Papers Considered: 1. Notice of Motion, Memorandum of Law and Affirmation of Alina Levi, Esq., dated December 14, 2020, with Exhibits L-S and Affidavit of Sandra Tramble, dated September 14, 2020, with Exhibits A-K. 2. Notice of Cross Motion and Affirmation of Jason J. Kovacs, Esq., dated January 19, 2021 with Exhibits A-E; 3. Reply Affidavit of Mark Feliciano, with Exhibits A-F and Reply Memorandum of Law of Alina Levi, Esq., dated February 16, 2021; 4. Opposition Affirmation and Memorandum of Law of Alina Levi, Esq., dated February 16, 2021 with Exhibits A-F; 5. Reply Affirmation of Jason Kovacs, Esq., dated February 22, 2021 with Exhibits A-C; 6. Letter of Alina Levi, Esq., dated February 23, 2021 attaching the February 18, 2021 Opinion of the Court of Appeals in Freedom Mtge. Corp. v. Engel, 37 NY3d 1 [2021]; 7. Supplemental Affirmation of Alina Levi, Esq., dated August 23, 2021; 8. Supplemental Affirmation of Jason J. Kovacs, Esq., dated August 30, 2021. DECISION/ORDER Defendant, mortgage-assignee, Deutsche Bank National Trust Company as Trustee of the IndyMac Index Mortgage Trust 2006-AR5 Pass-Through Certificates, Series 2006-AR25 Under The Pooling and Servicing Agreement, dated July 1, 2006, [Deutsche Bank) and its loan servicer, Defendant Ocwen Loan Servicing, LLC.,1 [Ocwen, collectively, Defendants] move for summary judgment dismissing this action for declaratory judgment and to quiet title to real property, pursuant to RPAPL Article 15. Plaintiffs-mortgagors oppose and cross-move for summary judgment, claiming the 6-year statute of limitations to proceed on the note/mortgage has expired, requiring the cancellation of the debt. Defendants oppose. Background In May 2006, Plaintiffs signed a note payable to lender IndyMac Bank, F.S.B. (Note) which was secured by a mortgage from MERS,2 as nominee therefor. On October 19, 2009 Deutsche Bank commenced a foreclosure action against, inter alia, Plaintiffs and MERS, the latter as subordinate mortgagee, alleging an April 1, 2009 default. It was dismissed for lack of standing, noting that MERS’ assignment to Deutsche Bank was dated and recorded shortly after the action commenced. Decision and Order dated July 21, 2010, Ulster County Index No. 09-5307 [2009 Action).3 In January 2012, Deutsche Bank commenced a 2nd foreclosure action and moved for summary judgment. Ulster County Index No. 12-269 (2012 Action]. Plaintiffs asserted Deutsche Bank’s lack of standing and the motion was held in abeyance for the submission of an “explanation as to how plaintiff actually acquired possession of the original Note [endorsed in blank] and when such possession occurred.” Decision and Order, dated June 10, 2016. When no further submissions were forthcoming, Plaintiffs’ cross-motion to dismiss was granted, as “the evidence does not establish that plaintiff was the valid holder of the note and mortgage at the time this action was commenced.” Decision and Order dated December 2, 2016. No appeals were filed and the loan has not been modified. Plaintiffs seek a declaration that Defendants lack an interest in the subject real property to which they hold title, requiring that the mortgage be stricken from the public record. CPLR §213(2); RPAPL §1501(4).4 Parties’ Contentions on Summary Judgment Defendants claim that dismissal of the 2 prior foreclosure actions for lack of standing establish they were ineffective to accelerate the loan and, therefore, the 6-year limitations period has not lapsed. They cite Administrative Orders staying filings in non-essential matters between March 22, 2020 and April 30, 2020, due to the COVID-19 pandemic and submit the affidavit of PHH senior loan analyst, Sandra Tramble, stating that the original Note, indorsed in blank, was delivered to Deutsche Bank as Trustee, through its document custodian, on June 6, 2006. She submits a computerized Note possession history as a business record, confirming same. Finally, Defendants aver that this action is frivolous, meriting the imposition of sanctions. Plaintiffs claim, inter alia, entitlement to summary judgment because the 2012 Action accelerated the mortgage debt and has not been decelerated to date, rendering any further foreclosure action time-barred and the Note and mortgage unenforceable. Alternatively, they cite the affidavit of Ocwen’s contract management coordinator, Sonja Manderville, dated August 15, 2015 (Manderville Affidavit), stating that “all amounts due pursuant to the note and Mortgage have been accelerated,” as establishing, together with pre-foreclosure default and demand letters,5 and the 2012 foreclosure complaint demanding full payment, that the loan was accelerated more than 6 years ago. Discussion/Summary Judgment Summary judgment is a drastic remedy and should be granted only when no material facts are sufficiently disputed as to warrant a trial. Gaddani v. Dormitory Auth. of State of N.Y., 43 A.D.3d 1218, 1219 (3d Dept. 2007) citing Matter of LaBier v. LaBier, 291 A.D.2d 730, 732 [3d Dept. 2002). The totality of the evidence should be viewed in the light most favorable to the non-moving party and the Court should accord it the benefit of every reasonable inference. Tenkate v. Tops Mkts., 38 A.D.3d 987, 989 (3d Dept. 2007). Thus, to prevail, the moving party must establish prima facie entitlement to judgment as a matter of law "by adducing sufficient competent evidence to show that there are no issues of material fact." Alvarez v. Prospect Hosp., 68 NY2d 320, 324 [1986]. “Only when the movant bears this burden and the nonmoving party fails to demonstrate the existence of any [such…. issue] will the motion be properly granted.” Staunton v. Brooks, 129 AD3d 1371 [3d Dept. 2015]. Statute of Limitations Foreclosure claims have a 6-year statute of limitations CPLR §213 (4), which begins to run when the lender accelerates the debt by an “unequivocal overt act that discloses the noteholder’s choice” to seek recovery of the entire balance of the debt, after the borrower’s default. Freedom Mtge. Corp. v. Engel, 37 NY3d 1, 19-22 [2021], rearg denied. 