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PETITIONER OBTAINED JUDGMENTS EXCEEDING $1 BILLION AGAINST RESPONDENTS STEMMING FROM THE 2008 FINANCIAL CRISES WHICH HAVE YET TO BE SATISFIED; PETITIONER BROUGHT THIS TURNOVER PROCEEDING IN 2023; THE CORPORATE VEIL-PIERCING CLAIM AND THE FRAUDULENT CONVEYANCE AND VOIDABLE TRANSACTIONS CAUSES OF ACTION PROPERLY SURVIVED THE MOTION TO DISMISS (FIRST DEPT).

The First Department, in a full-fledged opinion by Justice Higgitt, affirmed the denial of the motion to dismiss the corporate veil-piercing claim and the fraudulent conveyance and voidable transactions causes of action: The respondents have not satisfied a pair of judgments totaling more than $1 billion stemming from the 2008 financial crisis. The petitioner, UBS, commenced this turnover proceeding pursuant to CPLR 5225 in 2023:

… UBS alleged that, after it secured the first judgment, it discovered that [respodents] had conspired to frustrate UBS’s ability to recover against the judgment debtors. UBS alleged that [respondents], exercising complete domination over the judgment debtors and other related entities, transferred the debtors’ assets to themselves or other entities that they controlled in an effort to avoid paying UBS any of the obligations stemming from … the judgments. * * *

For pleading purposes, a party seeking to pierce the corporate veil does not have to satisfy the heightened pleading requirement imposed on one interposing a cause of action for fraud (see CPLR 3016); rather, the party must plead facts that would establish that the individual defendant’s domination of the corporation was used to perpetrate a wrong or injustice against the party, and the allegations of domination must be adorned with particularized allegations of consequent wrongs … .  Matter of UBS Sec. LLC v Dondero, 2026 NY Slip Op 05460, First Dept 9-24-26

Practice Point: Consult this opinion for insight into the pleading requirements for piercing the corporate veil and fraudulent conveyance and voidable transactions causes of action in the context of a (post-judgment) turnover proceeding pursuant to CPLR 5225.

 

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IN DENYING THE STATE POLICE’S REQUEST FOR AN EXTREME RISK PROTECTION ORDER (ERPO) AGAINST THE 18-YEAR-OLD RESPONDENT, THE JUDGE FOCUSED ON THE ABSENCE OF EVIDENCE RESPONDENT HAD ACCESS TO FIREARMS TO THE EXCLUSION OF EVIDENCE RESPONDENT POSED A RISK OF SERIOUS HARM TO HIMSELF OR OTHERS; NEW HEARING ORDERED (THIRD DEPT). ​

The Third Department, reversing Supreme Court and remitting the matter for a new hearing, determined the judge hearing the State Police’s application for an “extreme risk protection order (ERPO) against the 18-year-old respondent did not apply the correct criteria in denying the request. Supreme Court erroneously focused on the lack of evidence the respondent had access to a firearm to the exclusion of evidence respondent posed a risk of serious harm to himself or others:

… CPLR article 63-A establishes a procedure by which a court may temporarily restrict a person’s access to firearms where that person has been judicially determined to pose a risk of serious harm to themself or others (see CPLR 6340 [1]; 6342, 6343). The purpose of the statutory scheme is “to prevent individuals from accessing firearms, rifles, and shotguns who have been deemed, through judicial process, likely to engage in conduct that would result in serious harm to themselves or others” … . Upon application, the court may first issue a temporary ERPO upon a finding of probable cause to believe that “the respondent is likely to engage in conduct that would result in serious harm to himself, herself or others” (CPLR 6342 [1]). Where, as here, a temporary ERPO is denied, the court must nevertheless conduct a hearing on the application for a final ERPO (see CPLR 6342 [5]). At that hearing, the petitioner bears the burden to establish, by clear and convincing evidence, “that the respondent is likely to engage in conduct that would result in serious harm to himself, herself or others,” as defined in Mental Hygiene Law § 9.39 (a) (CPLR 6343 [2]). 

In making that determination, the court must consider the eight factors enumerated in CPLR 6342 (2), together with any other relevant circumstances (see CPLR 6343 [2] …). The statutory factors include, among other things, acts of the respondent involving “a threat or act of violence or use of physical force directed toward self, the petitioner, or another person” (CPLR 6342 [2] [a]). Significantly, only three of the eight enumerated factors expressly concern a weapon or firearm (see CPLR 6342 [2] [c], [d], [g]). Thus, nothing in the statutory framework requires proof that the threatened or anticipated physical harm will be accomplished with a firearm, nor does it make a respondent’s existing possession of or access to a firearm a prerequisite to issuance of an ERPO. Indeed, the Legislature’s express reference to firearms in certain statutory factors, while omitting any such limitation from the governing likelihood-of-serious-harm standard and the general threat-of-violence factor, demonstrates that no such additional requirement may properly be engrafted onto the statute … .

