Bank of N.Y. v. Richards

192 A.D.3d 1228

143 N.Y.S.3d 708

The BANK OF NEW YORK, as Trustee, Now Known as the Bank of New York Mellon, Appellant,

v. Patrick RICHARDS et al., Defendants,andTerri Richards, Respondent.

530864

530916

Supreme Court, Appellate Division, Third Department, New York.

Calendar Date: January 7, 2021

Decided and Entered: March 4, 2021

Shapiro, DiCaro & Barak, LLC, Rochester (Ellis M. Oster of counsel), for appellant.

Burgess & Associates PC, Clifton Park (Peter L. Burgess of counsel), for respondent.

Before: Garry, P.J., Egan Jr., Lynch, Clark and Reynolds Fitzgerald, JJ.

MEMORANDUM AND ORDER

Reynolds Fitzgerald, J.

Appeals (1) from an order of the Supreme Court (Nolan Jr., J.), entered June 10, 2019 in Saratoga County, which granted defendant Terri Richards' motion to, among other things, vacate a default judgment, and (2) from an order of said court, entered October 30, 2019 in Saratoga County, which, among other things, granted defendant Terri Richards' cross motion to dismiss the complaint against her.

In 2007, defendant Patrick Richards (hereinafter Richards) executed a note for $92,500. As security for payment of the note, Richards and his wife, defendant Terri Richards (hereinafter defendant), executed a mortgage placing a lien against their jointly owned property. The note was subsequently assigned to plaintiff. In 2009, following Richards' alleged failure to remit payment pursuant to the note, plaintiff commenced a mortgage foreclosure action against, among others, both Richards and defendant. Pursuant to CPLR 3408, the parties participated in mandatory settlement negotiations. When no settlement occurred, the parties were released from the settlement process. In February 2013, Supreme Court (Chauvin, J.) ordered plaintiff to file a motion for an order of reference within 60 days, cautioning that failure to timely file the motion could result in the case being administratively closed as abandoned. Plaintiff did not comply, and the case was administratively closed and stricken from the court's calendar on April 17, 2013.

Richards died in April 2015. Defendant advised plaintiff of his death but was informed that a representative of plaintiff could not speak to her. In December 2018, plaintiff moved for an order restoring the action to the calendar, an order of reference and a default judgment. Upon receipt of the motion, defendant sought representation from various legal assistance programs and eventually obtained pro bono counsel. In February 2019, defendant's counsel filed a notice of appearance and learned that Supreme Court (Nolan Jr., J.) had granted plaintiff's December 2018 motion and entered a default judgment against defendant in January 2019. In March 2019, defendant moved to vacate the default judgment pursuant to CPLR 5015. Supreme Court granted defendant's motion in June 2019 and vacated the default judgment, finding the existence of a meritorious defense and a reasonable excuse for her failure to appear. The court then recalendared plaintiff's motion to restore the matter to the calendar, to which defendant cross-moved to dismiss the complaint against her pursuant to CPLR 3215(c). In October 2019, Supreme Court denied plaintiff's motion and granted defendant's cross motion. Plaintiff appeals from the June 2019 and October 2019 orders.

Plaintiff contends that Supreme Court erred in vacating the default judgment. A party seeking to vacate a judgment or order based on default "must demonstrate a reasonable excuse for the default and the existence of a meritorious defense" ( Inwald Enters., LLC v. Aloha Energy, 153 A.D.3d 1008, 1010, 61 N.Y.S.3d 358 [2017] [internal quotation marks and citations omitted]). "The reasonableness of [the] proffered excuse must be assessed based on all relevant factors, including the extent of the delay, whether there has been prejudice to the opposing party, whether there has been willfulness, and the strong public policy in favor of resolving cases on the merits" ( Luderowski v. Sexton, 152 A.D.3d 918, 919–920, 59 N.Y.S.3d 505 [2017] [internal quotation marks and citations omitted]). "A motion to vacate a prior judgment or order is addressed to the court's sound discretion, subject to reversal only where there has been a clear abuse of that discretion" ( Hayes v. Village of Middleburgh, 140 A.D.3d 1359, 1362, 34 N.Y.S.3d 659 [2016] [internal quotation marks and citations omitted]).

Contrary to plaintiff's contentions, the record evinces that, despite encountering several obstacles, defendant diligently sought representation in order to respond to plaintiff's motion. Once she obtained same, said counsel immediately apprised himself of the situation and filed the motion to vacate the default judgment. There is no evidence that defendant acted in bad faith or willfully defaulted, that plaintiff was prejudiced by the delay or by having the matter determined on the merits (see Matter of Santander Consumer USA, Inc. v. Kobi Auto Collision & Paint Ctr., Inc., 166 A.D.3d 1365, 1366, 89 N.Y.S.3d 344 [2018] ). Thus, we find that defendant has demonstrated a reasonable excuse for her default.

As to whether defendant demonstrated a meritorious defense, a defendant "need[s] only to make a prima facie showing of legal merit" ( Luderowski v. Sexton, 152 A.D.3d at 920, 59 N.Y.S.3d 505 [internal quotation marks and citations omitted]). "[T]he quantum of proof needed to prevail on a CPLR 5015(a)(1) motion is less than that required when opposing a summary judgment motion" ( Abel v. Estate of Collins, 73 A.D.3d 1423, 1425, 901 N.Y.S.2d 749 [2010] ). Defendant proffered that plaintiff failed to provide a reasonable excuse in waiting almost six years in seeking the default judgment and that the action was abandoned. As plaintiff was required to take proceedings for the entry of default judgment within one year of the default or face dismissal, we find that defendant demonstrated a meritorious defense (see CPLR 3215[c] ; Keyes v. McLaughlin, 49 A.D.2d 974, 975, 373 N.Y.S.2d 891 [1975] ). As such, Supreme Court did not abuse its discretion in granting defendant's motion to vacate the default judgment.

Next, plaintiff asserts that Supreme Court erred in granting defendant's cross motion to dismiss the complaint pursuant to CPLR 3215(c). That statute provides that "[i]f the plaintiff fails to take proceedings for the entry of judgment within one year after the default, the court shall not enter judgment but shall dismiss the complaint as abandoned ... unless sufficient cause is shown why the complaint should not be dismissed" ( CPLR 3215[c] ). To avoid dismissal, the plaintiff "must demonstrate a reasonable excuse for the delay and that the cause of action has merit" ( Bank of Am., N.A. v. Rahl, 178 A.D.3d 1293, 1294, 116 N.Y.S.3d 116 [2019] [internal quotation marks and citations omitted]). Plaintiff attributes the delay to "some loss mitigation activity" and that, upon Richards' death, the action was stayed. Plaintiff's allegations of loss mitigation activities are conclusory and unsubstantiated. Generally, the death of a party stays the action until substitution of the personal representative (see Wells Fargo Bank, N.A. v. Schubnel, 176 A.D.3d 1353, 1353, 110 N.Y.S.3d 464 [2019] ). However, Richards' death occurred in 2015, four years after the default and two years after the...