Tolling CPLR 3215(c) During CPLR 3408 Settlement Conferences in Mortgage Foreclosures

Introduction

In Bank of Am., N.A. v Keefer (2026 NY Slip Op 00231), the Appellate Division, Second Department addressed two recurring foreclosure issues: (1) strict compliance with RPAPL 1304’s 90-day pre-foreclosure notice requirement, and (2) whether—and how—CPLR 3215(c)’s one-year “abandonment” clock for seeking a default judgment runs while mandatory foreclosure settlement conferences are pending under CPLR 3408.

The plaintiff lender, Bank of America, commenced a 2013 mortgage foreclosure against co-borrowers James E. Keefer, Jr. (who answered and asserted RPAPL 1304 noncompliance) and Lynn Marie Keefer (who defaulted). After years of motion practice, the Supreme Court (Suffolk County) dismissed the complaint against James Keefer for RPAPL 1304 defects and, later, denied the lender’s request for a default judgment against Lynn Keefer and sua sponte dismissed the complaint against her as abandoned under CPLR 3215(c). The plaintiff appealed.

Summary of the Opinion

  • As to James Keefer: Affirmed dismissal. The court held the lender failed to strictly comply with RPAPL 1304 because it mailed a single 90-day notice jointly addressed to both borrowers in one envelope.
  • As to Lynn Keefer: Modified. The court held the Supreme Court erred by sua sponte dismissing the claim under CPLR 3215(c) because the one-year deadline was tolled during the pendency of mandatory settlement conferences (CPLR 3408[n]). The Second Department further held the lender made the showing required by CPLR 3215(f) and was entitled to leave to enter a default judgment against Lynn Keefer.
  • Procedural clarifications: The appeal from the October 5, 2023 order was dismissed as superseded by the February 20, 2024 order on reargument; the court treated the notice of appeal from the sua sponte dismissal portion as an application for leave to appeal and granted leave (CPLR 5701[c]).

Analysis

Precedents Cited

1) RPAPL 1304: Strict compliance; separate mailing requirements; no joint envelope

  • Citibank, N.A. v Conti-Scheurer, 172 AD3d 17: Cited for the foundational rule that “Strict compliance with RPAPL 1304 notice to the borrower or borrowers is a condition precedent to the commencement of a foreclosure action.” This frames RPAPL 1304 not as a technicality, but as a gatekeeping prerequisite to suit.
  • Wells Fargo Bank, N.A. v Yapkowitz, 199 AD3d 126: The key authority relied upon for the proposition that “the mailing of a 90-day notice jointly addressed to two or more borrowers in a single envelope is not sufficient” under RPAPL 1304. This case supplies the specific rule the court applies to the Kiefers’ facts.
  • Capital One, N.A. v Hunter, 236 AD3d 980; U.S. Bank N.A. v Reddy, 220 AD3d 967; Deutsche Bank Natl. Trust Co. v Loayza, 204 AD3d 753: Cited as consistent Second Department applications of Yapkowitz, reinforcing that the “single-envelope, multiple-borrower” practice is a recurring and dispositive RPAPL 1304 defect.

2) CPLR 3215(c): Mandatory dismissal, sua sponte authority, and tolling during CPLR 3408

  • Giglio v NTIMP, Inc., 86 AD3d 301: Cited for the interpretation that CPLR 3215(c) is “mandatory” in the first instance—courts “shall” dismiss if the plaintiff fails to seek a default judgment within one year—underscoring that abandonment is not a discretionary concept once the statutory prerequisites are met.
  • Ocwen Loan Servicing, LLC v Buonauro, 233 AD3d 972: Cited alongside Giglio to confirm the mandatory nature of CPLR 3215(c) where the one-year period has truly expired without sufficient cause.
  • Deutsche Bank Natl. Trust Co. v O'Connor, 223 AD3d 872; Cumanet, LLC v Murad, 188 AD3d 1149: These cases supply the crucial tolling principle: CPLR 3408(n) requires that motions be held in abeyance during the settlement conference process, and the Second Department has interpreted that to toll CPLR 3215(c)’s one-year deadline while conferences are pending.
  • Federal Natl. Mtge. Assn. v Vivenzio, 229 AD3d 510; Bank of Am., N.A. v Bhola, 219 AD3d 430; Cumanet, LLC v Murad, 188 AD3d 1149: Cited for the application of the tolling analysis and for measuring timeliness by “taking into account the toll” during settlement conferences.

3) Default judgment proof requirements

  • Pemberton v Montoya, 216 AD3d 988: Cited for CPLR 3215(f)’s evidentiary requirements: proof of service, proof of the facts constituting the claim, and proof of default.
  • Woodson v Mendon Leasing Corp., 100 NY2d 62: Cited for the effect of default: a defaulting defendant is deemed to have admitted the complaint’s factual allegations, supporting the conclusion that the lender’s submissions sufficed to obtain leave for default judgment.