The record reflects that Supreme Court nevertheless imposed such a requirement. Matter of New York State Police v Owen WW., 2026 NY Slip Op 05452, Third Dept 9-24-26

Practice Point: Consult this decision for insight into the procedure and criteria for determining an application for an extreme risk protection order (ERPO).

 

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HERE THE FORECLOSURE SALE TOOK PLACE ABOUT AN HOUR BEFORE DEFENDANTS CLOSED WITH ANOTHER BUYER; THE FORECLOSURE SALE EXTINGUISHED DEFENDANTS’ RIGHT TO REDEEM THE MORTGAGE; THE SUCCESSFUL BIDDER AT THE FORECLOSURE SALE THEREFORE PREVAILED (SECOND DEPT).

The Second Department, reversing Supreme Court, determined the foreclosure sale to the successful bidder, Pekich, took place before the purported sale of the same property by defendants to Ore on the same day. Therefore defendants’ right to redeem the property was extinguished by the foreclosure sale:

“‘A mortgagor or other owner of the equity of redemption of a property subject to a judgment of foreclosure and sale may redeem the mortgage at any time prior to the foreclosure sale'” … . However, “[t]he right to redeem is extinguished as a matter of law upon the foreclosure sale, whether or not the deed has been delivered, and once the right to redeem is lost, it cannot be revived, even by court order” … .

Here, the record demonstrates that the foreclosure sale of the property at which Pekich was the successful bidder concluded at 3:15 p.m. on June 21, 2024, and that the payoff sum was wired to the plaintiff during Ore and the [defendants’] closing more than one hour later, at 4:23 p.m. on June 21, 2024. Under these circumstances, Pekich became the equitable owner of the property upon the completion of the foreclosure sale, and any right to redeem the mortgage had already been extinguished by the time Ore and the [defendants] purported to close on the property … . JPMorgan Chase Bank, N.A. v Gezlev, 2026 NY Slip Op 05387, Second Dept 9-23-26

Practice Point: A foreclosure sale to a successful bidder extinguishes a mortgagor’s right to redeem the mortgage. Here the foreclosure sale took place one hour before defendants attempted to redeem the mortgage with proceeds from another purported sale of the property. The successful bidder prevailed.

 

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IN THIS FORECLOSURE ACTION DEFENDANT’S MOTION TO VACATE THE NOTE OF ISSUE SHOULD HAVE BEEN DENIED; THE MOTION WAS UNTIMELY AND DID NOT DEMONSTRATE ANY UNANTICIPATED CIRCUMSTANCES SINCE THE FILING OF THE NOTE OF ISSUE (SECOND DEPT).

The Second Department, reversing Supreme Court, determined defendant’s motion to vacate the note of issue in this foreclosure action should have been dismissed as untimely:

… [S]upreme Court also should have denied the defendant’s … motion pursuant to CPLR 5015(a)(3) to vacate the note of issue filed by the plaintiff. A motion to vacate a note of issue is governed by 22 NYCRR 202.21, pursuant to which any party to an action may, within 20 days of service of the note of issue and certificate of readiness, move to vacate the note of issue upon an affidavit demonstrating that the case is not ready for trial … . Where a party’s motion to vacate a note of issue is timely, “the party is ‘required only to demonstrate why the case [is] not ready for trial'” … . However, where the motion is not timely, the party seeking relief must meet the “‘more difficult standard'” of 22 NYCRR 202.21(d) which “‘requires the movant to demonstrate unusual or unanticipated circumstances and substantial prejudice'” … .

Here, the defendant’s motion to vacate the note of issue was untimely as it was made … more than 20 days after the note of issue was filed … . Moreover, the defendant failed to demonstrate the existence of unusual or unanticipated circumstances since the filing of the note of issue warranting its vacatur … . Federal Natl. Mtge. Assn. v Cassis, 2026 NY Slip Op 05381, Second Dept 9-23-26

Practice Point: Where a motion to vacate the note of issue is made more than 20 days after the note of issue was filed it must demonstrate “the existence of unusual or unanticipated circumstances since the filing of the note of issue warranting its vacatur.” If the motion to vacate is timely made it must demonstrate only that the case is not ready for trial.

 

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WHEN THE COUNTY FAILED TO RESPOND TO PETITIONER’S APPEAL OF THE DENIAL OF A FOIL REQUEST WITHIN TEN DAYS, THE COUNTY WAS DEEMED TO HAVE “CONSTRUCTIVELY DENIED” THE APPEAL; AT THAT POINT PETITIONER HAD EXHAUSTED ADMINISTRATIVE REMEDIES AND WAS FREE TO COMMENCE A CPLR ARTICLE 78 PROCEEDING (SECOND DEPT).

