INSIDERS SUCCESS VENTURES LLC v. Deutsche Bank National Trust Company, etc., respondent. (2020)

DECISION & ORDER

In an action pursuant to RPAPL 1501(4) to cancel and discharge of record a mortgage, the plaintiff appeals from an order of the Supreme Court, Kings County (Andrew Borrok, J.), dated January 11, 2018, as amended. The order, as amended, granted the motion of the defendant Deutsche Bank National Trust Company pursuant to CPLR 5015(a)(1) to vacate a judgment of the same court entered September 26, 2017, upon its default in appearing or answering the complaint, and for leave to interpose a late answer, and denied the plaintiff's cross motion to cancel a notice of pendency filed against the subject property and to impose sanctions pursuant to 22 NYCRR 130–1.1.

ORDERED that the order, as amended, is modified, on the law and in the exercise of discretion, by (1) deleting the provision thereof granting the motion of the defendant Deutsche Bank National Trust Company pursuant to CPLR 5015(a)(1) to vacate a judgment of the same court entered September 26, 2017, upon its default in appearing or answering the complaint, and for leave to interpose a late answer, and substituting therefor a provision denying that motion, and (2) deleting the provision thereof denying that branch of the plaintiff's cross motion which was to cancel a notice of pendency filed against the subject property, and substituting therefor a provision granting that branch of the cross motion; as so modified, the order, as amended, is affirmed, with costs to the plaintiff.

In November 2016, the plaintiff commenced this action pursuant to RPAPL 1501(4) to cancel and discharge of record a mortgage allegedly held against certain real property in Brooklyn by the defendant Deutsche Bank National Trust Company (hereinafter Deutsche Bank). Although the action was initially filed in New York County, the plaintiff re-filed the action in Kings County on January 4, 2017. Deutsche Bank was thereafter served with the summons and complaint on January 12, 2017. Deutsche Bank failed to timely appear in the action or interpose an answer to the complaint.

In April 2017, the plaintiff moved pursuant to CPLR 3215 for leave to enter a default judgment against, among others, Deutsche Bank, upon its failure to timely appear or answer. The plaintiff's motion was granted, and a judgment was entered on September 26, 2017, upon the default of Deutsche Bank, cancelling and discharging of record the subject mortgage. Deutsche Bank moved pursuant to CPLR 5015(a)(1) to vacate the default judgment and for leave to interpose a late answer. Deutsche Bank also filed a notice of pendency against the subject property. The plaintiff cross-moved to cancel the notice of pendency and to impose sanctions against Deutsche Bank pursuant to 22 NYCRR 130–1.1. In the order appealed from, as amended, the Supreme Court granted Deutsche Bank's motion and denied the plaintiff's cross motion.

Generally, a defendant seeking to vacate a judgment or order entered on default must demonstrate a reasonable excuse for the default and a potentially meritorious defense to the action (see CPLR 5015[a][1]; Eugene Di Lorenzo, Inc. v. A.C. Dutton Lbr. Co., 67 N.Y.2d 138, 141, 501 N.Y.S.2d 8, 492 N.E.2d 116; FRT 2011–1 Trust v. Duncan, 156 A.D.3d 867, 868, 65 N.Y.S.3d 759). Here, in support of its motion, Deutsche Bank submitted an affidavit of a senior loan analyst employed by Ocwen Financial Corporation, whose indirect subsidiary was Ocwen Loan Servicing, LLC, the servicer of the subject mortgage. The affidavit, which indicated that the servicer did not refer this action to the law firm retained by Deutsche Bank “due to confusion regarding the multiple cases filed in multiple counties,” was conclusory and unsubstantiated and, under the circumstances of this case, did not constitute a reasonable excuse for Deutsche Bank's default (see Glanz v. Parkway Kosher Caterers, 176 A.D.3d 686, 688–689, 110 N.Y.S.3d 129). The absence of a reasonable excuse for Deutsche Bank's default renders it unnecessary to determine whether it demonstrated the existence of a potentially meritorious defense to the action (see id. at 689, 110 N.Y.S.3d 129; Clarke v. Liberty Mut. Fire Ins. Co., 150 A.D.3d 1192, 1196, 55 N.Y.S.3d 400).

Accordingly, the Supreme Court should have denied Deutsche Bank's motion pursuant to CPLR 5015(a)(1) to vacate the judgment entered September 26, 2017, and for leave to interpose a late answer, and granted that branch of the plaintiff's cross motion which was to cancel the notice of pendency filed against the subject property.

However, under the circumstances of this case, the Supreme Court providently exercised its discretion in declining to impose sanctions against Deutsche Bank pursuant to 22 NYCRR 130–1.1.

RIVERA, J.P., ROMAN, MILLER and WOOTEN, JJ., concur.