U.S. BANK, NAT'L. ASS. v. EMMANUEL

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Docket Number

No. 2010-06490.

Attorney(S)

Hogan Lovells US, LLP, New York, N.Y. (David Dunn, Allison J. Schoenthal, Renee Garcia, and Tracy L. Hresko of counsel), for appellant.

Judges

Mark C. Dillon
Ruth C. Balkin
Randall T. Eng

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Smart Summary

Factual and Procedural Background

The defendant, Arriana Emmanuel, defaulted on her mortgage loan. On July 30, 2009, the plaintiff, U.S. Bank, National Association, allegedly the holder of the mortgage and note, commenced a foreclosure action. In January 2010, the plaintiff moved ex parte pursuant to CPLR 314 and 315 to direct service upon the defendant by publication and sought other related relief. The Supreme Court, Kings County, denied the plaintiff’s motion without considering its merits and, on its own initiative, dismissed the complaint with prejudice and cancelled the notice of pendency, concluding that the plaintiff lacked standing to commence the action. The plaintiff appealed these rulings.

Legal Issues Presented

Whether the Supreme Court properly denied the plaintiff’s ex parte motion for service by publication under CPLR 314 and 315.
Whether the Supreme Court properly dismissed the complaint with prejudice sua sponte and cancelled the notice of pendency based on the plaintiff’s alleged lack of standing.

Arguments of the Parties

The opinion does not contain a detailed account of the parties' legal arguments.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
Dime Sav. Bank of N.Y. v. Mancini, 184 AD2d 989, 990	Supports service by publication when defendant evades service and due diligence is shown	Used to affirm that service by publication was appropriate under the circumstances
Contimortgage Corp. v. Isler, 48 AD3d 732, 734-735	Supports the propriety of service by publication in mortgage foreclosure cases	Referenced to bolster the appropriateness of granting service by publication
State St. Bank Trust Co. v. Coakley, 16 AD3d 403	Addresses standards for service by publication in foreclosure actions	Applied to confirm the plaintiff’s right to service by publication
OCI Mtge. Corp. v. Murphy, 258 AD2d 633	Supports service by publication where defendant evades service	Used to affirm the correctness of granting service by publication
HSBC Bank USA, N.A. v. Valentin, 72 AD3d 1027, 1029-1030	Limits the court’s power to dismiss complaints sua sponte to extraordinary circumstances	Applied to find that dismissal with prejudice was improvident absent extraordinary circumstances
Rienzi v. Rienzi, 23 AD3d 450	Establishes that sua sponte dismissal is reserved for extraordinary cases	Referenced to support that dismissal was unwarranted in this case
Wells Fargo Bank Minn., N.A. v. Mastropaolo, 42 AD3d 239, 243-244	Lack of standing is not a jurisdictional defect justifying sua sponte dismissal	Used to reject the Supreme Court’s dismissal based on plaintiff’s alleged lack of standing

Court's Reasoning and Analysis

The court analyzed the plaintiff’s proof submitted in support of its ex parte motion and found it demonstrated due diligence in attempting service by other methods and that the defendant was evading service. Under CPLR 314 and 315, this justified service by publication. The Supreme Court’s denial of the motion without considering its merits was therefore improper.

Regarding the sua sponte dismissal of the complaint with prejudice and cancellation of the notice of pendency, the appellate court emphasized that such dismissal is a drastic remedy reserved for extraordinary circumstances, which were not present here. The Supreme Court had not been presented with any extraordinary facts warranting dismissal. Instead, it dismissed the complaint based on the plaintiff’s alleged lack of standing, which the appellate court held is not a jurisdictional defect and does not justify sua sponte dismissal. Consequently, the dismissal was an improvident exercise of discretion.

Holding and Implications

The court REVERSED the order insofar as it denied the plaintiff’s ex parte motion and dismissed the complaint with prejudice. The ex parte motion for service by publication pursuant to CPLR 314 and 315 was granted. The dismissal of the complaint and cancellation of the notice of pendency were vacated.

The direct effect of this decision is to allow the plaintiff to proceed with the foreclosure action and serve the defendant by publication. The opinion does not establish new precedent but clarifies that lack of standing is not a jurisdictional defect warranting sua sponte dismissal and underscores the limited circumstances under which a court may dismiss a complaint on its own motion.

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U.S. BANK, NATIONAL ASSOCIATION, Appellant, v. ARRIANA EMMANUEL et al., Defendants.

Ordered that on the Court's own motion, the appeal from so much of the order as denied the plaintiffs ex parte motion is deemed an application pursuant to CPLR 5704 (a) to vacate so much of the order as denied the ex parte motion; and it is further,

Ordered that on the Court's own motion, the appeal from so much of the order as, sua sponte, dismissed the complaint with prejudice is deemed an application for leave to appeal from that portion of the order, and leave to appeal is granted ( see CPLR 5701 [c]); and it is further,

Ordered that the order is reversed insofar as appealed from, on the law, on the facts, and in the exercise of discretion, without costs or disbursements; and it is further,

Ordered that the application pursuant to CPLR 5704 (a) is granted, without costs or disbursements, and the ex parte motion pursuant to CPLR 314 and 315 is granted.

The defendant Arriana Emmanuel (hereinafter the defendant) defaulted on her mortgage loan. On July 30, 2009, the plaintiff, allegedly the holder of the mortgage and note, commenced this action to foreclose the mortgage. In January 2010 the plaintiff moved ex parte pursuant to CPLR 314 and 315 to direct service upon the defendant by publication and for certain other related relief. The Supreme Court denied the motion without considering its merits and, sua sponte, directed the dismissal of the complaint with prejudice and cancelled the notice of pendency, concluding that the plaintiff lacked standing to commence the action. We reverse the order insofar as appealed from.

The proof submitted by the plaintiff in support of its motion demonstrated that service could not be made upon the defendant by another prescribed method with due diligence ( see CPLR 315) and that she was evading service. Under these circumstances, the Supreme Court should have granted the ex parte motion, inter alia, for service by publication ( see Dime Sav. Bank of N.Y. v Mancini, 184 AD2d 989, 990; cf. Contimortgage Corp. v Isler, 48 AD3d 732, 734-735; State St. Bank Trust Co. v Coakley, 16 AD3d 403; OCI Mtge. Corp. v Murphy, 258 AD2d 633).

The Supreme Court improvidently exercised its discretion in, sua sponte, directing the dismissal of the complaint with prejudice and cancelling the notice of pendency ( see HSBC Bank USA, N.A. v Valentin, 72 AD3d 1027, 1029-1030). A court's power to dismiss a complaint, sua sponte, is to be used sparingly and only when extraordinary circumstances exist to warrant dismissal ( see Rienzi v Rienzi, 23 AD3d 450). Here, the Supreme Court was not presented with any extraordinary circumstances warranting dismissal of the complaint. Rather, the plaintiff made an ex parte motion, inter alia, to direct service upon the defendant by publication. Rather than addressing the motion on its merits, the Supreme Court, sua sponte, directed dismissal of the complaint with prejudice and cancelled the notice of pendency, finding that the plaintiff lacked standing. Contrary to the Supreme Court's determination, a party's lack of standing does not constitute a jurisdictional defect and does not warrant a sua sponte dismissal of the complaint by the court ( see Wells Fargo Bank Minn., N.A. v Mastropaolo, 42 AD3d 239, 243-244).

[Prior Case History: 27 Misc 3d 1220(A), 2010 NY Slip Op 50819(U).]