Opinion
22 Civ. 4743 (VB) (JCM)
08-29-2023
WINDWARD BORA LLC, Plaintiff, v. JOSHUA LUNGEN, STERLING NATIONAL BANK F/K/A PROVIDENT BANK, Defendant.
REPORT AND RECOMMENDATION
HONORABLE VINCENT L. BRICCETTI, UNITED STATES DISTRICT JUDGE
Plaintiff Windward Bora, LLC (“Plaintiff”) filed this action for foreclosure against Defendants Joshua Lungen and Sterling National Bank on June 7, 2022. (Docket No. 1). Plaintiff moved for summary judgment against Mr. Lungen (“Defendant” or “Mr. Lungen”) pursuant to Rule 56 of the Federal Rules of Civil Procedure on May 19, 2023. (Docket Nos. 44 48). Defendant filed his opposition to the motion on June 16, 2023, (Docket No. 49), and Plaintiff filed its reply on June 24, 2023. (Docket No. 51). For the reasons stated herein, I respectfully recommend that the Court grant Plaintiff's motion for summary judgment.
I. FACTUAL BACKGROUND
The facts relevant to this dispute are straight-forward and largely uncontested.In January 2007, Defendant executed and delivered a consolidated mortgage (the “Mortgage”) to Provident Bank in the amount of $250,000 covering property located at 10 Iverness Drive, New City, NY 10956. (Docket Nos. 1 ¶ 8; 45 ¶¶ 1-2). Simultaneous with the execution of the Mortgage, Mr. Lungen executed and delivered a consolidated and restated note to Provident Bank for the same amount. (Docket No. 1 ¶ 9). The rights under the consolidated mortgage were subsequently assigned on two occasions: first from Sterling National Bank (as successor to Provident Bank) to Kondaur Capital, LLC in December 2021, and then from GITSIT Solutions LLC (formerly known as Kondaur Capital, LLC) to Plaintiff in January 2022. (Id. ¶ 10; Ex. D).
In responding to Plaintiff's motion for summary judgment, Defendant failed to follow Local Rule 56.1 of the United States Courts for the Southern and Eastern Districts of New York's requirement that the party “opposing a motion for summary judgment shall include a correspondingly numbered paragraph responding to each numbered paragraph in the statement of the moving party.” Local Civ. R. 56.1(b). Instead, Defendant filed a single paragraph denying “paragraph 3.” (Docket No. 49 at 1). Thus, the remaining paragraphs in Plaintiff's Rule 56.1 Statement “will be deemed admitted for purposes of the motion.” Local Civ. R. 56.1(c); Gadsden v. Jones Lang Lasalle Americas, Inc., 210 F.Supp.2d 430, 438 (S.D.N.Y. 2002) (“Courts in this circuit have not hesitated to deem admitted the facts in a movant's Local Civil Rule 56.1 Statement that have not been controverted by a Local Civil Rule 56.1 statement from the nonmoving party”) (collecting cases).
According to Plaintiff, Mr. Lungen has not made a monthly payment on the Mortgage since July 20, 2016. (Id. ¶ 13). In response to Mr. Lungen's non-payment, Sterling National Bank filed a foreclosure action in the Supreme Court of the State of New York in Rockland County on July 27, 2016. See Sterling National Bank v. Joshua Lungen, et. al., No. 033038/2016 (N.Y. Sup. Ct., Rockland Cnty. 2016) (the “State Court Action”). The State Court Action was dismissed on January 29, 2019, for lack of personal jurisdiction. (Id. at NYSCEF No. 100) (“Defendant established that the mortgaged premises was not his actual dwelling place or usual place of abode at the time of service of the summons and amended complaint....As such, service upon Defendant's son at the mortgaged premises was not proper service upon Defendant”). Following the State Court Action's dismissal, and the Mortgage's assignment to Plaintiff herein, Plaintiff issued a Default Notice to Mr. Lungen on March 1, 2022, advising him that he was in default and legal action may be taken against him. (Docket Nos. 1 ¶ 14; 45 ¶ 4). On that same day, Plaintiff issued a CFPB Reg. F Validation Notice and a N.Y. Real Prop. Acts. Law § 1304(1) 90-day notice to Mr. Lungen, as required by New York law. (Docket No. 45 ¶ 5). Defendant failed to cure the default; as a result, Plaintiff filed this mortgage foreclosure action on June 7, 2022. (Id.)
NYSCEF refers to the New York State Courts' Electronic Filing system. The Court may take judicial notice of documents filed on this system as they are part of the public record. See Missere v. Gross, 826 F.Supp.2d 542, 553 (S.D.N.Y. 2011) (taking judicial notice of “all documents in the public record, including the decisions of the . . . Supreme Court in the Article 78 proceedings”) (collecting cases).
