It can, but usually does not, at least in the residential mortgage foreclosure case. [The recent decision eliciting this discussion is Wells Fargo Bank, N.A. v. Gonzalez, 174 A.D.3d 555, 104 N.Y.S.3d 167 (2d Dept. 2019)].
But first a word as to why this is meaningful to lenders and servicers when much of the time this issue is addressed by their counsel.
Mortgage foreclosure cases in New York are too time consuming even when a defendant borrower does not oppose the case. However, and as lenders and servicers will know, an answer from the borrower is frequently interposed. Once that occurs, the answer must be disposed of for the case to proceed. Typically, this is addressed by a motion for summary judgment, the plaintiff’s assertion that there are no issues of fact. Indeed, the foreclosure is stalled until summary judgment can be granted.
Along with an answer, defaulting borrowers will not infrequently either make discovery demands (interrogatories, notices for depositions, among others) or oppose the motion for summary judgment on the ground that discovery is needed to reveal certain facts or facts claimed to be known only to the foreclosing party. If discovery must indeed proceed, then it will add many, many months – or much more – to the course of the proceeding, which already will incur six months, or much more, to dispose of the motion for summary judgment. In sum, if discovery claimed to be needed by a defendant will intercept the summary judgment process, the length of the foreclosure will be greatly increased.
So, does it happen that way? As noted, it can in more complex commercial cases, but it is far less likely in the residential matter.
In the new case, principles, albeit rather standard, were restated but they are worth knowing. One concept is that an award of summary judgment is not deemed premature merely because discovery has not been completed.
Next, a defendant seeking discovery is required to present some evidentiary basis to suggest that the discovery might lead to relevant evidence or that the facts essential to justify opposition to the motion for summary judgment were exclusively within the knowledge and control of the moving party, i.e. the foreclosing plaintiff.
Finally, the mere hope or speculation that evidence sufficient to defeat a motion for summary judgment may be uncovered during the discovery process will not suffice to deny the motion for summary judgment.
Lenders and servicers (and certainly their counsel) will readily recognize that in the overwhelming number of instances, defendants’ assertions regarding discovery fall into the categories mentioned: the borrower will not have evidence showing that essential facts – or any others – are solely within the knowledge of the foreclosing plaintiff. Nor will their expectation that somehow something will turn up be a basis to halt the summary judgment process.
While none of this means that a discovery effort by a defaulting borrower cannot impede foreclosure, case law is clear (restated by the case cited here) that discovery demands typically will not halt the foreclosure case.
Mr. Bergman, author of the four-volume treatise, Bergman on New York Mortgage Foreclosures, LexisNexis Matthew Bender (rev. 2019), 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.