Bank of N.Y. Mellon v. Luria
| Decision Date | 11 May 2022 |
| Docket Number | Index No. 800018/2020 |
| Parties | The BANK OF NEW YORK MELLON etc., Plaintiff, v. Ann LURIA, et al., Defendants. |
| Court | New York Supreme Court |
The following papers numbered 1 to 5 were read on Defendant's motion for renewal of this Court's prior decision and order awarding Plaintiff summary judgment of foreclosure:
Notice of Motion — Affirmation / Exhibits -- Affidavit 1-3
Upon the foregoing papers it is ORDERED that the motion is disposed of as follows:
The Defendant Borrower's Motion for Renewal
This is a mortgage foreclosure action. The plaintiff Bank has been awarded summary judgment on its foreclosure claim, but a Judgment of Foreclosure and Sale remains to be entered. Defendant borrower Ann Luria now moves for renewal on the basis of the Second Department's recent decision in Bank of America v. Kessler, 202 AD3d 10 (2d Dept. 2021). She contends that Plaintiff's 90-day notice did not comply with the requirements of RPAPL § 1304, as interpreted by Kessler , because in addition to the language prescribed in Section 1304(1) it contained the following language:
Nationstar is a debt collector. This is an attempt to collect a debt and any information obtained will be used for that purpose. However, if you are currently in bankruptcy or have received a discharge in bankruptcy, this communication is not an attempt to collect a debt from you personally to the extent that it is included in your bankruptcy or has been discharged, but is provided for informational purposes only.
Relying on Kessler and its progeny, Defendant argues that by including this language in the 90-day notice Plaintiff violated RPAPL § 1304(2), which provides that "[t]he notices required by this section shall be sent by the lender, assignee or mortgage loan servicer in a separate envelope from any other mailing or notice . "
The Kessler decision is highly curious in at least three respects.
First, the Kessler majority asserts that the language of the statutory requirement that Section 1304 90-day notices be sent "in a separate envelope from any other mailing or notice " is "clear, precise, and unambiguous," and purports to "give effect to its plain meaning" in holding that:
[I]nclusion of any material in the separate envelope sent to the borrower under RPAPL 1304 that is not expressly delineated in these provisions constitutes a violation of the separate envelope requirement of RPAPL 1304(2).
See, id., 202 AD3d at 12-14 (emphasis added). In so holding, however, the Kessler Court nowhere construes the statutory terms "other mailing" or "other notice." By sleight-of-hand, the Court instead speaks in its holding of the inclusion of other "material" — which is by no stretch of the imagination the same thing as an "other" "mailing" or "notice."
As Justice Miller observes in his searing dissent, the majority thereby runs afoul of the plain language of RPAPL § 1304(1) :
Second, by purporting to declare the "plain meaning" of RPAPL § 1304, the Kessler majority avoided having to grapple with Justice Miller's point ( id., 202 AD3d at 26-27 ) that a statute in derogation of the common law, or which infringes upon an existing common right, must be strictly construed. See, Transit Commission v. Long Island R. Co., 253 NY 345, 355 (1930) (); Hayes v. Davidson, 98 NY 19, 22 (1885) ; McKinney's Statutes §§ 301, 311. "It is a well-settled rule in this state that a party has a right to sue on any cause of action which he holds, and any statutory exception to that right must be distinctly expressed." Saxe v. Peck, 139 AD 419 (3d Dept. 1910). The Second Department itself has repeatedly held that " RPAPL 1301 is ‘strictly construed since it is in derogation of a plaintiff's common-law right to pursue the alternate remedies of foreclosure and recovery of the mortgage debt at the same time’." See, Stone Mountain Holdings, LLC v. Spitzer, 186 AD3d 520, 521 (2d Dept. 2020) ; VNB New York Corp., 131 AD3d 1235, 1236 (2d Dept. 2015) ; Hometown Bank of Hudson Valley v. Belardinelli, 127 AD3d 700, 701 (2d Dept. 2015) ; Dollar Dry Dock Bank v. Piping Rock Builders, Inc., 181 AD2d 709, 710 (2d Dept. 1992) ; Valley Savings Bank v. Rose, 228 AD2d 666, 667 (2d Dept. 1996).
Inasmuch as RPAPL § 1304 establishes a statutory condition precedent to commencement of a mortgage foreclosure action (see, Kessler, supra, 202 AD3d at 14 ), it is difficult to escape the conclusions that:
The Kessler majority sought to justify its holding as a "bright-line rule" warranted by the Court of Appeals’ reasoning in Freedom Mortgage Corporation v. Engel, 37 NY3d 1 (2021). See, Kessler, supra, 202 AD3d at 14, 18. For two reasons, however, Engel is inapropos.
First, Engel involved no statute, but instead a common law judge-made rule as to what constitutes the valid revocation of a prior acceleration of the mortgage debt. See, id., 37 NY3d at 28-30. In developing the common law, the court acts in a quasi-legislative capacity. In that context, articulating a common law bright-line rule dictated by considerations of policy, practicality and prudence is well within the court's competence. Kessler , in stark contrast, involved the interpretation of a legislative enactment. In that context, the court's role is not to make rules but to discern the intent of the Legislature guided by applicable principles of statutory construction. It is the Legislature's intent as expressed in the language of the statute that must prevail regardless of the court's notions of policy, practicality and prudence.
Second, Engel's bright-line rule that the discontinuance of a foreclosure action automatically revokes a prior acceleration effected by the complaint in foreclosure displaced Second Department holdings that "require[d] courts to scrutinize the course of the parties’ post-discontinuance conduct and correspondence to determine whether a noteholder meant to revoke the acceleration when it discontinued the action." Engel, supra, 37 NY3d at 30. Applying RPAPL § 1304, in contrast, requires only judicial evaluation of the 90-day notice; no unwieldy inquiry concerning the parties’ post-notice conduct and correspondence is needed. In addition, the Court of Appeals found the Second Department's approach in Engel "analytically unsound as a matter of contract law and unworkable from a practical standpoint" because it "render[ed] it impossible for parties to know whether, or when, a valid revocation has occurred," which in turn (1) "leaves the parties without concrete contemporaneous guidance as to their current contractual obligations," and (2) undermines the "consistent, straightforward application of the statute of limitations which serves the objectives of ‘finality, certainty and predictability,’ to the benefit of both borrowers and noteholders" See, id., 37 NY3d at 30-32. In contrast, judicial determination of the validity of RPAPL § 1304 notices impacts neither the parties’ understanding of their ongoing contractual obligations nor the operation of the statute of limitations. Any uncertainty or unpredictability that may inhere in applying § 1304 according to the language of the statute as written is not meaningfully other or different from that generally inherent in judicial application of the law.
Hence, Engel simply does not support the Kessler majority's imposition of a "bright-line" rule at odds with the statutory language of RPAPL § 1304.
The additional "material" included in the November 29, 2016 90-day notice was a brief advisory dictated by the Federal Debt Collection Practices Act ("FDCPA"), 15 USC § 1692 et seq. There were two components. First:
Nationstar is a debt collector. This is an attempt to collect a debt and any information obtained will be used for that purpose.
The "debt collector" advisory is what is colloquially known as the "mini-Miranda" warning required in certain communications with a debtor by the FDCPA. See, 15 USC § 1692e(11). Second:
However, if you are currently in bankruptcy or...
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