HSBC BANK USA NATIONAL ASSOCIATION v. 1501 LLC (2026)

DECISION & ORDER

In an action to foreclose a mortgage, the plaintiff appeals from an order of the Supreme Court, Kings County (Lawrence Knipel, J.), dated January 29, 2024.  The order, insofar as appealed from, granted those branches of the motion of nonparty Property 1501, LLC, which were pursuant to CPLR 3215(c) to dismiss the complaint insofar as asserted against the defendant Joy Wharton as abandoned and pursuant to CPLR 306–b to dismiss the complaint insofar as asserted against the remaining defendants.

ORDERED that the order is modified, on the law, by deleting the provision thereof granting that branch of the motion of nonparty Property 1501, LLC, which was pursuant to CPLR 306–b to dismiss the complaint insofar as asserted against the defendants Brian Griffith, Midland Funding, LLC, Capital One Bank, New York State Department of Taxation and Finance, City of New York Environmental Control Board, City of New York Parking Violations Bureau, City of New York Transit Adjudications Bureau, State of New York, and “John Doe” and substituting therefor a provision denying that branch of the motion;  as so modified, the order is affirmed insofar as appealed from, without costs or disbursements.

In February 2004, Vivian A. Wharton (hereinafter the decedent) and his spouse executed a note in the principal sum of $225,000 in favor of Wells Fargo Home Mortgage, Inc., which was secured by a mortgage on certain real property located in Brooklyn (hereinafter the subject property).  The decedent, who was predeceased by his spouse, died in April 2011.

In June 2015, the plaintiff commenced this action against the alleged heirs and distributees of the decedent's estate, including the defendants Joy Wharton (hereinafter Joy) and Brian Griffith (hereinafter Brian), among others, to foreclose the mortgage.  Joy failed to answer the complaint.  Thereafter, in May 2023, Joy and Brian, among others, formed nonparty Property 1501, LLC (hereinafter Property 1501).  Also in May 2023, Joy conveyed her interest in the subject property to Property 1501.

In November 2023, Property 1501 moved, inter alia, pursuant to CPLR 3215(c) to dismiss the complaint insofar as asserted against Joy as abandoned and pursuant to CPLR 306–b to dismiss the complaint insofar as asserted against the remaining defendants on the ground that the plaintiff failed to serve the summons and complaint upon them within 120 days of commencement of the action.  In an order dated January 29, 2024, the Supreme Court, among other things, granted those branches of the motion.  The plaintiff appeals.

The Supreme Court properly granted that branch of Property 1501's motion which was pursuant to CPLR 3215(c) to dismiss the complaint insofar as asserted against Joy as abandoned.  Pursuant to CPLR 3215(c), “[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” (see Greenpoint Mtge. Funding, Inc. v. Recinos, 241 A.D.3d 796, 798, 241 N.Y.S.3d 346;  Wells Fargo Bank, NA v. McKenzie, 183 A.D.3d 574, 576, 123 N.Y.S.3d 148).  “ ‘This statute is strictly construed, as the language of CPLR 3215(c) is not, in the first instance, discretionary, but mandatory, inasmuch as courts “shall” dismiss claims for which default judgments are not sought within the requisite one-year period, as those claims are then deemed abandoned’ ” (Greenpoint Mtge. Funding, Inc. v. Recinos, 241 A.D.3d at 798, 241 N.Y.S.3d 346, quoting Ocwen Loan Servicing, LLC v. Buonauro, 233 A.D.3d 972, 974, 225 N.Y.S.3d 269).  “However, there is an exception to this mandatory dismissal if the plaintiff shows ‘sufficient cause’ as to why the complaint should not be dismissed” (id., citing CPLR 3215[c] ).  “ ‘This Court has interpreted this language as requiring both a reasonable excuse for the delay in timely moving for a default judgment, plus a demonstration that the cause of action is potentially meritorious' ” (id., quoting Ocwen Loan Servicing, LLC v. Buonauro, 233 A.D.3d at 974, 225 N.Y.S.3d 269).  “ ‘The determination of whether an excuse is reasonable in any given instance is committed to the sound discretion of the motion court’ ” (US Bank N.A. v. Perez, 203 A.D.3d 988, 989, 161 N.Y.S.3d 844, quoting Bank of N.Y. Mellon v. Izmirligil, 144 A.D.3d 1067, 1069, 44 N.Y.S.3d 44;  see Wells Fargo Bank, N.A. v. Wercberger, 244 A.D.3d 1029, 1031, 248 N.Y.S.3d 615).

Property 1501, as successor in interest to Joy, had standing to move pursuant to CPLR 3215(c) to dismiss the complaint insofar as asserted against Joy (see Wells Fargo Bank, NA v. McKenzie, 183 A.D.3d at 575, 123 N.Y.S.3d 148).  Moreover, here, Property 1501's submissions established that Joy was served in August 2015 and that the plaintiff did not move for leave to enter a default judgment against Joy within one year of Joy's default in appearing or answering the complaint.  Contrary to the plaintiff's contention, its assertion that its delay of more than seven years between Joy's default and Property 1501's motion to dismiss was attributable to delays in obtaining letters of administration for the decedent's estate was insufficient to excuse its substantial delay (see Greenpoint Mtge. Funding, Inc. v. Recinos, 241 A.D.3d at 798–799, 241 N.Y.S.3d 346;  US Bank N.A. v. Perez, 203 A.D.3d at 990, 161 N.Y.S.3d 844).

However, the Supreme Court erred in granting that branch of Property 1501's motion which was pursuant to CPLR 306–b to dismiss the complaint insofar as asserted against the remaining defendants.  The record fails to demonstrate that any of the remaining defendants conveyed an interest in the subject property to Property 1501 such that Property 1501 had standing, as a successor in interest to any of the remaining defendants, to move pursuant to CPLR 306–b to dismiss the complaint insofar as asserted against them (see e.g. OneWest Bank N.A. v. All the Heirs at Law [Moran], 240 A.D.3d 803, 807, 240 N.Y.S.3d 413;  Wells Fargo Bank, NA v. McKenzie, 183 A.D.3d at 575, 123 N.Y.S.3d 148).

The parties' remaining contentions either are without merit, are not properly before this Court, or need not be reached in light of our determination.

DILLON, J.P., BRATHWAITE NELSON, DOWLING and QUIRK, JJ., concur.