United States District Court, S.D. New York
VITO V. COSTA and MARION P. COSTA, Plaintiffs,
DEUTSCHE BANK NATIONAL TRUST COMPANY AS TRUSTEE FOR GSR MORTGAGE LOAN TRUST 2006-OAI, MORTGAGE PASS-THROUGH CERTIFICATES, SERIES 2006-OA1, and SPECIALIZED LOAN SERVICING LLC, Defendants. v.
OPINION AND ORDER
KATHERINE POLK FAILLA United States District Judge
of its technical jargon, this case is about whether a nearly
decade-old defaulted mortgage loan remains enforceable.
Plaintiffs Vito and Marion Costa argue that the applicable
six-year statute of limitations has expired and that they are
therefore entitled to the cancellation and discharge of their
mortgage loan. Defendants, the loan trustee and the servicer,
maintain that the limitations period has not expired because
it had not started prior to this action or, if it had, it was
tolled or renewed; thus, foreclosure is warranted. Even if
their foreclosure claim is time-barred, however, Defendants
still seek to recoup their expenses in maintaining the
property over the past decade. The parties filed
cross-motions for summary judgment pursuant to Federal Rule
of Civil Procedure 56 following the close of discovery. For
the reasons that follow, Plaintiffs' motion is granted
and Defendants' motion is denied.
A. Factual Background
The Costas' Mortgage Loan
own the property located at 60 Interlaken Avenue in New
Rochelle, New York (the “Property”). (Pl. 56.1
¶ 1). On May 9, 2006, Vito took out a mortgage loan with
IndyMac Bank F.S.B. (“IndyMac”) as nominal lender
in the amount of $544, 000 (the “Loan”).
(Id. at ¶ 17). To accomplish this, Vito
executed a note to IndyMac in that amount (the
“Note”), and both Vito and Marion secured the
Note by granting a corresponding mortgage on the Property
(the “Mortgage, ” and collectively, the
“Loan Instruments”) to Mortgage Electronic
Registration Systems, Inc. (“MERS”) as nominee
for IndyMac. (Id. at ¶¶ 12, 17, 30;
Steiner Decl., Ex. E (Note); id., Ex. D
(Mortgage)). The adjustable-rate Note, which IndyMac
endorsed in blank, has an initial yearly interest rate of
2.85% and an interest-rate cap of 9.95%. (Pl. 56.1
¶¶ 18, 22).
Deutsche Bank National Trust Company (“DB”) is a
National Banking Association with its principal place of
business in Los Angeles, California. (Pl. 56.1 ¶ 2). DB
is the Trustee for GSR Mortgage Loan Trust 2006-OA1, Mortgage
Pass-Through Certificates, Series 2006-0A1, which owns the
Loan (the “Trust”); DB is being sued in its
capacity as Trustee. (Id.; Def. 56.1 ¶
Defendant Specialized Loan Servicing LLC (“SLS”)
is a Delaware limited liability company and the current
servicer of the Loan. (Pl. 56.1 ¶ 5).
18, 2006, just over a week after the Loan closing, DB took
physical possession of the Note and Mortgage, and maintained
possession of these instruments at a location in Santa Ana,
California, until January 7, 2016. (Pl. 56.1 ¶¶
25-26; Def. 56.1 ¶¶ 5-6; Steiner Decl., Ex. A (Ward
Dep.), at 46:8-47:6). On that date, SLS caused DB to transfer
the instruments to Defendants' counsel in this matter,
with whom the instruments remain. (Def. 56.1 ¶ 7; Haber
Decl., ¶¶ 2-3).
The Costas' Loan Default and the 2008 Foreclosure
began making monthly payments on the Loan starting in July
2006. (Costa Decl., ¶ 11). He made seventeen payments
through November 2007, but was unable to make the December
2007 monthly payment or any thereafter. (Id. at
¶¶ 11, 13; Pl. 56.1 ¶ 43; Def. 56.1 ¶
about February 4, 2008, IndyMac sent Vito a notice notifying
him that the Loan was in default (the “Notice of
Default” or the “Notice”). (Pl. 56.1 ¶
44; Def. 56.1 ¶ 12; Steiner Decl., Ex. M (Notice of
Default)). The Notice is examined in greater detail
infra but, broadly speaking, it informed Vito of the
amount owed on the Loan and the consequences of not curing
the default by March 7, 2008. (Pl. 56.1 ¶ 45; Def. 56.1
¶ 12; Steiner Decl., Ex. M (Notice of Default); Ward
Decl. ¶ 15). Those consequences included a potential
foreclosure action and sale of the Property. (Steiner Decl.,
Ex. M (Notice of Default)).
failed to cure the defaulted Loan by the March 7, 2008
deadline. (Def. 56.1 ¶ 13). Consequently, on March 20,
2008, IndyMac commenced a foreclosure action against the
Costas in New York State Supreme Court, Westchester County
(the “Westchester Court”), entitled IndyMac
Bank, F.S.B. v. Vito V. Costa, et al., Index No.
