FILED: QUEENS COUNTY CLERK 03/10/ :08 PM INDEX NO /2015 NYSCEF DOC. NO. 75 RECEIVED NYSCEF: 03/10/2017

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1 FILED QUEENS COUNTY CLERK 0308 PM INDEX NO /2015 NYSCEF DOC. NO. 75 RECEIVED NYSCEF SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF QUEENS X DEUTSCHE BANK NATIONAL TRUST COMPANY, AS TRUSTEE UNDER THE POOLING AND SERVICING AGREEMENT RELATED TO IMPAC SECURED ASSETS CORP., MORTGAGE PASS- THROUGH CERTIFICATES, SERIES , - against Plaintiff, FISHEL MOTZEN, NEW YORK CITY PARKING VIOLATIONS BUREAU, THE CITY OF NEW YORK, et al, JOHN DOE#1 to JOHN DOE #10, the last 10 names being fictitious and unknown to plaintiff, the persons or parties intended being the persons or parties, if any, having or claiming an interest in or lien upon the mortgaged premises described in the verified complaint, Index No /2015 NOTICE OF ENTRY Motion Sequence 1 Defendants. X PLEASE TAKE NOTICE, that the Short Form Order dated February 16, 2017 (Hon. Marguerite A. Grays, J.S.C.), denying Defendant Fishel Motzen s Motion for summary judgment and granting, in part, Plaintiff s cross-motion, a true copy of which is annexed hereto, was duly entered in the Office of the Clerk of the Supreme Court, Queens County, on March 8, Dated New York, New York March 8, 2017 BLANK ROME LLP By_ /s/ Sholom Wohlgelernter Sholom Wohlgelernter, Esq. Jill E. Allward, Esq. Attorneys for Plaintiff 405 Lexington Avenue New York, New York (212) / v.1 1 of 8

2 FILED QUEENS COUNTY CLERK 03/08/ PM INDEX NO /2015 NYSCEF DOC. NO RECEIVED NYSCEF 03/08/2017 Short Form Order NEW YORK SUPREME COURT - QUEENS COUNTY Present HONORABLE MARGUERITE A. GRAYS Justice IAS PART 4 DEUTSCHE BANK NATIONAL TRUST COMPANY, AS TRUSTEE UNDER THE POOLING AND SERVICING AGREEMENT RELATING TO IMPAC SECURITIES ASSETS CORP., MORTGAGE PASS-THROUGH CERTIFICATES, SERIES , Plaintiff(s) -against- FISHEL MOTZEN NEW YORK CITY PARKING VIOLATIONS BUREAU, THE CITY OF NEW YORK "JOHN DOE #1" to "JOHN DOE # 10". Defendant(s) Index Number / 2015 Motion Date November 30, 2016 Motion Ca. No. 70 Motion Seq. No. 2 r MEP MAR Counn CLERK QUEENS COUNTY The following papers numbered 1-8 read on this motion by Fishel Motzen pursuant to CPLR 3212 for (1) summary judgment dismissing the complaint insofar as asserted against him based upon the expiration of the statute of limitations, (2) summary judgment in favor of defendant Fishel Motzen and against plaintiff on the issue of liability with respect to first and second counterclaims interposed by defendant Motzen and a hearing on the assessment of damages, and (3) summary judgment against plaintiff with respect to defendant Motzen's third counterclaim pursuant to RPAPL 1501(4); and this cross-motion by plaintiff pursuant to CPLR 1003 and 3025 for leave to serve a supplemental summons and amended complaint, as proposed, to add Chabad of Flushing, Inc. (Chabad) as a party defendant and thereupon to assert causes of action against Chabad for foreclosure, unjust enrichment and imposition of an equitable mortgage against the subject property, and to assert an additional cause of action against defendant Motzen for unjust enrichment. Papers Numbered Notice of Motion - Affidavits - Exhibits 1-4 Answering Affidavits - Exhibits 5 Notice of Cross Motion - Affidavits - Exhibits 6 Reply Affidavits of 78

3 FILED QUEENS COUNTY CLERK 03/08/ PM INDEX NO /2015 NYSCEF DOC. NO RECEIVED NYSCEF 03/08/2017 Plaintiff Deutsche Bank National Trust Co., as trustee under a pooling and servicing agreement related to IMPAC Secured Assets Corp., Mortgage Pass-Through Certificates, Series (plaintiff Trustee), commenced this action on April 24, 2015 seeking foreclosure of a mortgage given by defendant Fishel Motzen on the real property known as th Street, Flushing, New York to secure payment of a 30-year note, evidencing a loan, in the original principal amount of $660, plus interest, from IMPAC Funding Corp. d/b/a IMPAC Lending Group (IMPAC). In its complaint, plaintiff Trustee alleges that it is the holder of the note and owner of the