Freedom Mtge. Corp. v Engel

Freedom Mtge. Corp. v Engel

Opinion

 [**917]   [***547]  [*19]   DiFIORE, Chief Judge:

These appeals—each turning on the timeliness of a mortgage foreclosure claim—

involve the intersection of two areas of law where the need for clarity [****2]  and consistency are at their zenith: contracts affecting real property ownership and the application of the statute of limitations. In Vargas v Deutsche Bank Natl. Trust Co. and Wells Fargo Bank, N.A. v Ferrato, the primary issue is when the maturity of the debt was accelerated, commencing the six-year statute of limitations period. Applying the long-standing rule derived from Albertina Realty Co. v Rosbro Realty Corp. (258 NY 472, 180 N.E. 176 [1932]) that a noteholder must effect an "unequivocal overt act" to accomplish such a substantial change in the parties' contractual relationship, we reject the argument in Vargas that the default letter in question accelerated the debt, and similarly conclude in Wells Fargo that two complaints in prior discontinued foreclosure actions that each failed to reference the pertinent modified loan likewise were not sufficient to constitute a valid acceleration. The remaining cases turn on whether the noteholder's voluntary discontinuance of a prior foreclosure action revoked acceleration of the debt, reinstating the borrower's contractual right to repay the loan over time in installments. ] Adopting a clear rule that will be easily understood by the parties and can be consistently applied by the courts, we hold that where [****3]  the maturity of the debt has been validly accelerated by commencement of a foreclosure action, the noteholder's voluntary withdrawal of that action revokes the election to accelerate, absent the noteholder's contemporaneous statement to the contrary. These conclusions compel a reversal of the Appellate Division order in each case.

] The parties do not dispute that under CPLR 213 (4), a mortgage foreclosure claim is governed by a six-year statute of limitations (see Lubonty v U.S. Bank N. A., 34 NY3d 250, 261, 116 N.Y.S.3d 642, 139 N.E.3d 1222 [*20]  [2019])—in each case, the timeliness dispute turns on whether or when the noteholders exercised certain rights under the relevant contracts, impacting when each claim accrued and whether the limitations period expired, barring the noteholders' foreclosure claims. Because these cases involve the operation of the statute of limitations, we begin with some general principles. ] We have repeatedly recognized the important objectives of certainty and predictability served by our statutes of limitations and endorsed by our principles of contract law, particularly where the bargain struck between the parties involves real property (see ACE Sec. Corp., Home Equity Loan Trust, Series 2006-SL2 v DB Structured Prods., Inc., 25 NY3d 581, 593, 15 N.Y.S.3d 716, 36 N.E.3d 623 [2015]). ] Statutes of limitations advance our society's interest in [****4]  "giving repose to human affairs" (John J. Kassner & Co. v City of New York, 46 NY2d 544, 550, 389 N.E.2d 99, 415 N.Y.S.2d 785 [1979] [citations omitted]). Our rules governing contract interpretation—the principle that agreements should be enforced pursuant to their clear terms—similarly promotes stability and predictability according to the expectations of the parties (see 159 MP Corp. v Redbridge Bedford, LLC, 33 NY3d 353, 358, 104 N.Y.S.3d 1, 128 N.E.3d 128 [2019]). This Court has emphasized  [***548]   [**918]  the need for reliable and objective rules permitting consistent application of the statute of limitations to claims arising from commercial relationships (see ACE Sec. Corp., 25 NY3d at 593-594, citing Ely-Cruikshank Co. v Bank of Montreal, 81 NY2d 399, 403, 615 N.E.2d 985, 599 N.Y.S.2d 501 [1993]; Ajdler v Province of Mendoza, 33 NY3d 120, 130, 99 N.Y.S.3d 749, 123 N.E.3d 233 n 6 [2019]).

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