CIT Bank, N.A. v. O'Sullivan et al, No. 2:2014cv05966 - Document 43 (E.D.N.Y. 2016)

Court Description: MEMORANDUM OF DECISION AND ORDER granting 32 Motion for Default Judgment; granting 32 Motion for Summary Judgment; denying 37 Motion for Summary Judgment; Based on the foregoing, the Court grants summary judgment in favor of the Plaintiff CI T Bank, N.A. and dismisses with prejudice the affirmative defenses and counterclaim of the Defendants John OSullivan and Filomena OSullivan. Further, the Court grants the Banks motion for a default judgment against Citibank. Finally, the Court denies the cross-motion by the Homeowners for summary judgment in their favor, and also denies the Homeowners motion for sanctions against the Bank in its entirety. Within 30 days of the date of this Order, the Bank shall submit, on notice, a proposed judgment of foreclosure and sale consistent with this opinion. So Ordered by Judge Arthur D. Spatt on 5/10/2016. cm by cm/ecf. (Coleman, Laurie)

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CIT Bank, N.A. v. O&#039;Sullivan et al Doc. 43 UNITED STATES DISTRICT COURT EASTERN DISTRICT OF NEW YORK ----------------------------------------------------------------------------x CIT BANK, N.A., formerly known as ONEWEST BANK, N.A., FILED CLERK 5/10/2016 3:55 pm U.S. DISTRICT COURT EASTERN DISTRICT OF NEW YORK LONG ISLAND OFFICE MEMORANDUM OF DECISION AND ORDER 14-cv-5966 (ADS)(AYS) Plaintiff, JO(N O SULL)VAN A/K/A JO(N OSULLIVAN, F)LOMENA O SULL)VAN A/K/A F)LOMENA OSULL)VAN, CITIBANK NA, JOHN DOE (being fictitious and unknown to Plaintiff, intended to be tenants, occupants, persons, or corporations having or claiming an interest in or lien encumbering the property described in the Complaint or their heirs at law, distributes, executors, administrators, trustees, guardians, assignees, creditors, or successors.) -against- Defendants. ----------------------------------------------------------------------------x APPEARANCES: Gross Polowy, LLC Attorneys for the Plaintiff 900 Merchants Concourse, Suite 412 Westbury, NY 11590 By: Michael W. Nardolillo, Esq. John J. Ricciardi, Esq., Of Counsel Lieb at Law, P.C. Attorneys for the Defendants John O’Sullivan a/k/a John OSullivan and Filomena O’Sullivan a/k/a Filomena OSullivan 376a Main Street Center Moriches, NY 11934 By: Dennis C. Valet, Esq. Jeffrey M. Marchese, Esq., Of Counsel NO APPEARANCE: Citibank, N.A. Defendant 1 Dockets.Justia.com On October , SPATT, District Judge: , the Plaintiff C)T Bank, N.A. the Plaintiff or Bank Real Property Actions and Proceedings Law RPAPL , seeking to foreclosure its security commenced this diversity mortgage foreclosure action under Article 13 of the New York interest in a parcel of real property owned by the Defendants John O Sullivan a/k/a John OSullivan John and Filomena O Sullivan a/k/a Filomena OSullivan Oceanside Residence . Filomena , together with John, the Homeowners ), located at 40 West Windsor Parkway in Oceanside (the On November 7, 2014, the Homeowners filed an answer, substantially denying the allegations in the complaint and asserting numerous affirmative defenses. Relevant here: (1) the First Affirmative Defense alleged that the Bank lacks standing to maintain this action; and (2) the Third Affirmative Defense alleged that the Bank failed to comply with RPAPL § 1304, which regulates the form and manner of notice that a lender must provide asserted a counterclaim for their costs and attorneys fees under New York Real Property to a defaulting borrower prior to commencing a foreclosure action. The Homeowners also Law RPL § 282. Citibank as a Defendant in this action, alleging that Citibank is the holder of a junior Further, in addition to the Homeowners, the Plaintiff named Citibank, N.A. secured lien against the Oceanside Residence, which the Bank seeks to extinguish and appeared in this action. On February , , the Clerk of the Court noted Citibank s thereby quiet title to the property. To date, Citibank has not filed an answer or otherwise default. 