Denial of Plaintiff’s Motion to Intervene in a Foreclosure Action Did Not Prohibit, Under the Doctrine of Collateral Estoppel, the Plaintiff’s Action to Be Declared the Owner of the Subject Property/A Person With an Interest in Real Property Who Is Not Joined in a Foreclosure Action Is Unaffected by the Judgment of Foreclosure

The Second Department, reversing Supreme Court, determined that plaintiff’s (Jamison’s) action to declare her the owner of property subject to foreclosure should not have been dismissed under the doctrine of collateral estoppel.  Plaintiff’s ownership of the property had not been determined in the foreclosure action in which she unsuccessfully sought to intervene.  In addition, a person with an interest in real property who is not joined in a foreclosure action remains unaffected by the judgment of foreclosure:

The doctrine of collateral estoppel bars relitigation of an issue which has been necessarily decided in a prior action and is determinative of the issues disputed in the present action, provided that there was a full and fair opportunity to contest the decision now alleged to be controlling … . The party seeking the benefit of the doctrine of collateral estoppel must establish that the identical issue was necessarily decided in the prior action, and is determinative in the present action … . Once the party invoking the doctrine discharges his or her burden in that regard, the party to be estopped bears the burden of demonstrating the absence of a full and fair opportunity to contest the prior determination … .

Here, the bank failed to establish that the issue of whether Jamison has an interest in the subject property had already been decided, since the order it relied upon expressly provided that no determination had made by the court with respect to the issue of whether or not Jamison was a necessary or indispensable party, and Jamison’s motion to intervene as of right in the foreclosure action was denied without explanation. In any event, where a person with an interest in real property is not joined as a party to an action to foreclose a mortgage on that property, that person’s rights are left unaffected by the judgment of foreclosure and sale, and the foreclosure sale may be considered void as to the omitted person … . Accordingly, Jamison’s interest, if any, in the subject property was neither litigated nor determined in the foreclosure action, and the order denying her motion to intervene as of right in the foreclosure action was not an adjudication of her rights on the merits. Jamison v Aquai, 2015 NY Slip Op 04097, 2nd Dept 5-13-15