Transamerica Credit v Kolokotsas

[*1] Transamerica Credit v Kolokotsas 2006 NY Slip Op 50448(U) [11 Misc 3d 1070(A)] Decided on January 31, 2006 Supreme Court, Suffolk County Spinner, J. Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431. This opinion is uncorrected and will not be published in the printed Official Reports.

Decided on January 31, 2006
Supreme Court, Suffolk County

TRANSAMERICA CREDIT, Plaintiff,

against

JERRY KOLOKOTSAS, KYRIAKOS ARGITIS, STACEY A. BONEY, ABN-AMRO MORTGAGE GROUP INC., WELLS FARGO BANK MINNESOTA, NATIONAL ASSOCIATION, AS TRUSTEE UNDER THE POOLING ANS SERVICING AGREEMENT, DATED AS OF SEPTEMBER 1, 2002, AMONG ASSET BACKED FUNDING CORPORATION, OPTION ONE MORTGAGE CORPORATION AND WELLS FARGO BANK MINNESOTA, ABFC ASSET BACKED CERTIFICATES SERIES 2002-OPT1, and JOHN DOE etc., Defendants.



2005-17464



PLAINTIFF'S ATTORNEY

Steven J. Baum, P.C.

P.O. Box 1291

Buffalo, New York 14240-1291

DEFENDANTS' (KOLOKOTSAS, ARGITIS AND BONEY) ATTORNEY

Gastwirth Mirsky & Stein LLP

1129 Northern Boulevard

Manhasset, New York 11030

DEFENDANTS' (ABN-AMRO) ATTORNEY

Twomey Latham Shea Kelly Dubin

Reale & Quartararo

P.O. Box 9398

Riverhead, New York 11901

Jeffrey Arlen Spinner, J.

Upon the following papers numbered 1 to 216 read on (1) the Motion by Plaintiff for, inter alia, an order: granting summary judgment dismissing Defendants' Answers pursuant to CPLR §§ 3212 and 3211; granting permission to treat said Answers as limited Notices of Appearance entitling said Defendants to receive, without prior notice, copies of the Notice of Sale, Notice of Discontinuance [*2]and Notice of Surplus Money Proceedings, if any; substituting FRANK GABRIEL and KEVIN McGRATH as Party-Defendants in place of JOHN DOE and amending the caption hereof to reflect same; appointing a Referee to determine the amount due Plaintiff and ascertain whether the premises being foreclosued can be sold in parcels; and (2) the Cross-Motion of Defendant ABN-AMRO MORTGAGE GROUP, INC., for, inter alia, an order: granting summary judgment dismissing the Complaint herein as time barred and because of Plaintiff's alleged laches in prosecuting this matter:

Plaintiff's Notice of Motion and supporting papers - 1-91

Defendant ABN-AMRO MORTGAGE GROUP, INC.'s Notice of Cross-Motion

and supporting papers - 92-116

Defendant ABN-AMRO MORTGAGE GROUP, INC.'s Memorandum of Law - 117-122

Defendant KOLOKOTSAS, ARGITIS AND BONEYs' Affirmation in Opposition

and supporting papers - 123-127

Plaintiff's Affirmation in Opposition to Cross-Motion and Reply Affirmation to Motion

and supporting papers - 128-216:

This is an action to foreclose a first mortgage dated June 22, 1995 in the original principal amount of $ 11,562.07 with interest thereon at the rate of 14.98% per annum, encumbering premises commonly known as 27 Camille Lane, Holbrook, Town of Islip, New York. The Plaintiff filed a Summons & Verified Complaint and Notice of Pendency with the Clerk of Suffolk County on July 21, 2005 which set forth, among other things, that the Defendant JERRY KOLOKOTSAS had defaulted on his obligation as of October 1, 1995. The Defendants JERRY KOLOKOTSAS, KYRIAKOS ARGITIS and STACEY A. BONEY appeared through the offices of Gastwirth Mirsky & Stein LLP and timely interposed a Verified Answer containing two Affirmative Defenses. The Defendant ABN-AMRO MORTGAGE GROUP INC.. appeared through the offices of Twomey Latham Shea Kelley Dubin Reale & Quartararo LLP and timely interposed a Verified Answer containing four Affirmative Defenses and a Cross-Claim as against the Defendant JERRY KOLOKOTSAS. The Defendant JERRY KOLOKOTSAS has failed to answer the Cross-Claim interposed by ABN-AMRO and is therefore in default thereof. The remaining Defendants are in default by virtue of their failure to appear or answer in this action.

