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HSBC Bank United States v. Gold
Factual and Procedural Background
In February 1998, the defendant, Pinchas Gold, executed a note and mortgage to Republic Consumer Lending Group, Inc. for a $100,000 loan secured by residential property in Brooklyn. The defendant defaulted on payments starting April 1, 2009. On June 24, 2009, HSBC Mortgage Corporation (USA), as assignee of the note and mortgage, commenced a foreclosure action (the prior foreclosure action). In September 2011, HSBC Mortgage assigned the mortgage and note to the plaintiff. The prior foreclosure action was dismissed on August 7, 2014. Subsequently, on July 28, 2015, the plaintiff commenced the instant foreclosure action against the defendant. The defendant moved to dismiss the complaint against him as time-barred pursuant to CPLR 3211(a)(5). The Supreme Court, Kings County, granted the motion, and the plaintiff appealed.
Legal Issues Presented
- Whether the plaintiff’s foreclosure complaint against the defendant was barred by the six-year statute of limitations.
- Whether the statute of limitations was tolled or the acceleration of the mortgage debt was revoked within the limitations period.
- Whether new arguments raised on appeal regarding revocation of acceleration and tolling by RPAPL 1304 notice are properly before the court.
Arguments of the Parties
Defendant's Arguments
- The statute of limitations began to run on June 24, 2009, when HSBC Mortgage accelerated the entire mortgage debt by commencing the prior foreclosure action.
- The plaintiff’s instant foreclosure action, commenced on July 28, 2015, was filed more than six years after acceleration and is therefore time-barred.
Plaintiff's Arguments
- Before the Supreme Court, the plaintiff argued that its failure to act in the prior foreclosure action amounted to an affirmative revocation of acceleration.
- On appeal, the plaintiff abandoned the prior argument and instead contended that (1) mailing of demand letters in October 2014 and April 2015 constituted a revocation of acceleration, and (2) service of the RPAPL 1304 notice tolled the statute of limitations for 90 days.
- However, these new arguments were not raised before the Supreme Court and thus are not properly before this Court.
Table of Precedents Cited
| Precedent | Rule or Principle Cited For | Application by the Court |
|---|---|---|
| Wells Fargo Bank, N.A. v Burke, 155 AD3d 668, 669 | Defendant’s initial burden to show statute of limitations expired on CPLR 3211(a)(5) motion to dismiss. | Confirmed defendant met initial burden to show time-bar expired. |
| U.S. Bank N.A. v Joseph, 159 AD3d 968, 969-970 | Statute of limitations accrues on each installment but runs on entire debt after acceleration. | Applied to determine when statute of limitations began running on entire mortgage debt. |
| Barry v Cadman Towers, Inc., 136 AD3d 951, 952 | Burden shifts to plaintiff to raise question of fact after defendant meets initial burden. | Plaintiff failed to raise a question of fact regarding tolling or revocation of acceleration. |
| Milone v US Bank N.A., 164 AD3d 145, 151-153 | Statute of limitations begins to run on date of acceleration for entire debt. | Used to determine timing of statute of limitations in this case. |
| Freedom Mtge. Corp v Engel, 163 AD3d 631, 632 | Revocation of acceleration requires affirmative act within six-year limitations period. | Plaintiff failed to show such affirmative act; thus acceleration not revoked. |
| Beneficial Homeowner Serv. Corp. v Tovar, 150 AD3d 657, 659 | New arguments not raised in lower court are not properly before appellate court. | Rejected plaintiff’s new arguments on appeal as improperly raised. |
| Deutsche Bank Natl. Trust Co. v Adrian, 157 AD3d 934, 935 | Acceleration starts statute of limitations running; revocation must be affirmative act. | Supported court’s conclusion on statute of limitations and acceleration issues. |
| NMNT Realty Corp. v Knoxville 2012 Trust, 151 AD3d 1068, 1069-1070 | Same as above regarding acceleration and revocation. | Reinforced legal standard for acceleration and revocation. |
| EMC Mtge. Corp. v Patella, 279 AD2d 604, 606 | Affirmative act required to revoke acceleration within limitations period. | Applied to determine absence of revocation here. |
| U.S. Bank, N.A. v Kess, 159 AD3d 767, 768 | Statute of limitations runs from acceleration date. | Used to confirm timing of limitations period. |
| Deutsche Bank Natl. Trust Co. v Gambino, 153 AD3d 1232, 1233 | Acceleration triggers statute of limitations. | Supported defendant’s burden showing expiration of limitations. |
Court's Reasoning and Analysis
The court began by outlining the burden-shifting framework under CPLR 3211(a)(5): the defendant must prima facie show the statute of limitations expired, after which the plaintiff must raise a factual question about tolling or revocation of acceleration. The court found that the defendant met his burden by demonstrating that acceleration occurred on June 24, 2009, when the prior foreclosure action was commenced, thus starting the six-year limitations period on the entire mortgage debt.
The plaintiff’s instant foreclosure action, commenced on July 28, 2015, was filed more than six years after acceleration, making it untimely. The plaintiff failed to raise any genuine issue of fact that the acceleration had been revoked by an affirmative act within the limitations period. The plaintiff’s initial argument—that failure to act in the prior foreclosure action amounted to revocation—was abandoned on appeal.
The plaintiff’s new arguments on appeal, that subsequent demand letters and the RPAPL 1304 notice tolled or revoked acceleration, were not presented in opposition before the Supreme Court and thus were not properly before the appellate court. Accordingly, the court declined to consider them. The court affirmed the order dismissing the complaint as time-barred.
Holding and Implications
The order of the Supreme Court, Kings County, dismissing the complaint against the defendant as time-barred pursuant to CPLR 3211(a)(5) is affirmed, with costs.