005909/2008 (the “2008 Foreclosure Action”).
(Def. 56.1 ¶ 14; Pl. 56.1 ¶ 48). On April 15, 2008,
the Costas filed an answer and counterclaims in that action;
they also filed a third-party complaint against the mortgage
broker and affiliated individuals, all of whom had originally
facilitated the Loan. (Pl. 56.1 ¶ 52; Steiner Decl., Ex.
P, Q). The gist of both pleadings was that the Costas had
been duped into taking out the Loan: They thought they were
receiving a fixed-rate loan at 2.85%, when in fact
they were given an adjustable-rate loan with an
initial rate of 2.85% and a capped rate of 9.95%. (Pl. 56.1
¶ 53; Costa Decl. ¶¶ 5-6, 8-9, 11, 15). The
third-party action was removed to federal court and
eventually settled, but the 2008 Foreclosure Action remained
active in the Westchester Court. (Pl. 56.1 ¶¶
11, 2008, the Office of Thrift Supervision closed IndyMac and
appointed the Federal Deposit Insurance Corporation (the
“FDIC”) as its receiver. (Pl. 56.1 ¶ 36).
The FDIC organized IndyMac as a federal savings association,
IndyMac Federal Savings Bank F.S.B. (“IndyMac
Federal”), and became its conservator. (Id.).
IndyMac Federal never substituted for IndyMac in the 2008
Foreclosure Action after the latter's failure. (Pl. 56.1
¶ 58; Steiner Decl., Ex. V). And there was no case
activity in the 2008 Foreclosure Action between April 15,
2008, the date on which the Costas filed their answer and
counterclaim, and roughly four years later, on May 3, 2012,
when IndyMac filed a Request for Judicial Intervention (the
“RJI”). (Pl. 56.1 ¶¶ 59-60; Steiner
Decl., Ex. V, O). Following the RJI, the 2008 Foreclosure
Action was referred to the Westchester Court's
“Foreclosure Settlement Part, ” and a May 7, 2012
“Foreclosure Conference Notice” was issued to
Vito, notifying him that an initial settlement conference was
scheduled for June 26, 2012. (Pl. 56.1 ¶ 61; Steiner
Decl., Ex. W, X).
The Parties' Unsuccessful Settlement Efforts and
Dismissal of the 2008 Foreclosure Action for Failure to
effort to resolve the 2008 Foreclosure Action, the parties
engaged in seven settlement conferences between June 26,
2012, and August 26, 2013. (Haber Decl., Ex. C; Steiner
Decl., Ex. W). As part of this process, the court referee set
forth a schedule for the submission and consideration of a
loan-modification application. (Pl. 56.1 ¶ 70; Steiner
Decl., Ex. AQ). Between October 2012 and June 2013, Vito
submitted five applications to IndyMac under the Home
Affordable Modification Program (“HAMP”), a
federal program designed to assist financially struggling
homeowners with their monthly loan payments. (Pl. 56.1
¶¶ 68-79; Steiner Decl., Ex. Z (Oct. 2012);
id., Ex. AB (Feb. 2013); id., Ex. AP (Apr.
2013); id., Ex. AE (May 2013); id., Ex. AG
(June 2013)). Along with his February 2013 and April 2013
applications, Vito submitted identical hardship letters
outlining the reasons for his request (the “Hardship
Letters”). (Pl. 56.1 ¶ 80; Steiner Decl., Ex. AK).
