Friday, August 10, 2018

STATUTE OF LIMITATIONS DEFENSE CANNOT BE RAISED BY COURT



352 Legion Funding Assoc. v 348 Riverdale, LLC, 2018 NY Slip Op 05662 Decided on August 8, 2018, Appellate Division, Second Department:

"In April 2007, the defendant 348 Riverdale, LLC (hereinafter the defendant), borrowed the sum of $250,000 from the plaintiff. As security for the loan, the defendant executed and delivered to the plaintiff a note and mortgage on property located in Brooklyn. The terms of the loan provided that it matured on May 1, 2008. However, by a letter dated April 2, 2008, the maturity date was purportedly extended to May 1, 2010. The defendant continued making payments on the loan until April 2009, and thereafter defaulted.

The plaintiff commenced this action to foreclose the mortgage by filing a summons and complaint on December 5, 2014. The defendant failed to appear, answer, or make any motion asserting any defense to the complaint. Thereafter, the plaintiff moved, inter alia, for leave to enter a default judgment and for an order of reference to compute the sum due on the note. The defendant did not oppose the motion. By order dated March 16, 2016, the Supreme Court denied the plaintiff's motion, and sua sponte directed the dismissal of the complaint on the ground that the plaintiff commenced the action after the statute of limitations had expired. The court reasoned that the letter which extended the maturity date of the loan was unenforceable because it was not signed by the [*2]defendant, and that the statute of limitations began to run on May 1, 2008, the original maturity date of the mortgage. The plaintiff moved, inter alia, to renew its prior motion. By order dated January 5, 2017, the court denied the motion. The plaintiff appeals from both orders.

We agree with the plaintiff that the Supreme Court erred in sua sponte raising the affirmative defense of the statute of limitations and directing the dismissal of the complaint on that ground. The statute of limitations is an affirmative defense which is waived by a party unless it is raised either in a responsive pleading, or by motion prior to the submission of a responsive pleading (see CPLR 3211[e]; Deutsche Bank Trust Co. Ams. v Cox, 110 AD3d 760, 762; Aurora Loan Servs. LLC v Dimura, 104 AD3d 796, 797; Horst v Brown, 72 AD3d 434, 436). "A court may not take judicial notice,' sua sponte, of the applicability of a statute of limitations if that defense has not been raised" (Paladino v Time Warner Cable of N.Y. City, 16 AD3d 646, 647; see De Oleo v Charis Christian Ministries, Inc., 94 AD3d 541, 542; Horst v Brown, 72 AD3d at 436). Here, the defendant neither answered the complaint nor submitted a pre-answer motion which raised the statute of limitations defense."

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