The direct effect of this decision is the dismissal of the plaintiff’s foreclosure action against the defendant for being filed after the expiration of the six-year statute of limitations following acceleration of the mortgage debt. No broader or new legal precedent was established, as the court applied well-settled principles regarding mortgage acceleration, statute of limitations, and procedural rules on appellate argument preservation.
JOHN M. LEVENTHAL, J.P.
COLLEEN D. DUFFY FRANCESCA E. CONNOLLY LINDA CHRISTOPHER, JJ. (Index No. 509253/15)
Stern & Eisenberg, P.C., Depew, NY (Margaret J. Cascino, Anthony P. Scali, and Todd Baltch of counsel), for appellant.
Berg & David PLLC, Brooklyn, NY (Abraham David and Stefanie Murphy-Boykins of counsel), for respondent.
DECISION & ORDER
In an action to foreclose a mortgage, the plaintiff appeals from an order of the Supreme Court, Kings County (Noach Dear, J.), dated April 7, 2016. The order granted the motion of the defendant Pinchas Gold pursuant to CPLR 3211(a)(5) to dismiss the complaint insofar as asserted against him as time-barred.
ORDERED that the order is affirmed, with costs.
In February 1998, the defendant Pinchas Gold (hereinafter the defendant) executed and delivered to Republic Consumer Lending Group, Inc. (hereinafter Republic), a note promising to repay a loan in the amount of $100,000. To secure payment on the note, the defendant also executed and delivered to Republic a mortgage on residential property located in Brooklyn. The defendant defaulted on the mortgage payment due April 1, 2009, and on all payments due thereafter.
On June 24, 2009, HSBC Mortgage Corporation (USA) (hereinafter HSBC Mortgage), as assignee of the note and mortgage, commenced an action to foreclose the mortgage (hereinafter the prior foreclosure action). Thereafter, in September 2011, HSBC Mortgage assigned the mortgage and note to the plaintiff. On August 7, 2014, the prior foreclosure action was dismissed.
On July 28, 2015, the plaintiff commenced the instant foreclosure action against the defendant, among others. The defendant moved pursuant to CPLR 3211(a)(5) to dismiss the complaint insofar as asserted against him as time-barred, arguing that the statute of limitations had expired on June 24, 2015, six years after the debt had been accelerated by the commencement of the prior foreclosure action. The Supreme Court granted the motion, and the plaintiff 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" (Wells Fargo Bank, N.A. v Burke, 155 AD3d 668, 669; see U.S. Bank N.A. v Joseph, 159 AD3d 968, 969). "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" (Barry v Cadman Towers, Inc., 136 AD3d 951, 952; see Stewart v GDC Tower at Greystone, 138 AD3d 729, 730).
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 Milone v US Bank N.A., 164 AD3d 145, 151; U.S. Bank N.A. v Joseph, 159 AD3d at 970; Nationstar Mtge., LLC v Weisblum, 143 AD3d 866, 867; Wells Fargo Bank, N.A. v Burke, 94 AD3d 980, 982). Once a mortgage debt is accelerated, however, the statute of limitations begins to run on the entire debt (see Milone v US Bank N.A., 164 AD3d at 151; U.S. Bank N.A. v Joseph, 159 AD3d at 970; Amrusi v Nwaukoni, 155 AD3d 814; Stewart Tit. Ins. Co. v Bank of N.Y. Mellon, 154 AD3d 656, 659). "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 AD3d 631, 632 [internal quotation marks omitted]; see Deutsche Bank Natl. Trust Co. v Adrian, 157 AD3d 934, 935; NMNT Realty Corp. v Knoxville 2012 Trust, 151 AD3d 1068, 1069-1070; EMC Mtge. Corp. v Patella, 279 AD2d 604, 606).
In support of his motion, the defendant demonstrated that the six-year statute of limitations (see CPLR 213[4]) began to run on the entire debt on June 24, 2009, when HSBC Mortgage accelerated the mortgage debt by commencing the prior foreclosure action (see Freedom Mtge. Corp. v Engel, 163 AD3d at 632; U.S. Bank, N.A. v Kess, 159 AD3d 767, 768; Deutsche Bank Natl. Trust Co. v Gambino, 153 AD3d 1232, 1233). Since the plaintiff did not commence the instant foreclosure action until July 28, 2015, which was more than six years after acceleration of the debt, the defendant met his initial burden of demonstrating, prima facie, that the instant action was untimely (see Milone v US Bank N.A., 164 AD3d at 153; U.S. Bank, N.A. v Kess, 159 AD3d at 768; Deutsche Bank Natl. Trust Co. v Adrian, 157 AD3d at 935).
In opposition, the plaintiff failed to raise a question of fact as to whether it revoked its election to accelerate the mortgage within the six-year limitations period. The plaintiff's sole argument in opposition was that its "failure to act [in the prior foreclosure action] was, in effect, an affirmative revocation of the acceleration by the Plaintiff." On appeal, the plaintiff has abandoned that argument, contending instead that (1) the mailing of a 90-day demand letter in October 2014, and a 30-day demand letter in April 2015, after the prior foreclosure action was dismissed, constituted a revocation of the prior acceleration, and (2), in any event, even if there were no revocation of the prior acceleration, its service of the RPAPL 1304 notice tolled the statute of limitations for 90 days. These arguments, which were not raised in the plaintiff's opposition to the defendant's motion before the Supreme Court, are not properly before this Court (see Beneficial Homeowner Serv. Corp. v Tovar, 150 AD3d 657, 659).
LEVENTHAL, J.P., DUFFY, CONNOLLY and CHRISTOPHER, JJ., concur. ENTER:
Aprilanne Agostino
Clerk of the Court
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