Deutsche Bank Nat'l Trust Co. v. MacPherson

200 A.D.3d 647

159 N.Y.S.3d 72

DEUTSCHE BANK NATIONAL TRUST COMPANY, etc., respondent,

v.Donald MACPHERSON, et al., defendants,Quantuck Farms Corp., appellant.

2019–14310, 2019–14311

Index No. 614087/18

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

Argued—October 29, 2021

December 1, 2021

Irwin Popkin, Melville, NY, for appellant.

Hinshaw & Culbertson, LLP, New York, NY (Schuyler B. Kraus and Han Sheng Beh of counsel), for respondent.

WILLIAM F. MASTRO, J.P., VALERIE BRATHWAITE NELSON, ANGELA G. IANNACCI, LARA J. GENOVESI, JJ.

DECISION & ORDER

In an action to foreclose a mortgage, the defendant Quantuck Farms Corp. appeals from two orders of the Supreme Court, Suffolk County (Thomas Whelan, J.), both dated November 19, 2019. The first order, insofar as appealed from, granted those branches of the plaintiff's motion which were for summary judgment on the complaint insofar as asserted against that defendant, to strike that defendant's answer and affirmative defenses, and for an order of reference. The second order, insofar as appealed from, granted the same relief and appointed a referee to compute the amount due to the plaintiff.

ORDERED that the orders are affirmed insofar as appealed from, with costs.

On June 7, 2006, the defendant Donald MacPherson acquired the subject property from the defendant Quantuck Farms Corp. (hereinafter Quantuck Farms) for no consideration. On that same day, MacPherson borrowed $877,500 from the plaintiff's predecessor in interest. In exchange for the loan, he executed a note, which provided for repayment in monthly installments over the course of 30 years, and a mortgage on the subject property. Approximately three months later, on September 25, 2006, MacPherson transferred the property back to Quantuck Farms for no consideration.

In July 2018, the plaintiff commenced this action to foreclose the mortgage against MacPherson and Quantuck Farms, among others. In its answer, Quantuck Farms asserted certain affirmative defenses, including that the statute of limitations had expired because the plaintiff had commenced an action in 2009 to foreclose upon the same mortgage, therein had elected to call due the entire amount secured by the mortgage, and more than six years had passed (see CPLR 213[4] ).

The plaintiff moved, inter alia, for summary judgment on the complaint insofar as asserted against Quantuck Farms, to strike Quantuck Farms's answer and affirmative defenses, and for an order of reference. In support of that branch of its motion which was to strike Quantuck Farms's affirmative defense that the statute of limitations had expired, the plaintiff submitted, among other things, a loan modification agreement signed by MacPherson on November 21, 2017. Therein, MacPherson acknowledged that $754,973.55 of principal was unpaid on the note and that he was or would be in default under the terms of the note. MacPherson promised to pay a new agreed-upon principal, which included the amounts and arrearages that were past due on the note at that time. The plaintiff argued that, by signing the loan modification agreement on November 21, 2017, MacPherson acknowledged the debt and re-started the statute of limitations in accordance with General Obligations Law § 17–101.

In opposition, Quantuck Farms argued that the loan modification agreement re-started the statute of limitations only as to MacPherson, not as to Quantuck Farms. In reply, the plaintiff argued, among other things, that Quantuck Farms was essentially an alter ego of MacPherson, who had signed a lease agreement on the subject property as president of Quantuck Farms, and that Quantuck Farms, as a non-signatory to the subject loan agreement, lacked standing to challenge which provisions of the agreement were applicable.

In an order dated November 19, 2019, the Supreme Court, inter alia, granted those branches of the plaintiff's motion which were for summary judgment on the complaint insofar as asserted against Quantuck Farms, to strike Quantuck Farms's answer and affirmative defenses, and for an order of reference. The court determined that Quantuck Farms lacked standing to assert a statute of limitations defense because it was a stranger to the mortgage transaction. In a second order, also dated November 19, 2019, the court, among other things, granted those same branches of the plaintiff's motion and appointed a referee to compute the amount due to the plaintiff. Quantuck Farms appeals from both orders.

The Supreme Court erred in concluding that Quantuck had no standing to assert a statute of limitations defense. As the owner of the subject property at the time the action was commenced, Quantuck had standing to assert a statute of limitations defense (see U.S. Bank N.A. v. Balderston, 163 A.D.3d 1482, 1483, 83 N.Y.S.3d 382 ; cf. U.S. Bank N.A. v. Bernice 380 Corp., 186 A.D.3d 1750, 1752, 130 N.Y.S.3d 515 ; BH 263, LLC v. Bayview Loan Servicing, LLC, 175 A.D.3d 1375, 1376, 109 N.Y.S.3d 142 ).

Nonetheless, the subject branches of the plaintiff's motion were properly granted because, in support of that branch of its motion which was for summary judgment dismissing Quantuck Farms’ affirmative defense...