2 Presently before the Court are four separate motions: The Bank and the Homeowners cross-move for summary judgment under Federal Rule of Civil Procedure Fed. R. Civ. P. 56; (1) (2) The Bank moves under Fed. R. Civ. P. 55 for a default judgment against Citibank; and The Homeowners move under New York Civil Practice Law and Rules CPLR § 3408 for an award of sanctions against the Bank based on its alleged failure to negotiate a loan modification in good faith. (3) For the reasons that follow, the Court grants the Bank s motion for summary affirmative defenses and counterclaim; grants the Bank s motion for a default judgment against Citibank; denies the judgment, dismissing with prejudice the Homeowners Homeowners cross-motion for summary judgment in all respects; and denies the Homeowners motion for sanctions against the Bank. Except as otherwise noted, the following facts are drawn from the parties joint I. Background . Stmt. , DE [ statement of undisputed facts pursuant to Local Civil Rule 56.1 and are not in dispute. -1], A. The Note and Mortgage )ndyMac Bank, F.S.B. )ndyMac in the principal sum of $ , . The Homeowners On or about August 3, 2007, the Homeowners obtained a loan from non-party executed a promissory note the Note Stmt. ¶ 1. Compl., Ex. in favor of )ndyMac in the same amount. See 56.1 The Note was secured by a mortgage the Mortgage . on the Oceanside Residence. See id. ¶ 2. Copies of the Note and Mortgage are annexed to the complaint. See 3 Plaintiff. Copies of the relevant assignment documents are in the record as Exhibit C to On or about September 26, 2009, IndyMac assigned the Note and Mortgage to the , Affidavit of Caryn Edwards Edwards Aff. , DE [ ], at ¶ & Ex. C. the supporting affidavit of Caryn Edwards, an authorized signatory of the Bank. See Dec. assignment was duly recorded in the Nassau County Clerk s Office on or about March 8, The 2010. See 56.1 Stmt. ¶ 4. An endorsement to the original Note is also annexed to the the Homeowners loan. See Compl. Ex. . complaint, and indicates that the Plaintiff has been substituted for IndyMac as the payee on B. The Default On or about May 1, 2009, the Homeowners defaulted under the Note and Mortgage by failing to make the required monthly payments. See Edwards Aff. ¶ 8. On or about April 8, 2014, approximately five years after their initial default, the Bank sent individual notices to the Homeowners, pursuant to RPAPL § 1304, advising them 90 days, the Bank may commence a legal action against them the -Day Notices . These that their home loan was 1,804 days in default, and if the matter was not resolved within & Ex E. notices, copies of which are in the current record, were sent by certified mail to the In an opposing affidavit, John states that he was never served with the 90-Day Oceanside Residence. See Edwards Aff. ¶ Notice. See July , Affidavit of John O Sullivan O Sullivan Aff. , DE [23], at ¶ 3. However, neither he nor Filomena deny actually receiving these notices in the mail, and the Bank submitted documentary evidence in the form of United States Postal Service records See Ex. C & D to the Pl. Reply Memo of Law, DE [38-3, 4]. establishing that they were duly delivered to the Oceanside Residence on April 12, 2014. 4 On April 8, 2014, the Bank also sent notices of default the Default Notices to the Homeowners. See Edwards Aff. ¶ 9. Again, John denies that he was served with the Default Notice. See O Sullivan Aff. ¶ 4. However, again, the Homeowners do not deny actually receiving these mailings, and the documentary evidence establishes that the 12, 2014. See id., Ex. A , B & D to the Pl. Reply Memo of Law, DE [38-1, 2]. notices were sent by certified mail to the Oceanside Residence and duly delivered on April & Ex. F. On April 11, 2014, the Bank filed the 90-Day Notice with the New York State Department of Financial Services. See Edwards Aff. ¶ C. Additional Relevant Facts prior attempt by the Homeowners to modify the terms of their loan. See O Sullivan Aff. ¶ 5 In his supporting affidavit, John sets forth various assertions apparently relating to a stating that he has been trying to modify the [home loan] with the Plaintiff since . In particular, John states that, on an unspecified date, he and Filomena entered into a trial modification previously with the Plaintiff. Id. ¶ 6. In this regard, the Bank submits a document titled Home Affordable Modification Program [HAMP] Trial Period Plan, which is Caryn Edwards, DE [38- ], at Ex. E. signed by the Homeowners and dated September 21, 2010. See Jan. 21, 2016 Reply Aff. of John further states that [d]uring that trial modification period, [he] was incorrectly advised by a Donna last name unknown from )ndymac [sic] that [he] had been denied a modification and that he should not make the third and final payment of that trial modification period. O Sulivan Aff. ¶¶ 7-8. Apparently based on this advice, the result, [n]ow, )ndymac [sic] has advised [him] that [he] cannot be offered a [permanent] Homeowners