United States District Court, E.D. New York
MEMORANDUM & ORDER
N.VITALIANO United States District Judge
Great Recession of 2008 plunged the nation into a frightening
crisis in the home mortgage market. In the darkness of the
crisis, many home owning families saw their dreams dashed.
Here, we finally see, and warmly welcome, the light of a new
long-lived foreclosure action, plaintiff Eastern Savings
Bank, fsb, ("ESB"), without objection, moves to (i)
vacate the February 14, 2014 Judgment of Foreclosure and Sale
("JFS") pursuant to Federal Rule of Civil Procedure
60(b)(5), and (ii) discontinue the action pursuant to Rule
41(a)(2). For the reasons that follow, ESB's motion is
six years ago, ESB brought this mortgage foreclosure action
against Peter K. Strez, Catherine A. Strez (collectively, the
"borrowers"), and a collection of nominal
defendants - the City of New York Environmental Control Board
("ECB"), and John Doe #1 through John Doe #12.
See Dkt. No. 1. On July 26, 2013, the Court granted
plaintiffs motion for summary judgment of foreclosure, denied
the borrowers' cross-motion for summary judgment,
dismissed the John Doe defendants, and granted plaintiffs
motion for default against the non-appearing ECB.
See Dkt. No. 41. On December 23, 2013, judgment was
entered against the borrowers in the amount of $587, 615.47,
and against the defaulting ECB, thereby foreclosing ECB's
interest in the subject premises. Dkt. No. 48. The JFS was
entered on February 14, 2014. Dkt. No. 51.
an appeal to the Second Circuit, the borrowers entered into a
settlement, resulting in a Forbearance Extension Agreement
(the "Agreement"), which was approved by this Court
on June 25, 2015. Dkt. No. 67. The Agreement, inter
alia, provided that:
(i) if the Borrower reinstates the Note and Mortgage[, ]
[ESB] [would] undertake to vacate the JFS without prejudice
or (ii) if the full contractual payoff of the Note and
Mortgage [was] made[J [ESB] [would] report to the court the
[JFS] as fully satisfied by voluntary payment.
Dkt. No. 67 at 8.
borrowers fulfilled their obligation to ESB in or around
November 2016. See Dkt. No. 68 ("Mot. to
Vacate"). In short, according to ESB, "the
borrowers fully performed" under a subsequent extension
of the original Agreement, "pursuant to which it was
agreed upon [b]orrowers' strict compliance[, ] no sale
would occur, the subject Mortgage would be reinstated, and
the JFS vacated." Mot. to Vacate at 1. The pending
motion would restore the lending relationship ante
60(b)(5) empowers a district court to "relieve a party
or its legal representative from a final judgment, order, or
proceeding [when]... the judgment has been satisfied,
released or discharged; it is based on an earlier judgment
that has been reversed or vacated; or applying it
prospectively is no longer equitable[, ]" if the motion
has been made within a "reasonable time."
Fed.R.Civ.P. 60(b)(5) & (c)(1); cf. PRC Harris, Inc.
v. Boeing Co., 700 F.2d 894, 897 (2d Cir. 1983)
("In considering whether a [Rule 60(b)(5)] motion is
timely, we must scrutinize the particular circumstances of
the case, and balance the interest in finality with the
reasons for delay."). The elapse of time - a sure enemy
of litigation - is a less significant consideration where
adverse interests join in the application.
same time, the Second Circuit has cautioned that vacatur of
judgment following settlement should not be granted as a
matter of course. See Mfrs. Hanover Trust Co. v.
Yanakas, 11 F.3d 381, 385 (2d Cir. 1993). In United
States Bancorp Mortgage Co. v. Bonner Mall Partnership,
the Supreme Court similarly cautioned against the use of
vacatur following settlement absent a showing of
"equitable entitlement to the extraordinary remedy of
vacatur." 513 U.S. 18, 26, 115 S.Ct. 386, 130 L.Ed.2d
233 (1994). Indeed, "[s]ince 60(b) allows extraordinary
judicial relief, it is invoked only upon a showing of
exceptional circumstances." United States v.
Int'lBhd. of Teamsters, 51 F.Supp.2d 314, 317
(S.D.N.Y.1999) (citing Nemaizer v. Baker, 793 F.2d
58, 61 (2d Cir. 1986)). The trend in this circuit, then, is
that judgments should be vacated only after a careful
balancing of "the interests of honoring settlements
reached by the parties against the public interest in the
finality of judgments and the development of decisional
law." Jewelers Vigilance Comm., Inc. v. Vitale Inc.,
Ill. F.R.D. 184, 186 (S.D.N.Y. 1998) (citations
it appearing from the unopposed representations of ESB that
the borrowers are now able to fulfill, and have been
fulfilling, their obligations under the home mortgage
agreement with ESB, applying the JFS prospectively, following
the successful negotiation of and compliance by the Strezes
with the Agreement, is no longer equitable. Moreover, no
litigant has opposed relief from the judgment. Indeed, it
bears repeating that there is no opposition to the motion
from any nominal or third party, nor, at this juncture, is
any such opposition even conceivable. To be sure,
"[n]othing before the Court suggests that the parties
are attempting to 'game the system'
in some fashion." Am. Home Assur. Co. v. Kuehne
& Nagel (AG & CO.) KG, No. 06 CIV. 6389 (JLC),
2010 WL 1946718, at *2 (S.D.N.Y. May 7, 2010) (citing 13C
Charles Alan Wright, Arthur R. Miller, & Edward H.
Cooper, Federal Practice & Procedure. §
3533.10.2 at 597 (3d ed. 2008)).
appropriate balancing of competing interests tips heavily in
favor of vacating the JFS. Quite frankly, the concerns that
would ordinarily militate against permitting settling parties
to contract around a litigated judgment are of little or no
relevance in this context. Those contrary interests zero in
on public policy values in the finality of judicial
proceedings and the collateral impacts such absence of
finality might have on the development of decisional law.
Decisional law was hardly advanced in this proceeding.
See Am. Home Assur. Co., 2010 WL 1946718, at *2. The
litigation was quite simply an action to foreclose on a home
mortgage - an unfortunate, standard and all too frequent
occurrence. Nor, though final for purposes of procedural
rules and appellate rights, was the judgment ever truly final
in a practical sense. Quite to ...