mortgage. Plaintiff Trustee additionally alleges that defendant Motzen defaulted under the note and mortgage by failing to pay the monthly installment payment due on April 1, 2007, and as a consequence, plaintiff elects to accelerate the mortgage debt. In the complaint's prayer for relief, plaintiff Trustee also seeks to adjudge defendant Motzen to be liable for any deficiency remaining after the foreclosure sale of the mortgaged premises. Defendant Motzen served an answer denying certain allegations of the complaint, asserting various affirmative defenses, including the expiration of the statute of limitations, and interposing three counterclaims. Defendant Motzen seeks a judgment awarding damages based upon alleged violation of the federal Fair Debt Collection Practices Act (see 15USC 1692 et seq.)(fdcpa) and General Business Law 349, declaring the subject mortgage to be invalid and to cancel and discharge the mortgage on the grounds that its enforcement is time-barred under the statute of limitations (RPAPL 1501[4]), and enjoining plaintiff Trustee from taking any further action to enforce the subject mortgage. Plaintiff Trustee served a reply, and asserted various affirmative defenses. On August 13, 2007, a foreclosure action entitled Deutsche Bank Nat Trust Co. v Motzen (Supreme Court, Queens County, Index No /2007) (the Deutsche action) was commenced by Deutsche Bank National Trust Co. (Deutsche) against Fishel Motzen based upon the same claimed default in payment of the mortgage installment due on April 1,2007 under the subject mortgage as is alleged in this action. Deutsche moved for leave to voluntary discontinue the Deutsche action (Index No /2007) (CPLR 3217[b]), and to cancel the notice of pendency. By order dated August 23, 2012, that motion by Deutsche was granted without opposition. Defendant Motzen moves (1) for summary judgment dismissing the complaint insofar as asserted against him based upon the expiration of the statute of limitations, (2) for summary judgment in his favor on the issue of liability with respect to first and second counterclaims interposed by him and a hearing on the assessment of damages, and (3) for summary judgment against plaintiff with respect to his third counterclaim pursuant to RPAPL 1501(4). Plaintiff Trustee opposes the motion and cross-moves for leave to serve a supplemental summons and amended complaint, as proposed, to add Chabad as a party defendant and thereupon to assert causes of action against Chabad for foreclosure, unjust enrichment and imposition of an equitable mortgage against the subject property, and to assert an additional cause of action against defendant Motzen for unjust enrichment. Plaintiff Trustee asserts that defendant Chabad is a necessary party defendant because Fishel Motzen conveyed the subject property to Chabad by deed dated December 17, The remaining parties herein have not appeared in relation to the motion or cross-motion of 78

4 FILED QUEENS COUNTY CLERK 03/08/ PM INDEX NO /2015 NYSCEF DOC. NO RECEIVED NYSCEF 03/08/2017 It is well established that the proponent of a summary judgment motion "must make a prima facie showing of entitlement to judgment as a matter of law, tendering sufficient evidence to demonstrate the absence of any material issues of fact" (Alvarez v Prospect Hosp., 68 NY2d 320, 324 [1986]; Zuckerman v City of New York, 49 NY2d 557 [1980]). An action to foreclose a mortgage is governed by a six-year statute of limitations (CPLR 213[4]). With respect to a mortgage payable in installments, separate causes of action accrue for each installment that is not paid and the statute of limitations begins to run on the date each installment becomes due (Wells Fargo Bank, NA. v Cohen, 80 AD3d 753 [2010]; Loiacono v Goldberg, 240 AD2d 476 [1997]). Once a mortgage debt is accelerated, however, the entire amount is due and the statute of limitations begins to run on the entire debt (Wells Fargo Bank, NA. v Burke, 94 AD3d 980 [2012]; EMC Mtge. Corp. v Patella, 279 AD2d 604 [2001]). Where, as here, the acceleration of the debt is made optional