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PLAINTIFF BANK WAS NOT ENTITLED TO SUMMARY JUDGMENT IN THIS REFORECLOSURE ACTION; THERE WAS A QUESTION OF FACT WHETHER WILLFUL NEGLECT BY PLAINTIFF BANK OR ITS PREDECESSOR IN INTEREST RESULTED IN THE DEFECT IN THE ORIGINAL FORECLOSURE ACTION (SECOND DEPT).

The Second Department, reversing Supreme Court, determined plaintiff bank was not entitled to summary judgment in this reforeclosure action:

Where the interest of a necessary party has not been foreclosed upon in a judgment of foreclosure and sale, the purchaser of the foreclosed property has two potential remedies: a strict foreclosure action pursuant to RPAPL 1352, or a reforeclosure action pursuant to RPAPL 1503. RPAPL 1503 provides … that, when real property has been sold at a foreclosure sale ‘and it appears from the public records or from the allegations of the complaint that such judgment, sale or conveyance was or may have been, for any reason, void or voidable as against any person, including an owner of the real property mortgaged, the purchaser . . . may maintain an action as provided in this article to determine the right of any person to set aside such judgment, sale or conveyance or to enforce an equity of redemption or to recover possession of the property, or the right of any junior mortgagee to foreclose a mortgage'” … . “[T]o 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 [foreclosure] plaintiff and that the defendant or the person under whom he [or she] claims was not actually prejudiced thereby'” … .

Here, US Bank’s [plaintiff’s] predecessor in interest allowed the notice of pendency in the foreclosure action to lapse. During that lapse, Wilkshire obtained and recorded title to the property by a referee’s deed pursuant to the foreclosure of a lien for unpaid homeowners association dues. Subsequently, US Bank filed a new notice of pendency, which was not served upon Wilkshire. Thereafter, US Bank obtained an order and judgment of foreclosure and sale in the foreclosure action. On its motion for summary judgment in the instant action, US Bank failed to submit any evidence to establish, prima facie, that the defect in the foreclosure action was not due to willful neglect by itself or by its predecessors in interest. Thus, US Bank failed to establish its entitlement to judgment as a matter of law … . U.S. Bank N.A. v 18 Wilkshire Circle, LLC, 2024 NY Slip Op 06372, Second Dept 12-18-24

Practice Point: Consult this decision for some discussion of the remedies of “strict foreclosure” and “reforeclosure” under the Real Property Actions and Proceedings Law (RPAPL) where there was some defect in the original foreclosure proceedings.

 

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WHERE A MOTION TO RENEW IS NOT BASED UPON A CHANGE IN THE LAW, THERE IS NO TIME LIMIT FOR BRINGING THE MOTION (SECOND DEPT),

The Second Department, reversing Supreme Court, noted that there was no time limit for bringing a motion to renew:

Contrary to the court’s determination, “[e]xcept where a motion to renew is based upon a change in the law, which is not the case here, CPLR 2221 does not impose a time limit for making a motion for leave to renew” … . Since the plaintiff’s prior motion had been denied with leave to renew, the plaintiff was not required to demonstrate a reasonable justification for his failure to submit the new facts on the prior motion … . Smith v Realty on Fox Croft Corp., 2024 NY Slip Op 06371, Second Dept 12-18-24

Practice Point: If a motion to renew is not based upon a change in the law, there is no time limit for bringing the motion.

 

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A PERMANENT INJUNCTION IS NOT APPROPRIATE WHERE PLAINTIFFS DO NOT ALLEGE ANY NONECONOMIC DAMAGES (SECOND DEPT).

The Second Department, reversing Supreme Court, determined the issuance of a permanent injunction was error because the injury can be adequately compensated by money damages:

“‘A permanent injunction is a drastic remedy which may be granted only where the plaintiff demonstrates that it will suffer irreparable harm absent the injunction'” …  To establish prima facie entitlement to a permanent injunction, a plaintiff must demonstrate: (a) that there was a violation of a right presently occurring, or threatened and imminent; (b) that he or she has no adequate remedy at law; (c) that serious and irreparable harm will result absent the injunction; and (d) that the equities are balanced in his or her favor … . Further, irreparable injury, for the purposes of equity, means any injury for which money damages are insufficient … . In contrast, where an injury can be adequately compensated by money damages, injunctive relief is inappropriate … .

Here, the plaintiffs failed to allege any noneconomic damages. Rockefeller v Leon, 2024 NY Slip Op 06370, Second Dept 12-18-24

Practice Point: If plaintiffs do not allege any noneconomic damages, a permanent injunction is not an appropriate remedy.