did not make the third and final payment on their trial modification, and as a 5 HAMP modification for the [loan] because a previous trial modification was offered but not completed, through no fault of [his] own. Id. ¶ 10. Consistent with this assertion, the them that it was unable to offer [them] a Home Affordable Modification because [they] did Homeowners submitted a May 21, 2010 letter from IndyMac Mortgage Services, advising not make all of the required Trial Period Plan payments by the end of the trial period. See Exhibit to the Homeowners Memo of Law, DE [37-6]. The Homeowners also submitted a notice from IndyMac Mortgage Services, dated loan modification because they previously started, but ha[d] not completed, a (AMP trial May 18, 2015, which apparently advised the Homeowners that they were ineligible for a modification. See Jan. 8, 2016 Affidavit of Jeffrey M. Marchese, Esq., DE [37-9], at Ex. . This notice also indicates that the (omeowners loan had been reviewed for, and denied a May 18, 2015. Id. (indicating that IndyMac had reviewed [the (omeowners ] loan for modification on September 25, 2013, and again at or around the time of the notice, namely, another modification but was unable to offer one because after previously being denied a changed . Further, the notice advises the (omeowners that they were not eligible for a soHome Affordable Modification on 9/25/13 [their financial] circumstances ha[d] not called in-house modification because the loan was more than twelve months in arrears. See id. There is no evidence that the Homeowners timely pursued an in-house modification within twelve months after their default. As noted, the Homeowners do not deny that they failed to successfully complete the withhold the final payment by Donna. )n this regard, John asserted that, despite his trial modification in or about September 2010, but claim that they were induced to 6 conversation with Donna. See O Sulivan Aff. ¶ 9. repeated demands, the Plaintiff has not provided him with an audio recording of his D. Relevant Procedural History On October 13, 2014, the Bank commenced this action seeking to foreclose the Mortgage; sell the Oceanside Residence to satisfy the balance due on the Note; and recover a monetary judgment representing any deficiency. The Homeowners do not dispute that they were properly served with the summons and complaint on October 20, 2014. See 56.1 Stmt. ¶ 12. On March 9, 2015, United States Magistrate Judge Steven I. Locke conducted an initial conference, which was adjourned to allow the parties an opportunity to negotiate a loan modification. See id. ¶ 18. On March 14, 2015, the case was reassigned to United States Magistrate Judge Anne Y. Shields. On June 8, 2015, Judge Shields conducted a second conference, during which the parties advised the court that they had been unable to successfully negotiate a the viability of alternative resolutions, including a short sale or deed in lieu of foreclosure. modification. See id. ¶ 19. However, the parties were granted additional time to discuss Id. On July 9, 2015, the parties again appeared before Judge Shields and reported that they had been unable to reach any agreement. See id. ¶ 20. The present dispositive motion practice ensued. 7 II. A. Discussion The Cross-Motions for Summary Judgment As noted above, the Bank and the Homeowners cross-move for summary judgment under Fed. R. Civ. P. 56. Under Fed. R. Civ. P. 56(a), [t]he court shall grant summary judgment if the movant 1. The Standard of Review judgment as a matter of law. The Court must draw all reasonable inferences and resolve shows that there is no genuine dispute as to any material fact and the movant is entitled to all ambiguities in favor of the non-moving party. Castle Rock Entm t, )nc. v. Carol Publ g Grp., Inc., 150 F.3d 132, 137 (2d Cir. 1998) (quoting Garza v. Marine Transp. Lines, Inc., 861 Where, as here, cross-motions for summary judgment have been filed, the Court F.2d 23, 26 (2d Cir. 1998)). reasonable inferences against the party whose motion is under consideration. must consider each motion independently, and must apply the same standards, drawing all Point 4 Data Corp. v. Tri-State Surgical Supply & Equip., Ltd., No. 11-cv-726, 2013 U.S. Dist. LEXIS 109298, at *57 (E.D.N.Y. Aug. 2, 2013) (quoting Town of Southold v. Town of E. Hampton, [A]t the summary judgment stage the judge s function is not himself to weigh the 477 F.3d 38, 46 (2d Cir. 2007)). genuine issue for trial. evidence and determine the truth of the matter but to determine whether there is a Redd v. N.Y. State Div. of Parole, 678 F.3d 166, 173-74 (2d Cir. 2012) (quoting Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249, 106 S. Ct. 2505, 91 L. Ed. 2d 202 (1986)). 