Berkshire Bank v. Tedeschi

Filing 35

MEMORANDUM-DECISION and ORDERED, that Plaintiffs Motion (Dkt. No. 16) for partial summary judgment on the Complaints (Dkt. No. 1) first, second, and fourth causes of action is GRANTED; and it is further ORDERED, that Defendants Cross-Motion (Dkt. No. 22) for summary judgment is GRANTED in part and DENIED in part; and it is further ORDERED, that the Complaints (Dkt. No. 1) third cause of action is DISMISSED with prejudice; and it is further ORDERED, that Defendant shall pay Plaintiffs attorneys f ees and costs in an amount to be determined by the Court at a later date. Plaintiff is ordered to file a motion concerning the amount of attorneys fees and costs for which it seeks reimbursement within fourteen (14) days of the date of this Memorandum-Decision and Order. Defendant shall then have fourteen (14) days from the filing date of Plaintiffs motion to respond. Signed by Senior Judge Lawrence E. Kahn on March 27, 2013. (sas)

UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF NEW YORK
BERKSHIRE BANK,
Plaintiff,
-against-

1:11-CV-0767 (LEK/CFH)

NANCY K. TEDESCHI,
Defendant.
___________________________________
MEMORANDUM-DECISION and ORDER
I.

INTRODUCTION
This is an action by Plaintiff Berkshire Bank (“Plaintiff”) to recover the balance due and

owing on promissory notes executed in Plaintiff’s favor by Defendant Nancy K. Tedeschi
(“Defendant”). Plaintiff commenced this action by filing a Complaint on July 6, 2011. Dkt. No. 1
(“Complaint”). Presently before the Court are Plaintiff’s Motion for summary judgment on the
Complaint’s first, second, and fourth causes of action and Defendant’s Cross-Motion for summary
judgment dismissing the Complaint in its entirety. Dkt. Nos. 16 (“Motion”), 22 (“Cross-Motion”).
For the following reasons, Plaintiff’s Motion is granted in full and Defendant’s Cross-Motion is
granted in part and denied in part.
II.

BACKGROUND
A. Factual Background
Plaintiff is a Massachusetts savings bank with its principal place of business in Pittsfield,

Massachusetts. Compl. ¶ 2. Defendant is an individual who resides in East Wenatchee,
Washington. Id. ¶ 3. At times relevant to this action, Defendant was involved in the purchase and
sale of real estate and negotiable instruments. See Defendant’s Affidavit in support of her Cross-

Motion (Dkt. No. 22-2) (“Tedeschi Aff.”) ¶ 7. Defendant also previously owned a title company
and ran a mortgage bank and is admittedly a “very sophisticated businesswoman.” Plaintiff’s
Statement of material facts (Dkt. No. 16-2) (“Pl.’s S.M.F.”) ¶ 2-3; Defendant’s Response to
Plaintiff’s Statement of material facts (Dkt. No. 22-30) (“Def.’s Resp. S.M.F.”) ¶ 2-3; see also
Tedeschi Aff. ¶ 34.
Of issue in this case are the large sums of money Defendant borrowed from Plaintiff on
several occasions in 2006 and 2007 to finance Defendant’s various real estate projects. The facts
surrounding the parties’ original financial arrangements are undisputed. On approximately June 8,
2006, in Clifton Park, New York, Defendant executed an Adjustable Rate Note (“the FL Term
Note”) in Plaintiff’s favor in the original principal amount of $212,000. Compl. ¶ 14-15; Dkt. No.
12 (“Answer”) ¶ 1. The FL Term Note was secured by a mortgage on Defendant’s real property
located at 600 South Dixie Highway, Prado Condominium, Unit 353, West Palm Beach, Florida
(“the FL Property”). Compl. ¶ 16; Answer ¶ 1. On approximately November 20, 2006, in Clifton
Park, New York, Defendant executed an Adjustable Rate Note (“the NY Term Note”) in favor of
Plaintiff in the original principal amount of $1,350,000. Pl.’s S.M.F. ¶ 4; Def.’s Resp. S.M.F. ¶ 4;
Compl. ¶ 7. Nearly a year later, on October 29, 2007, Defendant executed a Homeowner’s Equity
Account Agreement, Note and Disclosure Statement (“the NY Line-of-Credit Note,” and
collectively with the NY Term Note, “the NY Notes”) in favor of Plaintiff in the original principal
amount of $150,000. Pl.’s S.M.F. ¶ 6; Def.’s Resp. S.M.F. ¶ 6. The NY Notes (collectively with
the FL Term Note, “the Notes”) were secured by a mortgage on Defendant’s real property located at
257 Riverview Road, Rexford, New York (“the NY Property,” collectively with the FL Property,
“the Properties”). Pl.’s S.M.F. ¶ 7; Def.’s Resp. S.M.F. ¶ 7.
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Between approximately November 2009 and January 2011, Defendant defaulted on the
Notes by failing to make the required monthly payments. Pl.’s S.M.F. ¶ 9; Def.’s Resp. S.M.F. ¶ 9;
Defendant’s Statement of material facts (Dkt. No. 22-29) (“Def.’s S.M.F.”) ¶ 2; Compl. ¶ 17.
Further, Defendant failed to cure the defaults after Plaintiff sent her proper notice. Pl.’s S.M.F.
¶¶ 10-13; Def.’s Resp. S.M.F. ¶¶ 10-13; Compl. ¶ 18.
Following Defendant’s default, Plaintiff and Defendant entered into negotiations on how to
resolve the outstanding balance on the Notes. In an effort to avoid foreclosure on the Properties,
Defendant requested that Plaintiff accept deeds in lieu of foreclosure. Plaintiff refused Defendant’s
request and proposed instead a short sale in which Defendant would execute a new promissory note
to cover a portion of the difference between what the Properties might fetch in a sale and the
amounts alleged to be due on the Notes. Def.’s S.M.F. ¶ 5; Plaintiff’s Response to Defendant’s
Statement of material facts (Dkt. No. 27) (“Pl.’s Resp. S.M.F”) ¶¶ 4-5. Defendant refused
Plaintiff’s request. Def.’s S.M.F. ¶ 5; Pl.’s Resp. S.M.F ¶ 5. While negotiations continued,
Defendant informed Plaintiff that if they could not come to an agreement avoiding foreclosure on
the Properties, she would file for Chapter 7 bankruptcy. Def.’s S.M.F. ¶ 6.1
The parties agree that Defendant executed separate Short Sale Agreements concerning the
NY Property and the FL Property on March 1 and June 8, 2010, respectively. Dkt. Nos. 16-10 (“NY
Agreement”), 22-19 (“FL Agreement”) (collectively, “the Agreements”). Pursuant to the terms of
the Agreements, Defendant sold the NY Property for $900,000 and the FL Property for $85,000.
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Plaintiff challenges Defendant’s assertion that “commence[ment of] foreclosure
proceedings seeking a deficiency judgment” was the event that would trigger Defendant’s filing for
bankruptcy. Pl.’s Resp. S.M.F. ¶¶ 6-7. The Court finds that Defendant’s communications with
Plaintiff clearly show that she meant to file for bankruptcy if they could not agree on an alternative
to foreclosure. See Dkt. Nos. 22-13 to -17.
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Plaintiff then applied $826,742.68 in proceeds from the sale of the NY Property to the principal
balance on the NY Notes, and $70,478.48 in proceeds from the sale of the FL Property to the
principal balance on the FL Term Note. Pl.’s S.M.F. ¶¶ 24-25; Def.’s Resp. S.M.F. ¶¶ 24-25.
Plaintiff claims that the remaining balance on the FL Term Note was $124,437.12 after application
of the sale proceeds. Compl. ¶ 21. Plaintiff claims that the balance on the NY Term Note and the
NY Line-of-Credit Note as of June 25, 2012, was $568,081.41 and $158,633.70, respectively. Pl.’s
S.M.F. ¶¶ 26-27. As required by the Agreements, Plaintiff thereafter recorded discharges of the
mortgages securing the Notes. Pl.’s S.M.F. ¶ 18; Def.’s Resp. S.M.F. ¶ 18; Pl.’s Resp. S.M.F. ¶ 15.
Defendant claims that prior to her execution of the Agreements, she and Plaintiff entered
into a “verbal” agreement that Plaintiff would accept the net proceeds of the sales of the Properties
in full satisfaction of Defendant’s obligations on the Notes. Def.’s S.M.F. ¶¶ 8-10.2 Defendant
further claims that this agreement is embodied in the FL Agreement but not in the NY Agreement.
Id. ¶¶ 9-10. The NY Agreement parallels the FL Agreement in most material respects; however, the
NY Agreement contains an additional clause that expressly reserves Plaintiff’s right to recover the
deficiency balance on the NY Notes after the short sale of the NY Property. Compare Dkt. No. 1610, with Dkt. No. 22-19. The parties agree that in the interval between the execution of the
Agreements, Plaintiff did not communicate to Defendant its intention to insert the additional clause
into the NY Agreement. Def.’s S.M.F. ¶ 11; Pl.’s Resp. S.M.F. ¶ 11.
Plaintiff denies that its negotiations with Defendant included a release of Defendant’s
obligations on the Notes after a short sale of the Properties or that Plaintiff entered into an oral

