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Adam Leitman Bailey, P.C. Secures Settlement for Lender and Avoids Loan Being Discharged as Time-Barred

Borrowers executed a note and mortgage in 2006 and soon after defaulted on the loan. A foreclosure proceeding was commenced in 2009, which was ultimately discontinued voluntarily without prejudice in 2012. 

In 2016, borrowers commenced a quiet title action pursuant to RPAPL Article 15 seeking to discharge the loan as time-barred by the statute of limitations. The borrowers argued that the 2009 action accelerated the loan, and, therefore, the six-year statute of limitations expired in 2015.

Adam Leitman Bailey, P.C. was retained by the lender to defend the quiet title action, which, given the unfavorable facts for the lender, would likely be a losing battle.   

The borrowers moved for summary judgment, and Adam Leitman Bailey, P.C. opposed arguing that the 2009 action was commenced by a plaintiff that lacked standing and, therefore, the filing of the complaint did not accelerate the loan. Additionally, Adam Leitman Bailey, P.C. argued that the stipulation of discontinuance was an affirmative act to revoke any election to accelerate the loan.

The borrowers’ motion was successfully denied, as the Court determined that triable issues of facts remained with respect to whether plaintiff in the 2009 action had standing to accelerate and whether there was a revocation of any election to accelerate.  

The parties engaged in brief discovery, and the matter was scheduled for trial. 

At the pre-trial conferences, Adam Leitman Bailey, P.C. took the opportunity to push for settlement. Understanding that the borrowers were fearful of protracted litigation, and knowing that the plaintiff would likely lose at trial, Adam Leitman Bailey, P.C. strategized and negotiated a loan modification, re-setting the statute of limitations and procuring an again-performing loan in the plaintiff’s portfolio.   

Jackie Halpern Weinstein, Esq. and Danny Ramrattan, Esq. of the Foreclosure and Title Litigation Groups at Adam Leitman Bailey, P.C. secured this highly desirable result for the lender.  

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