Genovese v Nationstar Mtge. LLCGenovese v Nationstar Mtge. LLC
First Department, December 19, 2023
APPEARANCES OF COUNSEL
Padernacht Law, P.C., Bronx (Daniel A. Padernacht of counsel), for appellant.
Nelson Mullins Riley & Scarborough LLP, New York City (Alan F. Kaufman and Lisa A. Herbert of counsel), for respondent.
Higgitt, J.
On March 13, 2006, plaintiff‘s decedent executed a reverse mortgage in favor of Wells Fargo Bank encumbering his single-family home in the Bronx. The reverse mortgage, which was
On May 14, 2009, Wells Fargo commenced an action to foreclose the mortgage; the action was commenced against the decedent‘s heirs. At the time the action was commenced, no fiduciary had been appointed to represent the decedent‘s estate. Paragraphs (7) and (10) of the foreclosure action complaint expressly asserted that Wells Fargo had accelerated the debt secured by the mortgage.1
On December 2, 2009—almost seven months after Wells Fargo commenced the foreclosure action—co-executors of the decedent‘s estate were appointed by the Surrogate‘s Court of Bronx County.
Notwithstanding that the action was commenced in the spring of 2009, Wells Fargo did not secure an order of reference until September 15, 2015. Seven months later, Wells Fargo obtained a judgment of foreclosure and sale. The judgment of foreclosure and sale was vacated, however, by an April 7, 2017 order of Supreme Court (Wells Fargo Bank, NA v Dreyfuss, 2017 NY Slip Op 33555[U] [Sup Ct, Bronx County 2017, Kenneth L. Thompson, Jr., J.]) on the ground that the court lacked personal jurisdiction over the defendants—the decedent‘s heirs. Supreme Court found that it lacked jurisdiction over the defendants because “[a] plaintiff is unable to commence an action during the period between the death of a potential defendant and the appointment of a representative of the estate” (id. at *2, quoting Laurenti v Teatom, 210 AD2d 300, 301 [2d Dept 1994]), and no representative had been appointed for the decedent‘s estate at the time the foreclosure action was commenced. The court did not mention the subject of the acceleration of the mortgage debt. In addition to vacating the judgment
On September 25, 2017, Wells Fargo assigned the mortgage to defendant Nationstar Mortgage LLC.
Five years after the April 7, 2017 order vacating the judgment of foreclosure and sale and dismissal of the mortgage foreclosure action (and approximately 4 1/2 years after the assignment of the mortgage to Nationstar), plaintiff, one of the two individuals named as co-executors of the decedent‘s estate, commenced this
Defendant moved to dismiss the
Supreme Court granted defendant‘s motion and dismissed the
After Supreme Court issued its order dismissing the
“The legislature [found] that there is an ongoing problem with abuses of the judicial foreclosure process and lenders’ attempts to manipulate statutes of limitations; that the problem has been exacerbated by recent court decisions which, contrary to the intent of the legislature, have given mortgage lenders and loan servicers opportunities to avoid strict compliance with remedial statutes and manipulate statutes of limitation[s] to their advantage; and that the purpose of [FAPA] is to clarify the meaning of existing statutes, and to rectify these erroneous judicial interpretations thereof” (Assembly Mem in Support, Bill Jacket, L 2022, ch 821 at 8).
FAPA‘s aim:
“to thwart and eliminate abusive and unlawful litigation tactics that have been adopted and pursued in mortgage foreclosure actions to manipulate the law and judiciary to yield to expediency and the convenience of mortgage banking and servicing institutions at the expense of the finality and repose that statutes of limitations are meant to ensure” (id.; see also Senate Introducer‘s Mem in Support of 2022 NY Senate Bill S5473D at 1).
“a defendant shall be estopped from asserting that the period allowed by the applicable statute of limitation for the commencement of an action upon the instrument has not expired because the instrument was not validly accelerated prior to, or by way of commencement of a prior action, unless the prior action was dismissed based on an expressed judicial determination, made upon a timely interposed defense, that the instrument was not validly accelerated.”
