U.S. Bank National Association v White
Categories
Attorneys and Parties
Brief Summary
Mortgage foreclosure procedure and title litigation, specifically whether a lender in a long-pending foreclosure action could amend its complaint to add a recorded property owner more than a decade after commencement and after the foreclosure statute of limitations had expired, and whether the notice of pendency could be canceled under CPLR 6514 [cancellation of notice of pendency].
The Supreme Court, Nassau County, denied the lender's motion for leave to serve and file a supplemental summons and amended complaint adding Kensington Realty Development, LLC, as a defendant under CPLR 3025(b) [leave to amend pleadings should be freely granted], and granted Kensington's cross-motion to cancel the notice of pendency.
Nothing was overturned. The Appellate Division affirmed the order insofar as appealed from.
The majority held that the trial court providently exercised its discretion because the plaintiff offered no adequate excuse for waiting more than 11 years to seek to add Kensington, even though Kensington's deed had been recorded before the foreclosure began, and because the statute of limitations under CPLR 213(4) [six-year statute of limitations for mortgage foreclosure] had expired, making the proposed amendment patently devoid of merit.
Background
The borrowers allegedly executed a note secured by a mortgage on property in Floral Park. Before this foreclosure action was commenced in July 2008, the borrowers had already conveyed their interest in the property to Kensington Realty Development, LLC, and that deed was recorded on February 7, 2007. The plaintiff's predecessor nevertheless began the foreclosure without naming Kensington. Over the next decade, the action was dismissed for want of prosecution, restored, and eventually resulted in a second judgment of foreclosure and sale in September 2018, still without Kensington as a party. The court noted that the foreclosure judgment did not affect Kensington's rights because Kensington had never been joined. In 2019, the plaintiff first moved to add Kensington, and that motion was initially granted without opposition. Later, Kensington challenged jurisdiction, and in September 2022 the Supreme Court vacated the 2019 order. In November 2022, the plaintiff again moved to add Kensington, and Kensington opposed and sought cancellation of the notice of pendency.
Lower Court Decision
The Supreme Court denied leave to amend and add Kensington as a defendant and granted cancellation of the notice of pendency. The court effectively concluded that the plaintiff's attempt to add Kensington at that late stage of the case was improper.
Appellate Division Reversal
There was no reversal. The Appellate Division affirmed the Supreme Court's order insofar as appealed from, holding that denial of leave to amend was a proper exercise of discretion and that cancellation of the notice of pendency therefore stood.
Legal Significance
The decision reinforces that, although amendments are generally liberally allowed under CPLR 3025(b) [leave to amend pleadings should be freely granted], a court may deny amendment in a long-pending foreclosure case where the movant knew or should have known the relevant facts for years, offers no reasonable excuse for the delay, and seeks to add a party after the limitations period has expired. The court also emphasized that an omitted recorded owner is not bound by a foreclosure judgment entered without joinder, and that any later effort to cut off that owner's rights may require reforeclosure under RPAPL 1523(2) [plaintiff must show the defect was not due to fraud or wilful neglect and that the omitted party was not actually prejudiced].
A foreclosing lender must identify and join all recorded owners promptly. Waiting years after commencement, and even after judgment, to add an omitted title holder can doom amendment efforts, especially once the six-year foreclosure limitations period has expired and the lender has no persuasive explanation for the delay.