Lender Deserves an “A” for Effort in Attempting to Side-step the Statute of Limitations Implications of Reliance on CPLR 3217(b)

• Posted on: Jan 30 2026

By: Jonathan H. Freiberger

On January 28, 2026, the Appellate Division, Second Department, decided Deutsche Bank National Trust Company v. Starr, a mortgage foreclosure action that addresses many of the issues raised in our prior BLOG articles.[1] The borrower in Starr allegedly defaulted in her repayment obligations under a promissory note secured by a mortgage on real property. In 2009, the lender commenced a mortgage foreclosure action (the “First Action”). In 2010, the First Action was discontinued by order of the Court on the lender’s motion.

The Lender commenced a new foreclosure action in 2012, in which the borrower asserted numerous affirmative defenses. In 2016, the motion court granted the lender’s motion for summary judgment and denied the borrower’s cross motion to dismiss the complaint due to the lender’s failure to comply with RPAPL 1304 and 1306.[2] In 2019, the Second Department modified the motion court’s order by denying the lender’s motion for summary judgment and affirming the denial of the borrower’s motion for summary judgment.

Here is where things get interesting. The lender, realizing that it could not prove compliance with RPAPL 1306, brought an order to show cause by which it sought an order “dismissing the instant action, without prejudice, due to [the lender’s] inability to show compliance with RPAPL 1306 and/or on equitable grounds.”[3] Compliance with RPAPL 1306 is a condition precedent to the commencement of a foreclosure action. Tri-State III, LLC v. Litkowski, 239 A.D.3d 911, 914 (2^nd Dep’t 2025); see also our BLOG article “Second Department Dismisses Two Mortgage Foreclosure Actions for Failure to Comply with RPAPL 1306.”

Typically, a motion to discontinue an action would be brought under CPLR 3217(b),[4] which provides:

Except as provided in subdivision (a), an action shall not be discontinued by a party asserting a claim except upon order of the court and upon terms and conditions, as the court deems proper. After the cause has been submitted to the court or jury to determine the facts the court may not order an action discontinued except upon the stipulation of all parties appearing in the action.

Unfortunately, however, a dismissal under CPLR 3217(b) would have been the death knell of the lender’s claim because the lender would have been time-barred from commencing a new action. In some cases, CPLR 205-a(a) provides a six-month grace period to commence a new action if the old action is dismissed after the statute of limitations expires. However, the six-month grace period expressly excepts from its scope, inter alia, “voluntary dismissals”.[5] Accordingly, the borrower cross-moved under CPLR 3217(b) to discontinue the action, with prejudice, because any new action would be time-barred. The motion court denied the lender’s motion, granted the borrower’s cross-motion and dismissed the action with prejudice. The motion court found that the dismissal was warranted due to the lender’s laches, an argument not raised by any party.

On the lender’s appeal, the Court affirmed on alternative (statute of limitations) grounds (because laches was not raised by any of the parties). The Court explained:

Contrary to the [lender]’s contention, its motion, denominated as one to dismiss the complaint without prejudice based upon its inability to comply with RPAPL 1306 and/or on equitable grounds, was, in actuality, one pursuant to CPLR 3217(b) to discontinue the action without prejudice… [W]hen an action is terminated by a voluntary discontinuance, a plaintiff is not entitled to the benefit of the six-month grace period afforded by CPLR 205-a(a)…. Here, the [lender] attempted to avoid the undesired consequences of a voluntary discontinuance by denominating its motion as one seeking dismissal of the complaint, but, as the [lender] was moving to dismiss its own action, its motion was, in actuality, one to voluntarily discontinue the action pursuant to CPLR 3217(b)….”

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…CPLR 3217(b) permits a voluntary discontinuance of an action by court order “upon terms and conditions, as the court deems proper.” In general, absent a showing of special circumstances, including prejudice to a substantial right of the defendant or other improper consequences, a motion for a voluntary discontinuance should be granted without prejudice. The determination of whether, and upon what terms and conditions, to grant a motion to discontinue an action pursuant to CPLR 3217(b) lies within the sound discretion of the court.

Here, in opposition to the [lender]’s motion and in support of her cross-motion, the borrower made the requisite showing that she would be prejudiced by a discontinuance of the action without prejudice. The [borrower] demonstrated, prima facie, that a future action would be time-barred [for the reasons previously discussed].

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] This BLOG has written dozens of articles addressing numerous aspects of residential mortgage foreclosure. To find such articles, please see the BLOG tile on our website and search for any foreclosure, or other commercial litigation, issue that may be of interest you.

[2] This BLOG has written numerous articles addressing RPAPL 1304 and 1306. To find such articles, please see the BLOG tile on our website and type “RPAPL 1304” and/or “RPAPL 1306” into the “search” box. Briefly, RPAPL 1304 requires a lender, ninety days before the commencement of a foreclosure action, specific notices. RPAPL 1306, among other things, requires lenders to file with the Superintendent of Financial Services, certain information about borrowers within three business days of sending RPAPL 1304 notices.

[3] Some of the facts stated herein were obtained from the appellate records available on the Court’s NYSCEF system. The quoted language is from the Lender’s order to show cause.

[4] CPLR 3217(a), in general, permits an action to be discontinued by serving a notice of discontinuance on all parties prior to the time a responsive pleading is served or by stipulation signed by all parties of record before the case “has been submitted to the court or jury”.

[5] CPLR 205-a is recently enacted pursuant to FAPA and applies to foreclosure actions. CPLR 205 is a similar statute and applies to other cases. This BLOG has written numerous articles on CPLR 205, CPLR 205-a and FAPA. To find such articles, please see the BLOG tile on our website and type “CPLR 205”, “CPLR 205-a” or “FAPA” into the “search” box.

Tagged with: Commercial Litigation, Mortgage Foreclosure, Mortgage Foreclosure Litigation, Real Estate Litigation