Can Foreclosure Be Dismissed When Plaintiff Does Not Appear At Settlement Conference?

A new case says “no” – under interesting and revealing circumstances.  [Bayview Loan Servicing, LC v. Martano, 131 A.D.3d 1187, 18 N.Y.S.3d 71 (2d Dept. 2015).]

Lenders and servicers recognize what an ordeal the settlement conference process presents.  First, it is fertile ground for delay of the case, readily adding three months to a year – or more – to duration of the action.  While a foreclosing plaintiff is not obliged to settle, hearing officers and judges can apply daunting pressure to elicit settlements which may be undesirable.  Finally, even when settlements may be reached, too often they soon fail, rendering all both time consuming and futile.

An added peril is the possibility that plaintiff could miss a conference and a court would then dismiss the action for failure to appear.  That is what happened in the mentioned new case, although it was reversed on appeal, leading to the enlightening principles to be discussed.

As a matter of timing, this case had reached a referee’s report of the sum due only then followed by a settlement conference on April 13, 2011.  Plaintiff did not appear and the hearing officer stated that the case should be dismissed for that non-appearance, which was cited to be without excuse.

More than a year later the plaintiff moved to confirm the referee’s report and on the return date of that motion (August 17, 2012) a settlement conference was scheduled, then adjourned to September 21, 2012, on which date, although all the parties appeared, the court on its own directed dismissal of the action (without prejudice).  This dismissal was founded upon the plaintiff’s failure to appear at the conference way back in April 2011 (as the hearing officer had suggested).

When plaintiff moved to vacate this default, the court ruled as follows:

1. The borrower was not prejudiced and does not claim any prejudice from the plaintiff’s delay of some four-and-a-half months before moving to vacate the order dismissing the case; and
2. It is the plaintiff which may have been prejudiced by a seventeen month delay between the default and the dismissal of the action based upon that default during which period the six year statute of limitations expired, thus barring the plaintiff from recommencing the foreclosure even though the case was dismissed without prejudice; and
3. There is nothing in the record to support the dismissal of the action seventeen months after the date the plaintiff failed to appear and in any event the plaintiff established a reasonable excuse for the default based upon a specific claim of law office failure.

Hence, a reversal and the case was reinstated.

This is all very helpful although it does not say what might have happened if the plaintiff did not have an excuse.  Here, the plaintiff changed attorneys so that the former attorneys did not appear at the conference and the new attorneys were not aware of it.  There is a bit more to it but it was apparent to the court deemed this to be a valid excuse.

In sum, the case is very helpful, it suggests that failure to appear at a settlement conference might not be a fatal act, but, plaintiffs must nevertheless be very attentive lest a neglect to appear without an excuse lead to a dismissal.

Mr. Bergman, author of the four-volume treatise, Bergman on New York Mortgage Foreclosures, LexisNexis Matthew Bender (rev. 2017), is a partner with Berkman, Henoch, Peterson, Peddy & Fenchel, P.C. in Garden City, New York. He is also a member of the USFN, The American College of Real Estate Lawyers, The American College of Mortgage Attorneys, an adviser to the New York Times on foreclosure issues and writes a regular servicing column for the New York Law Journal. He is AV rated by Martindale-Hubbell, his biography appears in Who’s Who In American Law and he has been for years listed in Best Lawyers In America and New York Super Lawyers.