Wells Fargo Bank N.A. v. Grover

• Decision Date: 25 October 2018
• Docket Number: 526095
• Citation: 86 N.Y.S.3d 299,165 A.D.3d 1541
• Parties: WELLS FARGO BANK N.A. Successor By Merger to Wells Fargo Bank Minnesota N.A., formerly known as Norwest Bank Minnesota N.A., Renaissance Home Equity Loan Asset–Backed Certificates Series 2002–1, Respondent, v. William P. GROVER, Appellant, et al., Defendants.
• Court: New York Supreme Court — Appellate Division

165 A.D.3d 1541

86 N.Y.S.3d 299

WELLS FARGO BANK N.A. Successor By Merger to Wells Fargo Bank Minnesota N.A., formerly known as Norwest Bank Minnesota N.A., Renaissance Home Equity Loan Asset–Backed Certificates Series 2002–1, Respondent,

v.William P. GROVER, Appellant, et al., Defendants.

526095

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

Calendar Date: September 12, 2018

Decided and Entered: October 25, 2018

The Crossmore Law Office, Ithaca (Edward Y. Crossmore, Ithaca, of counsel), for appellant.

Hinshaw & Culbertson LLP, New York (Dana B. Briganti, New York, of counsel), for respondent.

MEMORANDUM AND ORDER

Garry, P.J.

Appeal from an order of the Supreme Court (Faughnan, J.), entered April 19, 2017 in Tompkins County, which, among other things, denied William P. Grover's motion for summary judgment dismissing the complaint against him.

In 2002, defendant William P. Grover (hereinafter defendant) borrowed a sum of money from plaintiff's predecessor in interest and executed a note secured by a mortgage on property in the City of Ithaca, Tompkins County. In February 2009, plaintiff commenced a foreclosure action arising from defendant's failure to pay the mortgage installment due in May 2008. In April 2013, plaintiff moved to voluntarily discontinue the 2009 action without prejudice, as it could not verify the validity of the execution or notarization of all the documents that had been filed. Plaintiff also sought to cancel the notice of pendency and to discharge the referee. Supreme Court (Mulvey, J.) granted the motion in its entirety.

In January 2016, plaintiff commenced this foreclosure action based upon defendant's continued failure to make payments. After joinder of issue, defendant moved for summary judgment dismissing the complaint against him, asserting that the action was time-barred. Plaintiff cross-moved for summary judgment and an order of reference. Supreme Court (Faughnan, J.) found that the action was timely because the voluntary discontinuance of the 2009 action had brought about a revocation of the acceleration of the debt that had resulted from the commencement of that action and, thus, denied defendant's motion and granted plaintiff's cross motion. Defendant appeals.

We affirm, albeit on grounds different from those upon which Supreme Court based its decision. A debtor's partial payment toward a mortgage debt may renew the statute of limitations in a foreclosure action if the creditor "show[s] that there was a payment by the debtor or the debtor's agent of an admitted debt, made and accepted as such, accompanied by circumstances amounting to an absolute and unqualified acknowledgment by the debtor of more being due, from which a promise may be inferred to pay the remaining balance" ( Saini v. Cinelli Enters. , 289 A.D.2d 770, 771, 733 N.Y.S.2d 824 [2001] [internal quotation marks, brackets and citations omitted], lv denied 98 N.Y.2d 602, 744 N.Y.S.2d 762, 771 N.E.2d 835 [2002] ; see General Obligations Law § 17–107[1], [2][b] ; Petito v. Piffath , 85 N.Y.2d 1, 7, 623 N.Y.S.2d 520, 647 N.E.2d 732 [1994] ; see generally Lew Morris Demolition Co. v. Board of Educ. of City of N.Y. , 40 N.Y.2d 516, 521, 387 N.Y.S.2d 409, 355 N.E.2d 369 [1976] ). We find that plaintiff demonstrated its entitlement to judgment as a matter of law on the ground that defendant made partial payments against the mortgage debt under circumstances sufficient to renew the statute of limitations and thus render this action timely.

Plaintiff submitted evidence that, while the 2009 action was pending, defendant entered into an agreement to make three reduced mortgage payments during a trial period under a federal mortgage debt relief program known as the Home Affordable Mortgage Program (hereinafter HAMP), and that he then made payments due in September and October 2010, but failed to make the third payment. The purpose of HAMP, which was established in response to the 2008 mortgage foreclosure crisis pursuant to the Emergency Economic Stabilization Act of 2008 ( 12 USC § 5201 et seq. ), was to "provide relief to borrowers who have defaulted on their mortgage payments or who are likely to default by reducing mortgage payments to sustainable reduced levels, without discharging any of the underlying debt" ( U.S. Bank N.A. v. Sarmiento , 121 A.D.3d 187, 197–198, 991 N.Y.S.2d 68 [2014] [internal quotation marks and citation omitted] ). As part of the process of obtaining a HAMP mortgage modification, eligible borrowers agreed to make three reduced payments during a trial period; if these payments were made and all other requirements were satisfied, the process resulted in the permanent modification of the mortgage.¹ A borrower entering into a HAMP agreement was required, among other things, to acknowledge that he or she was unable to afford mortgage payments and was in default or in danger of default, that partial payments under the HAMP agreement did not cure the borrower's default, and that the provisions of the underlying note and mortgage "remain[ed] in full force and effect" ( Thomas v. JPMorgan Chase & Co. , 811 F.Supp.2d 781, 787–788 [S.D. N.Y.2011] ; see U.S. Bank N.A. v. Sarmiento , 121 A.D.3d at 197–199, 991 N.Y.S.2d 68 ). Thus, a borrower who entered into a HAMP agreement necessarily admitted the existence of the underlying debt, acknowledged that more payments were due, and made an implied promise to pay them in consideration of the modification of the mortgage.

The contract documents that defendant executed when he entered into the HAMP agreement are not part of the record on this appeal.² However, partial payment and an implied promise to pay the remainder may be proven by extrinsic evidence, such as canceled checks or a borrower's admissions (see Education Resources Inst., Inc. v. Piazza , 17 A.D.3d 513, 514, 794 N.Y.S.2d 65 [2005] ; Costantini v. Bimco Indus. , 125 A.D.2d 531, 531, 510 N.Y.S.2d 136 [1986] ; Bernstein v. Kaplan , 67 A.D.2d...