8 )n a New York mortgage foreclosure action, a plaintiff makes a prima facie case – 2. The Relevant Burdens of Proof with summary judgment appropriate if nothing else is shown – where the foreclosing party (1) a mortgage, a note, and proof of default on the note by the mortgagor. produces documentary evidence establishing the three elements of a foreclosure claim: Wells Fargo Bank, N.A. v. Ullah, No. 13-cv-485, 2015 U.S. Dist. LEXIS 77175, at *10 (S.D.N.Y. June 15, 2015) (quoting E. Sav. Bank, FSB v. Bright, No. 11-cv-1721, 2012 U.S. Dist. LEXIS 93082, at *7-*8 (E.D.N.Y. July 5, 2012)); see E. Sav. Bank, FSB v. Ferro. No. 13-cv-5882, 2015 U.S. )f a plaintiff meets its prima facie burden and the defendant does not contest those Dist. LEXIS 22021, at *19 (E.D.N.Y. Feb. 24, 2015) (same). by showing a meritorious affirmative defense. Bright, 2012 U.S. Dist. LEXIS 93082, at *8; facts, a presumptive right to collect the overdue amount exists that can only be overcome see 1077 Madison St., LLC v. Smith, No. 13-cv-7182, 2015 U.S. Dist. LEXIS 135025, at *13 (E.D.N.Y. Aug. 27, 2015) (Report and Recommendation) (same), adopted, 2015 U.S. Dist. LEXIS 134173 (E.D.N.Y. Sept. 30, 2015). In that regard, the burden shifts to the homeowner to produce admissible evidence of such an affirmative defense. See Bright, 2012 U.S. Dist. LEXIS 93082, at *8 (citing Regency Sav. Bank, F.S.B. v. Merritt Park Lands Assocs., 139 F. Supp. 2d 462, 465 (S.D.N.Y. 2001)). 3. Application to the Facts of this Case a. As to the Bank’s Initial Burden to Establish a Prima Facie Case In this case, the Court finds that the Bank has sustained its initial burden of producing documentary evidence sufficient to establish a prima facie foreclosure claim. 9 As noted above, the Bank submitted valid copies of the Note and Mortgage, both signed by the Homeowners. The Plaintiff also submitted an affidavit by Caryn Edwards, an authorized signatory of the Bank, who stated that, based on her review of the relevant books and records maintained by the Bank pertaining to the Homeowners account, she has personal knowledge of the Note and Mortgage at issue in this case. Edwards stated that the Homeowners defaulted on their obligations under the Note and Mortgage by failing to make the required monthly payments after May 1, 2009. The Homeowners do not dispute this fact, but the Bank nonetheless submitted copies of the 90-Day Notices and the Default Notices that it sent to the Homeowners on April 8, 2014, notifying them that they were in default under the Note and Mortgage and at risk of losing their home, together with proof of mailing and successful delivery. merits of the Bank s motion – in particular, they do not materially deny that they signed the This evidence is uncontroverted. In fact, the Homeowners do not challenge the Note and Mortgage, or that those instruments are valid and binding against them; that the Bank is the lawful holder of these instruments and therefore entitled to enforce them; or Rather, in the absence of any proof to overcome the Plaintiff s prima facie case, the that they, the Homeowners, defaulted by failing to make the required monthly payments. Homeowners opposition consists entirely of evidentiary challenges directed at the materials submitted in support of the Bank s motion, few of which relate to the accuracy, authenticity, or reliability of the relevant documentary evidence. As discussed more fully below, the Court finds that each of the Homeowners challenges is without merit and is insufficient to create a triable issue of fact sufficient to defeat summary judgment. 