2

The Court notes that Defendant likely means that she entered into an “oral” agreement with
Plaintiff, as there is no indication from her briefs or the evidence she submitted in support of her
Cross-Motion that there was another written agreement preceding the Agreements.
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agreement with Defendant to that effect. Pl.’s Resp. S.M.F. ¶¶ 4, 9-10. The Agreements do not,
therefore, in Plaintiff’s view, embody such an agreement and do not preclude Plaintiff from
recovering the remaining balance on the Notes in this action.
B. Procedural Background
Plaintiff filed its Complaint on July 6, 2011. Compl. In its Complaint, Plaintiff alleges four
causes of action. The first, second, and third causes of action are for breach of the NY Term Note,
NY Line-of-Credit Note, and FL Term Note, respectively. Id. ¶¶ 29-40. The fourth cause of action
is for attorney’s fees and costs resulting from Plaintiff’s collection efforts. Id. ¶¶ 41-42. As relief
for Defendant’s alleged default on the Notes, Plaintiff asks the Court to enter judgment against
Defendant in the total amount due on the Notes plus prejudgment interest and the aforementioned
fees and costs. Id. at 6.
Defendant filed an Answer to the Complaint on November 21, 2011, asserting therein nine
affirmative defenses to Plaintiff’s claims on the Notes. Dkt. No. 12 (“Answer”). In the order that
they appear in the Answer, Defendant’s affirmative defenses are that Plaintiff’s claims are barred
because: (1) Plaintiff failed to bring them before the statute of limitations in § 1371 of New York’s
Real Property Actions and Proceedings Law (“RPAPL”) expired; (2) Plaintiff knowingly and
voluntarily released them; (3) Plaintiff knowingly discharged them; (4) Plaintiff knowingly satisfied
them; (5) Plaintiff knowingly entered into an accord with Defendant in connection with them; (6)
Plaintiff knowingly waived them; (7) the doctrine of estoppel or promissory estoppel applies with
regard to them; (8) Plaintiff and Defendant entered into a novation in connection with them; and (9)
the doctrine of ratification applies. See id. ¶¶ 3-11.
On August 1, 2012, Plaintiff filed its Motion for partial summary judgment. Mot. In its

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Motion, Plaintiff seeks summary judgment on the Complaint’s first, second, and fourth causes of
action and asks that the Court enter judgment in its favor in the amount of $726,715.11 (the balance
allegedly remaining on the NY Notes) plus attorney’s fees and costs. Plaintiff’s Memorandum of
law in support of its Motion for partial summary judgment (Dkt. No. 16-2) (“Pl.’s Mem.”) at 11.
Defendant in turn filed her Cross-Motion for summary judgment on September 26, 2012. CrossMot. In her Cross-Motion, Defendant seeks summary judgment on each of her affirmative defenses
and asks the Court to dismiss the Complaint in its entirety. Defendant’s Memorandum of law in
support of her Cross-Motion for summary judgment (Dkt. No. 22-1) (“Def.’s Mem.”) at 1.
III.

LEGAL STANDARD
Rule 56 of the Federal Rules of Civil Procedure instructs a court to grant 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(c). Although “[f]actual disputes that are irrelevant or
unnecessary” will not preclude summary judgment, “summary judgment will not lie if . . . the
evidence is such that a reasonable jury could return a verdict for the nonmoving party.” Anderson v.
Liberty Lobby, Inc., 477 U.S. 242, 248 (1986); see also Taggart v. Time, Inc., 924 F.2d 43, 46 (2d
Cir. 1991).
The party seeking summary judgment bears the burden of informing the court of the basis
for the motion and of identifying those portions of the record that the moving party claims will
demonstrate the absence of a genuine issue of a material fact. Celotex Corp. v. Catrett, 477 U.S.
317, 323 (1986). If the moving party shows that there is no genuine dispute as to any material fact,
the burden shifts to the nonmoving party to demonstrate “the existence of an element essential to
that party’s case, and on which that party will bear the burden of proof at trial.” Id. This requires

6

the nonmoving party to do “more than simply show that there is some metaphysical doubt as to the
material facts.” Matsushita Elec. Indus. Co. v. Zenith Corp., 475 U.S. 574, 586 (1986).
At the same time, a court must resolve all ambiguities and draw all reasonable inferences in
favor of the nonmoving party. Reeves v. Sanderson Plumbing Prods., Inc., 530 U.S. 133, 150
(2000); Nora Beverages, Inc. v. Perrier Grp. of Am., Inc., 164 F.3d 736, 742 (2d Cir. 1998). A
court’s duty in reviewing a motion for summary judgment is “carefully limited” to finding genuine
disputes of fact, “not to deciding them.” Gallo v. Prudential Residential Servs., 22 F.3d 1219, 1224
(2d Cir. 1994).
IV.

