Ramirez v Fay Servicing, LLC

Supreme Court, Westchester County

Decided on April 2, 2026

Index No. 57297/2026

William J. Giacomo, J.

In this putative class action, defendants Fay Servicing, LLC and Wilmington Trust, National Association, as Trustee of MFRA Trust 2014-2 (Wilmington) (collectively, defendants) move, pre-answer pursuant to CPLR 3211(a)(1), (5), and (7) for dismissal of the plaintiff Matilde Ramirez, individually and on behalf of all others similarly situated' s complaint.

Papers Considered

Motion Seq. 001 NYSCEF Doc. No. 1-17

1. Notice of Motion/ Affirmation in Support of Stephen J. Vargas, Esq.

2. Memorandum of Law in Opposition

3. Affirmation of Stephen J. Vargas, Esq. in Reply

4. Amended Complaint/Exhibits A-F

5. Correspondence

FACTUAL AND RELEVANT PROCEDURAL BACKGROUND

Plaintiff commenced this action by filing a summons and complaint on February 10, 2026. In brief, the complaint alleges that plaintiff executed a mortgage loan secured by her residence which was subsequentlty modified pursuant to a written agreement. This agreement provided that a portion of the loan principal in the amount of $262,868.24 would be designated as deferred principal balance on which no interest shall accrue.

Plaintiff subsequently became a defendant in a foreclosure action under Index No. 68137/2022. A Judgment of Foreclosure and Sale was ultimately granted on July 5, 2024 by the Honorable Charles D. Wood, J.S.C. The Judgment set forth, in relevant part, that the referee calculated $926,627.05, as the amount due to plaintiff for the principal, interest and advances made pursuant to the Note and Mortgage, as of March 19, 2024. Further, the "Referee shall also pay to the Plaintiff . . . the sum of $926,627.05, the said amount so reported due as aforesaid, together with contractual interest thereon from March 19, 2024, the date interest was calculated to in said report to the date of entry of this Order, and thereafter the statutory post-judgment date to the date of transfer of title . . .."

The notice of sale set forth, in pertinent part:

"Pursuant to a Judgment of Foreclosure and Sale duly entered on October 25, 2024, I, the undersigned Referee will sell at public auction at the Westchester County Courthouse, lobby, 111 Dr. Martin Luther King Jr. Boulevard, White Plains, NY 10601 on February 9, 2026 at 9:30 a.m., premises known as 110 Mahopac Avenue, Granite Springs a/k/a Somers, NY 10527. All that certain plot, piece or parcel of land, with the buildings and improvements thereon erected, situate, lying and being in the Town of Somers, County of Westchester and State of New York, Section 26.12, Block 2 and Lot 3. The approximate amount of judgment is $926,627.05 plus interest and costs. Premises will be sold subject to provisions of filed Judgment Index #68137/2022."

The record indicates that the foreclosure auction was held as scheduled and Wilmington was the successful bidder.

The complaint alleges that the referee in the foreclosure action "correctly calculated pre-judgment interest in accordance with the Modification Agreement by charging interest solely on the Interest Bearing Principal Balance and excluding the Deferred Principal Balance, consistent with the express terms of the Modification Agreement." However, "[n]otwithstanding the express terms of the Modification Agreement and the Referee's pre-judgment interest calculation, Defendants thereafter calculated, sought, imposed, and enforced statutory post-judgment interest on the Deferred Principal Balance by treating that balance as part of the interest-bearing judgment amount, without contractual or legal authorization."

According to the complaint, the foreclosure sale notice issued improperly reflected the [*2]post-judgment interest as applied to the entire judgment, even on the amounts that contractually may not accrue interest. Further, defendants are allegedly not authorized to impose statutory post-judgment interest on amounts that the parties' contract expressly designates as non interest bearing.

The complaint alleges that plaintiff's loan is not an isolated instance and that other borrowers have foreclosure judgments which also purportedly improperly impose statutory post-judgment interest. As a result, plaintiff brings this action pursuant to CPLR Article 9, alleging that "this is a putative class action arising from Defendants' uniform mortgage servicing practice of seeking, imposing, and collecting statutory post-judgment interest on portions of mortgage loan balances that are expressly designated as non-interest bearing under written mortgage modification agreements."