The Second Department, reversing Supreme Court, noted that the county’s failure to respond to a FOIL request within five days and the county’ s failure to respond to a FOIL administrative appeal within ten days constitute constructive denials of the FOIL request. Therefore, after the county’s failure to timely respond to the administrative appeal, the petitioner had exhausted administrative remedies and was free to bring a CPLR article 78 proceeding:​

“Any administrative appeal of a denial [must] be undertaken within 30 days of the denial” … . Within 10 business days of such an appeal, the agency must “‘fully explain in writing to the person requesting the record the reasons for further denial, or provide access to the record sought'” (… Public Officers Law § 89[4][a]; see 21 NYCRR 1401.5[c]; 1401.7[f]). “[A] FOIL request is deemed denied if there is no response to the request within five business days” … . This is known as a “constructive denial” …, and an agency’s failure to respond to an administrative appeal within the 10-day limit also constitutes a constructive denial (see 21 NYCRR 1401.7[f]). As there is no dispute that the County did not respond within the 10-day limit, its failure to respond acted as a constructive denial of the petitioner’s appeal, and therefore, the respondents’ argument that the petitioner failed to exhaust the available administrative remedies before commencing a CPLR article 78 proceeding is without merit … . Matter of Landa v Rockland County, 2026 NY Slip Op 05398, Second Dept 9-23-26

Practice Point: The failure of a government agency to respond to a FOIL request within five days and to a FOIL administrative appeal within ten days are deemed “constructive denials.”​

 

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THERE IS NO RESTRICTION ON THE NUMBER OF TIMES A PLAINTIFF MAY TAKE ADVANTANGE OF THE SIX-MONTH EXTENSION TO FILE A NEW ACTION (CPLR 205(A)) WHERE THE COMPLAINT IS DISSMISSED BECAUSE PLAINTIFF HAS NOT YET OBTAINED LETTERS OF ADMINISTRATION (SECOND DEPT).

The Second Department, reversing Supreme Court, determined that the dismissal of a complaint on behalf of a decedent because plaintiff has not yet obtained letters of administration is not on the merits. Therefore a plaintiff can take advantage of the six-month extension to file another action (CPLR 205(a)) every time the complaint is dismissed on that ground:​

CPLR 205(a) provides that, “[i]f an action is timely commenced and is terminated in any other manner than by a voluntary discontinuance, a failure to obtain personal jurisdiction over the defendant, a dismissal of the complaint for neglect to prosecute the action, or a final judgment upon the merits, the plaintiff . . . may commence a new action upon the same transaction or occurrence . . . within six months after the termination provided that the new action would have been timely commenced at the time of commencement of the prior action.” “Dismissal of an action for lack of capacity to sue is not a dismissal on the merits and, therefore, does not preclude the applicability of the six-month savings period under CPLR 205(a)” … . Where a complaint is dismissed pursuant to CPLR 3211(a)(3) for lack of capacity to sue because the plaintiff has not yet obtained letters to administer the decedent’s estate, “there is no restriction on the number of times that a plaintiff may qualify for a six-month statutory grace period” under CPLR 205(a) … .

Here, the Supreme Court directed dismissal of the complaint pursuant to CPLR 3211(a)(3) for lack of capacity to sue because the plaintiff had not yet obtained letters to administer the decedent’s estate. Under these circumstances, there is no restriction on the number of times that the plaintiff may qualify for a six-month statutory grace period under CPLR 205(a) … .  Greene v Five Towns Premier Rehabilitation & Nursing Ctr., 2026 NY Slip Op 05286, Second Dept 9-16-26

Practice Point: Where a complaint is dismissed because plaintiff has not yet obtained letters of administration there is no restriction on the number of times plaintiff can take advantage of the six-month extension to file a new action pursuant to CPLR 205(a).​

 

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A “CONCLUSORY AND UNSUBSTANTIATED” AFFIDAVIT DENYING DEFENDANT RESIDED AT THE ADDRESS WHERE SERVICE WAS MADE WAS NOT SUFFICIENT TO REBUT THE PRESUMPTION OF PROPER SERVICE (SECOND DEPT).

The Second Department, reversing Supreme Court, determined the defendant’s affidavit denying she resided at the address where service was made was insufficient to rebut the presumption of proper service:

“‘Ordinarily, a process server’s affidavit of service constitutes prima facie evidence of proper service and, therefore, gives rise to a presumption of proper service. Where, however, there is a sworn, nonconclusory denial of service by a defendant, the affidavit of service is rebutted and the plaintiff must establish jurisdiction by a preponderance of the evidence at a hearing'” … . “‘While bare and unsubstantiated denials are insufficient to rebut the presumption of service, a sworn denial containing a detailed and specific contradiction of the allegations in the process server’s affidavit will defeat the presumption of proper service'” … .

