CIT Bank, N.A. v. Zisman

• Court: Court of Appeals for the Second Circuit
• Decided: February 26, 2024
• Docket: 20-1314
• Status: Unpublished

Opinion

20-1314 (L) CIT Bank, N.A. v. Zisman

UNITED STATES COURT OF APPEALS FOR THE SECOND CIRCUIT

SUMMARY ORDER

RULINGS BY SUMMARY ORDER DO NOT HAVE PRECEDENTIAL EFFECT. CITATION TO A SUMMARY ORDER FILED ON OR AFTER JANUARY 1, 2007, IS PERMITTED AND IS GOVERNED BY FEDERAL RULE OF APPELLATE PROCEDURE 32.1 AND THIS COURT’S LOCAL RULE 32.1.1. WHEN CITING A SUMMARY ORDER IN A DOCUMENT FILED WITH THIS COURT, A PARTY MUST CITE EITHER THE FEDERAL APPENDIX OR AN ELECTRONIC DATABASE (WITH THE NOTATION “SUMMARY ORDER”). A PARTY CITING A SUMMARY ORDER MUST SERVE A COPY OF IT ON ANY PARTY NOT REPRESENTED BY COUNSEL.

At a stated term of the United States Court of Appeals for the Second Circuit, held at the Thurgood Marshall United States Courthouse, 40 Foley Square, in the City of New York, on the 26th day of February, two thousand twenty-four.

PRESENT: DENNIS JACOBS, DENNY CHIN, ALISON J. NATHAN, Circuit Judges. _____________________________________

CIT Bank, N.A.,

Plaintiff-Counter- Defendant-Appellant,

v. No. 20-1314 (L), 22-3024 (con)

Sharon Zisman, Berel Zisman,

Defendants-Counter- Claimants-Appellees, New York City Department of Finance, New York City Environmental Control Board,

Defendants-Appellees. _____________________________________ FOR PLAINTIFF- COUNTER-DEFENDANT-APPELLANT: STEPHEN C. PARSLEY (R. Aaron Chastain on the brief), Bradley Arant Boult Cummings LLP, Birmingham, AL. FOR DEFENDANTS -COUNTER-CLAIMANTS-APPELLEES: MARK M. KRANZ (Eli S. Fixler, on the brief), Suslovich & Klein LLP, Brooklyn, NY.

Appeal from a judgment of the United States District Court for the Eastern

District of New York (Amon, J.).

UPON DUE CONSIDERATION, IT IS HEREBY ORDERED,

ADJUDGED, AND DECREED that the judgment of the district court is

AFFIRMED.

In these consolidated appeals, Plaintiff-Appellant CIT Bank appeals from an

April 9, 2020 judgment of the district court granting the motion of Defendants-

Appellees Sharon and Berel Zisman for summary judgment, as well as the district

court’s subsequent denial of CIT Bank’s motion to vacate that judgment. 2 In the district court, CIT Bank brought a judicial foreclosure action against

the Zismans for their alleged default under the terms of a mortgage and note for a

Brooklyn property. The district court granted summary judgment to the Zismans

because the six-year statute of limitations for the action had run. In a prior state

court foreclosure action regarding the same property, CIT Bank had elected to

accelerate the loan more than six years earlier when it filed an affidavit of bank

Vice President, Erica Johnson-Seck, stating that intent. Under New York law, the

statute of limitations began running at the acceleration of the loan, so CIT bank’s

foreclosure action was time-barred. CIT Bank later moved to vacate the judgment

because of an intervening New York Court of Appeals decision under which it

argued that it had revoked the acceleration of the mortgage, thereby stopping the

statute of limitations from running. See Freedom Mortg. Corp. v. Engel, 169 N.E.3d

912 (N.Y. 2021). The district court denied the motion, concluding that the

circumstances did not warrant vacatur and, anyway, CIT Bank had not revoked

the prior acceleration, even under Engel.

We assume the parties’ familiarity with the underlying facts, procedural

history, and issues on appeal, to which we refer only as necessary to explain our

decision to affirm. 3 I. Motion for Summary Judgment

CIT Bank first challenges the district court’s grant of summary judgment for

the Zismans. Specifically, CIT Bank argues that the district court erred when it

construed the Johnson-Seck affidavit filed in the state court action on February 23,

2010, as an election to accelerate the loan, thus triggering the six-year statute of

limitations for the foreclosure action under N.Y. C.P.L.R. § 213(4), which had run

before CIT Bank filed the present action on April 7, 2017. We disagree.

“We review de novo a district court’s decision to grant summary judgment,

construing the evidence in the light most favorable to the party against whom

summary judgment was granted and drawing all reasonable inferences in that

party’s favor.” Bey v. City of New York, 999 F.3d 157, 164 (2d Cir. 2021). We affirm

the district court’s grant of summary judgment if “there is no genuine dispute as

to any material fact and the movant is entitled to judgment as a matter of law.”