The contents of these HAMP applications, and IndyMac's
responses, are detailed infra. Ultimately, however,
IndyMac found none of Vito's HAMP applications to be
complete and, therefore, never considered him for a loan
modification. (Def. 56.1 Opp. ¶¶ 69-79).
on August 26, 2013, the Westchester Court issued a Notice to
Resume Prosecution. (Pl. 56.1 ¶ 81). That notice told
IndyMac that its prosecution of the 2008 Foreclosure Action
“must be resumed”; that its note of issue
“must be served” within 90 days of the receipt of
the notice; and that its motion for summary judgment
“must be made” within 120 days after the filing
of the note of issue. (Steiner Decl., Ex. AL). The notice
also cautioned that failure to comply with any of the
aforementioned directives would require IndyMac to show a
justifiable excuse for its failure at a January 29, 2014
conference. (Id.). The notice concluded with the
following warning: “[IndyMac's] failure to appear
and show justifiable excuse on said date shall result in the
dismissal of the complaint, upon the court's own
initiative, for want of prosecution of the above-referenced
action pursuant to CPLR [§] 3216(a) and (e).”
never filed a note of issue. (Pl. 56.1 ¶ 84). Nor did it
take any other steps to prosecute the 2008 Foreclosure
Action. (Id.). Accordingly, on January 31, 2014, the
Westchester Court dismissed the 2008 Foreclosure Action for
failure to prosecute. (Id.; Def. 56.1 ¶ 16;
Steiner Decl., Ex. AM).
The Property's Carrying Costs
the Plaintiffs' December 2007 default, the Loan's
servicers began making payments toward the Property's
taxes, assessments, water rates, escrow, insurance premiums,
and related charges (the “Carrying Costs”). (Def.
56.1 ¶ 17; Ward Aff., ¶ 19). When SLS began
servicing the Loan in June 2014, it reimbursed the prior
servicer for the entire balance of the escrow advances, $106,
116.59. (See Ward Aff., ¶ 20). From June 2014
through the present, SLS has continued to make advances for
the Property's Carrying Costs. (See id. at
¶ 20, Ex. O). Moreover, the entirety of the escrow
advances made by the prior servicers and SLS has been
reimbursed by DB, totaling about $149, 042.93 as of the date
of Defendants' Local Rule 56.1 Statement. (See
Id. at ¶ 22; Haber Decl., ¶ 4, Ex. B).
filed this action in New York State Supreme Court,
Westchester County, on February 23, 2015. (Dkt. #1). The
matter was removed to this Court on April 6, 2015.
(Id.). After about five months of discovery, the
parties filed cross-motions for summary judgment. Plaintiffs
filed their motion and supporting materials on March 21,
2016. (Dkt. #36-41). Defendants filed their motion, a
combined brief supporting their motion and opposing
Plaintiffs', and supporting materials on April 18-19,
2016. (Dkt. #42-48). Plaintiffs filed a combined brief
opposing Defendants' motion and replying in support of
their own motion on May 5, 2016. (Dkt. #51). Defendants filed
a combined brief replying in support of their own motion and
sur-replying in opposition to Plaintiffs' on May 23, 2016
(Dkt. #53), concluding the briefing on the instant motions.
Motions for Summary Judgment Under Rule 56
56(a) instructs a court to “grant summary judgment if
the movant shows that there is no genuine dispute as to any
material fact and the movant is entitled to judgment as a
matter of law.” Fed.R.Civ.P. 56(a). “When
ruling on a summary judgment motion, the district court must
construe the facts in the light most favorable to the
non-moving party and must resolve all ambiguities and draw
all reasonable inferences against the movant.” Pace
v. Air & Liquid Sys. Corp., 171 F.Supp.3d 254, 262
(S.D.N.Y. 2016) (internal quotation marks omitted) (quoting
Dallas Aerospace, Inc. v. CIS Air Corp., 352 F.3d
775, 780 (2d Cir. 2003)). And where, as here,
“‘parties file cross-motions for summary
judgment, ... each party's motion must be examined on its
own merits, and in each case all reasonable inferences must
be drawn against the party whose motion is under
consideration.'” Fireman's Fund Ins. Co. v.
Great Am. Ins. Co. of N.Y., 822 F.3d 620, 631 n.12 (2d
Cir. 2016) (alterations omitted) (quoting Morales v.
Quintel Entm't, Inc., 249 F.3d 115, 121 (2d Cir.
motion for summary judgment may properly be granted …
only where there is no genuine issue of material fact to be
tried, and the facts as to which there is no such issue
warrant the entry of judgment for the moving party as a
matter of law.” Rogoz v. City of Hartford, 796
F.3d 236, 245 (2d Cir. 2015) (quoting Kaytor v. Elec.
