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Second Department Finds that Requesting Foreclosure Settlement Conference Satisfies Requirement for “Taking Proceedings” Under CPLR 3215(c)

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  • Posted on: Feb 16 2024

By Jonathan H. Freiberger

Today we revisit CPLR 3215(c), a provision addressed several times by this Blog.  See, e.g., [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, 162 A.D.3d 1094, 1095 (2nd Dep’t 2018); Wells Fargo Bank v. Cafasso, 158 A.D.3d 848, 849 (2nd Dep’t 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.’”  Cafasso, 158 A.D.3d at 849; see also Wells Fargo Bank, N.A. v. Robinson-John, 220 A.D.3d 974, 977 (2nd Dep’t 2023).  The “reasonableness” of an excuse is within the sound discretion of the motion court. See, e.g., Onuoha, 162 A.D.3d at 1095 – 96 (citations omitted); Cafasso, 158 A.D.3d at 849 (citations omitted).  In Robinson-John, the Court found that “…the purported submission of a completed loss mitigation application by the defendant did not automatically toll the plaintiff’s deadline under CPLR 3215(c) during the time when the plaintiff was reviewing the application” and that the “unsubstantiated and conclusory claims of loss mitigation from the plaintiff’s counsel do not amount to a reasonable excuse.”  Robinson-John, 220 A.D.3d at 977 (citations and internal quotation marks, brackets and ellipses omitted.

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, 163 A.D.3d 614, 615 (2nd Dep’t 2018); see also Bank of America, N.A. v. Bhola, 219 A.D.3d 430, 432 (2nd Dep’t 2023);  Mort. Electronic Registration Systems, Inc. v. McVicar, 203 A.D.3d 915, 916 – 17 (2nd Dep’t 2022).  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, 161 A.D.3d 942, 943 (2nd Dep’t 2018); Lucido, 163 A.D.3d at 615; Mort. Electronic Registration Systems, 203 A.D.3d at 916 – 17.  

A prior BLOG discussed Citibank, N.A. v. Kerszko, 203 A.D.3d 42 (2nd Dep’t 2022), in which the Court decided “interesting and unusual issues” including the issue addressed by the Court for the “first time” of “whether the presentment to a court of a proposed ex parte order to show cause for an order of reference, which is rejected by the court for defects inherent in the papers, qualifies as a taking of proceedings for the entry of judgment pursuant to CPLR 3215(c), so as to avoid dismissal of the complaint as abandoned under that statute.”  Kerszko, 203 A.D.3d at 43 – 44.  The Kerszko Court, in answering the question in the affirmative, provided a thoughtful analysis of, inter alia, what it means to “take proceedings” under CPLR 3215(c).  Kerszko, 203 A.D.3d at 48 – 52.  Significantly, the lender in Kerszko presented its ex parte order of reference, which the court declined to sign because the moving affidavit was “incomplete”, in November of 2009.  Kerszko, 203 A.D.3d at 44.  A new application for an order of reference was not resubmitted until 2015.  Nonetheless, the Kerszko Court found because “the plaintiff presented a proposed ex parte order of reference within the one-year statutory period [it did not matter that] the Supreme Court rejected the order of reference as defective [because] the mere presentment of it established the plaintiff’s intent to proceed toward the entry of judgment and not to abandon the action.”  Kerszko, 203 A.D.3d at 52. (citation omitted).  According to the Kerszko Court, “[w]hat matters is the intent manifested by the presentment of an application, not what specific form it took or how it was filed.”  Id.  See also MidFirst Bank v. Morris, 221 A.D.3d 889 (2nd Dep’t 2023).

On February 14, 2024, the Second Department decided U.S. Bank N.A. v. Jerriho-Cadogan, a case addressing the “takes proceedings” language of CPLR 3215(c).  Jerriho-Cadogan involves a mortgage foreclosure action commenced in September of 2010.  The borrowers defaulted in appearing, although served with process.  In November of 2010, the lender filed a request for judicial intervention (RJI) for a mandatory foreclosure settlement conference and, as a result, two conferences were held in early 2011.  The case languished for several years whereupon the motion court “issued a conditional order dated April 29, 2014, directing dismissal of the complaint pursuant to CPLR 3216 unless the plaintiff filed a note of issue or otherwise proceeded by motion for the entry of judgment within 90 days.”  Nothing happened until November of 2015, when the lender, inter alia, moved to restore the case to the calendar, which motion was granted in March of 2016.  The lender’s subsequent motion for leave to enter a default judgment was denied without prejudice and “with leave to refile upon showing a reasonable excuse for the delay in timely moving for leave to enter a default judgment.”  The lender moved again, and the motion was not opposed by the borrowers.  In its order deciding the second motion, the court “sua sponte, directed dismissal of the complaint as abandoned pursuant to CPLR 3215(c) and directed the cancellation and discharge of the notice of pendency filed against the subject property.”

On the lender’s appeal, the Second Department reversed, finding that steps were taken within a year to obtain a default against the borrowers.  In so doing, the Court explained:

To avoid dismissal pursuant to CPLR 3215(c), it is not necessary for a plaintiff to actually obtain a default judgment within one year of the default.  Rather, as long as proceedings are being taken, and these proceedings manifest an intent not to abandon the case but to seek a judgment, the case should not be subject to dismissal. 

Here, the [lender] demonstrated that, within one year after the [borrowers’] default, it filed a request for judicial intervention which sought a foreclosure settlement conference within the foreclosure action as mandated by CPLR 3408. Where, as here, a settlement conference is a necessary prerequisite to obtaining a default judgment (see CPLR 3408[a], [m]), a formal judicial request for such a conference in connection with an ongoing demand for the ultimate relief sought in the complaint constitutes ‘proceedings for entry of judgment’ within the meaning of CPLR 3215(c). Since the [lender] demonstrated that it initiated proceedings for the entry of a judgment of foreclosure and sale within one year after the [borrowers’] default, it was not required to proffer a reasonable excuse or demonstrate a potentially meritorious cause of action.

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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