In recent case US Bank National Association v. Davis, Supreme Court Appellate Division, 2nd Dept., New York, 2021 WL 2816725, 2021 NY Slip Op. 04251, decided July 7, 2021, the Court found that the Judgment of foreclosure and sale was reversed plaintiff’s motion to confirm the referee’s report and for a judgment of foreclosure and sale is denied, cross motion of the defendants Ray Osborn Davis and 964–966 Myrtle, LLC, which was pursuant to CPLR 3215(c) to dismiss the complaint insofar as asserted against the defendant 964–966 Myrtle, LLC, as abandoned is granted, and the order dated June 14, 2017, was modified.
On July 19, 2010, the plaintiff commenced this action against, Davis and 964-966 Myrtle LLC, alleging, that Davis had defaulted on his mortgage by failing to make the payment due October 1, 2009, and all payments due thereafter. Davis filed a form answer, pro se, and thereafter, an answer and counterclaim by his attorney. Plaintiff agreed to accept pursuant to a stipulation. Myrtle LLC failed to answer the complaint or otherwise appear in the action. In August 2013, filed for summary judgment on the complaint insofar as asserted against Davis, to strike his answer, and for an order of reference. Davis opposed the motion.
On December 17, 2015, the Supreme Court granted the plaintiff’s motion for summary judgment and appointed a referee to calculate the amount due to the plaintiff. In September 2016, the plaintiff moved to confirm the referee’s report and for a judgment of foreclosure and sale. The defendants opposed the motion and cross-moved to dismiss the complaint. The defendants sought dismissal of the complaint against Myrtle LLC pursuant to CPLR 3215(c) based upon the plaintiff’s failure to move for leave to enter a default judgment against it within one year of its default in answering.
In an order dated June 14, 2017, the Supreme Court granted the plaintiff’s motion and denied the defendants’ cross motion, finding that the excuse offered by the plaintiff for its failure to timely move for leave to enter a default judgment against Myrtle LLC was reasonable. In a judgment of foreclosure and sale dated June 28, 2017, the court directed the sale of the subject property. The defendants appealed.
A plaintiff establishes its standing in a mortgage foreclosure action by demonstrating that, when the action was commenced, it was either the holder or assignee of the underlying note (see Aurora Loan Servs., LLC v. Taylor, 25 N.Y.3d 355, 361, 12 N.Y.S.3d 612, 34 N.E.3d 363). “Either a written assignment of the underlying note or the physical delivery of the note prior to the commencement of the foreclosure action is sufficient to transfer the obligation, and the mortgage passes with the debt as an inseparable incident” (U.S. Bank, N.A. v. Collymore, 68 A.D.3d 752, 754, 890 N.Y.S.2d 578; see Aurora Loan Servs., LLC v. Taylor, 25 N.Y.3d at 361–362, 12 N.Y.S.3d 612, 34 N.E.3d 363; Citimortgage, Inc. v. Laupot, 190 A.D.3d 680, 135 N.Y.S.3d 889).
Plaintiff argued and Court found that by submitting copies of excerpts from the PSA, and its attached mortgage loan schedule, which included the subject mortgage loan, the plaintiff established, prima facie, that, as of July 1, 2006, the plaintiff, as trustee under the PSA, was an assignee of the mortgage loan and owner of the note. Thus, it had standing to commence this action on July 19, 2010.
In opposition, the defendants failed to raise a triable issue of fact. Their assertions that a subsequent assignment of mortgage was invalid, and that the PSA did not prove the physical delivery of the note, were found irrelevant considering the proof of assignment by the terms of the PSA.
Pursuant to CPLR 3215(c), “[i]f the plaintiff fails to take proceedings for the entry of judgment within one year after [a defendant’s] default, the court shall not enter judgment but shall dismiss the complaint as abandoned … unless sufficient cause is shown why the complaint should not be dismissed.” “The language of CPLR 3215(c) is not, discretionary, but mandatory, inasmuch as courts ‘shall’ dismiss claims (CPLR 3215[c]) for which default judgments are not sought within the requisite one-year period, as those claims are then deemed abandoned. Failure to take proceedings for entry of judgment may be excused if the plaintiff to demonstrates that it had a reasonable excuse for the delay in taking proceedings for entry of a default judgment and that it has a potentially meritorious action. The determination is in the sound discretion of the Court.
In this case, the plaintiff served its complaint on Myrtle LLC after which Myrtle LLC failed to answer or otherwise appear in the action. Thus, Myrtle LLC was in default as of August 21, 2010. However, it was not until August 13, 2013, that the plaintiff moved, for summary judgment on the complaint insofar as asserted against Davis, and for leave to enter a default judgment. In its opposition to the defendants’ cross motion to dismiss the complaint, the plaintiff argued that it had a reasonable excuse for not moving for leave to enter a default judgment within a year of Myrtle LLC’s default. On appeal, the plaintiff abandoned that argument and, for the first time on appeal, alleged that the cross motion was properly denied because the plaintiff had moved for summary judgment in 2013, demonstrating its intent not to abandon this case. Additionally, the settlement conference delays ended August 2011, two years before August, 2013, when the plaintiff moved, for leave to enter a default judgment. As far as the FEMA declaration delay, from October 2012 to March 2013, the Court found that vague and unsubstantiated.
The plaintiff’s argument, raised for the first time on appeal, that, by moving for summary judgment and leave to enter a default judgment in August 2013, the plaintiff had “manifest[ed] its intent not to abandon this case” was not supported. Here, the plaintiff moved for summary judgment and an order of reference almost two years after the default, when the statutory time within which to enter a default had long since expired, thus it was too late for the plaintiff to “manifest an intent not to abandon the case so as to avoid dismissal of the complaint insofar as asserted against Myrtle LLC pursuant to CPLR 3215(c).
The many delays that were occurring during this action did not give plaintiff a sufficient argument to avoid noncompliance with CPLR 3215c. For further information regarding this case, please contact Deborah Gallo at firstname.lastname@example.org.