II. LEGAL STANDARD
Summary judgment is appropriate where “the movant shows that there is no genuine dispute as to any material fact.” Fed.R.Civ.P. 56(a). The moving party has the initial burden of showing the absence of any genuine issue of material fact. See Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). If the moving party meets its burden, “the nonmoving party must come forward with admissible evidence sufficient to raise a genuine issue of fact for trial in order to avoid summary judgment.” Jaramillo v. Weyerhaeuser Co., 536 F.3d 140, 145 (2d Cir. 2008). “An issue of fact is genuine if the evidence is such that a reasonable jury could return a verdict for the nonmoving party.” SCR Joint Venture L.P. v. Warshawsky, 559 F.3d 133, 137 (2d Cir. 2009) (citations and internal quotations omitted). “A fact is material if it might affect the outcome of the suit under the governing law.” Id.
“In determining whether summary judgment is appropriate, this Court will ‘construe the facts in the light most favorable to the non-moving party and must resolve all ambiguities and draw all reasonable inferences against the movant.'” Brod v. Omya, Inc., 653 F.3d 156, 164 (2d Cir. 2011) (quoting Williams v. R.H. Donnelley, Corp., 368 F.3d 123, 126 (2d Cir. 2004)). However, the non-moving party cannot defeat a motion for summary judgment simply by relying on unsupported assertions or conclusory statements, see Goenaga v. March of Dimes Birth Defects Found., 51 F.3d 14, 18 (2d Cir. 1995), and must do more than demonstrate the existence of “some metaphysical doubt as to the material facts,” McClellan v. Smith, 439 F.3d 137, 144 (2d Cir. 2006) (quoting Matsushita Elec. Indus Co. v. Zenith Radio Corp., 475 U.S. 574, 586 (1986)). Rather, to defeat a motion for summary judgment, “the non-moving party must set forth significant, probative evidence on which a reasonable fact-finder could decide in its favor.” Senno v. Elmsford Union Free Sch. Dist., 812 F.Supp.2d 454, 467-68 (S.D.N.Y. 2011) (citing Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 256-57 (1986)).
III. DISCUSSION
Plaintiff has established a prima facie case of foreclosure and Defendant has failed to raise a genuine issue of material fact. Fed.R.Civ.P. 56(a). To foreclose on a mortgage under New York law,the Plaintiff must satisfy three elements: “(1) the proof of the existence of an obligation secured by a mortgage; (2) a default on that obligation by the debtor; and (3) notice to the debtor of that default.” United States v. Paugh, 332 F.Supp.2d 679, 680 (S.D.N.Y. 2004) (citations omitted). “Once the plaintiff/mortgagee establishes a prima facie case of the foreclosure elements, it is entitled to foreclose unless the defendant/mortgagor makes an affirmative showing.” Id. at 681 (citing Nassau Tr. Co. v. Montrose Concrete Prod. Corp., 451 N.Y.S.2d 663 (1982)).
Both Plaintiff and Defendant rely on New York foreclosure law in their briefs, and the documents governing the Mortgage all include a New York choice of law provision. Thus, “New York law governs this dispute.” U.S. Bank, N.A. v. Squadron VCD, LLC, No. 10-CV-5484 (VB), 2011 WL 4582484, at *4 (S.D.N.Y. Oct. 3, 2011).
Here, Defendant does not dispute any of the elements required to prevail in a foreclosure action, namely that: (1) he executed and delivered the Mortgage to Provident Bank to secure a $250,000 consolidated loan; (2) this Mortgage is now held by Plaintiff through a series of validly recorded assignments; (3) he has ceased making the required monthly payments on the Mortgage; and (4) he has been given notice of default. (Docket No. 45 ¶¶ 1-2). Instead, he proffers a single argument in opposition: that Plaintiff's action is time-barred under the applicable six-year statute of limitations, (see N.Y. C.P.L.R. § 213(4)), because “the balance [of the Mortgage] was accelerated as of September 6, 2013, as set forth in paragraph 13 of the complaint [in the State Court Action].” (Docket No. 49 at 1). This argument fails for two reasons.