to the holder of the note and mortgage, the holder's exercise of the election to take advantage of the acceleration provision must be clear, unequivocal and overt for the provision to be operational (see Wells Fargo v Burke, 94 AD3d at ). Furthermore, the borrower must have notice of the election (see id. at 983; 446 West 44th St. v Riverland Holding Corp., 267 App Div 135, 137 [1943]). A debt may be accelerated by a demand, or commencement of an action in which the election is within the body of the complaint (see EMC Mtge. Corp. v Smith, 18 AD3d 602, 603 [2005]; Clayton Nail v Guldi, 307 AD2d 982, 982 [2003]; EMC Mtge. Corp. v Patella, 279 AD2d 604; Logue v Young, 94 AD2d 827 [1983]). A lender, however, may revoke its election to accelerate all sums due under an optional acceleration clause in a mortgage provided that there is no change in borrower's position in reliance thereon. This revocation must be done by an affirmative act occurring within the statute of limitations period (EMC Mtge. Corp. v Patella, 279 AD2d at 606). Defendant Fishel Motzen asserts that the six-year statute of limitations (see CPLR 213[4]) began to run on August 13, 2007, when Deutsche commenced the Deutsche action, electing to accelerate the mortgage debt, and that due to the passage of more than six years from such acceleration, the present action is time-barred. In support of his motion, defendant Motzen offers a copy of the complaint in the Deutsche action (Index No /2007), wherein Deutsche claimed to be the holder of the subject mortgage, and purportedly elected to accelerate the balance due under the mortgage. Based upon this showing, defendant Motzen has established his initial burden of demonstrating, prima facie, that this action is time-barred (see U.S. Bank NA. v Martin, 144 AD3d 891, 892 [2016]; Lessoff v 26 Ct. St Assoc., LLC, 58 AD3d 610 [2009]). The burden shifts to plaintiff Trustee to present evidentiary facts establishing that the action is timely, or to raise a triable issue of fact as to whether the action is timely (see U.S. Bank NA. v Martin, 144 AD3d 891, 892 [2016]). Plaintiff Trustee contends that the commencement of the Deutsche action was ineffective to constitute a valid exercise of the option to accelerate the debt because Deutsche lacked the authority to accelerate the debt or to sue to foreclose. Plaintiff Trustee alternatively contends that to the extent 3 34 of 78

5 FILED QUEENS COUNTY CLERK 03/08/ PM INDEX NO /2015 NYSCEF DOC. NO RECEIVED NYSCEF 03/08/2017 Deutsche had the authority to sue to foreclose, Deutsche revoked its election to accelerate the mortgage debt by voluntarily discontinuing the Deutsche action, which discontinuance was within the six-year statute of limitations. At the outset, the Court notes that the voluntary discontinuance of the Deutsche action (CPLR 3217[b]) did not constitute an affirmative unambiguous act of revocation by Deutsche of its purported acceleration of the debt (see e.g. U.S. Bank N.A. v Martin, 144 AD3d 891[2016]). In addition, when making its motion for leave to discontinue the action, Deutsche did not specify a reason for requesting a discontinuance other than to state it was its wish not to proceed with the action. It made no claim that Motzen had not been served with process (cf. Wells Fargo Bank, NA. v Burke, 94 AD3d 980 [2012]; 21st Mortg. Corp. v Osorio, 51 Misc 3d 1219[A] [Sup Ct, Queens County 2016]). In fact, Kristen B. Burke, Esq., counsel for Deutsche, admitted in her affirmation dated July 24, 2012 that Motzen had agreed to withdraw his motion to dismiss the Deutsche complaint and consented to the court's jurisdiction by so-ordered stipulation dated May 5, An entity purporting to accelerate a mortgagor's mortgage debt in a prior action must have been the holder of the option to accelerate by virtue of its being the holder or assignee of the underlying note and mortgage at the time of commencement (see Wells Fargo Bank, NA. v Burke, 94 AD3d 980 [2d Dept 2012]; EMC Mortgage Corp. v Suarez, 49 AD3d 592 [2d Dept 2008]). Thus, if Deutsche had the authority