Bank of N.Y. Mellon v. MS Global Grp., LLC

222 A.D.3d 821

202 N.Y.S.3d 392

BANK OF NEW YORK MELLON, etc., respondent,

v.MS GLOBAL GROUP, LLC, appellant, et al., defendants.

2020–00824

Index No. 502152/12

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

Argued—September 29, 2023

December 20, 2023

Rosenberg Fortuna & Laitman, LLP, Garden City, NY (Anthony R. Filosa and Robert Smith of counsel), for appellant.

Akerman LLP, New York, NY (Jordan M. Smith and Eric M. Levine of counsel), for respondent.

MARK C. DILLON, J.P., CHERYL E. CHAMBERS, LINDA CHRISTOPHER, BARRY E. WARHIT, JJ.

DECISION & ORDER

In an action, inter alia, to foreclose a mortgage, the defendant MS Global Group, LLC, appeals from an order of the Supreme Court, Kings County (Noach Dear, J.), dated December 2, 2019. The order, insofar as appealed from, denied those branches of the motion of the defendant MS Global Group, LLC, which were pursuant to CPLR 3211(a)(5) to dismiss the complaint insofar as asserted against it as time-barred, pursuant to RPAPL 1301(3) and CPLR 3217(c) to dismiss the first cause of action, to foreclose the mortgage, insofar as asserted against it, and pursuant to CPLR 5015(a)(4) to vacate a prior order of the same court dated May 9, 2019, for lack of jurisdiction.

ORDERED that the order dated December 2, 2019, is modified, on the law, (1) by deleting the provision thereof denying that branch of the motion of the defendant MS Global Group, LLC, which was pursuant to CPLR 3211(a)(5) to dismiss the second cause of action, to reform the mortgage, insofar as asserted against it as time-barred, and substituting therefor a provision granting that branch of the motion, and (2) by deleting the provision thereof denying that branch of the motion of the defendant MS Global Group, LLC, which was pursuant to CPLR 3211(a)(5) to dismiss the first cause of action, to foreclose the mortgage, insofar as asserted against it as time-barred; as so modified, the order is affirmed insofar as appealed from, without costs or disbursements, and the matter is remitted to the Supreme Court, Kings County, for further proceedings in accordance herewith.

In January 2006, the defendant Farkhadjan Usmanov executed a note secured by a mortgage on certain property located in Brooklyn. The mortgage was recorded on January 13, 2006. On July 21, 2006, the plaintiff commenced an action to foreclose the mortgage (hereinafter the 2006 action). When the defendants defaulted in answering or appearing, in November 2006, the Supreme Court granted the plaintiff's motion to appoint a referee to ascertain and compute the amount due on the note. However, on August 18, 2008, the court denied the plaintiff's subsequent motion to confirm the referee's report and for a judgment of foreclosure and sale. Thereafter, the plaintiff voluntarily discontinued the 2006 action by stipulation filed on December 31, 2009.

In March 2012, the plaintiff commenced a second action to foreclose the mortgage (hereinafter the March 2012 action). However, the March 2012 action was voluntarily discontinued by notice of discontinuance dated September 22, 2015, and filed on October 8, 2015. While the March 2012 action was pending, on July 30, 2012, the plaintiff commenced a third foreclosure action (hereinafter the instant action). In February 2017, the Supreme Court granted the plaintiff's motion for leave to amend the complaint to add a cause of action to reform the mortgage. On July 18, 2018, the property was conveyed to MS Global Group, LLC (hereinafter MS Global), and in February 2019, the plaintiff moved to join MS Global as a necessary party. The court granted the motion by order dated May 9, 2019.

After it was served in the instant action, MS Global moved, inter alia, pursuant to CPLR 3211(a)(5) to dismiss the complaint insofar as asserted against it as barred by the statute of limitations, pursuant to RPAPL 1301(3) and CPLR 3217(c) to dismiss the first cause of action, to foreclose the mortgage, insofar as asserted against it, and pursuant to CPLR 5015(a)(4) to vacate the order dated May 9, 2019, for lack of jurisdiction.

The plaintiff opposed the motion, and cross-moved for leave to enter a default judgment and for an order of reference. MS Global opposed the cross-motion. By order dated December 2, 2019, the Supreme Court denied the motion and the cross-motion. With respect to the statute of limitations, the court determined that while MS Global met its prima facie burden of demonstrating that the action was untimely, the plaintiff raised a question of fact as to whether it had standing to commence the 2006 action and to accelerate the debt at that time. However, the court noted that the issue of standing was not adjudicated to its conclusion in the 2006 action. MS Global appeals.

An action to foreclose a mortgage is governed by a six-year statute of limitations (see id. § 213 [4]; Lubonty v. U.S. Bank N.A., 34 N.Y.3d 250, 261, 116 N.Y.S.3d 642, 139 N.E.3d 1222 ; U.S. Bank N.A. v. Dallas, 212 A.D.3d 680, 682, 182 N.Y.S.3d 707 ). "[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" ( BHMPW Funding, LLC v. Lloyd–Lewis, 194 A.D.3d 780, 782, 149 N.Y.S.3d 141 [internal quotation marks omitted]; see GMAT Legal Title Trust 2014–1 v. Kator, 213 A.D.3d 915, 916, 184 N.Y.S.3d 805 ). Acceleration occurs, inter alia, by the commencement of a foreclosure action wherein the holder of the note elects in the complaint to call due the entire amount secured by the mortgage (see Freedom Mtge. Corp. v. Engel, 37 N.Y.3d 1, 22, 146 N.Y.S.3d 542, 169 N.E.3d 912 ; GMAT Legal Title Trust 2014–1 v. Kator, 213 A.D.3d at 916, 184 N.Y.S.3d 805 ; Ditech Fin., LLC v. Connors, 206 A.D.3d 694, 697, 170 N.Y.S.3d 560 ).

Here, in support of its motion, MS Global demonstrated, prima facie, that the six-year statute of limitations began to run on July 21, 2006, when the plaintiff commenced the 2006 action and elected to call due the entire amount secured by the mortgage (see U.S. Bank N.A. v. Doura, 204 A.D.3d 721, 723, 166 N.Y.S.3d 51 ; Wilmington Sav. Fund Socy., FSB v. Iqbal, 195 A.D.3d 772, 773, 145 N.Y.S.3d 372 ). MS Global further demonstrated that the instant action was commenced on July 30, 2012, more than six years after the 2006 action was commenced (see U.S. Bank N.A. v. Doura, 204 A.D.3d at 723, 166 N.Y.S.3d 51 ).

On appeal, the plaintiff argues, inter alia, that under Freedom Mtge. Corp. v. Engel , 37 N.Y.3d 1, 146 N.Y.S.3d 542, 169 N.E.3d 912, the voluntary discontinuance of the 2006 action revoked its acceleration of the mortgage debt in that action, and thus, the instant action is timely. However, under the recently enacted Foreclosure Abuse Prevention Act (L 2022, ch 821, § 8 [eff Dec. 30, 2022]; hereinafter FAPA), the voluntary discontinuance of the 2006 action did not " ‘in form or effect, waive, postpone, cancel, toll, extend, revive or reset the limitations period to commence an action and to interpose a claim, unless expressly prescribed by statute’ " ( U.S. Bank N.A. v. Simon, 216 A.D.3d 1041, 1043, 191 N.Y.S.3d 61, quoting CPLR 3217[e] ). Contrary to the plaintiff's further...