MORTGAGE FORECLOSURE - EFFECT OF BANK'S DELAY

A balancing of interests.

Chase Home Fin., LLC v Berger, 2020 NY Slip Op 04289, Decided on July 29, 2020, Appellate Division, Second Department:

"In March 2004, Abraham Berger (hereinafter the defendant) borrowed the sum of $300,000 from the plaintiff's predecessor in interest. The loan was evidenced by a note and secured by a mortgage on certain real property located in Spring Valley. In October 2009, the plaintiff commenced this action against the defendant and others alleging, inter alia, that the defendant defaulted in his payment obligations under the note and mortgage.

In August 2010, the plaintiff obtained a default judgment of foreclosure and sale against the defendant. Four years later, the plaintiff attempted to enforce the judgment of foreclosure and sale by moving, inter alia, for leave to substitute the affidavit of merit. The Supreme Court granted the motion in an order dated February 20, 2015. Thereafter, the defendant moved to vacate, among other things, an order of reference dated April 6, 2010, and the judgment of foreclosure and sale, and pursuant to CPLR 3211(a) to dismiss the complaint insofar as asserted against him on the ground, inter alia, that he had never been served with the summons and complaint. In late 2017, the plaintiff moved, among other things, pursuant to CPLR 306-b to extend the time to serve the defendant with the summons and complaint.

After the plaintiff admitted that its original affidavit of service was erroneous and failed to produce its process server when the parties appeared for a hearing to determine the validity [*2]of service of process, the Supreme Court denied the plaintiff's motion and granted the defendant's motion, inter alia, to dismiss the complaint insofar as asserted against him. The plaintiff now appeals and argues, among other things, that the court should have granted its motion in the interest of justice.

CPLR 306-b provides, in relevant part, that "[s]ervice of the summons and complaint . . . shall be made within one hundred twenty days after the commencement of the action." CPLR 306-b further provides that, "[i]f service is not made upon a defendant within the time provided in this section, the court, upon motion, shall dismiss the action without prejudice as to that defendant, or upon good cause shown or in the interest of justice, extend the time for service."

"An extension of time for service is a matter within the Court's discretion" (Leader v Maroney, Ponzini & Spencer, 97 NY2d 95, 101). In applying the CPLR 306-b interest of justice standard, which is distinct from the good cause standard (see State of New York Mtge. Agency v Braun, 182 AD3d 63), the court must engage in " a careful judicial analysis of the factual setting of the case and a balancing of the competing interests presented by the parties'" (BAC Home Loans Servicing, L.P. v Herbst, 180 AD3d 980, 981, quoting Leader v Maroney, Ponzini & Spencer, 97 NY2d at 105). In so doing, " the court may consider diligence, or lack thereof, along with any other relevant factor in making its determination, including expiration of the Statute of Limitations, the [potentially] meritorious nature of the cause of action, the length of delay in service, the promptness of a plaintiff's request for the extension of time, and prejudice to defendant'" (BAC Home Loans Servicing, L.P. v Herbst, 180 AD3d at 981, quoting Leader v Maroney, Ponzini & Spencer, 97 NY2d at 105-106).


Here, we agree with the Supreme Court that the plaintiff's delay of nearly five years between obtaining a default judgment of foreclosure and sale against the defendant and its attempt to enforce that judgment, during which time the statute of limitations expired, weighed against extending the time to serve the defendant with the summons and complaint by approximately nine years. In addition, the court found that the plaintiff was seeking relief pursuant to CPLR 306-b to avoid the consequences of its inability to produce its process server on the scheduled date of the hearing. Under these circumstances, the court providently exercised its discretion in determining that granting the plaintiff's motion would not serve the interest of justice. Likewise, we agree with the court's determination granting the defendant's motion, inter alia, to dismiss the complaint insofar as asserted against him on the ground that he had not been properly served with the summons and complaint."

REMEMBER COMMENCEMENT AND SERVICE ARE TWO DIFFERENT THINGS

Chief Administrative Judge Marks released a Memorandum yesterday announcing that, beginning Monday, May 25, "e-filing through the NYSCEF system -- including the filing of new non-essential matters -- will be restored in those counties of the state that have not yet met the benchmarks required" under the Governor's reopening plan, including those in New York City and Long Island.

But have a process server ready to serve in quarantine times because pursuant to CPLR 306-b service of a summons and complaint must be made within 120 days after the commencement of the action, which the court, upon motion, may in its discretion and "upon good cause shown or in the interest of justice, extend the time for service" (CPLR 306-b; Leader v Maroney, Ponzini & Spencer, 97 NY2d 95, 101 [2001]; Chan v Zoubarev, 157 AD3d 851 [2018]). To establish good cause, a plaintiff must demonstrate reasonable diligence in attempting service Leader v Maroney, Ponzini & Spencer, supra at 105-106). The interest of justice standard does not require reasonably diligent efforts at service, but courts, in making their determinations, may consider the presence or absence of diligence, along with other factors (see Leader v Maroney, Ponzini & Spencer, 97 NY2d at 105) including the expiration of the statute of limitations, the meritorious nature of the action, the length of delay in service, the promptness of a request by the plaintiff for an extension, and prejudice to the defendant (see Bumpus v New York City Transit Auth.,, 66 AD3d 26, 32 [2009)]).

