U.S. Bank v. Speller

2023 NY Slip Op 51153(U)

U.S. Bank National Association, etc., Plaintiff, v. Michael M. Speller, Ellen M. Fitzsimmons, et al., Defendants.

Index No. 500088/2022

Supreme Court, Putnam County

October 31, 2023

Unpublished Opinion

Plaintiff is represented by Gross Polowy, LLC

Defendant appeared Pro Se

Victor G. Grossman, J.

The following papers numbered 1 to 13 were read on Plaintiff's motion for summary judgment of foreclosure and an order of reference and Defendants' cross motion for dismissal and other relief:

Notice of Motion - Affirmation / Exhibits - Affidavit / Exhibits - Memorandum 1-4

Notice of Cross Motion - Affidavits (2) / Exhibits - Memorandum 5-8

Reply Affirmation / Exhibits 9

Supplemental Affidavit (Defendants) / Exhibits 10

Supplemental Affirmation - Supplemental Affidavit (Plaintiff) 11-12

Further Supplemental Affidavit (Defendant) 13

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

This is a residential mortgage foreclosure action. Plaintiff U.S Bank National Association (not in its individual capacity but solely as trustee for the RMAC Trust, Series 2016-CTT) moves for summary judgment of foreclosure and an order of reference. In opposition, Defendant homeowners Michael Speller and Ellen Fitzsimmons contend inter alia that Plaintiff lacks standing to foreclose, that Plaintiff failed to comply with the requirements of RPAPL §1304 and that by virtue of the application of the Foreclosure Abuse Prevention Act (FAPA) the action is barred by the Statute of Limitations.

I. FACTUAL AND PROCEDURAL BACKGROUND

A. The Note and Mortgage

Defendant Michael Speller executed and delivered a Promissory Note dated July 28, 2005 to Wilmington Finance, a division of AIG Federal Savings Bank for the sum of $330,000 with interest on the unpaid balance thereof at the rate of 6.55 % per annum. Both Mr. Speller and his spouse, defendant Ellen Fitzsimmons, executed the associated Mortgage encumbering their home at 57 Eastwood Road, Brewster, New York. The Note states inter alia:

If I am in default, the Note Holder may send me a written notice telling me that if I do not pay the overdue amount by a certain date, the Note Holder may require me to pay immediately the full amount of Principal which has not been paid and all the interest that I owe on that amount.

Even if, at a time when I am in default, the Note Holder does not require me to pay immediately in full as described above, the Note Holder will still have the right to do so if I am in default at a later time.

(Note, p. 2, ¶6[C, D]) The Mortgage states inter alia:

Lender's Rights if Borrower Fails to Keep Promises and Agreements. [I]f all of the conditions stated in subsections (a), (b) and (c) of this Section 22 are met, Lender may require that I pay immediately the entire amount then remaining unpaid under the Note and under this Security Instrument. (Mortgage, p. 14, ¶22)

Even if Lender does not exercise or enforce any right of Lender under this Security Instrument or under Applicable Law, Lender will still have all of those rights and may exercise and enforce them in the future. Even if: (3) Lender accepts payments in amounts less than the amount then due, Lender will have the right under Section 22 elow to demand that I make Immediate Payment in Full of any amounts remaining due and payable to Lender under the Note and under this Security Instrument.

(Mortgage, p. 11, ¶12[b])

This is the fourth foreclosure action instituted in connection with the Defendants' mortgaged premises. Resolution of the issues presently before the Court requires a recitation of the history of all four proceedings.

B. The 2009 Foreclosure Action

HSBC Mortgage Services Inc. commenced a foreclosure action under Index No. 3313/2009 on November 13, 2009. The Note, with an allonge endorsed in blank by the original lender, was annexed to the complaint. The complaint alleged that Defendants had defaulted on their obligations under the Mortgage as of December 15, 2008 and accelerated the mortgage debt.

By letter dated November 5, 2009, HSBC Mortgage Services had advised Mr. Speller that his account "remains in default," but that HSBC "has options available that may prevent the possibility of losing your mortgaged property" and offered an "opportunity to work with you to get your account back on track." Mr. Speller produced a copy of this letter bearing his own handwritten notations, including the figures "$30,450.12" and "$7,612.53" and the words "11/27 called in wire confirm - F/C stopped effective Monday." Mr. Speller also produced a signed "Authorization to Wire Funds" dated 11/27/09, reflecting a transfer from the account of Ellen M. Speller (i.e., defendant Fitzsimmons) to HSBC Bank USA, N.A. in the amount of $7,612.53. As Mr. Speller acknowledges, bank records unambiguously reflect the fact that the payment of $7,612.53 was made pursuant to a "Repayment Plan" whereby (a) that sum was applied to the mortgage interest due on December 15, 2008, January 15, 2009, and February 15, 2009, and (b) interest in the amount of $17,227.80, due from February 15, 2009 to December 15, 2009, was deferred, creating a "deferred balance" of $17,227.80. "Unpaid/Deferred Interest" in the amount of $17,227.80 was thereafter reflected in a September 28, 2010 account statement, also produced by Mr. Speller.