There are five causes of action asserted in the complaint; breach of contract, unjust enrichment, violation of General Business Law § 349, attorneys' fees pursuant to RPL § 282 and violations of the FDCPA.

Instant Motion

Defendants move to dismiss the complaint and for sanctions due to plaintiff's allegedly frivolous conduct. To start, defendants argue that the complaint must be dismissed due to the doctrines of res judicata and collateral estoppel. The motion for judgment and foreclosure and sale was granted in its entirety, and plaintiff never moved to vacate it. As a result, plaintiff may not re-litigate the sum awarded in the Judgment, which included post-judgment statutory interest pursuant to CPLR 5004 on the deferred principal balance that had previously accrued no principal balance.

Defendants also move to dismiss pursuant to CPLR 3211 (a) (1) based on the documentary evidence in the record, which includes the judgment of foreclosure and sale. Here, as noted, the Court awarded Wilmington the sum of $926,627.05, which included $262,878.24 deferred principal balance with no interest charged on it. According to defendants, plaintiff's interpretation of the loan modification agreement is unreasonable as she is requesting to have the judgment bifurcated to include a judgment amount that would not accrue post-judgment interest.

Defendants provide reasons for why the causes of action should be dismissed pursuant to CPLR 3211 (a) (7). For instance, there are no factual allegations specifically alleged as against Fay Servicing. As another example, defendants argue that the breach of contract claim fails, as plaintiff admittedly did not perform in accordance with the contract when she failed to make her mortgage payments.

Defendants are seeking sanctions against plaintiff due to her conduct in filing this action. In brief, plaintiff had moved by order to show cause to cancel the sale. The Court declined to sign the order to show cause and the sale proceeded. Two days after the foreclosure sale was held, plaintiff commenced this action. According to defendants, plaintiff commenced this action as a way to harass defendants because they conducted the foreclosure sale.

In opposition, among other things, plaintiff argues that res judicata is inapplicable as the defendants' post-judgment interest is inconsistent with the Referee's confirmed computation. Further, the class members were not parties to the foreclosure action and cannot be bound by res judicata. Plaintiff claims that the modification agreement limited the amount of interest that could be applied to certain payments and that the bifurcated methodology used by the Referee in applying interest to the amount due should also be applied to post-judgment.

DISCUSSION

[*3]I. Dismissal

A motion to dismiss a complaint pursuant to CPLR 3211 (a) (1) may be granted only if the documentary evidence submitted by the moving party utterly refutes the factual allegations of the complaint, "conclusively establishing a defense as a matter of law." Endless Ocean, LLC v Twomey, Latham, Shea, Kelley, Dubin & Quartararo, 113 AD3d 587, 588 (2d Dept 2014). On a motion to dismiss pursuant to CPLR 3211 (a) (7), "the facts as alleged in the complaint [are] accepted as true, the plaintiff is [given] the benefit of every possible favorable inference," and the court must determine simply "whether the facts as alleged fit within any cognizable legal theory." Mendelovitz v Cohen, 37 AD3d 670, 671 (2d Dept 2007). However, "bare legal conclusions as well as factual claims flatly contradicted by the record are not entitled to any such consideration." Silverman v Nicholson, 110 AD3d 1054, 1055 (2d Dept 2013) (internal quotation marks and citation omitted).

Pursuant to CPLR 3211 (a) (5), in pertinent part, a party may move to dismiss on the ground that a cause of action may not be maintained because of res judicata or collateral estoppel. "Under the doctrine of res judicata, a party may not litigate a claim where a judgment on the merits exists from a prior action between the same parties involving the same subject matter. The rule applies not only to claims actually litigated but also to claims that could have been raised in the prior litigation." Matter of Singer v Windfield, 125 AD3d 666, 667 (2d Dept 2015).

