Wells Fargo Bank, N.A. v. Eitani

• Decision Date: 08 February 2017
• Parties: WELLS FARGO BANK, N.A., etc., respondent, v. Doron EITANI, et al., defendants, David Cohan, appellant.
• Court: New York Supreme Court — Appellate Division

148 A.D.3d 193

47 N.Y.S.3d 80

WELLS FARGO BANK, N.A., etc., respondent,

v. Doron EITANI, et al., defendants,David Cohan, appellant.

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

Feb. 8, 2017.

Warner & Scheuerman, New York, NY (Jonathon D. Warner and Karl E. Scheuerman of counsel), for appellant.

McGlinchey Stafford, PLLC, New York, NY (Edward E. Groves of counsel), for respondent.

RANDALL T. ENG, P.J., JOHN M. LEVENTHAL, CHERYL E. CHAMBERS, JOSEPH J. MALTESE, and COLLEEN D. DUFFY, JJ.

MALTESE, J.

On this appeal, we are asked to answer two questions with respect to whether CPLR 205(a) protects the plaintiff in this mortgage foreclosure action from the preclusive consequence of the statute of limitations.

Under certain conditions, CPLR 205(a) provides an additional six months in which to recommence a prior action that has been dismissed on grounds other than voluntary discontinuance, lack of personal jurisdiction, neglect to prosecute, or a final judgment on the merits. The first question in this case is whether a prior action to foreclose the same mortgage was dismissed for neglect to prosecute, a category of dismissal that renders CPLR 205(a) inapplicable. We answer this question in the negative, concluding that the prior action was not dismissed for neglect to prosecute.

The second question is more novel. We must determine whether the plaintiff in this mortgage foreclosure action, which was assigned the note and mortgage during the pendency of the prior foreclosure action, is entitled to the savings provision—or grace period—of CPLR 205(a) even though the prior action was commenced by a prior holder of the note. For the reasons that follow, we conclude that a plaintiff in a mortgage foreclosure action which meets all of the other requirements of the statute is entitled to the benefit of CPLR 205(a) where, as here, it is the successor in interest as the current holder of the note.

Factual and Procedural Background

On May 20, 2005, the defendant Doron Eitani of Miami, Florida, purchased a residential property located at 2920 Avenue N in Brooklyn. In order to finance the purchase, Eitani executed and delivered an adjustable rate note to Argent Mortgage Company, LLC (hereinafter Argent), wherein Eitani promised to repay the sum of $560,000, with interest. The note was secured by a mortgage on the property.

Just three months after closing on the house, Eitani defaulted on the note and mortgage. By letter dated September 2, 2005, the servicer for the subject loan, Countrywide Home Loans Servicing LP, advised Eitani that the loan was in default and, if the default was not cured by October 7, 2005, "the mortgage payments [would] be accelerated with the full amount remaining accelerated and becoming due and payable in full." To date, Eitani has failed to cure the default. Thus, the subject mortgage loan has been in default for more than 11 years.

On or about November 16, 2005, Argent commenced a foreclosure action (hereinafter the prior action). On June 6, 2008, after unsuccessful attempts to resolve the default, Argent obtained an order of reference based upon Eitani's default in answering the complaint. However, Argent did not obtain a judgment of foreclosure and sale.

During the course of the prior action, and the mortgage foreclosure crisis of 2008, Argent assigned and delivered the subject note and mortgage to Wells Fargo Bank, N.A., as trustee, in trust for the registered holders of Park Place Securities, Inc., asset-backed pass-through certificates, series 2005–WCW1 (hereinafter Wells Fargo), as reflected in an assignment dated January 24, 2008, and recorded on February 14, 2008.

On March 23, 2011, while the prior action was still pending, Eitani conveyed by deed the subject property to the defendant-appellant, David Cohan, who then became the owner of record.

On March 2, 2012, Shapiro, DiCaro & Barak, LLP, of Rochester, were substituted for Steven J. Baum, P.C., of Amherst, as attorneys for the plaintiff.

On August 1, 2013, the Administrative Judge for Civil Matters in the Supreme Court, Kings County, on a routine clearing of the docket, issued an order directing dismissal of the prior action "as abandoned pursuant to CPLR 3215(c), without costs or prejudice." While the handwritten caption of the form dismissal order listed Argent as the plaintiff, at that time Wells Fargo had been the holder of the note and mortgage for well over five years.

Less than four months later, on November 25, 2013, Wells Fargo, the holder of the note and mortgage, commenced the instant foreclosure action in accordance with CPLR 205(a). Once again, Eitani failed to appear in the action.

David Cohan, the current owner of the property, first appeared in the instant action by moving pursuant to CPLR 3211(a)(5) to dismiss the complaint insofar as asserted against him on the ground that it was time-barred. Cohan argued that the action was time-barred by the applicable six-year statute of limitations because it was commenced more than eight years after the mortgage was accelerated in 2005.

