U.S. Bank Nat'l Ass'n v. Gordon

158 A.D.3d 832

72 N.Y.S.3d 156

U.S. BANK NATIONAL ASSOCIATION, etc., appellant,

v.Marsha Rose GORDON, etc., respondent, et al., defendants.

2015–10074

Index No. 506363/13

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

Argued January 20, 2017

February 28, 2018

McGlinchey Stafford, PLLC, New York, N.Y. (Mitra Paul Singh and Brian McGrath of counsel), for appellant.

Hanna & Vlahakis, Brooklyn, N.Y. (Mark Hanna of counsel), for respondent.

L. PRISCILLA HALL, J.P., ROBERT J. MILLER, HECTOR D. LASALLE, FRANCESCA E. CONNOLLY, VALERIE BRATHWAITE NELSON, JJ.

DECISION & ORDER

In an action to foreclose a mortgage, the plaintiff appeals from an order of the Supreme Court, Kings County (Velasquez, J.), dated September 17, 2015, which granted that branch of the motion of the defendant Marsha Rose Gordon which was pursuant to CPLR 3211(a)(5) to dismiss the complaint insofar as asserted against her as time-barred.

ORDERED that the order is reversed, on the law, with costs, and that branch of the motion of the defendant Marsha Rose Gordon which was pursuant to CPLR 3211(a)(5) to dismiss the complaint insofar as asserted against her as time-barred is denied.

In November 2005, the defendant Marsha Rose Gordon borrowed $412,000 and executed a promissory note evidencing her debt in favor of Fremont Investment & Loan. The note was secured by a mortgage on real property located in Brooklyn. Rose Gordon was required to make monthly payments under the terms of the note, but the note and mortgage gave the holder of the note the option of electing to accelerate the entire debt upon Rose Gordon's default.

In 2007, less than two years after the loan was issued, an action to foreclose the mortgage (hereinafter the 2007 action) was commenced against Rose Gordon by "U.S. Bank National Association c/o Chase Home Finance, LLC 10790 Rancho Bernardo Road San Diego, CA 92127" (hereinafter the prior plaintiff). The complaint in the 2007 action alleged that Rose Gordon had defaulted by failing to make a required monthly payment when it became due, and stated that the plaintiff in that action was electing to call due the entire amount secured by the mortgage.

In 2008, an order of reference was issued to the prior plaintiff in the 2007 action. However, in 2011, Rose Gordon was granted leave to serve an answer. In her answer, Rose Gordon asserted that the prior plaintiff lacked standing to commence that action. Thereafter, in response to a motion to compel responses to outstanding discovery requests, Rose Gordon cross-moved, inter alia, to dismiss the 2007 complaint on the ground that the prior plaintiff lacked standing. The prior plaintiff subsequently moved for leave to amend the caption to reflect U.S. Bank N.A., as Trustee of J.P. Morgan Acquisition Corp.2006–FRE2, Asset Backed Pass–Through Certificates, Series 2006–FRE2, as successor plaintiff.

In an order dated May 16, 2013, the Supreme Court determined that the prior plaintiff was not the holder of the note when the 2007 action was commenced. Accordingly, the court granted that branch of Rose Gordon's cross motion which was to dismiss the 2007 complaint for lack of standing. The court denied, as academic, that branch of the prior plaintiff's motion which sought leave to amend the caption to reflect the successor plaintiff.

The instant action to foreclose the mortgage was commenced on October 22, 2013, by U.S. Bank National Association, as Trustee for J.P. Morgan Acquisition Corp.2006–FRE2, Asset Backed Pass–Through Certificates, Series 2006–FRE2. The complaint (hereinafter the 2013 complaint) alleged that the mortgage had been assigned to the plaintiff in 2009, and that it was the current holder of both the note and the mortgage.

The 2013 complaint further alleged that Rose Gordon had defaulted by failing to make monthly payments beginning on March 1, 2007, and that the plaintiff was exercising its option to accelerate the debt and call due the entire amount secured by the mortgage.

Rose Gordon thereafter submitted a pre-answer motion, inter alia, to dismiss the 2013 complaint on the ground that the action was barred by the applicable statute of limitations. In support of her motion, Rose Gordon submitted, among other things, a copy of the 2007 complaint. Rose Gordon argued that the 2007 complaint "serve[d] to demonstrate that the mortgage was accelerated as of ... March 1, 2007."

The plaintiff opposed Rose Gordon's motion, inter alia, to dismiss the 2013 complaint. The plaintiff argued that the statute of limitations did not begin to run on the entire mortgage debt until that debt was accelerated and that Rose Gordon's motion should be denied because the action was timely commenced. The plaintiff further argued that, pursuant to CPLR 205, it was entitled to commence this action within six months after the dismissal of the 2007 action.

In the order appealed from, the Supreme Court determined that "the [2007] complaint ... demonstrate[d] that the mortgage was accelerated as of ... March 1, 2007." Accordingly, the court granted that branch of Rose Gordon's motion which was to dismiss the 2013 complaint as time-barred. The court did not address the arguments advanced by the plaintiff in opposition to Rose Gordon's motion.