"The doctrine of collateral estoppel, a narrower species of res judicata, precludes a party from relitigating in a subsequent action or proceeding an issue clearly raised in a prior action or proceeding and decided against that party or those in privity, whether or not the tribunals or causes of action are the same." Karakash v Trakas, 163 AD3d 788, 789 (2d Dept 2018) (internal quotation marks and citations omitted).

The Appellate Division, Second Department has held that "[u]nder New York's transactional analysis approach to res judicata, once a claim is brought to a final conclusion, all other claims . . . are barred, even if based upon different theories or if seeking a different remedy." 83-17 Broadway Corp. v DebCon Fin. Servs., Inc., 39 AD3d 583, 584 (2d Dept 2007) (internal quotation marks omitted). Moreover, "a judgment of foreclosure and sale entered against a defendant is final as to all questions at issue between the parties, and all matters of defense which were or which might have been litigated in the foreclosure action are concluded." Id. at 584-585.

As noted, the Court granted defendants' motion for judgment of foreclosure and sale on July 5, 2024. The order held that the sum of $926,627.05 was due the plaintiff, as of March 19, 2024, plus contractual interest theron from March 19, 2024, and thereafter statutory post-judgment interest. The Judgment was entered on October 25, 2024. After plaintiff filed for bankruptcy, the foreclosure auction sale was stayed until a third notice of sale was filed on January 5, 2026. This notice of sale set forth that the approximate amount of judgment is $926,627.05 plus interest and costs and that the premises will be sold subject to provisions of filed Judgment Index #68137/2022.

Plaintiff did not oppose the motion, nor did she move to vacate or appeal the Judgment. It is irrelevant that now, post judgment, plaintiff attempts to dispute the statutory post-judgment interest, as provided for in the order.

In sum, the underlying amount due and language in the Judgment of Foreclosure and Sale have already been litigated in the prior action and plaintiff's claims are now barred by the [*4]doctrine of res judicata.

CPLR 5004

As set forth below, even if the Court were to address the plaintiff's arguments, they are without merit. The loan modification agreement at issue provided that "$262,878.24 of the New Principal Balance shall be deferred (the 'Deferred Principal Balance') and Borrower will not pay interest or make monthly payments on this amount." Here, plaintiff does not dispute that the referee computed the amount due correctly and did not include prejudgment interest on the deferred balance of $262,878.24 and only applied prejudgment interest on the principal balance of $557,769.78. However, plaintiff argues that post-judgment interest was incorrectly applied, in total, to the deferred and principal amounts, and that the deferred balance cannot, as per the contract, be subject to post-judgment interest.

Pursuant to CPLR 5003, "Every money judgment shall bear interest from the date of its entry. Every order directing the payment of money which has been docketed as a judgment shall bear interest from the date of such docketing." The rate is set at 9% by CPLR 5004: "Interest shall be at the rate of nine per centum per annum, except where otherwise provided by statute."

Courts have held that, "when a contract provides for interest to be paid at a specified rate until the principal is paid, the contract rate of interest, rather than the legal rate set forth in CPLR 5004, governs until payment of the principal or until the contract is merged in a judgment. . . Accordingly, the contract rate, rather than the statutory rate, governed the rate of interest until the entry of judgment." NYCTL 1998-2 Trust v Wagner, 61 AD3d 728, 729 (2d Dept 2009) (internal quotation marks and citations omitted).

In the present situation, the referee properly calculated the amount due and applied prejudgment interest only to the principal balance. Then, after the entry of judgment, statutory post-judgment interest started to accrue on the entire amount. Neither defendants nor the Court are expected to parse out amounts of the Judgment post-judgment, and they are all subject to statutory interest once the judgment was entered. Moreover, the modification agreement at issue also indicates that the agreement shall not "in any way impair, diminish, or affect any of Lender's rights under or remedies on the Note and Security Instrument, whether such rights or remedies arise thereunder or by operation of law," i.e. statutory post judgment interest.

Accordingly, the documentary evidence warrants dismissal of plaintiff's claims related to post-judgment calculations. As a result, the remaining claims, stemming from this purportedly improper calculation, are also dismissed. In its discretion, the Court declines to award sanctions.

