Singer v. Federal National Mortgage Association

UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF NEW YORK

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SOLOMON SINGER,

Plaintiff, MEMORANDUM & ORDER

19-CV-5992 (EK)(TAM)

-against-

FEDERAL NATIONAL MORTGAGE

ASSOCIATION,

Defendant.

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ERIC KOMITEE, United States District Judge:

Solomon Singer borrowed money to purchase a home in

Brooklyn in 2006. The initial lender sold the mortgage, which

passed through several hands before the Federal National

Mortgage Association (“Fannie Mae”) acquired it. Singer brought

this action to discharge that mortgage as time-barred under the

New York Real Property Law. Magistrate Judge Merkl recommended

that the mortgage be discharged, given that the statute of

limitations to initiate a foreclosure action had expired. In an

order dated October 2022, this Court adopted that

recommendation.

Fannie Mae also asserted two counterclaims, however,

which remain pending. First, it brought an unjust-enrichment

claim to recover tax and insurance payments it made on the

property after Singer defaulted, but within the six-year

limitations period set out by the New York Real Property Law.

Second, it sought an equitable lien on the property equal to the

value of those tax and insurance payments.

Singer now moves for summary judgment on those

counterclaims on the basis that (1) New York law precludes an

unjust enrichment claim in these circumstances, and (2) Fannie

Mae’s failure to pursue its legal remedies under the mortgage

agreement bars it from obtaining an equitable lien. For the

following reasons, that motion is granted.

Background

The following facts are drawn from the parties’

submissions in connection with the motion for summary judgment,

including the parties’ Local Rule 56.1 Statements. The Court

views the facts in the light most favorable to Fannie Mae, which

is the non-moving party. Citations to a party’s Rule 56.1

statement incorporate by reference the documents cited therein.

A. The Mortgage History and State-Court Proceedings

Singer borrowed money from Fairmont Funding — which is

not a party to this case — to buy the property at issue, which

is located on Walsh Court. Pl.’s Rule 56.1 Statement ¶ 1

(“Pl.’s 56.1”), ECF No. 87-3. In 2009, after Singer failed to

make the required payments, OneWest Bank — the new owner of the

mortgage — filed a foreclosure action in New York State Supreme

Court. Id. ¶ 4; see also Notice of Default 3, ECF No. 87-8.

The state court twice dismissed that action on procedural

grounds. Pl.’s 56.1 ¶¶ 6-8.

In 2015, OneWest assigned the mortgage to Fannie Mae.

Id. ¶ 11. Since 2009, the mortgage owners (including Fannie

Mae) have paid real estate taxes and casualty insurance premiums

on the property. A.J. Loll Aff. ¶¶ 15, 17 (“Loll Aff.”), ECF

No. 88-2. It is these payments that Fannie Mae now seeks to

recoup through its unjust enrichment and equitable lien claims.

B. Proceedings in this Case

Singer filed this action in state court, seeking to

discharge the mortgage at issue. Pl.’s 56.1 ¶ 14. Fannie Mae

removed to this Court in October 2019. Id. ¶ 15. It then filed

the counterclaims at issue. By way of remedies, Fannie Mae is

seeking to recover all tax and insurance payments made within

the six-year statute of limitations.

Singer then filed his first motion for summary

judgment, in which he sought a judgment discharging the

mortgage. ECF No. 41-1. This Court referred that motion to

Judge Merkl. Judge Merkl recommended finding that (i) Singer is

the current owner of the property, (ii) Fannie Mae held the note

in question, (iii) OneWest had accelerated the mortgage debt in

the 2009 state action, and (iv) pursuant to that acceleration,

the six-year statute of limitations to initiate a foreclosure

action had expired. See Report & Recommendation 23 (“R&R”), ECF

No. 59. On this basis, Judge Merkl recommended that Singer’s

motion for summary judgment be granted. Id. This Court adopted

the R&R in its entirety. ECF No. 67.

Singer now moves for summary judgment on Fannie Mae’s

counterclaims. At oral argument, Fannie Mae stipulated to the

dismissal of its claim for the declaration of an equitable

mortgage. See Oral Arg. Tr. 36:5-12, ECF No. 95. Thus, only

its claims for unjust enrichment and the declaration of an

equitable lien remain.

Legal Standard

Summary judgment is appropriate when “the movant shows

that there is no genuine dispute as to any material fact” and

that he “is entitled to judgment as a matter of law.” Fed. R.

Civ. P. 56(a). A material fact is one that “can affect the

outcome under the applicable substantive law.” Graham v.

