Documented “Actually Incurred” Foreclosure Attorneys’ Fees Must Be Awarded in a Reasonable Amount—Arbitrary Reductions Are an Improvident Exercise of Discretion

1. Introduction

Case: JPMorgan Chase Bank, N.A. v Carl, 2026 NY Slip Op 02833 (2d Dept May 6, 2026).
Parties: Plaintiff-lender JPMorgan Chase Bank, N.A. (cross-appellant) and borrowers Bernard J. Carl and Joan T. Carl (appellants).
Context: A mortgage foreclosure arising from a 2007 $12,000,000 home equity line of credit (HELOC) secured in part by Southampton real property.

The appeal presented recurring foreclosure issues: (i) what proof suffices for summary judgment on default; (ii) whether borrower counterclaims are time-barred or preempted; (iii) whether summary judgment is premature due to outstanding discovery; (iv) standards for confirming a referee’s computation; and (v) critically, how courts should assess contractual attorneys’ fees in foreclosure—especially where the lender documents fees “actually incurred,” yet the trial court drastically reduces the award.

2. Summary of the Opinion

The Second Department largely affirmed the foreclosure judgment: it upheld summary judgment for the lender, the striking of the borrowers’ defenses and counterclaims, denial of discovery/leave to amend, confirmation of the referee’s report, and entry of the judgment of foreclosure and sale. However, it modified the judgment on the lender’s cross-appeal by increasing attorneys’ fees from $5,000 to $40,000, holding the Supreme Court improvidently exercised its discretion by awarding only $5,000 despite unrebutted documentation showing $40,000 was reasonable for the work performed.

3. Analysis

A. Precedents Cited

  • HSBC Bank USA, N.A. v Bhatti, 186 AD3d 817 (2020) and Aurora Loan Servs., LLC v Baritz, 144 AD3d 618 (2016)
    Role in decision: These cases supply the standard prima facie foreclosure showing on summary judgment: production of the mortgage, unpaid note (or credit instrument), and evidence of default. The court used them to frame what the lender had to prove before the burden shifted to defendants.
  • Bank of N.Y. Mellon v Gordon, 171 AD3d 197 (2019) (quoting Viviane Etienne Med. Care, P.C. v Country- Wide Ins. Co., 25 NY3d 498 (2015))
    Role in decision: These authorities clarify acceptable methods of proving default in admissible form—e.g., admissions via notice to admit, affidavits by persons with personal knowledge, or other admissible evidence. The court used this framework to validate the lender’s affidavit-and-records proof.
  • Bank of Am., N.A. v Bente, 237 AD3d 1017 (2025) and Citigroup v Kopelowitz, 147 AD3d 1014 (2017)
    Role in decision: These cases support reliance on business records attached to an affiant’s submission to establish default. The court cited them to reject the borrowers’ argument that the affidavit was deficient: the records were attached and “evinced the defendants’ default.”
  • Fandy Corp. v Lung-Fong Chen, 262 AD2d 352 (1999) (and CPLR 213[1])
    Role in decision: The court relied on this line of authority to hold the misrepresentation counterclaims time-barred where the alleged misstatements occurred in March 2008—more than six years before the May 2018 commencement.
  • Hines v MicroBilt Corp., 237 AD3d 1070 (2025) and Macpherson v JPMorgan Chase Bank, N.A., 665 F3d 45 (2011)
    Role in decision: These cases underpin federal preemption analysis under the Fair Credit Reporting Act (FCRA). The court used them to dismiss the borrowers’ “false reporting to credit agencies” counterclaim as preempted by federal law.
  • Dalrymple v Morocho, 208 AD3d 751 (2022) (and CPLR 3212[f])
    Role in decision: This authority supports denial of “premature” objections to summary judgment where the opponent cannot show an evidentiary basis that discovery will yield relevant evidence, or that essential facts are solely within the movant’s control.
  • HSBC Bank USA, N.A. v Cherestal, 178 AD3d 680 (2019); Bank of N.Y. Mellon v Conforti, 209 AD3d 942 (2022); U.S. Bank N.A. v Sheth, 177 AD3d 1018 (2019)
    Role in decision: These cases provide the confirmation standard for a referee’s report: confirmation is appropriate when findings are substantially supported by the record and issues are clearly defined/resolved. The court used them to affirm confirmation of the computation of sums due.
  • People's United Bank v Patio Gardens III, LLC, 143 AD3d 689 (2016)
    Role in decision: This is the core fee-enforcement principle: contractual mortgage fees are enforceable only to the extent they are “reasonable and warranted for the services actually rendered.” The court invoked it to reject the trial court’s steep reduction.
  • Parker Waichman, LLP v Mauro, 215 AD3d 869 (2023)
    Role in decision: This case lists the fee-setting factors—time/labor, difficulty, skill, and effectiveness—used to evaluate reasonableness. The court used these factors to assess the lender’s submissions.
  • McCormick 110, LLC v Gordon, 200 AD3d 672 (2021) and GS Brooklyn Apts., LLC v Roberts, 176 AD3d 689 (2019)
    Role in decision: These decisions support awarding fees consistent with documented work and billing where the amount is reasonable. The court relied on them to justify $40,000 as a reasonable fee on this record.

