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Current Developments in the Commercial Divisions of the
New York State Courts by Schlam Stone & Dolan LLP
Posted: June 9, 2021

Action Dismissed As Impermissible Duplicative Foreclosure Action

On May 5, 2021, Justice Knipel of the Kings County Commercial Division issued a decision in Flushing Bank v. 609 Kent Ave. Realty, Inc., 2021 NY Slip Op. 31633(U), dismissing a duplicative foreclosure action, explaining:

RPAPL 1301(3) prohibits a party from commencing an action at law to recover any part of the mortgage debt while the foreclosure proceeding is pending or has not reached final judgment, without leave of court in which the foreclosure action was brought. Furthermore, RPAPL 1301(2) provides that the complaint shall state whether any other action has been brought to recover any part of the mortgage debt, and, if so, whether any part has been collected. The Second Department has recently held that the object of the statute is to shield the mortgagor from the expense and annoyance of two independent actions at the same time with reference to the same debt.

Here, there is no dispute that Flushing commenced the instant foreclosure action without first obtaining leave of court in violation of RPAPL 1301(3), despite the pendency of both the 2013 and 2018 Prior Pending Foreclosure Actions. While the complaint identifies the 2013 Prior Pending Foreclosure Action, it fails to identify the 2018 Prior Pending Foreclosure Action, as required by RPAPL 1301(2). 609 Kent should not have to defend itself in multiple actions to foreclose the same mortgage on the Property.

(Internal quotations and citations omitted).

We frequently litigate disputes over the sale or leasing of commercial property. Contact Schlam Stone & Dolan partner John Lundin at jlundin@schlamstone.com if you are involved in a dispute regarding a commercial real estate transaction.

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