Apex Bank v Fasulo-Brancaleone
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Attorneys and Parties
Brief Summary
Mortgage foreclosure and whether borrowers may recover attorneys' fees under Real Property Law § 282(1) [implies a reciprocal covenant requiring a mortgagee to pay a mortgagor's reasonable attorneys' fees incurred in the successful defense of a mortgage action where the mortgage permits the mortgagee to recover such fees].
The Supreme Court, Nassau County, granted the defendants' cross-motion for attorneys' fees and entered judgment awarding them $57,357.70 against the plaintiff.
The Appellate Division reversed the judgment awarding attorneys' fees, denied the fee branch of the defendants' cross-motion, vacated the November 7, 2022 decision, and modified the September 29, 2021 order accordingly.
Because in a related appeal the defendants were no longer prevailing parties after the appellate court held they were not entitled to summary judgment dismissing the foreclosure complaint, they had not achieved a 'successful defense' required for fees under Real Property Law § 282.
Background
In this residential mortgage foreclosure action, Apex Bank moved for summary judgment on the complaint and for an order of reference. In opposition, defendants Theresa D. Fasulo-Brancaleone and Peter Brancaleone, Jr. cross-moved, among other things, for attorneys' fees. The Supreme Court granted that fee request in a September 29, 2021 order, and a later judgment dated January 19, 2023, based on that order and a November 7, 2022 decision, awarded the defendants $57,357.70. The plaintiff appealed. In a related appeal decided the same day, the Appellate Division held that the defendants were not entitled to summary judgment dismissing the complaint insofar as asserted against them.
Lower Court Decision
The lower court treated the defendants as entitled to recover attorneys' fees under Real Property Law § 282(1) and entered judgment in their favor for $57,357.70.
Appellate Division Reversal
The Appellate Division reversed the judgment on the law, with costs, denied the branch of the defendants' cross-motion seeking attorneys' fees, vacated the November 7, 2022 decision, and modified the September 29, 2021 order accordingly. The court reasoned that, because the related appeal established that the defendants had not prevailed in obtaining dismissal of the foreclosure complaint, they were not prevailing parties and therefore could not recover fees for a 'successful defense' under Real Property Law § 282(1). The court also denied the respondents' motion to strike Point VII of the appellant's brief.
Legal Significance
The decision reinforces that fee-shifting under Real Property Law § 282(1) is strictly limited to mortgagors who actually achieve a successful defense of the foreclosure action. A temporary lower-court victory does not support a fee award if that victory is undone on appeal and the borrowers are no longer prevailing parties.
In New York mortgage foreclosure litigation, borrowers cannot recover reciprocal attorneys' fees under Real Property Law § 282 unless they remain the prevailing parties after appellate review.