to accelerate the mortgage debt and sue to foreclosure in the Deutsche action, this action is time-barred. On the other hand, if Deutsche lacked such authority, and plaintiff Trustee prevails in this action, plaintiff Trustee's recovery is limited to only those unpaid installments which accrued within the six-year period immediately preceding its commencement of this action (see generally EMC Mortgage Corp. v Suarez, 49 AD3d 592 [2008]; Lavin v Elmakiss, 302 AD2d 638 [2003]; Loiacono v Goldberg, 240 AD2d 476 [1997]). "A plaintiff establishes its standing in a mortgage foreclosure action by demonstrating that, when the action was commenced, it was either the holder or assignee of the underlying note" (Dyer Trust v. Global World Realty, Inc., 140 AD3d 827, 828 [2016]; see Aurora Loan Servs., LLC v Taylor, 25 NY3d 355, [2015]; Flagstar Bank, FSB v Mendoza, 139 AD3d 898 [2016]). "Either a written assignment of the underlying note or the physical delivery of the note prior to the commencement of the foreclosure action is sufficient to transfer the obligation, and the mortgage passes with the debt as an inseparable incident" (Dyer Trust v Global World Realty, Inc., 140 AD3d at 828 [2016]; see Aurora Loan Servs., LLC v Taylor, 25 NY3d at ). "Holder status is established where the plaintiff possesses a note that, on its face or by allonge, contains an indorsement in blank or bears a special indorsement payable to the order of the plaintiff' (Wells Fargo Bank, NA v Ostiguy, 127 AD3d 1375, 1376 [2015]; see US Bank, N.A. v Zwisler, AD3d, 2017 WL ,2017 NY App Div LEXIS 679 [2017]). Plaintiff Trustee has offered evidentiary facts, raising a triable issue of fact as to whether the action is timely in connection with the unpaid installments which accrued within the six-year period immediately preceding its commencement of this action. The complaint in the Deutsche action alleged that Deutsche was the holder of the mortgage being foreclosed and that such mortgage was 4 45 of 78

6 FILED QUEENS COUNTY CLERK 03/08/ PM INDEX NO /2015 NYSCEF DOC. NO RECEIVED NYSCEF 03/08/2017 ; to be assigned by an assignment to be recorded. At the time of the making of the motion for an order of reference in the Deutsche action, Deutsche presented, among other things, an affirmation dated October 11, 2007 of Michael J. Wrona, Esq., its counsel, and a copy of the note, mortgage and the assignment executed by MERS, as nominee for IMPAC on August 14, To the extent Deutsche relied upon the assignment executed on August 14, 2007 to establish its status as an assignee of the subject mortgage, such assignment, which purports to be effective as of August 6, 2007, constitutes a retroactive assignment. Such retroactive assignment did not confer standing upon Deutsche in the Deutsche action, which was commenced one day prior the execution of the assignment (see Wells Fargo Bank, N.A. v Marchione, 69 AD3d 204 [2009]; see Countrywide Home Loans, Inc. v Gress, 68 AD3d 709 [2009]). To the extent plaintiff Trustee relies upon the affirmation of Mr. Wrona to show that Deutsche lacked authority to accelerate the mortgage debt, such affirmation does not eliminate all issues of fact relative to the issue of whether Deutsche was a holder of the note at the time of the commencement of the Deutsche action. Mr. Wrona states in his affirmation that "[t]he note was not available" when the complaint was filed (in the Deutsche action), but fails to state in what manner the note was unavailable to him at such time, and whether the version of the note which existed at the time of the commencement of the Deutsche action was endorsed in blank or to Deutsche. Although Mr. Wrona references a copy of the note annexed to his affirmation, that copy was not provided to this court. The version of the note annexed to the complaint herein has an undated endorsement by IMPAC to plaintiff Trustee, but bears no other endorsements. That branch of the motion by defendant Motzen pursuant to CPLR 3212 for summary judgment dismissing the complaint insofar as asserted against him on the ground that