Jose Buco, Plaintiff, v. NA NA NA WAMU 2007 HY3 (2022)

The following e-filed documents, listed by NYSCEF document number (Motion 001) 8, 9, 10, 11, 12, 13, 14, 15, 16, 17, 18, 19, 20, 21, 22, 23, 24, 25, 26, 27, 28, 29, 30, 31, 32 were read on this motion to DISMISS.

Plaintiff, Jose Buco, defaulted on a mortgage loan for his condominium apartment. In 2014, defendant U.S. Bank NA, the holder of the note and mortgage, brought a foreclosure action in this court. (See U.S. Bank NA v. Buco, Index No. 850355/2014 [Sup Ct, NY County] [Manuel Mendez, J.].) In 2016, U.S. Bank obtained a judgment of foreclosure and sale in that action on default. (See NYSCEF No. 19 [reproducing judgment].)

In 2018, Buco brought this action, alleging that U.S. Bank wrongfully declined to allow him to purchase the property in a short sale or to purchase the note and mortgage at a discount, in (putative) violation of the Donnelly Act. (NYSCEF No. 2 at 1-2.) He seeks an order declaring that the note and mortgage are unenforceable and directing expungement of the mortgage; or, in the alternative, a judgment permitting him to purchase the property at a discount. (Id. at 2.) U.S. Bank now moves without opposition to dismiss the action under CPLR 3211 (a) (4), (a) (5), and (a) (7).

The branch of U.S. Bank's motion seeking dismissal under CPLR 3211 (a) (4) based on the 2014 foreclosure action is denied. After entry of a judgment of foreclosure and sale, a foreclosure action is no longer considered "pending" for CPLR 3211 (a) (4) purposes. (See Green Point Sav. Bank v Clarke, 220 AD2d 384, 385 [2d Dept 1995].)

The branch of U.S. Bank's motion seeking dismissal on claim-preclusion grounds under CPLR 3211 (a) (5) is granted.¹ A judgment of foreclosure and sale in a foreclosure action is final for claim-preclusion purposes. (Eaddy v US Bank N.A., 180 AD3d 756, 758 [2d Dept 2020].) And Buco could have raised his Donnelly Act-related arguments in the prior foreclosure action, but did not do so. Further, even if one were to assume that these arguments would have constituted a counterclaim in the prior action (rather than a defense), claim preclusion would still apply here. Although New York is a permissive-counterclaim state, a defendant like Buco may not remain silent in one action, then bring a second action on the basis of a preexisting claim for relief that would impair the rights or interests established in the first action. (Yang v Korea First Bank, 247 AD2d 237, 237-238 [1st Dept 1998] [affirming claim-preclusion-based dismissal of action asserting "claims of fraud and malfeasance in administration of [plaintiffs'] mortgage loan" by a bank because plaintiffs could have, but did not, raise those arguments in a prior foreclosure action brought by that bank].)

Accordingly, it is

ORDERED that U.S. Bank's motion to dismiss is granted without opposition, and the action is dismissed, with costs and disbursements to be taxed by the Clerk upon the submission of an appropriate bill of costs; and it is further

ORDERED that U.S. Bank shall serve a copy of this order with notice of its entry on all parties and on the office of the County Clerk, which shall enter judgment accordingly.

Dated: December 9, 2022

Hon. Gerald Lebovits

J.S.C.

FOOTNOTES

1.   Given this court's claim-preclusion holding, the court does not reach U.S. Bank's CPLR 3211 (a) (7) arguments for dismissal.

Gerald Lebovits, J.