The Plaintiff has made application to this Court for an Order granting, inter alia, summary judgment in its favor pursuant to CPLR 3212. In response, the Defendant ABN-AMRO has filed opposing papers together with a Cross-Motion for summary judgment dismissing the Plaintiff's action on the grounds of laches, estoppel and expiration of the applicable statute of limitations. The Defendants KOLOKOTSAS, ARGITIS and BONEY have interposed what could most generously be described as token opposition to the Plaintiff's application. This feeble attempt at opposition consists solely of the attorney's affirmation of Alan C. Stein Esq. which is wholly devoid of even a scintilla of probative value.

In support of its application for summary judgment, the Plaintiff has submitted the Affidavit of Liquenda Allotey, an authorized agent and attorney-in-fact for the Plaintiff. That Affidavit sets forth the events of default, the steps taken by the Plaintiff since the default and the delays occasioned by the multiple bankruptcy filings of the Defendant KOLOKOTSAS.

Defenses of Failure To State A Claim Upon Which Relief May Be Granted

The Answers interposed by the appearing Defendants contain Affirmative Defenses alleging that the Plaintiff has failed to state a cause of action upon which the Court may grant relief. A fair [*3]reading of the allegations of the Plaintiff's complaint lead to the inescapable conclusion that the Plaintiff has pleaded its cause sufficiently and therefore these Defenses are stricken.

Defenses of Statute Of Limitations

Both of the Answers interposed by the appearing Defendants set forth an Affirmative Defense asserting that this action is barred by the applicable Statute of Limitations. For the reasons hereinafter set forth, these Affirmative Defenses are devoid of both legal and factual efficacy and are hereby stricken.

The controlling Statute of Limitations for an action to foreclose a mortgage upon real property is found in CPLR 213(4) which reads, in pertinent part, as follows:

"The following actions must be commenced within six years:... (4) an action upon a bond or note, the payment of which is secured by a mortgage upon real property..."

According to the Plaintiff's Verified Complaint and its Affidavit in support of this application, the Defendant-Mortgagor JERRY KOLOKOTSAS defaulted upon the secured obligation by failing to remit the installment payment due on October 1, 1995 as well as all subsequent payments thereunder. The Plaintiff does not dispute the applicability of CPLR 213(4) to this action.

Therefore, it is argued by the Defendants, the Statute of Limitations herein mandates that any action filed after October 1, 2001 must be dismissed as time-barred. The Plaintiff responds by asserting that the Statute of Limitations has been tolled by the provisions of CPLR 204(a) and that this action is therefore timely commenced. Section 204(a) of the Civil Practice Laws and Rules of New York reads as follows:

"(a) Stay. Where the commencement of an action has been stayed by a court or by statutory prohibition, the duration of the stay is not part of the time within which the action must be commenced."

A review of all of the submissions on this motion demonstrates that the Defendant JERRY KOLOKOTSAS filed two petitions for relief pursuant to Chapter 13 of the Bankruptcy Code (11 U.S.C. Section 1301, et. seq.) with the United States Bankruptcy Court For The Eastern District Of New York. The first petition was filed under docket no. 97-73762-mlc on October 7, 1997 and was dismissed on June 16, 1998. The second petition was filed under docket no. 98-86223-mlc on June 15, 1998 and was thereafter dismissed on January 29, 2002.

The filing of a petition in bankruptcy invokes the provisions of 11 U.S.C. Section 362 (the ubiquitous "automatic stay"). This automatic stay, specifically Section 362(a)(1), operates as an injunction against the commencement or the continuation of specified actions against the both debtor and the debtor's estate, Midlantic National Bank vs. New Jersey Dept. Of Envl. Prot., 474 US 494. This automatic stay becomes effective at the moment of the filing of the petition, In Re Best Payphones, 279 BR 92 (Bankr. SDNY) and the automatic stay applies to all entities, even to proceedings pending in state and federal courts, Maritime Elec. Co. vs. United Jersey Bank, 959 F 2d 1194 (3rd Cir.). Except for several enumerated situations not relevant to this action, the automatic stay operates as a prohibition against the continuation of certain actions such as those to colelct a debt, to foreclose a mortgage, etc.

Where, as here, there has been a bankruptcy filing, the provisions of CPLR 204(a) are effective [*4]and invoked as a matter of law. Under that section, the applicable Statute of Limitations is tolled for the period of time during which a stay or prohibition is in effect. Based upon the Defendant KOLOKOTSAS' Chapter 13 filings, CPLR 204(a) effectively tolled the Statute of Limitations for a period of four years, three months, twenty two days (from October 7, 1997 through January 29, 2002), thereby extending the limitations period up to December 1, 2005. Therefore, the Plaintiff's action, which was filed on July 21, 2005 was timely commenced. Accordingly, the Affirmative Defenses asserting Statute of Limitations must fail and are hereby stricken.

