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The Second Department Decided an Issue Under CPLR 3215(c) Addressed by it For the First Time

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  • Posted on: Jan 7 2022

By Jonathan H. Freiberger

On January 5, 2022, the Second Department decided Citibank, N.A. v. Kerszko.  The appeal in Citibank raised numerous “interesting and unusual issues,” but the focus of today’s article is on an issue recognized by the Second Department to be addressed by it for the first time: “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.” [Eds. Note: This Blog has discussed CPLR 3215(c) [here], [here] and [here].]   The Court held that “[i]t does qualify” and, therefore, CPLR 3215(c) was inapplicable.

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.)

Citibank involved a mortgage foreclosure action commenced in March of 2009.  Borrower failed to appear, answer or move with respect to the complaint.  In May of 2009, a mandatory CPLR 3408 settlement conference was conducted “but was unproductive.” In November of 2009, due to borrower’s default in appearing, lender moved, ex parte, for an order of reference.  Supreme Court declined to sign the proposed order because the supporting affidavit was incomplete.  Five years later, in March of 2015, with the assistance of new counsel, lender moved for an order of reference, which motion was marked off the calendar because the “motion had been erroneously made returnable on a date when the CMP was not open.”  

The motion was made again in December of 2015, and, in anticipating a CPLR 3215(c) dismissal, lender argued in its motion “any dismissal of the complaint pursuant to CPLR 3215(c) would be unwarranted, for reasons that sought to excuse the lengthy delay in bringing the motion.”  This motion, “consistent with [borrower’s] pattern of defaults,” was unopposed.  By order dated February 10, 2016 (the “February Order”), supreme court denied lender’s motion and, sua sponte, dismissed the action as abandoned.  In so doing, supreme court “rejected the plaintiff’s ‘good cause’ argument for the lateness of its motion, but also because, in its view, the presentation to the court of the proposed ex parte order of reference in November 2009, which the court refused to sign, did not qualify as a taking of proceedings for the entry of judgment pursuant to CPLR 3215(c).”  (Emphasis added.)  Lender appealed the February Order.

Lender moved to vacate the February Order, arguing that “the presentment of the proposed ex parte order of reference in November 2009, within one year after [borrower’s] default, rendered the abandonment provision of CPLR 3215(c) inapplicable.  [Eds. Note:  the tortured procedural and factual history of the case caused the Second Department to analyze numerous appellate issues that, while beyond the scope of this article, are interesting.]

According to the Court, “the dismissal provisions of CPLR 3215(c) are not implicated in any action where the plaintiff ‘take[s] proceedings’ for the entry of judgment within one year after a defendant’s default [because when such] proceedings are taken within the statutory one-year period, any delays occasioned in the prosecution of the action beyond that year are irrelevant to CPLR 3215(c).”

The Court, in discussing the origins of the “take proceedings” language of CPLR 3215(c), concluded that the legislature, in enacting that statute, necessarily meant something other than “filing” or “serv[ing] a motion” or “formal motion practice.”  The Court concluded that the “take proceedings” language was intended to be a broader and more encompassing concept than a more tightly defined “filing” or “service” of a motion for leave to enter a default judgment or other type of motion.  Indeed, the Court cited a litany of cases in support of the notion that CPLR 3215(c) should be construed such that “a plaintiff [should not be deemed to have] abandoned an action if, within one year after the defendant’s default, the plaintiff has manifested an intent not to abandon the case, but to take steps to seek a judgment.”  Obtaining a judgment within a year is not necessary, “so long as proceedings were undertaken to do so during the initial year after the defendant’s default.”

According to the Second Department, “[t]he relevant inquiry, therefore, is not the form that an application takes when presented to the court or its result. Rather, it is the intent that can be inferred from an application presented to the court seeking to have the action ‘proceed,’ inconsistent with that of an abandonment of the plaintiff’s claims.”  (Emphasis in original.)  This, the Court noted, was consistent with the approach of the First Department.  The Court concluded that:

[t]he fact that that the Supreme Court rejected the order of reference as defective is beside the point, as the mere presentment of it established the plaintiff’s intent to proceed toward the entry of judgment and not to abandon the action.  What matters is the intent manifested by the presentment of an application, not what specific form it took or how it was filed. That being the case, the court should not have sua sponte directed dismissal of the complaint pursuant to CPLR 3215(c). That statute has no application under the facts and circumstances of this case, as the plaintiff presented an ex parte proposed order of reference within one year after [borrower]’s default.

Supreme court’s order dismissing the mortgage foreclosure action was reversed and lender’s motion for an order of reference was granted.

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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