the action is barred by the statute of limitations is granted to the extent of granting summary judgment dismissing that portion of the complaint in which plaintiff Trustee seeks recovery of unpaid installments which accrued prior to the six-year period immediately preceding commencement of this action, and is otherwise denied because issues of fact exist whether Deutsche had the authority to accelerate the debt or to sue to foreclose at the time of the commencement of the Deutsche action. That branch of the motion by defendant Motzen for summary judgment in his favor and against plaintiff Trustee on the issue of liability with respect to his first and second counterclaims and a hearing on the assessment of damages is denied. The FDCPA does not apply to a creditor, such as plaintiff Trustee, that seeks to enforce a debt owed directly to it (see 15 USC 1692a[6][B]), and defendant Motzen has failed to establish that an exception to that general rule applies here (see Cavalry Portfolio Servs., LLC v Renne, 27 Misc 3d 129[A][2010]). A viable claim under General Business Law 349 is predicated upon allegations that (1) the challenged conduct was consumer-oriented, (2) the conduct or statement was materially misleading, and (3) the consumer sustained damages (see Lum v New Century Mtge. Corp., 19 AD3d 558, 559 [2005]; see Blue Cross & Blue Shield of N.J., Inc. v Philip Morris USA Inc., 3 NY3d 200, 205; Sturman v Chemical Bank, 95 NY2d 24, 29; Gaidon v Guardian Life Ins. Am., 94 NY2d 330, 344; 5 56 of 78

7 FILED QUEENS COUNTY CLERK 03/08/ PM INDEX NO /2015 NYSCEF DOC. NO RECEIVED NYSCEF 03/08/2017 'Emigrant Mortg. Co., Inc. v Fitzpatrick, 95 AD3d 1169 [ 2012]). Defendant Motzen claims plaintiff Trustee violated General Business Law 349 because it misrepresented in the body of the instant complaint that no prior action has been brought to foreclose the mortgage and the mortgage is valid and enforceable. These allegations in the complaint do not amount to conduct that has an impact on the public at large and as such, do not state a cause of action for violation of General Business Law 349. That branch of the motion by defendant Motzen for summary judgment against plaintiff Trustee with respect to defendant Motzen's third counterclaim to discharge the mortgage on the ground its enforcement is time-barred under the statute of limitations (RPAPL 1501[4]) is denied. Under RPAPL 1501(4), "any person having an estate or interest in the real property subject" to a mortgage may maintain an action to cancel and discharge such mortgage where "the period allowed by the applicable statute of limitation[s] for the commencement of an action to foreclose a mortgage... has expired." To maintain a cognizable cause of action under RPAPL Article 15, a plaintiff must describe in his or her complaint the nature of his or her interest in the real property and the source of this interest (see RPAPL 1515[1]). Defendant Motzen admitted in his answer that Chabad was the "current owner" of the property, and has failed to establish prima facie that he has an interest in the subject property within the meaning of RPAPL 1501(4) (see Guccione v Estate of Guccione, 84 AD3d 867 [2011]; Lennard v Chinkpoo Realty Holding Corp., 76 AD3d 1052 [2010]). With respect to the branch of plaintiff Trustee's motion for leave to serve a supplemental summons and amended complaint, as proposed, it is well settled that leave to amend or supplement pleadings "shall be freely given," unless the proposed amendment is palpably insufficient or patently devoid of merit (see CPLR 3025; Fahey v County of Ontario, 44 NY2d 934, 935 [1978]; Holchendler v We Transport, Inc., 292 AD2d 568 [2002]). Moreover, as a general rule, leave to amend should be granted where there is no significant prejudice or surprise to the defendants (see Edenwald Contr. Co. v City of New York, 60 NY2d 957 [1983]; Dal Youn Chung v Farberov, 285 AD2d 524 [2001]). Defendant Motzen concedes that Chabad is the record owner of the subject property, having obtained title to it prior to the bringing of this