Papers Considered:

This pair of actions involving mortgaged property were consolidated on September 13, 2016. Both actions stem from the loan Defendant Clyde Forth f/k/a Jessica Reeves-Cohen (hereinafter "Defendant Forth") obtained from Plaintiff Wells Fargo Home Mortgage, Inc. (hereinafter "Wells Fargo") on January 23, 2004. Defendant Forth executed a note in favor of Plaintiff Wells Fargo, which was secured by a mortgage on the subject property.

On May 16, 2006, Defendant Forth and Defendant Ian Machell (hereinafter "Machell"; collectively hereinafter "Defendants") obtained a second loan from Plaintiff Wells Fargo. Both Defendant Forth and Defendant Machell executed a note in favor of Plaintiff Wells Fargo, which was secured by a mortgage on the subject premises. On the same date, both loans from 2004 and 2006 were consolidated.

Thereafter, the loan is currently due and owing for the July 1, 2009 payment. On October 5, 2009,^[FN1] Wells Fargo filed a foreclosure action against Defendants under index number 09-5062. On October 2, 2012, Supreme Court (Zwack, J.) marked the matter off the calendar pursuant to CPLR R. 3404. The matter had never been dismissed. No attempt to restore was made. No appeal was filed. No motion to reargue or renew was made.

On April 16, 2015, Plaintiff Wells Fargo moved to vacate the dismissal pursuant to CPLR R. 5015 (a) (1) and CPLR R. 3404. The matter was subsequently transferred to this Court. On August 20, 2015, the Court denied Plaintiff's motion, finding, inter alia, even though Supreme Court (Zwack, J.) had marked the matter off the calendar and not dismissed the action, the matter was dismissed by operation of law pursuant to CPLR R. 3404 as more than one year had elapsed from the time the matter was marked off the calendar until Plaintiff Wells Fargo [*3]sought to restore the matter (see Curtin v Grand Union Co., 124 AD2d 918, 919 [3d Dept 1986]; see also Merrill v Robinson, 99 AD2d 578, 578 [3d Dept 1984]; CPLR R. 3404). Further, Plaintiff Wells Fargo's application pursuant to CPLR R. 5015 (a) (1) was without merit, as the application was both untimely and lacked a reasonable excuse for the delay. The matter was formally dismissed. No motion to reargue was made. No appeal was filed.

On October 2, 2015, Plaintiff Wells Fargo, as servicer for Federal Home Loan Mortgage Corporation (hereinafter "FHLMC") sent correspondence to both Defendants at the mortgaged premises stating the following:

Previously, your loan was accelerated and all sums secured by the Security Instrument immediately due and payable. FHLMC hereby de-accelerates the Loan, withdraws its prior demand for immediate payment of all sums secured by the Security Instrument and reinstates the Loan as an installment loan.

On October 12, 2015, Plaintiff Wells Fargo sent Defendants the RPAPL § 1304 notice to the mortgaged premises. On March 1, 2016, Plaintiff Wells Fargo commenced a foreclosure action against Defendants (hereinafter "Action 1").

On March 2, 2016, unbeknown that Plaintiff Wells Fargo commenced a foreclosure action, Defendant Forth commenced an action pursuant to article 15 of the RPAPL to secure cancellation and discharge of the record of the mortgage (hereinafter "Action 2"). The action was against Plaintiff Wells Fargo. The grounds for such relief were that the prior foreclosure action (Index No.: 09-5062) was dismissed on August 20, 2015, and further action is barred by the statute of limitations.

On March 15, 2016, Defendant Machell moved ^[FN2] in Action 1 pursuant to CPLR R. 3211 (a) (5) dismissing the complaint on the grounds that the action is barred by the statute of limitations. Plaintiff Wells Fargo opposed the application, arguing that it properly "de-accelerated" the mortgage within the statute of limitations as permitted under New York law. Defendants submitted a reply.

On April 21, 2016, Defendant Forth moved in Action 2 for an order directing entry of default judgment. On May 25, 2016, Plaintiff Wells Fargo cross-moved in Action 2 for an order 1) denying Defendant Forth's motion for default judgment; 2) granting Plaintiff Wells Fargo's cross-motion extending time for Wells Fargo to answer the complaint in Action 2; 3) granting Plaintiff Wells Fargo's cross-motion to dismiss the complaint with prejudice pursuant to CPLR R. 3211 (a) (1) and 3211 (a) (7); and 4) any other and further relief as the Court deems just and proper. Plaintiff Wells Fargo alternatively moved for the matters to be consolidated.

