NYCTL 1998 TRUST v. PHILLIP (2026)

DECISION & ORDER

In an action to foreclose a tax lien, the defendants Lauri–Lei Phillip and Lauri–Anne Phillip appeal from stated portions of an order of the Supreme Court, Kings County (Lawrence Knipel, J.), dated March 18, 2024.  The order, inter alia, (1) denied those branches of those defendants' motion which were to vacate two orders of the same court (Mark I. Partnow, J.), both dated May 10, 2022, and to stay the sale of the subject property, (2) denied those branches of those defendants' separate motion which were pursuant to CPLR 317 to vacate the default of Llewellyn Phillip in appearing or answering the complaint and pursuant to CPLR 3012(d) and 2004 for leave to serve and file a late answer, and (3) granted that branch of the plaintiffs' cross-motion which was to extend the time to conduct a sale of the subject property.

ORDERED that the order dated March 18, 2024, is affirmed insofar as appealed from, with costs.

In July 2016, the plaintiffs commenced this action against, among others, Llewellyn Phillip (hereinafter the decedent) to foreclose a tax lien on certain real property located in Brooklyn (hereinafter the property).  The decedent failed to timely appear or answer the complaint.  A judgment of foreclosure and sale was issued, upon the decedent's default, on May 1, 2019.  Thereafter, a tax lien sale of the property was scheduled.

In or around July 2019, the decedent moved to stay the sale of the property.  The plaintiffs opposed the decedent's motion and cross-moved, inter alia, to extend the time to conduct a sale of the property.  The motion and cross-motion were thereafter adjourned.

On June 7, 2021, the decedent died.  On October 8, 2021, the Surrogate's Court issued restricted letters of administration for the decedent's estate to the defendants Lauri–Lei Phillip and Lauri–Anne Phillip (hereinafter together the defendants).

Subsequently, in two orders, both dated May 10, 2022 (hereinafter the May 2022 orders), the Supreme Court denied the decedent's motion to stay the sale of the property and granted the plaintiffs' cross-motion, among other things, to extend the time to conduct a sale of the property.

A tax lien sale of the property was scheduled again.

Thereafter, the defendants moved, inter alia, to vacate the May 2022 orders as legal nullities and to stay the sale of the property.  In support of their motion, the defendants argued, among other things, that upon the decedent's death, the Supreme Court was divested of jurisdiction to determine the merits of the decedent's motion and the plaintiffs' cross-motion.  The plaintiffs cross-moved, inter alia, to extend the time to conduct a sale of the property.

The defendants separately moved, among other things, pursuant to CPLR 317 and the court's equitable power to vacate the decedent's default in appearing or answering the complaint and pursuant to CPLR 3012(d) and 2004 for leave to serve and file a late answer.

In an order dated March 18, 2024, the Supreme Court, inter alia, denied those branches of the defendants' motion which were to vacate the May 2022 orders and to stay the sale of the property, denied those branches of the defendants' separate motion which were pursuant to CPLR 317 and the court's equitable power to vacate the decedent's default in appearing or answering the complaint and pursuant to CPLR 3012(d) and 2004 for leave to serve and file a late answer, and granted that branch of the plaintiffs' cross-motion which was to extend the time to conduct a sale of the property.  The defendants appeal.

“Generally, the death of a party divests a court of jurisdiction to act, and automatically stays proceedings in the action pending the substitution of a personal representative for the decedent” (Nationstar Mtge., LLC v. Azcona, 186 AD3d 614, 615 [internal quotation marks omitted];  see MTGLQ Invs., L.P. v. Pollins, 183 AD3d 620, 620).  “In most instances a personal representative appointed by the Surrogate's Court should be substituted in the action to represent the decedent's estate” (Wells Fargo Bank, N.A. v. Miglio, 197 AD3d 776, 777 [internal quotation marks omitted] ).  “If ‘a party's death does not affect the merits of a case,’ such as where a default judgment is entered against a borrower [in an action to foreclose a mortgage,] ‘there is no need for strict adherence to the requirement that the proceedings be stayed pending substitution’ ” (Nationstar Mtge., LLC v. Harrilall, 244 AD3d 985, 986, quoting Nationstar Mtge., LLC v. Azcona, 186 AD3d at 615–616;  see Wells Fargo Bank, N.A. v. Miglio, 197 AD3d at 777).

Here, the decedent was properly served with process pursuant to CPLR 308(2) (see Gilhuys v. Trovato, 233 AD3d 963, 964;  Rattner v. Fessler, 202 AD3d 1011, 1015).  The decedent thereafter failed to timely appear or answer the complaint.  Under these circumstances, there was no need for strict adherence to the requirement that the action be stayed after the decedent's death pending substitution (see Nationstar Mtge., LLC v. Harrilall, 244 AD3d at 986;  U.S. Bank N.A. v. Sanon, 238 AD3d 800; Wells Fargo Bank, N.A. v. Miglio, 197 AD3d at 777;  Nationstar Mtge., LLC v. Azcona, 186 AD3d at 615–616).  Accordingly, the Supreme Court properly denied that branch of the defendants' motion which was to vacate the May 2022 orders.

Insofar as the defendants moved to challenge service on the decedent pursuant to CPLR 317, that statute is inapplicable here.  New York City Administrative Code § 11–340 provides that so much of CPLR 317 “as requires the court to allow a defendant to defend an action after final judgment shall not apply to an action to foreclose a tax lien” (id.;  see NYCTL 2015–A Trust v. Diffo Props.  Corp., 171 AD3d 538, 538).  Neither have the defendants established a basis for vacating the decedent's default pursuant to CPLR 2004 or 3012(d) by establishing a reasonable excuse for the default or a meritorious defense to the action (see Nechadim Corp. v. 500 Putnam St. Realty, LLC, 237 AD3d 957;  National Loan Invs., L.P. v. Bruno, 191 AD3d 999).

Contrary to the defendants' contention, the Supreme Court lacked the equitable or statutory power to reduce the interest prescribed by law (see Matter of Mill Cr. Phase 1 Staten Is. Bluebelt Sys., 10 NY3d 898, 900;  Matter of City of New York [Hammel Boardwalk Corp.], 288 N.Y. 51, 57;  NYCTL 1997–1 Trust v. Denis, 147 AD3d 966, 967;  NYCTL 1998–2 Trust v. McGill, 138 AD3d 1077, 1080;  Matter of Bradhurst Urban Renewal Area [Stage 1], 40 AD3d 218, 219;  Matter of Delafield 246 Corp. v City of New York, 11 AD3d 268, 272).

The Supreme Court providently exercised its discretion in denying that branch of the defendants' motion which was to stay the sale of the property and in granting that branch of the plaintiffs' cross-motion which was to extend the time to conduct a sale of the property (see Deutsche Bank Natl. Trust Co. v Lawson, 244 AD3d 922, 924;  Nationstar Mtge., LLC v. Dunn, 230 AD3d 1327, 1330).

The parties' remaining contentions either are without merit or need not be considered in light of our determination.

BARROS, J.P., GENOVESI, VOUTSINAS and LANDICINO, JJ., concur.