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Deutsche Bank Natl. Trust Co. Ams. v. Bernal

Supreme Court, Westchester County

May 5, 2017

Deutsche Bank National Trust Company Americas, AS TRUSTEE FOR MORTGAGE ASSET-BACKED PASS- THROUGH CERTIFICATES, SERIES 2007-QH6, Plaintiff,
Jhon Bernal, OPTION ONE MORTGAGE CORPORATION, JOHN DOE (being fictitious, the names unknown to Plaintiff intended to be tenants, occupants, persons or corporations having or claiming an interest in or lien upon the property described in the complaint or their heirs at law, distributees, executors, administrators, trustees, guardians, assignees, creditors or successors), Defendants.

          Sandelands Eyet LLP By: Margaret S. Stefandl, Esq. Attorneys for Plaintiff

          Jasbrinder Sahni, Esq. Attorney for defendant Jhon Bernal

          HON. ALAN D. SCHEINKMAN Justice.

         In this residential foreclosure action, Defendant moves for an order dismissing the complaint and for legal fees; Plaintiff cross-moves to strike the answer and counterclaims of Defendant, or in the alternative to compel discovery.

         The critical facts may be succinctly stated. Plaintiff's predecessor-in-interest brought a foreclosure action against Defendant in 2009 and, in doing so, elected to accelerate all sums due on the underlying debt. The prior action was dismissed for failure to prosecute in March 2015. One month later, the attorney for the servicer, on behalf of Plaintiff, purported to give notice to Defendant that it rescinded the acceleration. Plaintiff commenced the present action in December 2015, more than six years after the underlying debt had been accelerated. The question of law presented is whether the mortgagee has effectively rescinded the prior acceleration of the underlying debt so as to avoid application of the statute of limitations. This Court holds that, under the circumstances presented, the mortgagee did not do so and the present action is time barred.

         Factual and Procedural Background

         This action was commenced by the filing of a summons, complaint and notice of pendency with the Westchester County Clerk on December 2, 2015 via New York State Courts Electronic Filing system (hereafter, "NYSCEF"). Defendant Jhon Bernal (hereafter "borrower") filed an answer with counterclaims via NYSCEF on December 24, 2015. Plaintiff filed a notice of rejection of borrower's answer on December 24, 2015 and filed a reply to the counterclaims on January 13, 2016.

         Plaintiff alleged in the complaint, inter alia, that on or about March 12, 2007, borrower executed and delivered a note whereby borrower promised to pay $425, 000.00 plus interest on the unpaid amount due, permitting the principal balance to increase to a total maximum obligation of $467, 500.00. Plaintiff further alleged that as security for payment of said note that borrower duly executed and delivered a mortgage which was recorded in the office of the Westchester County Clerk on September 20, 2007. Plaintiff stated that the mortgaged property address is known as 27 Morgan Street, New Rochelle, New York 10805. Plaintiff alleged that it is the owner and holder of the subject note and mortgage or has authority to commence this action on behalf of the owner. Plaintiff alleged that borrower defaulted on its obligations under the note and mortgage by failing to make the payment that was due on March 1, 2009 and thereafter. Plaintiff alleges that it accelerated the underlying debt by notice given on July 31, 2015.

         On December 23, 2015 plaintiff filed a specialized request for judicial intervention indicating that this action was eligible pursuant to CPLR 3408(a) for a mandatory settlement conference. On December 23, 2015, the office of the clerk of the Foreclosure Settlement Conference Part (hereafter "FSCP") filed a foreclosure conference notice advising the parties to appear for an initial settlement conference on "1/25/16 at 9:30 a.m., on the 18th floor Courtroom 1803 of the Westchester County Courthouse." A copy of the notice was also sent to borrowers via U.S. Mail. On January 15, 2016 both parties appeared in the FSCP by counsel. The matter was released without settlement on that date and plaintiff was directed to resume prosecution of the action. The matter was adjourned to the FSCP Dismissal Calendar on July 8, 2016. On July 8, 2016 plaintiff's counsel appeared in the FSCP and a preliminary conference was scheduled for September 14, 2016.

         A preliminary conference was held on September 14, 2016 and a preliminary conference stipulation was executed by the parties and "so-ordered" by this Court on September 28, 2016. The stipulation was filed via NYSCEF on September 29, 2016. A trial readiness conference was held on March 13, 2017 and adjourned to June 5, 2017.

         Borrower filed the instant motion to dismiss the complaint and for attorneys fees on November 28, 2016. Plaintiff filed opposition to the motion and a cross-motion to strike the answer or compel discovery on January 6, 2017. The parties filed a stipulation to adjourn the motion to January 27, 2017. The motion was deemed fully submitted on that date. [1]


         Defendant moves to dismiss the complaint on the basis that this action is time barred.

         A foreclosure action is subject to a six-year statute of limitations (see CPLR 213[4]). "With respect to a mortgage payable in installments, separate causes of action accrued for each installment that is not paid, and the statue of limitations begins to run, on the date each installment become due...However, 'even if a mortgage is payable in installments, once a mortgage debt is accelerated, the entire amount is due and the Statute of Limitations begins to run on the entire debt'" Wells Fargo Bank, N.A. v Burke, 94 A.D.3d 980');">94 A.D.3d 980 (2d Dept 2012).

         It is undisputed that on July 4, 2009, Aurora Loan Services, LLC ("Aurora") filed a summons and complaint commencing a prior action regarding the same mortgage debt that is at issue in the instant action. The prior action was dismissed on March 11, 2015 for lack of prosecution. Defendant had moved for dismissal pursuant to CPLR 3216 (entitled "Want of prosecution"), which motion was not opposed by Plaintiff. Since the March 11, 2015 dismissal order did not specify that the dismissal was "with prejudice", the dismissal, by operation of law, was without prejudice (CPLR 3216[a]).

         Defendant argues that "...clearly, the notice of acceleration was served before the complaint dated July 14, 2009 [in the prior action] was filed" (see Defendant's Memorandum of Law, Preliminary Statement). Defendant offers no evidence to show that the debt was accelerated before the filing of the summons and complaint, contending instead, that paragraph twenty-two of the mortgage at issue mandates that the lender serve a "notice of acceleration", which is a condition precedent to filing a foreclosure action. Thus, Defendant reasons, either the notice of acceleration was provided to him at least thirty days before the prior action was ...

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