 

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ABSENT SUBSTANTIAL PREJUDICE OR OTHER IMPROPER RESULTS, A MOTION FOR LEAVE TO DISCONTINUE THE ACTION WITHOUT PREJUDICE SHOULD BE GRANTED (SECOND DEPT).

The Second Department, reversing Supreme Court, determined the motion for leave to discontinue the action without prejudice should have been granted:

The plaintiff and the defendants own abutting real properties located in Brooklyn. In 2019, the plaintiff commenced this action against the defendants, inter alia, for injunctive relief, alleging that the defendants, among other things, erected a concrete wall and planted grass and trees on portions of the plaintiff’s property without the plaintiff’s permission. The defendants, inter alia, asserted a counterclaim for adverse possession of the disputed portions of the plaintiff’s property. Thereafter, the plaintiff moved pursuant to CPLR 3217(b) for leave to discontinue the action without prejudice. In an order dated November 17, 2022, the Supreme Court denied the plaintiff’s motion. …

The Supreme Court should have granted the plaintiff’s motion pursuant to CPLR 3217(b) for leave to discontinue the action without prejudice. The determination of a motion pursuant to CPLR 3217(b) for leave to discontinue an action without prejudice is within the sound discretion of the court … . “Generally such motions should be granted unless the discontinuance would prejudice a substantial right of another party, circumvent an order of the court, avoid the consequences of a potentially adverse determination, or produce other improper results” … . Here, the court improvidently exercised its discretion in denying the plaintiff’s motion, as there was no showing of substantial prejudice or other improper results … . KNG Realty NY Co., LLC v Halpern, 2024 NY Slip Op 06329, Second Dept 12-18-24

Practice Point: If there is no showing of substantial prejudice, a motion for leave to discontinue an action without prejudice should be granted.​

 

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UNLIKE THE APPELLATE DIVISION, THE COURT OF APPEALS CANNOT CONSIDER UNPRESERVED ISSUES IN THE INTEREST OF JUSTICE; THE FAILURE TO RAISE THE ISSUE IN THE TRIAL COURT PRECLUDED REVIEW BY THE COURT OF APPEALS (CT APP). ​

The Court of Appeals, over a three-judge dissent, determined the preservation requirement precluded consideration of the appeal. The underlying question concerned when the period for calculation of prejudgment interest should begin to run:

“As we have many times repeated, this Court with rare exception does not review questions raised for the first time on appeal. Unlike the Appellate Division, we lack jurisdiction to review unpreserved issues in the interest of justice” … . “To demonstrate that a question of law is preserved for this Court’s review, a party must show that it raised the specific argument in [the trial court] and asked the court to conduct that analysis in the first instance” … . …

Among the many salutary reasons for our preservation rule is that “in making and shaping the common law . . . this Court best serves the litigants and the law by limiting its review to issues that have first been presented to and carefully considered by the trial and intermediate appellate courts” … . In considering whether to disturb well-settled Appellate Division precedent, this Court should only act where it has the benefit of a full record, including a reasoned trial court decision

As it relates to the proceedings below, claimant never raised the question of the accrual date of prejudgment interest in the trial court. Further, when a party objects to a provision contained in a judgment, they generally have the ability to seek relief pursuant to CPLR 5015 and 5019, as plaintiff was invited to do here. Had plaintiff made such a motion, arguments in favor of and against earlier accrual of prejudgment interest could have been made, thereby providing a fully developed record for appeal, an essential step for parties seeking review from the Court of Appeals. But, plaintiff did not preserve an objection to the imposition of prejudgment interest on the record before the trial court. As plaintiff had an opportunity to raise his objections in the trial court but failed to do so, the issue is unreviewable on appeal to this Court. Sabine v State of New York, 2024 NY Slip Op 06288, CtApp 12-17-24

Practice Point: Unlike the Appellate Division, the Court of Appeals cannot consider an unpreserved issue “in the interest of justice.” If the issue was not raised and preserved in the trial court, the Court of Appeals will not consider it.​

 

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A CONDITIONAL ORDER OF DISMISSAL PURSUANT TO CPLR 3216 WHICH DOES NOT STATE THE FAILURE TO FILE A NOTE OF ISSUE WITHIN 90 DAYS WOULD BE THE BASIS OF A MOTION TO DISMISS THE COMPLAINT IS INEFFECTIVE AND CAN BE VACATED (SECOND DEPT).