Plaintiff's Amended Complaint

The Court notes that after the motion was fully briefed and ready for a determination, plaintiff wrote a letter to the Court advising the Court that she submitted an amended complaint. Plaintiff is requesting for the instant motion to be moot and for the amended complaint to supersede the original complaint. Plaintiff argues that the amended complaint provides additional factual details regarding the mathematical verification of the referee's prejudgment interest. There are six causes of action in the amended complaint related to the defendants' alleged improper calculations. In addition to the five initially asserted in the complaint, plaintiff is seeking a declaratory judgment.

Further, according to plaintiff, there are additional causes of action arising from the defendants' alleged unlawful entry into plaintiff's occupied residence on February 27, 2026. These causes of action are not part of the class action allegations and allegedly started to accrue after the commencement of the underlying action. In brief, the amended complaint alleges that [*5]"[a]t the time of this unlawful entry, Plaintiff and/or Plaintiff's family members remained lawful occupants of the premises, no eviction proceeding had been commenced, and no writ of possession had been issued. Defendants' conduct constitutes trespass, unlawful eviction, conversion, and infliction of emotional distress, and warrants an award of punitive damages." Plaintiff has also informed the Court that defendants have no intention of withdrawing their motion to dismiss.

Pursuant to CPLR 3025(a), plaintiff had a right to amend her complaint during the pendency of defendants' motion to dismiss. Nonetheless, although plaintiff is permitted to amend once as of right, the timing makes clear that the alleged amplification of the class action, or post-judgment interest claims, was not done in good faith to clarify claims, but done in anticipation of the Court's ruling. Further, contrary to plaintiff's contention, the filing of an amended complaint does not render defendants' motion moot. "It has long been the rule in this Judicial Department that a motion to dismiss which is addressed to the merits may not be defeated by an amended pleading." Livadiotakis v Tzitzikalakis, 302 AD2d 369, 370 (2d Dept 2003).

Moreover, a defendant who moved to dismiss the merits of the complaint retains the option of applying the motion to the amended complaint. Plotch v Citibank, N.A., 244 AD3d 604, 604 (1st Dept 2025) ("The service of an amended pleading does not automatically moot a pending motion to dismiss, and defendant has a right to determine whether it will opt to apply its pending motion to the new pleadings").

Here, applying the defendants' motion to the amended complaint, the fundamental legal deficiencies as identified by the Court are not cured. Thus, the proposed class action claims; namely, one through six; are dismissed for the reasons provided above. See e.g. Id. ("Here, defendants' motion to dismiss the original complaint could properly be directed toward the amended complaint because the theory underlying the original complaint—namely, that defendants failed to furnish certain information necessary for plaintiff's board application—remained unchanged, aside from several clarifying additions to the original pleading").

To the extent the amended complaint asserts entirely new claims, such as allegations of trespass and conversion, these claims arise from separate transactions and occurrences and should not be permitted to proceed in this action. Pursuant to CPLR 603, a Court is authorized to sever claims "in furtherance of convenience or to avoid prejudice." Here, the seventh through twelfth causes of action in the amended complaint do not arise from the allegedly improper interest calculations and do not include any class action claims. It well settled that "severance may be appropriate where there are no issues of fact or questions of law to be determined that are common to the two causes of action." Herskovitz v. Klein, 91 AD3d 598, 599 (2d Dept 2012). Accordingly, these claims, as set forth in the seventh through twelfth causes of action, are severed from the amended complaint and must be commenced under a new index number as a new action.

All other arguments raised on this motion and evidence submitted by the parties in connection thereto have been considered by this court notwithstanding the specific absence of reference thereto.

CONCLUSION

Accordingly it is hereby

ORDERED that defendants' motion to dismiss the complaint is granted; and it is further

ORDERED that the amended complaint is also dismissed, however claims seven through twelve are severed from the amended complaint and may be brought in a new plenary action.

The Clerk is directed to enter judgment accordingly.

Dated: April 2, 2026

White Plains, New York

HON. WILLIAM J. GIACOMO, J.S.C.