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PURCHASING AND FORECLOSING ON MORTGAGES IN NEW YORK DOES NOT CONSTITUTE “DOING BUSINESS IN NEW YORK” WITHIN THE MEANING OF THE LIMITED LIABILITY COMPANY LAW; THE LLC CANNOT SUE IN NEW YORK (FIRST DEPT).

The First Department, reversing Supreme Court, determined plaintiff limited liability company (NS194) could not sue in New York because purchasing and foreclosing on mortgages in New York does not constitute doing business in New York under the Limited Liability Company Law:

Supreme Court erred in directing plaintiff to prove NS194’s compliance with Limited Liability Company Law § 802 … . Defendants failed to rebut the presumption that NS194 was not conducting business within the state and lacked capacity to sue pursuant to Limited Liability Company Law § 802. Plaintiff’s conduct of purchasing and foreclosing on mortgages in New York does not constitute doing business in this state (see Limited Liability Company Law § 803[a][1] [“maintaining or defending any action or proceeding” is not “doing business in this state”] …). … ([S]ee Star201, LLC v Martinez, AD3d , 2026 NY Slip Op 02144, *2 [2d Dept Apr. 8, 2026] [“the mere maintenance of an action [for foreclosure] by a foreign corporation does not constitute doing business within the State”] …). Wilmington Sav. Fund Socy. v Okoronkwo, 2026 NY Slip Op 03253, First Dept 5-21-26

Practice Point: An LLC which purchases and forecloses on mortgages in New York is not “doing business in New York” and therefore cannot sue in New York.​

 

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THE BANK SENT THE RPAPL 1304 NOTICE OF FORECLOSURE TO THE TWO BORROWERS IN THE SAME ENVELOPE, A VIOLATION OF RPAPL 1304; FORECLOSURE COMPLAINT DISMISSED (SECOND DEPT). ​

The Second Department, reversing Supreme Court, determined the foreclosure complaint should have been dismissed because the RPAPL 1304 notice of foreclosure was mailed to both borrowers in the same envelope:

RPAPL 1304(1) provides that “at least ninety days before a lender, an assignee or a mortgage loan servicer commences legal action against the borrower, . . . including mortgage foreclosure, such lender, assignee or mortgage loan servicer shall give notice to the borrower.” “Strict compliance with RPAPL 1304 notice to the borrower or borrowers is a condition precedent to the commencement of a foreclosure action” … , and “the plaintiff has the burden of establishing satisfaction of this condition” … . “[T]he mailing of a 90-day notice jointly addressed to two or more borrowers in a single envelope is not sufficient to satisfy the requirements of RPAPL 1304, and . . . the plaintiff must separately mail a 90-day notice to each borrower as a condition precedent to commencing the foreclosure action” …  * * *

… [T]he defendants established that the plaintiff failed to comply with RPAPL 1304 since it is undisputed that a jointly addressed 90-day notice, rather than individually addressed notices in separate envelopes, was sent to the defendants … . HSBC Bank USA, N.A. v Palmore, 2026 NY Slip Op 03152, Second Dept 5-20-26

Practice Point: The bank’s strict compliance with the notice of foreclosure requirements in RPAPL 1304 is a condition precedent to any foreclosure action. Here, sending the RPAPL 1304 notice of foreclosure to the two borrowers in the same envelope violated RPAPL 1304 requiring dismissal of the foreclosure complaint.

 

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WHERE THE STATUTORY PRECONDITIONS FOR DISMISSAL OF A COMPLAINT FOR NEGLECT TO PROSECUTE (CPLR 3216) ARE NOT MET, THE COURT HAS NO AUTHORITY TO, SUA SPONTE, DISMISS THE ACTION; RATHER, THE ACTION MUST BE RESTORED TO THE ACTIVE CALENDAR (SECOND DEPT).

The Second Department, reversing Supreme Court, determined the judge did not have the authority to, sua sponte, dismiss the complaint for neglect to prosecute. At the time the purported 90-day notice was issued by the judge, issue had not yet been joined. In addition, the purported 90-day notice did not include all the information required by CPLR 3216(b):

“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” … . “[A] court may not dismiss an action based on neglect to prosecute unless the CPLR 3216 statutory preconditions to dismissal are met” … . Here, the Supreme Court was without authority to issue a 90-day notice since issue was not joined in the action … .

