Benjamin v. LaSalle Bank, N.A.

Summary

The Appellate Division, Second Department, reversed in part an order dismissing an RPAPL 1501(4) action seeking cancellation and discharge of a mortgage. The court held that U.S. Bank was not entitled to the six-month savings provision under CPLR 205-a because it was not the original foreclosure plaintiff and had not shown that it was acting on the original plaintiff's behalf; it also held that LaSalle Bank remained a proper party and that the plaintiffs were entitled to seek a default judgment against it. The court affirmed the portion of the order denying dismissal of claims asserted by the decedent.

Holdings

1. The Benjamins stated a viable RPAPL 1501(4) cause of action because the mortgage debt was accelerated when LaSalle commenced the 2009 foreclosure action and demanded payment of the full balance, and more than six years had elapsed before the present action was commenced.
2. U.S. Bank was not entitled to invoke CPLR 205-a's six-month savings provision because it was not the original plaintiff in the 2009 action and did not plead or prove that it was acting on behalf of the original plaintiff.
3. U.S. Bank could not invoke CPLR 205-a for Chittra's claim because the foreclosure complaint against her had been dismissed pursuant to CPLR 3215, and the retroactive application of FAPA and CPLR 205-a did not violate federal or state due process.
4. LaSalle was not entitled to dismissal because the record, including LaSalle's prosecution of the 2009 foreclosure and its answer in the present action, contradicted its contention that it no longer existed or was not a proper party.
5. The Benjamins were entitled to leave to enter a default judgment against LaSalle because they submitted proof of service, facts establishing a viable cause of action, and LaSalle's default, while LaSalle failed to show either that it was not in default or that it had a reasonable excuse and potentially meritorious defense.

Questions Presented

1. Whether the Benjamins stated an RPAPL 1501(4) cause of action to cancel and discharge the mortgage after more than six years had elapsed since acceleration of the mortgage debt.
2. Whether U.S. Bank, as successor in interest to LaSalle, was entitled to the six-month savings provision under CPLR 205-a for a new foreclosure action.
3. Whether the retroactive application of the Foreclosure Abuse Prevention Act and CPLR 205-a violated due process.
4. Whether LaSalle was entitled to dismissal on the ground that it was no longer a proper party.
5. Whether the Benjamins established entitlement to leave to enter a default judgment against LaSalle under CPLR 3215.

Disposition

reversed