A. Defendant Failed to Plead a Statute of Limitations Defense in his Answer
Defendant's assertion of the statute of limitations defense is untimely. When Defendant answered the Complaint on July 19, 2022, he only asserted three affirmative defenses: (1) lack of standing; (2) failure to state a cause of action; and (3) failure to satisfy conditions precedent to foreclose on the Mortgage. (Docket No. 9 ¶¶ 3-14). Defendant did not plead a statute of limitations defense. Nevertheless, he argues that the Court should consider it now since Plaintiff had a chance to respond in its reply brief, and Plaintiff suffered no prejudice. (Docket No. 49 at 4-5) (collecting cases).Although failure to raise an affirmative defense until moving for summary judgment “ordinarily results in waiver . . . the law in the Second Circuit is clear that when a defendant raises an affirmative defense, like the statute of limitations, in its summary judgment motion papers that was not asserted in the pleadings, courts may nonetheless consider the argument so long as the plaintiff had an opportunity to respond.” Scott v. City of Mount Vernon, No. 14-CV-4441 (KMK), 2017 WL 1194490, at *24 (S.D.N.Y. Mar. 30, 2017). Here, Plaintiff responded to Defendant's statute of limitations defense in its reply brief, (Docket No. 51 at 6-8), so any prejudice is minimal. Therefore, the Court will address the merits of this defense as if properly asserted in Defendant's Answer.
Defendant did not assert any of these defenses in his brief in opposition to Plaintiff's motion for summary judgment, therefore, they have been waived. Wilmington Tr., Nat'l Ass'n v. Winta Asset Mgmt. LLC, 20-cv-5309 (JGK), 2022 WL 2657166, at *7 (S.D.N.Y. July 8, 2022) (holding that a defendant “waived [its] affirmative defenses by not raising them in opposition to the plaintiff's motion for summary judgment”) (citations omitted); see also Palmieri v. Lynch, 392 F.3d 73, 87 (2d Cir. 2004) (holding that plaintiff waived an argument by not raising it “in his opposition to summary judgment”).
Defendant also seeks to amend his Answer to plead a statute of limitations defense, (Docket No. 51 at 4-5), but since I recommend finding this defense fails on the merits, an amendment to add it would be futile.
B. This Action was Timely Filed Prior to Expiration of the Statute of Limitations
Defendant's statute of limitations defense fails on the merits since it is not supported by the record in this case, the State Court Action, or the law on foreclosure in New York. The complaint in the State Court Action does not state that the Mortgage was accelerated on September 6, 2013, as Defendant claims. (Docket No. 49 at 1). Rather, it states:
The defendant has defaulted in [sic] the payments due under the Consolidation, Modification and Extension Agreement, since November 25, 2013; and as of the date of this complaint, there is due and owing to the plaintiff the principal sum of $251,312.40 plus interest from September 6, 2013 at the rate set forth in the instrument secured by the mortgage. There are late charges and disbursements, which are allowable under the instrument secured by the mortgage.State Court Action, NYSCEF No. 1 ¶ 13 (emphasis in original).Defendant improperly concludes that because this paragraph states that “the principal sum of $251,312.40 plus interest” is due from “September 6, 2013,” this indicates that the Mortgage was accelerated on this date and not on July 27, 2016, as Plaintiff asserts. (see Docket No. 49 at 1; Docket No. 51 at 7). However, Defendant does not point to any evidence substantiating this assertion. Moreover, Defendant has not submitted any proof that he was given notice of Plaintiff's acceleration on that date.
The plaintiff in the State Court Action filed an Amended Complaint on August 10, 2016 (State Court Action, NYSCEF No. 10), but paragraph 13 is identical in both pleadings.
In New York, a mortgagor must be given notice of a mortgagee's intent to accelerate payments on a mortgage. See Wells Fargo Bank, N.A. v. Burke, 943 N.Y.S.2d 540, 542 (2d Dep't 2012) (“the borrower must be provided with notice of the holder's decision to exercise the option to accelerate the maturity of a loan, and such notice must be clear and unequivocal”) (citations and internal quotations omitted). Absent notice, there is no acceleration, and the statute of limitations does not begin to run. 1900 Cap. Tr. III v. Guaman, 186 N.Y.S.3d 218, 218 (1st Dep't 2023) (holding that giving “notice of default in accordance with the terms of the mortgage agreement” is a “condition precedent to accelerating the debt”).
Defendant does not point to, nor could the Court identify, any evidence in the record indicating that Plaintiff provided notice of the acceleration of the Mortgage on September 6, 2013. Instead, the notices of default are either silent as to acceleration or merely threaten its possibility. See, e.g., Docket No. 46-3 at 12, 22 (notification from Plaintiff that failure to cure “may result in acceleration of [Defendant's] loan”); State Court Action, NYSCEF No. 5 (default notices to Defendant not mentioning acceleration). Defendant fails to point to any evidence supporting his contention that the operative date for purposes of acceleration was September 6, 2013. See Seivright v. Montefiore Med. Ctr., Hosp. of Albert Einstein Coll. of Med., No. 11 Civ. 8934 (AJN), 2014 WL 896744, at *1 (S.D.N.Y. Mar. 3, 2014) (“a dispute of fact cannot be manufactured by a conclusory denial that does not point to evidence in the record. Thus, to the extent that a party has simply baldly asserted that the evidence submitted by the opposing party is disputed . . . this does not create a dispute of fact”) (citations and internal quotations omitted) (collecting cases).
