In rendering decisions, New York trial courts vary widely in their application of rules of procedure. Fortunately, for the homeowner in Wells Fargo Bank, N.A. v. Bonanno, the New York State Appellate Division, Second Department, rendered a favorable decision based on the proper application of the procedural rule at issue.
In October 2003, the homeowner obtained a $322,700 loan from Wells Fargo, secured by a mortgage on her Seaford, New York home. Thereafter, the homeowner defaulted on her loan, failing to make the required payments toward it. In August 2011, Wells Fargo started a foreclosure action against the homeowner by personally serving her with process. The homeowner failed to answer the complaint. Nevertheless, the homeowner appeared with Wells Fargo for two court-mandated foreclosure settlement conferences. After the parties could not reach a settlement at the May 9, 2012 conference, the Nassau County Supreme Court advised Wells Fargo to proceed with the action.
Nearly two years passed before Wells Fargo moved for an order of reference, which would send the case to a court-appointed Referee to compute the total amount owed to Wells Fargo under the terms of the mortgage. The homeowner cross-moved to dismiss Wells Fargo’s complaint against her, arguing, among other things, that Wells Fargo failed to timely move for a default judgment against her after she defaulted by failing to answer the complaint.
Under NY 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.”
Despite this rule, which explicitly requires a plaintiff to move for a default judgment within a year, the Supreme Court granted Wells Fargo’s motion and denied the homeowner’s cross-motion, finding that Wells Fargo had shown good cause for the delay in prosecuting the action and had not abandoned it.
Armed with the law on her side, the homeowner appealed the Supreme Court’s decision. The Appellate Division found that Wells Fargo failed to demonstrate it had a reasonable excuse for its protracted delay in moving for a default judgment against the homeowner. To this end, the Appellate Division noted that, in spite of the trial court authorizing Wells Fargo to proceed with the prosecution of this case, Wells Fargo took no steps to move for a default judgment until nearly two years later. Moreover, Wells Fargo failed to show it had reasonable excuse for this delay. As such, the homeowner prevailed on her motion to dismiss Wells Fargo’s foreclosure action.
This case highlights the fact that banks have been inundated with foreclosure actions over the past several years and, as such, let numerous cases fall through the cracks. Here, the homeowner capitalized on Wells Fargo’s procedural mistake and undue delay, which, as we noted in a previous post, is one such way to succeed in defending a foreclosure action.