BENEFICIAL HOMEOWNER SERVICE CORP., vs TOVAR | NY Statute of Limitations Foreclosure Dismissal

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BENEFICIAL HOMEOWNER SERVICE CORP., vs TOVAR | NY Statute of Limitations Foreclosure Dismissal

BENEFICIAL HOMEOWNER SERVICE CORP., vs TOVAR | NY Statute of Limitations Foreclosure Dismissal

SUPREME COURT OF THE STATE OF NEW YORK
I.A.S. PART XVIII SUFFOLK COUNTY

PRESENT:
HON. STEPHEN M. BEHAR

BENEFICIAL HOMEOWNER SERVICE CORP.,
Plaintiff,

-against-

THERESA A. TOVAR A/K/ A THRESA TOVAR; ET AL.,
Defendants.

In this foreclosure action, Defendant, Tovarl
, moves for an Order, pursuant to CPLR 3211 (a)
(5), dismissing Plaintiffs Complaint, with prejudice, on the ground that the Complaint is time baITed
pursuant to the six-year statute of limitations [see CPLR S 213 (4)], together with an award of
attomeys’ fees, costs, and disbursements, pursuant to RPL 9 282, in the amount of $7640.00.

PROCEDURAL HISTORY

THE PRIOR “2007” FORECLOSURE ACTION

Based on Defendant’s alleged default of February 16,2007, Plaintiff accelerated the
Consolidated Mortgage and Consolidated Note herein by commencing a foreclosure action (hereinafter
the “2007 action”). Said action was filed on October 4, 2007, under Index No.: 31069/2007. (See,
infra Ex. 1of Defendant’s April 17,2014 Affim1ation in Support).

On February 4,2008, the Court (Malia, J., presiding) granted Plaintiff’s application for a
default Judgment and for an Order of Reference (mot. seq. 001) (See, infra Ex. 2 of Defendant’s April
17,2014 Affirmation in Support). On September 22, 2008, the Court (Malia, J., presiding) granted
Plaintiff’s application for a Judgment of Foreclosure and Sale (mot. seq. 004) (id.).

On April 30, 2009, Defendant filed a Chapter 13 Bankruptcy petition (See, infra Ex. 4 of
Defendant’s August 20, 2014 Reply Memorandum at Law). On July 14,2009, Defendant’s Chapter 13
Bankruptcy case was dismissed and the automatic bankruptcy stay was terminated (See, infra Ex. 2 of
Defendant’s August 20,2014 Reply Memorandum at Law). •

On January 26,2010, Defendant filed an Order to Show Cause (mot. seq. 005), pursuant to
CPLR 5015 (4), seeking to dismiss Plaintiff’s 2007 action based on the improper service of the
complaint therein. Defendant’s application was granted on May 6,2010. (See, infra Ex. 1 of
Defendant’s August 20,2014 Reply Memorandum at Law). Thereafter, on April 3, 2012, Plaintiff filed
an unopposed motion to discontinue the 2007 action (mot. seq. 006), which was granted by the Court
on April 20, 2012 (See, infra Ex. 4 of Defendant’s August 20, 2014 Reply Memorandum at Law).2

PLAINTIFF’S INSTANT “2014” FORECLOSURE ACTION

Plaintiff filed the instant and second foreclosure action (the “2014 action”) on February 21,
2014, under Index No.: 061092/2014. (See, infra Ex. 1 of Defendant’s August 20, 2014 Reply
Memorandum at Law). The instant action min’ors the 2007 action, in that it claims the same Plaintiff
against the same Defendant, based on the same previously accelerated Consolidated Mortgage and
Note.

Defendant argues that by filing the 2007 action, Plaintiff effectively accelerated the subject
Consolidated Mortgage and Consolidated Note, rendering October 4,2007 the “Acceleration Date” for
the statute of limitation purposes. Using the October 4,2007 acceleration date, Plaintiff could only
satisfy the statute oflimitation herein by re-filing the action (once dismissed) on or before October 3,
2013.

