Commodore Factors Corp. v. Deutsche Bank Nat'l Trust Co.

189 A.D.3d 766

137 N.Y.S.3d 512

COMMODORE FACTORS CORP., Appellant,

v.DEUTSCHE BANK NATIONAL TRUST COMPANY, etc., Respondent, et al., Defendants.

2018–03212

Index No. 2212/15

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

December 2, 2020

Submitted September 15, 2020

Ruskin Moscou Faltischek, P.C., Uniondale, N.Y. (Adam L. Browser and Jeffrey A. Wurst of counsel), for appellant.

Reed Smith LLP, New York, N.Y. (Andrew B. Messite and Kerren B. Zinner of counsel), for respondent.

LEONARD B. AUSTIN, J.P., JOHN M. LEVENTHAL, SHERI S. ROMAN, BETSY BARROS, JJ.

DECISION & ORDER

In an action, inter alia, pursuant to Real Property Actions and Property Law § 1501(4) to cancel and discharge of record a mortgage, the plaintiff appeals from an order of the Supreme Court, Nassau County (Vito M. DeStefano, J.), entered January 12, 2018. The order granted the motion of the defendant Deutsche Bank National Trust Company for summary judgment dismissing the amended complaint insofar as asserted against it and, in effect, declaring that the plaintiff's mortgage did not have priority over the terms of that defendant's lien modification agreement, and denied the plaintiff's cross motion for summary judgment on the amended complaint insofar as asserted against that defendant and, in effect, declaring that its mortgage had priority over the terms of the lien modification agreement.

ORDERED that the order is affirmed, with costs, and the matter is remitted to the Supreme Court, Nassau County, for the entry of a judgment, inter alia, declaring that the plaintiff's mortgage did not have priority over the terms of the lien modification agreement.

In June 2004, the defendants Alan Dinow and Carol R. Dinow (hereinafter together the borrowers) obtained a loan from Aames Funding Corporation, which was secured by a mortgage on their real property in Woodbury. The mortgage was thereafter assigned to the defendant Deutsche Bank National Trust Company (hereinafter Deutsche Bank). In September 2004, the borrowers obtained a loan from the plaintiff secured by a mortgage on the same property.

Following the borrowers' defaults on their payment obligations under both mortgage agreements, the plaintiff commenced an action to foreclose its mortgage in 2007, and Deutsche Bank commenced a foreclosure action in April 2008. In May 2010, the borrowers filed for bankruptcy under chapter 7 of the United States Bankruptcy Code (see 11 U.S.C. § 701 et seq. ), triggering an automatic stay of the foreclosure actions. In August 2010, the borrowers' Chapter 7 bankruptcy proceedings terminated with a discharge of their debts. Both foreclosure actions were ultimately dismissed for lack of personal jurisdiction.

In 2012, the plaintiff commenced another foreclosure action against, among others, the borrowers. In February 2015, the borrowers entered into a lien modification agreement with Deutsche Bank. Subsequently, the plaintiff commenced this action against, inter alia, Deutsche Bank. The first cause of action in the amended complaint sought to cancel and discharge of record Deutsche Bank's mortgage on the subject property pursuant to RPAPL 1501(4) on the ground that the statute of limitations to foreclose that mortgage had expired. The second cause of action sought a judgment declaring that the plaintiff's mortgage had priority over the terms of the lien modification agreement.

Deutsche Bank moved for summary judgment dismissing the amended complaint insofar as asserted against it and, in effect, declaring that the plaintiff's mortgage did not have priority over the terms of the lien modification agreement. In support of its motion, Deutsche Bank argued, among other things, that, pursuant to General Obligations Law § 17–101, the lien modification agreement revived the statute of limitations period to foreclose on its mortgage. In addition, Deutsche Bank argued that there was no merit to the plaintiff's claim that its lien should now have priority over Deutsche Bank's lien, inasmuch as no new funds were extended to the borrowers pursuant to the lien modification agreement, and the agreement permitted substantial amounts of principal to be forgiven as timely payments were made. The plaintiff opposed Deutsche Bank's motion and cross-moved for summary judgment on the amended complaint insofar as asserted against Deutsche Bank and, in effect, declaring that its mortgage had priority over the terms of the lien modification agreement. In an order entered January 12, 2018, the Supreme Court granted Deutsche Bank's motion and denied the plaintiff's cross motion. The plaintiff appeals.

An action to foreclose a mortgage is governed by a six-year statute of limitations (see CPLR 213[4] ; Nationstar Mtge., LLC v. Dorsin, 180 A.D.3d 1054, 1055, 119 N.Y.S.3d 435 ). Even 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 (see Nationstar Mtge., LLC v. Dorsin, 180 A.D.3d at 1055, 119 N.Y.S.3d 435 ; Bank of N.Y. Mellon v. Craig, 169 A.D.3d 627, 628–629, 93 N.Y.S.3d 425 ).

" General Obligations Law § 17–101 effectively revives a time-barred claim when the debtor has signed a writing which validly acknowledges the debt" ( Lynford v. Williams, 34 A.D.3d 761, 762, 826 N.Y.S.2d 335 ; see Yadegar v. Deutsche Bank Natl. Trust Co., 164 A.D.3d 945, 947, 83 N.Y.S.3d 173 ). To constitute a valid acknowledgment, a "writing must be signed and recognize an existing debt and must contain nothing inconsistent with an intention on the part of the debtor to pay it" ( Sichol v. Crocker, 177 A.D.2d 842, 843, 576 N.Y.S.2d 457 [internal quotation marks omitted]; see Yadegar v. Deutsche Bank Natl. Trust Co., 164 A.D.3d at...