Oral argument was scheduled for September 13, 2016 on the three motions. The Court specifically requested Plaintiff Wells Fargo submit prior to oral argument a copy of the 1304 notice and 1306 summary sheet, along with the certified mail receipt for the 1304 notice. Plaintiff Wells Fargo timely complied. Oral argument was held, wherein the matters were [*4]consolidated upon consent of the parties. A conference order was issued, ordering the parties attempt settlement and if they are unable to settle by December 1, 2016, each shall be permitted to supplement their motion papers. No settlement was reached and both parties supplemented their submissions.

The submissions are voluminous, and the Court has considered all papers submitted including the several letter-correspondence submitted by each party.

Defendant Machell moves to dismiss the complaint in Action 1 on the grounds of barred by the statute of limitations. He contends that Plaintiff Wells Fargo accelerated the note and mortgage on October 5, 2009, the action was dismissed on August 20, 2015, and that the six-year statute of limitations for commencing a new action had expired by March 1, 2016. Plaintiff Wells Fargo submits opposition arguing that it "de-accelerated" the mortgage on October 2, 2015. Since this was within the statute of limitations period, Plaintiff Wells Fargo contends that it properly revoked the acceleration and was able to commence this new action. Defendant Machell submits a reply, arguing that Plaintiff Wells Fargo was required to provide actual notice and failed to do so as they mailed the "de-acceleration" notice to the mortgaged premises which Plaintiff Wells Fargo knew that neither party had lived at for at least three years.

An action to foreclose a mortgage is governed by a six-year statute of limitations. (CPLR § 213 [4].) The statute of limitations "begins to run from the due date of each unpaid installment unless the debt has been accelerated; once the debt has been accelerated by a demand or commencement of an action, the entire sum becomes due and the statute of limitations beings to run on the entire mortgage" (Lavin v Elmakiss, 302 AD2d 638, 639 [3d Dept 2003]; see Saini v Cinelli Enters., 289 AD2d 770, 771 [3d Dept 2001], lv denied 98 NY2d 602 [2002]).

However, "a lender may revoke its election to accelerate all sums due under an optional acceleration clause in a mortgage provided that there is no change in the borrower's position in reliance thereon" (Federal Natl. Mtge. Assn. v Mebane, 208 AD2d 892, 894 [2d Dept 1994]). An "affirmative act of revocation occurring during the six-year limitations period subsequent to the initiation of the prior action" (Kashipour v Wilmington Sav. Fund Socy., FSB, 144 AD3d 985 [2d Dept 2016]; see EMC Mtge. Corp. v Patella, 279 AD2d 604, 606 [2d Dept 2001]).

The notion of "de-accelerating" and revoking an election to accelerate appears to largely be a creature of the Appellate Division, Second Department. There is one Appellate Division, Third Department matter partially repeating the principle articulated by Second Department. Such case, Lavin, supra (302 AD2d at 639), stated that "once the debt was accelerated . . . [mortgagees'] election in this regard could be revoked only through an affirmative act occurring within the statute of limitations period" (citations omitted).

Another trial court within the Third Department and in the same judicial district as this Court built on the rule of law articulated by the Second Department and adds "the revocation should be clear, unequivocal, and give actual notice to the borrower of the lender's election to revoke in sum, akin to the manner plaintiff gave notice to exercise the option to accelerate" (Bank of New York Mellon v Slavin, 54 Misc 3d 311, 315 [Sup Ct, Rensselaer County 2016, Zwack, J.], citing Mebane, supra, 208 AD2d at 894, Wells Fargo Bank, N.A. v Burke, 94 AD3d 980 [2d Dept 2012]). From this Court's review, the rule appears to be drawn from the Second Department cases cited above and cited by Plaintiff Wells Fargo.

Here, while Plaintiff Wells Fargo indeed attempted to "de-accelerate" and revoke the election to accelerate three days prior to the statute of limitations expiring, this attempt failed. [*5]The notice was sent to the mortgaged premises. The premises which Plaintiff Wells Fargo secured and winterized, as it was vacant, since August 2012. Defendant Machell had been living at another address and had been served at that address by Plaintiff Wells Fargo since 2009 in the prior action which was dismissed. Defendant Forth had also been served at another address during the pendency of the prior litigation as well. Defendants provided affidavits of service from Plaintiff Wells Fargo, in the prior action, demonstrating that they had been served at different addresses than the mortgaged premises. This is glaringly uncontroverted by Plaintiff Wells Fargo in the voluminous submissions. The subject mortgage provides under subdivision (7) governing "Giving of Notices" that "any notice that must be given to me under this Note will be given by delivering it or by mailing it by first class mail to me at the Property Address above or at a different address if I give the Note Holder a notice of my different address." Both Defendants did that, as evinced by the service in the prior action at other addresses.

