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Adam Leitman Bailey, P.C. Revives a Time-Barred Mortgage Loan on Appeal

Adam Leitman Bailey, P.C. was retained by the note owner to salvage a 2007 foreclosure action that was dismissed pursuant to CPLR § 3216 for the Plaintiff’s prior counsel’s alleged failure to prosecute.  By virtue of the CPLR § 3216 dismissal, foreclosure of the loan was then time-barred by the statute of limitations, and the Plaintiff was unable to use the six month grace period afforded by CPLR § 205 needed to timely commence a new action.  Accordingly, Adam Leitman Bailey, P.C.’s only option was to appeal the Court’s decision dismissing the action, and appeal the denial of Plaintiff’s cross-motion to extend Plaintiff’s time to file and serve the Note of Issue.

On appeal, the Third Department found that the borrower demonstrated compliance with serving the 90-day demand to resume prosecution, and that Plaintiff’s prior counsel in its opposition and cross-motion papers failed to demonstrate “justifiable excuse for the delay and a good and meritorious cause of action.”  The Third Department specifically stated that the opposition filed by lender’s prior counsel only advanced a conclusory and unsubstantiated claim of law office failure that would not be deemed a justifiable excuse.

Anticipating these findings, however, Adam Leitman Bailey, P.C. also argued on appeal that the note owner had a meritorious claim and that CPLR §3216 was extremely forgiving in litigation delay.  Adam Leitman Bailey, P.C. emphasized  that the borrower did not suffer any prejudice and, more importantly,  was able to live at the premises payment free for over a decade.

The Third Department agreed with Adam Leitman Bailey, P.C.’s argument, and determined that, regardless of the lack of a justifiable excuse, the Court “still retains some residual discretion to refuse dismissal of a complaint as a penalty under CPLR 3216.”

In so holding, the court  referenced Adam Leitman Bailey, P.C.’s arguments that Plaintiff never intended to abandon the action, as it previously moved for summary judgment, but then the action was reassigned and remained dormant at the hand of the court for  a period of time.

Thus, the Third Department held that the Court should not have dismissed the complaint and should have granted Plaintiff’s cross-motion to extend the time to file the note of issue and allow the action to be decided on the merits.  Not only did the Court  decide the appeal in favor of the note owner, but the Court also awarded costs to Plaintiff.

Jeffrey R. Metz, of the Appellate Practice Group and Jackie Halpern Weinstein and Danny Ramrattan, of the Foreclosure Litigation Group at Adam Leitman Bailey, P.C. secured this win for the note owner.

Memorandum and Order 03.18.21

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