In addition, “[p]ursuant 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 [or her] for unreasonably neglecting to proceed” … . Here, there is no evidence in the record that the plaintiff was served with a written demand as required by CPLR 3216. Moreover, the conditional order of dismissal, which, in effect, served as a 90-day notice pursuant to CPLR 3216, was defective in that it did not state that the plaintiff’s failure to comply with the demand would serve as a basis for the Supreme Court, on its own motion, to dismiss the action for failure to prosecute … . Further, the record demonstrates that no such motion was ever made, nor was there entry of an order of dismissal. Therefore, 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 order of dismissal … . Deutsche Bank Natl. Trust Co. v Poyer, 2026 NY Slip Op 03145, Second Dept 5-20-26

Practice Point: An action cannot be dismissed by a judge, sua sponte, for failure to prosecute if (1) issue had not yet been joined, or (2) if all the statutory preconditions for dismissal pursuant to CPLR 3216 have not been met. Rather, the action must be restored to the active calendar.

 

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THE DEATH OF ONE OF THE DEFENDANTS DURING THE FORECLOSURE PROCEEDINGS RENDERED THE JUDGMENT OF FORECLOSURE, WHICH INCLUDED A DEFICIENCY JUDGMENT AGAINST THE DECEASED DEFENDANT, A NULLITY (SECOND DEPT).

The Second Department, reversing Supreme Court, determined the judgment of foreclosure was a nullity and the court did not have jurisdiction over the appeal because one of the defendants died during the proceedings:

“‘Generally, the death of a party divests a court of jurisdiction to act, and automatically stays proceedings in the action pending the substitution of a personal representative for the decedent'” … . Ordinarily, any determination rendered without such a substitution is deemed a nullity … . However, under certain circumstances, where a party’s death does not affect the merits of a case, this Court has found that there is no need for strict adherence to the requirement that the proceedings be stayed pending substitution … .

Here, the record demonstrates that as of July 2021, the plaintiff and the Supreme Court were on notice that [defendant] Trevor P. Williams had died. Nevertheless, the proceedings continued after that date, and in March 2022, the court issued the subject order and judgment of foreclosure and sale, which contains a deficiency provision applicable to Trevor P. Williams.

Given the deficiency provision contained in the order and judgment of foreclosure and sale, the demise of Trevor P. Williams affects the merits of the case … . The contention of nonparty U.S. Bank Trust, N.A., that it waived the right to seek a deficiency against Trevor P. Williams is based on evidence dehors the record and, therefore, is not properly considered on this appeal … . Therefore, under the circumstances of this case, since a proper substitution was not made as required by CPLR 1015(a), the Supreme Court was without jurisdiction, inter alia, to issue the order and judgment of foreclosure and sale. Accordingly, the order and judgment of foreclosure and sale appealed from is a nullity and must be vacated and the appeal must be dismissed, as this Court has no jurisdiction to entertain the appeal . Champion Mtge. v Williams, 2026 NY Slip Op 02960, Second Dept 5-13-28

Practice Point: If the death of a party doesn’t affect the merits of the case, sometimes the need to stay the proceeding and substitute a personal representative can be overlooked. Here, however, the judgment of foreclosure included a deficiency judgment against the deceased defendant. Therefore the death affected the merits and the proceedings were rendered a nullity.​

 

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BECAUSE THE ORDER DISMISSING THE COMPLAINT DID NOT DECIDE A MOTION MADE ON NOTICE, THE ORDER IS NOT APPEALABLE AS OF RIGHT; THEREFORE, A MOTION TO VACATE THE DISMISSAL PURSUANT TO CPRL 2221(A) IS PROPER (SECOND DEPT).

The Second Department, reversing Supreme Court, determined plaintiff’s motion to vacate the dismissal order in this foreclosure action should have been granted. The order dismissing the complaint was not appealable as of right because it did not decide a motion made on notice. Therefore a motion to vacate the dismissal pursuant to CPLR 2221(a) was proper and should have been granted:

The Supreme Court should have granted the plaintiff’s motion, in effect, pursuant to CPLR 2221(a) to vacate the dismissal order and to restore the action to the active calendar. A motion pursuant to CPLR 2221(a) is not subject to any specific time limitation … . Where, as here, an order directing dismissal of a complaint is not appealable as of right because it did not decide a motion made on notice, it is procedurally proper for the aggrieved party to move pursuant to CPLR 2221(a) to vacate that order … .

