Deutsche Bank Nat'l Trust Co. v. Blank

• Decision Date: 30 December 2020
• Docket Number: 2018–12894,Index No. 518616/17
• Citation: Deutsche Bank Nat'l Trust Co. v. Blank, 189 A.D.3d 1678, 140 N.Y.S.3d 52 (N.Y. App. Div. 2020)
• Parties: DEUTSCHE BANK NATIONAL TRUST COMPANY, etc., respondent, v. Bette BLANK, etc., appellant, et al., defendants.
• Court: New York Supreme Court — Appellate Division

189 A.D.3d 1678

140 N.Y.S.3d 52

DEUTSCHE BANK NATIONAL TRUST COMPANY, etc., respondent,

v.Bette BLANK, etc., appellant, et al., defendants.

2018–12894

Index No. 518616/17

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

Argued—June 1, 2020

December 30, 2020

DECISION & ORDER

In an action to foreclose a mortgage, the defendant Bette Blank appeals from an order of the Supreme Court, Kings County (Noach Dear, J.), dated October 3, 2018. The order denied that defendant's motion pursuant to CPLR 3211(a)(5) to dismiss the complaint insofar as asserted against her as time-barred.

ORDERED that the order is affirmed, with costs.

In 2006, the defendant Bette Blank (hereinafter the defendant) executed a note promising to repay a loan in the amount of $650,000, which was secured by real property located in Brooklyn. Upon the defendant's default in paying the loan, the plaintiff commenced a foreclosure action on December 10, 2009 (hereinafter the prior action). In the complaint in the prior action, the plaintiff exercised its option to accelerate the loan. The defendant did not answer or appear in that action, and the plaintiff moved, inter alia, for leave to enter a default judgment against her and for an order of reference. In opposition to that motion, and in support of a cross motion, the defendant asserted that she had not properly been served with the summons and complaint.

Before those motions were decided, on August 18, 2015, and August 19, 2015, respectively, the plaintiff sent the defendant a de-acceleration notice, indicating that it was restoring the loan to an installment loan, and a stipulation to discontinue the foreclosure action. The defendant refused to sign the stipulation. The plaintiff thereafter moved to discontinue the prior action, and that motion was granted in an order dated November 10, 2015.

Almost two years later, on September 27, 2017, the plaintiff commenced the instant action to foreclose the mortgage, again electing to accelerate the loan and alleging that the defendant was in default. The defendant moved pursuant to CPLR 3211(a)(5) to dismiss the complaint insofar as asserted against her, contending that the action was time-barred because the loan had been previously accelerated, more than six years earlier, in connection with the prior action. By order dated October 3, 2018, the Supreme Court denied the motion, concluding that, at a minimum, questions of fact existed as to whether the loan had been properly de-accelerated. The defendant appeals.

"On a motion to dismiss a cause of action pursuant to CPLR 3211(a)(5) on the ground that it is barred by the statute of limitations, a defendant bears the initial burden of establishing, prima facie, that the time in which to sue has expired" ( HSBC Bank USA, N.A. v. Gold, 171 A.D.3d 1029, 1030, 98 N.Y.S.3d 293 [internal quotation marks omitted]). "If the defendant satisfies this burden, the burden shifts to the plaintiff to raise a question of fact as to whether the statute of limitations was tolled or otherwise inapplicable, or whether the plaintiff actually commenced the action within the applicable limitations period" ( id. at 1030, 98 N.Y.S.3d 293 [internal quotation marks omitted]).

An action to foreclose a mortgage is subject to a six-year statute of limitations (see CPLR 213[4] ). With respect to a mortgage payable in installments, separate causes of action accrue for each installment that is not paid and the statute of limitations begins to run on the date each installment becomes due (see HSBC Bank USA, N.A. v. Gold, 171 A.D.3d at 1030, 98 N.Y.S.3d 293 ; Milone v. U.S. Bank N.A., 164 A.D.3d 145, 151, 83 N.Y.S.3d 524 ). Once a mortgage debt is accelerated, however, the statute of limitations begins to run on the entire debt (see HSBC Bank USA, N.A. v. Gold, 171 A.D.3d at 1030, 98 N.Y.S.3d 293 ; Milone v. U.S. Bank N.A., 164 A.D.3d at 151, 83 N.Y.S.3d 524 ). "A lender may revoke its election to accelerate the mortgage, but it must do so by an affirmative act of revocation occurring during the six-year statute of limitations period subsequent to the initiation of the prior foreclosure action" ( Freedom Mtge. Corp. v. Engel, 163 A.D.3d 631, 632, 81 N.Y.S.3d 156 [internal quotation marks omitted]; see HSBC Bank USA, N.A. v. Gold, 171 A.D.3d at 1030, 98 N.Y.S.3d 293 ; Milone v. U.S. Bank N.A., 164 A.D.3d at 154, 83 N.Y.S.3d 524 ).

