Pennymac Corp. v. Shelby

• Citation: 190 A.D.3d 759,140 N.Y.S.3d 116
• Decision Date: 13 January 2021
• Docket Number: Index No. 511826/14,2018–02792
• Parties: PENNYMAC CORP., appellant, v. Elliot SHELBY, respondent, et al., defendants.
• Court: New York Supreme Court Appellate Division

190 A.D.3d 759

140 N.Y.S.3d 116

PENNYMAC CORP., appellant,

v.Elliot SHELBY, respondent, et al., defendants.

2018–02792

Index No. 511826/14

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

Argued—March 27, 2020

January 13, 2021

Zeichner Ellman & Krause LLP, New York, N.Y. (Philip S. Rosen of counsel), for appellant.

Oved & Oved LLP, New York, N.Y. (Jonathan A. Lynn of counsel), for respondent.

WILLIAM F. MASTRO, A.P.J., ROBERT J. MILLER, COLLEEN D. DUFFY, VALERIE BRATHWAITE NELSON, JJ.

DECISION & ORDER

In an action to foreclose a mortgage, the plaintiff appeals from an order of the Supreme Court, Kings County (Noach Dear, J.), dated December 19, 2017. The order denied the plaintiff's motion for leave to enter a default judgment against the defendant Elliot Shelby and for an order of reference, and granted the cross motion of the defendant Elliot Shelby pursuant to CPLR 3012(d) to compel the plaintiff to accept a late answer.

ORDERED that the order is affirmed, with costs.

In November 2014, the plaintiff commenced this action against, among others, the defendant Elliot Shelby (hereinafter the defendant) to foreclose on a mortgage on certain real property in Brooklyn. A prior foreclosure action had been commenced in 2006 against the defendant, among others, by the plaintiff's predecessor in interest involving the same mortgage and property as this action, but was dismissed in July 2014 for failure to prosecute.

Without answering, the defendant moved in June 2015 to dismiss the complaint in this action insofar as asserted against him as time-barred. In April 2016, the Supreme Court denied the motion as untimely filed and, in June 2017, denied the defendant's motion for leave to reargue.

Thereafter, the defendant attempted to serve an answer on the plaintiff. The plaintiff rejected the defendant's answer as untimely, and immediately moved for leave to enter a default judgment against the defendant and for an order of reference. The defendant then cross-moved pursuant to 3012(d) to compel the plaintiff to accept his late answer. In an order dated December 19, 2017, the Supreme Court denied the plaintiff's motion and granted the defendant's cross motion. The plaintiff appeals.

In order to avoid the entry of a default judgment upon his failure to answer, the defendant was required to demonstrate both a reasonable excuse for the default and a potentially meritorious defense to the action (see DeStaso v. Bottiglieri, 52 A.D.3d 453, 454, 861 N.Y.S.2d 676 ). The determination of what constitutes a reasonable excuse lies within the Supreme Court's discretion (see Corvera v. Prime Source Dev., LLC, 172 A.D.3d 1161, 1163, 101 N.Y.S.3d 395 ), and should be based on all relevant factors, including the extent of the delay, whether there has been prejudice to the opposing party, whether there has been willfulness, and the strong public policy in favor of resolving cases on the merits (see Rekhtman v. Clarendon Holding Co., Inc., 165 A.D.3d 856, 857–858, 84 N.Y.S.3d 558 ).

Here, the defendant demonstrated a reasonable excuse for his delay in answering the complaint, as his counsel acted reasonably in relying upon the oral assurances of opposing counsel permitting service of a late answer (see Saltzman v. Knockout Chem. & Equip. Co., 108 A.D.2d 908, 908, 485 N.Y.S.2d 794 ; see also DeStaso v. Bottiglieri, 52 A.D.3d at 454–455, 861 N.Y.S.2d 676 ), and there is no evidence that the plaintiff was prejudiced by the defendant's delay in answering (see McKiernan v. Vaccaro, 168 A.D.3d 826, 827, 90 N.Y.S.3d 292 ; Jong Gwon Kim v. Strippoli, 144 A.D.3d 982, 984, 42 N.Y.S.3d 245 ).

In addition, the defendant's st...