Legal Reasoning

1) RPAPL 1304: A condition precedent defeated by a single-envelope notice

The court treated RPAPL 1304 compliance as a threshold issue: because strict compliance is a condition precedent, noncompliance is fatal to the foreclosure claim against an answering borrower who properly raises the defense. The dispositive fact was not merely that notice was sent, but how it was sent—one 90-day notice, jointly addressed to James Keefer and Lynn Keefer, in a single envelope. Under Wells Fargo Bank, N.A. v Yapkowitz and its progeny, that mailing method fails RPAPL 1304(2)’s “separate envelope” requirement, warranting dismissal as to James Keefer.

2) CPLR 3215(c): Sua sponte dismissal power exists, but the one-year clock is tolled in CPLR 3408 cases

The opinion draws a careful distinction between (a) the court’s authority and (b) the factual/legal predicate for using it. First, the Second Department agreed with the lender that CPLR 3215(c) expressly authorizes dismissal “upon its own initiative,” rejecting any argument that sua sponte action is improper as a category.

However, the court held that dismissal was not warranted on this record because the case was subject to mandatory settlement conferences, and CPLR 3408(n) requires motions to be held in abeyance while that process is ongoing (also reflected in 22 NYCRR 202.12-a[c][7]). Consistent with Deutsche Bank Natl. Trust Co. v O'Connor and Cumanet, LLC v Murad, the Second Department treated the settlement-conference period as tolling the CPLR 3215(c) one-year deadline. Once tolling was applied, the lender’s motion—made about seven months after release from the settlement part—was timely, so abandonment dismissal could not stand.

3) Entitlement to leave to enter default judgment against Lynn Keefer

Having concluded the claim was not abandoned, the court assessed whether the lender satisfied CPLR 3215(f). Applying Pemberton v Montoya and Woodson v Mendon Leasing Corp., it held the lender established proof of service, proof of the claim, and proof of default, and that Lynn Keefer’s default deemed the complaint’s factual allegations admitted. Accordingly, upon reargument, the Supreme Court should have granted leave to enter a default judgment against Lynn Keefer.

Impact

  • Foreclosure notice practice: The decision reinforces a bright-line mailing rule in the Second Department: lenders must send RPAPL 1304 notices in a manner that complies with the “separate envelope” mandate, and a joint notice to multiple borrowers in one envelope remains a litigation-ending defect as to an answering borrower.
  • Default-judgment timing in CPLR 3408 cases: The most practice-shaping portion is the reaffirmation that CPLR 3215(c)’s one-year period is tolled while mandatory settlement conferences are pending. This narrows the circumstances in which courts may properly dismiss foreclosure claims as abandoned against defaulting defendants when the case has been in the settlement part.
  • Sua sponte dismissal remains available—but fact-sensitive: Trial courts retain authority to raise CPLR 3215(c) on their own initiative, but they must account for CPLR 3408(n) tolling before concluding that a claim is abandoned.
  • Case management and motion sequencing: The decision implicitly encourages accurate docket accounting: release dates from the settlement part and the duration of conferences may be outcome-determinative on abandonment disputes.

Complex Concepts Simplified

RPAPL 1304 “condition precedent” and “strict compliance”
A “condition precedent” is a legal prerequisite. In foreclosure of a “home loan,” the lender must properly send a 90-day notice before suing. “Strict compliance” means substantial compliance is not enough—technical mailing requirements matter.
“Separate envelope” under RPAPL 1304(2)
The statute requires specific mailing methods and that the notice be sent “in a separate envelope from any other mailing or notice.” The Second Department’s case law (applied here) treats a single envelope addressed to multiple borrowers as noncompliant.
CPLR 3215(c) “abandonment”
If a defendant defaults and the plaintiff does not seek a default judgment within one year, the court generally must dismiss the claim as “abandoned,” unless sufficient cause is shown.
“Sua sponte”
The court acts on its own, without a motion by either party. CPLR 3215(c) expressly allows this in appropriate circumstances.
CPLR 3408(n) tolling during mandatory settlement conferences
In residential foreclosure cases, courts hold settlement conferences. While that process is ongoing, motions are held in abeyance, and the Second Department treats that period as pausing (“tolling”) the one-year clock under CPLR 3215(c).
“Leave to enter a default judgment” vs. “order of reference”
“Leave to enter a default judgment” is permission to obtain judgment against a non-answering defendant after proving service, the claim, and the default. An “order of reference” is a foreclosure-specific step appointing a referee to compute amounts due.

Conclusion

Bank of Am., N.A. v Keefer delivers two clear messages. First, RPAPL 1304 remains unforgiving: sending a single 90-day notice jointly addressed to multiple borrowers in one envelope defeats strict compliance and supports dismissal as to an answering borrower. Second, and more procedurally significant, CPLR 3215(c)’s one-year deadline for seeking a default judgment is tolled while mandatory CPLR 3408 settlement conferences are pending; courts may act sua sponte under CPLR 3215(c), but only after correctly accounting for that tolling. The result is a split outcome: dismissal against the answering borrower stands, while the defaulting borrower remains in the case and is subject to entry of default judgment upon the lender’s timely motion.