This sounds pedantic; it is not. Rather, it is an area where a foreclosing plaintiff can readily stumble and face dismissal of its foreclosure action. The point is made in a recent case, although here the lender won – a cautionary result nonetheless [U.S. Bank, N.A. v. Brown, 213 A.D.3d 717, 183 N.Y.S.3d 507 (2d Dept. 2023)].
The underlying problem here for mortgage holders is that foreclosures can be commenced, then later to be started anew. But on occasion, especially when the mortgage is assigned, a started foreclosure action just sits out there, still viable, and the lender, or new mortgage holder begins a second action.
Those recognizing immediately that something is wrong with such a situation are correct. As a matter of long standing practice in New York [CPLR §3211(a)(4)] a party may move to dismiss an action on the ground that there is another action pending between the same parties for the same cause of action.
The result of such a motion by a borrower could indeed result in dismissal, leaving the earlier foreclosure alive, no doubt unexpected by the mortgage holder. If however, that prior action had flaws which could lead to its dismissal (a real possibility), the lender’s problem is magnified – especially if the statute of limitations becomes a factor. Clearly this “prior action pending” is a meaningful concern.
The reverse side of the concept is the borrower’s approach. While the power to attack a foreclosure with the defense of another action pending assuredly exists, that defense must appear in either a pre-answer motion to dismiss or as expressed in an answer to the complaint. In the case mentioned the borrower failed to raise the defense by either method. Rather he waited three years after the second action was begun and employed the defense only in a cross-motion to the judgment. Defendant lost – defense held waivable.
The lender prevailed – this time – but only because the borrower erred. The danger of forgetting that a prior existing action can bring dismissal remains.
Mr. Bergman, author of the four-volume treatise, Bergman on New York Mortgage Foreclosures, LexisNexis Matthew Bender (rev. 2023), is a partner with Berkman, Henoch, Peterson & Peddy, 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.