DISCUSSION
A. Choice of Law
Subject-matter jurisdiction in this case is based on diversity of citizenship under 28 U.S.C.

§ 1332. Compl. ¶ 4. Although neither party has explicitly addressed the choice-of-law question that
arises when an action is brought under diversity jurisdiction, the parties’ briefs assume that New
York law controls the issues presented in this case. See generally Pl.’s Mem; Def.’s Mem. “[S]uch
implied consent is, of course, sufficient to establish the applicable choice of law.” Arch Ins. Co. v.
Precision Stone, Inc., 584 F.3d 33, 38-39 (2d Cir. 2009) (quoting Golden Pacific Bancorp. v.
F.D.I.C., 273 F.3d 509, 513 n.4 (2d Cir. 2001)). The Court therefore applies New York law in
resolving the Motion and Cross-Motion.
B. The Notes
“To establish a prima facie case of default on a promissory note under New York law, a
plaintiff must provide proof of the valid note and of [the] defendant’s failure, despite proper
demand, to make payment.” Genger v. Sharon, No. 10 Civ. 4506, 2012 WL 6628037, at *6

7

(S.D.N.Y. Dec. 20, 2012) (citing Cavendish Traders, Ltd. v. Nice Skate Shoes, Ltd., 117 F. Supp. 2d
394, 399 (S.D.N.Y. 2000)). Summary judgment is therefore appropriate in an action on a
promissory note “if there is no material question concerning execution and default of the note.”
United States v. Galarza, No. 10-CV-894, 2011 WL 256536, at *1 (E.D.N.Y. Jan. 26, 2011). “A
plaintiff meets his burden for summary judgment on a promissory note by presenting evidence of
execution of the note, and asserting, without dispute from the defendant, that the defendant failed to
pay.” Lau v. Mezei, No. 10-CV-4838, 2012 WL 3553092, at *4 (S.D.N.Y. Aug. 16, 2012) (citing
Valley Nat’l Bank v. Oxygen Unlimited, LLC, No. 10 Civ. 5815, 2010 WL 5422508, at *3
(S.D.N.Y. 2010)). “When it is ‘undisputed that the [n]ote is valid and that [the defendant] has failed
to make payment,’ summary judgment is appropriate.” Id. (quoting Lehman Bros. Holdings Inc. v.
Walji, No. 09-CV-1995, 2011 WL 1842838, at *3 (S.D.N.Y. May 11, 2011)).
Both parties submitted copies of the Notes with their papers. Dkt. Nos. 16-5, 16-6, 22-5 to 7, 28-3. Defendant does not dispute that the Notes are valid promissory notes that she executed and
later failed to pay after Plaintiff made proper demand. See Pl.’s S.M.F. ¶¶ 4-6, 8-13; Def.’s Resp.
S.M.F. ¶¶ 4-6, 8-13. See generally Def.’s S.M.F.; Def.’s Mem.; Defendant’s Reply memorandum of
law (Dkt. No. 30) (“Def.’s Reply”). Instead, Defendant argues that Plaintiff has failed to establish
its prima facie case of default, and is therefore not entitled to summary judgment, because it has not
produced original, “wet ink” versions of the Notes. Def.’s Mem. at 20-22. According to Defendant,
§ 3-307 of New York’s enactment of the Uniform Commercial Code (“NY UCC”) requires a
plaintiff seeking recovery on a promissory note to produce the original note. Id. at 20-21. If a
plaintiff fails to produce the original note, Defendant contends, then a plaintiff must satisfy the
requirements of NY UCC § 3-804. Id. at 21.

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Defendant’s arguments are meritless because she confuses when §§ 3-307 and 3-804 apply
and what each section requires as proof. By its terms, § 3-804 applies only when a plaintiff has
shown that she has “lost” the note in question. Where a note has been lost and the defendant
contests its existence and authenticity, a plaintiff may not rely on copies of the note to establish her
prima facie case.3 See Genger, 2012 WL 6628037, at *7 & n.94 (“[P]laintiffs . . . produce[d]
. . . only incomplete copies of the [n]ote . . . . The fact that no original of the [note] has been
located, and the fact that defendants dispute that a complete original ever existed, places plaintiffs
within N.Y.U.C.C. § 3-804 . . . .” (emphasis in original)).
Section § 3-307, by contrast, applies when a plaintiff still has possession of the note. In that
situation, a plaintiff may support its prima facie case with copies of the note so long as “the
existence of the original writings and the authenticity and accuracy of the copies are not disputed.”
Cavendish Traders, 117 F. Supp. 2d at 399 n.8 (citing Chamberlain v. Amato, 688 N.Y.S.2d 345,
346 (App. Div. 1999)); see also Genger, 2012 WL 6628037, at *7 n.94.
Here, Plaintiff asserts that it has maintained possession of the original Notes since their
inception and has made them available for Defendant’s review at Plaintiff’s place of business in
Massachusetts. Pl.’s Opp. at 19 (citing Dkt. No. 26 ¶¶ 1-5; Dkt. No. 25-3 ¶ 1). Defendant does not
dispute that she executed the original Notes or that the copies submitted by Plaintiff are authentic
and accurate. Indeed, Defendant effectively concedes these points by submitting copies of the Notes

