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Procedure can protect you from improper foreclosure

On Behalf of | Nov 3, 2014 | Foreclosure, Real Estate Litigation, Residential Real Estate |

Sometimes being a master of procedure is how you win the day in court and protect your client from improper foreclosure. We can illustrate this point with an example from an appearance The Law Office of Sam J. Saad III made recently in a foreclosure case. In the case, one we were previously able to have dismissed, the opposing attorney filed a Motion to Substitute Plaintiff. This was very clearly improper procedure.

By way of background, this foreclosure sat dormant for over 10 months. On November 26, 2013, the Court issued a Notice of No Record Activity since the case was not being prosecuted. The Notice allowed any party to show cause why the case should not be dismissed within 60 days of the Notice. No one filed anything and on February 19, 2014, the Court entered an order dismissing the foreclosure action for lack of prosecution. On March 26, 2014, the Plaintiff filed a motion to Substitute Party Plaintiff to substitute Green Tree Servicing as the new loan servicer. Plaintiff’s counsel obviously dropped the ball by allowing the action to be dismissed and the filing of a Motion to Substitute Party Plaintiff is a legal nullity since the action was dismissed prior to the filing of the Motion. The Plaintiff has not attempted to set aside the Order of Dismissal, but if they do, we will object as the case was dismissed. More on that later… Once they realize their mistake, the Plaintiff could refile the action or alternatively seek to set aside the dismissal based upon some showing of excusable neglect. Either way, the foreclosure will not likely be resolved in the near future.

Instead of following proper procedure, the Plaintiff scheduled its Motion to Substitute Party Plaintiff for hearing. The Plaintiff’s attorney never addressed the simple fact that this action was dismissed earlier this year, leaving it open for us to oppose allowing Plaintiff to do anything prior to addressing the dismissal of the action. The bank did designate a lead attorney for Plaintiff who was served with the various notices and order of dismissal. As is typical with the large banks and foreclosure mill law firms, the associate assigned to the case left the firm but continued to receive notices and orders from the Court.

After Senior Counsel for Litigation, David Lupo, pointed out that the case had already been dismissed, the Judge refused to even hear arguments on the Motion to Substitute Plaintiff and denied it.

At some point, we do expect the Bank to file a Motion to Vacate the Order of Dismissal, however, there are a variety of arguments against setting aside the dismissal. As stated above, the record indicates that the Plaintiff designated an attorney as responsible for this case and then did little else with the lawsuit. The attorney who was designated as the lead Plaintiff’s attorney appears to have left the Plaintiff’s law firm. The Court correctly continued to send notices and orders to this attorney since the lead attorney failed to file a substitution of counsel, and thus, remained counsel of record. Apparently, she did not forward anything to her old law firm or take any action in the case. As such, the court dismissed the case.

In order to request that the dismissal be set aside, the Plaintiff has to demonstrate excusable neglect to the Court. Excusable Neglect is a legitimate excuse for the failure of a party or lawyer to take required action (like filing an answer to a complaint) on time. Illness, press of business by the lawyer (but not necessarily the defendant), or an understandable oversight by the lawyer’s staff (“just blame the secretary”) are common excuses which the courts will often accept. We actually had another hearing on this identical issue and successfully argued against setting aside the dismissal.

To the extent that the dismissal is not set aside, the Plaintiff will have to refile the foreclosure complaint and restart the entire process. Thus, the Defendant will have significantly greater time before a foreclosure judgment and sale can occur.