Citimortgage, Inc. v Fimbel
Attorneys and Parties
Brief Summary
Residential mortgage foreclosure procedure—whether the death of a defendant-mortgagor automatically stays the action absent substitution when the surviving spouse, as tenant by the entirety, holds full title and the lender waives any deficiency judgment.
The Supreme Court, Suffolk County, denied plaintiff’s unopposed motion, holding the action was stayed upon the mortgagor’s death pending substitution.
The denial of plaintiff’s motion based on a purported death stay.
The decedent’s death did not affect the merits because the surviving spouse, as tenant by the entirety, became seized of the entire ownership interest, and the lender elected to discontinue as to the decedent and not seek a deficiency judgment; strict adherence to substitution and stay was unnecessary.
Background
Plaintiff commenced a foreclosure in July 2019 against, among others, James Fimbel (decedent) and Janice Fimbel concerning property in Smithtown. Plaintiff rejected Janice’s answer as untimely in February 2020. The decedent died in May 2020. In October 2022, plaintiff moved for an order of reference, leave to enter a default judgment against Janice, to amend the caption to delete the decedent, and, in effect, to discontinue the action as to him.
Lower Court Decision
By order dated January 30, 2023, the Supreme Court denied the motion on the ground that the action was automatically stayed upon the decedent’s death pending substitution of a personal representative.
Appellate Division Reversal
Reversed and remitted. The Appellate Division held that a stay was not required because, upon the decedent’s death, the surviving spouse as tenant by the entirety held the entire ownership interest, rendering the decedent a non-necessary party in the absence of a deficiency claim. Plaintiff’s motion to delete the decedent from the caption and discontinue as to him effected a waiver of any deficiency judgment. The Supreme Court should have reached the merits of plaintiff’s unopposed motion for an order of reference, default judgment against Janice, amendment of the caption, and discontinuance as to the decedent.
Legal Significance
Clarifies that in a foreclosure action, when a mortgagor-defendant dies but the surviving spouse holds title by tenancy by the entirety and the lender waives any deficiency judgment, the action need not be stayed for substitution; the deceased mortgagor is not a necessary party. The decision follows precedents including Paterno v CYC, LLC; DLJ Mtge. Capital, Inc. v 44 Brushy Neck, Ltd.; Wells Fargo Bank, N.A. v Bachmann; HSBC Bank USA v Ungar Family Realty Corp.; Nationstar Mtge., LLC v Azcona; and U.S. Bank N.A. v Auteri.
In foreclosure cases involving tenants by the entirety, the death of one spouse does not mandate a stay or substitution if the surviving spouse holds full title and the lender waives a deficiency; courts should proceed to the merits.