N.Y. Mortg. Agency v. Braun, 2016–12588

• Decision Date: 13 February 2020
• Docket Number: 2017-06885,Index No. 12921/09,2016–12588
• Citation: 182 A.D.3d 63,119 N.Y.S.3d 522
• Parties: STATE OF NEW YORK MORTGAGE AGENCY, Appellant, v. Yakov BRAUN, Respondent, et al., Defendants.
• Court: New York Supreme Court — Appellate Division

182 A.D.3d 63

119 N.Y.S.3d 522

STATE OF NEW YORK MORTGAGE AGENCY, Appellant,

v.Yakov BRAUN, Respondent, et al., Defendants.

2016–12588

2017-06885

Index No. 12921/09

Supreme Court, Appellate Division, Second Department, New York.

Argued - February 25, 2019

February 13, 2020

OPINION & ORDER

LEVENTHAL, J.

APPEALS by the plaintiff, in an action to foreclose a mortgage, from (1) an order of the Supreme Court (Thomas E. Walsh II, J.), entered October 4, 2016, in Rockland County and (2) an order of the same court entered March 16, 2017. The order entered October 4, 2016, denied the plaintiff's motion pursuant to CPLR 306–b to extend the time to serve the defendant Yakov Braun with the summons and complaint, and pursuant to CPLR 308(5) to direct an alternative method for service of process. The order entered March 16, 2017, insofar as appealed from, denied that branch of the plaintiff's motion which was for leave to renew the prior motion and, in effect, upon reargument, adhered to the original determination.

On these appeals, we agree with the plaintiff that an extension of time to serve a certain defendant was warranted in the interest of justice. In reaching this conclusion, we reject the view that the motion pursuant to CPLR 306–b to extend the time for service, made in a pending action but after the Supreme Court issued an order granting a motion to dismiss based on lack of personal jurisdiction, should have been denied without consideration of its merits.

Factual and Procedural Background

In December 2009, the plaintiff¹ commenced this action to foreclose a residential mortgage against Yakov Braun (hereinafter the defendant) and others. Allegedly, service of the summons and complaint was made on the defendant pursuant to CPLR 308(2) by serving his wife at the subject property on two occasions. Following the defendant's failure to appear in the action or answer the complaint, the Supreme Court issued an order of reference and an amended judgment of foreclosure and sale. The defendant petitioned for relief in the United States Bankruptcy Court, Southern District of New York, but his case was dismissed.

The day before a scheduled foreclosure sale of the subject property, the defendant moved, inter alia, to vacate the judgment of foreclosure and sale and to dismiss the complaint insofar as asserted against him for lack of personal jurisdiction. The Supreme Court, in an order dated December 17, 2013, inter alia, directed a hearing to determine the validity of service of process. The parties presented evidence at the hearing. However, the plaintiff was unable to present the testimony of the process server because he had died prior to the hearing. Thereafter, the court, in an order entered January 22, 2016, granted the defendant's motion to dismiss the complaint insofar as asserted against him for lack of personal jurisdiction.

In or around April 2016, the plaintiff moved, among other things, pursuant to CPLR 306–b to extend the time to serve the defendant with the summons and complaint. In an order entered October 4, 2016, the Supreme Court denied the plaintiff's motion. Subsequently, in an order entered March 16, 2017, the court denied that branch of the plaintiff's motion which was for leave to renew the prior motion and, in effect, upon reargument, adhered to the original determination. The plaintiff appeals from the order entered October 4, 2016, and from the order entered March 16, 2017.

This Appeal

The parties dispute, inter alia, whether the Supreme Court correctly denied that branch of the plaintiff's motion which was pursuant to CPLR 306–b to extend the time to serve the defendant with the summons and complaint.

CPLR 306–b, entitled, "Service of the summons and complaint, summons with notice, third-party summons and complaint, or petition with a notice of petition or order to show cause[,]" provides:

"Service of the summons and complaint, summons with notice, third-party summons and complaint, or petition with a notice of petition or order to show cause shall be made within one hundred twenty days after the commencement of the action or proceeding, provided that in an action or proceeding, except a proceeding commenced under the election law, where the applicable statute of limitations is four months or less, service shall be made not later than fifteen days after the date on which the applicable statute of limitations expires. If service is not made upon a defendant within the time provided in this section, the court, upon motion, shall dismiss the action without prejudice as to that defendant, or upon good cause shown or in the interest of justice, extend the time for service."