3

Section 3-804 provides two ways for a plaintiff to recover on a lost note: (1) by providing
proof of the plaintiff’s ownership of the note, the note’s terms, and the reasons why plaintiff could
not produce it; or (2) by posting “security, in an amount fixed by the court not less than twice the
amount allegedly unpaid on the instrument, indemnifying the defendant, his heirs, personal
representatives, successors and assigns, against loss, including costs and expenses, by reason of
further claims on the instrument.”
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in support of her Cross-Motion. Dkt. Nos. 25-5 to -7. And although Defendant vaguely asserts that
it is possible that Plaintiff no longer has possession of the original notes, she points to no facts in the
record showing that this assertion is anything more than speculation on her part. See Def.’s Mem. at
20-22; Def.’s Reply at 9-10. The Court is therefore not convinced that a genuine factual issue exists
as to whether Plaintiff is the current holder of the notes. Plaintiff has therefore met its burden of
establishing a prima facie case of default. See Cavendish Traders, 117 F. Supp. 2d at 399 n.8; Lau,
2012 WL 3553092, at *4 (finding a copy of an executed note, the authenticity and accuracy of
which had not been disputed by the defendant, sufficient to establish a plaintiff’s prima facie case).
Consequently, Plaintiff has also established that it is entitled to summary judgment on its first,
second, and fourth causes of action if the Court concludes that Defendant’s affirmative defenses to
the enforcement of the NY Agreement are meritless.
C. The Short Sale Agreements
1. RPAPL § 1371
Defendant argues that this action is barred in its entirety by RPAPL § 1371. Pl.’s Mem. at 611. Section 1371 is located within Article 13 of RPAPL, which governs actions to foreclose on
mortgages, and is entitled “Deficiency judgment.” Subsection (1) of § 1371 provides that
[i]f a person who is liable to the plaintiff for the payment of the debt secured by the
mortgage is made a defendant in the action, and has appeared or has been personally
served with the summons, the final judgment may award payment by him of the whole
residue, or so much thereof as the court may determine to be just and equitable, of the
debt remaining unsatisfied, after a sale of the mortgaged property and the application of
the proceeds, pursuant to the directions contained in such judgment, the amount thereof
to be determined by the court as herein provided.
Subsection (2) requires that a motion for a deficiency judgment be brought within 90 days of the
deed for the foreclosed property passing from the foreclosure-sale referee’s control. N.Y. RPAPL

10

§ 1371(2); Arbor Nat’l Commercial Mortg., LLC v. Carmans Plaza, LLC, 759 N.Y.S.2d 683, 684
(App. Div. 2003) (“The courts have uniformly treated the 90-day period contained in RPAPL
1371(2) as a provision in the nature of a statute of limitations, so that the plaintiff’s failure to serve
notice within the 90-day period is a complete bar to the entry of a deficiency judgment . . . .”
(citations omitted)); Lennar Northeast Partners Ltd. v. Gifaldi, 695 N.Y.S.2d 213, 215 (Sup. Ct.
1998) (“[T]he date the deed passed beyond the Referee’s control begins the limitation period.”). If
such a motion is not brought within the 90-day “statute of limitations” period, subsection (3)
provides that “the proceeds of the sale regardless of amount shall be deemed to be in full
satisfaction of the mortgage debt and no right to recover any deficiency in any action or proceeding
shall exist.” N.Y. RPAPL § 1371(3).
According to Defendant, the requirements of § 1371 apply in this case because § 1371 and
its legislative history demonstrate that a mortgagee may obtain a deficiency judgment in New York
only through “a mortgage foreclosure action wherein the defendant is named and served and given
the opportunity to assert her equity of redemption, enjoy the benefits of a competitive auction at a
judicially supervised foreclosure sale and defend herself against an excessive deficiency judgment.”
Id. at 8. Because § 1371 is allegedly the “sole path” to a deficiency judgment, Defendant argues that
the NY Agreement, which contains the additional sentence reserving Plaintiff’s right to recover the
deficiency balance on the NY Notes, impermissibly “circumvents” § 1371’s protections for
mortgagors and is therefore unenforceable. Id. 10-11. Furthermore, Defendant contends that
because Plaintiff did not name her in a foreclosure action on the New York and Florida properties,
Plaintiff “waived” its right to seek a deficiency judgment on the Notes under subsection (1) of

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§ 1371.4 Def.’s Mem. at 8. Defendant contends, finally, that Plaintiff’s claims on the Notes are
time-barred because Plaintiff did not bring this action until well after subsection (2)’s 90-day
limitations period had expired. Id. at 8-9.
Plaintiff responds to Defendant’s arguments by asserting that § 1371, by its terms and
location within RPAPL, applies only in the context of a foreclosure action and does not bar a
plaintiff from recovering on a defaulted note after the private sale of the property securing it.
Plaintiff’s Memorandum of law in opposition to Defendant’s Cross-Motion (Dkt. No. 25) (“Pl.’s
Opp.”) at 7-11.
The Court finds that Defendant has failed to establish that New York has a strong public
policy requiring deficiency judgments to be procured only within a foreclosure action. Whether
taken individually or collectively, the cases that Defendant cites demonstrate only that New York
has prohibited a mortgagee from maintaining an action to foreclosure on a mortgaged property and a
separate action to recover a money judgment on the promissory note secured by the same mortgage.
Indeed, Sanders v. Palmer, 499 N.E.2d 1242, 1244-45 (N.Y. 1986), which Defendant relies on
heavily to support her argument, states that one of § 1371’s two main purposes is to avoid multiple
lawsuits, one in equity and the other in law, on the same mortgage. Sanders goes on to explain that
§ 1371 and its predecessor statutes were enacted against the background of the Great Depression,
when many homeowners lost their homes in foreclosure sales at prices that did not reflect the
property’s “real value.” See id. at 1244 (quoting Public Papers of Herbert H. Lehman, 1933, at 140,

4

In her Memorandum of law, Defendant does not explicitly identify which of her arguments
corresponds with which of her affirmative defenses. See generally Def.’s Mem. Based on
Defendant’s use of the word “waived” in this argument, and the absence of any similar language in
any of her other arguments, the Court finds that this argument corresponds with her sixth affirmative
defense. See Answer ¶ 8.
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141-42). Such foreclosure sales often resulted in lenders seeking “exaggerated” deficiency
judgments against the homeowners. See id. According to Sanders, § 1371’s second purpose, then,
is to “benefit the mortgagor and burden the mortgagee” by: (1) requiring the deficiency amount to be
determined with reference to the market value of the foreclosed property or its sale price, whichever
is higher; and (2) deeming the proceeds of the foreclosure sale to be in full satisfaction of the
outstanding debt if a deficiency judgment is not sought within the 90-day limitations period. See id.
1243-45.
The facts of this case do not implicate § 1371’s purposes or the concerns it was enacted to
address. First, it is undisputed that Plaintiff never filed an action to foreclose on the Properties.
Thus, Plaintiff cannot possibly run afoul of § 1371’s first purpose of protecting mortgagors from
having to defend against both a foreclosure action and a separate deficiency action. Second,
Defendant chose to sell the Properties, as opposed to being forced to sell them because they had
been foreclosed upon, and she did so over time on the open market, not on a set date at a foreclosure
sale. As Plaintiff has correctly explained in its Opposition, “in a foreclosure sale, the borrower has
no control over the sale price; for a private short sale to occur, by contrast, the borrower must
execute the purchase and sale agreement.” Pl.’s Opp. at 11. These circumstances mitigate any
concerns that Defendant will be subjected to an “exaggerated” judgment that has no relation to the
“real value” of the Properties.
In addition, while it is true that Plaintiff did not satisfy the requirements of § 1371 by
naming Defendant in a foreclosure action and bringing a motion for a deficiency judgment within
that section’s limitations period, these failures do not preclude Plaintiff’s claims on the Notes.
Section 1371 simply does not apply in this case because the necessary predicate for its