See also State Court Action, NYSCEF No. 24 at 86-93 (default notices not mentioning acceleration); State Court Action, NYSCEF No. 29 (default notices stating that failure to pay “may” result in acceleration); State Court Action, NYSCEF No. 70 (default notices not mentioning acceleration).
The only evidence Defendant submitted in opposition to Plaintiff's summary judgment motion was an attorney affirmation with conclusory statements about the statute of limitations. (Docket No. 50). This itself is grounds for granting Plaintiff's motion as “[a]ffidavits in opposition to summary judgment must be made on personal knowledge. An attorney affidavit does not meet this standard and is insufficient to defeat a summary judgment motion.” Rohlehr v. Brookdale Univ. Hosp. & Med. Ctr., 390 F.Supp.2d 207, 208 (E.D.N.Y. 2005) (internal quotations omitted); see also Victoria Sales Corp. v. Emery Air Freight, Inc., No. 86-CV-1610 (KMW), 1989 WL 76227, at *7 (S.D.N.Y. July 5, 1989) (same).
Therefore, the earliest date Plaintiff's foreclosure claim could have accrued, based on the evidence here, is July 27, 2016-the date that the State Court Action was filed. Freedom Mortg. Corp. v. Engel, 146 N.Y.S.3d 542, 549 (2021) (“to be valid, an election to accelerate must be made by an ‘unequivocal overt act' that discloses the noteholder's choice, such as the filing of a verified complaint seeking foreclosure and containing a sworn statement that the noteholder is demanding repayment of the entire outstanding debt”) (quoting Albertina Realty Co. v. Rosbro Realty Corp., 258 N.Y. 472, 476 (1932)). Since the State Court Action was filed on July 27, 2016, and this action was filed on June 7, 2022, the applicable six-year statute of limitations has not expired.Accordingly, since there is no dispute that Plaintiff has established a prima facie case of foreclosure, and there is no genuine dispute as to any material fact, I respectfully recommend granting Plaintiff's motion for summary judgment.
Defendant makes much of a new law enacted on December 30, 2022 (N.Y. Foreclosure Abuse Prevention Act, 2022 N.Y. Laws Ch. 821 (McKinney)) amending N.Y. C.P.L.R. § 203(h) to prevent tolling of the statute of limitations on foreclosure actions after commencement of a lawsuit to recover on overdue debt. (Docket No. 49 at 1). However, Plaintiff did not argue that the statute of limitations was tolled, but rather that it began to run upon the filing of the State Court Action. (Docket No. 51 at 7). Thus, the Foreclosure Abuse Prevention Act is of no moment to this lawsuit, which was timely filed.
IV. CONCLUSION
For the foregoing reasons, I conclude and respectfully recommend granting Plaintiff's motion for summary judgment and allowing Plaintiff to foreclose on the property located at 10 Iverness Drive, New City, New York 10956.
V. NOTICE
Pursuant to 28 U.S.C. § 636(b)(1) and Rule 72(b)(2) of the Federal Rules of Civil Procedure, the parties shall have fourteen (14) days from receipt of this Report and Recommendation to serve and file written objections. See Fed.R.Civ.P. 6(a) and (d) (rules for computing time). A party may respond to another party's objections within fourteen (14) days after being served with a copy. See Fed.R.Civ.P. 72(b)(2). Objections and responses to objections, if any, shall be filed with the Clerk of the Court, with extra copies delivered to the chambers of the Honorable Vincent L. Briccetti at the United States District Court, Southern District of New York, 300 Quarropas Street, White Plains, New York, 10601, and to the chambers of the undersigned at the same address.
Requests for extensions of time to file objections must be made to the Honorable Vincent L. Briccetti and not to the undersigned. Failure to file timely objections to this Report and Recommendation will result in a waiver of objections and will preclude later appellate review of any order of judgment that will be rendered. See 28 U.S.C. § 636(b)(1); Fed.R.Civ.P. 6(a), 6(b), 6(d), 72(b); Caidor v. Onondaga Cnty., 517 F.3d 601, 604 (2d Cir. 2008).
RESPECTFULLY SUBMITTED: