Deutsche Bank National Trust Company v. Bances

Background

Deutsche Bank National Trust Company, as trustee for specified asset-backed certificates, brought a mortgage-foreclosure action against Jean Bances and Hugo Bances and added YRH Property Corp. and the New York State Department of Taxation and Finance as defendants. YRH later asserted crossclaims against Bances seeking to quiet title to the property identified as 24 Kress Avenue, New Rochelle, New York. Bances did not answer or otherwise respond to YRH’s crossclaims. The Clerk entered a certificate of default, and YRH asked the court to enter a default judgment.

At the initial pretrial conference, Bances appeared without a lawyer. She also asked for a lawyer, which the court treated as an oral request for the court to seek volunteer pro bono counsel. The court treated her explanation opposing YRH’s default-judgment request as an oral request for relief from default.

YRH’s Default-Judgment Request

YRH sought a declaration that Bances sold the property to YRH at a February 3, 2025 closing and properly signed and delivered the deed. YRH relied on its allegation that a letter from Legal Services of the Hudson Valley raised a fraud issue concerning the transaction, but argued that default judgment should still be entered because Bances could not show that YRH knew about the alleged fraud.

At the conference, Bances said an unknown caller told her she had won $16 million, a new car, and a new house through a Reader’s Digest Sweepstakes. She said she was told that she had to sell her home quickly for $600,000 to receive those benefits. According to her account, she was taken to Queens for the closing, did not know who her lawyer was, signed the deed after being told she would go to the new house, and never received the purchase price or the promised prizes and home. YRH represented that the mortgage servicer refused $521,017.64 to satisfy Bances’s mortgage and that YRH’s counsel was holding that amount in escrow.

The court held that entering a default judgment declaring that Bances had properly sold and conveyed the property was inappropriate at that time. It denied without prejudice YRH’s application for default judgment, allowing YRH to renew the request at a later stage if discovery supports it.

Request for Volunteer Counsel

The court explained that federal law allows a court to request a volunteer lawyer for a person who cannot afford counsel, but does not require a lawyer to be provided in a civil case and does not give the court authority to compel an attorney to take the case. Courts consider whether the litigant is indigent, whether the claims appear likely to have substance, and factors such as the ability to investigate facts, the need for cross-examination, the complexity of the issues, and whether counsel would help produce a fairer result.

Although Bances had not formally applied to proceed without paying court fees, the court found, for purposes of her oral request, that she was presumed to qualify as indigent. The court found that her allegations of fraud might have substance at this early stage. It also found that counsel could assist with discovery about the alleged fraud, the February 3 closing, and Deutsche Bank’s allegations that Bances failed to make timely mortgage payments. The court further found that representation could help if summary-judgment motions or a trial later occurred.

The court therefore granted Bances’s application for the court to request volunteer pro bono counsel. It explained that finding a volunteer could take time, that no volunteer lawyer was guaranteed to accept the case, and that Bances might have to continue without a lawyer.

Disposition

YRH’s application for default judgment was denied without prejudice to renew at a later stage if appropriate. Bances’s application for the court to request counsel was granted. The Clerk was directed to mail Bances a copy of the order.