13

application—a foreclosure action—is missing. The cases that Defendant cites in support of her
contrary contention are inapposite because they apply § 1371 to situations in which a foreclosure
action and sale have, in fact, taken place. See Pl.’s Opp. at 9-10 (providing a chart demonstrating
this fact). The Court therefore finds no basis under New York law for applying § 1371 to the facts
of this case and barring Plaintiff from recovering the balance remaining on the Notes.
2. Facial Ambiguity in the Agreements
The parties dispute whether the Agreements are ambiguous with regard to the effect each has
on the balance remaining on the Notes after the sale of the Properties. Def.’s Mem. at 14-16; Pl.’s
Opp. at 2-4. “Whether a contract is ambiguous is a question of law for the court and is to be
determined by looking ‘within the four corners of the document.’” Triax Capital Advisors, LLC v.
Rutter, 921 N.Y.S.2d 54, 56 (App. Div. 2011) (quoting Kass v. Kass, 696 N.E.2d 174, 180 (N.Y.
1998)). A contract is unambiguous if “on its face [it] is reasonably susceptible of only one
meaning.” Id. (quoting Greenfield v. Philles Records, 780 N.E.2d 166, 170 (N.Y. 2002)) (internal
quotation marks omitted). Conversely, “[a] contract is ambiguous if the provisions in controversy
are reasonably or fairly susceptible of different interpretations or may have two or more different
meanings.” Id. (quoting Feldman v. Nat’l Westminster Bank, 760 N.Y.S.2d 3, 5 (App. Div. 2003))
(internal quotation marks omitted).
“The existence of ambiguity is determined by examining the ‘entire contract and
consider[ing] the relation of the parties and the circumstances under which it was executed,’ with
the wording to be considered ‘in the light of the obligation as a whole and the intention of the
parties as manifested thereby.’” Id. (quoting Kass, 696 N.E.2d at 180-81). The “intent of the parties
must be found within the four corners of the contract, giving a practical interpretation to the

14

language employed and the parties’ reasonable expectations.” Id. (quoting Del Vecchio v. Cohen,
733 N.Y.S.2d 479, 480 (App. Div. 2001)) (internal quotation marks omitted).
[W]hen parties set down their agreement in a clear, complete document, their writing
should as a rule be enforced according to its terms. Evidence outside the four corners
of the document as to what was really intended but unstated or misstated is generally
inadmissible to add to or vary the writing.
W.W.W. Assocs., Inc. v. Giancontieri, 566 N.E.2d 639, 642 (N.Y. 1990) (citations omitted). This
rule imparts “stability to commercial transactions” and is therefore “all the more compelling in the
context of real property transactions, where commercial certainty is a paramount concern.” Id.
Before turning to its interpretation of the Agreements, the Court first concludes that it may
not read the Agreements together. Although the Agreements are between the same parties and
contain many identical terms, they were executed months apart; involve the sale of different
properties at vastly different prices; relate to different promissory notes evidencing loans in vastly
different amounts; and do not in any way make reference to each other. In sum, despite their surface
similarity, the Agreements represent two unrelated transactions and therefore the Court must read
the Agreements individually. See BWA Corp. v. Alltrans Express U.S.A., 493 N.Y.S.2d 1, 3 (App.
Div. 1985) (“Where several instruments constitute part of the same transaction, they must be
interpreted together. In the absence of anything to indicate a contrary intention, instruments
executed at the same time, by the same parties, for the same purpose, and in the course of the same
transaction will be read and interpreted together, it being said that they are, in the eye of the law, one
instrument.”); see also Europacific Asset Mgmt. Corp. v. Tradescape Corp., No. 03 Civ. 4556, 2005
WL 497787, at *12 (S.D.N.Y. 2005) (applying New York law in choosing to read two contracts
together because they constituted part of the same transaction); 11 RICHARD A. LORD, WILLISTON
ON CONTRACTS §

30:26 (4th ed. 1990) (summarizing the law regarding the interpretation of
15

interrelated contracts).
a. The FL Agreement
The FL Short Sale Agreement contains an initial “re:” line that identifies: (1) the subject
loan, by Plaintiff’s reference number; (2) Defendant as the borrower on that loan; and (3) the FL
Property. Dkt. No. 22-19 at 2.5 There is no dispute that the loan identified is the one evidenced by
the FL Term Note. The next line of the Agreement reads: “[Plaintiff] and [Defendant] hereby agree
to a short payoff of your loan, subject to the following terms and conditions.” Id. Ten numbered
paragraphs follow. The first paragraph states that “[t]he net proceeds to [Plaintiff] from the sale of
the property must not be less than $70,478.48.” Id. at 2, ¶ 1. The sixth paragraph states that “[a]ny
funds held in Borrower’s escrow impound account and/or any insurance claim proceeds relating to
the loan will be considered the property of [Plaintiff] and will be applied toward [Plaintiff’s] loss.”
Id. at 3, ¶ 6. The ninth paragraph states that upon Defendant’s compliance with the terms and
conditions of the FL Agreement, “and upon clearing of any net proceeds funds, Berkshire Bank will
prepare and submit for recording through its normal channels a release of the mortgage or deed of
trust that secures the loan.” Id. at 3, ¶ 9. The tenth and final numbered paragraph informs
Defendant “that any principal balance on the Loan that is written off as a result of this Agreement,
will be subject to by law to any applicable legal reporting requirements promulgated by the IRS,
which could, mean that [Defendant] is subject to the receipt of a 1099C.”6 Id. at 4, ¶ 10.

5

In referring to specific pages in the FL Agreement, the Court uses the numbers
electronically added to the top of each page by the Clerk of the Court, not the numbers on the
bottom of each page.
6

The Court takes judicial notice that a “1099C” is an IRS form used to report debt that has
been discharged by a federal government agency or another qualifying lender. See FED. R. EVID.
201 (“The court may judicially notice a fact that is not subject to reasonable dispute because
16

The Court concludes that the FL Agreement is reasonably susceptible of only one meaning
and is therefore unambiguous. That meaning, however, is the one advocated by Defendant, not
Plaintiff. Read in the context of the entire agreement, the phrase “short payoff of your loan” clearly
means that the FL Agreement would result in Defendant’s obligations on the FL Term Note being
“paid off” in full.7 Nothing in the first paragraph can reasonably be read to limit the FL Agreement
to an agreement for a one-time payment against the balance on the FL Term Note that leaves
Defendant obligated on the remainder. Rather, the first paragraph merely suggests that Plaintiff
would accept only a certain minimum sum of money from the sale of the FL Property before it
would agree to forgive Defendant’s remaining obligation on the FL Term Note. That Plaintiff

it . . . can be accurately and readily determined from sources whose accuracy cannot reasonably be
questioned.”). These forms are publicly available on the IRS’s website at http://www.irs.gov/pub/
irs-pdf/f1099c.pdf.
7