DECISION & ORDER

“On a motion to dismiss a complaint pursuant to CPLR 3211 (a) (5) on statute of limitations
grounds, the moving defendant must establish, prima facie, that the time in which to commence the
action has expired.” Lake v. NY Hasp. Med. Ctr. of Queens, 119AD3d 843 [2d Dept 2014. If the
defendant meets that burden, it is then incumbent upon plaintiff to raise a question of fact as to whether
the statute of limitations was tolled or was otherwise inapplicable, or whether it actually commenced
the action within the applicable limitations period. Reid v. Inc. Vii. of Floral Park, 107 AD3d 777, 778
[2d Dept 2013].

It is well settled that an action to foreclose a mortgage may be brought to recover unpaid sums
which were due within the six-year period immediately preceding the commencement of the action.
See, CPLR S 213 (4); Wells Fargo Bank, N.A. v. Burke, 94 AD3d 980, 982 [2d Dept 2012]. “[W]ith
respect to a mortgage payable in installments, there are ‘separate causes of action for each installment
accrued, and the Statute of Limitations [begins] to run, on the date each installment [becomes] due'”
Wells Fargo Bank, N.A. v. Cohen, 80 AD3d 753, 754 [2d Dept 2010]. “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’.” Burke, 94 AD3d at 982. “The filing of the summons
and complaint and lis pendens in an action accelerate[s] the note and mortgage.” Clayton Nat’l, fnc. v.
Guidi, 307 AD2d 982, 982 [2d Dept 2003]. “Once the mortgage debt [is] accelerated, the borrowers’
right and obligation to make monthly installments cease[s] and all sums bec[ome] immediately due and
payable.” Fed. Nat’l Mtge. Ass’n v. Mebane, 208 AD2d 892,894 [2d Dept 1994].

Here, the Defendant has met her prima facie showing that Plaintiff s instant foreclosure action
was commenced after the applicable statute of limitation period, demonstrating an entitlement to the
dismissal of the instant action, with prejudice, pursuant to CPLR S 213 (4) and CPLR 3211 (a) (5).
Reid, 107 AD3d at 778.

After reviewing Plaintiffs counsel unsuccessful attempt to rebut Defendant’s prima facie
showing, this Court finds that the instant action has been filed after the applicable statute of limitation
period, and therefore, must be dismissed.

Plaintiff unsuccessfully argues that Defendant’s Chapter 13 Bankruptcy filing tolled the applicable
statute of limitations herein.

The tolling of a statute of limitation period pursuant to CPLR S 204 (a) only applies when a “stay”
affects “the commencement of an action”. As such, Plaintiff does not benefit of any tolling of the
statute of limitation period under CPLR S 204 (a) because Defendant’s Chapter 13 Bankruptcy filing
did not stay Plaintiffs ability to commence an action. Indeed, Plaintiff had already commenced the
action on October 4,2007, whereas Defendant filed for Bankruptcy protection in April, 2009. See, e.g.,
Saini v. Cinelli Enters., 289 AD2d 770, 772 [3Td Dept 2001], Iv denied 98 NY2d 602 [2002] (“With
regard to the claimed effect of defendant’s bankruptcy filing on the Statute of Limitations, we find that
it neither renewed nor tolled the six-year Statute of Limitations. The first action had been discontinued
prior to the time that defendant filed its bankruptcy petition in December 1997 and the bankruptcy
petition was dismissed in December 1998, long before this second foreclosure action was commenced
and, thus, the bankruptcy proceeding never operated to toll a pending foreclosure action.”).

Accordingly, Plaintiffs counsel’s argument that the Defendant’s bankruptcy filing stayed and/or
otherwise tolled the applicable statute of limitations herein is unsupported by the facts of this case.

Plaintiff next argues that the applicable statute of limitations was suspended by Governor
Cuomo’s Executive Order’s No.’s 52 & 81 (Hanusek Aff. ~ 6, Ex. B). This argument is also
unavailing.

Plaintiff contends that Governor Cuomo’s Executive Order’s 52 and 81 (hereinafter “9 NYCRR
S 8.52″ and “9 NYCRR S 8.81 “, respectively) added “an additional 143 days to the statute of
limitations expiration of October 4, 2013,” (Hanusek Aff. ,r 6).