B. Legal Reasoning

  1. Foreclosure summary judgment proof of default (business-records-based affidavit).
    The lender’s evidentiary package—HELOC agreement, mortgage, business records, and an affidavit from Alicia Hernandez—established (i) the borrowers drew advances up to the $12 million limit and (ii) failed to pay the credit line in full at maturity. Critically, the court emphasized a practical evidentiary point: the business records Hernandez relied upon were attached and themselves demonstrated default. With that prima facie showing made, the defendants failed to raise a triable issue of fact.
  2. Counterclaims: limitations and federal preemption.
    The first two counterclaims (intentional and negligent misrepresentation) were premised on March 2008 misrepresentations. Applying the six-year period referenced by the court (CPLR 213[1]), the Second Department held the claims time-barred because suit began in May 2018. The third counterclaim (false reporting to credit agencies) was dismissed because the allegations were preempted by the FCRA.
  3. “Premature” summary judgment and CPLR 3212(f).
    The borrowers’ effort to defer summary judgment via discovery failed because they did not provide an evidentiary basis that further discovery would yield material facts, nor that such facts were uniquely within the lender’s control—requirements highlighted by the court’s CPLR 3212(f) analysis.
  4. Confirmation of referee’s report.
    The court applied the “substantially supported by the record” standard and found the computation of the amount due under the HELOC supported. Thus, confirmation and entry of the foreclosure and sale judgment were proper.
  5. Attorneys’ fees: the key modification.
    The agreement authorized the lender to collect attorneys’ fees “actually incurred.” The lender submitted attorney affirmations and invoices showing $40,000 in fees and supporting its reasonableness under recognized factors (time/labor, difficulty, skill, effectiveness). The Second Department held the trial court improvidently exercised discretion by awarding only $5,000 and modified the judgment to award $40,000.

    Practical doctrinal point: While trial courts have discretion over the amount of a “reasonable” fee, that discretion is constrained by the record. Where the movant supplies competent documentation of fees actually incurred and their reasonableness—and the reduction is not anchored in record-based findings—appellate correction is warranted.

C. Impact

  • Fee applications in foreclosure: The decision reinforces that contractual fee clauses are not an invitation to nominal awards. If a lender substantiates “actually incurred” fees with detailed billing and contextual attorney affirmations, a severe, unexplained haircut risks reversal as an improvident exercise of discretion.
  • Defense strategy and discovery: Borrowers opposing summary judgment must do more than request discovery; they must articulate (with evidentiary support) what discoverable facts exist, why they are material, and why they are within the lender’s exclusive control.
  • Counterclaims in foreclosure pleadings: The opinion highlights two frequent pitfalls—limitations periods for misrepresentation-based claims tied to origination-era events, and FCRA preemption for credit-reporting allegations—both of which can streamline foreclosure cases by narrowing ancillary disputes.
  • Referee confirmation: The decision continues the Second Department’s consistent approach: absent record-based defects, referee computations will be confirmed, making the earlier summary-judgment phase the critical battleground.

4. Complex Concepts Simplified

Summary judgment (CPLR 3212)
A procedural device to win without trial by showing there is no genuine factual dispute requiring a factfinder; the opponent must then show a real, material dispute.
Business records proof of default
Payment histories and account records kept in the ordinary course of business can prove default if properly supported (often by an affiant familiar with recordkeeping) and presented in admissible form—here, attached and demonstrative of default.
CPLR 3212(f) (“facts essential to justify opposition”)
A rule allowing a party to resist summary judgment as “premature” if it shows that essential facts are unavailable and likely exist, often because they are within the movant’s exclusive knowledge; mere hope that discovery helps is insufficient.
Statute of limitations (CPLR 213[1] as applied here)
A time limit for bringing claims; if the alleged wrongdoing occurred outside the limitations period, the claim is dismissed regardless of merits.
FCRA preemption
Federal law can displace (preempt) state-law claims in certain areas; for certain credit-reporting conduct, the FCRA limits state-law causes of action, leading to dismissal of overlapping state claims.
Order of reference / referee’s report
In foreclosure, a referee is often appointed to calculate the amount due. The court confirms the report if supported by the record, enabling entry of a foreclosure and sale judgment.
“Reasonable” attorneys’ fees actually incurred
Even if a contract allows fee-shifting, the court awards only fees that are reasonable for the work performed, typically assessed using time/labor, difficulty, skill, and effectiveness—and supported by billing records and attorney affirmations.

5. Conclusion

JPMorgan Chase Bank, N.A. v Carl affirms standard foreclosure mechanics—business-records proof of default, dismissal of stale or preempted counterclaims, denial of speculative discovery requests, and confirmation of referee computations—but its most consequential holding is remedial and practical: where a mortgage or credit agreement authorizes recovery of attorneys’ fees actually incurred, and the lender substantiates a reasonable amount with affirmations and invoices, a nominal, unsupported fee award may constitute an improvident exercise of discretion subject to appellate modification. The decision thus strengthens record-driven fee adjudication in New York foreclosure practice.