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U.S. Bank v. Doura
Factual and Procedural Background
On January 30, 2006, Ricot Doura executed a $500,000 note secured by a mortgage on Brooklyn real property. In May 2008, the plaintiff's predecessor initiated a foreclosure action alleging default from November 1, 2007, onward, electing to accelerate the entire debt. That prior action was dismissed without prejudice in March 2017 due to the plaintiff's failure to appear at a status conference.
In July 2017, the plaintiff commenced the current foreclosure action, alleging default from August 1, 2011, onward. The defendants answered, asserting the action was time-barred and counterclaimed to cancel and discharge the mortgage. The plaintiff moved for summary judgment on the complaint, to strike the defendants’ answer and counterclaim, and for an order of reference. The defendants cross-moved for summary judgment dismissing the complaint as time-barred and on their counterclaim. The Supreme Court denied the plaintiff's motion, granted the defendants' motion dismissing the complaint as time-barred, but denied summary judgment on the counterclaim. Both parties appealed.
Legal Issues Presented
- Whether the plaintiff's foreclosure action was time-barred under the six-year statute of limitations applicable to mortgage foreclosures.
- Whether the defendants were entitled to summary judgment on their counterclaim to cancel and discharge the mortgage pursuant to RPAPL 1501(4) based on the time-barred nature of the foreclosure action.
Arguments of the Parties
Appellant's Arguments
- The plaintiff contended the foreclosure action was timely, relying on the savings provision of CPLR 205(a) to argue that the dismissal of the prior action did not bar the current action.
Respondents' Arguments
- The defendants asserted that the mortgage debt was accelerated when the prior foreclosure action was commenced in 2008, triggering the statute of limitations.
- They argued the instant 2017 action was commenced more than six years after acceleration, rendering it time-barred.
- They also sought summary judgment on their counterclaim to cancel and discharge the mortgage, asserting the foreclosure action was barred and the prior action was no longer pending.
Table of Precedents Cited
| Precedent | Rule or Principle Cited For | Application by the Court |
|---|---|---|
| Kashipour v Wilmington Sav. Fund Socy., FSB, 144 A.D.3d 985 | Six-year statute of limitations applies to mortgage foreclosure actions. | Confirmed the applicable limitations period for the foreclosure action. |
| Nationstar Mtge., LLC v Weisblum, 143 A.D.3d 866 | Acceleration of mortgage debt triggers statute of limitations on entire debt. | Supported the conclusion that acceleration occurred with the prior foreclosure action. |
| EMC Mtge. Corp. v Patella, 279 A.D.2d 604 | Acceleration begins the statute of limitations period on entire mortgage debt. | Quoted to explain the legal effect of acceleration on limitations. |
| Wells Fargo Bank, N.A. v Lefkowitz, 171 A.D.3d 843 | Acceleration occurs upon commencement of foreclosure action seeking full balance. | Used to establish that acceleration happened when the prior action was commenced. |
| Freedom Mtge. Corp. v Engel, 37 N.Y.3d 1 | Acceleration of mortgage debt by election in foreclosure complaint. | Supported defendants’ prima facie showing of acceleration in the prior action. |
| Wilmington Sav. Fund Socy., FSB v Iqbal, 195 A.D.3d 772 | Application of statute of limitations and acceleration principles. | Reinforced that the current action was time-barred. |
| Deutsche Bank Natl. Trust Co. v Baquero, 192 A.D.3d 660 | Acceleration and limitations period in mortgage foreclosure context. | Supported the defendants’ showing of time-bar. |
| Botach Mgt. Group v Gurash, 138 A.D.3d 771 | Improper to raise new arguments for the first time on appeal. | Rejected plaintiff's CPLR 205(a) argument as untimely. |
| Deutsch v LoPresti, 272 A.D.2d 506 | New legal issues generally must be raised below, not first on appeal. | Supported denial of plaintiff's new argument on appeal. |
| Wilmington Sav. Fund Socy., FSB v Rosenbaum, 197 A.D.3d 1132 | RPAPL 1501(4) allows cancellation of mortgage where foreclosure action is time-barred. | Supported granting defendants’ summary judgment on counterclaim. |
| Deutsche Bank Natl. Trust Co. v Gordon, 179 A.D.3d 770 | Cancellation of mortgage when foreclosure action is barred. | Applied to affirm defendants’ entitlement to cancel mortgage. |
| 21st Mtge. Corp. v Nweke, 165 A.D.3d 616 | RPAPL 1501(4) counterclaim standards for mortgage cancellation. | Used to justify reversal and granting summary judgment on counterclaim. |
Court's Reasoning and Analysis
The court held that the prior foreclosure action initiated by the plaintiff's predecessor accelerated the entire mortgage debt, starting the six-year statute of limitations period at that time. Since the current action was commenced more than six years after the prior action, it was time-barred. The plaintiff's attempt to rely on CPLR 205(a) to save the action was rejected because it was raised for the first time on appeal and did not present a pure question of law. Consequently, the court affirmed the dismissal of the complaint against the defendants.
