## Facts

- Karen C. Mabry executed an August 22, 2005 mortgage note on a mixed-use property in Queens County; the note was later assigned to BNH Caleb 14 LLC.
- The note required monthly payments on the first of each month and permitted a 5% late charge if a payment became overdue for 10 days.
- The note also contained an acceleration clause referencing “any grace period set forth therein,” but the note did not clearly define a “grace period.”
- For the April 1, 2014 payment, Mabry tendered payment after the due date; BNH asserted it was received April 14, 2014.
- The April payment did not include a late fee of about \$118.15 (5% of the monthly payment).
- BNH, through counsel, endorsed and deposited the late April payment rather than rejecting it or conditioning acceptance on immediate payment of the late fee.
- BNH later rejected Mabry’s May 2014 payment, declared the mortgage accelerated based on the April lateness and missing late fee, and commenced a foreclosure action.

## Issues

1. Whether BNH, after accepting and depositing the late April payment without the late fee, could accelerate the mortgage debt and foreclose based on that late payment and nonpayment of the late fee.
2. Whether equity (including unconscionability and lack of prejudice) barred acceleration and foreclosure on these facts, making summary judgment inappropriate.

## Decision

- The court denied BNH’s motion for summary judgment in the foreclosure action.
- The court granted BNH’s unopposed motion to amend the caption.
- Although BNH established a prima facie foreclosure case, Mabry raised triable issues and equitable defenses based on BNH’s conduct in accepting the late payment, the unclear “grace period” language, and the minimal nature of the alleged default.

## Legal Principles

- Foreclosure is an equitable remedy; courts may refuse acceleration and foreclosure where enforcement would be inequitable or disproportionate to the default.
- Contract terms tied to default and acceleration are construed in context; unclear provisions (such as an undefined “grace period”) may undermine a claimed contractual right to accelerate as a matter of law.
- A lender’s acceptance and deposit of a late payment—without rejecting it or clearly reserving rights—can support equitable defenses that preclude summary judgment on acceleration and foreclosure.
- Summary judgment in foreclosure may be denied where the borrower raises triable issues concerning unconscionability, waiver/estoppel-type conduct, and the absence of demonstrated prejudice to the lender from a minor or technical default.

## Conclusion

The court refused to grant summary judgment of foreclosure where the lender accepted a late payment and then sought to accelerate and foreclose over an unpaid late fee, holding that equitable considerations and factual disputes about the parties’ conduct and the contract terms required denial of foreclosure relief at the summary judgment stage.


BNH Caleb 14 LLC v. Mabry, 49 Misc. 3d 402, 11 N.Y.S.3d 844 (Sup. Ct. Queens Cnty. 2015)