HSBC Bank USA, N.A. v. Besharat

80 Misc.3d 269

195 N.Y.S.3d 380

HSBC BANK USA, N.A., Plaintiff,

v.Walid BESHARAT; Cindy Besharat a/k/a Cindy Ann Besharat, et al., Defendants.

Index No. 500836 / 2021

Supreme Court, Putnam County, New York.

Decided on May 19, 2023

Plaintiff is represented by Knuckles, Komosinski & Manfro, LLP, 565 Taxter Road, Elmsford, NY 10523.

Defendants are represented by James Marsico, Esq. 2500 Westchester Ave., Suite 109, Purchase, NY 10577.

Victor G. Grossman, J.

The following papers numbered 1 to 10 were read on Plaintiff's motion for a judgment of foreclosure and sale, and Defendants’ cross motion for an order vacating this Court's prior award of summary judgment to Plaintiff and dismissing the complaint:

Notice of Motion — Affirmation / Exhibits — Affidavit 1-3

Notice of Cross Motion — Affirmation / Exhibits -- Affidavit 4-6

Affirmation in Opposition and Further Support / Exhibits 7

Reply Affirmations (2) 8-9

Sur-Reply Affirmation / Exhibits 10

Upon the foregoing papers it is ORDERED that the motion is disposed of as follows:

This is a residential mortgage foreclosure action. Plaintiff HSBC Bank USA, N.A. moves for a Judgment of Foreclosure and Sale. Defendants cross move based on the newly enacted Foreclosure Abuse Prevention Act (FAPA) for dismissal on the purported ground that Plaintiff's action is barred by the Statute of Limitations.

THE COURT'S PRIOR ORDER

In a Decision and Order dated October 26, 2022, prior to the enactment of FAPA, the Court granted Plaintiff's motion for summary judgment and an order of reference and rejected Defendants’ Statute of Limitations defense. Regarding the Statute of Limitations, the Court therein wrote:

The statute of limitations governing mortgage foreclosure actions is six (6) years.

See, CPLR § 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 (2019). Where the mortgage debt is payable in installments, a separate cause of action accrues for each unpaid installment, and the limitations period begins to run on the date each installment becomes due. See,Wells Fargo Bank, N.A v. Cohen, 80 A.D.3d 753, 754, 915 N.Y.S.2d 569 (2d Dept. 2011). However, once a mortgage debt is accelerated, the entire amount becomes due and the statute of limitations begins to run on the entire debt (see,EMC Mtge. Corp. v. Patella, 279 A.D.2d 604, 605, 720 N.Y.S.2d 161 [2d Dept. 2001] ), and continues to run on the entire debt unless and until the acceleration is revoked within the limitations period. See,Freedom Mortgage Corp. v. Engel, 37 N.Y.3d 1, 146 N.Y.S.3d 542, 169 N.E.3d 912 (2021).

The relevant procedural history of this action is as follows.

A prior foreclosure action was commenced on January 18, 2013. The complaint therein alleged that Defendants had defaulted as of July 1, 2010 and demanded the entire amount due under the mortgage. This demand constituted an acceleration of the mortgage debt; indeed, a demand for the entire amount due under a mortgage upon the mortgagor's default is the very definition of an acceleration of a debt otherwise payable in installments. Contrary to Defendants’ suggestion, no express statement of an "election" to "accelerate" was required. As per the Court of Appeals’ decision in Freedom Mortgage Corp. v. Engel, supra, then, the voluntary discontinuance of the 2013 action by stipulation dated March 22, 2016 constituted a timely "revocation" of the acceleration effectuated by the complaint in that action. See, id. At that point, the statute of limitations continued to run with respect Defendants’ default on individual monthly installment payments due but ceased to run with respect to the entire mortgage debt.

A second foreclosure action was commenced on March 30, 2018. Under the applicable six (6) year statute of limitations, this action was timely interposed with respect to any default occurring after March 30, 2012. The 2018 action was dismissed without prejudice by court order dated December 21, 2020. However, the grounds for dismissal were such that Plaintiff was entitled to invoke the savings provision of CPLR § 205(a), which provides that:

the plaintiff may commence a new action upon the same transaction within six months after the termination [of the prior action] provided that the new action would have been timely commenced at the time of commencement of the prior action and that service upon defendant is effected within such six-month period.

The Complaint in the present action was thereafter duly filed on June 11, 2021 and served on Defendants on June 17, 2021 — all within the six-month period prescribed by Section 205(a). Per CPLR § 205(a), then, the present action is in effect deemed to have been interposed as of March 30, 2018, such that it is timely with respect to all defaults occurring after March 30, 2012. Inasmuch as the default date alleged in the present Complaint is April 1, 2012, the Plaintiff's claim is in all respects timely interposed.

(Decision and Order dated October 26, 2022, pp. 3-4).

DEFENDANTS’ MOTION

Defendants contend that FAPA has upended this Court's October 26, 2022 ruling on the Statute of Limitations in two respects.

