Wells Fargo Bank, N.A. v. YSB Assets, LLC
Attorneys and Parties
Brief Summary
Residential mortgage foreclosure; timeliness of default-judgment proceedings under New York Civil Practice Law and Rules (CPLR) 3215(c) [if the plaintiff fails to take proceedings for entry of judgment within one year after a defendant’s default, the court shall dismiss the complaint as abandoned unless sufficient cause is shown].
Granted the lender leave to enter a default judgment and an order of reference against YSB Assets, LLC, and denied YSB’s motion to dismiss as abandoned under CPLR 3215(c).
The Appellate Division reversed the grant of default judgment and order of reference and instead dismissed the amended complaint against YSB as abandoned under CPLR 3215(c).
The lender failed to take proceedings toward entry of judgment within one year of YSB’s default (as calculated after CPLR 3211(f) [service of a pre-answer motion extends the time to answer until 10 days after service of notice of entry of the order deciding the motion] and applicable COVID-19 tolls and stays) and did not provide a reasonable excuse for the delay; therefore, dismissal was required.
Background
The foreclosure action was commenced in 2009 against, among others, 222 Amanda Properties, Inc., the alleged owner of the Brooklyn property. In 2016, the property was conveyed to YSB Assets, LLC (YSB). In 2019, the court substituted YSB as a defendant. YSB filed a pre-answer motion to dismiss the amended complaint, which was denied by order entered February 5, 2020; notice of entry was served April 30, 2020. Under CPLR 3211(f), YSB’s time to answer ran from service of notice of entry. Accounting for the COVID-19 executive-order tolls (9 NYCRR 8.202.8, 8.202.67 [tolling legal time limits due to the COVID-19 emergency]) and the COVID-19 Emergency Eviction and Foreclosure Prevention Act of 2020 [60-day automatic stay of foreclosure proceedings], the lender had until January 2022 to take proceedings toward entry of judgment. The lender did not move for default and an order of reference until March 2022 (later withdrawn) and again in October 2022. YSB opposed and cross-moved to dismiss as abandoned under CPLR 3215(c).
Lower Court Decision
The Supreme Court, Kings County, granted the lender’s motion for leave to enter a default judgment and an order of reference against YSB and denied YSB’s CPLR 3215(c) motion to dismiss as abandoned; a referee was appointed to compute amounts due.
Appellate Division Reversal
The Appellate Division reversed, denied the lender’s requests for a default judgment and order of reference, and granted YSB’s CPLR 3215(c) motion dismissing the amended complaint as abandoned. The court held the lender failed to take proceedings within one year of YSB’s default (as extended by CPLR 3211(f) and COVID tolls/stays) and failed to offer a reasonable excuse for the delay, making it unnecessary to assess the merits.
Legal Significance
Reaffirms strict enforcement of CPLR 3215(c) in foreclosure cases: plaintiffs must timely take proceedings toward entry of judgment within one year after default, measured after any CPLR 3211(f) extensions and recognized COVID-19 tolls/stays; absent a reasonable excuse for delay, the complaint must be dismissed as abandoned regardless of potential merit.
Lenders must initiate default-judgment proceedings within the one-year CPLR 3215(c) window (as adjusted by CPLR 3211(f) and COVID tolls/stays) or risk dismissal as abandoned; lacking a reasonable excuse is fatal to avoiding dismissal.