However, the court found error in denying the defendants' summary judgment on their counterclaim to cancel and discharge the mortgage. Because the foreclosure action was time-barred and the prior action was dismissed without resolution, the defendants were entitled as a matter of law to cancel the mortgage under RPAPL 1501(4).
Holding and Implications
The Supreme Court's order is affirmed insofar as it dismissed the complaint as time-barred and denied the plaintiff's summary judgment motions, and reversed insofar as it denied defendants' summary judgment on their counterclaim to cancel and discharge the mortgage.
The direct consequence is that the foreclosure complaint against the defendants is dismissed due to expiration of the statute of limitations, and the mortgage is ordered canceled and discharged of record. No new legal precedent was established; the decision applies settled principles regarding acceleration, statute of limitations, and RPAPL 1501(4) counterclaims in the context of mortgage foreclosures.
McCalla Raymer Leibert Pierce, LLC, New York, NY (Harold L. Kofman of counsel), for appellant-respondent.
Solomon Rosengarten, Brooklyn, NY, for respondents-appellants.
ANGELA G. IANNACCI, J.P. REINALDO E. RIVERA PAUL WOOTEN DEBORAH A. DOWLING, JJ.
DECISION & ORDER
In an action to foreclose a mortgage, the plaintiff appeals, and the defendants Ricot Doura and Appolo Pitton cross-appeal, from an order of the Supreme Court, Kings County (Noach Dear, J.), dated May 23, 2019. The order, insofar as appealed from, denied those branches of the plaintiff's motion which were for summary judgment on the complaint insofar as asserted against the defendants Ricot Doura and Appolo Pitton, to strike their answer and counterclaim, and for an order of reference, and granted that branch of those defendants' cross motion which was, in effect, for summary judgment dismissing the complaint insofar as asserted against them on the ground that the action was time-barred. The order, insofar as cross-appealed from, denied that branch of the cross motion of the defendants Ricot Doura and Appolo Pitton which was for summary judgment on their counterclaim to cancel and discharge of record the subject mortgage.
ORDERED that the order is affirmed insofar as appealed from; and it is further, ORDERED that the order is reversed insofar as cross-appealed from, on the law, and that branch of the cross motion of the defendants Ricot Doura and Appolo Pitton which was for summary judgment on their counterclaim to cancel and discharge of record a mortgage is granted; and it is further, ORDERED that one bill of costs is awarded to the defendants Ricot Doura and Appolo Pitton.
On January 30, 2006, the defendant Ricot Doura (hereinafter the borrower) executed a note in the sum of $500, 000, which was secured by a mortgage on real property in Brooklyn (hereinafter the subject mortgage).
In or about May 2008, the plaintiff's predecessor in interest commenced an action to foreclose the subject mortgage against, among others, the borrower and the defendant Appolo Pitton (hereinafter together the defendants), alleging, inter alia, that the borrower had defaulted on the mortgage by failing to make the payment due November 1, 2007, and all payments due thereafter (hereinafter the prior action). In the complaint, the plaintiff's predecessor in interest elected "to declare immediately due and payable the entire unpaid balance of [the] principal." In an order dated March 2, 2017, the Supreme Court directed dismissal of the prior action without prejudice after the plaintiff's predecessor in interest failed to appear for a scheduled status conference.
In or about July 2017, the plaintiff commenced the instant action against, among others, the defendants to foreclose the subject mortgage, alleging, inter alia, that the borrower had defaulted on his mortgage by failing to make the payment due August 1, 2011, and all payments due thereafter. The defendants interposed an answer asserting, among other things, an affirmative defense that the action was time-barred and a counterclaim pursuant to RPAPL 1501(4) to cancel and discharge of record the subject mortgage.