Here, a process server’s affidavit constituted prima facie evidence of proper service pursuant to CPLR 308(2) upon the defendant … . Contrary to the defendant’s contention, her affidavit denying that she resided at the address where service allegedly was effectuated was conclusory and unsubstantiated and, therefore, was insufficient to rebut the presumption of proper service … . Cole v Shorter, 2026 NY Slip Op 05273, Second Dept 9-16-26

Practice Point: Here a “conclusory and unsubstantiated” affidavit denying that defendant resided at the address where service was made was deemed insufficient to rebut the presumption of proper service.

 

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DEFENDANTS’ PARTICIPATION IN FORECLOSURE SETTLEMENT CONFERENCES DID NOT CONSTITUTE AN “APPEARANCE” IN THE FORECLOSURE ACTION; THEREFORE DEFENDANTS COULD MOVE TO DISMISS THE ACTION AS ABANDONED WHERE PLAINTIFF FAILED TO TAKE A TIMELY DEFAULT JUDGMENT (SECOND DEPT).

The Second Department, reversing Supreme Court, determined defendants in this foreclosure action did not waive their right to seek dismissal pursuant to CPLR 3215(c) by participating in settlement conferences. Pursuant to CPLR 3215(c) a defendant who has not appeared in an action may move to dismiss the action as abandoned where plaintiff has not obtained a default judgment within six years:

… [T]he defendants did not waive their right to seek dismissal pursuant to CPLR 3215(c). A defendant may waive the right to seek dismissal pursuant to CPLR 3215(c) by serving an answer or taking “any other steps which may be viewed as a formal or informal appearance” … . Here, the defendants did not serve an answer or participate in the action on the merits prior to cross-moving in July 2018, inter alia, pursuant to CPLR 3215(c) to dismiss the complaint insofar as asserted against them as abandoned … . The defendants’ participation in settlement conferences pursuant to CPLR 3408 “did not demonstrate a clear intent to participate in the lawsuit on the merits” and thus, did not constitute a formal or informal appearance in the action … . Wilmington Sav. Fund Socy., FSB v Dresdner, 2026 NY Slip Op 05350, Second Dept 9-16-26

Practice Point: Participation in foreclosure settlement conferences does not constitute an “appearance” in a foreclosure action.

 

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PLAINTIFF BANK’S FAILURE TO MOVE FOR A JUDGMENT OF FORECLOSURE AND SALE AS DIRECTED IN A 2017 ORDER WAS NOT SUFFICIENT GROUNDS FOR THE COURT, SUA SPONTE, TO DISMISS THE COMPLAINT (SECOND DEPT).

The Second Department, reversing Supreme Court in this foreclosure action, determined plaintiff bank’s failure to move for a judgment of foreclosure and sale as directed by a 2017 order was not sufficient grounds for the court, sua sponte, to dismiss the complaint:

“‘A court’s power to dismiss a complaint, sua sponte, is to be used sparingly and only when extraordinary circumstances exist to warrant dismissal'” … . Here, the plaintiff’s failure to move for a judgment of foreclosure and sale as directed by the March 2017 order was not a sufficient ground upon which to, sua sponte, direct dismissal of the complaint … . Accordingly, the Supreme Court should have granted those branches of the plaintiff’s motion which were to vacate the August 2017 order and to restore the action to the active calendar. U.S. Bank, N.A. v Morrison, 2026 NY Slip Op 05346, Second Dept 9-16-26

Practice Point: Appellate courts don’t like sua sponte dismissals of complaints.

Similar issue and result in Wilmington Sav. Fund Socy., FSB v Hilario, 2026 NY Slip Op 05351, Second Dept 9-16-26

 

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FALURE TO COMPLY WITH THE MODE OF SERVICE SPECIFIED IN AN ORDER TO SHOW CAUSE DEPRIVES THE COURT OF JURISDICTION (SECOND DEPT).

The Second Department, reversing Supreme Court, determined plaintiff did not comply with the mode of service specified in the order to show cause and did not give proper notice of the motion. Therefore, Supreme Court was without jurisdiction to hear it:

The Supreme Court erred in granting the plaintiff’s motion for a preliminary injunction and to restore the action to the active calendar. The mode of service provided for in an order to show cause is jurisdictional in nature and must be literally followed … . The failure to give proper notice of a motion deprives the court of jurisdiction to hear the motion … . Here, since the plaintiff failed to comply with the directives in the order to show cause, the court was without jurisdiction to entertain the motion … . Sosa v Gonzaga, 2026 NY Slip Op 05337, Second Dept 9-16-26

Practice Point: A party’s failure to comply with the mode of service specified in an order to show cause deprives the court of jurisdiction to hear the motion.

 

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