Second Circuit Flexes Rule 62.1: Appellate Remand Permitted After Sua Sponte Indicative Ruling

Introduction

In Gustavia Home LLC v. Hoyer; Hoyer v. Bank of America, the United States Court of Appeals for the Second Circuit dismissed, without prejudice, two related appeals and remanded to the district court after that court issued a sua sponte “indicative ruling” under Federal Rule of Civil Procedure 62.1. Although a “summary order” and therefore formally non-precedential, the decision provides valuable guidance on:

• How a district court may correct an earlier ruling despite the pendency of an appeal;
• The interaction between Rules 62.1 and 12.1 when the indicative ruling is initiated by the court rather than a party;
• The practical consequences for foreclosure litigation in New York when allegedly defective mortgage assignments come to light.

Summary of the Judgment

The Second Circuit:

1. Dismissed both appeals (Nos. 19-471 and 22-1383) without prejudice;
2. Remanded the actions to the Eastern District of New York so that the district court can reconsider its 2019 summary judgment and 2022 denial of injunctive relief;
3. Set out a streamlined mechanism for any party to reinstate the appeal after the district court acts on remand.

Because the underlying summary judgment may be vacated, the court declined to address the substantive challenges raised by the borrowers (Hoyer and Paul) relating to RPAPL §1304 notices and the validity of Gustavia’s mortgage assignment.

Detailed Analysis

1. Precedents Cited

• Griggs v. Provident Consumer Discount Co., 459 U.S. 56 (1982) – Clarifies that filing a notice of appeal divests the district court of jurisdiction over the aspects of the case on appeal.
• Federal Rule of Civil Procedure 62.1 – Authorises a district court, lacking full jurisdiction due to an appeal, to issue an “indicative ruling” stating that it would grant (or thinks there is a substantial issue regarding) a motion if the case were remanded.
• Federal Rule of Appellate Procedure 12.1(b) – Permits the appellate court to remand for the limited purpose stated in the indicative ruling while optionally retaining jurisdiction.
• Retirement Board of the Policemen’s Annuity & Benefit Fund v. Bank of New York Mellon, 775 F.3d 154 (2d Cir. 2014) – Recognised Rule 62.1’s utility where the district court signals willingness to grant relief post-appeal.
• Mendia v. Garcia, 874 F.3d 1118 (9th Cir. 2017) – Cited approvingly for the proposition that an indicative ruling can be considered even in the absence of a formal Rule 62.1 motion.

The panel acknowledged that the Second Circuit had not previously squarely addressed whether a motion is a prerequisite to a Rule 62.1 indicative ruling, but it relied on Mendia and the parties’ post-ruling letters to conclude that the procedural requirement was satisfied or, at a minimum, waived.

2. Legal Reasoning

1. Jurisdictional Framework. Once the borrowers appealed, the district court lacked authority to revisit the foreclosure judgment. Rule 62.1 provides a safety valve: the court may indicate its inclination to grant relief if the appellate court remands. The Second Circuit emphasised its own power under Rule 12.1(b) to remand yet retain jurisdiction.
2. Sua Sponte Indicative Ruling Is Acceptable. Although Rule 62.1 ordinarily contemplates a party’s motion, the district court here acted sua sponte after discovering evidence in the separate “Second Action” casting doubt on the mortgage assignment. The Second Circuit found no barrier to remand because (a) the appellants had expressly endorsed the indicative ruling and (b) Gustavia waived procedural objections.
3. Mootness & Prudence. Deciding the merits of the borrower's RPAPL §1304 claim would risk an advisory opinion if, on remand, the district court ultimately vacates the 2019 foreclosure judgment. Judicial economy therefore favoured dismissal without prejudice.
4. Mechanism for Reinstatement. To protect appellate rights, the panel created an automatic, letter-based reinstatement process, thereby avoiding redundant notices of appeal and docketing fees.

3. Impact of the Judgment

Although non-precedential, the order is likely to be cited for its practical articulation of Rule 62.1/12.1 procedure:

• Appellate Practice. Litigants and district courts within the Second Circuit may rely on this decision when considering whether an indicative ruling, even absent a formal motion, can justify a remand.
• Foreclosure Litigation. The court openly questioned the adequacy of evidence regarding mortgage assignments, underscoring heightened scrutiny of chain-of-title documentation—an issue prevalent in post-2008 foreclosure disputes.
• Bankruptcy–Foreclosure Interface. The timeline illustrates an increasingly common strategy in which borrowers file successive bankruptcy petitions that automatically stay foreclosure and appellate proceedings. The Second Circuit’s order implicitly affirms the importance of bankruptcy-court stay-relief orders to allow foreclosure to proceed.
• Institutional Lending. Lenders should expect that inaccuracies in RPAPL §1304 notices or chain-of-assignment records can derail summary judgment, leading to significant delay and expense.

Complex Concepts Simplified

• Summary Order. An appellate decision without precedential force; it generally resolves the parties’ dispute but does not create binding law.
• Summary Judgment. A procedural device allowing the court to resolve a case without trial when there is no “genuine dispute of material fact.”
• Indicative Ruling (Rule 62.1). A statement by the district court, issued while an appeal is pending, saying it would grant or seriously consider a motion if it had jurisdiction.
• Remand (Rule 12.1). When the appellate court sends the case back to the district court for limited purposes, sometimes while keeping supervisory jurisdiction.
• RPAPL §1304. New York statute requiring a specific 90-day notice to borrowers before a residential mortgage foreclosure can be commenced.
• Automatic Stay. A legal freeze triggered by filing for bankruptcy; it halts most collection and litigation activities against the debtor.

Conclusion

The Second Circuit’s handling of Gustavia Home LLC v. Hoyer is a masterclass in procedural flexibility. By remanding after a sua sponte indicative ruling, the court ensured that potentially erroneous foreclosure relief would not stand unexamined, preserved judicial resources, and established a user-friendly path to reinstate appeals if necessary. The practical lesson is clear: when credible new information surfaces, even post-appeal, Rule 62.1 empowers the district court—and Rule 12.1 empowers the appellate court—to correct the record without forfeiting appellate safeguards. Foreclosure litigants, bankruptcy practitioners, and appellate lawyers alike should take heed of this roadmap for responsive, efficient adjudication.