JPMORGAN CHASE BANK NATIONAL ASSOCIATION v. The Executor of the Estate of Rita Lerner, et al., Defendants. (2019)

Order, Supreme Court, New York County (Barbara Jaffe, J.), entered on or about March 10, 2017, which, insofar as appealed from as limited by the briefs, granted plaintiff's motion to add the Executor of the Estate of Rita Lerner as a defendant and to dismiss defendant Lynn D. Salvage's counterclaims, and denied Salvage's cross motion to dismiss the complaint, unanimously modified, on the law and the facts, to deny plaintiff's motion, and to grant plaintiff's alternate motion to compel Salvage to accept its late reply to her counterclaims, and otherwise affirmed, without costs.  Appeal from order, same court and Justice, entered October 23, 2017, which, insofar as appealed from as limited by the briefs, denied Salvage's motion to renew, unanimously dismissed, without costs, as academic.

This is an action to foreclose a mortgage on a condominium unit owned and occupied by Salvage, who is Lerner's daughter.  Before Lerner passed away, she and Salvage owned the unit as joint tenants with right of survivorship.  Lerner was the sole borrower on the loan that is secured by the mortgage.

The motion to add the executor of Lerner's estate should have been denied because no such person had been appointed at the time plaintiff made its motion.  “[A] plaintiff is unable to commence an action during the period between the death of a potential defendant and the appointment of a representative of the estate” (Arbelaez v. Chun Kuei Wu, 18 A.D.3d 583, 584, 795 N.Y.S.2d 327 [2d Dept. 2005] [internal quotation marks omitted] ).

However, the court properly denied Salvage's cross motion to dismiss the complaint for failure to join an indispensable party, namely, the executor.  The estate does not have any ownership interest in the condominium, which passed entirely, as a matter of law, to Salvage upon Lerner's death.  Moreover, dismissal for nonjoinder is a last resort (see Saratoga County Chamber of Commerce v. Pataki, 100 N.Y.2d 801, 821, 766 N.Y.S.2d 654, 798 N.E.2d 1047 [2003], cert denied 540 U.S. 1017, 124 S.Ct. 570, 157 L.Ed.2d 430 [2003] ), and the factors mentioned in CPLR 1001(b) do not tip overwhelmingly in favor of dismissal.  For example, Lerner's estate will not be prejudiced by nonjoinder because “[t]he absence of a necessary party in a mortgage foreclosure action ․ leaves that party's rights unaffected by the judgment of foreclosure and sale” (Glass v. Estate of Gold, 48 A.D.3d 746, 747, 853 N.Y.S.2d 159 [2d Dept. 2008] ).  Plaintiff has recently waived its right to seek a deficiency judgment;  hence, this action does not require the estate's joinder (see Countrywide Home Loans, Inc. v. Keys, 27 A.D.3d 247, 811 N.Y.S.2d 362 [1st Dept. 2006], lv denied 7 N.Y.3d 702, 818 N.Y.S.2d 192, 850 N.E.2d 1167 [2006] ).

Salvage's counterclaims should not have been dismissed pursuant to CPLR 3215(c).  Salvage and plaintiff/counterclaim defendant (hereinafter Chase) engaged in negotiations after Salvage asserted her counterclaims (see e.g. Iorizzo v. Mattikow, 25 A.D.3d 762, 764, 807 N.Y.S.2d 663 [2d Dept. 2006] ).  It would not be equitable (see generally Jo Ann Homes at Bellmore v. Dworetz, 25 N.Y.2d 112, 122, 302 N.Y.S.2d 799, 250 N.E.2d 214 [1969] [“a foreclosure action is a proceeding in a court of equity” (internal quotation marks omitted) ] ) to dismiss the counterclaims based on a nine-month gap between the end of negotiations and the making of Salvage's cross motion, especially when Chase has hardly been a model of celerity.  Further, Chase did not show that it had been prejudiced by Salvage's failure to pursue her counterclaims (see Laourdakis v. Torres, 98 A.D.3d 892, 893, 950 N.Y.S.2d 703 [1st Dept. 2012] ), and Salvage has demonstrated that the counterclaims she was pursuing in her own right were “potentially meritorious” (Brooks v. Somerset Surgical Assoc., 106 A.D.3d 624, 625, 966 N.Y.S.2d 65 [1st Dept. 2013] ).

Since we are denying Chase's motion to dismiss Salvage's counterclaims, we consider its alternate motion to compel her to accept its late reply.  That motion is granted (see HSBC Bank USA v. Lugo, 127 A.D.3d 502, 503, 9 N.Y.S.3d 6 [1st Dept. 2015] ).

In light of the denial of Chase's motion to add the executor of Lerner's estate as a defendant, Salvage's arguments about her motion to renew are academic.