This Court disagrees. 9 NYCRR S 8.52 temporarily suspended “[s]ection 201 of the [CPLR],
so far as it bars actions whose limitation period concludes during the period,” between October 26,
2012 See, infra Ex. 5 of Defendant’s August 20, 2014 Reply Memorandum at Law) (emphasis added),
and December 25,2012 (See, infra Ex. 5 of Defendant’s August 20, 2014 Reply Memorandum at Law).
Simply put, 9 NYCRR SS 8.52 and/or 8.81 suspended any statute oflimitations under section 201 of
the CPLR if and/or when the statutory time period for an action to be commenced expired between
October 26,2012 and December 25,2012. Here, indisputably, upon Plaintiffs counsel’s own
concession, the statute of limitations would not expire until October 4,20133. (Hanusek Aff. ’16).
Since the applicable statute of limitations for the commencement of this action expired on or
before October, 2013, 9 NYCRR SS 8.52 and/or 8.81 did not suspend the statute of limitation period
herein.

Plaintiff argues that the mandatory default notices sent by Plaintiff constitute a revocation of the
previous acceleration (Hanusek Aff. ’19, Ex. C). This contention also fails to persuade the Court.
The Second Department has again and again opined that without an affirmative and unambiguous
act by a lender to revoke a prior acceleration, the acceleration remains undisturbed and the limitations
statute still runs. UMLIC VP, LLC v. Mel/ace, 19 AD3d 684, 684 [2d Dept 2005]; Guidi, 307 AD2d at
982; Lavin v. Elmakiss, 302 AD2d 638, 639 [2d Dept 2003]. Strictly from a procedural standpoint, the
Court notes that Plaintiffs opposition is supported only by the affirmation of Plaintiffs attorney,
unsupported by any affidavit from an individual with personal knowledge. As such, Plaintiff has
“presented insufficient evidence to [meet its burden which requires it to] raise a triable issue of fact as
to whether the statute of limitations was tolled” (Educ. Res. Inst., Inc. v. Piazza, 17 AD3d 513, 515 [2d
Dept 2005]), let alone establish whether Plaintiff has made an affirmative and unambiguous act to
revoke a prior acceleration.

The Court further notes, without comment, that the 90 day default notices specifically state that
“[IIJnder New York State Law, we are required to send you this notice,” and “[wJe are sending yo II
this notice as required by New York State law.” (See, infra Ex. 4 of Defendant’s August 20, 2014
Reply Memorandum at Law) (emphasis added). Failure to provide these mandatory notice would
mandate dismissal of the action for failure to satisfy the statutory conditions precedent as set forth in
RPAPL S 1304. In Aurora Loan Servs., LLC v. Weisblum, 85 AD3d 95, 103 [2d Dept 2011], the Court
held: “[P]roper service of the RPAPL 1304 notice containing the statutorily-mandated content is a
condition precedent to the commencement of the foreclosure action. The plaintiffs failure to show
strict compliance requires dismissal.” Given the mandatory nature of the notices attached, the Court is
hard-pressed to find or imply an intent on the part of the Plaintiff to revoke any prior acceleration of the
Consolidated Note and Mortgage herein; especially, when such assertion is not supported by an
 Affidavit of an individual With personal knowledge of the facts surrounding said alleged revocation.

Moreover, the Court of Appeals has held that once a mortgagee makes the election to file a
foreclosure summons and complaint, thus accelerating the mortgage debt due and owed in full, said
election is “final and irrevocable … and not subject to change at the option of the [mortgagee],”
Kilpatrick v. Germania Life Ins. Co., 183 NY 163, 168 [1905]. Notwithstanding, the Second
Department has recently opined that “a lender may revoke its election to accelerate all sums due under
an optional acceleration clause in a mortgage provided that there is no change in the borrower’s
position in reliance thereon. ” Mebane, 208 AD2d at 894 (citation omitted); but, in Patella, 279 AD2d
at 604, the Court held: “Although a lender may revoke its election to accelerate the mortgage, the
dismissal of the prior foreclosure action by the court did not constitute an affirmative act by the lender.
revoking its election to accelerate, and the record is barren of any affirmative act of revocation
occurring during the six-year Statute of Limitations period subsequent to the initiation of the prior
action.” (internal citations omitted). In Mebane, 208 AD2d at 894, the Court held: “[T]he record is
barren of any affim1ative act of revocation occurring within the six-year Statute of Limitations period
subsequent to the service of the complaint in the prior foreclosure action, wherein the holder of the
mortgage notified the borrowers of its election to accelerate. The prior foreclosure action was never
withdrawn by the lender, but rather, dismissed sua sponte by the court. It cannot be said that a
dismissal by the court constituted an affirmative act by the lender to revoke its election to accelerate.
Indeed, rather than seeking to revoke the prior election to accelerate, the plaintiff made a failed attempt
in 1991 to revive the prior foreclosure action, and, in fact, in its complaint in the instant action
commenced in 1992, the plaintiff continues to seek recovery of the entire mortgage debt pursuant to the
acceleration clause.” (internal citations omitted).