10 For example, the Homeowners contend that the Bank failed to sufficiently establish the Bank was the holder of the Note and Mortgage, not that the Bank was the holder of its standing to maintain this action because the affidavit of Caryn Edwards states only that The (omeowners argue incredulously that Edwards omission of the word original raises a material question as to whether the Bank is the original Note and Mortgage. actually in possession of the operative mortgage documents. )n the Court s view, this argument is bordering on frivolous. The uncontroverted evidence establishes that the Mortgage was validly assigned by assignment was duly recorded in the Nassau County Clerk s Office. The relevant IndyMac to the Plaintiff prior to the commencement of this foreclosure action, and that the assignment documents, as well as an endorsement substituting the Bank as the payee on the underlying Note, are in the record. Further, Edwards states unequivocally in her Bank pertaining to the (omeowners account, the Plaintiff is the holder of the Note. affidavit that, based on her inspection of the relevant business records maintained by the The Homeowners also argue that the photocopies of the Note and Mortgage submitted in the present motion record are insufficient to establish that the Bank is actually in possession of the original documents. However, this contention was flatly rejected by the New York Court of Appeals in a case that the Homeowners cite as Although the Taylors assert that the best evidence rule should require authoritative elsewhere in their brief. See Aurora Loan Servs., LLC v. Taylor, 25 N.Y.3d 355, such is required in this context . production of the original [promissory note], they fail to cite any authority holding that 11 with RPAPL § 1304, which requires lenders to provide defaulting borrowers with days The Homeowners further contend that the Bank failed to establish its compliance notice before seeking to foreclose. In this regard, the Homeowners do not substantively challenge the sufficiency of the 90-Day Notices that the Bank sent to them. Nor do they deny that the notices were timely mailed, delivered, and received by them. Rather, the Homeowners argue that the notices are technically deficient because they are unsigned. However, the Court identifies no language in the text of § 1304 that requires a valid 90-Day Notice be physically signed, and the Homeowners identify no other legal authority to support their position. They also argue that the Bank failed to establish that the notices were validly mailed because the record contains neither an affidavit of service nor proof of the office procedures used by the Bank to ensure proper mailings. This argument is unavailing. The Court discerns no logical basis for requiring such proof in light of the uncontroverted United States Postal Service records, which demonstrate that the notices were, in fact, successfully mailed and delivered to the Oceanside Residence. Nor is an affidavit of service necessary given the Homeowners tacit admission that they actually received them. See Loc. Civ. R. 56.1(c) (facts not specifically controverted are deemed admitted). facts or law, that he was not served with the 90-Day Notice is insufficient to raise a triable In this regard, the carefully crafted affidavit of John, which states, without citation to requires only that such notice be sent . . . to the borrower, by registered mail and also by issue of material fact to defeat summary judgment. The plain language of the statute 12 first-class mail to last known address of the borrower. RPAPL ¶ 1304(2). The Homeowners contention that the Bank was under any greater obligation is without merit. The Homeowners further contend that the Court should strike the affidavit of Caryn Edwards in its entirety because it fails to specifically identify what materials she reviewed argue that the best evidence rule codified in Federal Rule of Evidence Fed. R. Evid. in acquiring personal knowledge of the relevant facts. In this regard, the Homeowners 1002 requires that, in order for her affidavit to be admissible, Edwards must either produce all of the original business records that form the basis of her personal knowledge, or provide an excuse as to why those records could not be produced. This argument is The best evidence rule holds that [a]n original writing, recording or photograph patently without merit. otherwise. Fed. R. Evid. 1002. It is clear that Edwards reference to the Bank s business is required in order to prove its content unless these rules or a federal statute provides knowledge of the relevant facts, not to prove their contents. Thus, in the Court s view, records was made simply to indicate the general method by which she gained personal basis for requiring Edwards to specify or produce the original contents of the Bank s Fed. R. Evid. 1002 has no application here, and the Court can identify no other rational As to the documents whose contents Edwards does seek to prove – for example, the underlying case file. Note, Mortgage, assignment, 90-Day Notices, and Default Notices – photocopies of those documents are either annexed to her sworn affidavit