Fed. R. Civ. P. 56(a).

Under New York law, “once a mortgage debt is accelerated, the entire

amount is due and the [s]tatute of [l]imitations begins to run on the entire debt.”

U.S. Bank Nat’l Ass’n v. Sopp, 95 N.Y.S.3d 261, 263 (App. Div. 2019) (citations

omitted). The acceleration of a mortgage debt “may occur in different ways.” Id. 4 (citation omitted). But “[w]here the holder of the note elects to accelerate the

mortgage debt, notice to the borrower must be clear and unequivocal.” Id.

(cleaned up); see also Albertina Realty Co. v. Rosbro Realty Corp., 180 N.E. 176, 177

(N.Y. 1932) (noting that an “unequivocal overt act . . . constituted a valid election”).

The Johnson-Seck affidavit begins with the following sentence: “I am the

Vice President of One[W]est Bank, F.S.B., successor-in-interest to INDYMAC

FEDERAL BANK by purchase through FDIC receivership, the Plaintiff in the

action herein.” 1 App’x at 370. The affidavit continues that it was made “in support

of Plaintiff’s motion for summary judgment . . . to appoint a referee, and to

substitute One[W]est Bank, F.S.B., as the plaintiff.” Id. The language at issue in

the affidavit is the last clause:

That as alleged in paragraph SEVENTH of the complaint, the defendants BEREL ZISMAN & SHARON ZISMAN have failed and neglected to comply with the conditions of mortgage(s), bond(s) or note(s) by omitting and failing to pay items of principal and interest or taxes, assessments, water rates, insurance premiums, escrow and/or other charges, all as more

1IndyMac commenced the initial foreclosure action in state court, but subsequently underwent federal receivership. OneWest Bank then acquired IndyMac, after which OneWest merged into and became CIT Bank, N.A. See CIT Bank, N.A. v. Zisman, 2020 WL 8081939, at *1 (E.D.N.Y. Apr. 8, 2020) (“On or about June 12, 2009, during the pendency of the State Court Action, the Mortgage and Note were assigned from IndyMac to OneWest Bank, the former name of CIT.”).

5 fully appears in “Schedule E of the Summons and Complaint” and accordingly the plaintiff hereby elects to call due the entire amount secured by the mortgage described in previous paragraphs.

Id. at 373–74 (emphasis added). Finally, the affidavit concludes with OneWest’s

prayer for relief, stating that the “deponent [OneWest’s vice president]

respectfully prays for an order . . . directing the entry of summary judgment in its

favor . . . [and] amending the caption to substitute OneWest Bank FSB as plaintiff

in place and stead of IndyMac Federal Bank, F.S.B.” Id. at 379.

Taking that language into account, the district court did not err in holding

that the filing of this affidavit in the first foreclosure action, in which the Zismans

were also defendants, was an unequivocal overt act demonstrating CIT Bank’s

election to accelerate the loan. The affidavit explicitly states that CIT Bank “hereby

elects to call due the entire amount secured by the mortgage.” Id. at 374. That

language expresses CIT Bank’s intent, at the time of the filing of the affidavit, to

accelerate the mortgage. CIT Bank’s arguments to the contrary are unavailing.

CIT Bank first argues that the affidavit was merely a “form of evidence

submitted by IndyMac to verify allegations that IndyMac had made in the

complaint.” Appellant’s Br. at 11. Essentially, CIT Bank argues that the “plain

language” of the affidavit is “almost word-for-word identical” to the language 6 contained in the original complaint, which therefore demonstrates that it was not

an “independent legal act of acceleration.” Id. at 12–14. However, CIT Bank cites

no case law demonstrating that unequivocal language in an affidavit—which was

a legal act independent of the earlier complaint, as it simultaneously sought a grant

of summary judgment and formal substitution of the plaintiff in the action—

cannot constitute a valid election of acceleration on a mortgage loan. The language

in the affidavit may closely resemble the language in the complaint, but contrary

to CIT Bank’s argument, the independent requests within the affidavit

demonstrate that the acceleration was intended as a new legal act.

CIT Bank also argues that the affidavit could not have accelerated the

mortgage because its reference to “the plaintiff” in the affidavit can only mean

IndyMac, who was not the holder of the mortgage and note and therefore could

not have sought acceleration of the loan. But this argument elides the numerous

references the affidavit makes to substituting IndyMac as plaintiff with

OneWest/CIT Bank. See e.g., App’x at 379 (“[Y]our deponent respectfully prays for

an order . . . amending the caption to substitute OneWest Bank FSB as plaintiff in

place and stead of IndyMac Federal Bank, F.S.B.”). Moreover, under N.Y. C.P.L.R.

