In 7208 Ct Holdings LLC v. U.S. Bank N.A., the Supreme Court of New York, Kings County denied Plaintiff’s motion for summary judgment in their quiet title action seeking a judgment declaring the note and mortgage at issue unenforceable. The central issue was whether the loan was accelerated by the commencement of a 2008 mortgage foreclosure action which would allow Plaintiff to have the mortgage cancelled and retain sole ownership of the property based upon the expiration of the applicable statute of limitations. The court examined whether CPLR §213(4)(b) should be interpreted based on the plain meaning of the statute or whether Appellate Division precedent should be followed, allowing an exception for the lender to claim the mortgage loan was not validly accelerated by the commencement of a mortgage loan foreclosure where the action was judicially dismissed because the plaintiff lacked standing.
In 2005, owners Baron and Bruny granted a mortgage on their New York property to Lend America. The mortgage was later assigned to U.S. Bank (“Defendant”) through an assignment of mortgage dated July 31, 2008. Defendant commenced a mortgage foreclosure action to accelerate on July 22, 2008 and the Supreme Court, Kings County dismissed the action for lack of standing in November of 2015, since Defendant did not have ownership of the debt until July 31, 2008. Bruny passed away in 2023, and his interest in the Property was inherited by 7208 Ct Holdings LLC (“Plaintiff”). Plaintiff commenced a quiet title action seeking an order that Defendant was barred from claiming an interest in the Property. Plaintiff’s 2026 motion for summary judgment alleged that the mortgage on the property was unenforceable because the Defendant’s 2008 mortgage foreclosure action had accelerated the loan and the six year statute of limitations period in which Defendant could have foreclosed on the mortgage expired in 2014.
Under New York’s Civil Practice Law and Rules §213(4), an action to foreclose on real property must be commenced within a six year statute of limitations period. An acceleration of a mortgage debt occurs when a lender commences an action to foreclose on a note and mortgage and seeks payment of the balance due. Once that debt is accelerated the state of limitations begins to run. New York Real Property Actions and Proceedings Law §1501(4) provides that when that statute of limitations period expires, any person having an interest in the subject real property may seek the cancellation and discharge of the encumbrance on the property.
The issue in this case was the dismissal of Defendant’s original foreclosure action. Under the Foreclosure Abuse Prevention Act (“FAPA”), a lender is estopped from claiming that a prior loan acceleration is invalid to prevent the statute of limitations period from commencing “unless the prior action was dismissed based on an expressed judicial determination, made upon a timely interposed defense, that the instrument was not validly accelerated. (CLPR §213(4)(b)) The Court, however, also highlights the Appellate Division precedent that if a foreclosure action is dismissed because the party lacked standing to bring the action due to a lack of authority to accelerate the debt (like, for instance, not having ownership of the debt) then the statute of limitations period is not triggered and the clock does not begin to run.
The Court concluded that there are two ways, under both the CPLR and the Appellate Division precedent, that lenders may claim a mortgage loan was not validly accelerated: 1) there is a judicial determination that the instrument was not validly accelerated or 2) the action to foreclose was dismissed because the plaintiff lacked standing to commence the foreclosure action.
The Defendant here did not have ownership of the debt until 9 days after mortgage foreclosure action was commenced. Consequently, Defendant did not have standing to bring the suit due to lack of authority over the debt. The Supreme Court concluded that under Appellate Division precedent and the CPLR, Plaintiff was not entitled to bring the quiet title action because Defendant had no authority to bring the original foreclosure suit and, therefore, the six year statute of limitations period had not run.
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