Henderson, 89 F.3d 75, 79 (2d Cir. 1996).1 A genuine dispute is

one that can “reasonably be resolved in favor of either party.”

Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250 (1986). In

performing this analysis, the court must resolve all ambiguities

and draw all inferences in favor of the non-moving party. Gallo

v. Prudential Residential Servs., Ltd. P'ship, 22 F.3d 1219,

1223 (2d Cir. 1994). “If, in this generous light, a material

1 Unless otherwise noted, when quoting judicial decisions this order

accepts all alterations and omits all citations, footnotes, and internal

quotation marks.

issue is found to exist, summary judgment is improper.”

Nationwide Life Ins. Co. v. Bankers Leasing Ass'n, 182 F.3d 157,

160 (2d Cir. 1999).

The moving party may establish that there is no

genuine dispute “by showing that little or no evidence may be

found in support of the nonmoving party's case.” Gallo, 22 F.3d

at 1223-24 (citing Celotex Corp. v. Catrett, 477 U.S. 317, 325

(1986)). If the moving party meets this burden, the non-moving

party “must come forward with specific facts showing that there

is a genuine issue for trial.” LaBounty v. Coughlin, 137 F.3d

68, 73 (2d Cir. 1998). However, the non-moving party “must do

more than simply show that there is some metaphysical doubt as

to the material facts, and may not rely on conclusory

allegations or unsubstantiated speculation.” Brown v. Eli Lilly

& Co., 654 F.3d 347, 358 (2d Cir. 2011). If “no rational finder

of fact could find in favor of the nonmoving party because the

evidence to support its case is so slight, summary judgment must

be granted.” Id.

Discussion

A. Unjust Enrichment

“To prevail on a claim for unjust enrichment in New

York, a plaintiff must establish 1) that the defendant

benefitted; 2) at the plaintiff’s expense; and 3) that equity

and good conscience require restitution.” Kaye v. Grossman, 202

F.3d 611, 616 (2d Cir. 2000).

1. The existence of the written mortgage agreement

precludes the unjust enrichment claim

By its unjust enrichment claim, Fannie Mae seeks to

recover the tax and insurance payments it made on the property

after Singer defaulted. New York law bars this claim.

Unjust enrichment is “an obligation the law creates in

the absence of any agreement.” Goldman v. Metro. Life Ins. Co.,

841 N.E.2d 742, 746 (N.Y. 2005). Therefore, “[t]he existence of

a valid and enforceable written contract governing a particular

subject matter ordinarily precludes recovery in quasi contract

for events arising out of the same subject matter.” Clark-

Fitzpatrick, Inc. v. Long Island R.R. Co., 516 N.E.2d 190, 193

(N.Y. 1987); see also Beth Israel Med. Ctr. v. Horizon Blue

Cross & Blue Shield of N.J., Inc., 448 F.3d 573, 587 (2d Cir.

2006) (New York law “precludes unjust enrichment claims whenever

there is a valid and enforceable contract governing a particular

subject matter”).

Here, the mortgage agreement between the parties

squarely covers the subject of this dispute. That contract said

that Singer would “pay to Lender all amounts necessary to pay

for taxes, assessments . . . hazard or property insurance

covering the Property, flood insurance (if any), and any

required mortgage insurance.” Mortgage Contract 8, ECF No. 87-

5. It also provided that, if Singer failed to maintain

insurance coverage on the property, the lender could “obtain

insurance coverage, at Lender’s option and expense,” which would

become Singer’s “additional debt secured by this Security

Instrument.” Id. at 9.

In a recent case, the Second Department held that a

similar agreement barred an unjust-enrichment claim. In

Auquilla v. Villa, the court affirmed the trial court’s

cancellation and discharge of a mortgage. 233 N.Y.S.3d 79, 88

(2d Dep’t 2025). It then went a step further, and directed the

trial court to enter summary judgment for the mortgagor on the

mortgagee’s unjust-enrichment counterclaim. Id. at 92. The

counterclaim in question was, like this one, predicated on

payments the mortgagee had made to preserve the property after

the mortgagor abandoned it. Id. at 89. Citing Clark-

Fitzpatrick, the Second Department concluded that because the

mortgage agreement governed the mortgagee’s right to make those

payments, the mortgagee could not recover them in a quasi-

contract action. Id.

A federal court in this district, too, reached a

similar conclusion in a case closely resembling this one. In

839 Cliffside Ave. LLC v. Deutsche Bank National Trust Co., the

plaintiff sought to discharge a mortgage lien on a residential

property. No. 15-CV-4516, 2018 WL 4608198, at *1 (E.D.N.Y.