"A party may move for judgment dismissing one or more causes of action asserted against him [or her] on the ground that ... the cause of action may not be maintained because of ... [a] statute of limitations" ( CPLR 3211[a] [5] ). As relevant here, "an action upon a bond or note, the payment of which is secured by a mortgage upon real property, or upon a bond or note and mortgage so secured, or upon a mortgage of real property, or any interest therein" "must be commenced within six years" ( CPLR 213[4] ).

In resolving a motion to dismiss pursuant to CPLR 3211(a)(5), the court must accept the facts as alleged in the complaint as true, and accord the plaintiff the benefit of every possible favorable inference (see Faison v. Lewis, 25 N.Y.3d 220, 224, 10 N.Y.S.3d 185, 32 N.E.3d 400 ; Ford v. Phillips, 121 A.D.3d 1232, 1234, 994 N.Y.S.2d 688 ; 6D Farm Corp. v. Carr, 63 A.D.3d 903, 905, 882 N.Y.S.2d 198 ; see also Leon v. Martinez, 84 N.Y.2d 83, 87–88, 614 N.Y.S.2d 972, 638 N.E.2d 511 ). "To dismiss a cause of action pursuant to CPLR 3211(a)(5) on the ground that it is barred by the applicable statute of limitations, a defendant bears the initial burden of demonstrating, prima facie, that the time within which to commence the action has expired" ( Stewart v. GDC Tower at Greystone, 138 A.D.3d 729, 729, 30 N.Y.S.3d 638 ; see Campone v. Panos, 142 A.D.3d 1126, 1127, 38 N.Y.S.3d 226 ). "If the defendant satisfies this burden, the burden shifts to the plaintiff to raise a question of fact as to whether the statute of limitations was tolled or otherwise inapplicable, or whether the plaintiff actually commenced the action within the applicable limitations period" ( Barry v. Cadman Towers, Inc., 136 A.D.3d 951, 952, 25 N.Y.S.3d 342 ; see Stewart v. GDC Tower at Greystone, 138 A.D.3d at 730, 30 N.Y.S.3d 638 ).

Here, as the plaintiff correctly contends, Rose Gordon failed to sustain her initial burden of demonstrating, prima facie, that the action was untimely. "The time within which an action must be commenced, except as otherwise expressly prescribed, shall be computed from the time the cause of action accrued to the time the claim is interposed" ( CPLR 203[a] ; see Hahn Automotive Warehouse, Inc. v. American Zurich Ins. Co., 18 N.Y.3d 765, 770, 944 N.Y.S.2d 742, 967 N.E.2d 1187 ). "With respect to a mortgage payable in installments, separate causes of action accrue[ ] for each installment that is not paid, and the statute of limitations begins to run, on the date each installment becomes due" ( Wells Fargo Bank, N.A. v. Burke, 94 A.D.3d 980, 982, 943 N.Y.S.2d 540 ; see Wells Fargo Bank, N.A. v. Cohen, 80 A.D.3d 753, 754, 915 N.Y.S.2d 569 ; Loiacono v. Goldberg, 240 A.D.2d 476, 477, 658 N.Y.S.2d 138 ; Pagano v. Smith, 201 A.D.2d 632, 633, 608 N.Y.S.2d 268 ). However, "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" ( EMC Mtge. Corp. v. Patella, 279 A.D.2d 604, 605, 720 N.Y.S.2d 161 ; see Wells Fargo Bank, N.A. v. Burke, 94 A.D.3d at 982, 943 N.Y.S.2d 540 ; Lavin v. Elmakiss, 302 A.D.2d 638, 639, 754 N.Y.S.2d 741 ; Zinker v. Makler, 298 A.D.2d 516, 517, 748 N.Y.S.2d 780 ). "Where the acceleration of the maturity of a mortgage debt on default is made optional with the holder of the note and mortgage, some affirmative action must be taken evidencing the holder's election to take advantage of the accelerating provision, and until such action has been taken the provision has no operation" ( Wells Fargo Bank, N.A. v. Burke, 94 A.D.3d at 982–983, 943 N.Y.S.2d 540 ; see Esther M. Mertz Trust v. Fox Meadow Partners, 288 A.D.2d 338, 340, 734 N.Y.S.2d 77 ; Ward v. Walkley, 143 A.D.2d 415, 417, 532 N.Y.S.2d 426 ; see also 1–5 Bergman on New York Mortgage Foreclosures § 5.11[2] [2017] ).

Here, Rose Gordon contends, and the Supreme Court concluded, that the allegations contained in the 2007 complaint served to demonstrate that the mortgage was accelerated on March 1, 2007, the date of Rose Gordon's alleged default in failing to make her required monthly payments. However, inasmuch as the acceleration provisions in the note and mortgage were made optional at the discretion of the holder and were not automatically triggered upon Rose Gordon's default (see generally 1–4 Bergman on New York Mortgage Foreclosures § 4.03[2017] ), the allegation in the 2007 complaint that Rose Gordon defaulted on March 1, 2007, did not constitute evidence that the mortgage was accelerated on that date (see Wells Fargo Bank, N.A. v. Burke, 94 A.D.3d at 982–983, 943 N.Y.S.2d 540 ; Esther M. Mertz Trust v. Fox Meadow Partners, 288 A.D.2d at 340, 734 N.Y.S.2d 77 ; Ward v. Walkley, 143 A.D.2d at 417, 532...