In a recent decision, HSBC Bank USA, N.A. v. Hillaire, No. 2024-02731 (Jan. 28, 2026), New York’s Appellate Division, Second Department, addressed the date an action “terminates” for purposes of the six-month grace period on refiling — pursuant to CPLR §§ 205(a) and 205-a — after a non-merits dismissal. The court resolved inconsistent holdings in the Second Department by concluding that when a lawsuit is dismissed and the aggrieved party does not appeal or move for reargument/reconsideration, the action terminates on the 30th day after the dismissal order is served with notice of entry. Defendants in venues encompassed by the Second Department should understand the decision in determining how to respond to refiled lawsuits. Defendants in other New York venues should be aware of the decision and contrary holdings, since inconsistency between appellate departments remains.
Background
When a lawsuit is dismissed not on the merits, and not for failure to obtain personal jurisdiction, by voluntary discontinuance, or for failure to prosecute, CPLR § 205(a) provides a six-month grace period in which a new lawsuit based on the same events can be refiled, even if the statute of limitations has otherwise expired between the original filing and the refiling. For example, courts have held that where a lawsuit is dismissed for lack of capacity, the dismissal is not on the merits and a new lawsuit with capacity defects corrected can be filed within six months, even though the statute of limitations expired in the interim. CPLR § 205-a(a) provides a similar grace period for certain actions relating to real property, though it applies to a narrower range of dismissals and imposes other requirements (e.g., service must be “completed” not merely “effected” as under § 205(a)).
To take advantage of the grace period, the new lawsuit must be filed, and service on the defendant effected (or in the case of § 205-a(a) “completed”), “within six months after the termination” of the prior lawsuit. New York holdings have been inconsistent as to when a lawsuit “terminates” for purposes of § 205(a) and therefore when the six-month period begins to run. The legislation does not define “termination.” New York’s Court of Appeals has held that an action does not terminate for purposes of § 205(a) until appeals as of right are exhausted. For example, after dismissal on a motion to dismiss, an action terminates when the dismissal is affirmed on a perfected appeal. Appellate courts have held that in the case of an un-perfected appeal, termination occurs when the un-perfected appeal is dismissed for failure to perfect. Within the Second Department, courts have alternately held that in the absence of an appeal, an action terminates 30 days from the date of service of the dismissal order with notice of entry, or 30 days from entry of the dismissal order without regard to when it is served. Courts in the First, Third, and Fourth departments have treated the date of dismissal, or alternatively the date of entry of the dismissal, as the date of termination.
HSBC Bank USA, N.A. v. Hillaire
In HSBC Bank USA, N.A. v. Hillaire, No. 2024-02731 (Jan. 28, 2026), plaintiff brought a mortgage foreclosure action in Supreme Court, Kings County. On March 21, 2022, the court dismissed the lawsuit on a non-merits basis. On March 29, 2022, the dismissal order was entered and served with notice of entry. There was no appeal. On Sept. 9, 2022, plaintiff recommenced the action, and plaintiff completed service on Oct. 20, 2022. Defendants moved for summary judgment on the grounds the lawsuit was time barred. Defendants argued the action terminated on March 29, 2022, when the dismissal order was entered and served, and therefore the six-month grace period expired on Sept. 29, 2022, three weeks before plaintiff completed service on Oct. 20, 2022. The court ruled in favor of defendants and dismissed the lawsuit.
On appeal, plaintiff argued the six-month grace period began to run 30 days after the date the order was served with notice of entry — i.e., when plaintiff’s time to appeal expired. Stated differently, plaintiff argued the six-month period began to run 30 days after March 29, 2022, or on April 28, 2022, giving plaintiff until October 28, 2022, to commence the action and complete service, making the action timely since service was completed on October 20.
The Second Department acknowledged the above inconsistent holdings. The court reasoned that mere entry of an order of dismissal should not be sufficient to trigger the six-month period, since CPLR 2220 requires orders arising from motions on notice to be both entered and served. And the Second Department has held that when an order may affect the rights of a party, service on the adverse party is necessary for the order to have validity. The Second Department described the rationale for these holdings as ensuring both notice to the impacted party and a fixed date from which to measure subsequent events, e.g., deadlines to appeal or move to reargue. A party would be incentivized not to comply with the rules requiring service of the order if termination were measured from the date of dismissal or entry of dismissal, since the adverse party would thus be alerted to the need to appeal, move for reconsideration or refile. Likewise, adverse parties, the court reasoned, should be given their statutory 30 days in which to determine whether to appeal or move for reargument/reconsideration.
Ultimately, the court held that, to be consistent with the above and other policy rationales and rules of construction, “termination” for purposes of § 205(a) (and § 205-a(a)) must occur upon expiration of the 30-day window following service of the dismissal with notice of entry. Only then can the action be deemed “terminated” within the meaning of § 205(a). Following this holding, the court held that plaintiff’s six-month window began to run 30 days after March 29, 2022, when the order was served, or on April 28, 2022, and therefore that the six-month grace period expired on Oct. 28, 2022. Because plaintiff commenced the action and completed service by Oct. 20, 2022, the action was timely. The court reversed the lower court’s decision granting summary judgment to defendants.
Takeaways
The decision resolves inconsistent holdings in the Second Department as to when the six-month grace period begins after a non-merits dismissal that is not appealed. Under HSBC Bank USA, N.A. v. Hillaire, that period begins to run 30 days after the dismissal order is served with notice of entry. Defendants in venues encompassed by the Second Department should understand the decision in determining how to respond to refiled lawsuits. Defendants in other New York venues should be aware of the decision and contrary holdings, since inconsistency between appellate departments remains.
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