Sept. 25, 2018). The bank countersued, seeking foreclosure and

other relief. Id. After the bank’s counterclaim for

foreclosure was dismissed as time-barred, id. at *3, the parties

cross-moved for summary judgment on the bank’s unjust-enrichment

counterclaim, which sought recovery of payments “made for taxes,

insurance, and water.” Id. at *11. The court granted summary

judgement against the bank because it was “indisputable that the

Mortgage governs the matter in dispute, namely, the payments

Defendant made for taxes, insurance, and water on the Subject

Property.” Id. at *12.

The logic of Auquilla and 839 Cliffside applies with

equal force here. Fannie Mae acknowledges as much, but contends

that 839 Cliffside was wrongly decided. (Auquilla was published

after briefing in this case concluded, so Fannie Mae’s brief

does not address that case.) In support, Fannie Mae cites

Federal National Mortgage Association v. Mebane, 208 A.D.2d 892

(2d Dep’t 1994). There, the Second Department held that the

bank-plaintiff’s foreclosure action was time-barred, id. at 894,

but went on to state that “contrary to the borrowers’

contention, [the bank-plaintiff] stated a valid cause of action

sounding in unjust enrichment to recover sums advanced, inter

alia, for property taxes and insurance, within the six-year

period prior to the commencement of this action.” Id. at 894-

95.

As an initial matter, the Second Department’s more

recent decision in Auquilla squarely undercuts Fannie Mae’s

reliance on Mebane. But just as importantly, Mebane contains no

substantive analysis. Unlike Auquilla, it does not mention, let

alone engage with, New York’s settled rule that claims for

unjust enrichment cannot succeed where a contract governs “the

same subject matter.” Clark-Fitzpatrick, 516 N.E.2d at 193.

Moreover, Fannie Mae did not actually prevail on its unjust

enrichment claim in Mebane. Instead, all the Appellate Division

actually did was modify the lower court’s order to allow the

bank leave to amend its complaint to plead such a claim. And as

Singer points out, the bar for granting leave to amend in New

York was extremely low at the time. E.g., DeGuire v. DeGuire,

125 A.D.2d 360, 360 (2d Dep’t 1986) (“[G]enerally the merits of

a proposed amended complaint will not be examined on a motion

for leave to amend.”).2

2 Indeed, in the Second Department, courts were not required to

undertake any assessment of the merits before granting leave to amend. “The

legal sufficiency or merits of a proposed amendment to a pleading [would] not

be examined unless the insufficiency or lack of merit [was] clear and free

from doubt.” Sample v. Levada, 8 A.D.3d 465, 467-68 (2d Dep’t 2004); see

also Lucido v. Mancuso, 49 A.D.3d 220, 227 (2d Dep’t 2008) (applicable

precedent “make[s] clear that a plaintiff seeking leave to amend the

complaint is not required to establish the merit of the proposed amendment in

the first instance”).

When applying state law, federal district courts “are

not strictly bound by state intermediate appellate courts.”

DiBella v. Hopkins, 403 F.3d 102, 112 (2d Cir. 2005). At the

same time:

Where an intermediate appellate state court rests its

considered judgment upon the rule of law which it

announces, that is a datum for ascertaining state law

which is not to be disregarded by a federal court unless

it is convinced by other persuasive data that the highest

court of the state would decide otherwise.

West v. AT&T, 311 U.S. 223, 237 (1940). Here, considering the

limitations discussed above, Mebane cannot be read to set forth

a “considered judgment” on this question. Having mentioned the

issue only in passing, it provides little if any data to support

a prediction that the New York Court of Appeals would discard

the rule of Clark-Fitzpatrick in this setting. See Phansalker

v. Andersen Weinroth & Co., 344 F.3d 184, 199 (2d Cir. 2003)

(”[W]e must give fullest weight to the decisions of a state’s

highest court.”).

2. Fannie Mae’s expenditures were not made for

Singer’s benefit

Fannie Mae’s unjust enrichment claim fails for a

second reason: the company made the insurance and tax payments

voluntarily. Every court to decide the issue has held that the

voluntary-payment doctrine bars claims by a mortgage holder to

recover such payments after a borrower defaults. In New York,

“the voluntary payment doctrine . . . bars recovery of payments

voluntarily made with full knowledge of the facts, and in the

absence of fraud or mistake of material fact or law.” Dillon v.

