You Can’t Put the Cart (Judgment of Foreclosure and Sale) Before the Horse (Summary Judgment)

• Posted on: Aug 16 2024

By: Jonathan H. Freiberger

Sometimes this BLOG takes an in-depth look at recently decided cases from New York’s appellate courts; other times it simply reports on cases with an interesting holding. Today’s BLOG reflects the latter.

Bank of New York Mellon v. Levinson, is a mortgage foreclosure action decided by the Appellate Division, Second Department, on August 14, 2024. The defendant/borrower in Bank of New York, borrowed $1.2 million from the lender and secured his repayment obligations with a mortgage on real property in Suffolk County. In 2007, upon the borrower’s default, the lender commenced a foreclosure action (the “First Foreclosure Action”). By the complaint in the First Foreclosure Action, the lender accelerated the loan balance due to it. [Eds. Note: this BLOG has addressed issues regarding acceleration of loans. See, e.g., [here], [here], [here] and [here].] In 2016, the First Foreclosure Action was dismissed “on the ground that the lender lacked standing.” [Eds. Note: this BLOG has addressed standing in mortgage foreclosure actions. See, e.g., [here], [here] and [here].]

In 2017, the lender commenced a new foreclosure action (the “Second Action”) against the borrower and the Homeowner’s Association to which the borrower (and the subject property) belonged (the “HOA”). The HOA’s motion to dismiss the Second Action as against it on statute of limitations grounds was denied. [Eds. Note: this BLOG has addressed statute of limitations issues in mortgage foreclosure actions. See, e.g., [here], [here], [here], [here], [here], [here], [here], [here], [here], [here] and [here].] The lender then moved for “summary judgment on the complaint insofar as asserted against the borrower and related defendants, for leave to enter a default judgment against the nonanswering defendants, and for an order of reference.” The lender’s notice of motion, however, did not seek summary judgment as against the HOA. Nonetheless, the motion was granted, and a referee was appointed to calculate the amounts due to the lender.

Thereafter, the HOA’s interest in the property was transferred to DH Group Holdings, Inc. The lender moved to confirm the referee’s report and for a judgment of foreclosure and sale. DH Group cross-moved for leave to intervene in the Second Action as a defendant and to renew the HOA’s motion to dismiss due to a change in the law. DH Group also opposed the lender’s motion to confirm and for a judgment of foreclosure and sale on the ground that summary judgment in the lender’s favor was never obtained against the HOA. The motion court permitted DH Group to intervene in the Second Foreclosure Action, but denied its motion to renew and granted the lender’s motion to confirm the referee’s report and for a judgment of foreclosure and sale.

On DH Gorup’s appeal, the Second Department reversed because summary judgment was never obtained against the HOA and, in so doing, the Court stated:

To be entitled to a judgment of foreclosure and sale against a defendant, a plaintiff must first establish entitlement to judgment against that defendant via a summary judgment motion or a motion for leave to enter a default judgment, or at trial (see generally Christiana Trust v Rashid, 228 AD3d 822, 824-825; MTGLQ Invs., L.P. v White, 179 AD3d 790). Here, the record demonstrates that the plaintiff neither sought nor obtained summary judgment or leave to enter a default judgment against the HOA, the intervenor’s predecessor in interest, nor was a trial held against the HOA. The plaintiff’s argument that the intervenor is not aggrieved by the order and judgment of foreclosure and sale is without merit, as the intervenor opposed the plaintiff’s motion, inter alia, to confirm the referee’s report and for a judgment of foreclosure and sale on this specific ground (see Mixon v TBV, Inc., 76 AD3d 144, 156-157).

The Court also determined that DH Group’s motion to renew was properly denied. The Court found that the “evidence demonstrated that the 2007 foreclosure action was dismissed based upon an expressed judicial determination that Countrywide lacked standing, and thus, the commencement of that action did not accelerate the mortgage note (see CPLR 213[4][a]; U.S. Bank N.A. v Marrero, 221 AD3d 631, 632).”

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.