Bank of New York Mellon Trust Company, N.A. v Burns
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Attorneys and Parties
Brief Summary
Mortgage foreclosure and statute of limitations, specifically whether a pre-foreclosure default notice accelerated the mortgage debt and whether the later action was time-barred.
The Supreme Court granted the defendants leave to renew based on the Foreclosure Abuse Prevention Act (FAPA), held that the lender's purported de-acceleration was ineffective, and concluded that the foreclosure action was untimely.
The Appellate Division reversed the order granting renewal, denying the plaintiff summary judgment and an order of reference, and granting the defendants summary judgment dismissing the amended complaint. It reinstated the July 26, 2018 order that had granted the plaintiff's motion and denied the defendants' cross-motion.
The July 31, 2010 default notice did not actually accelerate the debt; it only stated that acceleration would occur in the future if the default was not cured. The debt was accelerated only when the first foreclosure action was commenced on December 12, 2012. Because this action was filed on June 29, 2017, it was brought within the six-year limitations period.
Background
In 2007, Edmund J. Burns, Jr. executed a $1 million note in favor of JPMorgan Chase Bank, N.A., secured by a mortgage on Westchester County property signed by Edmund J. Burns, Jr. and Misti Burns. On July 31, 2010, Chase Home Finance, LLC sent a default notice stating that if the default was not cured within 32 days, the loan would be accelerated and foreclosure proceedings would begin. On December 12, 2012, the plaintiff commenced a first foreclosure action and elected in the complaint to call due the entire mortgage debt. That action was later dismissed against the defendants under CPLR 3216 [rule permitting dismissal for failure to prosecute]. In April 2016, Select Portfolio Servicing, Inc. sent a letter purporting to de-accelerate the debt. The plaintiff then commenced this foreclosure action on June 29, 2017, and the defendants asserted, among other defenses, that it was time-barred.
Lower Court Decision
In the July 26, 2018 order, the Supreme Court granted the plaintiff summary judgment on the amended complaint insofar as asserted against the defendants, struck their answer, and issued an order of reference, while denying the defendants' cross-motion for summary judgment dismissing the complaint. In 2023, after the enactment of the Foreclosure Abuse Prevention Act (FAPA), the defendants moved for leave to renew. The Supreme Court granted renewal and, upon renewal, vacated the earlier relief in favor of the plaintiff, denied the plaintiff's motion, and granted the defendants summary judgment dismissing the amended complaint as untimely.
Appellate Division Reversal
The Appellate Division held that the 2010 default notice was not an acceleration because it merely expressed a future intent to accelerate if the default was not cured. Actual acceleration occurred only when the first foreclosure action was filed on December 12, 2012, and the complaint demanded the full amount due. Since the present action was commenced on June 29, 2017, before the limitations period expired on December 12, 2018, it was timely. The court therefore reversed the 2023 order insofar as appealed from, denied renewal, and reinstated the July 26, 2018 order.
Legal Significance
The decision reinforces that a default notice warning that a loan will be accelerated if a borrower fails to cure is not itself an acceleration. In mortgage foreclosure cases, the statute of limitations runs from an actual, clear acceleration, such as the filing of a foreclosure complaint demanding the full balance. Where no earlier acceleration occurred, arguments about the effectiveness of a later de-acceleration under the Foreclosure Abuse Prevention Act (FAPA) do not make the action untimely.
A lender's conditional warning of future acceleration does not start the foreclosure statute of limitations; only an actual acceleration does. Because the first real acceleration occurred in the 2012 foreclosure action, the 2017 foreclosure action was timely.