§ 1018, an assignee can continue an action in the name of the original mortgagee, 7 even in the absence of a formal substitution. See, e.g., Wells Fargo Bank, N.A. v.

Eitani, 47 N.Y.S.3d 80, 87 (App. Div. 2017); Woori America Bank v. Glob. Universal

Grp. Ltd., 20 N.Y.S.3d 597, 598–99 (App. Div. 2015). Therefore, even if the reference

to the “plaintiff” in the affidavit only meant IndyMac and CIT Bank was not

formally the plaintiff in the action, CIT Bank still retained authority to continue

the action and accelerate the loan, as it had already been assigned the mortgage

and note.

CIT Bank finally argues that if there is any ambiguity about whether the

affidavit was an election to accelerate the loan, it must be read in its favor.

However, given the above discussion, and most importantly, the unequivocal

nature of the statement within the Johnson-Seck affidavit, we observe no

ambiguity. The district court did not err in granting summary judgment to the

Zismans on this basis.

II. Motion to Vacate

CIT Bank next challenges the district court’s denial of its motion to vacate

the grant of summary judgment under Federal Rule of Civil Procedure 60(b)(6)

8 based on a change in New York law. 2 CIT Bank argues that IndyMac’s February

11, 2016 motion to discontinue the first foreclosure action decelerated the debt,

thus resetting the statute of limitations. That argument is based on a New York

Court of Appeals decision issued after the district court’s grant of summary

judgment, Freedom Mortgage Corporation v. Engel, which held that a “noteholder’s

withdrawal of its only demand for immediate payment of the full outstanding

debt, made by the unequivocal overt act of filing a foreclosure complaint, destroys

the effect of the election.” 169 N.E.3d 912, 926 (N.Y. 2021) (cleaned up). CIT Bank

contends that Engel, as an intervening change in governing law, was an

appropriate basis for vacatur and that the district court erred in denying that relief.

We review CIT Bank’s challenge to the district court’s ruling on the motion

to vacate under the deferential abuse of discretion standard of review. See Mandala

v. NTT Data, Inc., 88 F.4th 353, 359 (2d Cir. 2023). We must “affirm the . . . denial

of vacatur, unless the ruling is based on an erroneous view of the law or on a

2 CIT Bank’s appellate brief does not appear to challenge the denial as to Rule 60(b)(1), so it is considered waived. See JP Morgan Chase Bank v. Altos Hornos de Mexico, S.A. de C.V., 412 F.3d 418, 428 (2d Cir. 2005). To the extent CIT Bank is making an argument under Rule 60(b)(1), we reject it for the reasons stated in the district court’s well-reasoned opinion. 9 clearly erroneous assessment of the evidence.” Id. (citation omitted). On the facts

of this case, we conclude that the district court did not abuse its discretion.

Engel alone does not justify relief from the grant of summary judgment. “As

a general matter, a mere change in decisional law does not constitute an

‘extraordinary circumstance’ for the purposes of Rule 60(b)(6), and the interest in

finality outweighs the losing party’s concern that justice was not done.” Tapper v.

Hearn, 833 F.3d 166, 172 (2d Cir. 2016) (cleaned up); Agostini v. Felton, 521 U.S. 203,

239 (1997) (“Intervening developments in the law by themselves rarely constitute

the extraordinary circumstances required for relief under Rule 60(b)(6).”). And

Engel itself is no longer good law. The New York State Legislature promptly

abrogated the rule on which CIT Bank’s motion relies in the Foreclosure Abuse

Prevention Act (“FAPA”), 2022 N.Y. Laws Ch. 821. See GMAT Legal Title Trust

2014-1 v. Kator, 184 N.Y.S.3d 805, 808 (App. Div. 2023) (explaining that FAPA “had

the effect of nullifying” Engel’s holding by amending N.Y. C.P.L.R. § 3217 to

provide that an action’s “voluntary discontinuance . . . shall not . . . revive or reset

the limitations period to commence an action and to interpose a claim”) (quoting

N.Y. C.P.L.R. § 3217(e)).

10 For those reasons, and given the deferential abuse of discretion standard of

review, we observe no error in the district court’s holding that vacatur under Rule

60(b) was not warranted.

Finally, because we hold that the district court did not abuse its discretion

when it granted summary judgment to the Zismans or when it denied CIT Bank’s

motion to vacate the judgment, we do not reach the parties’ alternative arguments

regarding FAPA’s retroactivity.

* * *

We have considered CIT Bank’s remaining arguments and find them to be

without merit. For the foregoing reasons, the judgment of the district court is

FOR THE COURT: Catherine O’Hagan Wolfe, Clerk of Court