U-A Columbia Cablevision of Westchester, 790 N.E.2d 1155, 1156

(N.Y. 2003).

Indeed, New York courts have held that the voluntary-

payment doctrine bars a counterclaim for unjust enrichment in

cases like this one. In Clark v. Daby, the plaintiff brought an

action to foreclose the mortgage on defendant’s property, but

the Supreme Court discharged the mortgage as usurious. 300

A.D.2d 732, 732 (3d Dep’t 2002). While the appeal was pending

in that foreclosure action, the plaintiff paid property taxes on

the property to prevent an impending tax sale. Id. When leave

to appeal was denied, plaintiff sued to recover for its tax

payments under a theory of unjust enrichment. Id. On summary

judgment, the Third Department affirmed dismissal of the unjust-

enrichment claim, holding that it was barred by the voluntary-

payment doctrine because the plaintiff’s “sole motivation in

making the payment was to protect their own interests.” Id. at

733. “The fact that plaintiffs’ calculated risk failed makes

their conduct no less voluntary, and there is no evidence or

claim that defendant’s conduct with regard to this matter was in

any way tortious or fraudulent.” Id.

The Second Department reached a similar conclusion in

a more recent case. In Wells Fargo Bank, N.A. v. Burke, the

plaintiff bank had initiated three foreclosure actions — each

unsuccessful. 155 A.D.3d 668, 668 (2d Dep’t 2017). The third

action was dismissed as time-barred. Id. at 668-69. The bank

then filed an unjust-enrichment action to recover “the amount of

real property taxes and hazard insurance premiums” it had paid

during the defendant’s default. Id. at 669. Following Clark,

the Second Department held that the unjust enrichment claim was

barred. The bank’s payments were “a voluntary, calculated risk

to protect the plaintiff’s interest in the property while it

continued to litigate the validity of the mortgage, rather than

the product of mistake or fraud.” Id. at 671. Thus, the

voluntary-payment doctrine foreclosed relief for the bank.

Federal case law is in accord. In Costa v. Deutsche

Bank, the Southern District held that the voluntary-payment

doctrine barred a counterclaim for unjust enrichment in

circumstances like those present here. 247 F. Supp. 3d 329

(S.D.N.Y. 2017). There too, the plaintiffs sought to discharge

a mortgage because — following acceleration of the repayment

schedule pursuant to an unsuccessful state court foreclosure

action — the statute of limitations had run. Id. at 333. The

court granted summary judgment and discharged the mortgage. Id.

at 353. The defendants — Deutsche Bank, which held the loan,

and the loan servicer — counterclaimed for unjust enrichment,

seeking to recover for payments they made towards taxes,

insurance premiums, and related charges. Id. at 336, 353.

The Costa court held that the voluntary-payment

doctrine applies even when the outlay of money by the paying

party (that is, the bank) benefits the opposing party (the

borrower) as well. Quoting a Second Circuit ruling, the Costa

court held that an incidental benefit to the borrower is not

enough under New York law. Instead, the bank had the “burden to

demonstrate that services were performed for the [borrower]

resulting in the latter’s unjust enrichment.” Id. at 354

(quoting Law Offices of K.C. Okoli, P.C. v. BNB Bank, N.A., 481

F. App’x 622, 627 (2d Cir. 2012) (emphasis in original)). The

court therefore dismissed the counterclaim on summary judgment,

because the evidence adduced showed only that the defendants

“took a calculated risk” by continuing to make payments to

preserve the mortgaged property’s value. Id. at 355. If that

risk turned out to “have been a losing gamble,” that did “not

retroactively alter for whom that benefit was intended.” Id.

Fannie Mae argues that these cases were all wrongly

decided. But they are persuasively reasoned, and Fannie Mae

cites no decisions (from a New York State court or otherwise)

that arrive at the opposite conclusion on analogous facts.

Fannie Mae also attempts to distinguish these cases on the

creative — but attenuated — basis that none of them stated

explicitly whether the payments at issue were made pursuant to

an escrow agreement.3 The escrow arrangement — present in the

instant case — would change the outcome, Fannie Mae says,

because under such an agreement, “the borrower gets the benefit

of paying [twelve] even installments,” after which the lender

“makes one lump sum payment” for taxes and insurance. Oral Arg.

Tr. 31:12-15. In Fannie Mae’s view, this structure smooths the

borrower’s payment schedule and obviates the need for him to

make separate tax and insurance payments. Id.