Further, Plaintiff Wells Fargo knew that it did not give "actual notice" of the "de-acceleration" to both Defendants. When the Court asked for the 1304 notice and the certified mailing prior to oral argument, Plaintiff Wells Fargo's counsel also provided the certified mailing tracker and "transaction detail" sheet from the post office. This confirmed that the 1304 notice was sent to the mortgaged property and quite clearly shows that the certified mail was returned as "undeliverable as addressed" to Plaintiff Wells Fargo. Conveniently, Plaintiff's counsel also provided a PDF image of the envelope from the 1304 notice which had the "Return to Sender, Attempted — Not Known — Unable to Forward." This prompted Defendants to further object to the 1304 notice as invalid.

While the decision of Supreme Court (Zwack, J.) is not binding, this Court sees no reason to depart from the "actual notice" requirement articulated therein. This is consistent with the cases in the Second Department which focus on the affirmative act of a lender in revoking the election to accelerate within the statute of limitations period. This Court cannot say that an affirmative act by a lender in revoking the election to accelerate can be done in a manner known by the lender to not provide notice to the borrowers. The notice requirement is more than a ministerial act, but must be reasonably calculated to apprise the borrowers of the lender's actions.

To hold otherwise would bless Plaintiff Wells Fargo's attempted service of both the notice to "de-accelerate" and the 1304 notice at an address Plaintiff Wells Fargo knew was the wrong address for over three years as they have been serving both Defendants at the updated addresses and Plaintiff secured then winterized the mortgaged premises. This would not only be poor precedent, but also inconsistent to the way the Legislature is evolving its stance against the handling of mortgage foreclosures in this State. (See L 2016, c 73, pt Q; see also, i.e., RPAPL § 1309 [1] [added L 2016, c 73, eff Dec. 20, 2016] [permitting a plaintiff, where a property is vacant and abandoned, to serve a motion or order to show cause for a judgment of foreclosure and sale to the "last known address of the borrower and the property address."].)

Therefore, the Court cannot say that Plaintiff Wells Fargo gave "actual notice" to the Defendants of the revocation. Similarly, Plaintiff Wells Fargo also failed to give notice, pursuant to the standard practice, to the last known address of the Defendant. Since the Court's prior dismissal of the action does not constitute an affirmative act by the lender to revoke its election to accelerate (Petalla, 279 AD2d at 606; Mebane, supra, 208 AD2d at 894), Plaintiff Wells Fargo failed to properly revoke its election within the statute of limitations period. The six-year statute of limitations bars this action, and therefore the action must be dismissed.

Moreover, as further argued by Defendants after the revealing certified mail tracker [*6]document and PDF copy of the returned envelope, Plaintiff Wells Fargo also failed to give notice to "any other address of record" of the required RPAPL § 1304 statement which independently warrants dismissal. (See TD Bank, N.A. v Oz Lerory, 121 AD3d 1256, 1257 [3d Dept 2014] ["[P]roper service of the RPAPL 1304 notice containing the statutorily-mandated content is a condition precedent to the commencement of [a] foreclosure action [and t]he plaintiff's failure to show strict compliance requires dismissal."] [internal quotations and citations omitted].)

The Court considered the several tolls, equities, and defenses argued by Plaintiff Wells Fargo, and finds none would save the action.

Given the above, the Court denies Plaintiff Wells Fargo's cross-motion to dismiss based on the documentary evidence and for failure to state a cause of action. The Court notes that the affidavit of Richard L. Penno, Vice President Loan Documentation for Wells Fargo Bank, N.A., is without effect. He contends the notice of "de-accelerating" the loan was sent to the mortgaged property, but wholly neglects to address whether he or any other individual at Wells Fargo had checked the file for an updated address for notices. Since it has been sharply and directly contradicted by the documentary evidence that Plaintiff Wells Fargo had been serving both Defendants at other addresses for over four years, the Court finds it troubling for it to be Wells Fargo's "regular practice" to blindly generate these letters to the mortgaged property. Not only is this inconsistent with the law, but also under subdivision (7) of Wells Fargo's own mortgage agreement.

As to the branch of Plaintiff Wells Fargo's motion to dismiss for lack of proper service, this is denied. Personal service upon a corporation is governed by CPLR § 311, which permits under subdivision (a) (1) that personal service shall be made by delivering the summons to a "managing or general agent" of the corporation. "As a general proposition, 'a process server's affidavit of service establishes a prima facie case as to the method of service and, therefore, gives rise to a presumption of proper service" (Carver Fed. Sav. Bank v Shaker Gardens, Inc., 135 AD3d 1212, 1213 [3d Dept 2016], quoting Caci v State of New York, 107 AD3d 1121, 1123 [3d Dept 2013] [internal quotation marks and citations omitted]). Here, the affidavit of service provides that Defendant Forth served "Michael Flanagan" who is "Store Manager" of the Wells Fargo branch on 235 Fair Street, Kingston, New York. This satisfies requirement under CPLR § 311 (a) (1).

