Deutsche Bank National Trust Company v Cahn
Categories
Attorneys and Parties
Brief Summary
Mortgage foreclosure procedure and the effect of filing successive foreclosure actions on the same debt.
The Supreme Court, Suffolk County, granted the plaintiff leave under Civil Practice Law and Rules (CPLR) 3217(b) [leave of court required for voluntary discontinuance by order] to discontinue the foreclosure action against Daniel Cahn and Randi Cahn without prejudice.
The Appellate Division reversed both November 6, 2023 orders insofar as they granted the plaintiff leave to discontinue the action against the Cahn defendants.
Because after the plaintiff filed a second foreclosure action on the same mortgage debt without first obtaining leave of court, Real Property Actions and Proceedings Law (RPAPL) 1301(3) [bars commencement or maintenance of another action to recover the same mortgage debt while a prior action is pending or after final judgment for the plaintiff without leave of the court, and provides that if the second action is filed without leave, the first action is deemed discontinued upon commencement of the second action] caused the first action to be automatically discontinued by operation of law as of September 13, 2023. Since the action had already been discontinued, there was nothing left for the court to discontinue under CPLR 3217(b).
Background
Daniel Cahn executed a $432,000 note in 2006 in favor of HSBC Mortgage Corporation, secured by a mortgage on Greenlawn property given by Daniel Cahn and Randi Cahn. Deutsche Bank commenced this foreclosure action in April 2015. In March 2023, the Supreme Court denied the plaintiff's summary judgment motion and granted the Cahn defendants' cross-motion to dismiss the complaint against them based on the plaintiff's failure to comply with RPAPL 1304. No final judgment had yet been entered. On August 7, 2023, the plaintiff moved for leave to discontinue the action against the Cahn defendants without prejudice. The defendants opposed, arguing that the plaintiff had already commenced a second foreclosure action on September 13, 2023, involving the same mortgage debt and had done so without leave of court.
Lower Court Decision
The Supreme Court held that the plaintiff could discontinue the action against Daniel Cahn and Randi Cahn without prejudice under CPLR 3217(b), and it issued two orders dated November 6, 2023 granting that relief.
Appellate Division Reversal
The Appellate Division held that the action was still technically pending when the plaintiff moved to discontinue because the earlier dismissal order had not yet resulted in a final judgment. However, once the plaintiff filed the second foreclosure action without leave of court, RPAPL 1301(3) automatically deemed the first action discontinued as of September 13, 2023. Therefore, the Supreme Court should have denied the motion for leave to discontinue because the discontinuance had already occurred by operation of law. The appellate court reversed both orders insofar as appealed from and awarded one bill of costs to the Cahn defendants.
Legal Significance
The decision reinforces the Foreclosure Abuse Prevention Act amendment to RPAPL 1301(3), making prior leave of court a condition precedent to commencing a second action to recover the same mortgage debt. If a lender starts a second foreclosure action without obtaining that leave while the first action is pending, the first action is automatically discontinued. Courts therefore cannot later grant discretionary discontinuance relief for an action that has already ended by statute.
A mortgage lender cannot file a second foreclosure action on the same debt without first obtaining leave of court and then seek to clean up the first case with a later discontinuance motion; under RPAPL 1301(3), the first action is already deemed discontinued once the second action is improperly commenced.