Laches

The Defendant ABN-AMRO has asserted an Affirmative Defense sounding in laches. The gravamen of this assertion is that the Plaintiff failed to take any action to foreclose its mortgage, thereby prejudicing ABN-AMRO, a subsequent encumbrancer. This assertion has been put forth not by Affidavit of a party but instead by the Affirmation of counsel. Counsel's affirmation continues on with speculative and conclusory (albeit unsupported) allegations of a deliberate scheme to allow the interest to accrue on its loan, claims of "near usury," and other specious pronouncements.

First and foremost, the law in New York is that where a foreclosure action is timely commenced within the applicable limitations period, the defense of laches cannot lie, First Federal Savings And Loan Association Of Rochester vs. Capalongo, 152 AD2d 833 (3rd Dept. 1989).

Second, virtually all of counsel's assertions regarding "near usury," a scheme to increase its lien through the accrual of interest and other claims are specious and wholly unsupported by any of the evidence submitted to the Court. Indeed the Court is constrained to take judicial notice that a loan with an interest rate in excess of 25% per annum is usurious, see Penal Law sec. 190.40. The loan at issue herein, secured by a mortgage upon real property, bears interest at the rate of 14.98% per annum which is, although perhaps unfortunately, not usurious, Hyfin Credit Union vs. Leibowitz, 102 AD2d 844 (2nd Dept. 1984), Novelty Textile Mills Inc. Vs. Hopkins, 145 Misc 2d 583 (1989).

Third, the Defendant ABN-AMRO is prohibited from asserting a defense of usury inasmuch as it was not a signatory to the original loan agreement, Pacer/Cats/CCS vs. Movie-Fone Inc., 226 AD2d 127 (1st Dept. 1996).

Moreover, although ABN-AMRO alleges that it will be harmed by the Plaintiff's foreclosure action, there has been no proof of the same. Indeed, this assertion is supported solely by the statements of counsel alleging (albeit without substantiation) that the Plaintiff has engaged in a scheme to increase its lien by the accrual of interest at a time when lending rates are below the note rate at issue herein.

Estoppel

The Defendant ABN-AMRO has asserted an Affirmative Defense sounding in estoppel. A review of the same shows a lack of evidence to support this Affirmative Defense (save for unsubstantiated self-serving assertions of bad faith on the part of the Plaintiff) and the same is therefore stricken.

ABN-AMRO's Cross-Claim against KOLOKOTSAS

The Cross-Motion of ABN-AMRO contains a Cross-Claim asserted against the co-Defendant [*5]JERRY KOLOKOTSAS. The Cross-Claim asserts that the Defendant JERRY KOLOKOTSAS perpetrated a fraud upon ABN-AMRO by executing a written instrument, under oath, affirmatively representing that the mortgage under foreclosure herein was "paid in full" and that he would obtain a satisfaction thereof for the benefit of ABN-AMRO. The allegations of fraud by the said Defendant are buttressed by Exhibits "K" and "L" appended to the Plaintiff's opposition to ABN-AMRO's Cross-Motion. These exhibits, consisting of a letter from Alyssa Lefkowitz Esq. of LandAmerica Commonwealth (the title insurer of ABN-AMRO's lien) to Alan C. Stein Esq. (Mr. KOLOKOTSAS' attorney) as well as a copy of the allegedly fraudulent undertaking, effectively serve to demonstrate the existence of a meritorious cross-claim.

This Cross-Claim (together with the Cross-Motion) was served on October 4, 2005 upon Gastwirth Mirsky & Stein LLP, counsel who appeared in this action on behalf of Defendant KOLOKOTSAS. The Defendant KOLOKOTSAS and his attorneys have failed to respond, answer or otherwise move with respect thereto. Therefore a default will be entered against Defendant JERRY KOLOKOTSAS as to liability on the Cross-Claim in favor of ABN-AMRO.

Conclusion

For all of the foregoing reasons, the Plaintiff's application for summary judgment is granted in its entirety. The Answers of the appearing Defendants are hereby stricken and are deemed to be Notices of Appearance entitling them to notice of all future proceedings herein including but not limited to applications for Judgment of Foreclosure & Sale, Notice of Sale, Notice of Discontinuance and Notice of Surplus Monies. The caption of this action shall be amended to delete the "JOHN DOE" defendants and substitute FRANK GABRIEL and KEVIN MCGRATH in the place and stead thereof. The Defendant ABN-AMRO MORTGAGE GROUP INC..'s cross-motion for summary judgment is denied. The Defendant ABN-AMRO MORTGAGE GROUP INC.'s cross-claim against the Defendant JERRY KOLOKOTSAS is granted to the extent of liability only with damages, if any, to be established at a later date. The Court will appoint a Referee to compute sums by separate Order of the same date herewith.

This shall constitute the decision, judgment and order of this Court.

Dated: January 31, 2006

Riverhead, New York

_________________________________________

HON. JEFFREY ARLEN SPINNER, A.J.S.C