Pursuant to CPLR 306–b, a court may, in the exercise of discretion, grant a motion for an extension of time within which to effect service for good cause shown or in the interest of justice (see Leader v. Maroney, Ponzini & Spencer, 97 N.Y.2d 95, 104–105, 736 N.Y.S.2d 291, 761 N.E.2d 1018 ; Bumpus v. New York City Tr. Auth., 66 A.D.3d 26, 31–32, 883 N.Y.S.2d 99 ). " ‘Good cause’ and ‘interest of justice’ are two separate and independent statutory standards" ( Bumpus v. New York City Tr. Auth., 66 A.D.3d at 31, 883 N.Y.S.2d 99 ). "To establish good cause, a plaintiff must demonstrate reasonable diligence in attempting service. Good cause will not exist where a plaintiff fails to make any effort at service ... or fails to make at least a reasonably diligent effort at service. By contrast, good cause may be found to exist where the plaintiff's failure to timely serve process is a result of circumstances beyond the plaintiff's control" ( id. at 31–32, 883 N.Y.S.2d 99 [internal citations omitted] ).

If good cause for an extension is not established, courts must consider the broader interest of justice standard of CPLR 306–b (see Bumpus v. New York City Tr. Auth., 66 A.D.3d at 32, 883 N.Y.S.2d 99 ). In considering the interest of justice standard, "the court may consider diligence, or lack thereof, along with any other relevant factor in making its determination, including expiration of the Statute of Limitations, the meritorious nature of the cause of action, the length of delay in service, the promptness of a plaintiff's request for the extension of time, and prejudice to defendant" ( Leader v. Maroney, Ponzini & Spencer, 97 N.Y.2d at 105–106, 736 N.Y.S.2d 291, 761 N.E.2d 1018 ).

Here, although we reject the plaintiff's contention that it established good cause for an extension (see Estate of Fernandez v. Wyckoff Hgts. Med. Ctr., 162 A.D.3d 742, 743, 80 N.Y.S.3d 271 ), we agree with the plaintiff that an extension of time to serve the defendant with the summons and complaint was warranted in the interest of justice. The action was timely commenced in December 2009, based on the defendant's alleged default that year in paying his indebtedness that was secured by the mortgage. The statute of limitations, however, had expired by the time the plaintiff moved pursuant to CPLR 306–b to extend the time for service (see Estate of Fernandez v. Wyckoff Hgts. Med. Ctr., 162 A.D.3d at 744, 80 N.Y.S.3d 271 ). The defendant had actual notice of the controversy. The Supreme Court, in its order dated December 17, 2013, wrote, among other things, that the defendant "is prepared to say anything and to conceal anything to stave off a foreclosure sale" and that "[i]t is clear that [the defendant] has been well-aware that a foreclosure action was pending. (The day before a previously-scheduled foreclosure sale, [the defendant] filed a Chapter 13 bankruptcy petition)." The plaintiff also demonstrated the existence of a potentially meritorious cause of action, and the lack of identifiable prejudice to the defendant attributable to the delay in service (see Emigrant Bank v. Estate of Robinson, 144 A.D.3d 1084, 1085–1086, 44 N.Y.S.3d 48 ). Moreover, as the interest of justice standard permits consideration of "any other relevant factor" ( Leader v. Maroney, Ponzini & Spencer, 97 N.Y.2d at 105, 736 N.Y.S.2d 291, 761 N.E.2d 1018 ), we take into account that the process server's death prior to the hearing on the issue of service hampered the plaintiff's ability to meet its burden of proof at that hearing. While the plaintiff's lack of promptness in requesting the extension of time weighs against granting the extension, on a careful analysis of the factual setting of the case and a balancing of the competing interests the parties present, we conclude that an extension of time to serve the defendant with process was warranted in the interest of justice. We note that a plaintiff who believes service was properly made has no incentive to move to extend the time to serve until after it has been found that service was, in fact, deficient.

In concluding that an extension of time to serve the defendant was warranted in the interest of justice, we find unpersuasive the defendant's argument that the plaintiff's motion was properly denied because it was made in an action that was no longer pending.

In Cooke–Garrett v. Hoque (109 A.D.3d 457, 970 N.Y.S.2d 81 ), decided in 2013, this Court reversed an order that had denied, as untimely, the plaintiff's motion pursuant to CPLR 306–b to extend the time to serve the defendant, and remitted the matter to the Supreme Court for a determination on the merits. The Supreme Court had issued an order granting the defendant's motion to vacate his default in appearing and answering the complaint on the ground of lack of personal jurisdiction. However, no judgment dismissing the complaint on the ground of lack of personal jurisdiction was entered. The plaintiff subsequently moved to extend her time to serve the defendant. The Supreme Court denied the plaintiff's motion on the ground that its prior order "had dismissed the [instant] action" and, thus, there was no pending action in which to grant an extension of time for service of process ( Cooke–Garrett v. Hoque, 109 A.D.3d at 457, 970 N.Y.S.2d 81 ). On appeal, however, this Court agreed with the...