Plaintiff’s arguments concerning the meaning of the word “payoff” are unconvincing. See
Pl.’s Opp. at 4. Reading “payoff” to be used in its time sense (as in, the time at which a payment is
made) makes little sense in context. The same is true for reading “payoff” to mean simply a onetime payment. Plaintiff could have—and should have—used the word “payment” if that is what it
meant. A search of New York case law shows that “payoff,” when unaccompanied by language
specifically limiting it to a certain amount, is used almost universally to mean payment of a debt in
full. See, e.g., 4 B’s Realty 1530 CR39, LLC, v. Toscano, 818 F. Supp. 2d 654, 659 (E.D.N.Y.
2011) (“[The defendant] was justified in refusing to unconditionally meet the [p]laintiff’s payoff
demand in December 2008.”); Donerail Corp. N.V. v. 405 Park LLC, 952 N.Y.S.2d 137, 144 (App.
Div. 2012) (“Of course, no rational seller would pay off a mortgage in advance of the closing,
because if the closing failed to occur, the seller would have lost the mortgage loan.”); N.Y.
Community Bank v. Vermonty, 892 N.Y.S.2d 137, 139 (App. Div. 2009) (“The Bank sent the
sheriff a payoff letter, stating that the total amount due to satisfy the mortgage loan on [the
defendant’s] property was $105,751.29.”); Deutsche Bank Nat’l Trust Co. v. Bills, No. 1027-09,
2012 WL 4868108, at *4 n.5 (N.Y. Sup. Ct. 2012) (Table) (“[The party] avers only that she . . . did
not receive or cash the payoff check for the Countrywide mortgage loan in the amount of
$760,895.21 . . . .”). Furthermore, the Court notes that one of the online dictionaries Plaintiff uses
to define “payoff” also provides an example of that word used to mean the full payment of a debt.
See DICTIONARY.COM, http://www.dictionary.com (last visited Mar. 22, 2013) (search for “payoff”)
(“The loan payoff amount may be more or less than the trade-in or market value of your vehicle.”).
17

anticipated incurring a loss on the FL Term Note as a result of the FL Agreement is demonstrated by
the language of the sixth paragraph, which specifically mentions Plaintiff’s loss in unequivocal
terms. Despite Plaintiff’s arguments to the contrary, the ninth paragraph cannot reasonably be read
to limit the FL Agreement to an agreement solely to discharge the mortgage securing the FL Term
Note. The FL Agreement is, after all, for a “short payoff of [Defendant’s] loan.” Dkt. No. 22-19 at
1 (emphasis added). The Court finds it much more reasonable to read the ninth paragraph, in light
of that initial phrase, to mean that the mortgage would be discharged to allow the FL Property to be
transferred to a third-party purchaser free of encumbrances, thus permitting the short sale to take
place. The tenth paragraph, like the sixth, shows that Plaintiff was aware that it might incur a loss
as a result of the FL Agreement. The Court therefore concludes that the FL Agreement was
intended by the parties to release Defendant from liability on the FL Term Note once Plaintiff
received the proceeds of Defendant’s sale of the FL Property provided they were at least $70,478.48.
b. The NY Agreement
The NY Agreement is practically identical to the FL Agreement but for the following
material differences. First, the NY Agreement’s “re:” line identifies the NY Notes and the NY
Property as opposed to the FL Term Note and FL Property. Dkt. No. 16-10 at 2.8 Next, the first
paragraph requires that the net proceeds of the sale of the NY Property be no less than $826,742.68.
Id. at 2, ¶ 1. Finally, and significantly, the ninth paragraph contains an additional sentence reading:
“[Plaintiff] reserves the right to pursue any deficiency balance left on either loan, or both of them,
against [Defendant].” Id. at 3, ¶ 9.

8

In referring to specific pages in the NY Agreement, the Court uses the numbers
electronically added to the top of each page by the Clerk of the Court, not the numbers on the
bottom of each page.
18

Reading the NY Agreement as a whole, the Court concludes that its meaning is
unambiguous. The Court finds that meaning to be the one advocated by Plaintiff, not Defendant.
The first sentence of the NY Agreement containing the phrase “short payoff of your loans” is
expressly made subject to the terms and conditions in the numbered paragraphs that follow it.9 Id. at
1. Thus, the “short payoff” that the NY Agreement effects is expressly limited by the additional
sentence in the ninth paragraph reserving Plaintiff’s right to seek the deficiency balance on the NY
Notes. The Court therefore concludes that the NY Agreement was not intended by the parties to
release Defendant from liability on the NY Term Note.
3. Accord vs. Novation
Defendant argues that the Agreements were either executory accords or novations that
provided for full satisfaction of her obligations on the Notes. Def.’s Mem. at 12-14. Under New
York law, there can be no novation when the original contract has already been breached. In re
Cohen, 422 B.R. 350, 372 (E.D.N.Y. 2010) (citing Wasserstrom v. Interstate Litho Corp., 495
N.Y.S.2d 217, 219 (App. Div. 1985)). Here, because it is undisputed that Defendant breached the
Notes by defaulting on them, the Agreements cannot be novations.10 Def.’s S.M.F. ¶ 2.
Under New York law, an executory accord is

9

The Court notes that while the same is true for the FL Agreement, that fact does not change
the Court’s analysis.
10

Furthermore, “[u]nder New York law, when parties agree to a ‘novation,’ the existing
obligation is extinguished immediately by acceptance of a new agreement; however, if parties intend
that under the new agreement, the existing claim would be discharged in the future by rendition of
substituted performance, the new agreement is an ‘executory accord.’” In re Cohen, 422 B.R. at
373. The parties clearly intended that whatever effect the Agreements would have on the Notes and
mortgages, that effect would only come about in the future, after Defendant performed under the
Agreements, and not immediately upon the execution of the Agreements.
19