In opposition, Wells Fargo, which became the holder of the note and mortgage long before the prior action was dismissed, argued that the action is not time-barred because, pursuant to the savings provision of CPLR 205(a), the instant action was timely "recommenced" within six months of the prior action's dismissal.

In reply, Cohan contended that the savings provision of CPLR 205(a) was not available to Wells Fargo both because the prior action was dismissed for failure to prosecute, and because Wells Fargo was not the plaintiff in that action.

The Supreme Court denied Cohan's motion, concluding that CPLR 205(a) was applicable and thus the action was timely commenced within six months of dismissal of the prior action. Cohan appeals.

Discussion

On a motion to dismiss a complaint pursuant to CPLR 3211(a)(5) on the ground that the statute of limitations has expired, the moving defendant must establish, prima facie, that the time in which to commence the action has expired (see Ross v. Jamaica Hosp. Med. Ctr., 122 A.D.3d 607, 608, 996 N.Y.S.2d 118 ; Landow v. Snow Becker Krauss, P.C., 111 A.D.3d 795, 796, 975 N.Y.S.2d 119 ; Zaborowski v. Local 74, Serv. Empls. Intl. Union, AFL–CIO, 91 A.D.3d 768, 768–769, 936 N.Y.S.2d 575 ). As a general matter, an action to foreclose a mortgage is subject to a six-year statute of limitations (see CPLR 213[4] ; Yeshiva Chasdei Torah v. Dell Equity, LLC, 90 A.D.3d 746, 746, 935 N.Y.S.2d 33 ). Here, Cohan met his prima facie burden by demonstrating that the statute of limitations began to run in October or November 2005, when Argent, Wells Fargo's predecessor in interest, accelerated the mortgage debt owed by the defendant Eitani (see Wells Fargo Bank, N.A. v. Burke, 94 A.D.3d 980, 982, 943 N.Y.S.2d 540 ; Koeppel v. Carlandia Corp., 21 A.D.3d 884, 884, 800 N.Y.S.2d 607 ; EMC Mtge. Corp. v. Smith, 18 A.D.3d 602, 603, 796 N.Y.S.2d 364 ; Clayton Natl. v. Guldi, 307 A.D.2d 982, 982, 763 N.Y.S.2d 493 ), and that the instant action was commenced in November 2013, more than six years later.

However, in opposition to Cohan's prima facie showing, Wells Fargo established that the action was timely commenced pursuant to the savings provision of CPLR 205(a).

CPLR 205(a) provides, in pertinent part, that:

"[i]f an action is timely commenced and is terminated in any other manner than by a voluntary discontinuance, a failure to obtain personal jurisdiction over the defendant, a dismissal of the complaint for neglect to prosecute the action, or a final judgment upon the merits, the plaintiff ... may commence a new action upon the same transaction or occurrence ... within six months after the termination provided that the new action would have been timely commenced at the time of commencement of the prior action and that service upon defendant is effected within such six-month period."

The facts herein meet the requirements of CPLR 205(a) in that: (1) there is no dispute that this action would have been timely commenced when the prior action was commenced in 2005; (2) the moving defendant, Cohan, was served within the six-month period after the prior action was dismissed; and (3) this action is based on the same occurrence as the prior action, namely the default on the payment obligations under the note and mortgage. Further, it is undisputed that the dismissal of the prior action was not based upon a voluntary discontinuance, lack of personal jurisdiction, or a final judgment on the merits (see CPLR 205[a] ).

Cohan focuses on just two aspects of CPLR 205(a). He contends that Wells Fargo, the plaintiff in the instant action, is not entitled to the grace period set forth in CPLR 205(a) because (1) the prior action was dismissed on the basis of "neglect to prosecute," and (2) Wells Fargo is not the plaintiff that commenced the prior action. In our view, the Supreme Court properly rejected these contentions and denied Cohan's motion to dismiss the complaint as time-barred.

I. The prior dismissal was not based on a neglect to prosecute

Pursuant to a statutory amendment which took effect in 2008, CPLR 205(a) provides that: "Where a dismissal is one for neglect to prosecute the action made pursuant to [CPLR 3216 ] or otherwise, the judge shall set forth on the record the specific conduct constituting the neglect, which conduct shall demonstrate a general pattern of delay in proceeding with the litigation" (see Marrero v. Crystal Nails, 114 A.D.3d 101, 978 N.Y.S.2d 257 ). Here, the prior action was dismissed "without costs or prejudice" in 2013, well after the effective date of the amendment, on the basis that it was "abandoned pursuant to CPLR 3215(c)," not CPLR 3216. Tracking the language of CPLR 3215(c), the order of dismissal simply stated that the plaintiff "failed to proceed to entry of judgment within one year of default," and that "[t]ime spent prior to discharge from a mandatory settlement conference [was not] computed in calculating the one year...