foreclosure action. Chabad therefore is a necessary party defendant (RPAPL 1311). Defendant Motzen claims he has been prejudiced by the delay by plaintiff Trustee in seeking to join Chabad as a party defendant because he is "now deprive[d]" of the asset he might need to pay off a potential monetary judgment. Such claim is without merit insofar as he transferred title to Chabad in 2009, during the pendency of the Deutsche action. Defendant Motzen additionally raised the failure to join Chabad as a necessary party defendant as an affirmative defense herein and consequently, cannot be surprised that plaintiff Trustee seeks to join Chabad as a party defendant in this action for foreclosure. To the extent plaintiff Trustee proposes to amend the complaint to add a cause of action against defendants Motzen and Chabad for money damages for unjust enrichment, predicated upon the Trustee's payment of advances and other charges in relation to the real property, a plaintiff may not recover in equity under unjust enrichment where there is an enforceable contract governing the 6 67 of 78

8 FILED QUEENS COUNTY CLERK 03/08/ PM INDEX NO /2015 NYSCEF DOC. NO RECEIVED NYSCEF 03/08/2017 ' terms of the transaction (see Metropolitan Switch Bd. Mfg. Co., Inc. v. B & G Elec. Conirs., Div. of B & G Indus., Inc., 96 AD3d 725, 726 [2012]). The subject mortgage authorizes the lender, in the event of the borrower's default under the mortgage, to pay the taxes, insurance premiums and charges to protect its mortgage interest, and such payments become part of the debt owed under the mortgage. Hence, if the statute of limitations defense ultimately fails vis-a-vis the balance of the foreclosure cause of action, and such foreclosure claim ultimately prevails, there can be no recovery of damages for unjust enrichment since the advances shall become part of the mortgage debt. However, inasmuch as the pleading principles enunciated in the CPLR allow for pleading alternative causes of action (CPLR 3014) and alternative or different forms of relief (CPLR 3017), the court shall allow an amendment of the complaint to add the unjust enrichment claim against defendants Motzen and Chabad as an alternative cause of action. The proposed claim for imposition of an equitable mortgage fails to state a cause of action. New York has long recognized that "[a]n equitable mortgage may be constituted by any writing from which the intention so to do may be gathered, and an attempt to make a legal mortgage, which fails for want of some solemnity, is valid inequity,... a specific lien upon land... and that an equitable mortgage thus created, is entitled to a preference over subsequent judgment creditors" (Hamilton Trust Co. v Clemes, 163 NY 423, 428). Moreover, when the transaction is the lending of money, to be secured by a mortgage, but "the mortgage... is so defective or informal as fail in effectuating the purposes of its execution, equity will impress upon the land... a lien in favor of the creditor" (Sprague v Cochran, 144 NY 104, 111]). Plaintiff Trustee makes no allegation that the subject mortgage fails for want of solemnity, or is otherwise defective or informal so to fail to effectuate the purposes of its execution. Under such circumstances, the proposed cause of action for imposition of an equitable mortgage is palpably insufficient. That branch of the cross-motion by plaintiff Trustee for leave to file and serve a supplemental summons and amended complaint as proposed is granted to the extent of granting plaintiff Trustee leave to serve and file a supplemental summons and amended complaint in accordance with this order and reflecting the addition of Chabad as a party defendant, with the appropriate caption, within twenty (20) days of service of a copy of this order with notice of entry, and to file an amended notice of pendency to conform to the amended and supplemental caption of this action, which the Queens County Clerk hereby is directed to accept for filing. Defendants shall have the statutorily-prescribed time to interpose responsive papers. Dated of 78