The Second Department, reversing Supreme Court, determined the conditional order of dismissal should have be vacated because it did not indicate that plaintiff’s failure to file a note of issue within 90 days would be the basis for a motion to dismiss:

“‘CPLR 3216 permits a court, on its own initiative, to dismiss an action for want of prosecution where certain conditions precedent have been complied with'” … . Pursuant to CPLR 3216(b), an action cannot be dismissed pursuant to CPLR 3216(a) “‘unless a written demand is served upon the party against whom such relief is sought in accordance with the statutory requirements, along with a statement that the default by the party upon whom such notice is served in complying with such demand within said ninety day period will serve as a basis for a motion by the party serving said demand for dismissal as against him for unreasonably neglecting to proceed'” … .

Here, the conditional dismissal order did not contain the requisite language advising that the failure to file a note of issue would be the basis for a motion to dismiss … . Under these circumstances, the action should have been restored to the active calendar without considering whether the plaintiff had a reasonable excuse for its delay in moving to vacate the conditional dismissal order … . Wells Fargo Bank v Wasersztrom, 2024 NY Slip Op 06231, Second Dept 12-11-24

Practice Point: A conditional order of dismissal for want of prosecution pursuant to CPLR must include a statement that the failure to file a note of issue within 90 days would be the basis for a motion to dismiss the complaint. If that language is not in the conditional order, the order may be vacated.​

 

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DEFENDANT BOUGHT THE FORECLOSED PROPERTY WITHOUT KNOWLEDGE THE JUDGMENT OF FORECLOSURE AND SALE HAD BEEN APPEALED; DEFENDANT WAS A PURCHASER IN GOOD FAITH AND FOR VALUE AND WAS THEREFORE INSULATED FROM THE EFFECTS OF THE APPELLATE REVERSAL (SECOND DEPT).

The Second Department, reversing Supreme Court, determined defendant (Bartlett) was a purchaser in good faith and for value of the foreclosed property. The foreclosure was reversed on appeal. Defendant, as the fee owner of the property, was insulated from the effects of the reversal:

Where a judgment of foreclosure and sale is reversed on appeal, the successful appellant may seek restitution of the real property lost by the judgment (see CPLR 5015[d]; 5523). However, where the real property was sold pursuant to the judgment of foreclosure and sale, and the title is held by “a purchaser in good faith and for value,” recovery is limited to the value of the real property (id. § 5523). In the absence of a stay of the sale or an outstanding notice of pendency, title of the purchaser in good faith and for value “is . . . insulate[d] . . . from the effects of an appellate reversal” … .

Here, in support of its cross-motion, Bartlett established, through an affidavit of its member, that Bartlett acquired title to the property subsequent to a foreclosure sale, without actual knowledge of a successful appeal by the plaintiffs in the underlying action that resulted in a vacatur of the judgment of foreclosure and sale … . The affidavit also demonstrated that the plaintiffs had not obtained a stay of the foreclosure sale in the underlying action. Under these circumstances, Bartlett established … that it was a purchaser in good faith and for value entitled to the protection of CPLR 5523 … . Puretz v Mae, 2024 NY Slip Op 06227, Second Dept 12-11-24

Practice Point: A buyer of foreclosed property who had no knowledge the judgment of foreclosure had been appealed is insulated from the effects of a reversal on appeal. The buyer, as a purchaser in good faith for value, is the fee owner of the property.

 

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PLAINTIFF’S MOTION TO AMEND THE NOTICE OF CLAIM TO ADD ALLEGATIONS WHICH MERELY AMPLIFIED THE ALLEGATIONS IN THE ORIGINAL NOTICE SHOULD HAVE BEEN GRANTED (SECOND DEPT). ​

The Second Department, reversing (modifying) Supreme Court, determined plaintiff’s motion to amend the notice of claim in this traffic accident case should have been granted to the extent the amendment merely amplified the allegations in the original notice. By contrast, the attempts to amend the notice by adding new theories of liability were properly denied. Plaintiff, a police officer, was a passenger in a police car driven by another officer, Lassen. Plaintiff sued Lassen for negligent operation of the police car and the city for negligent supervision and training:

… Supreme Court should have granted that branch of the plaintiff’s motion which was for leave to amend the complaint to add allegations relating to purported acts or omissions regarding Lassen’s operation of the police vehicle, including causes of action pursuant to General Municipal Law § 205-e asserted against the City defendants and predicated upon Lassen’s alleged violation of various provisions of the Vehicle and Traffic Law regulating the operation of motor vehicles … . These causes of action were based upon the same purported acts and omissions already set forth in the notice of claim … . Since Lassen’s alleged negligent and/or reckless operation of the police vehicle and the City’s concomitant negligence in failing to properly supervise and/or train Lassen were set forth in the notice of claim and the complaint, the new allegations effectively “amplif[ied]” the previously asserted allegations and did not constitute “new, distinct, and independent theories of liability” … . The fact that the proposed amended complaint alleged violations of statutory provisions not set forth in the notice of claim or original complaint, was not, standing alone, a basis to deny leave to amend … . Since the notice of claim “provided information . . . sufficient to alert the [defendants] to the potential [General Municipal Law § 205-e] cause[s] of action” predicated upon Lassen’s alleged failure to properly operate the police vehicle … , the court should not have denied that branch of the plaintiff’s motion which was for leave to amend the complaint to add those allegations on the ground that they were outside the existing notice of claim. Mitchell v Jimenez, 2024 NY Slip Op 06192, Second Dept 12-11-24

Practice Point: A motion to amend a notice of claim which seeks to amplify allegations in the original notice should be granted. A motion to amend a notice of claim which seeks to add new theories of liability is properly denied.

 

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HERE AN OTHERWISE UNTIMELY COUNTERCLAIM WAS RENDERED TIMELY PURSUANT TO CPLR 203(D) TO THE EXTENT IT SOUGHT EQUITABLE RECOUPMENT, AS OPPOSED TO AFFIRMATIVE RELIEF (SECOND DEPT).

The Second Department, reversing (modifying) Supreme Court, determined the counterclaim alleging professional malpractice was timely pursuant to CPLR 203(d) to the extent the counterclaim sought equitable recoupment, as opposed to affirmative relief:

Even crediting the court’s determination that this claim accrued on February 4, 2019, rendering time-barred the counterclaim alleging professional malpractice asserted on February 15, 2022, the defendants are permitted, pursuant to CPLR 203(d), to seek equitable recoupment in a counterclaim. CPLR 203(d) provides, “[a] defense or counterclaim is interposed when a pleading containing it is served. A defense or counterclaim is not barred if it was not barred at the time the claims asserted in the complaint were interposed, except that if the defense or counterclaim arose from the transactions, occurrences, or series of transactions or occurrences, upon which a claim asserted in the complaint depends, it is not barred to the extent of the demand in the complaint notwithstanding that it was barred at the time the claims asserted in the complaint were interposed.” “This provision allows a defendant to assert an otherwise untimely claim which arose out of the same transactions alleged in the complaint, but only as a shield for recoupment purposes, and does not permit the defendant to obtain affirmative relief” … . Getzel Schiff & Pesce, LLP v Shtayner, 2024 NY Slip Op 06186, Second Dept 12-11-24

Practice Point: An otherwise untimely counterclaim which arises from a claim asserted in the complaint may be deemed timely pursuant to CPLR 2013(d) to the extent it seeks equitable recoupment as opposed to affirmative relief.​

 

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PLAINTIFFS RAISED QUESTIONS OF FACT WHETHER THE CONTINUOUS REPRESENTATION DOCTRINE APPLIED TO RENDER THE LEGAL MALPRACTICE CAUSES OF ACTION TIMELY (SECOND DEPT).

The Second Department, reversing Supreme Court, determined there were questions of fact whether the continuous representation doctrine applied to render legal malpractice causes of action timely:

The statute of limitations for a cause of action alleging legal malpractice is three years (see CPLR 214[6]). “However, causes of action alleging legal malpractice which would otherwise be barred by the statute of limitations are timely if the doctrine of continuous representation applies” … . “For the continuous representation doctrine to apply, there must be clear indicia of an ongoing, continuous, developing, and dependent relationship between the client and the attorney which often includes an attempt by the attorney to rectify an alleged act of malpractice” … . “[A] person [is not] expected to jeopardize his [or her] pending case or his [or her] relationship with the attorney handling that case during the period that the attorney continues to represent the person. Since it is impossible to envision a situation where commencing a malpractice suit would not affect the professional relationship, the rule of continuous representation tolls the running of the Statute of Limitations on the malpractice claim until the ongoing representation is completed” … . Dellwood Dev., Ltd. v Coffinas Law Firm, PLLC, 2024 NY Slip Op 06184, Second Dept 12-11-24

Practice Point: Here there were questions of fact whether the continuous representation doctrine applied to render the legal malpractice causes of action timely.

 

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