Death of a Litigant
Print Article- Posted on: Oct 11 2024
Because litigation can be a long and drawn-out process, it is not uncommon for litigants to die during the pendency of a lawsuit. In today’s BLOG article, we address the problems that may arise when a litigant dies. This BLOG has previously addressed this issue. See, e.g., [here] and [here]. As previously noted in prior BLOG articles, in this context CPLR § 1015 – Substitution Upon Death – is instructive and provides:
(a) Generally. If a party dies and the claim for or against him is not thereby extinguished the court shall order substitution of the proper parties.
(b) Devolution of rights or liabilities on other parties. Upon the death of one or more of the plaintiffs or defendants in an action in which the right sought to be enforced survives only to the surviving plaintiffs or against the surviving defendants, the action does not abate. The death shall be noted on the record and the action shall proceed.
The procedure for the substitution of a party, whether due to death or otherwise, is set forth in CPLR § 1021 and the extensions of time necessary to tend to the procedural steps involved with the substitution of a party are governed by CPLR § 1022.
Significantly, the “death of a party divests the court of jurisdiction and stays the proceedings until a proper substitution has been made pursuant to CPLR 1015(a). Moreover, any determination rendered without such substitution will generally be deemed a nullity.” Hayden v. Brown, 230 A.D.3d 657, 658 (2nd Dep’t 2024) (citations and internal quotation marks omitted); see also Fazilov v. Acosta, 228 A.D.3d 910, 911 (2nd Dep’t 2024).[1] The proceedings are generally stayed “pending the substitution of a personal representative for the decedent.” Wells Fargo Bank, N.A. v. Miglio, 197 A.D.3d 776, 777 (2nd Dep’t 2021) (citations and internal quotation marks omitted). It should be noted, however, that “if a party’s death does not affect the merits of a case, there is no need for strict adherence to the requirement that the proceedings be stayed pending substitution.” Wells Fargo, 197 A.D.3d at 777 (citation and internal quotation marks omitted).[2]
Against this backdrop, today’s article discusses Nationstar Mortgage, LLC v. Persaud, a case decided on October 9, 2024, by the Appellate Division, Second Department. The plaintiff/lender in Nationstar, commenced a residential mortgage foreclosure action on real property owned by the defendant/borrower.[3] The borrower answered the foreclosure complaint and asserted counterclaims. Subsequently, in 2017, the motion court entered a judgment of foreclosure and sale. The borrower died in May of 2020, and, in November of the same year, his wife was appointed the administrator of his estate. The lender’s motion to extend its time to conduct a foreclosure sale was granted and it later served a notice of sale on the deceased borrower. The borrower’s estate administrator, however, was neither substituted in the action nor served with any relevant papers – including the notice of sale.
In May of 2022, the subject property was “knocked down” to BH at the foreclosure sale pursuant to “Terms of Sale,” which provided, inter alia, that closing was on a “time of the essence” basis. BH’s title report, however, provided that the “Foreclosure Action must be amended and all heirs of the Estate named and served.” As a result, BH failed to close and, accordingly, the lender “determined that BH … was in default of the terms of sale and, thus, forfeited its down payment.” The motion court granted BH’s motion to rescind its bid because the title report revealed that the title to the property was “unmarketable”. On appeal, the Second Department affirmed.
After discussing the legal issues addressed below, the Court stated:
Here, [the borrower] answered the complaint and asserted counterclaims. As such, he was entitled to service of all papers in the action, including the notice of sale. [The borrower]’s death triggered a stay of all proceedings in the action pending substitution of a legal representative. Following his death, [the borrower]’s wife was appointed the administrator of his estate. Under these circumstances, contrary to the [lender]’s contention, [the borrower]’s death affected the merits of this action, and any determinations made by the Supreme Court after his death were a nullity, including the order extending the time to hold the foreclosure sale and the foreclosure sale itself. [Citations omitted.]
A court may exercise its inherent equitable power over a sale made pursuant to its judgment or decree to ensure that it is not made the instrument of injustice.Marketability of title is concerned with impairments on title to a property, i.e., the right to unencumbered ownership and possession. As a general rule, a purchaser at a foreclosure sale is entitled to a good, marketable title. A purchaser at a judicial sale should not be compelled by the courts to accept a doubtful title, and, if it was bad or doubtful, he or she should, on his or her application, be relieved from completing the purchase. A sale of land in the haste and confusion of an auction room is not governed by the strict rules applicable to formal contracts made with deliberation after ample opportunity to investigate and inquire. Here, because the foreclosure sale after [the borrower]’s death was a nullity, [the borrower]’s estate retained its interest in the property even after BH … made a successful bid. A judgment of foreclosure and sale does not divest the mortgagor of its title and interest in the property until the sale is actually conducted. Since [the borrower]’s estate retained an interest in the property, title was not marketable. As such, the Supreme Court providently exercised its equitable powers in granting those branches of [BH’s] motion which were to rescind its successful bid at the foreclosure sale and to direct the referee to return its down payment. [Citations internal quotation marks and ellipses omitted.]
Jonathan H. Freiberger is a partner and co-founder of Freiberger Haber LLP.
This article is for informational purposes and is not intended to be and should not be taken as legal advice.
[1] In addition, the “death of a party terminates his or her attorney’s authority to act on behalf of the deceased party.” Id. (citations and internal quotation marks omitted).
[2] For example, where a mortgagor/property owner dies intestate and the mortgagee does not seek a deficiency judgment, the mortgagor/property owner’s death “does not affect the merits of a case, [and] there is no need for strict adherence to the requirement that the proceedings be stayed pending substitution.” Id. (citations and internal quotation marks omitted).
[3] Eds. Note: this BLOG has written numerous articles addressing all aspects of residential mortgage foreclosure. To find BLOG articles related to foreclosure, visit the “Blog” tile on our website and enter “foreclosure” (or any related topic of interest) in the “search” box.
