In a highly contested foreclosure action, Adam Leitman Bailey, P.C. was retained to step in as counsel for the new purchaser of the note and mortgage being foreclosed.
The record owner Defendant moved to dismiss the action arguing that the loan was time barred by the six-year statute of limitations due to a prior action commenced in 2009 for the foreclosure of the same loan.
In opposition, Adam Leitman Bailey, P.C. pulled the 2009 foreclosure action file to investigate. The investigation revealed that the Plaintiff in the 2009 action lacked the standing needed to commence it. In order to prove that the 2009 Plaintiff lacked standing, however, Adam Leitman Bailey, P.C. needed to present proof in the form of business records showing that the prior Plaintiff did not have possession of the note when it commenced the 2009 action.
Adam Leitman Bailey, P.C.’s foreclosure department head, Jackie Halpern Weinstein, was able to successfully obtain an affidavit from the prior Plaintiff that included business records demonstrating that it did not have physical possession of the note until a time after the 2009 action was actually commenced.
With these proofs in support, Adam Leitman Bailey, P.C. then argued that the Second Department consistently holds that “an acceleration of a mortgaged debt, by either written notice or the commencement of an action, is only valid if the party making the acceleration had standing at that time to do so”, and so the prior action here did not start the statute of limitations running. Mejias v. Wells Fargo N.A., 186 A.D.3d 472, 474–75 (2d Dept. 2020); see also U.S. Bank Nat’lAss’n v. Gordon, 158 A.D.3d 832, 836 (2d Dept. 2018).
The Court agreed with Adam Leitman Bailey, P.C. and denied the Defendant’s motion to dismiss, determining that, based on the evidence, the prior Plaintiff did not have physical possession of the note prior to the commencement of the prior action, and, therefore, lacked standing to accelerate the loan.