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THERE WAS A QUESTION OF FACT WHETHER THE PLAINTIFF’S FAILURE TO INCLUDE DEFENDANT IN THE ORIGINAL FORECLOSURE PROCEEDING WAS THE RESULT OF “WILFUL NEGLECT;” THEREFORE, PURSUANT TO RPAPL 1523, DEFENDANT’S “WILFUL-NEGLECT” AFFIRMATIVE DEFENSE IN THIS REFORECLOSURE ACTION SHOULD NOT HAVE BEEN DISMISSED (SECOND DEPT).

The Second Department, reversing Supreme Court, determined defendant’s affirmative defense to the reforeclosure should not have been dismissed. Plaintiff had not named defendant in its original foreclosure action, apparently because a quitclaim deed adding defendant to the title was not discovered in the title search. Defendant demonstrated there had been a prior foreclosure action in which defendant had been named as a party. Therefore, there was a question of fact whether the failure to name defendant in the original foreclosure action was the result of “wilful neglect:”

To prevail in a reforeclosure action, the plaintiff must demonstrate that the defect in the original foreclosure action “was not due to fraud or wilful neglect of the plaintiff and that the defendant or the person under whom he claims was not actually prejudiced thereby” (RPAPL 1523[2] [emphasis added]).

Pursuant to the language of RPAPL 1523 … the plaintiff had the burden of demonstrating … both that the defect in the underlying foreclosure action was not the result of fraud or the wilful neglect of the foreclosure plaintiff, and that the defect did not prejudice the defendant (see RPAPL 1523[1], [2]). * * *

Contrary to the plaintiff’s contention, the evidence of the prior foreclosure action in which the defendant was named as a party raised a triable issue of fact as to whether the plaintiff’s failure to name her as a defendant in the underlying foreclosure action was the result of “wilful neglect” (RPAPL 1523[2] …). U.S. Bank N.A. v Lomuto, 2021 NY Slip Op 05363, Second Dept 10-6-21

 

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