J & JT Holding Corp. v. Deutsche Bank Nat'l Trust Co.

• Decision Date: 05 June 2019
• Docket Number: Index No. 12296/14,2016–05768
• Citation: 173 A.D.3d 704,104 N.Y.S.3d 112
• Parties: J & JT HOLDING CORP., Respondent, v. DEUTSCHE BANK NATIONAL TRUST COMPANY, etc., Appellant.
• Court: New York Supreme Court — Appellate Division

173 A.D.3d 704

104 N.Y.S.3d 112

J & JT HOLDING CORP., Respondent,

v.DEUTSCHE BANK NATIONAL TRUST COMPANY, etc., Appellant.

2016–05768

Index No. 12296/14

Supreme Court, Appellate Division, Second Department, New York.

Argued—April 16, 2018

June 5, 2019

DECISION & ORDER

In an action, inter alia, pursuant to RPAPL article 15 to compel the determination of claims to real property, the defendant appeals from an order of the Supreme Court, Queens County (Rudolph E. Greco, Jr., J.), entered March 29, 2016. The order, insofar as appealed from, denied the defendant's motion pursuant to CPLR 3211(a)(1) and (7) to dismiss the complaint.

ORDERED that the order is reversed insofar as appealed from, on the law, with costs, and the defendant's motion pursuant to CPLR 3211(a)(1) and (7) to dismiss the complaint is granted.

In October 2006, nonparty Pradeep Lakhanlall obtained a loan in the amount of $ 480,000 from nonparty Impac Funding Corporation (hereinafter Impac) secured by a mortgage on real property located in South Ozone Park. The mortgage was recorded by Mortgage Electronic Registration Systems, Inc. (hereinafter MERS), the mortgagee of record, on behalf of Impac. In April 2007, after Lakhanlall defaulted on the payment due on January 1, 2007, and those due thereafter, the defendant, Deutsche Bank National Trust Company (hereinafter Deutsche Bank), commenced an action to foreclose the mortgage (hereinafter the foreclosure action). In an order dated October 1, 2008, the Supreme Court denied Deutsche Bank's ex parte motion for a judgment of foreclosure and sale because Deutsche Bank failed to annex a copy of the relevant assignment between it and MERS.

Deutsche Bank subsequently moved for leave to renew its motion for a judgment of foreclosure and sale, and included a copy of the assignment dated October 10, 2007, of the subject mortgage, together with the note, from MERS, as nominee for Impac, to it, referenced by the court in the prior order. In an order entered October 21, 2009 (hereinafter the October 2009 order), the Supreme Court granted leave to renew, and thereupon, adhered to its original determination and, sua sponte, directed dismissal of the complaint in the foreclosure action for lack of standing since the foreclosure action was commenced on April 30, 2007, prior to the date of the subject assignment.

Thereafter, Deutsche Bank moved to discontinue the foreclosure action and to cancel the notice of pendency that was filed when the foreclosure action was commenced. The motion was unopposed. By order entered June 12, 2013 (hereinafter the June 2013 order), the Supreme Court granted Deutsche Bank's motion, relieved the appointed referee, and directed that the Queens County Clerk cancel the notice of pendency.

By deed dated March 27, 2014, the plaintiff, J & JT Holding Corp., acquired title to the subject property from Lakhanlall. By summons and complaint dated August 6, 2014, the plaintiff commenced this action against Deutsche Bank pursuant to RPAPL article 15, seeking a declaration that it was the lawful owner of the subject property free and clear of any bond or mortgage, to bar Deutsche Bank from making any claim against the property, and to direct the Clerk to cancel and discharge of record the mortgage. The plaintiff alleged that the applicable six-year statute of limitations barred an action to foreclose upon the subject mortgage, relying on the date of the commencement of the foreclosure action on April 30, 2007, and the issuance of a default notice issued prior to April 30, 2007, to Lakhanlall.

Prior to answering, Deutsche Bank moved pursuant to CPLR 3211(a)(1) and (7) to dismiss the complaint. In an order entered March 29, 2016, the Supreme Court, among other things, denied Deutsche Bank's motion. Deutsche Bank appeals from so much of the order as denied its motion. We reverse the order insofar as appealed from.

"To succeed on a motion to dismiss based upon documentary evidence pursuant to CPLR 3211(a)(1), the documentary evidence must utterly refute the plaintiff's factual allegations, conclusively establishing a defense as a matter of law" ( Gould v. Decolator, 121 A.D.3d 845, 847, 994 N.Y.S.2d 368 ; see Goshen v. Mutual Life Ins. Co. of N.Y., 98 N.Y.2d 314, 326, 746 N.Y.S.2d 858, 774 N.E.2d 1190 ; Leon v. Martinez, 84 N.Y.2d 83, 88, 614 N.Y.S.2d 972, 638 N.E.2d 511 ). "In order for evidence to qualify as ‘documentary,’ it must be unambiguous, authentic, and undeniable" ( Granada Condominium III Assn. v. Palomino, 78 A.D.3d 996, 996–997, 913 N.Y.S.2d 668 ; see Fontanetta v. John Doe 1, 73 A.D.3d 78, 84–86, 898 N.Y.S.2d 569 ). "[I]t is clear that judicial records, as well as documents reflecting out-of-court transactions such as mortgages, deeds, contracts, and any other papers, the contents of which are ‘essentially undeniable,’ would qualify as ‘documentary evidence’ in the proper case" ( Fontanetta v. John Doe 1, 73 A.D.3d at 84–85, 898 N.Y.S.2d 569, quoting David D. Siegel, Practice Commentaries, McKinney's Cons Laws of NY, Book 7B, CPLR C3211:10, at 21–22).

