New York court rules against Banc of California in mortgage case

In a significant ruling, the Appellate Division of the Supreme Court of the State of New York has reversed a foreclosure judgment against Plumbing Supply Distribution, LLC and several related defendants. This decision, issued on September 30, 2026, affects not only the parties involved but also sets important precedents for future mortgage enforcement actions in New York.

The case, Banc of California, N.A. v. Plumbing Supply Distribution, LLC, was filed under docket number 2025-05391. It centers around a dispute over a mortgage foreclosure initiated by Banc of California against Plumbing Supply Distribution and its affiliates. The court's ruling highlights the necessity for lenders to provide adequate evidence of default before proceeding with foreclosure actions.

Background

The parties involved in this case are Banc of California, N.A. (the plaintiff) and Plumbing Supply Distribution, LLC, along with several other defendants including Mr. Commercial Group, LLC, Alta Huron Capital, LLC, Ryan Fisher, and Miranda Watson. The dispute arose when Banc of California sought to foreclose on a mortgage tied to a property located in Brooklyn.

The plaintiff initiated the foreclosure action in 2021, claiming that the defendants had defaulted on their mortgage payments. Following the filing, Banc of California moved for summary judgment, seeking a ruling in its favor without a full trial. The defendants opposed this motion, arguing that the plaintiff had not adequately proven their default.

In May 2024, the Supreme Court granted Banc of California's motion for summary judgment, leading to a referee's report that favored the plaintiff. Subsequently, in November 2024, the plaintiff moved to confirm the referee's report and obtain a judgment of foreclosure and sale. The defendants then cross-moved to reject the referee's findings, setting the stage for the appeal that would follow.

The Ruling

The Appellate Division, in its decision, ruled in favor of the defendants, reversing the earlier judgment of foreclosure and sale. The court found that Banc of California failed to establish a prima facie case of default. Specifically, the court noted, "the plaintiff failed to establish its prima facie entitlement to judgment as a matter of law, as well as its entitlement to an order of reference and a judgment of foreclosure and sale."

The judges involved in the ruling were Valerie Brathwaite Nelson, Paul Wooten, Janice A. Taylor, and Elena Goldberg Velazquez. The court emphasized the importance of proper evidence in foreclosure cases, stating that a plaintiff must submit the mortgage and unpaid note, along with evidence of the default. The court pointed out that the affidavit submitted by the plaintiff's vice president did not provide sufficient evidence of the defendants' alleged default.

According to the ruling, "the plaintiff failed to submit evidence in admissible form to establish the defendants' default." The court's decision effectively denied the plaintiff's motions for both summary judgment and confirmation of the referee's report, which were critical to moving forward with the foreclosure.

Impact

This ruling has significant implications for mortgage lenders and borrowers alike. It underscores the necessity for lenders to provide clear and admissible evidence of default before they can proceed with foreclosure actions. The decision may lead to more rigorous standards for documentation in similar cases, as lenders will need to ensure they have solid proof of defaults to avoid dismissal of their claims.

Furthermore, this ruling may encourage borrowers to challenge foreclosure actions more vigorously, knowing that they can rely on the requirement for lenders to provide concrete evidence of default. This could lead to an increase in litigation surrounding mortgage foreclosures in New York, as both parties navigate the legal landscape shaped by this decision.

What's Next

The defendants have successfully reversed the foreclosure judgment, but it remains to be seen whether Banc of California will appeal this ruling to a higher court. Additionally, there may be related cases pending that could further impact the interpretation of foreclosure laws in New York. Details were not available in the court filing.