Foreclosure Complaint Dismissed as Time-Barred Because Service Was “Completed” 5 Days After Six-Month Extension Afforded by the New CPLR 205-a
Print Article- Posted on: Apr 26 2024
In situations where the statute of limitations expires during the pendency of an action, under certain circumstances, CPLR 205(a)1 permits the plaintiff to commence a new action if the original action is dismissed but was timely commenced. CPLR 205(a) provides:
If an action is timely commenced and is terminated in any other manner than by a voluntary discontinuance, a failure to obtain personal jurisdiction over the defendant, a dismissal of the complaint for neglect to prosecute the action, or a final judgment upon the merits, the plaintiff … may commence a new action upon the same transaction or occurrence or series of transactions or occurrences within six months after the termination provided that the new action would have been timely commenced at the time of commencement of the prior action and that service upon defendant is effected within such six-month period. Where a dismissal is one for neglect to prosecute the action made pursuant to rule thirty-two hundred sixteen of this chapter or otherwise, the judge shall set forth on the record the specific conduct constituting the neglect, which conduct shall demonstrate a general pattern of delay in proceeding with the litigation. [Emphasis added.]
As this BLOG has previously explained, CPLR 205(a) is a “remedial” statute that “has existed in New York law since at least 1788” and can [t]race[] its roots to seventeenth century England.” Wells Fargo Bank, N.A. v. Eitani, 148 A.D.3d 193, 199 (2nd Dep’t 2017), appeal dismissed, 29 N.Y.3d 1023 (2017). The purpose of CPLR 205(a) is to “ameliorate the potentially harsh effect of the Statute of Limitations in certain cases in which at least one of the fundamental purposes of the Statute of Limitations has in fact been served, and the defendant has been given timely notice of the claim being asserted by or on behalf of the injured party.” George v. Mt. Sinai Hospital, 47 N.Y.2d 170, 177 (1979). Thus, the statute provides “a second opportunity to the claimant who has failed the first time around because of some error pertaining neither to the claimant’s willingness to prosecute in a timely fashion nor to the merits of the underlying claim.” George, 47 N.Y.2d at 178-79.
At the end of 2022, the Foreclosure Abuse Prevention Act (“FAPA”) went into effect and amends certain provisions of the CPLR and other statutes to the extent they relate to mortgage foreclosure actions.2 Among other things, FAPA’s provisions were designed to curtail certain practices of lenders designed to avoid statute of limitations issues in residential mortgage foreclosure actions by accelerating and deaccelerating loans to start the running of statutes of limitations anew.3 As part of FAPA, the Legislature enacted CPLR 205-A, which addresses issues similar to those in CPLR 205(a), but specifically in the context of certain residential mortgage foreclosure actions. CPLR 205-A provides:
If an action upon an instrument described under subdivision four of section two hundred thirteen of this article is timely commenced and is terminated in any manner other than a voluntary discontinuance, a failure to obtain personal jurisdiction over the defendant, a dismissal of the complaint for any form of neglect, including, but not limited to those specified in subdivision three of section thirty-one hundred twenty-six, section thirty-two hundred fifteen, rule thirty-two hundred sixteen and rule thirty-four hundred four of this chapter, for violation of any court rules or individual part rules, for failure to comply with any court scheduling orders, or by default due to nonappearance for conference or at a calendar call, or by failure to timely submit any order or judgment, or upon a final judgment upon the merits, the original plaintiff … may commence a new action upon the same transaction or occurrence or series of transactions or occurrences within six months following the termination, provided that the new action would have been timely commenced within the applicable limitations period prescribed by law at the time of the commencement of the prior action and that service upon the original defendant is completed within such six-month period. For purposes of this subdivision:
1. a successor in interest or an assignee of the original plaintiff shall not be permitted to commence the new action, unless pleading and proving that such assignee is acting on behalf of the original plaintiff; and
2. in no event shall the original plaintiff receive more than one six-month extension. [Emphasis supplied.]
The emphasized language in the above-quoted portions of CPLR 205(a) and 205-A was of critical importance to the Court (and the parties) in Deutsche Bank Nat. Trust Co. v. Heitner, decided on April 24, 2024, by the Appellate Division, Second Department.
The lender in Heitner commenced a foreclosure action in 2009, which was dismissed on October 24, 2018, for failure to comply with RPAPL 1304.4 A new action was commenced by the lender in 2019 to foreclose the same mortgage. The borrower moved to dismiss the new action as time-barred. The lender opposed the motion and cross-moved to extend the time to serve the borrowers with the summons and complaint. The borrower’s motion was granted and the lender’s cross-motion was denied. The lender appealed.
The Second Department reiterated that mortgage foreclosure actions are governed by a six-year statute of limitations, which began to run when the loan was accelerated at the time the original action was commenced in 2009.5 The lender argued that the new action was commenced within the six-month extension period afforded by CPLR 205(a). However, FAPA, which has been applied retroactively, “replaced the savings provision of CPLR 205(a) with CPLR 205-a in actions upon instruments described in CPLR 213(4).” (Hyperlink added.)
The Court highlighted the differing language between CPLR 205(a) and 205-A that was previously emphasized in above quoted statutory provisions. Thus, the Court stated:
Pursuant to CPLR 205-a, where, as here, an action upon an instrument described under CPLR 213(4) is timely commenced and is not terminated on certain enumerated grounds, “the original plaintiff . . . may commence a new action upon the same transaction or occurrence or series of transactions or occurrences within six months following the termination, provided that the new action would have been timely commenced” and that “service upon the original defendant is completed within such six-month period” (see id. § 205-a [emphasis added]). Notably, under CPLR 205(a), in order to qualify for the six-month extension, service need only be “effected” within the six-month period (id.; see U.S. Bank N.A. v McLean, 209 AD3d 792, 794). In contrast, in enacting CPLR 205-a, the Legislature chose to require that service upon the defendant be “completed” within the six-month period.
This distinction became critical because the borrowers were served by “affix and mail” pursuant to CPLR 308(4). As the Court explained:
In the instant action, the defendants were served by the “affix and mail” method pursuant to CPLR 308(4), which statute provides that “service shall be complete” 10 days after the filing of proof of service with the clerk of the relevant court. Since the plaintiff filed proof of service on April 19, 2019, service on the defendants was completed on April 29, 2019. It is undisputed that the 2009 foreclosure action was terminated on October 24, 2018, such that the six-month extension period provided by CPLR 205-a expired on April 24, 2019, five days before service upon the defendants was “completed.” Accordingly, the instant action was not timely commenced under CPLR 205-a, and therefore, the Supreme Court properly granted the defendants’ motion pursuant to CPLR 3211(a)(5) to dismiss the complaint insofar as asserted against them as time-barred. (Citation omitted.)
Footnotes
- Eds. Note: this BLOG has written about CPLR 205(a) [here] and [here].
- Eds. Note: this BLOG has written dozens of articles addressing numerous aspects of residential mortgage foreclosure. At this point, please see the BLOG tile on our website and search for any foreclosure, or other commercial litigation, issues that may be of interest you.
- Eds. Note: This BLOG has addressed issues related to FAPA, and its retroactive application, [here], [here] and [here].
- Eds. Note: This BLOG has written numerous articles related to RPAPL 1304. Please see the BLOG tile on our website and search for RPAPL 1304 related articles.
- Eds. Note: This BLOG has written numerous articles related to statute of limitations issues in mortgage foreclosure actions. Please see the BLOG tile on our website and search for “statute of limitations” and/or “acceleration” related articles.
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.