an agreement embodying a promise express or implied to accept at some future time a
stipulated performance in satisfaction or discharge in whole or in part of any present
claim, cause of action, contract, obligation, or lease, or any mortgage or other security
interest in personal or real property, and a promise express or implied to render such
performance in satisfaction or in discharge of such claim, cause of action, contract,
obligation, lease, mortgage or security interest.
N.Y. GEN. OBLIG. LAW § 15-501(1). Historically, executory accords were unenforceable at common
law. Denburg v. Parker Chapin Flattau & Klimpl, 624 N.E.2d 995, 1001 (N.Y. 1993). In New
York, however, an executory accord is enforceable by statute if it is: (1) in writing; and (2) signed
by the party against whom it is sought to be enforced. N.Y. GEN. OBLIG. LAW § 15-501. Plaintiff
agrees with Defendant that the Agreements were enforceable executory accords, Pl.’s Opp. at 6, and
the Court finds that the Agreements satisfy the requirements of § 15-501. A dispute remains,
however, over whether the Agreements provided for a full or partial satisfaction of Defendant’s
obligations on the Notes.
The Court refers to its discussion in Part IV.C.2.a supra to conclude that the FL Agreement
was an executory accord that provided for full satisfaction of Defendant’s obligations on the FL
Term Note. It is undisputed that Defendant sold the FL Property and transmitted the proceeds of the
sale to Plaintiff according to the terms and conditions of the FL Agreement. Defendant has,
therefore, satisfied the accord and is entitled to have Plaintiff’s claim against her on the FL Term
Note released. See N.Y. JUR. 2D Compromise, Accord, and Release § 29 (“By definition, an accord
and satisfaction has the effect of barring enforcement of the original claim; no action may be
maintained on an obligation which has been extinguished by an accord and satisfaction.” (citing,
inter alia, Ellis v. D.R. Watson Holdings, LLC, 875 N.Y.S.2d 380 (App. Div. 2009))).
Accordingly, the Court grants Defendant’s Motion for summary judgment dismissing Plaintiff’s

20

third cause of action seeking recovery on the FL Term Note.11
Similarly, the Court refers to its discussion in Part IV.C.2.b supra to conclude that the NY
Agreement was an executory accord that provided only for partial satisfaction of Defendant’s
obligation on the NY Notes and for discharge of the mortgages on the NY Property. Thus, although
Defendant has satisfied the accord by selling the NY Property and transmitting the proceeds to
Plaintiff, Defendant remains obligated on the NY Notes unless the Court finds merit in one of
Defendant’s remaining affirmative defenses.
3. Discharge
After Plaintiff received the proceeds from the short sale of the NY Property, it recorded a
Discharge of Mortgage (“DOM”) in the office of the Saratoga County Clerk. Pl.’s S.M.F. ¶ 18;
Def.’s Resp. S.M.F. ¶ 18. The DOM acknowledges the release of the mortgages securing the NY
Notes and then states, in an independent sentence, that “[t]he above mortgages were consolidated by
agreement record November 26, 2007 as Instrument #2007-003358.” Dkt. No. 22-26. Instrument
#2007-00358 is a Consolidation, Extension and Modification Agreement (“CEMA”) pertaining to
the mortgages and attached to it is a copy of the NY Term Note. Plaintiff’s Surreply to Defendant’s
Cross-Motion (Dkt. No. 34) (“Surreply”) at 1.
Defendant argues that the sentence in the DOM referring to the CEMA acted as a release of
the NY Term Note. Def.’s Reply at 7-8. Defendant also argues that Plaintiff “specifically and

11

Plaintiff argues that Defendant is not entitled to summary judgment on the FL Term Note
because Defendant has failed to demonstrate that the FL Agreement contains an express release.
Pl.’s Opp. at 21. The FL Term Note and the NY Term Note both provide that “Borrower will
continue to be obligated under the Note and this Security Instrument unless Lender releases
Borrower in writing.” Dkt. Nos. 16-5, 28-3. The Court rejects Plaintiff’s argument because it
concludes that the FL Agreement is an unambiguous written release of Defendant’s obligation on
the FL Term Note.
21

expressly referred to the actual notes by dates and dollar amounts and recording information.” Id.
The Court finds Defendant’s arguments to be meritless. First, the DOM’s reference to the CEMA
cannot reasonably be read to intend the release of the CEMA, let alone the NY Term Note that was
merely attached to it. Second, contrary to Defendant’s contention, the DOM does not refer on its
face to the actual notes; it refers, instead, to the mortgages. Under New York law, a note is a
separate instrument from the mortgage that secures it. F.D.I.C. v. Persaud, No. 90 CV 4409, 1997
WL 139010, at *4 (E.D.N.Y. Mar. 5, 1997) (citing Signal Fin. of N.Y., Inc. v. Polomaine, 519
N.Y.S.2d 933, 934 (City Ct. 1987)); Corey v. Collins, 782 N.Y.S.2d 51, 52 (App. Div. 2004) (“The
note represents the primary personal obligation of the mortgagor, and the mortgage is merely the
security for such obligation.” (quoting Copp v Sands Point Marina, 217 N.E.2d 654, 655 (N.Y.
1966))). Therefore, the DOM does not operate to discharge Defendant’s obligation on the NY
Notes.12 See Cent. Nat’l Bank, Canajoharie v. Purdy, 671 N.Y.S.2d 866, 867 (App. Div. 1998)
(“[The defendant’s] contention that the discharge of the mortgage operated as a satisfaction of the
underlying obligation is wholly without merit.” (citing Conn. Nat’l Bank v. Hack, 588 N.Y.S.2d
180, 181 (App. Div. 1992))).
4. Estoppel
Defendant contends that the doctrines of promissory and equitable estoppel apply to bar this
action. Def.’s Mem. at 17-20. According to Defendant, the parties entered into an oral agreement

12

To the extent that Defendant attempts to prove Plaintiff actually discharged her obligation
on the Notes by submitting credit-rating agency reports, those reports are inadmissible hearsay.
Def.’s S.M.F. ¶ 16; Dkt. No. 22-22. Therefore, the Court cannot consider them in deciding the
Motion and Cross-Motion. Hollman v. Taser Intern’l Inc., No. 06-CV-3588, 2013 WL 864538, at
*5 (E.D.N.Y. Mar. 8, 2013) (“In deciding whether a motion for summary judgment should be
granted, a district court may only consider admissible evidence.” (citing Nora Beverages, 164 F.3d
at 746)).
22

that Defendant’s obligations on the Notes would be extinguished after the short sale of the
Properties. Id. at 19. Defendant claims that she relied on this alleged oral agreement in signing the
Agreements. Id. at 19-20.
The elements of promissory estoppel and equitable estoppel overlap for purposes of
Defendant’s Cross-Motion. “The elements of a cause of action based upon promissory estoppel are
a clear and unambiguous promise, reasonable and foreseeable reliance by the party to whom the
promise is made, and an injury sustained in reliance on that promise.” Rock v. Rock, 953 N.Y.S.2d
165, 167 (App. Div. 2012) (quoting Schwartz v. Miltz, 909 N.Y.S.2d 729, 731 (App. Div. 2010))
(internal quotation marks omitted). Similarly, in order to prevail on the theory of equitable estoppel
under New York law, “the party seeking estoppel must demonstrate, with respect to himself, a lack
of knowledge of the true facts; reliance upon the con duct of the party estopped; and a prejudicial
change in position.” River Seafoods Inc. v. JPMorgan Chase Bank, 796 N.Y.S.2d 71, 74 (App. Div.
2005) (citing BWA Corp., 493 N.Y.S.2d at 3).
It suffices for the Court to say here that Defendant has provided no evidence showing that
Plaintiff ever affirmatively promised to release Defendant’s obligations on the Notes or that the
parties ever entered into such an oral agreement.13 First, the emails that Defendant relies on so
heavily as proof of an agreement do not establish that one was formed. See Dkt. Nos. 22-13 to -17,
-21. Second, in her Statement of material facts, Defendant cites only to a paragraph in her Affidavit
that neither expressly states nor even suggests that an agreement was formed. Def.’s S.M.F. ¶ 8.
That paragraph reads: “While negotiating the full payment and satisfaction of the Florida Mortgage,