Boat Corp., 609 F.3d 537, 545 (2d Cir. 2010)). In
determining whether summary judgment is merited, “[t]he
role of a court … is not to resolve disputed issues of
fact but to assess whether there are any factual issues to be
tried, while resolving ambiguities and drawing reasonable
inferences against the moving party.” NEM Re
Receivables, LLC v. Fortress Re, Inc., 173 F.Supp.3d 1,
5 (S.D.N.Y.) (internal quotation mark and citation omitted),
reconsideration denied, 187 F.Supp.3d 390 (S.D.N.Y.
moving for summary judgment “bears the initial burden
of demonstrating ‘the absence of a genuine issue of
material fact.'” ICC Chem. Corp. v. Nordic
Tankers Trading A/S, 186 F.Supp.3d 296, 301 (S.D.N.Y.
2016) (quoting Celotex Corp. v. Catrett, 477 U.S.
317, 323 (1986)). “[A] fact is material if it
‘might affect the outcome of the suit under the
governing law.'” Royal Crown Day Care LLC v.
Dep't of Health & Mental Hygiene of City of
N.Y., 746 F.3d 538, 544 (2d Cir. 2014) (quoting
Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248
(1986)). And “[a] dispute is genuine ‘if the
evidence is such that a reasonable jury could return a
verdict for the nonmoving party.'”
Fireman's Fund Ins. Co., 822 F.3d at 631 n.12
(quoting Anderson, 477 U.S. at 248).
movant satisfies its initial burden, then “the adverse
party must set forth specific facts showing that there is a
genuine issue for trial.” Anderson, 477 U.S.
at 250 (internal quotation marks and citation omitted). To
make this showing, a summary-judgment “opponent must do
more than simply show that there is some metaphysical doubt
as to the material facts.” Matsushita Elec. Indus.
Co. v. Zenith Radio Corp., 475 U.S. 574, 586 (1986).
Rather, that opponent must adduce “evidence on which
the jury could reasonably find for” him.
Anderson, 477 U.S. at 252.
15 of the Real Property Actions and Proceedings Law
York, the equitable action to quiet title has been largely
replaced by proceedings under Article 15 of the Real Property
Actions and Proceedings Law (the “RPAPL”).
See Barberan v. Nationpoint, 706 F.Supp.2d 408,
416-17 (S.D.N.Y. 2010) (citing 2-24 Warren's Weed New
York Real Property § 24.01); see also W. 14th St.
Commercial Corp. v. 5 W. 14th Owners Corp., 815 F.2d
188, 196 (2d Cir. 1987) (“New York has codified the
common law action to quiet title and statutorily redefined
the necessary elements for a well-pleaded remaining cloud on
title complaint.”). Article 15 does not, however,
“limit any other remedy in law or equity, ” N.Y.
R.P.A.P.L. § 1551; thus, a plaintiff “may choose
to seek an equitable common law action to quiet title despite
the existence of the RPAPL statute, or [he] may bring both
claims.” Barberan, 706 F.Supp.2d at 417. But
“[w]hether a quiet title action is commenced in equity
or under RPAPL Article 15, the result is almost the same -
although RPAPL Article 15 is a statutory action, ‘it
has been described as a hybrid one in which the relief
awarded is in large measure equitable in nature.'”
Id. (quoting Dowd v. Ahr, 563 N.Y.S.2d 917,
919 (3d Dep't 1990), rev'd on other grounds,
78 N.Y.2d 469 (1991)).
relevant here, RPAPL Article 15 provides:
Where the period allowed by the applicable statute of
limitation for the commencement of an action to foreclose a
mortgage, or to enforce a vendor's lien, has expired, any
person having an estate or interest in the real property
subject to such encumbrance may maintain an action against
any other person or persons, known or unknown … to
secure the cancellation and discharge of record of such
encumbrance, and to adjudge the estate or interest of the
plaintiff in such real property to be free therefrom.
… In any action brought under this section it shall be
immaterial whether the debt upon which the mortgage or lien
was based has, or has not, been paid; and also whether the
mortgage in question was, or was not, given to secure a part
of the purchase price.
N.Y. R.P.A.P.L. § 1501(4). A successful Article 15 claim
must set forth facts showing: (i) the nature of the
plaintiff's interest in the real property and the source
of this interest; (ii) that the defendant claims an interest
in the property adverse to that of the plaintiff, and the
particular nature of the interest; (iii) whether any
defendant is known or unknown, or incompetent; and (iv)
whether all interested parties are named. See Id.
§ 1515; Guccione v. Estate of Guccione, 923
N.Y.S.2d 591, 593 (2d Dep't 2011); see also Knox v.