CPLR 3215(c) provides that “[i]f the plaintiff fails to take proceedings for the entry of judgment within one year after the default, the court shall not enter judgment but shall dismiss the complaint as abandoned . . . unless sufficient cause is shown why the complaint should not be dismissed” … . Here, CPLR 3215(c) is not applicable to the defendant under the circumstances of this case, as she appeared in the action by answer … . “Further, this action does not present an extraordinary circumstance as would warrant a sua sponte dismissal of the complaint” … . US Bank N.A. v Jones-Boakai, 2026 NY Slip Op 03019, Second Dept 5-13-26

Practice Point: If an order dismissing a complaint is not appealable as of right because it did not decide a motion made on notice, a motion to vacate the dismissal pursuant to CPLR 2221(a) is proper.​

 

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THE ONLY ACTION PLAINTIFF TOOK WITHIN A YEAR OF DEFENDANT’S DEFAULT IN THIS FORECLOSURE CASE WAS TO REQUEST A SETTLEMENT CONFERENCE; BUT A SETTLEMENT CONFERENCE IS NOT REQUIRED WHEN THE DEFENDANT DOES NOT RESIDE AT THE PROPERTY SUBJECT TO FORECLOSURE; SINCE NO ACTION WAS TAKEN TO ENTER THE DEFAULT JUDGMENT WITHIN A YEAR, THE COMPLAINT WAS DISMISSED (SECOND DEPT).

The Second Department, reversing Supreme Court, determined plaintiff in this foreclosure action did not take proceedings for the entry of a default judgment within one year requiring dismissal of the complaint. Although plaintiff did request a settlement conference within one year, the settlement conference was not required because the defendant did not reside at the property subject to foreclosure:

… [P]laintiff had one year from July 17, 2012, to take proceedings for the entry of judgment against the defendant (see CPLR 3215[c] …). However, the plaintiff did not take such proceedings until over two years later, when it moved, inter alia, for leave to enter a default judgment against the defendant and for an order of reference in March 2015. Thus, the plaintiff failed to take proceedings for the entry of judgment within one year after the defendant’s default. Although the plaintiff filed a request for judicial intervention requesting a foreclosure settlement conference within the one-year period after the defendant’s default, a settlement conference was not required in this case because the defendant did not reside at the property subject to foreclosure (see CPLR 3408[a][1]). As such, the filing of the request for judicial intervention did not constitute the taking of proceedings for the entry of a judgment pursuant to CPLR 3215(c) and did not toll the one-year deadline to do so … . U.S. Bank N.A. v Islam, 2026 NY Slip Op 03015, Second Dept 5-13-26

Practice Point: Requesting a settlement conference which is not required does not toll the one-year period for taking proceedings to enter a default judgment in a foreclosure action.

 

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THE DEFENDANT’S ATTORNEY IN THIS FORECLOSURE ACTION FILED A NOTICE OF APPEARANCE WHICH WAIVED ANY OBJECTION TO PERSONAL JURISDICTION; JUDGMENT OF FORECLOSURE REINSTATED (SECOND DEPT).

The Second Department, reversing Supreme Court and reinstating the judgment of foreclosure, determined that the defendant’s (the Church’s) attorney’s filing of a notice of appearance waived any objection to personal jurisdiction:

CPLR 5015(a)(4) provides in relevant part that “[t]he court which rendered a judgment or order may relieve a party from it upon such terms as may be just, on motion of any interested person . . . upon the ground of . . . lack of jurisdiction to render the judgment or order.” Under CPLR 5015(a)(4), a default must be vacated once lack of personal jurisdiction has been established … . “[T]he filing of a notice of appearance in an action by a party’s counsel serves as a waiver of any objection to personal jurisdiction in the absence of either the service of an answer which raises a jurisdictional objection, or a motion to dismiss pursuant to CPLR 3211(a)(8) for lack of personal jurisdiction” … . Here, since it is undisputed that Goodman filed a notice of appearance on behalf of the Church and that the Church failed, at that time, to file an answer raising the defense of lack of personal jurisdiction or to make a pre-answer motion to dismiss on that ground, the Church waived the defense of lack of personal jurisdiction … . There is no merit to the Church’s contention that a notice of appearance that is untimely filed does not confer personal jurisdiction over a defendant … . NYCTL 1998-2 Trust v Grace Christian Church, 2026 NY Slip Op 02995, Second Dept 5-13-26

Practice Point: A notice of appearance by defendant’s attorney which is accepted by plaintiff, even if the notice is “late,” waives any objection to personal jurisdiction.

 

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RPAPL 1301, WHICH PROHIBITS SIMULTANEOUS ACTIONS AT LAW TO RECOVER ON A NOTE AND ACTIONS IN EQUITY TO FORECLOSE A MORTGAGE, DOES NOT APPLY TO OUT-OF-STATE PROPERTIES; RPAPL 1371 DOES NOT APPLY TO OUT-OF-STATE FORECLOSURES AND THEREFORE DOES NOT PROVIDE A BASIS TO DEEM A JUDGMENT SATISFIED UPON A FORECLOSURE SALE (FIRST DEPT).