13

The Court also finds convincing Plaintiff’s detailed arguments in its Opposition as to why
these doctrines do not apply to the facts of this case. Pl.’s Opp. at 11-18.
23

Berkshire never again asked me about signing a note or otherwise covering deficiency. I was
relieved and felt that this chapter of my life was behind me.” Tedeschi Aff. ¶ 33. Therefore, there
is nothing in the record that would justify the Court’s exercise of its equitable powers to estop the
enforcement of the NY Agreement as it is written.14
Likewise, Defendant has failed to present any evidence demonstrating fraud on the part of
Plaintiff’s counsel in inserting the reservation-of-rights sentence in the NY Agreement. A defendant
cannot avoid the consequences of an agreement she has willingly signed by making such
unsupported allegations. This is especially true here b ecause Defendant has admitted to being a
“very sophisticated businesswoman” but has also admitted to reading only the first page of the NY
Agreement. Pl.’s S.M.F. ¶ 20 (citing Dkt. No. 16-3 at 40:18-23); Def.’s Resp. S.M.F. ¶ 20. New
York law does not recognize the failure to read a contract before signing it as a valid reason not to
enforce the contract. E.g., Sofio v. Hughes, 556 N.Y.S.2d 717, 718-19 (App. Div. 1990) (“A party
who signs a document without any valid excuse for having failed to read it is ‘conclusively bound’
by its terms.” (quoting Gillman v. Chase Manhattan Bank, 534 N.E.2d 824, 828 (N.Y. 1988))).
Given her experience in business dealings like the one a t issue in this case, Defendant should have
known better than to rely solely on her assumption that the NY Agreement would be the same as the
FL Agreement.
Accordingly, the Court grants Plaintiff’s Motion for summary judgment as to the
Complaint’s first and second causes of action.

14

The Court notes that Defendant has failed to make any argument in her briefs concerning
her ninth affirmative defense of ratification. Because the Court finds that there is no evidence of an
oral agreement to be ratified by Plaintiff, however, the Court denies Defendant’s ratification
defense.
24

D. Attorney’s Fees
The Complaint’s fourth cause of action seeks reimbursement for the attorney’s fees and costs
Plaintiff incurred in bringing this action. Compl. ¶¶ 41-42. “[C]ourts applying New York law
should not infer a party’s intention to provide counsel fees as damages for a breach of contract
unless the intention to do so is unmistakably clear from the language of the contract.” Mid-Hudson
Catskill Rural Migrant Ministry, Inc. v. Fin. Host Corp., 418 F.3d 168, 177 (2d Cir. 2005) (internal
quotation marks and citations omitted). Here, the NY Term Note and NY Line-of-Credit Note both
explicitly require Defendant to reimburse Plaintiff for the attorney’s fees and costs it incurred in
enforcing them. Dkt. No. 16-5, § 7(E); Dkt. No. 16-6 at 5. Plaintiff has therefore met its initial
burden of establishing Defendant’s liability for attorney’s fees and costs.
Accordingly, the Court grants Plaintiff’s Motion as to the Complaint’s fourth cause of
action. The amount of fees and costs to be awarded to Plaintiff will be determined by the Court on
separate motion to be filed within 14 days of the date of this Memorandum-Decision and Order.
Defendant also argues that she is entitled to be reimbursed for the fees and costs she has
incurred in defending against this action under § 282 of New York’s Real Property Law (“RPL”).
Def.’s Mem. at 22. Although Defendant is a prevailing mortgagor and therefore entitled to fees and
costs under § 282, she has not made her request in a counterclaim as required by that section.15 The
15

Section 282, subsection (1) provides:

Whenever a covenant contained in a mortgage on residential real property shall provide
that in any action or proceeding to foreclose the mortgage that the mortgagee may
recover attorneys’ fees and/or expenses incurred as the result of the failure of the
mortgagor to perform any covenant or agreement contained in such mortgage, or that
amounts paid by the mortgagee therefor shall be paid by the mortgagor as additional
payment, there shall be implied in such mortgage a covenant by the mortgagee to pay
to the mortgagor the reasonable attorneys’ fees and/or expenses incurred by the
25

Court therefore denies Defendant’s request for fees and costs in this action.
V.

CONCLUSION
Accordingly, it is hereby:
ORDERED, that Plaintiff’s Motion (Dkt. No. 16) for partial summary judgment on the

Complaint’s (Dkt. No. 1) first, second, and fourth causes of action is GRANTED; and it is further
ORDERED, that Defendant’s Cross-Motion (Dkt. No. 22) for summary judgment is
GRANTED in part and DENIED in part consistent with this Memorandum-Decision and Order;
and it is further
ORDERED, that the Complaint’s (Dkt. No. 1) third cause of action is DISMISSED with
prejudice; and it is further
ORDERED, that Defendant shall pay Plaintiff’s attorney’s fees and costs in an amount to be
determined by the Court at a later date. Plaintiff is ordered to file a motion concerning the amount
of attorney’s fees and costs for which it seeks reimbursement within fourteen (14) days of the date
of this Memorandum-Decision and Order. Defendant shall then have fourteen (14) days from the
filing date of Plaintiff’s motion to respond; and it is further

mortgagor as the result of the failure of the mortgagee to perform any covenant or
agreement on its part to be performed under the mortgage or in the successful defense
of any action or proceeding commenced by the mortgagee against the mortgagor arising
out of the contract, and an agreement that such fees and expenses may be recovered as
provided by law in an action commenced against the mortgagee or by way of
counterclaim in any action or [a] proceeding commenced by the mortgagee against the
mortgagor. Any waiver of this section shall be void as against public policy.
N.Y. RPL § 282(1) (emphasis added). The Court notes, however, that § 282 also provides that a
prevailing mortgagor may recover its attorney’s fees and costs through a separate action commenced
against the mortgagee. Id.
26

ORDERED, that the Clerk of the Court serve a copy of this Memorandum-Decision and
Order on the parties.
IT IS SO ORDERED.

DATED:

March 27, 2013
Albany, New York

27