Countrywide Bank, 4 F.Supp.3d 499, 513 (E.D.N.Y. 2014)
(recognizing the “absence of a requirement that a
plaintiff asserting a statutory quiet title claim plead
‘invalidity'” of the defendant's mortgage
judgment issued pursuant to RPAPL Article 15 must
“declare the validity of any claim ... established by
any party, ” and may direct that an instrument
purporting to create an interest deemed invalid be cancelled
or reformed. Barberan, 706 F.Supp.2d at 417 (citing
§ 1521(1)); see also TEG N.Y. LLC v. Ardenwood
Estates, Inc., No. 03 Civ. 1721 (DGT), 2004 WL 626802,
at *4 (E.D.N.Y. Mar. 30, 2004) (noting that in an RPAPL
Article 15 action to compel the determination of a claim to
real property, a court may determine the ownership interests
in the property or reform a deed (citing § 1521(1))).
The judgment must “also declare that any party whose
claim to an estate or interest in the property has been
judged invalid, and every person claiming under him ... be
forever barred from asserting such claim.”
Barberan, 706 F.Supp.2d at 417 (internal quotation
marks omitted) (quoting § 1521(1)); see also
O'Brien v. Town of Huntington, 884 N.Y.S.2d 446, 451
(2d Dep't 2009).
New York law, “three elements must be established in
order to sustain a foreclosure claim: [i] the proof of the
existence of an obligation secured by a mortgage; [ii] a
default on that obligation by the debtor; and [iii] notice to
the debtor of that default.” United States v.
Paugh, 332 F.Supp.2d 679, 680 (S.D.N.Y. 2004); see
also R.B. Ventures, Ltd. v. Shane, 112 F.3d 54, 59 n.2
(2d Cir. 1997); United States v. Freidus, 769
F.Supp. 1266, 1277 (S.D.N.Y. 1991). “[C]ourts in this
Circuit have found that summary judgment in a mortgage
foreclosure action is appropriate where the Note and the
Mortgage are produced to the Court along with proof that the
[m]ortgagor has failed to make payments due under the
Note.” Gustavia Home, LLC v. Rutty, No. 16
Civ. 2823 (BMC), 2017 WL 354206, at *2 (E.D.N.Y. Jan. 24,
2017) (internal quotation marks and citation omitted).
“Once the [mortgagee] has made an affirmative showing
of the [mortgagor's] default, the [mortgagor] must make
‘an affirmative showing' that a defense to the
action exists.” Id.; see also
Paugh, 332 F.Supp.2d at 680 (same).
Plaintiffs' Summary-Judgment Motion Is Granted in Its
Entirety and Defendants' Summary-Judgment Motion Is
Denied in Its Entirety
move for summary judgment in favor of their RPAPL Article 15
action seeking the cancellation and discharge of record of
the Mortgage, a declaration adjudging the Property to be free
from an encumbrance relating to the Mortgage, and a
declaration discharging Plaintiffs' obligations under the
Note (see FAC ¶¶ 1, 22-29, 35-39; Pl. Br.
1, 28); and against Defendants' counterclaims and
affirmative defenses (Pl. Br. 19-27). Defendants move for
summary judgment in favor of their foreclosure and
unjust-enrichment counterclaims and against Plaintiffs'
claims and affirmative defenses. (See Ans.
¶¶ 18-26; Def. Br. 17-39).
motions turn principally on a single inquiry: whether the
statute of limitations to foreclose the Mortgage and enforce
the Note has expired. See N.Y. R.P.A.P.L. §
1501(4). If it has expired, then the ancillary question is
whether Defendants have established a claim of unjust
enrichment. Plaintiffs have the better of the arguments on
both fronts and, accordingly, their motion is granted in its
entirety and Defendants' denied in its entirety.
Plaintiffs' Motion Is Granted and Defendants' Motion
Is Denied on the Mortgage Loan-Related Claims and
The Statute of Limitations on Defendants' Foreclosure
Action Accrued on March 8, 2008
statute of limitations inquiry begins with a deceptively
simple question: When did the statute of limitations accrue?
The short answer is: upon expiration of the period to cure
the defaulted Loan.
undisputed that the New York statute of limitations governs
the inquiry. (Pl. Br. 11-15; Def. Br. 8). The New York
Court of Appeals has observed that the state's
“statutes of limitation serve the same objectives of
finality, certainty and predictability that New York's
contract law endorses. Statutes of limitation not only save
litigants from defending stale claims, but also express a
societal interest or public policy of giving repose to human
affairs.” ACE Sec. Corp. v. DB Structured Prod.,
Inc., 25 N.Y.3d 581, 593 (2015) (internal quotation
marks and alterations omitted) (quoting John J. Kassner
& Co. v. City of N.Y., 46 N.Y.2d 544, 550 (1979)).
statute of limitations for a mortgage-foreclosure action is
six years under New York law. See N.Y. C.P.L.R.