Upon the foregoing, the Court must hold that the mere act of serving mandatory default notices
together with summons and complaint, without more, cannot and does not constitute a de facto
revocation of a prior election to accelerate the mortgagor’s obligation under the Note and Mortgage.
Plaintiff also argues that the previous acceleration of the Note and Mortgage obligation (via the
filing of the 2007 action) was invalided by the Court’s subsequent determination (prompting the
dismissal of the 2007 action) that service of the Summons and Complaint was either improper or,
worse yet, never effectuated. (Hanusek Aff. ‘(10). This contention also fails in the eyes of the Court.

The Second Department has already held that: “[c]ontrary to the plaintiffs contention, the
dismissal of the 1992 action for lack of personal jurisdiction did not constitute an affirmative act by the
lender to revoke its election to accelerate.” Guidi, 307 AD2d at 982; accord Wydallis v. United States
Fid. & Guar. Co., 63 NY2d 872, 873 [1984] (“[w]here a prior action is dismissed for want of personal
jurisdiction, [CPLR S 205] cannot be applied to extend the period of limitations.”). Accordingly,

Plaintiffs latest contention, without more, must fail as a matter of law.

Plaintiffs final argument is that pursuant to GOL S 17-105 (1), Defendant’s Bankruptcy filing
caused the six (6) year statute of limitations to restart anew (Hanusek Aff. ~ 11).
Contrary to Plaintiffs contention, the listing of a mortgage as a secured debt on a bankruptcy
petition does not, in and of itself, constitute and affirmative act to re-acknowledge a debt under GOL S
17-105 (1). Erlichman v. Ventura, 271 AD2d 481, 482 [2d Dept 2000] (“[T]he listing of the debt on
[defendant’s] bankruptcy petition did not constitute written acknowledgment of the debt with the intent
to pay so as to remove any Statute of Limitations bar to recovery.”) (internal citations omitted); see
Saini, 289 AD2d at 772 (“[T]he fact that defendant listed this mortgage on its schedule of secured
claims on its disclosure statement to its bankruptcy petition did not constitute a promise to pay the
mortgage so as to renew or extend the Statute of Limitations but, rather, signified defendant’s intent not
to pay it.”) (internal citations omitted); accord Petito v. Piffath, 85 NY2d 1, 8-9 [1994], cert denied
516 US 864 [1995].

In light of the foregoing, this Court must conclude that Plaintiffs proffered excuses for having
failed to file the instant action within six years of the first acceleration of the Note and Mortgage
obligation herein (as revealed by the filing of the 2007 action) are untenable. Defendant’s application
herein to dismiss the instant action pursuant to CPLR 3211 (a) (5) and CPLR 213 (4) is therefore
granted.

Defendant’s request for an award of attorney’s fees, however, is denied. Defendant has not
established an entitlement to fees (see RPLS 282) under the facts and circumstances of this case.

Accordingly, it is therefore

ORDERED, that Defendant instant motion is granted only to the extent that the within action is
dismissed and the notice of pendency filed with the County Clerk under the within index number is
vacated; and it is further

ORDERED, that Defendant’s remaining requests, including her request for an award of counsel
fees pursuant to RPLS 282, are denied; and it is further

ORDERED, that Defendant, or her counsel, must serve a copy of this Decision and Order together
with notice of its entry upon Plaintiffs counsel and upon the County Clerk’s office within twenty (20)
days of its receipt hereof.

The foregoing constitutes the Decision and Order of the Court.

Dated: December 22,2014
Central Islip, NY
Hon. Stephen

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