Plaintiff Wells Fargo goes through great lengths to regurgitate the applicable standard of law, but oddly fails to even contend that Michael Flanagan was not qualified to accept service under CPLR § 311. Rather, Plaintiff Wells Fargo argues Defendant Forth only claims to have served a "store manager" and did not demonstrate whether the store manager told the process server that he was a managing or general agent of Wells Fargo or authorized to accept service. This is a strawman argument. There is no requirement for the process server to explain how he identified this person as the store manager. Plaintiff Wells Fargo easily could have defeated this claim with an affidavit from Mr. Flanagan or another representative stating that Mr. Flanagan did not qualify under CPLR § 311. But Plaintiff Wells Fargo's counsel cannot do so as he is without personal knowledge as to these facts, nor does Plaintiff's counsel actually argue to the contrary. In fact, Plaintiff Wells Fargo does not even contend that it did not receive service of process.

Notwithstanding, such statement "that the office employee in question was unauthorized, [*7]without more, did not suffice to rebut the presumption of proper service established by the process server's affidavit" (Passeri v Tomlins, 141 AD3d 816, 817 n 1 [3d Dept 2016]; see also Carver, supra, 135 AD3d at 1213 ["vague and unsupported denial of service is 'insufficient to dispute the veracity or content of the [process] server's affidavit'"], quoting Owens v Freeman, 65 AD3d 731, 733 [3d Dept 2009], lv dismissed 13 NY3d 855 [2009]). This branch of Plaintiff Wells Fargo's motion is denied.

However, the Court agrees with Plaintiff Wells Fargo to extend the time to serve pursuant to CPLR § 2004. Particularly, the Court finds it antagonistic for Defendant Forth's counsel to reject Plaintiff Wells Fargo's attempt to accept service of the summons and complaint, and to decline a courtesy copy to Plaintiff's counsel. This is against the spirit of the adversary process and against the well-established judicial preference to decide matters on the merits. (See Dodge v Commander, 18 AD3d 943, 946 [3d Dept 2005]; Lucas v United Helpers Cedars Nursing Home, 239 AD2d 853, 853 [3d Dept 1997] ["There is a judicial preference to decide cases on their merits."].) As such, Plaintiff Wells Fargo's motion to deny the application for a default application is granted, and leave to submit a late answer is granted.

Therefore, consistent with the findings herein, Plaintiff Wells Fargo may submit an answer to Defendant Forth's complaint within 20 days of service of notice of entry of this Decision and Order. Such time period shall not be extended for any reason. Defendant Forth has leave to re-file for a default judgment and/or summary judgment.

As to this pair of motions, the Court again considered the equities stressed by Plaintiff Wells Fargo in their submissions. Particularly the claim that such "equitable powers must be invoked to prevent the injustice of the Borrowers obtaining a free house — a house which they have not paid for in over six years, while Wells Fargo continues to pay their taxes and insurance." And the Court declines, as it has actually been over eight years in which Plaintiff Wells Fargo has tortured and peppered the Defendants with notices and threats causing Defendants, according to their affidavits included herein, embarrassment through a brief bankruptcy (less than two months) and significant counsel fees. All the while Plaintiff Wells Fargo continues to generate interest and penalties against both Defendants while again re-sharpening its efforts to seek a deficiency judgment against both Defendants per the newly filed summons and complaint. The handling of the prior foreclosure was less-than-desirable, and even the inception of this renewed attempt has repeated the same, fundamental flaws. While the black letter law noted above is clear, if the matter hinged on a balancing of equities, no judicial scale would tip in Wells Fargo's favor. These faults were caused by both client and counsel. The limited equities as to the paying of insurance and taxes are still preserved herein.

To the extent not specifically addressed above, the parties' remaining contentions have been examined and found to be lacking in merit or rendered academic.

Thereby, it is hereby

ORDERED that Defendant Forth's motion for a default judgment is DENIED, with leave to re-file as noted herein; and it is further

ORDERED that the branch of Plaintiff Wells Fargo's cross-motion to dismiss Defendant Forth's complaint against it is DENIED, with prejudice; and it is further

ORDERED that the branch of Plaintiff Wells Fargo's cross-motion for lack of proper service is DENIED, with prejudice; and it is further

ORDERED that the branch of Plaintiff Wells Fargo's cross-motion to extend the time to serve an answer is GRANTED, permitting service of such answer within 20 days of service of notice of entry of this Decision and Order, and composition of such answer shall not be inconsistent with this Decision and Order; and it is further

This constitutes the Decision and Order of the Court. Please note that a copy of this Decision and Order along with the original motion papers are being filed by Chambers with the County Clerk. The original Decision and Order is being returned to the prevailing party, to comply with CPLR R. 2220. Counsel is not relieved from the applicable provisions of this Rule with regard to filing, entry and Notice of Entry.

IT IS SO ORDERED.