The Second Department had something to say about that
A New York appeals court has revived a Deutsche Bank foreclosure that a trial judge threw out - even though the lender met every filing deadline the court set.
The Appellate Division, Second Department reversed the dismissal on September 16, finding the trial court had no business tossing the case on its own initiative. The ruling hands Deutsche Bank National Trust Company a default judgment against the borrowers and puts the foreclosure back on track.
The case dates to November 2016, when Deutsche Bank filed to foreclose on a property in Flushing, Queens. The borrowers never responded to the complaint and never showed up to the settlement conference.
From there, things got procedurally messy. After a May 2017 conference, the court ordered Deutsche Bank to file a certificate of merit and apply for an order of reference - a procedural step that moves a foreclosure toward auction - by July 25. The bank filed everything on time.
The court denied the application anyway, with leave to refile. Then a court attorney referee issued an August 11, 2017 report that acknowledged the bank had appeared at both the May and July conferences but faulted it for supposedly missing the filing deadline "without good cause shown." The referee recommended the whole case be dismissed.
Justice Marguerite A. Grays adopted the report and threw out the foreclosure without prejudice on August 30, 2017 - acting on her own motion, without either party asking for dismissal.
Nearly two years later, Deutsche Bank moved to vacate the dismissal, enter default judgment against the absent borrowers, and get the order of reference it had been seeking all along. Justice Pam Jackman Brown denied those requests in January 2020.
The Second Department disagreed. A court's power to dismiss a case on its own motion "is to be used sparingly and only when extraordinary circumstances exist," the panel wrote. Since Deutsche Bank had complied with the July 25 deadline, those circumstances were not present. The appeals court added that "any failure on the part of the plaintiff to comply with the directive in the status conference order to file an application for an order of reference was not a sufficient ground upon which to direct dismissal of this action."
The borrower's opposition also fell short of defeating the presumption of proper service, clearing the path for default judgment.
For servicers and foreclosure counsel navigating New York's notoriously slow pipeline, the case is a straightforward reminder: keep your filings airtight, because appellate courts will correct trial judges who penalize lenders for procedural missteps that never actually happened.
