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Second Department Finds Lender’s “Reasonable Excuse” Unavailing After Failing To Timely Seek Default Judgment Pursuant To CPLR 3215(c)

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  • Posted on: Feb 18 2022

By Jonathan H. Freiberger

On February 16, 2022, the Appellate Division, Second Department, decided Bank of New York Mellon Trust Company v. Lee, a mortgage foreclosure action that was dismissed, as abandoned, pursuant to CPLR 3215(c) due to lender’s failure to take any “proceedings toward entry of a default judgment within a year after the defendant’s default.”  [Eds. Note: This Blog previously has discussed CPLR 3215(c) [here], [here], [here], [here], [here] and [here].

By way of brief background, and as set forth in one of our prior Blogs, Rule 3215(c) of the New York Civil Practice Law and Rules provides, in pertinent part, that:

If the plaintiff fails to take proceedings for the entry of judgment within one year after the default, the court shall not enter judgment but shall dismiss the complaint as abandoned, without costs, upon its own initiative or on motion, unless sufficient cause is shown why the complaint should not be dismissed….  (Emphasis added.)

Courts have noted that the language of CPLR 3215(c) is mandatory in the first instance unless plaintiff demonstrates “sufficient cause” for the failure to timely “take proceedings for the entry of [a default] judgment]”.  (See, e.g., US Bank v. Onuoha (2nd Dep’t June 27, 2018); Wells Fargo Bank v. Cafasso (2nd Dep’t February 28, 2018). The Cafasso Court (quoting Giglio v. NTIMP, Inc., 86 A.D.3d 301 (2nd Dep’t 2011)), noted that “sufficient cause” “‘requir[es] both a reasonable excuse for the delay in timely moving for a default judgment, plus a demonstration that the cause of action is potentially meritorious.’”  The “reasonableness” of an excuse is within the sound discretion of the motion court. (See, e.g., Onuoha and Cafasso.)  Finally, a default judgment need not be obtained within one year, as long as proceedings to obtain a default judgment have been initiated.  (See Bank of America v. Lucido (2nd Dep’t July 11, 2018).)  In mortgage foreclosure actions, the preliminary step of moving for an order of reference is deemed to be a sufficient “proceeding” toward the entry of judgment to satisfy the one-year time frame of CPLR 3215(c).  (See, e.g., Deutsche Bank v. Delisser (2nd Dep’t May 16, 2018); Lucido.)

Lender in Bank of New York commenced a mortgage foreclosure action in October of 2013 and a few days later filed a supplemental summons and amended complaint. Borrower failed to answer the amended complaint or otherwise appear in the action.  Borrower appealed supreme court’s denial of her motion to dismiss the complaint as abandoned pursuant to CPLR 3215(c).  According to the Second Department’s decision, supreme court erroneously held that borrower’s failure to move to vacate her default precluded her from seeking dismissal of the complaint pursuant to CPLR 3215(c).

After concluding that there was no dispute that lender failed to take any “proceedings toward entry of a default judgment within a year after the [borrower]’s default,” the Court rejected lender’s assertion that it had “a reasonable excuse for its failure to timely seek a default judgment.”  In so doing, the Court stated:

In opposition to [borrower]’s motion, [lender] failed to demonstrate a reasonable excuse for its failure to timely seek a default judgment. [Lender] did not file a request for judicial intervention seeking a foreclosure settlement conference until December 28, 2015, approximately 22 months after [borrower]’s default. Even after the matter was released from the foreclosure settlement part on March 14, 2016, [lender] took no steps toward obtaining a default judgment before [borrower] moved to dismiss the complaint as abandoned in March 2018.  Contrary to [lender]’s contention, it failed to demonstrate a reasonable excuse for its delay based on its opposition to a motion to implead it in a separate action by the homeowners association for the premises to foreclose on a lien for unpaid common charges. Since that motion was made after the one-year statutory deadline had already passed, [lender]’s claim that it needed to oppose the motion before seeking a default judgment herein was legally insufficient to justify [lender]’s failure to take proceedings for entry of a default judgment within one year after [borrower]’s default. Since [lender] failed to demonstrate a reasonable excuse for its delay in seeking a default judgment, we need not consider whether it had a potentially meritorious cause of action.

TAKEAWAY

Bank of New York once again highlights the importance of taking prompt steps to secure a default against a defendant.


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.

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