Caprotti v. Deutsche Bank Nat'l Trust Co.

220 A.D.3d 1126

199 N.Y.S.3d 258

Jesse CAPROTTI, Also Known as Jesse C. Caprotti, et al., Respondents,

v.DEUTSCHE BANK NATIONAL TRUST COMPANY, as Trustee, et al., Appellants.

534302

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

Calendar Date: September 13, 2023

Decided and Entered: October 26, 2023

Blank Rome LLP, New York City (Alina Levi of counsel), for appellants.

Rusk Wadlin Heppner & Martuscello, LLP, Kingston (Jason J. Kovacs of counsel), for respondents.

Before: Garry, P.J., Egan Jr., Aarons, McShan and Mackey, JJ.

MEMORANDUM AND ORDER

Aarons, J. Appeal from an order of the Supreme Court (Richard Mott, J.), entered October 14, 2021 in Ulster County, which, among other things, denied defendants’ motion for summary judgment dismissing the complaint.

Plaintiffs executed a note secured by a mortgage on real property located in Ulster County. In 2009, defendant Deutsche Bank National Trust Company, as Trustee (hereinafter defendant), commenced an action against plaintiffs to foreclose on the mortgage. In a 2010 order, Supreme Court (Zwack, J.) dismissed the 2009 action due to lack of standing by defendant. In 2012, defendant commenced another mortgage foreclosure action against plaintiffs. In a 2016 order, Supreme Court (Cahill, J.) dismissed the 2012 action because defendant lacked standing. In 2019, plaintiffs commenced this action seeking to quiet title and to discharge and cancel the mortgage. Following joinder of issue, defendants moved for summary judgment dismissing the complaint and plaintiffs cross-moved for summary judgment. In an October 2021 order, Supreme Court (Mott, J.) denied the motion and the cross-motion. Defendants appeal.

A party with an interest in real property that is subject to a mortgage can commence an action to cancel and discharge the mortgage when the statute of limitations to foreclose on such mortgage has expired (see RPAPL 1501[4] ). Mortgage foreclosure actions are governed by a six-year statute of limitations (see CPLR 213[4] ). "[O]nce the debt has been accelerated by a demand or commencement of an action, the entire sum becomes due and the statute of limitations begins to run on the entire mortgage" ( U.S. Bank N.A. v. Stewart, 187 A.D.3d 1330, 1332, 134 N.Y.S.3d 469 [3d Dept. 2020] [internal quotation marks and citation omitted]; see MTGLQ Invs., L.P. v. Wentworth, 192 A.D.3d 186, 188, 140 N.Y.S.3d 292 [3d Dept. 2021], lv denied 37 N.Y.3d 916, 2021 WL 5934416 [2021] ). However, "[a]n acceleration of a mortgaged debt is only valid if the party making the acceleration had standing at that time to do so" ( BHMPW Funding, LLC v. Lloyd–Lewis, 194 A.D.3d 780, 782, 149 N.Y.S.3d 141 [2d Dept. 2021] ; see Deutsche Bank Natl. Trust Co. v. Board of Mgrs. of the E. 86th St. Condominium, 162 A.D.3d 547, 547, 75 N.Y.S.3d 424 [1st Dept. 2018] ).

In support of their motion, defendants tendered proof establishing that the prior actions to foreclose on the mortgage were both dismissed due to lack of standing. The 2010 order recited that the motion to dismiss the 2009 action was being granted because "[defendant] lacked standing to commence the present proceeding." The 2016 order likewise recited that "the evidence does not establish that [defendant] was the valid holder of the note and mortgage at the time this action was commenced" and that the 2012 action was being dismissed on standing grounds.¹ Because the 2009 and the 2012 actions were dismissed due to lack of standing by defendant, the debt was not validly accelerated when those actions were commenced. As such, the statute of limitations to foreclose on the mortgage did not start to run. Stated differently, the statute of limitations has not expired. In view of the foregoing, defendants met their summary judgment burden (see Mejias v. Wells Fargo N.A., 186 A.D.3d 472, 474, 129 N.Y.S.3d 523 [2d Dept. 2020] ).

In opposition, plaintiffs point to an affidavit from a loan servicer who averred that a demand letter accelerating the debt was sent to plaintiffs in July 2009. Although the loan servicer stated that the debt was accelerated, the July 2009 letter advised plaintiffs that "[i]f you do not cure your default, we will accelerate your mortgage with the full amount remaining accelerated and becoming due and payable in full, and foreclosure proceedings will be initiated at that time." This language does not constitute a clear and unequivocal notice that the debt was being accelerated. To the contrary, it was an expression of future intent and did not suffice to accelerate the debt (see GMAT Legal Tit. Trust 2014–1, U.S. Bank N.A. v. Wood, 192 A.D.3d 1285, 1287, 144 N.Y.S.3d 237 [3d Dept. 2021] ; Wilmington Trust, N.A. v. Mausler, 192 A.D.3d 1212, 1214, 143 N.Y.S.3d 713 [3d Dept. 2021] ). Plaintiffs’ reliance on an allegation in the complaint of the 2012 action stating that the debt was accelerated as evidence that the debt was accelerated in July 2009 is unavailing.

Plaintiffs further cite to the Foreclosure Abuse Prevention Act (see L 2022, ch 821, § 7), which added, as relevant here, CPLR 213(4)(b). They contend that the new CPLR 213(4)(b) estops defendants from asserting that the applicable statute of limitations has not expired. We disagree. In an action seeking to cancel and discharge a mortgage, "a defendant shall be estopped from asserting that the period allowed by the applicable statute of limitation[s] for the commencement of an action upon the instrument has not expired because the instrument was not validly accelerated prior to, or by way of commencement of a prior action, unless the prior action was dismissed based on an...