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

189 A.D.3d 1786

138 N.Y.S.3d 671

U.S. BANK NATIONAL ASSOCIATION, as Trustee, Appellant,

v. Elizabeth CATALFAMO et al., Defendants,andSteven C. Catalfamo, Respondent.

530104

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

Calendar Date: October 14, 2020

Decided and Entered: December 10, 2020

Knuckles, Komosinski & Manfro, LLP, Elmsford (Louis A. Levithan of counsel), for appellant.

Matte & Nenninger, PC, Glens Falls (Christopher S. Nenninger of counsel), for respondent.

Before: Garry, P.J., Egan Jr., Lynch, Clark and Colangelo, JJ.

MEMORANDUM AND ORDER

Egan Jr., J.

Calendar Date: October 14, 2020

Appeal from an order of the Supreme Court (Kershko, J.), entered August 9, 2020 in Warren County, which, among other things, granted defendant Steven C. Catalfamo's motion for summary judgment dismissing the complaint against him.

In March 2007, defendant Steven C. Catalfamo (hereinafter Catalfamo) and his spouse, defendant Elizabeth Catalfamo, executed a promissory note in the amount of $732,878.74 in favor of Household Finance Realty Corporation of New York (hereinafter Household). The note was secured by a mortgage on real property located in the Town of Queensbury, Warren County. Catalfamo and his spouse defaulted on the note and Household thereafter commenced an action to foreclose on the mortgage (hereinafter the first action). In 2014, while the first action remained pending, Household assigned the mortgage to U.S. Bank Trust, N.A., plaintiff's predecessor-in-interest. In August 2014, Supreme Court (Krogmann, J.) dismissed the first action as abandoned and, in November 2014, denied a motion by U.S. Bank Trust to vacate said dismissal and restore the action to the court's calendar. Subsequently, in June 2015, U.S. Bank Trust sent Catalfamo a letter purporting to de-accelerate the loan and, in 2017, the mortgage was subsequently assigned to plaintiff.

On December 8, 2017, plaintiff commenced this mortgage foreclosure action, to which Catalfamo answered, asserting, among other affirmative defenses, that plaintiff's claim was barred by the statute of limitations. Catalfamo thereafter moved for summary judgment dismissing the complaint against him on the ground that the statute of limitations had expired. Plaintiff opposed the motion and moved for summary judgment to foreclose on the mortgage. Supreme Court (Kershko, J.) granted Catalfamo's motion, determining that the statute of limitations to commence a mortgage foreclosure action had expired. Plaintiff appeals.

As relevant here, "[t]he six-year statute of limitations in a mortgage foreclosure action begins to run from the due date for each unpaid installment unless the debt has been accelerated; once 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" ( Beneficial Homeowner Serv. Corp. v. Heirs at Large of Ramona E. Thwaits , 185 A.D.3d 1126, 1128, 127 N.Y.S.3d 163 [2020] [internal quotation marks and citation omitted], lv denied 35 N.Y.3d 918, 2020 WL 6854290 [Nov. 23, 2020] ; see CPLR 213[4] ). Once a lender has elected to accelerate a mortgage debt, such an election "can be revoked only through an affirmative act occurring within the statute of limitations period" ( Specialized Loan Servicing Inc. v. Nimec , 183 A.D.3d 962, 964, 123 N.Y.S.3d 713 [2020] ; see Beneficial Homeowner Serv. Corp. v. Heirs at Large of Ramona E. Thwaits , 185 A.D.3d at 1128, 127 N.Y.S.3d 163 ). Where, as here, the lender's affirmative act of revocation takes the form of a de-acceleration letter or notice, to be valid and enforceable, said notice must be clear and unambiguous (see Beneficial Homeowner Serv. Corp. v. Heirs at Large of Ramona E. Thwaits , 185 A.D.3d at 1128, 127 N.Y.S.3d 163 ; U.S. Bank N.A. v. Creative Encounters LLC , 183 A.D.3d 1086, 1087, 124 N.Y.S.3d 92 [2020], appeal dismissed 35 N.Y.3d 1062, 129 N.Y.S.3d 42, 152 N.E.3d 822 [2020] ; Wells Fargo Bank, N.A. v. Portu , 179 A.D.3d 1204, 1207, 116 N.Y.S.3d 761 [2020] ).

In support of his motion, Catalfamo submitted, among other things, Household's June 15, 2009 demand letter, indicating that it was electing to accelerate the loan and declaring the entire unpaid balance of the principal immediately due and payable based upon Catalfamo's failure to make the requisite monthly installment payments. The next day, Household commenced the first action to foreclose on the mortgage. Based thereon, the statute of limitations for commencing a mortgage foreclosure action began to run, at the latest, on June 16, 2009, when Household commenced the first action. After Supreme Court dismissed the first action as abandoned, plaintiff did not commence the second action until December 8, 2017, well in excess of the applicable six-year statute of limitations (see CPLR 213[4] ). Catalfamo, therefore, met his prima facie burden of demonstrating his entitlement to summary judgement dismissing the complaint on the ground that the action was untimely, shifting the burden to plaintiff to raise a question of fact as to whether the action was timely commenced (see U.S. Bank N.A. v. Creative Encounters LLC , 183 A.D.3d at 1087, 124 N.Y.S.3d 92 ).

In opposition to Catalfamo's motion and in support of its own motion for summary judgment, plaintiff submitted a copy of the June 3, 2015 letter sent by the mortgage servicer for plaintiff's predecessor-in-interest, purporting to de-accelerate Catalfamo's loan. According to plaintiff, this de-acceleration letter effectively stopped the running of the statute of limitations such that the second mortgage foreclosure action was, in fact, timely commenced. We disagree. The June 3, 2015 letter acknowledges that Catalfamo's obligations under the note and mortgage had been previously accelerated, but provides that "as of the date of this letter, the maturity of the [l]oan is hereby de-accelerated, immediate payment of all sums owed is hereby withdrawn, and the [l]oan is re-instituted as an installment loan."¹ Although the June 3, 2015 de-acceleration letter was issued within the statute of limitations period and, on its face, purported to reinstate the installment loan, we note that it was issued only 13 days prior to the expiration of the applicable statute of limitations (see Wells Fargo Bank, N.A. v. Portu , 179 A.D.3d at 1207, 116 N.Y.S.3d 761 ). In such cases, courts review the circumstances surrounding the issuance of such a notice in order to determine whether such a de-acceleration notice is being utilized as a pretext to avoid the approaching expiration of the...