According to Senator Sanders’ Introducer‘s Memorandum in support of FAPA, the addition of paragraph (b) would
“(1) clarify and codify the applicable principles of estoppel, insofar as all acceleration events, whether occurring prior to or by way of commencement of an action, are presumptively valid, unless a prior action was dismissed upon a timely interposed defense, asserted in a defendant‘s motion or application, based on an express judicial determination that no valid election to accelerate the instrument occurred prior to or by way of the commencement of that action; and (2) reflect the Legislature‘s recognition of the inherent difficulties defendants encounter in establishing a valid statute of limitations defense which, as per recent case law, may now depend on information and documents that are generally not in their possession and may otherwise be unavailable due to the passage of time” (Senate Introducer‘s Mem in Support of 2022 NY Senate Bill S5473D at 14-15 [citations omitted]).
FAPA was signed by the Governor on December 30, 2022, and took “effect immediately,” applying “to all actions commenced on an instrument described under [
Plaintiff also argues that defendant‘s predecessor‘s filing of the foreclosure complaint containing representations that the debt secured by the mortgage had been accelerated evidenced that the debt had in fact been accelerated, and that Supreme Court‘s finding that the foreclosure action was a nullity did not vitiate or otherwise disturb the predecessor‘s election to accelerate the debt.
Defendant contends that the mortgage foreclosure action was a nullity, the complaint therein could not validly accelerate the debt, and therefore the statute of limitations on a cause of action to foreclose on the mortgage did not begin to run. With respect to FAPA, defendant does not object to plaintiff raising the Act for the first time on appeal; rather, defendant addresses plaintiff‘s FAPA arguments on their merits.3 Defendant maintains that FAPA does not apply here because there was no pending action between the parties at the time the Act took effect. In any event, says defendant, FAPA does not apply to the parties’ controversy because it should not be given retroactive effect; defendant argues that FAPA, based on its plain terms and legislative history, should apply prospectively only. Lastly, defendant raises constitutional points: that retroactive application of FAPA to the parties’ controversy would impair or destroy vested rights enjoyed by defendant (i.e., rights relating to the mortgage, including the right to foreclose on it), and that
If defendant is estopped under
[1] Starting with “the language itself” of the relevant section of FAPA (Brothers v Florence, 95 NY2d at 299 [internal quotation marks omitted]), the Act took “effect immediately,” applying “to all actions commenced on an instrument described under [
Moreover, FAPA is remedial in nature (see Assembly Mem in Support, Bill Jacket, L 2022, ch 821 at 8-9; Senate Introducer‘s Mem in Support of 2022 NY Senate Bill S5473D at 1, 3-4; NY Assembly Debate on 2022 Assembly Bill A7737B, Mar. 23, 2022 at 9), and the “take-effect-immediately” language and the statements in the legislative memoranda in support of FAPA evince a sense of urgency (see Matter of Gleason, 96 NY2d at 122; Brothers v Florence, 95 NY2d at 299). Additionally, FAPA was designed, in part, to rewrite unintended judicial interpretations, and to reaffirm legislative judgment about what certain laws relating to the application of the statute of limitations to mortgage foreclosure actions should be (see Assembly Mem in Support, Bill Jacket, L 2022, ch 821 at 8-9; Senate Introducer‘s Mem in Support of 2022 NY Senate Bill S5473D at 1, 3-4). Ultimately, the Legislature‘s goal, expressed in the language of FAPA and its legislative history, was to see FAPA applied retroactively.
We cannot consider defendant‘s constitutional challenges to the retroactive application of FAPA under the Contract and Due Process Clauses of the Federal Constitution because, as plaintiff notes in her reply brief, defendant has not notified the Attorney General of those challenges (see
Having concluded that FAPA applies retroactively, we must next consider whether defendant is estopped under
Because we conclude that defendant is estopped under
Accordingly, the order of the Supreme Court, Bronx County (Kenneth L. Thompson, Jr., J.), entered November 4, 2022,
Kern, J.P., Moulton, Mendez and O‘Neill Levy, JJ., concur.
Order, Supreme Court, Bronx County, entered November 4, 2022, reversed, on the law, without costs, the motion denied and the complaint reinstated.
Notes
“[w]here the period allowed by the applicable statute of limitation for the commencement of an action to foreclose a mortgage . . . has expired, any person having an estate or interest in the real property subject to such encumbrance may maintain an action against any other person or persons . . . to secure the cancellation and discharge of record of such encumbrance, and to adjudge the estate or interest of the plaintiff in such real property to be free therefrom. . . . In any action brought under this section it shall be immaterial whether the debt upon which the mortgage or lien was based has, or has not, been paid; and also whether the mortgage in question was, or was not, given to secure a part of the purchase price.”