Commercial Division Blog
Lack of Standing is not a Jurisdictional Defect Justifying Sua Sponte Dismissal
On August 26, 2015, the Second Department issued a decision in Mortgage Electronic Registration System, Inc. v. Holmes, 2015 NY Slip Op. 06662, holding that a lack of standing is not a jurisdictional defect.
In Mortgage Electronic Registration System, the trial court responded to the plaintiff's motion to amend the caption to substitute a different plaintiff by sua sponte dismissing the action for lack of standing. The Second Department reversed, explaining:
The Supreme Court abused its discretion in, sua sponte, directing the dismissal of the complaint for the plaintiff's lack of standing. A court's power to dismiss a complaint, sua sponte, is to be used sparingly and only when extraordinary circumstances exist to warrant dismissal. Here, the court was not presented with extraordinary circumstances warranting sua sponte dismissal of the complaint. [The only individual defendant that appeared] had waived the defense of lack of standing by failing to assert it in her amended answer, which she withdrew in any event, the State waived the defense by serving and filing a limited notice of appearance, and the remaining defendants waived the defense by failing to appear or answer. Furthermore, 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.
(Internal quotations and citations omitted).