The First Department noted that RPAPL 1301 and 1371 do not apply to out-of-state foreclosures:

The motion court properly rejected defendants’ position that RPAPL 1301 was a ground to deny plaintiff’s motion. That section “prohibits a mortgage lender seeking repayment of a loan from simultaneously prosecuting an action at law to recover upon a promissory note and an action in equity to foreclose the mortgage” … . However, RPAPL 1301 does not apply “where, as here, the property securing the loan is located outside of New York State” … . This is the case even though the parties in their loan documents agreed that New York law would govern any disputes arising from the agreements.

Similarly, RPAPL 1371 does not apply to out-of-state foreclosures and therefore does not provide a basis to deem the judgment against defendants satisfied upon the foreclosure sale of the properties … . Thus, defendants’ motion seeking an order deeming the judgment satisfied because plaintiff failed to move for a deficiency judgment after the out-of-state properties were foreclosed upon and sold was also properly denied. WPC Billboard Lender LLC v Bartkowski, 2026 NY Slip Op 02951, First Dept 5-12-26

 

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PLAINTIFF DID NOT PROVE THE RPAPL 1304 NOTICE OF FORECLOSURE WAS PROPERTY MAILED TO DEFENDANT; THE MAILING WAS DONE BY A THIRD PARTY AND NO FIRST-HAND KNOWLEDGE OF THE THIRD-PARTY’S MAILING PROCEDURE WAS PRESENTED (FIRST DEPT). ​

The First Department, reversing Supreme Court, determined the plaintiff in this foreclosure action did not demonstrate the RPAPL 1304 notice of foreclosure was properly mailed to defendant. The mailing was done by a third-party and no first-hand evidence of that party’s mailing procedure was presented:

… [T]he affiant did not attest that she was familiar with the standard office mailing procedures of Covius Services, LLC, the third-party vendor that sent the RPAPL 1303 and 1304 notices on behalf of plaintiff. The affidavit therefore did not establish proof of a standard office mailing procedure designed to ensure that items were properly addressed and mailed … . The affidavit also did not address the nature of plaintiff’s relationship with Covius, nor did it address whether Covius’s records were incorporated into plaintiff’s own records or routinely relied upon in plaintiff’s business … . Thus, under the circumstances presented, the tracking numbers on the copies of the 90-day notices did not by themselves suffice to establish proper mailing under RPAPL 1304 … . Wells Fargo Bank, N.A. v Merino, 2026 NY Slip Op 02616, First Dept 4-28-26

Practice Point: If the mailing of the RPAPL 1304 notice of foreclosure is done by a third-party, first-hand knowledge of that party’s mailing procedure must be presented.​

 

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AFTER THE JUDGMENT OF FORECLOSURE AND THE EXPIRATION OF THE TIME FOR APPEAL, DEFENDANT, PRIOR TO THE SALE OF THE PROPERTY, PURSUANT TO CPLR 2221, MOVED TO VACATE THE JUDGMENT BASED ON THE FORECLOSURE ABUSE PREVENTION ACT (FAPA); THE MOTION SHOULD NOT HAVE BEEN DENIED AS UNTIMELY; MATTER REMITTED (FIRST DEPT).

The First Department, reversing Supreme Court, determined that defendant in this foreclosure action used the proper procedure for attempting to apply the Foreclosure Abuse Prevention Act (FAPA) retroactively. The foreclosure action had already proceeded to judgment and the time for appeal had expired. The only way to effectuate the FAPA at that point is a motion to renew (CPLR 2221) made before the sale of the property. Defendant’s CPLR 2221 motion should not have been denied as untimely:

The court granted plaintiff a judgment of foreclosure and sale … . Defendant moved pursuant to CPLR 2221 to vacate the judgment based on FAPA.

The court should not have determined that the motion was untimely. Generally, a CPLR 2221 motion based upon a change in the law must be made prior to the entry of a final judgment or before the time to appeal has fully expired … . However, following the Court of Appeals’ decision in Article 13 LLC v Ponce De Leon Fed. Bank ( —NY3d—, 2025 NY Slip Op 06536 [2025]), this Court held that “the only way to effectuate the retroactive application of FAPA after a judgment has been entered and the time to appeal has expired, is by filing a motion to renew before the sale is conducted” … . Defendant followed this precise process.

Accordingly, this matter is remanded for further proceedings, including consideration of the parties’ arguments concerning whether retroactive application of FAPA would violate the Takings and Due Process Clauses … . Bank of N.Y. Mellon v Adam P10tch, LLC, 2026 NY Slip Op 02596, First Dept 4-28-26

Practice Point: After the judgment of foreclosure and the expiration of the time for appeal, but before the sale of the property, a defendant can still make a motion to vacate the judgment based on the FAPA (CPLR 2221).

 

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