Wells Fargo Bank v. Rutty

2022 NY Slip Op 03926

Wells Fargo Bank, N.A., etc., respondent, v. Robert R. Rutty, et al., defendants, SLF New York Holdings, LLC, appellant.

No. 2018-11253, Index No. 713681/17

Supreme Court of New York, Second Department

June 15, 2022

Law Office of Keith S. Garret, P.C., Babylon, NY, for appellant.

Knuckles, Komosinski & Manfro, LLP, Elmsford, NY (Max T Saglimbeni of counsel), for respondent.

BETSY BARROS, J.P. REINALDO E. RIVERA CHERYL E. CHAMBERS PAUL WOOTEN, JJ.

DECISION & ORDER

In an action to foreclose a mortgage, the defendant SLF New York Holdings, LLC, appeals from an order of the Supreme Court Queens County (Carmen R. Velasquez, J.), entered July 24, 2018. The order, insofar as appealed form, denied that branch of the motion of the defendants SLF New York Holdings, LLC, and Hampton Partners, LLC, which was pursuant to CPLR 3211(a) to dismiss the amended complaint insofar as asserted against the defendant SLF New York Holdings, LLC.

ORDERED that the order is affirmed insofar as appealed from, with costs.

In September 2006, the defendant Robert R. Rutty executed a note in favor of People's Choice Home Loan, Inc., in the sum of $536, 000, which was secured by a mortgage on real property located in Springfield Gardens. In June 2011, the plaintiff commenced an action to foreclose the mortgage against, among others, Rutty (hereinafter the prior action). In an order dated April 5, 2013, the Supreme Court granted that branch of Rutty's motion which was pursuant to CPLR 3211(a) to dismiss the complaint in the prior action insofar as asserted against him on the ground of lack of standing.

In October 2017, the plaintiff commenced this action to foreclose the mortgage against, among others, the defendants SLF New York Holdings, LLC (hereinafter SLF), the owner of the mortgaged property, and Hampton Partners, LLC (hereinafter Hampton). Thereafter, SLF and Hampton moved, inter alia, pursuant to CPLR 3211(a) to dismiss the amended complaint insofar as asserted against SLF, arguing, inter alia, that this action was time-barred because the commencement of the prior action was sufficient to accelerate the mortgage debt. In an order entered July 24, 2018, the Supreme Court, among other things, denied that branch of the motion. SLF appeals.

A defendant moving to dismiss a complaint pursuant to CPLR 3211(a)(5) on the ground that it is barred by the statute of limitations bears the initial burden of establishing, prima facie, that the time in which to commence the action has expired (see HSBC Bank USA, N.A. v Gold, 171 A.D.3d 1029). If the defendant satisfies that burden, the burden then shifts to the plaintiff to raise a question of fact as to whether the statute of limitations was tolled or is otherwise inapplicable, or whether the plaintiff actually commenced the action within the statute of limitations period (see Wells Fargo Bank N.A. v Kehnres, 199 A.D.3d 869). "When a mortgage is payable in installments, which is the typical practice, an acceleration of the entire amount due begins the running of the statute of limitations on the entire debt" (Deutsche Bank Trust Co. Ams. v Marous, 186 A.D.3d 669, 670 [internal quotation marks omitted]). "However, an acceleration of a mortgaged debt is only valid if the party making the acceleration had standing at that time to do so" (HSBC Bank USA, N.A. v Spitz, 201 A.D.3d 708, 710).

Here, SLF failed to meet its burden of demonstrating, prima facie, that this action was time-barred, since SLF's submissions included a copy of the order dated April 5, 2013, granting that branch of Rutty's motion which was pursuant to CPLR 3211(a) to dismiss the complaint in the prior action insofar as asserted against him on the ground of lack of standing (see U.S. Bank Trust, N.A. v Williams, 168 A.D.3d 1122, 1123-1124). Since the prior action was dismissed for lack of standing, SLF failed to establish that the plaintiff had the authority to accelerate the debt through the complaint filed in the prior action (see BHMPW Funding, LLC v Lloyd-Lewis, 194 A.D.3d 780, 782-783; J & JT Holding Corp. v Deutsche Bank Natl. Trust Co., 173 A.D.3d 704, 707; US Bank Trust, N.A. v Williams, 168 A.D.3d at 1124).

SLF's remaining contentions are without merit.

Accordingly, the Supreme Court properly denied that branch of the motion which was pursuant to CPLR 3211(a) to dismiss the amended complaint insofar as asserted against SLF.

RIVERA, CHAMBERS and WOOTEN, JJ., concur.

BARROS, J.P., dissents, and votes to reverse the order insofar as appealed from, on the law, and grant that branch of the motion of the defendants SLF New York Holdings, LLC, and Hampton Partners, LLC, which was pursuant to CPLR 3211(a) to dismiss the amended complaint insofar as asserted against the defendant SLF New York Holdings, LLC, with the following memorandum:

I.

I respectfully disagree with my colleagues' determination that, under the circumstances of this case, the Supreme Court's dismissal of the prior foreclosure action for lack of "standing" nullified the plaintiff's acceleration of the mortgage debt so as to render this action timely commenced. In its order granting dismissal of the complaint in the prior foreclosure action insofar as asserted against the defendant Robert R. Rutty, the court merely determined that the plaintiff failed to submit proof that the subject note and mortgage were transferred to it before its predecessor in interest, People's Choice Home Loan, Inc. (hereinafter People's Choice), had filed for bankruptcy. Although the court described the basis of its dismissal under CPLR 3211(a) as one for lack of "legal capacity to sue" and lack of "standing," it expressly recognized the plaintiff as the note holder, which is the sine qua non of standing in a mortgage foreclosure action (see Aurora Loan Servs., LLC v Taylor, 25 N.Y.3d 355, 361-362).

Since the basis of the Supreme Court's dismissal did not implicate the issue of a plaintiff's standing as the note holder, the dismissal did not nullify the plaintiff's election to accelerate (see Freedom Mtge. Corp. v Engel, 37 N.Y.3d 1, 19). Thus, this...