Borrower Seeks Punitive Damages For Breach Of Contract – Rejected


15 October, 2018


Mortgage Lender and Servicer Alerts

Lenders and servicers are well aware, to their dismay, that desperate borrowers – certainly those bent on delaying foreclosure cases for as long as possible or have the idea that they somehow shouldn’t pay the money borrowed – call upon a wide array of tactics and assertions.  One of these worthy of attention is revealed in a recent case. [JPMorgan Chase Bank, N.A.  v. Corrado, 162 A.D.3d 994, 80 N.Y.S.3d 366 (2d Dept. 2018)].  There, in defending a foreclosure founded upon non-payment, in addition to denying everything, the borrower interposed a counterclaim seeking punitive damages against the lender for supposed breach of the mortgage contract.

In dismissing this counterclaim, the court cited the requirements for such an assertion to be effective and those are worthy of note.  They readily explain why a counterclaim of this nature will almost invariably fail and it will be meaningful for lenders to oppose them knowing the underpinning for that opposition.

A party pursuing punitive damages based on a breach of contract claim must, to be successful, show:

  • That the opposing party’s conduct is actionable as an independent tort; and
  • That the tortious conduct was of an egregious nature; and
  • That the egregious conduct was directed at the party seeking the damages; and
  • That the conduct was part of a pattern directed at the public generally.

As it was in this case, it would be a heavy burden indeed for a borrower to present support for each leg of this construct.  The counterclaim was dismissed and this exploration suggests why such borrower claims would be likely to fail in the future.


Mr. Bergman, author of the four-volume treatise, Bergman on New York Mortgage Foreclosures, LexisNexis Matthew Bender (rev. 2018), is a partner with Berkman, Henoch, Peterson, Peddy & Fenchel, P.C. in Garden City, New York. He is also a member of the USFN, The American College of Real Estate Lawyers, The American College of Mortgage Attorneys, an adviser to the New York Times on foreclosure issues and writes a regular servicing column for the New York Law Journal. He is AV rated by Martindale-Hubbell, his biography appears in Who’s Who In American Law and he has been for years listed in Best Lawyers In America and New York Super Lawyers.