120 DAYS AFTER COMMENCEMENT

CPLR 306-b provides: "Service of the summons and complaint, summons with notice, third-party summons and complaint, or petition with a notice of petition or order to show cause shall be made within one hundred twenty days after the commencement of the action or proceeding, provided that in an action or proceeding, except a proceeding commenced under the election law, where the applicable statute of limitations is four months or less, service shall be made not later than fifteen days after the date on which the applicable statute of limitations expires.  If service is not made upon a defendant within the time provided in this section, the court, upon motion, shall dismiss the action without prejudice as to that defendant, or upon good cause shown or in the interest of justice, extend the time for service."

Nationstar Mtge., LLC v Wilson 2019 NY Slip Op 07595 Decided on October 23, 2019 Appellate Division, Second Department

"If service of the summons and complaint is not made upon a defendant within 120 days of commencement of the action, "the court, upon motion, shall dismiss the action without prejudice as to that defendant, or upon good cause shown or in the interest of justice, extend the time for service" (CPLR 306-b). " Good cause' and interest of justice' are two separate and independent statutory standards" (Bumpus v New York City Tr. Auth., 66 AD3d 26, 31; see Leader v Maroney, Ponzini & Spencer, 97 NY2d 95, 104). "To establish good cause, a plaintiff must demonstrate reasonable diligence in attempting service" (Bumpus v New York City Tr. Auth., 66 AD3d at 31; see Leader v Maroney, Ponzini & Spencer, 97 NY2d at 105-106). The interest of justice standard is a broader standard "to accommodate late service that might be due to mistake, confusion or oversight, so long as there is no prejudice to the defendant" (Leader v Maroney, Ponzini & Spencer, 97 NY2d at 105 [internal quotation marks omitted]). "The interest of justice standard requires a careful judicial analysis of the factual setting of the case and a balancing of the competing interests presented by the parties" (id.). "Under the interest of justice standard, the court may consider diligence, or lack thereof, along with any other relevant factor in making its determination, including expiration of the Statute of Limitations, the meritorious nature of the cause of action, the length of delay in service, the promptness of a plaintiff's request for an extension of time, and prejudice to defendant'" (Wells Fargo Bank v Figueroa, 171 AD3d 987, 989, citing Leader v Maroney, Ponzini & Spencer, 97 NY2d at 105-106).

Here, the plaintiff failed to establish that it exercised reasonably diligent efforts in attempting to effect proper service upon Carbone, and thus failed to show good cause (see Wells Fargo Bank, NA v Barrella, 166 AD3d 711, 714; Hobbins v North Star Orthopedics, PLLC, 148 AD3d 784, 787-788). The first attempted service upon Carbone was made on October 30, 2014, at the property which is the subject of this foreclosure action. Carbone's answer raised the affirmative defense of improper service, and in his affidavit submitted in support of his motion to dismiss filed on February 2, 2015, this argument was set out in detail, in that Carbone asserted that he did not reside at the property address. Yet, Nationstar waited until February 20, 2015, the day before the expiration of the 120-day service period, to make a second attempt to serve Carbone at his residence, and notably this service was not completed within the 120-day period. Moreover, in regard to the second attempt at service, which the Supreme Court totally discredited, it cannot be said that the plaintiff exercised reasonable diligence in attempting service.

Further, the plaintiff failed to establish entitlement to an extension of time for service in the interest of justice. Even though Nationstar was on notice in April 2015—when Carbone moved to dismiss for the second time based on improper service, relying on the surveillance video [*3]recording of the process server—that the February 2015 service was defective, and even though a copy of the video was sent to counsel for Nationstar on February 26, 2016, Nationstar still waited until April 2016 to move for an extension of time to serve Carbone. The plaintiff's motion therefore was not made until one year after Carbone moved to dismiss, and 16 months after the expiration of the 120-day service period (see Jung Hun Cho v Bovasso, 166 AD3d 868, 870; Hourie v North Shore-Long Is. Jewish Health Sys., Inc.-Lenox Hill Hosp., 150 AD3d 707, 709). The facts that the action was timely commenced, that Carbone had actual notice of the action within the 120-day service period, and that the statute of limitations had expired by the time the plaintiff moved to extend the time to serve, militate in favor of granting the plaintiff's motion to extend the time to serve. However, these factors are outweighed by the lack of diligence evidenced by the Supreme Court's finding that the process server never served Carbone, despite the process server's affidavit claiming he did serve Carbone."

DELAY IN SERVING DEFENDANT

Wells Fargo Bank, NA v Barrella, 2018 NY Slip Op 07486, Decided on November 7, 2018, Appellate Division, Second Department:

On November 24, 2009, the plaintiff's former counsel, Steven J. Baum, P.C., commenced this residential foreclosure action by filing the summons and complaint with the Westchester County Clerk. In February 2012, the plaintiff retained new counsel, who discovered that the plaintiff's former counsel had failed to serve, among others, the defendant Joseph N. Barrella (hereinafter Joseph), as administrator, heir, and distributee of Anastasia Barrella, the surviving spouse of Joseph A. Barrella.