Pursuant to its Repayment Plan arrangement with Mr. Speller, the foreclosure was stopped and the 2009 foreclosure action was discontinued. Affirmations by attorney Richard D. Fermano, Esq. accompanying the voluntary discontinuance of the action and cancellation of the lis pendens state:

On or about 12/01/09, the Defendant entered into a Repayment Plan, in order to reinstate plaintiff's mortgage and pay all costs associated with said action.

No parties appeared in this action, and thus no consent to the cancellation of the Lis Pendens and the discontinuance of the action is required.

C. The 2010 Foreclosure Action

HSBC Mortgage Services Inc. commenced a second foreclosure action under Index No. 02177/2010 on July 19, 2010. The Note, with the allonge endorsed in blank by the original lender, was annexed to the complaint. The complaint alleged that Defendants had defaulted on their obligations under the Mortgage as of January 15, 2010 and accelerated the mortgage debt. This action was voluntarily discontinued on March 12, 2013 "due to an issue with the default notification."

D. The 2015 Foreclosure Action

U.S. Bank Trust, N.A., as Trustee for LSF8 Master Participation Trust commenced the third foreclosure action under Index No. 02137/2015 on December 9, 2015. The Note, with the allonge endorsed in blank by the original lender, was annexed to the complaint. The complaint alleged that Defendants had defaulted on their obligations under the Mortgage as of January 15, 2010 and accelerated the mortgage debt. By assignment dated May 31, 2016, the Mortgage was assigned to U.S. Bank National Association, not in its individual capacity but solely as trustee for the RMAC Trust, Series 2016-CTT (i.e., to the Plaintiff in the present action, hereinafter "U.S. Bank"). U.S. Bank acquired physical possession of the Note in October 2016. By Order dated November 29, 2018, U.S. Bank was substituted for U.S. Bank Trust, N.A., as Trustee for LSF8 Master Participation Trust as the Plaintiff in the 2015 foreclosure action.

By Order dated February 27, 2020, the Hon. Sam D. Walker dismissed the action on account of the Plaintiff's failure to appear at a conference. The Order states:

The plaintiff having failed to appear as directed on January 23, 2020, it is hereby

ORDERED, that the above-captioned action is dismissed pursuant to section 202.27(b) and (c) of the Uniform Civil Rules for The Supreme Court and The County Court, without prejudice to move to vacate the dismissal upon a showing of good cause for the failure to appear, and it is further

ORDERED, that the County Clerk of the County of Putnam is hereby directed to cancel and discharge of record all Notices of Pendency filed in this action against the premises known commonly as 57 Eastwood Road, Brewster (Town of Patterson) County of Putnam and said Clerk is hereby directed to enter upon the margin of the record of the same, a notice of cancellation referring to this Order.

E. The 2022 Foreclosure Action

U.S. Bank commenced this, the fourth foreclosure action, under Index No. 500088/2022 on January 26, 2022. The Note, with the allonge endorsed in blank by the original lender, was annexed to the certificate of merit. The Note without the allonge was annexed to the complaint. The complaint alleged that Defendants had defaulted on their obligations under the Mortgage as of January 15, 2010 and accelerated the mortgage debt. U.S. Bank now seeks summary judgment of foreclosure.

II. PLAINTIFF'S STANDING TO FORECLOSE

The record shows that the Mortgage was assigned by written assignment dated May 31, 2016 to U.S Bank, and further, that U.S. Bank was in physical possession of the Note together with an Allonge endorsed in blank by the original lender as of October 2016 and at the time this action was commenced. Based on certain alleged discrepancies in the appearance of the Note as produced at various stages of the proceedings over the years, Mr. Speller contested U.S. Bank's claim that it was in physical possession of the original Note.

Accordingly by Notice dated August 2, 2023, the Court directed U.S. Bank "to produce the original Note and Allonge in court on [August 22, 2023], together with an affidavit or affidavits accounting in detail for custody of the said original Note and Allonge during the period October 22, 2019 through and including January 26, 2022, the date this action was commenced." The original...