MTGLQ Investors, L.P. v Walker
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Attorneys and Parties
Brief Summary
Mortgage foreclosure and whether a prior foreclosure action accelerated the debt so that the later action was time-barred under Civil Practice Law and Rules (CPLR) 213(4) [six-year statute of limitations for mortgage foreclosure actions], with the borrower also seeking relief under Real Property Actions and Proceedings Law (RPAPL) 1501(4) [allows a person with an interest in real property to seek cancellation and discharge of a mortgage when the foreclosure limitations period has expired].
The Supreme Court, Queens County, granted the lender summary judgment against Jay Walker and an order of reference, and denied Walker's cross-motion seeking dismissal as untimely and cancellation of the mortgage.
The Appellate Division reversed those rulings, denied the lender's summary judgment and order of reference, and granted Walker summary judgment dismissing the complaint as barred by the statute of limitations and on his RPAPL 1501(4) counterclaim.
The 2010 foreclosure action accelerated the mortgage debt, starting the six-year limitations period. Because the new action was not filed until 2017, it was untimely. Under CPLR 3217(e) [under the Foreclosure Abuse Prevention Act (FAPA), voluntary discontinuance of a foreclosure action does not revive or reset the statute of limitations], BAC's later discontinuance of the 2010 action did not reset the clock.
Background
In October 2006, Jay Walker executed a $306,000 note to Countrywide Home Loans, Inc., secured by a mortgage on property in Jamaica, New York. The mortgage was assigned in March 2010 to BAC Home Loans Servicing. On May 20, 2010, BAC commenced a foreclosure action and elected in the complaint to call due the entire mortgage debt, thereby accelerating the loan. In January 2014, BAC obtained an order discontinuing that action and canceling the notice of pendency. The mortgage was later assigned to MTGLQ Investors, L.P., which then commenced a new foreclosure action on November 10, 2017. Walker answered, asserting among other defenses that the action was time-barred and counterclaimed under RPAPL 1501(4) to cancel and discharge the mortgage of record.
Lower Court Decision
The Supreme Court, Queens County, held in favor of MTGLQ Investors, L.P. on its motion for summary judgment against Walker and for an order of reference. It rejected Walker's statute-of-limitations defense and denied his cross-motion for summary judgment dismissing the complaint and for relief on his RPAPL 1501(4) counterclaim.
Appellate Division Reversal
The Appellate Division, Second Department, reversed insofar as appealed from. It held that BAC's 2010 foreclosure complaint accelerated the debt, causing the six-year limitations period under CPLR 213(4) to begin running in May 2010. Because the present action was commenced in November 2017, more than six years later, it was untimely. The court further held that BAC's voluntary discontinuance of the 2010 action did not reset or revive the limitations period under CPLR 3217(e), as amended by the Foreclosure Abuse Prevention Act (FAPA). The court therefore denied the plaintiff's summary judgment motion and order of reference, and granted Walker summary judgment dismissing the foreclosure claim and on his RPAPL 1501(4) counterclaim to cancel and discharge the mortgage.
Legal Significance
This decision reinforces New York's post-FAPA rule that once a lender accelerates a mortgage debt by filing a foreclosure complaint demanding the full balance, the six-year statute of limitations runs on the entire debt, and a later voluntary discontinuance does not undo that acceleration for limitations purposes. The court also confirmed that FAPA applies retroactively and rejected constitutional challenges to that application, relying on recent Court of Appeals and Appellate Division precedent.
A lender that accelerates a mortgage debt by filing foreclosure cannot avoid the statute of limitations simply by voluntarily discontinuing that case; after six years, the borrower may defeat a later foreclosure action and seek cancellation of the mortgage under RPAPL 1501(4).