37 NY3d 926 [2021]; Puzzuoli v. JPMorgan Chase Bank, N.A., 55 Misc 3d 417 [Sup Ct 2016] [mortgage cancelled due to expiration of statute of limitations). A debt is accelerated when, inter alia, a verified foreclosure complaint and lis pendens are filed, since the "determinative question is not what the noteholder intended or the borrower perceived [as acceleration], but whether the contractual election was effectively invoked,” Id. at 23. Indeed, a demand to repay the entire debt “terminates the borrower’s right to repay the debt over time through…monthly installments.” Id.; Albertina Realty Co. v. Rosbro Realty Corp., 258 NY 472, 476 [1932] (the unequivocal overt act of the plaintiff in filing the summons and verified complaint and lis pendens constituted a valid election” to accelerate the debt). On the issue of debt deceleration, the Court of Appeals has established a bright-line rule that a mortgagee’s voluntary discontinuance of a foreclosure action or “withdrawal of the complaint — constitutes a revocation of the acceleration” achieved by commencement of the action, “as a matter of law absent an express contemporaneous statement to the contrary by the noteholder…” Freedom Mtge. Corp. v. Engel, 37 NY3d at 31. Thus, deceleration will reset the clock on the limitations period, which will not begin to run again until a further act of acceleration. However, where the action’s commencement is a nullity due to a plaintiff’s lack of standing, no acceleration has occurred. Freedom Mtge. Corp. v. Engel, 37 NY3d at 25 (attempt to foreclose on the original mortgage without acknowledging the subsequent loan modification was ineffective to accelerate as it was unclear what debt was being accelerated). Thus, a dismissal for lack of standing is prima facie evidence that the debt was not accelerated by the foreclosure action’s commencement. Mejias v. Wells Fargo N.A., 186 AD3d 472, 474 [2d Dept 2020] (“acceleration of a mortgage debt…is only valid if the party [accelerating…] had standing at that time to do so”); U.S. Bank N.A. v. Friedman, 175 AD3d 1341, 1342 [2d Dept 2019] (emphasis added); Lasalle Bank Nat. Ass’n v. Ahearn, 59 AD3d 911 [3d Dept 2009] (mortgage foreclosure may not be brought by one who has no title). Here, Defendants have met their initial burden establishing that the mortgage debt was not accelerated by the prior foreclosure actions, as they were dismissed on standing grounds. Mejias v. Wells Fargo N.A., 186 AD3d at 474. However, Plaintiffs have raised a triable fact issue, precluding summary judgment for either party, inasmuch as the 2012 Action was dismissed upon the absence of evidence, not an evidentiary finding that standing was lacking. Indeed, definitive evidence was not submitted by Deutsche Bank, whose burden it was to produce same, despite an opportunity to do so. Further, no hearing was held on the issue. JPMorgan Chase Bank, N.A. v. Caliguri, 36 NY3d 953, 954 [2020], rearg denied. 36 NY3d 1085 [2021] (“[T]here is no checklist of required proof to establish standing…plaintiff satisfied its burden through evidence…it possessed the note when it commenced this action, including a copy of the original note endorsed in blank,…other supporting material, [and…] an affidavit of possession based on an employee’s review of plaintiffs business records); cf., Q & O Estates Corp. v. US Bank Tr. Nat’l Assoc., 175 AD3d 1337,1339 [2d Dept 2019], Iv to appeal denied sub nom. Q & O Estates Corp. v. US Bank Tr. Nat’l Assoc., 35 NY3d 910 [2020] (default order of reference denied upon court’s determination on the record that plaintiff lacked standing); with Capital One, N.A. v. Saglimbeni, 170 AD3d 508, 509 [1st Dept 2019] (court lacked basis to nullify acceleration “because there was no finding in the prior action that [plaintiff…] did not have the authority or standing to accelerate the mortgage debt.”); see also, Selene Fin., L.P. v. Coleman, 187 AD3d 1082 [2d Dept 2020] (dismissal for lack of standing is “not a dismissal on the merits for res judicata purposes.”). Moreover, Deutsche Bank has consistently asserted status as original noteholder and produces evidence of same herein, as of June 2006. This evidence and the Manderville Affidavit as to a prior acceleration raise triable fact issues as to whether the 2012 Action accelerated the debt, notwithstanding the dismissal on standing grounds. Freedom Mtge. Corp. v. Engel, 37 NY3d 1. Accordingly, the motions are denied, any remaining contentions rendered academic and a conference is scheduled for November 8, 2021, at 11:20AM at the Ulster County Courthouse. This constitutes the Decision and Order of this Court. The Court is Efiling this Decision and Order but that does not relieve Plaintiffs from compliance with the provisions of CPLR §2220 with regard to notice of entry. Dated: October 13, 2021