On June 22, 2015, approximately 5½ years after commencing the action, the plaintiff effectuated personal service upon Joseph by serving a person of suitable age and discretion at his actual place of business. On or about January 8, 2016, more than six months after serving Joseph [*2]and after the expiration of the statute of limitations, the plaintiff moved, inter alia, pursuant to CPLR 306-b to extend, nunc pro tunc, its time to serve Joseph. Joseph, together with the defendants Russell Barrella (hereinafter Russell), as heir and distributee of Anastasia Barrella, and Gail Fatato, as heir and distributee of Anastasia Barrella (hereinafter collectively the defendants), opposed the motion and cross-moved pursuant to CPLR 306-b to dismiss the complaint insofar as asserted against them. The Supreme Court, relying upon CPLR 306-b's interest of justice provision, granted that branch of the plaintiff's motion which was to extend its time to serve Joseph and denied the defendants' cross motion. The defendants appeal and we modify.

As relevant here, CPLR 306-b provides that "[s]ervice of the summons and complaint . . . shall be made within one hundred twenty days after the commencement of the action." Further, "[i]f service is not made upon a defendant within the time provided in this section, the court, upon motion, shall dismiss the action without prejudice as to that defendant, or upon good cause shown or in the interest of justice, extend the time for service." " Good cause' and interest of justice' are two separate and independent statutory standards" (Bumpus v New York City Tr. Auth., 66 AD3d 26, 31; see Leader v Maroney, Ponzini & Spencer, 97 NY2d 95, 104). "To establish good cause, a plaintiff must demonstrate reasonable diligence in attempting service" (Bumpus v New York City Tr. Auth., 66 AD3d at 31-32; see Leader v Maroney, Ponzini & Spencer, 97 NY2d at 105-106). "If good cause for an extension is not established, courts must consider the interest of justice' standard of CPLR 306-b" (Bumpus v New York City Tr. Auth., 66 AD3d at 32), which "requires a careful judicial analysis of the factual setting of the case and a balancing of the competing interests presented by the parties" (Leader v Maroney, Ponzini & Spencer, 97 NY2d at 105). "Unlike an extension request premised on good cause, a plaintiff [seeking an extension in the interest of justice] need not establish reasonably diligent efforts at service as a threshold matter" (Leader v Maroney, Ponzini & Spencer, 97 NY2d at 105). "However, the court may consider diligence, or lack thereof, along with any other relevant factor in making its determination, including expiration of the statute of limitations, the potentially meritorious nature of the cause of action, the length of delay in service, the promptness of a plaintiff's request for the extension of time, and prejudice to defendant" (Leader v Maroney, Ponzini & Spencer, 97 NY2d at 105-106; see Moundrakis v Dellis, 96 AD3d 1026, 1027; Bumpus v New York City Tr. Auth., 66 AD3d at 32). "No one factor is determinative—the calculus of the court's decision is dependent on the competing interests of the litigants and a clearly expressed desire by the Legislature that the interests of justice be served" (Leader v Maroney, Ponzini & Spencer, 97 NY2d at 106).

Here, the Supreme Court improvidently exercised its discretion in granting that branch of the plaintiff's motion which was to extend its time to serve Joseph. The plaintiff failed to establish that it exercised reasonably diligent efforts in attempting to effect proper service of process upon Joseph and, thus, failed to show good cause (see Hobbins v North Star Orthopedics, PLLC, 148 AD3d 784, 787-788; Loza v Alluri, 94 AD3d 824, 825). Further, the plaintiff failed to establish that an extension of time was warranted in the interest of justice (see Hobbins v N. Star Orthopedics, PLLC, 148 AD3d at 787-788; Loza v Alluri, 94 AD3d at 825). Where the plaintiff's delay in serving a defendant is protracted, and the defendant has no notice of the action for a protracted period of time, an inference of substantial prejudice arises (see Leader v Maroney, Ponzini & Spencer, 97 NY2d at 107; see also Ludemann v Maisel, 292 AD2d 428). The plaintiff failed to rebut the inference of substantial prejudice that arose due to its protracted delay in serving Joseph, as it failed to come forward with any proof that Joseph had notice of this action prior to being served more than 5½ years after the action was commenced (see Leader v Maroney, Ponzini & Spencer, 97 NY2d at 107; Ludemann v Maisel, 292 AD2d 428; cf. Jhang v Nassau Univ. Med. Ctr., 140 AD3d 1018, 1019-1020). Moreover, the plaintiff failed to explain its more than six-month delay in moving for relief pursuant to CPLR 306-b after it effectuated service upon Joseph (see Redman v South Is. Orthopaedic Group, P.C., 78 AD3d 1147, 1148; cf. Fernandez v Morales Bros. Realty, Inc., 110 AD3d 676, 677). Under theses circumstances, the plaintiff failed to establish its entitlement to an extension of time to serve Joseph under the interest of justice standard (see Leader v Maroney, Ponzini & Spencer, 97 NY2d at 107), and its motion should have been denied."