Landmark New York Court of Appeals Decision Clarifying Calculation of Statute of Limitations in Mortgage Foreclosure Actions

The New York Court of Appeals reversed four Appellate Division decisions and decided in favor of the mortgagees in a consolidated decision issued on February 18, 2021, ruling, inter alia, that:

• a demand letter which includes language that the debt "will be" accelerated expresses a possible future event and therefore does not constitute an unequivocal overt act which would accelerate the mortgage debt; 
• a defective pleading which incorrectly references only the original terms of a loan – not the operative modification agreement – is insufficient to accelerate the mortgage debt;
• a mortgagee's voluntary discontinuance of a foreclosure action is sufficient to revoke the acceleration created by the filing of that complaint; and
• a mortgagee's motivation for the discontinuance and revocation of the acceleration is irrelevant to the Court's analysis.

Second Circuit Finds HUD Assignees Immune from State Statute of Limitations Claims

The mortgage foreclosure world continues to experience change at a moment's notice. Lenders continue to defend against borrower actions seeking to discharge their mortgages as time-barred, which in turn has led to the development of several defenses supported by the appellate courts. Whether it is lack of standing to accelerate the mortgage debt, revocation, or re-affirmation of the debt, all of these defenses are not as interesting—and powerful—as full immunity from the statute of limitations. In Windward Bora, LLC v. Wilmington Savings Fund Society, FSB, that's exactly what the Second Circuit found, and its decision could have a substantial impact for lenders in New York and elsewhere. More ›

New York Cuts Statute of Limitations for Bringing an Action to Recover Medical Debts From Six to Three Years

On April 3, 2020, New York State Governor Andrew Cuomo signed New York's 2021 Executive Budget into law. Many of Governor Cuomo's and lawmakers' legislative agenda priorities were not included in the budget, due to the COVID-19 pandemic. Notably, Governor Cuomo's call for formal licensing and regulation of the debt collection industry was removed from the final budget. More ›

U.S. Supreme Court Resolves Circuit Split, Applies Occurrence Rule to FDCPA Statute of Limitations

Earlier this year, this blog reported on the Supreme Court's grant of certiorari in Rotkiske v. Klemm to resolve a split in circuits on the Fair Debt Collection Practices Act's (FDCPA) statute of limitations. This week, in an 8:1 opinion delivered by Justice Thomas, the Court concluded that the one-year statute of limitations in the FDCPA begins to run when the violation occurs, not when the violation is discovered. In doing so, they overturned rulings by the Fourth and Ninth Circuit, which had held the FDCPA's statute of limitations was subject to equitable tolling. More ›

New York's Highest Court to Determine Whether Voluntary Discontinuance Revokes Acceleration of Debt

We previously discussed the State of New York's Appellate Division for the Second Judicial Department's holding that a lender's voluntary discontinuance of a judicial foreclosure action by itself, whether by court order or stipulation of the parties, is insufficient to evidence a lender's intent to revoke the acceleration of the entire mortgage debt. Now, the legal landscape in New York might drastically change given the Court of Appeals' grant of leave to appeal in Freedom v Engel. More ›

U.S. Supreme Court Agrees to Resolve Circuit Split on When the Limitations Period for FDCPA Claims Should Start

As we predicted last year, the United States Supreme Court earlier this week granted Plaintiff's petition for certiorari in Rotkiske v. Klemm to resolve a split in the circuits on whether the statute of limitations for a Fair Debt Collection Practices Act (FDCPA) claim begins when the alleged violation occurred (known as the "occurrence rule") or when the consumer discovers the alleged violation (known as the "discovery rule"). More ›

New York is Split on Whether Notice of Default Letters Trigger the Statute of Limitations

In Milone v. US Bank, N.A., a New York intermediate appellate court held that a letter to a borrower stating that the failure to cure a mortgage loan default "will result in acceleration" does not start the clock on the statute of limitations to foreclose and recover the entire debt. This ruling differs from that of another New York intermediate appellate court, which had ruled otherwise, setting up the possibility of the New York Court of Appeals weighing in on a key issue in New York foreclosure actions. More ›

American Pipe Clarified: Statute of Limitations for Class Actions not tolled by a Prior Motion for Class Certification

In a unanimous decision, the United States Supreme Court held on June 11, 2018 that a pending motion for class certification does not toll the statute of limitations for the filing of a new class action lawsuit by a putative class member. Writing for the majority in China Agritech, Inc. v. Resh, Justice Ruth Bader Ginsburg repeatedly emphasized that the "efficiency and economy of litigation" is not promoted by allowing less than diligent plaintiffs to file a new, but time-barred, class action lawsuit. Clarifying the Court's prior holding in American Pipe & Constr. Co. v. Utah, 414 U.S. 538 (1974), Justice Ginsburg wrote that "[e]ndless tolling is not the result envisioned by American Pipe." More ›

Third Circuit Disagrees with Fourth and Ninth Circuit, Rules that Limitations Period for FDCPA Claims Starts on Occurrence

In Rotkiske v. Klemm, the Third Circuit ruled that the statute of limitations for a Fair Debt Collection Practices Act (FDCPA) claim begins to toll on the date of the alleged violation, not when the plaintiff discovers the violation. That's significant, because the Fourth and Ninth Circuits have ruled otherwise. More ›

Despite Acceleration of Debt Through Prior Dismissed Foreclosure Action, Bankruptcy Petition Tolls Statute of Limitations on Subsequent Action

In Lubonty v. U.S. Bank National Association, a mortgagor sought to void a mortgage loan claiming that the six-year statute of limitations to foreclose had expired. The mortgagor had commenced multiple bankruptcy proceedings that trigged automatic stays and prevented foreclosure from proceeding for approximately four and a half years. New York law, CPLR § 204, extends the statute of limitations "[w]here the commencement of an action has been stayed by a court or by statutory prohibition," and the trial court held that the six-year statute of limitations was extended by the time period during which the foreclosure was stalled through successive bankruptcy petitions. More ›