§ 213 (“[A]n 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”
shall “be commenced within six years.”).
Typically, the statute “begins to run from the due date
for each unpaid installment.” Plaia v.
Safonte, 847 N.Y.S.2d 101, 102 (2d Dep't 2007).
“[E]ven if a mortgage is payable in installments,
” however, “once a mortgage debt is accelerated,
the entire amount is due and the [s]tatute of [l]imitations
begins to run on the entire debt.” EMC Mortg. Corp.
v. Patella, 720 N.Y.S.2d 161, 162 (2d Dep't 2001)
(internal citations omitted); id. (“[O]nce a
mortgage debt is accelerated, ‘the borrowers' right
and obligation to make monthly installments cease[s] and all
sums [become] immediately due and payable', and the
six-year [s]tatute of [l]imitations begins to run on the
entire mortgage debt.” (quoting Federal Natl.
Mortg. Ass'n v. Mebane, 618 N.Y.S.2d 88, 90 (2d
Loan Instruments here offer the lender the option to
accelerate the Loan if the borrower defaults. The Mortgage
provides that in the event of a default the “Lender may
require that [the Borrower] pay immediately the entire amount
then remaining unpaid under the Note … [and the]
Lender may do [so] without making any further demand for
payment.” (Steiner Decl., Ex. D (Mortgage § 22),
at 16). Likewise, the Note indicates that “the Note
Holder may require [the borrower] to pay immediately the full
amount of principal that has not been paid.”
(Id., Ex. E (Note § 7(C)), at 4; see
also Def. Br. 11-12 (“[U]nder the terms of the
… Loan, acceleration of the debt does not occur
automatically upon default, but rather remains at the option
of the holder.”)).
as here, the Mortgage and Note make loan acceleration an
option, “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, 943 N.Y.S.2d 540, 542 (2d Dep't
2012). This affirmative act of acceleration may be in the
form of a demand or through the commencement of a foreclosure
action. See Lavin v. Elmakiss, 754 N.Y.S.2d 741, 743
(3d Dep't 2003) (“[O]nce 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.”); see also United
States v. Alessi, 599 F.2d 513, 515 n.4 (2d Cir. 1979)
(“Such acceleration must consist of either notice of
election to the [m]ortgagor or of some unequivocal overt act
(such as initiating a foreclosure suit) manifesting an
election in such a way as to entitle the mortgagor, if he
desires, to discharge the principal of the mortgage.”).
contend that either of two acts accelerated the Loan: the
Notice of Default or, alternatively, the 2008 Foreclosure
Action. Defendants maintain that neither effected an
acceleration of the Loan and that, indeed, the Loan was not
accelerated until “the filing of the counterclaim in
this matter.” (Def. Br. 17).
IndyMac's Notice of Default Accelerated the Loan
“As with other contractual options, ” an
acceleration-option holder “may be required to exercise
[the] option … in accordance with the terms of the
note and mortgage.” Burke, 943 N.Y.S.2d at
542; id. (“[T]he borrower must be provided
with notice of the holder's decision to exercise the
option to accelerate the maturity of a loan[.]”). The
Loan Instruments here establish such terms. The Mortgage
provides that the lender can accelerate the Loan “only
if” (i) the Loan is in default, (ii) a conforming
default notice is issued that provides at least a 30-day
period to cure the default, and (iii) the borrower does not
correct the default “by the date stated in th[e]
notice.” (Steiner Decl., Ex. D (Mortgage § 22), at
16). Similarly, the Note provides for “a written notice
telling [the borrower] that if [he or she does] not pay the
overdue amount by a certain date” that is “at
least 30 days after” the notice is sent, the holder may
accelerate the Loan. (Steiner Decl., Ex. E (Note §
7(C)), at 4).
addition to complying with the loan instruments, a notice or
demand to exercise the acceleration option “must be
‘clear and unequivocal.'” McIntosh v.
Fed. Nat'l Mortg. Ass'n, No. 15 Civ. 8073 (VB),
2016 WL 4083434, at *5 (S.D.N.Y. July 25, 2016) (quoting
Burke, 943 N.Y.S.2d at ...