Plotch v. U.S. Bank: Potential Re-Foreclosure Alone Cannot Bar Quiet Title & Condo-Lien Purchasers Are Not in Privity with the Association

Introduction

Plotch v. U.S. Bank National Association, No. 24-1308-cv, decided by the United States Court of Appeals for the Second Circuit on 16 July 2025, arises from an intricate web of state foreclosure, condo-lien enforcement, and federal quiet-title litigation surrounding a condominium unit and parking space in Queens, New York. The principal actors are:

Adam Plotch – purchaser of the property at a 2016 condominium-lien foreclosure sale;
U.S. Bank, N.A. – current assignee of a 2006 mortgage originally given by non-party Herman Chavez.

After U.S. Bank’s long-pending 2008 state-court mortgage-foreclosure action was restored and culminated in judgment (May 2023), Plotch’s federal quiet-title suit was dismissed on two grounds: (1) the state judgment allegedly bound him through “privity” with the condominium association, and (2) a quiet-title decree would be “premature” because U.S. Bank could still bring a re-foreclosure action under N.Y. R.P.A.P.L. § 1503. The Second Circuit vacated that dismissal, holding that:

Plotch was not in privity with the condo association and therefore not bound by the state judgment; and
The mere prospect of a future § 1503 re-foreclosure claim does not defeat an otherwise proper quiet-title action.

Summary of the Judgment

Reviewing the district court’s summary judgment de novo, the Second Circuit concluded:

No Preclusion. Because Plotch was not a party to the 2008 state foreclosure and lacked privity with the condo association, the 2023 judgment could not extinguish his interest or collaterally estop his federal suit.
Quiet Title Not Barred by Hypothetical Re-Foreclosure. A quiet-title plaintiff need not await a defendant’s discretionary re-foreclosure filing; otherwise, mortgagees could hold the threat of re-foreclosure “over the heads” of junior owners indefinitely.
Remand. The district court must reassess the case—now complicated by an actual re-foreclosure suit filed by U.S. Bank after the federal judgment—determining whether to stay, abstain, or proceed.

Analysis

1. Precedents Cited and Their Influence

McWhite v. I & I Realty Group, LLC, 210 A.D.3d 1069 (2d Dep’t 2022) – Affirms that omission of a necessary party renders a foreclosure judgment void as to that party.
Buechel v. Bain, 97 N.Y.2d 295 (2001) – Sets New York’s rigorous “full and fair opportunity” test for privity-based preclusion, stressing fairness and resolving doubts against estoppel.
Kolel Damsek Eliezer, Inc. v. Schlesinger, 90 A.D.3d 851 (2d Dep’t 2011) & David v. Biondo, 92 N.Y.2d 318 (1998) – Clarify that distinct interests or lack of incentive to litigate defeats privity.
Zuniga v. BAC Home Loans Servicing, L.P., 147 A.D.3d 882 (2d Dep’t 2017) & Mizrahi v. US Bank, N.A., 156 A.D.3d 617 (2d Dep’t 2017) – Define the standards for removing “clouds” on title under § 1501 and how pending foreclosure actions can prevent quiet-title relief.
Federal procedural cases (Jeffreys v. City of New York, Global Network Communications, Inc. v. City of New York, Covington Specialty Ins. Co. v. Indian Lookout Country Club, Inc.) govern summary-judgment review and judicial notice.

The Court synthesized these authorities to conclude that both privity and quiet-title doctrine hinge on equitable considerations—fair notice, opportunity to litigate, and the need to avoid perpetual uncertainty in land titles.

2. The Court’s Legal Reasoning

Privity Analysis.
- The condo association’s role was limited to enforcing its lien for common charges; it never held nor conveyed fee title to Plotch.
- Because Plotch acquired title from a court-appointed referee, not the association, there was no “mutually successive relationship” to the same rights.
- The association had no remaining stake post-sale and thus no incentive to protect Plotch’s distinct fee-simple interest in the state foreclosure.
- Without substitution in state court, Plotch lacked a “full and fair opportunity” to litigate; under Buechel, preclusion would be inequitable.
Quiet Title vs. Re-Foreclosure.
- Section 1501 allows an owner in possession to “smoke out” adverse claims; it is designed to resolve dormancy, not to reward it.
- Re-foreclosure (§ 1503) is permissive and untethered to limitation periods, meaning a mortgagee could delay forever if the mere possibility sufficed to block quiet title.
- The Court refused to create a strategic loophole: only an active, pending, and arguably meritorious re-foreclosure lawsuit can impair quiet-title relief.
- The subsequent filing of the 2024 re-foreclosure action—after the federal judgment—does not retroactively justify dismissal; the district court must now decide procedurally how to coordinate the parallel suits.

3. Impact on Future Litigation

a) Foreclosure & Quiet-Title Strategy.

Junior purchasers (like HOA-sale buyers) gain stronger footing to clear stale mortgages when lenders allow foreclosure actions to languish.
Mortgagees must either vigorously pursue foreclosure—including timely re-foreclosure—or risk title quieted against them.

b) Preclusion Doctrine.

Courts must engage in a granular, fact-specific privity analysis; “same property, different lien” is insufficient.
Parties seeking to bind non-litigants must ensure proper joinder or substitution; failure may leave judgments vulnerable.

c) Federal-State Interaction.

The decision underscores federal courts’ willingness to adjudicate quiet-title claims even amid related state proceedings, unless traditional abstention doctrines compel deference.
District judges are reminded to consider stays or abstention after assessing federal jurisdiction and parties’ rights, not as a shortcut to dismissal.

Complex Concepts Simplified

Quiet Title (R.P.A.P.L. § 1501). A lawsuit by someone in possession of property asking a court to declare that no other person has a valid claim—essentially “prove it or lose it.”
Re-Foreclosure (R.P.A.P.L. § 1503). A special action allowing a mortgagee to “clean up” a prior foreclosure that missed junior interests; there is no statute of limitations for this remedy.
Privity. A legal relationship so close that one person’s rights are deemed represented by another in prior litigation; necessary to bind non-parties to judgments.
Notice of Pendency (Lis Pendens). A public filing alerting buyers that real-property litigation is underway; expires after three years unless renewed (CPLR § 6513).
Statute of Limitations for Foreclosure. In New York, six years from acceleration of the loan (CPLR § 213(4)); restarting the clock often requires de-acceleration.
Summary Order (2d Cir. R. 32.1.1). A non-precedential disposition, citable for its persuasive value but not binding like a published opinion.

Conclusion

The Second Circuit’s decision in Plotch v. U.S. Bank provides two pivotal clarifications in New York mortgage and title litigation:

Purchasers at junior-lien foreclosure sales are not automatically in privity with the lienholder; absent substitution or other procedural safeguards, they cannot be bound by prior mortgage-foreclosure judgments.
The threat of a future, discretionary re-foreclosure action does not defeat a quiet-title claim; mortgagees must bring such actions promptly or risk losing their security interests as clouds on title.

Although issued as a non-precedential “summary order,” the Court’s thorough reasoning is likely to influence both federal and state courts confronting the increasingly common clash between dormant mortgages and purchasers seeking marketable title. Practitioners should move swiftly to join all necessary parties in foreclosure suits, renew lis pendens filings, and prosecute or defend re-foreclosure claims without delay—lest their clients’ rights be deemed “potential but inactive” and therefore insufficient to survive a quiet-title challenge.