Wilmington Trust, Nat'l Ass'n v. Mausler

192 A.D.3d 1212

143 N.Y.S.3d 713

WILMINGTON TRUST, NATIONAL ASSOCIATION, as Successor Trustee and Trustee, Respondent,

v.Craig MAUSLER, Also Known as Craig R. Mausler, et al., Appellants, et al., Defendants.

530109

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

Calendar Date: January 6, 2021

Decided and Entered: March 4, 2021

Craig Mausler, Schenectady, appellant pro se, and for Svetlana Mausler and another, appellants.

McCalla Raymer Leibert Pierce, New York City (Chong S. Lim of counsel), for respondent.

Before: Egan Jr., J.P., Aarons, Pritzker, Reynolds Fitzgerald and Colangelo, JJ.

MEMORANDUM AND ORDER

Aarons, J. Appeal from an order of the Supreme Court (Ryba, J.), entered July 16, 2019 in Albany County, which, among other things, granted plaintiff's motion for summary judgment.

Defendant Craig Mausler (hereinafter Mausler) executed a note in the amount of $382,600, and he and defendant Svetlana Mausler executed a mortgage secured by real property in Albany County in favor of defendant HSBC Mortgage Corporation. HSBC sent a letter, dated December 28, 2009, to Mausler indicating that he defaulted under the terms of the note by failing to make the required payments. After a series of assignments, plaintiff acquired the note. Plaintiff then commenced this mortgage foreclosure action in February 2016. After joinder of issue, various settlement conferences were held and, following the release of the matter from the conference settlement part, Supreme Court directed that a "proposed order of reference be filed [within] 30 days." Plaintiff did not comply with this deadline and, in April 2018, the matter was deemed "pre-marked off." In April 2019, plaintiff moved for, among other things, summary judgment, an order of reference and to add Victoria Mausler as a defendant. Mausler, Svetlana Mausler and Victoria Mausler (hereinafter collectively referred to as defendants) opposed the motion and cross-moved for summary judgment dismissing the complaint. Supreme Court granted plaintiff's motion and denied defendants' cross motion. This appeal ensued.¹

Defendants argue that plaintiff abandoned the action under CPLR 3404 and that Supreme Court erred in restoring the action to its calendar without a motion by plaintiff. Contrary to defendants' assertion, however, CPLR 3404 does not apply because the note of issue had not yet been filed (see Novastar Mtge., Inc. v. Melius, 145 A.D.3d 1419, 1421, 45 N.Y.S.3d 607 [2016] ; Schmidt v. Mack, 46 A.D.3d 1205, 1206, 849 N.Y.S.2d 99 [2007] ). Given the pre-note of issue status, dismissal for failure to prosecute was governed by CPLR 3216 (see Novastar Mtge., Inc. v. Melius, 145 A.D.3d at 1421, 45 N.Y.S.3d 607 ). That said, one condition for a case to be dismissed under CPLR 3216 is the service of a demand upon plaintiff to serve and file the note of issue within 90 days of the receipt of such demand (see CPLR 3216[b][3] ). The record does not indicate that a 90–day demand was ever served upon plaintiff and, therefore, the action was never dismissed. To that end, a motion to restore by plaintiff was unnecessary (see McCarthy v. Jorgensen, 290 A.D.2d 116, 118, 737 N.Y.S.2d 158 [2002] ).

Defendants contend that the action was not timely commenced. This contention rests on the premise that the debt was accelerated in December 2009 based upon a letter sent by HSBC to Mausler and, therefore, the action was untimely when commenced in February 2016. "[A]cceleration notices must be clear and unambiguous to be valid and enforceable" ( U.S. Bank N.A. v. Creative Encounters LLC, 183 A.D.3d 1086, 1087, 124 N.Y.S.3d 92 [2020] [internal quotation marks and citation omitted], appeal dismissed 35 N.Y.3d 1062, 129 N.Y.S.3d 42, 152 N.E.3d 822 [2020] ; see Bank of Am., N.A. v. Luma, 157 A.D.3d 1106, 1107, 69 N.Y.S.3d 170 [2018] ). The December 28, 2009 letter advised Mausler that he was in default and that he could cure this default by making a payment "within thirty days from the date of this letter." The letter further stated that "[i]f you do not cure this default within the specified time period, your obligation for payment of the entire unpaid balance of the loan will be accelerated and become due and payable immediately" (emphasis added). Additionally, the letter provided that if the amount due was not paid, "foreclosure proceedings may commence to acquire the [p]roperty by foreclosure and sale" (emphasis added). The Court of Appeals, however, recently explained that such language does not evince an intent by the noteholder to "seek immediate payment of the entire, outstanding loan, but referred to acceleration only as a future event" ( Vargas v. Deutsch Bank Natl. Trust Co., ––– N.Y.3d ––––, ––––, ––– N.Y.S.3d ––––, ––– N.E.3d ––––, 2021 N.Y. Slip Op. 01090, *4 [2021] ). Accordingly, contrary to defendants' contention, the December 2009 letter did not constitute a valid acceleration of the debt so as to trigger the applicable statute of limitations.

Defendants also argue that plaintiff failed to establish that it had standing. "To establish standing, a plaintiff must demonstrate that, at the time the action was commenced, it was the holder or assignee of the mortgage and the holder or assignee of the underlying note" ( U.S. Bank Trust, N.A. v. Moomey–Stevens, 189 A.D.3d 1790, 1791, 138 N.Y.S.3d 220 [2020] [citations omitted]; see JPMorgan Chase Bank N.A. v. Futterman, 173 A.D.3d 1496, 1497, 105 N.Y.S.3d 579 [2019] ). "Either a written assignment of the underlying note or the physical delivery of the note prior to the commencement of the foreclosure action is sufficient to transfer the obligation, and the mortgage passes with the debt as an inseparable incident" ( Goldman Sachs Mtge. Co. v. Mares, 166 A.D.3d 1126, 1129, 87 N.Y.S.3d 665 [2018] [internal quotation marks and citations omitted]). Plaintiff submitted an affidavit from a loan servicing associate of Nationstar Mortgage LLC – the servicer of the mortgage at issue. The associate averred that, as part of Nationstar's acquisition of the loan, it received the books and records of the prior servicer. The associate also stated that, upon a review of these books and records, Nationstar, as plaintiff's agent, has physical possession of the original note endorsed in blank and that plaintiff held the note prior to and at the time the action was commenced. As such, plaintiff satisfied its burden of showing that it had standing (see Deutsche Bank Natl. Trust Co. v. DeGiorgio, 171 A.D.3d 1267, 1269–1270, 97 N.Y.S.3d 769 [2019] ; BAC Home Loans Servicing, LP v. Uvino, 155 A.D.3d 1155, 1158, 64 N.Y.S.3d 377 [2...