"On a motion pursuant to CPLR 3211(a)(7) to dismiss for failure to state a cause of action, the court must accept the facts alleged in the complaint as true, accord the plaintiff the benefit of every possible favorable inference, and determine only whether the facts as alleged fit within any cognizable legal theory" ( Shah v. Exxis, Inc., 138 A.D.3d 970, 971, 31 N.Y.S.3d 512 ; see Goshen v. Mutual Life Ins. Co. of N.Y., 98 N.Y.2d at 326, 746 N.Y.S.2d 858, 774 N.E.2d 1190 ; Leon v. Martinez, 84 N.Y.2d at 87–88, 614 N.Y.S.2d 972, 638 N.E.2d 511 ). "Where evidentiary material is submitted and considered on a motion to dismiss a complaint pursuant to CPLR 3211(a)(7), and the motion is not converted into one for summary judgment, the question becomes whether the plaintiff has a cause of action, not whether the plaintiff has stated one, and unless it has been shown that a material fact as claimed by the plaintiff to be one is not a fact at all and unless it can be said that no significant dispute exists regarding it, dismissal should not eventuate" ( Rabos v. R & R Bagels & Bakery, Inc., 100 A.D.3d 849, 851–852, 955 N.Y.S.2d 109 ; see Guggenheimer v. Ginzburg, 43 N.Y.2d 268, 274–275, 401 N.Y.S.2d 182, 372 N.E.2d 17 ; Greenberg v. Spitzer, 155 A.D.3d 27, 44, 62 N.Y.S.3d 372 ).

"[A] person with an estate or interest in real property subject to an encumbrance may maintain an action to secure the cancellation and discharge of the encumbrance, and to adjudge the estate or interest free of it, if the applicable statute of limitations for commencing a foreclosure action has expired" ( Milone v. U.S. Bank N.A., 164 A.D.3d 145, 151, 83 N.Y.S.3d 524 ; see RPAPL 1501[4] ). An action to foreclose a mortgage is subject to a six-year statute of limitations (see CPLR 213[4] ; Kashipour v. Wilmington Sav. Fund Socy., FSB, 144 A.D.3d 985, 986, 41 N.Y.S.3d 738 ; Nationstar Mtge., LLC v. Weisblum, 143 A.D.3d 866, 867, 39 N.Y.S.3d 491 ; Wells Fargo Bank, N.A. v. Burke, 94 A.D.3d 980, 982, 943 N.Y.S.2d 540 ). " ‘[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’ " ( Nationstar Mtge., LLC v. Weisblum, 143 A.D.3d at 867, 39 N.Y.S.3d 491, quoting EMC Mtge. Corp. v. Patella, 279 A.D.2d 604, 605, 720 N.Y.S.2d 161 ; see Wells Fargo Bank, N.A. v. Burke, 94 A.D.3d at 982, 943 N.Y.S.2d 540 ).

"Where the acceleration of the maturity of a mortgage debt on default 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 at 982–983, 943 N.Y.S.2d 540, citing Esther M. Mertz Trust v. Fox Meadow Partners, 288 A.D.2d 338, 340, 734 N.Y.S.2d 77, and Ward v. Walkley, 143 A.D.2d 415, 417, 532 N.Y.S.2d 426 ). "Where the holder of the note elects to accelerate the mortgage debt, notice to the borrower must be ‘clear and unequivocal’ " ( Nationstar Mtge., LLC v. Weisblum, 143 A.D.3d at 867, 39 N.Y.S.3d 491, quoting Sarva v. Chakravorty, 34 A.D.3d 438, 439, 826 N.Y.S.2d 74 ; see Milone v. U.S. Bank N.A., 164 A.D.3d at 152, 83 N.Y.S.3d 524 ). In addition to written notice, ‘[a]n acceleration of a mortgage debt can occur ‘when a creditor commenced as action to foreclose upon a note and mortgage and seeks, in the complaint, payment of the full balance due’ " ( Wells Fargo Bank, NA v. Lefkowitz, 171 A.D.3d 843, 844, 97 N.Y.S.3d 696 quoting Milone v. U.S. Bank N.A., 164 A.D.3d at 152, 83 N.Y.S.3d 524 ). "However, service of a complaint is ineffective to constitute a valid exercise of the option to accelerate a debt where the plaintiff does not ‘have the authority to accelerate the debt or to sue to foreclose at that time’ " ( MLB Sub I, LLC v. Grimes, 170 A.D.3d 992, 993, 96 N.Y.S.3d 594, quoting Wells Fargo Bank, NA v. Burke, 94 A.D.3d at 983, 943 N.Y.S.2d 540 ).

Here, contrary to the plaintiff's contention and the opinion of our dissenting colleague, the commencement of the foreclosure action, which was dismissed on the ground that Deutsche Bank lacked standing, was ineffective to constitute a valid exercise of the option to accelerate the debt since Deutsche Bank did not have the authority to accelerate the debt at that time (see U.S. Bank N.A. v. Gordon, 158 A.D.3d 832, 836, 72 N.Y.S.3d 156 ; Stewart Tit. Ins. Co. v. Bank of N.Y. Mellon, 154 A.D.3d 656, 662–663, 61 N.Y.S.3d 634 ; 21st Mtge. Corp. v. Adames, 153 A.D.3d 474, 475, 60 N.Y.S.3d 198 ; Wells Fargo Bank, N.A. v. Burke, 94 A.D.3d at 983, 943 N.Y.S.2d 540 ; EMC Mtge. Corp. v. Suarez, 49 A.D.3d 592, 852 N.Y.S.2d 791 ). The plaintiff did not identify the specific time when the mortgage was actually, legally accelerated. Furthermore, the notices of default were nothing more than letters...