That a borrower in a mortgage foreclosure action is not entitled to a jury trial is a reasonably well known proposition (nonetheless worthy of emphasis here) although a new case underscores how encompassing the principle can be. [Security Pacific Natl. Bank v. Evans, 148 A.D.3d 465, 49 N.Y.S.3d 122 (1st Dept. 2017)].
Just as a practical observation, this is no doubt a comforting concept from the mortgage holder’s perspective. Banks and other lenders, although the source of funds to purchase real estate, seem not so favorably viewed by the public at large. Even though a foreclosure obviously represents a situation where a borrower has not repaid sums loaned, juries may not be so warmly disposed towards lenders. Juries playing no role in the foreclosure process is accordingly welcome.
And as a matter of law it has always been so. [For a detailed discussion, with citation, see 2 Bergman on New York Mortgage Foreclosures §22.38, LexisNexis Matthew Bender (rev. 2017)].
The underlying maxim is that mortgage foreclosure is an equitable action and there is, accordingly, no right to a trial by jury. This is so even if the complaint includes a request for a money damages or deficiency judgment because such relief is incidental to the mortgage foreclosure process. The deficiency remedy is primarily equitable in nature and the money judgment is just ancillary to the case. Thus, no right to a trial by jury is afforded, and that includes guarantors on the note. Nor do a borrower’s assertions of defenses of fraud or usury create an ability for a jury to decide the issue. Likewise, interposition of a counterclaim for what might not otherwise be equitable relief does not give rise to a jury demand.
In the new case, the prohibition against the availability of a jury extended yet further. There, where parties to a foreclosure sought specific performance of their settlement agreement, and injunctive relief – equitable relief was still being pursued and there remained no entitlement to a jury. Even were the borrower-defendant to suddenly assert a money damage claim, at the same time withdrawing equitable claims, it could not revive or create a right to a jury trial which had been waived through equitable claims applying to the same transaction.
Arcane stuff? Perhaps, but in the end the conclusion is meaningful and all good news for mortgage holders.
Mr. Bergman, author of the four-volume treatise, Bergman on New York Mortgage Foreclosures, LexisNexis Matthew Bender (rev. 2017), 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.