insofar as asserted against the defendants, to strike the defendants' affirmative defenses, and for an order of reference and granted those branches of the defendants' cross-motion which were for summary judgment dismissing the complaint insofar as asserted against them as time-barred and on their counterclaim pursuant to RPAPL article 15 to cancel and discharge of record the mortgage.  The plaintiff appeals.

The Supreme Court erred in granting those branches of the defendants' cross-motion which were for summary judgment dismissing the complaint insofar as asserted against them as time-barred and on their counterclaim pursuant to RPAPL article 15 to cancel and discharge of record the mortgage.  An action to foreclose a mortgage is governed by a six-year statute of limitations (see CPLR 213[4] ).  “[E]ven 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” (Bank of N.Y. Mellon v. Mor, 201 A.D.3d 691, 694, 162 N.Y.S.3d 64;  see U.S. Bank N.A. v. Connor, 204 A.D.3d 861, 862–863, 164 N.Y.S.3d 513).  The entire mortgage debt will be deemed to have been accelerated by, as relevant here, the commencement of a mortgage foreclosure action in which the complaint seeks payment of the full outstanding loan balance (see U.S. Bank N.A. v. Connor, 204 A.D.3d at 863, 164 N.Y.S.3d 513).

Here, although Deutsche Bank expressly elected to call due the entire amount secured by the mortgage when it commenced the prior action, that action was dismissed based upon the Supreme Court's determination that Deutsche Bank had failed to comply with the notice of default provision contained in paragraph 22 of the mortgage agreement, which required service of a specified default notice as a condition precedent to acceleration of the loan (see U.S. Bank Trust, N.A. v. Gruen, 237 A.D.3d 996, 998, 232 N.Y.S.3d 568;  cf.  Brennan v. Deutsche Bank Trust Co. Ams., 237 A.D.3d 1027, 1029–1030, 233 N.Y.S.3d 121).  Contrary to the defendants' contention, the plaintiff is not estopped from asserting that the debt was not validly accelerated by the commencement of the prior action, since that action was “dismissed based on an expressed judicial determination, made upon a timely interposed defense, that the instrument was not validly accelerated” (CPLR 213[4];  see U.S. Bank Trust, N.A. v. Gruen, 237 A.D.3d at 998, 232 N.Y.S.3d 568).

However, the Supreme Court correctly denied those branches of the plaintiff's motion which were for summary judgment on the complaint insofar as asserted against the defendants, to strike the defendants' affirmative defenses, and for an order of reference.  RPAPL 1304(1) provides that “with regard to a home loan, at least ninety days before a lender, an assignee or a mortgage loan servicer commences legal action against the borrower, ․ including mortgage foreclosure, such lender, assignee or mortgage loan servicer shall give notice to the borrower.”  “[P]roper service of RPAPL 1304 notice on the borrower or borrowers is a condition precedent to the commencement of a residential foreclosure action” (U.S. Bank Trust, N.A. v. Mohammed, 197 A.D.3d 1205, 1207, 154 N.Y.S.3d 80 [internal quotation marks omitted];  see Deutsche Bank Natl. Trust Co. v LoPresti, 203 A.D.3d 883, 884, 165 N.Y.S.3d 565).

Here, the plaintiff failed to tender sufficient evidence demonstrating the absence of triable issues of fact as to its strict compliance with the content requirements of RPAPL 1304.  RPAPL 1304(1) requires that the 90–day notice state:  “As of _, your home loan is _ days and _ dollars in default.”  The instant RPAPL 1304 notices stated:  “As of 07/05/2023, your home loan is 4954 days and $735,151.56 dollars in default.”  In contrast, the complaint stated that “there is now due and owing to the Plaintiff under said Note and Mortgage the principal sum of $440,882.36, with interest thereon from September 1, 2009.”  Although the complaint noted that the plaintiff “only seeks to collect those installments which are within 6 years past due as of the date of commencement,” the complaint clarified in a footnote that the amount of $440,882.36 “reflects the unpaid principal balance as of the default date and interest paid through date.”  At least one of these documents, then, contained an error concerning the amount due on the note—information that was required under RPAPL 1304.  Notably, the plaintiff's response to the defendants' cross-motion, among other things, for summary judgment dismissing the complaint insofar as asserted against them as time-barred did not attempt to clarify this discrepancy;  it only addressed the service of the 90–day notice.  The plaintiff's appellate brief likewise does not address this issue.  Accordingly, the plaintiff did not eliminate the existence of triable issues of fact as to whether the RPAPL 1304 notices were defective on their faces (see U.S. Bank N.A. v. Cox, 203 A.D.3d 1206, 166 N.Y.S.3d 41;  Flagstar Bank, FSB v. Damaro, 145 A.D.3d 858, 860, 44 N.Y.S.3d 128;  cf.  Citibank, N.A. v. Crick, 176 A.D.3d 776, 778, 110 N.Y.S.3d 720).

The parties' remaining contentions need not be reached in light of our determination.

GENOVESI, J.P., WARHIT, LOVE and QUIRK, JJ., concur.