or the Bank s complaint. Under unless a genuine question is raised about the original[s ] authenticity or the circumstances Fed. R. Evid. 1003, such duplicate[s] [are] admissible to the same extent as the original[s] 13 make it fair to admit the duplicate[s]. In this case, the Homeowners have not raised any to justify disregarding relevant photocopies. Further, in the Court s view, the (omeowners genuine issue about the original authenticity of any of the underlying documents sufficient failure to substantially rebut any of the determinative facts in this case make[s] it fair to admit the duplicates as proof of those facts. Finally, the Homeowners argue that the Bank was required to submit proof that Edwards is, in actuality, an authorized signatory of the Bank. In particular, the Homeowners insist that the Bank provide an executed power of attorney in favor of Edwards before her affidavit can be accepted. Again, the Court finds this argument to be Initially, the Court seriously doubts the accuracy of the Homeowners position that bordering on frivolous. in order for an agent to have signatory authority, she must also be designated as an attorney-in-fact for her principal. The Homeowners cite to no authority for such a rule. In any event, this argument has no relevance to the present dispute because Edwards did not sign the underlying Note or Mortgage on behalf of the Bank. Nor has it been alleged that, by her signature, she has bound the Bank to any instrument or obligation in this case. Therefore, whether she is actually authorized as a signatory on behalf of the Bank is of no moment. affidavit as a fact witness in support of the Bank s motion without first being designated as Rather, the Homeowners are apparently arguing that Edwards may not submit an the Bank s attorney-in-fact. )n the Court s view, this contention is clearly erroneous, and the only case cited by the Homeowners, namely, Yukos Capital S.A.R.L. v. Samaraneftagaz, 14 No. 10-cv-6147, 2012 U.S. Dist. LEXIS 104702 (S.D.N.Y. July 24, 2012), does not suggest Contrary to the Homeowners contention, the relevant caselaw makes abundantly otherwise. statements, usually based on an examination of the institution s business records, serve to clear that lenders routinely rely on factual affidavits by their employees, whose sworn authenticate those documents; place them before the court in connection with the motion; and often set forth additional relevant facts. See, e.g., Ferro, 2015 U.S. Dist. LEXIS 22021, at *19-*20; E. Sav. Bank, FSB v. Beach, No. 13-cv-341, 2014 U.S. Dist. LEXIS 31700 (E.D.N.Y. Feb. 12, 2014) (Report and Recommendation), adopted, 2014 U.S. Dist. LEXIS 31523 (E.D.N.Y. Mar. 10, 2014); E. Sav. Bank, FSB v. Rabito, No. 1-cv-2501, 2012 U.S. Dist. LEXIS 115869 (E.D.N.Y. Aug. 16, 2012) (same). In fact, courts in this district have previously relied upon sworn statements by Caryn Edwards, made in her capacity as an authorized signatory on behalf of the Bank, to grant foreclosure relief. See OneWest Bank, N.A. v. Denham, No. 14-cv-5529, 2015 U.S. Dist. LEXIS 126048 (E.D.N.Y. Aug. 31, 2015) (Report and Recommendation), adopted, 2015 U.S. Dist. LEXIS 125912 (E.D.N.Y. Sept. 21, 2015); OneWest Bank, N.A. v. Hawkins, No. 14-cv4656, 2015 U.S. Dist. LEXIS 131774 (E.D.N.Y. Sept. 2, 2015) (Report and Recommendation), adopted, 2015 U.S. Dist. LEXIS 130130 (E.D.N.Y. Sept. 25, 2015). Edwards signatory authority, or to otherwise call her credibility as a witness into question. In this case, the Homeowners have failed to provide any rational basis for doubting Therefore, in the Court s view, the absence of a power of attorney cannot provide a basis for defeating summary judgment. 15 Accordingly, in the Court s view, the Bank has sustained its burden of establishing, by competent documentary evidence, a prima facie foreclosure claim and presumptive entitlement to collect the overdue amount. b. As to the Homeowners’ Burden to Establish a Meritorious Affirmative Defense admissible evidence of a meritorious affirmative defense to overcome the Bank s As noted above, the burden now shifts to the Homeowners to proffer sufficient First Affirmative Defense based on the Bank s alleged lack of standing to maintain this entitlement to summary judgment. In that regard, the Homeowners again rely on: (1) the action; and the Third Affirmative Defense based on the Bank s alleged failure to comply with the notice requirement in RPAPL § 1304. However, as discussed above, the Court has considered these