Clarifying Malicious Prosecution versus Abuse of Process in Mortgage Foreclosures: Stewart v. Fein Such & Crain, LLP

Introduction

Stewart v. Fein Such & Crain, LLP (2025 NYSlipOp 01663) presents a dispute arising from a residential mortgage foreclosure and the subsequent civil claims of malicious prosecution and abuse of process. In 2003, Clarence and Myra Stewart executed a promissory note and mortgage in favor of Citicorp Trust Bank, FSB, which later was assigned to Christiana Trust. Christiana Trust, originally represented by the law firm Fein Such & Crain, LLP (FSC), commenced foreclosure in September 2014. After procedural twists—an order of reference granted in February 2017, vacatur on reargument in August 2017, and voluntary discontinuance in March 2019—the Stewarts sued FSC, Christiana Trust, PennyMac Loan Services (the loan servicer), and related entities for malicious prosecution and abuse of process. The Supreme Court denied the defendants’ CPLR 3211(a) motions to dismiss, and the Appellate Division modified the order by dismissing only the abuse of process claims.

Summary of the Judgment

The Appellate Division, Second Department, affirmed the denial of dismissal of the malicious prosecution causes of action against FSC, Christiana Trust, and PennyMac Loan Services, holding that the Stewarts adequately alleged every element—including initiation without probable cause, malice, favorable termination, and special injury. By contrast, the court held that the abuse of process claims against FSC, Christiana Trust, and PennyMac Loan Services failed for lack of any “perverted use of process to obtain a collateral objective.” Accordingly, the Appellate Division:

Affirmed the denial of dismissal of malicious prosecution claims;
Modified the lower court order by granting dismissal of the abuse of process claims;
Left all other aspects of the motion rulings intact.

Analysis

Precedents Cited

Hughes v. Vento (226 AD3d 753): Set forth the liberal standards for a CPLR 3211(a)(7) motion—accepting all pleaded facts as true and giving the plaintiff all favorable inferences.
Kaufman v. Kaufman (206 AD3d 805): Defined “probable cause” as an absence of any reasonable ground for the proceeding and emphasized that malice may be inferred from lack of probable cause.
Smith-Hunter v. Harvey (95 NY2d 191): Held that a voluntary discontinuance can qualify as a favorable termination for malicious prosecution if circumstances show innocence.
Engel v. CBS, Inc. (93 NY2d 195): Clarified “special injury” by recognizing that mere prosecution is insufficient—some additional burden equivalent to a provisional remedy is required.
Curiano v. Suozzi (63 NY2d 113): Emphasized that abuse of process is distinct from malicious prosecution and requires proof of a collateral objective.

Legal Reasoning

1. Malicious Prosecution The court identified six elements: (1) commencement of a prior proceeding; (2) instigation by the defendant; (3) lack of probable cause; (4) malice; (5) favorable termination; and (6) special injury. The Stewarts alleged that FSC and the lender defendants initiated and continued foreclosure without a genuine default, that they acted with improper motive (inference of malice), and that the case was vacated and discontinued in a manner consistent with their innocence. They also suffered a substantial property burden from the notice of pendency. Documentary evidence submitted by the defendants did not “utterly refute” these allegations as required under CPLR 3211(a)(1).

2. Abuse of Process A cause of action for abuse of process requires: (1) regular issuance of process; (2) intent to harm without justification; and (3) use of process “in a perverted manner” to obtain a collateral objective. Although malice was adequately alleged, the complaint contained no factual allegation that the defendants sought to achieve an objective beyond foreclosure relief—such as harassing the Stewarts into an unrecorded loan modification—after process issuance. Therefore, dismissal of the abuse of process claims was warranted.

Impact

Mortgage servicers and foreclosure counsel will note that a vacated order followed by voluntary discontinuance, under circumstances indicating innocence, can satisfy the “favorable termination” prong for malicious prosecution.
The decision reaffirms that an “abuse of process” claim cannot rest solely on a malicious motive—plaintiffs must identify a collateral aim beyond the relief legitimately sought in the underlying action.
This opinion underscores the high threshold for documentary dismissal under CPLR 3211(a)(1), requiring conclusive refutation of pleaded facts before a court may rule as a matter of law. Lower courts will apply these standards when addressing pre-discovery motions in similar foreclosure-related tort actions.

Complex Concepts Simplified

Probable Cause (in civil context): An objectively reasonable belief in the validity of the claim. Its absence must be glaring; mere uncertainty is insufficient.
Favorable Termination: Either a merits‐based decision exonerating the defendant or a voluntary discontinuance that implies innocence rather than a tactical retreat.
Special Injury: Beyond legal fees and general hardship, it is a specific, identifiable burden—like a lien or notice of pendency—that materially interferes with property rights.
Collateral Objective: An ulterior goal separate from the process’s normal purpose. For abuse of process, plaintiffs must show the defendant used the court process to pressure or coerce for some different benefit.

Conclusion

Stewart v. Fein Such & Crain, LLP clarifies two critical distinctions in New York tort law as applied to mortgage foreclosure litigation. First, it confirms that wrongful foreclosure efforts may support malicious prosecution claims when proceedings terminate in a manner implying the homeowner’s innocence. Second, it draws a clear line between malicious prosecution and abuse of process by demanding proof of a collateral, perverted use of process for the latter. Mortgage servicers, law firms, and litigants must heed these doctrinal contours when evaluating pre-discovery motions and assessing potential tort exposure in foreclosure and related proceedings.