The fact that Singer’s mortgage made use of an escrow

account is insufficient to demonstrate that Fannie Mae made the

tax and insurance payments for Singer’s benefit rather than its

own. For one thing, the relevant question under the voluntary-

payment doctrine is whether payments benefitted Singer — not

whether the method of delivering those payments benefitted him.

And here, as a Fannie Mae employee acknowledged, the “real

estate taxes were paid to prevent a lien from arising that may

have priority over the Mortgage.” Loll Aff. ¶ 16. Thus, the

payments benefitted Fannie Mae by preserving the value of the

property and minimizing the risk of a tax lien that would be

superior to Fannie Mae’s interest in the property.

3 As Fannie Mae’s counsel acknowledged at oral argument, however, the

vast majority of mortgages in the United States — like the mortgage at issue

here — are escrow mortgages. Oral Arg. Tr. 32:20-22.

Moreover, even if a mortgage contract’s contemplated

payment structure were relevant to the unjust-enrichment

analysis, the escrow agreement also protected Fannie Mae’s

interests. Federal regulations — specifically, the Consumer

Financial Protection Bureau’s Regulation X under the Real Estate

Settlement Procedures Act of 1974 (“RESPA”) — provide enhanced

protections for lenders as well as borrowers under an escrow

arrangement. 12 C.F.R. § 1024.17 (“Escrow Accounts”). Section

1024.17 enables lenders to charge borrowers like Singer more

than the “total annual escrow payments” in order to “maintain a

cushion no greater than one-sixth (1/6) of the estimated total

annual payments from the account.” Id. Lenders may also

“require the borrower to pay additional monthly deposits” to

eliminate any “deficienc[ies]” in the account’s balance. Id.

Singer’s motion for summary judgment on Fannie Mae’s

counterclaim for unjust enrichment is therefore granted, and the

claim is dismissed.

B. Declaration of an Equitable Lien

Singer also moves for summary judgment on Fannie Mae’s

claim seeking a declaration of an equitable lien on the premises

in the amount of the taxes and insurance paid within the six-

year statute of limitations. He is entitled to summary judgment

on this claim too.

“An equitable lien is a right to charge specific

property or its proceeds with the payment of a particular debt.”

Reisner v. Stoller, 51 F. Supp. 2d 430, 453 (S.D.N.Y. 1999).

“New York law allows the imposition of an equitable lien if

there is an express or implied agreement that there shall be a

lien on specific property. Such an agreement must evince a

sufficiently clear intent that the property is to be held, given

or transferred as security for the obligation.” M&B Joint

Venture, Inc. v. Laurus Master Fund, Ltd., 907 N.E.2d 690, 692

(N.Y. 2009). Importantly, however, a court may not impose an

equitable lien to permit a mortgagee to recover funds it had the

opportunity to obtain under the terms of a written mortgage

agreement. Auquilla, 233 N.Y.S.3d at 93.

Auquilla is on-point. In that case, the Second

Department concluded that a mortgagee was not entitled to an

equitable mortgage where, as here, the mortgagee had twice

failed to enforce its rights under the original written mortgage

agreement in a timely manner. 233 N.Y.S.3d at 92-93. The

appellate court then applied similar logic to the mortgagee’s

counterclaim for an equitable lien, noting that such a lien was

“simply an equitable mortgage . . . by another name.” Id. at

93. Because an equitable lien would “essentially be enforced

the same way as an equitable mortgage, i.e., through foreclosure

on the property,” the court found that permitting an equitable

lien would not advance the principles of equity, and therefore

granted summary judgement to the mortgagor. Id.

This case closely resembles Auquilla. The parties had

a written mortgage agreement. See generally Mortgage Contract.

Fannie Mae twice failed to enforce its rights under that

contract in state court, Pl.’s 56.1 ¶¶ 6-8, and the Court

eventually found that Fannie Mae’s foreclosure action was time-

barred. ECF No. 67. Fannie Mae now attempts to approximate the

outcome it could not achieve at law by seeking an equitable

lien. This is not permissible under New York law. Auquilla,

233 N.Y.S.3d at 93. The parties have not surfaced, and the

Court’s own research has not identified, any New York authority

that would undermine this result.

Accordingly, Singer’s motion for summary judgment on

Fannie Mae’s counterclaim for an equitable lien is granted.

Conclusion

For the foregoing reasons, Singer’s motion for summary

judgment on Fannie Mae’s counterclaims is granted. The Clerk of

Court is respectfully directed to enter judgment and close this

case.

SO ORDERED.

/s/ Eric Komitee

ERIC KOMITEE

United State

s District Judge

D ated: September 15, 2025

Brooklyn, New York