E*TRADE Bank, formerly known as TeleBank v. Adam Plotch, et al.
Attorneys and Parties
Brief Summary
Mortgage foreclosure—timeliness of default judgment proceedings and service/jurisdiction after substitution of counsel.
The Supreme Court granted plaintiff’s motion for a default judgment and order of reference, denied defendant’s CPLR 3215(c) cross-motion to dismiss, and later entered a judgment of foreclosure and sale.
The Appellate Division vacated the judgment of foreclosure and sale, denied plaintiff’s default-judgment motion, granted defendant’s CPLR 3215(c) cross-motion, and dismissed the complaint as against Adam Plotch.
Because (1) after a filed consent to change attorney under CPLR 321(b) [procedure for substitution of attorney; a client may discharge counsel and appear pro se], plaintiff served its motion for a judgment of foreclosure and sale only on former counsel, depriving the court of jurisdiction to enter that judgment, warranting vacatur under CPLR 5015(a)(4) [relief from a judgment for lack of jurisdiction]; and (2) plaintiff failed to take proceedings for entry of judgment within one year of defendant’s default as required by CPLR 3215(c) [dismissal required if plaintiff fails to take proceedings for entry of judgment within one year of default unless sufficient cause is shown]. Filing a request for judicial intervention (RJI) to obtain a CPLR 3408 settlement conference [mandates settlement conferences in residential foreclosure actions for resident borrowers] did not qualify where the borrower was not a resident of the property.
Background
Defendant Adam Plotch was personally served on July 30, 2013 and defaulted on August 13, 2013. Plotch’s counsel filed a notice of appearance on February 18, 2014. Plaintiff filed a request for judicial intervention (RJI) on May 1, 2014, sending the case to the foreclosure settlement part until July 23, 2014. Plaintiff moved for a default judgment and order of reference on January 14, 2015; Plotch cross-moved on February 5, 2015 to dismiss under CPLR 3215(c) or for leave to answer. The court granted plaintiff’s motion and denied Plotch’s on April 8, 2015. A consent to change attorney dated June 17, 2015 was filed July 9, 2015 and sent to plaintiff on July 14, 2015, substituting Plotch pro se pursuant to CPLR 321(b). Plaintiff then moved for a judgment of foreclosure and sale on September 1, 2015 but served only Plotch’s former counsel; the motion was granted without opposition on October 15, 2015. A related bankruptcy stay delayed the appeal for several years.
Lower Court Decision
The Supreme Court, Bronx County, granted plaintiff a default judgment and order of reference and denied defendant’s CPLR 3215(c) cross-motion; later, it entered an unopposed judgment of foreclosure and sale after plaintiff served only former counsel rather than Plotch personally, who had been substituted pro se.
Appellate Division Reversal
The Appellate Division reversed. It vacated the October 15, 2015 judgment of foreclosure and sale under CPLR 5015(a)(4) because plaintiff failed to serve the motion on Plotch after a valid CPLR 321(b) consent to change attorney substituted him pro se, depriving the court of jurisdiction. It also reviewed and reversed the April 8, 2015 order, holding that plaintiff did not take proceedings for entry of judgment within one year of default as required by CPLR 3215(c). Filing an RJI to seek a CPLR 3408 settlement conference did not qualify because Plotch was not a resident of the subject property and no conference was required as a prerequisite to default relief. The court therefore denied plaintiff’s default-judgment motion, granted Plotch’s CPLR 3215(c) cross-motion, and dismissed the complaint against him.
Legal Significance
Clarifies that in mortgage foreclosure cases involving nonresident borrowers, filing an RJI to request a CPLR 3408 conference does not satisfy CPLR 3215(c)’s one-year requirement to take proceedings for entry of judgment; failure to timely proceed mandates dismissal absent good cause. It also reinforces that a filed consent to change attorney that substitutes a party pro se is effective even without identifying new counsel or the party’s address, and post-substitution motions must be served on the party; otherwise, any resulting judgment is jurisdictionally void and subject to vacatur.
To preserve a default in a foreclosure case, a plaintiff must take qualifying steps toward entry of judgment within one year and must properly serve motions on a party who has substituted in pro se; an RJI for a non-required settlement conference does not suffice.