defenses and finds them to be unsupported by admissible evidence and otherwise without merit. recover costs and attorneys fees under RPL § 282, they have not advanced any substantive Further, although the Homeowners asserted a counterclaim in their answer to argument in support of that counterclaim, or otherwise demonstrated that it can survive Accordingly, in the Court s view, the Homeowners have failed to raise a genuine summary judgment. issue of material fact sufficient to overcome the Plaintiff s prima facie claim for foreclosure. The Bank s motion for summary judgment therefore is granted in its entirety, and the Court dismisses with prejudice the affirmative defenses and counterclaim of the Homeowners. c. As to the Homeowners’ Cross-Motion for Summary Judgment denying the Bank s dispositive motion, the Homeowners also assert that those defenses are In addition to raising the First and Third Affirmative Defenses as grounds for 16 sufficient, as a matter of law, to warrant dismissal of the complaint against them. However, contentions regarding the Bank s standing and its noncompliance with RPAPL § 1304 to be for substantially the same reasons as outlined above, the Court finds the Homeowners positions in this regard, and in the Court s view, the cross-motion is unsupported by any without merit. As noted above, there is no apparent legal basis for the Homeowners competent evidence. Accordingly, the Court finds that the Homeowners have failed to proffer sufficient admissible evidence to warrant judgment in their favor, as a matter of law, and the crossmotion for summary judgment is denied in its entirety. d. As to Whether a Judgment of Foreclosure and Sale is Warranted The Homeowners contend that, even if summary judgment is awarded in favor of juncture. In particular, they argue that a referee first has to be appointed to determine the the Bank, it would be improper to render a judgment of foreclosure and sale at this amounts owed on the mortgage when summary judgment is awarded in its favor, and then determined amounts. See Homeowners Reply Br. at . Plaintiff must file a motion seeking a Judgment of Foreclosure and Sale based upon such For this proposition, the Homeowners rely on the case of Andrews v. Citimortgage, states that [a] motion for the appointment of a referee to compute the amount due on a Inc., No. 14-cv-1534, 2015 U.S. Dist. LEXIS 43027, at *3 n.4 (E.D.N.Y. Mar. 31, 2015), which mortgage is a preliminary step towards obtaining a judgment of foreclosure Home Sav. Of Am., F.A. v. Gkanios, A.D. d , , 1996)). The Court finds this argument to be unpersuasive. 17 N.Y.S. d , quoting d Dep t Initially, the Court finds that the (omeowners interpretation of the relevant statute is incorrect. RPAPL § 1321 states, in relevant part, that: If the defendant fails to answer within the time allowed or the right of the plaintiff is admitted by the answer, upon motion of the plaintiff, the court shall ascertain and determine the amount due, or direct a referee to compute the amount due to the plaintiff and to such of the defendants as are prior incumbrancers of the mortgaged premises, and to examine and report whether the mortgaged premises can be sold in parcels and, if the whole amount secured by the mortgage has not become due, to report the amount thereafter to become due. Thus, contrary to the (omeowners contention, the plain language of the statute RPAPL § 1321(1) (emphasis supplied). required to appoint a referee to compute the amounts owned – it may perform that makes clear that where, as here, summary judgment is appropriate, the Court is not function itself. Accordingly, there appears to be no legal basis for denying the Bank s request for a judgment of foreclosure and sale at this juncture. Having found that a judgment of foreclosure and sale is warranted, the Court turns to the amounts due to the Bank under the Mortgage. In this regard, the Bank has submitted a proposed judgment of foreclosure and sale, in which it has calculated the total amount and $ , in attorneys fees. See Nov. 23, 2015 Affirmation of Regularity by John J. due to be $722,755.76, comprised of: (1) $717,780.76 due on the Note; (2) $1,475 in costs; Ricciardi, Esq Ricciardi Aff. , DE [ - ], at Ex. M ; see also Nov. 23, 2015 Sworn Statement of Damages by John J. Ricciardi, Esq., DE [33-12]. foreclosure and sale at this juncture, the Homeowners failed to contest – or even address – Aside from summarily contending that the Bank is not entitled to a judgment of