Here, the defendant demonstrated that the six-year statute of limitations began to run on the entire debt on December 10, 2009, when the plaintiff accelerated the mortgage debt by commencing the prior action (see HSBC Bank USA, N.A. v. Gold, 171 A.D.3d at 1030–1031, 98 N.Y.S.3d 293 ). Contrary to the defendant's contention, the statute of limitations did not begin to run earlier, on September 18, 2009, when the plaintiff sent the defendant a notice of default. That letter, which indicated that the loan might be accelerated in the event that she failed to cure the default by a certain date "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 ). Nevertheless, since the plaintiff did not commence the instant foreclosure action until September 27, 2017, which was more than six years after the December 10, 2009 acceleration of the debt, the defendant met her initial burden of demonstrating, prima facie, that the instant action was untimely (see HSBC Bank USA, N.A. v. Gold, 171 A.D.3d at 1031, 98 N.Y.S.3d 293 ; Milone v. U.S. Bank N.A., 164 A.D.3d at 153, 83 N.Y.S.3d 524 ).

At a minimum, however, the plaintiff raised questions of fact as to whether it validly revoked its acceleration prior to the expiration of the statute of limitations. In Milone v. U.S. Bank N.A., 164 A.D.3d at 154, 83 N.Y.S.3d 524, this Court held that "de-acceleration notices" must be "clear and unambiguous" and may not be issued "as a pretext to avoid the onerous effect of an approaching statute of limitations." In other words, to validly de-accelerate, a "borrower's right to make the monthly payments that became due between the time the loan was accelerated and the time the acceleration was revoked, together with the right to make future monthly installment payments" must actually be revived ( Christiana Trust v. Barua, 184 A.D.3d 140, 148, 125 N.Y.S.3d 420 ). Thus, "a de-acceleration letter is not pretextual if ... it contains an express demand for monthly payments on the note, or, in the absence of such express demand, it is accompanied by copies of monthly invoices transmitted to the homeowner for installment payments, or is supported by other forms of evidence" demonstrating that the borrower was made aware that the lender would accept the tender of monthly payments ( Milone v. U.S. Bank N.A., 164 A.D.3d at 154, 83 N.Y.S.3d 524 ; see Christiana Trust v. Barua, 184 A.D.3d at 167–168, 125 N.Y.S.3d 420 ).

In the present case, the plaintiff sent a letter to the defendant stating that it "hereby de-accelerates the Loan, withdraws its prior demand for immediate payment of all sums secured by the Security Instrument and re-institutes the Loan as an installment loan." These were the precise words contained in the notice of de-acceleration at issue in Milone. Thus, here, as in Milone, "the de-acceleration letter containing a clear and unequivocal demand that the homeowner meet her prospective monthly payment obligations constitutes a de-acceleration in fact and cannot be viewed as pretextual in any way" ( Milone v. U.S. Bank N.A., 164 A.D.3d at 154, 83 N.Y.S.3d 524 ).

Contrary to the defendant's contention and the conclusion of our dissenting colleague, under the circumstances of this case, it cannot be said as a matter of law that the plaintiff failed to validly revoke the December 10, 2009 acceleration prior to expiration of the statute of limitations because the prior action remained pending for a period of time after the de-acceleration notice was sent. A stipulation of discontinuance was emailed to the defendant's counsel on the day after the de-acceleration notice was mailed. It was only because the defendant declined to sign the stipulation that discontinuance of the prior action was delayed past the date that the plaintiff revoked the acceleration. Under these circumstances, it cannot be said that the fact that the prior action remained pending demonstrated the plaintiff's unwillingness to accept tender of monthly payments or that the defendant was unaware that the plaintiff would accept such tender. Moreover, even if it could be said that the de-acceleration notice was not valid while the prior action remained pending, that action was discontinued by order dated November 10, 2015, less than six years after the December 10, 2009 acceleration. Thus, even assuming that the de-acceleration letter could not be effective while the prior action was pending, the de-acceleration became effective prior to expiration of the six-year statute of limitations period that began to run upon commencement of the prior action.

Additionally, in light of the plaintiff's unequivocal withdrawal of its prior demand for payment of the loan in full and reinstatement of the loan as an installment loan, the plaintiff's statements by email and in the stipulation of discontinuance that it intended to recommence a foreclosure action did not demonstrate, as a matter of law, that it would reject a tender of arrears and monthly payments and go forward with a foreclosure action unless it received payment of the entire balance of the loan (cf. Vargas v. Deutsche Bank Natl. Trust Co., 168 A.D.3d 630, 93 N.Y.S.3d 32, lv granted 34 N.Y.3d 910, 2020 WL 772997 ). Rather, there is at least a question of fact as to whether the plaintiff was merely making clear that it would recommence foreclosure proceedings assuming that the borrower did not bring the loan current. Indeed, the defendant was sent a notice, on or about August 24, 2015, advising that she could avoid acceleration of the...