DBW TL Holdco 2014, LLC v Kirk
Categories
Attorneys and Parties
Brief Summary
Real estate and tax lien foreclosure; whether a plaintiff that settled with one defendant may discontinue the action as against that defendant and amend the judgment of foreclosure and sale accordingly.
The Supreme Court, Nassau County, denied the plaintiff's motion to discontinue the action insofar as asserted against Kathleen M. Kirk and to amend the existing judgment of foreclosure and sale to reflect that discontinuance.
The Appellate Division reversed the order denying the motion and granted the plaintiff's request to discontinue the action against Kathleen M. Kirk and to amend the judgment of foreclosure and sale accordingly.
Because the plaintiff and Kathleen M. Kirk had reached a settlement, and there was no showing that discontinuance would prejudice a substantial right of another party, circumvent a court order, avoid the consequences of an adverse determination, or produce any other improper result.
Background
The plaintiff brought an action to foreclose a tax lien against several defendants, including Kathleen M. Kirk and Robert P. Kirk, Jr. A judgment of foreclosure and sale was entered on March 19, 2019. After entry of that judgment, the plaintiff and Kathleen M. Kirk entered into a stipulation of settlement. The plaintiff then moved to discontinue the action as against Kathleen M. Kirk and to amend the foreclosure judgment to reflect the settlement and partial discontinuance. The Supreme Court denied that motion, and the plaintiff appealed. Separately, Robert P. Kirk, Jr. moved to dismiss the appeal on the ground that the plaintiff was no longer aggrieved, but the Appellate Division denied that branch of the motion.
Lower Court Decision
The Supreme Court, Nassau County, in an order dated September 28, 2022, denied the plaintiff's motion to discontinue the action insofar as asserted against Kathleen M. Kirk and to amend the judgment of foreclosure and sale accordingly.
Appellate Division Reversal
The Appellate Division, Second Department, reversed the order, on the law and in the exercise of discretion, with costs. It held that motions for leave to discontinue generally should be granted unless discontinuance would prejudice a substantial right of another party, circumvent a court order, avoid the consequences of a potentially adverse determination, or produce other improper results. Because the plaintiff and Kathleen M. Kirk had settled and no substantial prejudice or other improper consequence was shown, the Supreme Court improvidently exercised its discretion in denying the motion. The appellate court therefore granted the motion to discontinue as against Kathleen M. Kirk and to amend the judgment of foreclosure and sale.
Legal Significance
The decision reinforces New York's liberal approach to voluntary discontinuance, particularly where a settlement has been reached with one party after judgment. It confirms that, absent concrete prejudice or some improper tactical purpose, a court should ordinarily permit a plaintiff to discontinue claims against a settling defendant and conform the foreclosure judgment to that resolution.
When a foreclosure plaintiff settles with one defendant, a court should generally allow discontinuance of the action as to that defendant and amendment of the foreclosure judgment unless another party can show substantial prejudice or some improper result.