Wells Fargo Bank, N.A. v. DeFoe
Attorneys and Parties
Brief Summary
Residential mortgage foreclosure—whether borrowers can vacate a default and serve a late answer years after a CPLR 3408 settlement conference.
Upon reargument, the Supreme Court vacated the borrowers’ default, extended time to answer, and vacated the 2018 default judgment/order of reference.
The Appellate Division reversed the December 4, 2023 order insofar as appealed from, adhered to the prior denial of vacatur/leave to serve a late answer, and reinstated the November 5, 2018 default judgment and order of reference.
Defendants failed to show a reasonable excuse for their default; ignorance of the obligation to answer is not a valid excuse, and reliance on CPLR 3408(m) or (l) [mandates residential foreclosure settlement conferences; empowers the court during the conference phase to extend a defendant's time to answer and accept late answers] was unavailable because they waited about four years after the conference to seek relief.
Background
Wells Fargo commenced a foreclosure in April 2018 against Suzanne Lynn DeFoe and George J. Grazediski. Defendants did not answer. They appeared at a July 2018 CPLR 3408 settlement conference; the matter was released and plaintiff was directed to proceed with foreclosure. In August 2018, plaintiff moved for a default judgment and order of reference, which the court granted without opposition on November 5, 2018. In March 2022, defendants moved to vacate their default and for leave to serve a late answer; the court denied the motion on July 15, 2022. Defendants then sought reargument, and on December 4, 2023, the court granted reargument, vacated the default, extended time to answer, and vacated the 2018 order. Plaintiff appealed.
Lower Court Decision
The Supreme Court, Richmond County, upon reargument, accepted defendants’ claim that they could rely on the CPLR 3408 settlement conference framework to excuse their failure to answer, vacated their default, allowed a late answer, and vacated the prior default judgment/order of reference.
Appellate Division Reversal
The Appellate Division held defendants did not establish a reasonable excuse for default; mere unawareness of the duty to answer is insufficient, and CPLR 3408(m) or (l) [mandates residential foreclosure settlement conferences; empowers the court during the conference phase to extend a defendant's time to answer and accept late answers] could not justify their approximately four-year delay after the conference concluded. Because no reasonable excuse was shown, the court did not reach whether a meritorious defense existed. It reversed the December 4, 2023 order insofar as appealed from, adhered to the July 15, 2022 denial of vacatur/late answer, and reinstated the November 5, 2018 order granting a default judgment and order of reference.
Legal Significance
Reaffirms that in residential foreclosure cases, defendants seeking to oppose default relief must timely show both a reasonable excuse and a potentially meritorious defense. Appearance at a CPLR 3408 settlement conference does not indefinitely excuse failure to answer; substantial post-conference delay without justification defeats reliance on CPLR 3408 to obtain leave to serve a late answer.
Ignorance of the need to answer is not a reasonable excuse, and CPLR 3408’s settlement conference provisions cannot be used years after the conference to revive an unanswered foreclosure action; absent a timely, valid excuse, defaults and related foreclosure orders will be reinstated.