247 F. Supp. 3d 329
S.D.N.Y.2017Background
- Plaintiffs Vito and Marion Costa own 60 Interlaken Ave., New Rochelle; Vito executed a $644,000 note (May 9, 2006) and both signed the mortgage; MERS was nominee and Deutsche Bank (DB) is trustee; SLS is servicer.
- Vito defaulted by December 2007; IndyMac sent a February 4, 2008 Notice of Default giving 30 days to cure and warning that failure "will result in acceleration" and sale; no cure occurred by March 7, 2008.
- IndyMac commenced a state foreclosure suit on March 20, 2008; the Costas answered and asserted counterclaims; the foreclosure action was inactive for years, reopened for settlement conferences in 2012–2013, and was dismissed for failure to prosecute on Jan. 31, 2014.
- Plaintiffs sued (removed to federal court) under RPAPL Art. 15 seeking cancellation/discharge of the mortgage as time-barred; Defendants countersued for foreclosure and unjust enrichment for ~ $149,000 in property-carrying costs they paid after default.
- Cross-motions for summary judgment followed; central legal question: when did the six-year foreclosure statute of limitations accrue, and whether it was tolled or revived.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| When did the six-year statute of limitations to foreclose accrue? | The February 4, 2008 Notice of Default (and its 30-day cure period) effectuated clear and unequivocal acceleration, so accrual was March 8, 2008. | No effective acceleration until later (e.g., filing of counterclaim in this federal action); Notice was only a warning of a possible future event. | Notice was a clear and unequivocal election to accelerate upon failure to cure; statute accrued March 8, 2008. |
| Was the limitations period tolled during the 2008 foreclosure, settlement conferences, or HAMP negotiations? | Tolling applies because foreclosure activity, mandatory CPLR §3408 conferences, and HAMP negotiations prevented meaningful prosecution. | The filing of the prior foreclosure or settlement/HAMP processes did not statutorily prohibit refiling under CPLR §204; no authority that §3408 or HAMP retroactively tolled §213. | Tolling rejected: neither RPAPL §1301, §3408 settlement conferences, nor HAMP/Regulation X revived or tolled the six-year CPLR §213 period. |
| Did Vito’s HAMP applications or hardship letters constitute a written acknowledgment under G.O.L. § 17-101 that would revive the limitations period? | The HAMP applications and hardship letters acknowledged the debt and manifested intent to repay, restarting the limitations period. | The applications were conditional (contingent on modification/acceptance) and IndyMac never accepted them as complete or offered modification; thus no unconditional acknowledgment. | HAMP materials were conditional and incomplete; they did not unconditionally acknowledge the debt and did not revive the limitations period under § 17-101. |
| Are Defendants entitled to restitution (unjust enrichment) for carrying costs they advanced? | Even if foreclosure is time-barred, unjust-enrichment permits recovery for carrying costs paid on property benefit to plaintiffs. | The advances were made to protect defendants’ own interest in preserving the collateral; payments were voluntary and not performed for plaintiffs. | Unjust-enrichment claim denied: defendants failed to show payments were made for plaintiffs’ benefit; benefits were incidental to defendants’ efforts to protect their own interests. |
Key Cases Cited
- ACE Sec. Corp. v. DB Structured Prod., Inc., 25 N.Y.3d 581 (N.Y. 2015) (policy goals of statutes of limitation: repose, finality, predictability)
- Celotex Corp. v. Catrett, 477 U.S. 317 (U.S. 1986) (summary judgment burden-shifting framework)
- Anderson v. Liberty Lobby, Inc., 477 U.S. 242 (U.S. 1986) (standard for genuine issue of material fact)
- EMC Mortg. Corp. v. Patella, 279 A.D.2d 604 (App. Div. 2001) (upon acceleration, statute runs on entire mortgage debt)
- Pidwell v. Duvall, 28 A.D.3d 829 (App. Div. 2006) (distinguishing notices that merely warn of a possible future acceleration)
- Goldman Sachs Mtge. Co. v. Mares, 135 A.D.3d 1121 (App. Div. 2016) (notice stating that lender "may" accelerate held insufficient for clear and unequivocal acceleration)
- Colonie Block & Supply Co. v. D. H. Overmyer Co., 35 A.D.2d 897 (App. Div. 1970) (notice advising acceleration unless cured constituted effective acceleration after cure period)
- Lavin v. Elmakiss, 302 A.D.2d 638 (App. Div. 2003) (commencement of action or demand can effect acceleration)
- Petito v. Piffath, 85 N.Y.2d 1 (N.Y. 1994) (conditional settlement terms do not renew statute under GOL § 17-101)
- Clark v. Daby, 300 A.D.2d 732 (App. Div. 2002) (payments made to protect lender’s interest, incidental benefit to borrower, do not support unjust-enrichment recovery)