First, Defendants assert that inasmuch as it was the Legislature's expressly stated purpose in FAPA to overrule the Court of Appeals’ decision in Freedom Mortgage Corp. v. Engel, supra , this Court's determination, predicated on Engel , that "the voluntary discontinuance of the 2013 action by stipulation dated March 22, 2016 constituted a timely ‘revocation’ of the acceleration effectuated by the complaint in that action" cannot be sustained. Assuming arguendo that Defendants are correct in that regard, they nevertheless concede that the 2018 foreclosure action was timely commenced. Although the 2018 action was subsequently dismissed without prejudice by court order dated December 21, 2020, this Court ruled that the present action was thereafter timely commenced pursuant to CPLR § 205(a) because the summons and complaint were duly filed on June 11, 2021 and served on Defendants on June 17, 2021 — all within the six months following dismissal of the 2018 action, as prescribed by Section 205(a).

Secondly, then, Defendants assert that the Court's CPLR § 205(a) ruling cannot be sustained because FAPA replaced Section 205(a) with CPLR § 205-a. FAPA altered the Section 205(a) "savings provision" in multiple respects, but only one change is pertinent to the issue herein presented: while CPLR § 205(a) in 2021 required that service of process be "effected " within the specified six-month extension period, CPLR § 205-a now requires that service of process be "completed " within that six-month period.

Under either statute, service of process was timely made upon defendant Walid Besharat via CPLR § 308(1) by personal delivery of the summons and complaint on June 17, 2021, four days prior to the expiration of the six-month statutory period. Service of process was that same day "effected" on defendant Cindy Besharat via CPLR § 308(2) by delivery of the summons and complaint to her husband, Walid Besharat, and by mailing thereof to her home. Service upon Ms. Besharat was therefore timely under CPLR § 205(a), even though per Section 308(2) it was not "completed" until July 1, 2021 (ten days after the filing of the affidavit of service on June 21, 2021), after the close of the six-month window. See, U.S. Bank National Ass'n v. McLean, 209 A.D.3d 792, 794, 176 N.Y.S.3d 665 (2d Dept. 2022) ; Best Global Alternative, Ltd. v. American Storage & Transport, Inc., 68 Misc.3d 479, 480-484, 124 N.Y.S.3d 896 (Sup. Ct. Nassau Co. 2020) ; Siegel & Connors, NY Prac. § 52 (6th ed. 2018). Cf. contra, Roth v. Syracuse Hous. Auth., 2002 WL 31962630 (Sup. Ct. Onondaga Co., July 17, 2002), aff'd 306 A.D.2d 921, 760 N.Y.S.2d 377 (4th Dept. 2003), lv denied 1 N.Y.3d 507, 776 N.Y.S.2d 223, 808 N.E.2d 359 (2004). However, since FAPA / CPLR § 205-a now requires that service be "completed ", not just "effected ", within the six-month extension period, the application of Section 205-a here would render service upon Ms. Besharat untimely, retroactively deprive Plaintiff of the benefit of the Section 205(a) savings provision, and thus retroactively erect a statute of limitations bar against a claim that under the law prevailing when it was made was timely interposed. On that ground, Defendants seek dismissal of Plaintiff's mortgage foreclosure action.

In the first instance, then, the Defendants’ motion turns on two narrow issues:

• Did the Legislature intend that the procedural requirement of FAPA / CPLR § 205-a that service of process be "completed", as opposed to "effected", within the specified six-month extension period be applied retroactively to proceedings conducted in 2021?

• If so, would the retroactive imposition of CPLR § 205-a procedural requirements to erect a statute of limitations bar against a claim that was timely under the law prevailing when it was interposed pass constitutional muster?

IS CPLR § 205-a INTENDED TO BE RETROACTIVELY APPLIED?

In Regina Metropolitan Co., LLC v. N.Y.S. Div. of Housing and Community Renewal, 35 N.Y.3d 332, 130 N.Y.S.3d 759, 154 N.E.3d 972 (2020), rearg denied 35 N.Y.3d 1079, 130 N.Y.S.3d 426, 154 N.E.3d 12 (2020), the Court of Appeals provided a comprehensive framework for analyzing issues pertaining to the retroactivity of legislation. On the question whether, as a matter of statutory interpretation, the Legislature intended a newly enacted statute to be retroactively applied, the Court of Appeals’ teaching in Regina was beautifully distilled by the Fourth Department in Ruth v. Elderwood at Amherst, 209 A.D.3d 1281, 175 N.Y.S.3d 811 (4th Dept. 2022). The Court wrote:

When conducting a retroactivity analysis, a court must first assess whether applying the new law to conduct that occurred prior to its enactment "truly implicates the concerns historically associated with retroactive application of new legislation" ( [Regina ], 35 N.Y.3d 332, 365 [130 N.Y.S.3d 759, 154 N.E.3d 972] ). In that

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