Adam Leitman Bailey, P.C. Defeats Fatal Statute of Limitations Bar to Foreclose for Plaintiff Note Holder
In VW Bedstuy LLC v. Tavares, et al., a highly contested foreclosure proceeding, Adam Leitman Bailey, P.C. defeated the borrower’s motion to dismiss and won its motion for summary judgment and an order of reference in favor of the plaintiff, in defeating the borrower’s claim that the action was time-barred under the applicable statute of limitations.
The statute of limitations (the time within which the action must be commenced) applicable to a defaulted mortgage in New York is six years.
Where, as here, a mortgage is payable in installments, separate causes of action accrue for each installment so that the statute of limitations begins on the due date (default date) of each installment.
When authorized in the loan documents, as was the case here, the entire debt may be accelerated upon a borrower’s default. When the debt is accelerated, the full amount becomes due, and the statute of limitations begins to run at that moment on the complete debt.
The subject loan was accelerated on September 17, 2007, and a prior action was brought by the plaintiff to foreclose the Note and Mortgage on June 7, 2013 (the “2013 Action”), which 2013 Action was subsequently dismissed by the court for failure to comply with conditions precedent.
Specifically, the 2013 Action was dismissed for failure to comply with (i) the 90-day pre-foreclosure notice requirement imposed by RPAPL §1304, the purpose of which is to provide a borrower with notice of his or her default and an opportunity during the 90-day time period to attempt to reach a mutually agreeable resolution with the lender, and (ii) the required information filing with the Superintendent of Banks imposed by RPAPL §1306, which must be completed within three business days after filing the 90-day pre-foreclosure notice.
The instant action was commenced by Adam Leitman Bailey, P.C. on behalf of the plaintiff on September 25, 2015, and service upon all defendants was completed by October 24, 2015.
The borrower moved to dismiss the action, arguing that the statute of limitations ran, as the loan was accelerated on September 17, 2007, which was more than six years prior to the instant action being commenced.
Adam Leitman Bailey, P.C. first successfully argued that a dismissal for failure to comply with conditions precedent imposed by RPAPL §§ 1304 and 1306 is not a final decision on the merits of the case. Rather, as with jurisdictional issues or standing, the dismissal is without prejudice and, if the conditions precedent are complied with, a new complaint seeking the same relief may be filed.
Adam Leitman Bailey, P.C. defeated the borrower’s claim that the statute of limitations ran by arguing that the action must be deemed as being timely commenced, pursuant to New York’s “saving statute.” CPLR § 205(a), which provides, in relevant part, that:
[i]f an action is timely commenced and is terminated in any other manner than by voluntary discontinuance, a failure to obtain personal jurisdiction over the defendant, a dismissal of the complaint for neglect to prosecute the action, or a final judgment upon the merits, the plaintiff…may commence a new action upon the same transaction or occurrence or series of transactions or occurrences within six months after termination provided that the new action would have been timely commenced at the time of commencement of the prior action and that service upon defendant is effected within such six-month period. CPLR § 205(a).
Specifically, Adam Leitman Bailey, P.C. argued that: (i) the 2013 Action was timely commenced within six years of the loan being accelerated on September 17, 2007, (ii) the 2013 Action was not terminated by voluntary discontinuance, a failure to obtain personal jurisdiction over the defendant, a dismissal of the complaint for neglect to prosecute the action, or a final judgment upon the merits, and (iii) the instant action was commenced within six months of the 2013 Action being dismissed, with all defendants being served within that six-month period.
In addition to opposing the borrower’s motion to dismiss and for summary judgment, Adam Leitman Bailey, P.C. successfully cross-moved for summary judgment and an order of reference in favor of the plaintiff.
In support of the plaintiff’s cross-motion, Adam Leitman Bailey, P.C. thoroughly addressed and disproved each of the borrowers’ twenty-one pleaded affirmative defenses and six counterclaims, leaving the court with no legal choice, but to find for the plaintiff in denying the borrower’s motion in its entirety and granting the plaintiff’s cross-motion in its entirety.