U.S. Bank Trust, N.A. v Public Administrator of Suffolk County
Attorneys and Parties
Brief Summary
Mortgage foreclosure—whether plaintiff could use service by publication under New York Civil Practice Law and Rules (CPLR) 308(5) [permits court-authorized alternative service when traditional service is impracticable] and CPLR 316 [service by publication], whether alleged heirs are necessary parties under Real Property Actions and Proceedings Law (RPAPL) 1311 [identifies necessary parties in a mortgage foreclosure], and whether the court could sua sponte toll interest without a hearing (CPLR 5701(c) [allows leave to appeal from an order not otherwise appealable]).
Denied as academic plaintiff’s unopposed motion for leave to serve two heir-defendants (Noren and Eng) by publication on the ground they were unnecessary because the estate’s personal representative had been served; sua sponte tolled interest retroactive to November 9, 2020.
The denial as academic of leave to serve by publication and the sua sponte tolling of interest.
Plaintiff showed service by traditional means was impracticable, warranting publication; the record did not support that the heirs were unnecessary parties under RPAPL 1311; and the court could not sua sponte toll interest without affording plaintiff an opportunity to be heard.
Background
Eileen Noren executed a $267,176.28 note on January 14, 2008, secured by a mortgage on Suffolk County property. She died on August 22, 2008. The loan default occurred on April 30, 2014. On February 20, 2019, plaintiff (successor to Wells Fargo Financial Credit Services New York, Inc.) filed a foreclosure action against the Public Administrator of Suffolk County (as administrator of Noren’s estate) and nine alleged heirs, including Charles Noren and Kathleen Eng. Personal service attempts on Noren and Eng in March–May 2019 failed; a process server documented multiple address checks and database searches (U.S. Postal Service requests, New York State Department of Motor Vehicles records, Accurint-Lexis, Board of Elections records, phone listings, and Suffolk County Surrogate’s Court records). On or about February 25, 2023, plaintiff moved for leave to serve Noren and Eng by publication.
Lower Court Decision
By order dated May 8, 2023 (Supreme Court, Suffolk County, Hensley, J.), the court denied as academic the unopposed motion for leave to serve Noren and Eng by publication, reasoning they were unnecessary parties because the estate’s personal representative had been served, and sua sponte tolled the accrual of interest on the mortgage retroactive to November 9, 2020.
Appellate Division Reversal
Reversed on the law. The Appellate Division granted leave to appeal as to the sua sponte interest tolling (CPLR 5701(c)) and held: (1) service by publication on Noren and Eng is permitted because plaintiff demonstrated that traditional service was impracticable (CPLR 308(5); 316); (2) the record did not establish that the heirs were unnecessary parties under RPAPL 1311; and (3) the court improperly tolled interest sua sponte without giving plaintiff an opportunity to be heard. The order was reversed insofar as appealed, and leave to serve by publication was granted; the sua sponte tolling was vacated.
Legal Significance
Confirms that heirs may be necessary parties in foreclosure even when the personal representative has been served, and clarifies that the ‘impracticable’ standard for alternative service does not require the heightened due diligence showing of CPLR 308(4). Also reaffirms that a court cannot impose sua sponte interest-related sanctions without providing the affected party an opportunity to be heard.
When diligent efforts show traditional service is impracticable, courts should authorize service by publication on heir-defendants in foreclosure actions, and any sua sponte tolling of interest requires giving the plaintiff a chance to be heard.