District Judge in NY Knocks down Attempt to Avoid Statute of Limitations

Apr 3, 2017

Somewhere along the line, people are going to start asking why “the banks” wait so long and they will come up with the answer: that “the banks” make more money by waiting.

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THIS ARTICLE IS NOT A LEGAL OPINION UPON WHICH YOU CAN RELY IN ANY INDIVIDUAL CASE. HIRE A LAWYER.

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see Costa v. Deutsche Bank 2017 03 29

Ten years have expired since the alleged “default” occurred. Without any other action the maintenance of the property has been paid by somebody through the conduit of an alleged servicer probably using investor funds without investors knowing anything about it. Now suddenly someone, actually ANYONE, wants a judgment of foreclosure. They want a judgment for “unjust enrichment” as if that wasn’t rubbing salt in the wound of their incredibly wrongful foreclosure in the first instance.

In Florida there was a time that the statute of limitations would have barred the subsequent action for foreclosure or even unjust enrichment. With the Bartram decision and the decision of the Supreme Court of Florida to deny rehearing, it is law that pretender lenders and pretender servicers and pretender trustees can keep coming back to court until they win. BUT in New York, things are very different.

The question is whether the statute of limitations applies. It does and it has run according to NY Law. I would add the unanswered questions of laches and statute of repose. Note that the case was already dismissed once for lack of prosecution. In this opinion by Federal District Judge Katherine Polk Failla, reason prevails. Homeowners Motion for Summary Judgment is granted and case closed.

There is another piece that could cut multiple ways without the Judge realizing what door she was opening. Whereas “trial payments” actually form a new contract entitling the homeowner to the benefits of what as promised in a misleading way. We have previously outlined the elements of modification fraud. But in this case the Judge takes an alternate view that the “trial Payments” were a much more limited contract — namely making three payments in exchange for mere consideration of modification. This has been robustly repudiated in other courts and should have been left out of the opinion. The Judge was using it to declare that those payments did not renew the statute of limitations:

Just a few months ago in United States Bank National Association v. Martinez, the Kings County Supreme Court addressed whether a borrower’s payments during the HAMP Trial Period renewed the statute of limitations under § 17-101. See 2016 WL 7973961, at *16-17 (Table) (Sup. Ct. Kings Cty. 2016). Relying on Petito and Sichol, among other New York precedents, the court held that “[the borrower’s] execution of the 2009 HAMP Trial was not an acknowledgment of the debt sufficient to toll and renew the Statute of Limitations [under] § 17-101.” Id. at *17. The court reasoned:
The 2009 HAMP Trial does not qualify as an acknowledgment of an existing debt, pursuant to GOL § 17-101, because the 2009 HAMP Trial does not contain [the borrower’s] express acknowledgment of his indebtedness under the … Mortgage and Note [n]or [the borrower’] express promise to pay any of the outstanding debt. Instead, [the borrower] made a conditional promise to make three payments … during the three-month 2009 HAMP Trial period during which [the lender] promised to review [the borrower’s] documented income to determine whether [he] qualified for a final HAMP modification.
Id.; see id. at *16 (“[A] HAMP modification trial is not an agreement for the binding obligations of the parties going forward because it is merely a trial arrangement.” (internal quotation marks omitted) (quoting Meyers, 966 N.Y.S.2d at 116)).

Appeal is possible but probably unlikely. The prospect of a negative opinion from an appellate court is far more dangerous than the opinion of one judge, even if they are a Federal Judge.

There are presumptions, assumptions and other issues with this opinion. It is not the end of this fight but it lays out convincingly why there should be further action on the particular debt that was the subject of the action. The homeowner’s essentially end up with the mostly mythological “free house.”

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The Court finds that the unique facts of this case are governed by the
Third Department’s reasoning and holding in Clark: Defendants took a calculated risk in continuing to pay the Carrying Costs in order to maintain the Property following Plaintiffs’ December 2007 default.

The Third Department — relying on the principle that “the mere fact that the plaintiff’s activities bestowed a benefit on the defendant is insufficient” and that, instead, the plaintiff’s “services [must be] performed for the defendant resulting in [the latter’s] unjust enrichment” — upheld the summary-judgment dismissal of the lenders’ unjust-enrichment claim. Clark, 751 N.Y.S.2d at 623 (emphasis in original) (internal citations omitted). The court recognized that there was “no question” that the lenders’ tax payment “worked to [the borrower’s] benefit by relieving him of that burden.” Id. at 624. Nevertheless, the court found that it was equally clear that plaintiffs operated under no mistake of fact or law but, rather, their sole motivation in making the payment was to protect their own interests.

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