The plaintiff moved, inter alia, for summary judgment on the complaint insofar as asserted against the defendants, to strike their answer and counterclaim, and for an order of reference. The defendants opposed the plaintiff's motion, and cross-moved, in effect, for summary judgment dismissing the complaint insofar as asserted against them on the ground that the action was time-barred, and for summary judgment on their counterclaim to cancel and discharge of record the subject mortgage. The plaintiff opposed the cross motion.
In an order dated May 23, 2019, the Supreme Court denied the plaintiff's motion and granted that branch of the defendants' cross motion which was, in effect, for summary judgment dismissing the complaint insofar as asserted against them on the ground that the action was time-barred, finding that the maturity date of the loan was accelerated when the prior action was commenced, and that the instant action was commenced more than six years after the prior action was commenced. The court denied that branch of the defendants' cross motion which was, in effect, for summary judgment on their counterclaim. The plaintiff appeals, and the defendants cross-appeal.
An action to foreclose a mortgage is subject to a six-year statute of limitations (see CPLR 213[4]; Kashipour v Wilmington Sav. Fund Socy., FSB, 144 A.D.3d 985, 986; Nationstar Mtge., LLC v Weisblum, 143 A.D.3d 866, 867). "'[E]ven if a mortgage is payable in installments, once a mortgage debt is accelerated, the entire amount is due and the Statute of Limitations begins to run on the entire debt'" (Nationstar Mtge., LLC v Weisblum, 143 A.D.3d at 867, quoting EMC Mtge. Corp. v Patella, 279 A.D.2d 604, 605). "An acceleration of a mortgage debt can occur when a creditor commences an action to foreclose upon a note and mortgage and seeks, in the complaint, payment of the full balance due" (Wells Fargo Bank, N.A. v Lefkowitz, 171 A.D.3d 843, 844 [internal quotation marks omitted]).
Here, in support of their cross motion, the defendants established, prima facie, that the mortgage debt was accelerated when the plaintiff's predecessor in interest commenced the prior action and elected in the complaint to call due the entire amount secured by the mortgage (see Freedom Mtge. Corp. v Engel, 37 N.Y.3d 1, 31-32; Wilmington Sav. Fund Socy., FSB v Iqbal, 195 A.D.3d 772; Deutsche Bank Natl. Trust Co. v Baquero, 192 A.D.3d 660). The defendants further demonstrated that this action was commenced in 2017, more than six years later (see CPLR 213[4]; Wilmington Sav. Fund Socy., FSB v Iqbal, 195 A.D.3d 772; Deutsche Bank Natl. Trust Co. v Baquero, 192 A.D.3d 660). In opposition, the plaintiff failed to raise a triable issue of fact. The plaintiff's contention that this action was timely commenced based upon the savings provision of CPLR 205(a) is improperly raised for the first time on appeal (see Botach Mgt. Group v Gurash, 138 A.D.3d 771, 774; Deutsch v LoPresti, 272 A.D.2d 506, 507). Contrary to the plaintiff's assertion, the issue does not involve a pure question of law that appears on the face of the record and could not have been avoided if brought to the Supreme Court's attention.
Accordingly, the Supreme Court properly granted that branch of the defendants' cross motion which was, in effect, for summary judgment dismissing the complaint insofar as asserted against them on the ground that this action was time-barred, and denied those branches of the plaintiff's motion which were for summary judgment on the complaint insofar as asserted against the defendants, to strike their answer and counterclaim, and for an order of reference.
However, the Supreme Court erred in denying that branch of the defendants' cross motion which was for summary judgment on their counterclaim pursuant to RPAPL 1501(4) to cancel and discharge of record the subject mortgage (see Wilmington Sav. Fund Socy., FSB v Rosenbaum, 197 A.D.3d 1132, 1133; Deutsche Bank Natl. Trust Co. v Gordon, 179 A.D.3d 770, 773; 21st Mtge. Corp. v Nweke, 165 A.D.3d 616, 618). The defendants established as a matter of law that this action was time-barred, and the plaintiff failed to demonstrate that the prior action was still pending and unresolved.
IANNACCI, J.P., RIVERA, WOOTEN and DOWLING, JJ., concur.
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