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MOTION TO DISCONTINUE STATE FORECLOSURE ACTION WHILE FORECLOSURE WAS PURSUED IN FEDERAL COURT SHOULD HAVE BEEN GRANTED WITHOUT PREJUDICE BECAUSE THERE WAS NO SHOWING OF PREJUDICE ON THE PART OF DEFENDANT (SECOND DEPT).

The Second Department, reversing Supreme Court, determined plaintiff’s motion to discontinue the foreclosure action should not have been granted with prejudice because there was no showing of prejudice on the part of the defendant (Jach):

… [T]he plaintiff commenced this action … seeking to foreclose the subject mortgage. After interposing an answer, in which he alleged lack of standing as an affirmative defense, Jach moved for summary judgment dismissing the complaint insofar as asserted against him, and the plaintiff cross-moved, inter alia, for summary judgment on the complaint. The Supreme Court referred the action to a referee to hear and report on the issue of standing. After conducting a hearing, the referee issued a report finding, in effect, that the plaintiff had failed to establish its standing for purposes of its cross motion for summary judgment on the complaint.

… [W]ith this action still pending and the referee’s report not yet confirmed, the plaintiff commenced an action in federal court seeking to foreclose the subject mortgage. Subsequently, … the plaintiff moved before the Supreme Court, among other things, for leave to discontinue the action without prejudice, which Jach opposed.

In the order appealed from, the Supreme Court, inter alia, in effect, upon granting that branch of the plaintiff’s motion which was for leave to discontinue the action, did so with prejudice. The plaintiff appeals.

The Supreme Court, in granting that branch of the plaintiff’s motion which was for leave to discontinue the action, should have done so without prejudice. Pursuant to CPLR 3217(b), “an action shall not be discontinued by a party asserting a claim except upon order of the court and upon terms and conditions, as the court deems proper.” As a general rule, “a plaintiff should be permitted to discontinue an action without prejudice unless the defendant would be prejudiced thereby” … . Here, there was no evidence that Jach would be prejudiced by a discontinuance … . Onewest Bank, FSB v Jach, 2020 NY Slip Op 01357, Second Dept 2-26-20

 

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