the contents of the Bank s proposed judgment of foreclosure and sale; the Bank s calculation of its damages; or the underlying documentary evidence in any material way. 18 This despite the fact that they were duly served with: (1) the complaint, which specifically Oceanside Residence; (2) the Bank s proposed judgment of foreclosure and sale, with all seeks a judgment of foreclosure and sale, and appointment of a referee to sell the relevant calculations included; (3) the supporting affidavit of Caryn Edwards and the documentary evidence upon which it is based; and (4) the other documentary evidence, sought to be recovered, which were offered in support of the Bank s calculation of damages. including the Statement of Damages and the attorney affirmation outlining the legal fees the Homeowners failed to contest any of the Bank s calculations of the amounts presently In this regard, despite advancing extensive argument on a variety of other topics, due under the Note and Mortgage. Consequently, the Homeowners have failed to raise any issue of material fact in this regard, and the Court finds that a judgment of foreclosure and sale is warranted as a matter of law. judgment on notice for the Court s review and signature, together with an affirmation Within 30 days of the date of this Order, the Bank is directed to submit an updated identifying the relevant provisions of the Note and Mortgage, or other source of authority, entitling the Bank to such damages, and any additional receipts or proof of the amounts due, which may not have otherwise been included with the instant motion papers. particularized objections to the Bank s proposed judgment, together with any of its own The Homeowners shall have 14 days after receiving such notice to raise supporting evidence to disprove the Bank s calculation of the amounts due. 19 B. The Bank’s Motion for a Default Judgment Against Citibank As noted above, the Bank also moves under Fed. R. Civ. P. 55 for entry of a default judgment against Citibank, who has neither responded to this motion nor otherwise Courts regularly enter default judgment in foreclosure actions against defendants appeared in this action. with nominal interests in the relevant property, such as parties holding liens that are subordinate to the plaintiff s interest. Nationstar Mort. LLC v. Garcia, No. 15-cv-1854, 2015 U.S. Dist. LEXIS 176801, at *8-*9 (E.D.N.Y. Oct. 19, 2015) (Report and citations omitted . When a default judgment is entered against a defendant with a Recommendation), adopted, 2016 U.S. Dist. LEXIS 30307 (E.D.N.Y. Mar. 9, 2016) (Spatt, J.) nominal interest in a property, that defendant s interest in the relevant property is terminated. Id. at *9 (citing Bright, 2012 U.S. Dist. LEXIS 93082, at *3-*4, and Bank of Am., N.A. v. 3301 Atl. Ave. LLC, No. 10-cv-2504, 2012 U.S. Dist. LEXIS 90928, at *47-*48 (E.D.N.Y. )n this case, the Plaintiff alleges that Citibank is the holder of a lien encumbering June 29, 2012)). the [Oceanside Residence], which is subject and subordinate to Plaintiff s mortgage. Compl. ¶ . Accordingly, by this action, the Plaintiff seeks to have Citibank s interest foreclosed and [its] title, right, claim, lien, interest or equity of redemption to the property be forever extinguished. Id. at Ad Damnum Clause ¶ (c). The record reveals that Citibank was properly served with the summons and Service, DE [6]. As stated above, the Clerk of the Court noted Citibank s default on February complaint on October 20, 2014, but failed to answer or otherwise respond. See Aff. of 12, 2015. See DE [14]. On November 25, 2015, Citibank was served with copies of the 20 date, Citibank has neither responded to the Bank s motion nor otherwise appeared in this instant motion for entry of a default judgment. See Aff. of Service, DE [36]. However, to action. Under Fed. R. Civ. P. b , following the Clerk s issuance of a default notice, the district court has discretion to enter a default judgment against a non-appearing party. In that regard, the Second Circuit has provided three guiding factors to be considered in determining whether such relief is warranted: (1) whether the default was willful; (2) whether the Defendant has a meritorious defense; and (3) whether the Plaintiff will suffer prejudice if the motion for a default judgment is denied. See United States CFTC v. McCrudden, No. 10-cv-5567, 2015 U.S. Dist. LEXIS 139257, at *3-*4 (E.D.N.Y. Oct. 13, 2015) (citing Mason Tenders Dist. Council v. Duce Const. Corp., No. 02-cv-9044, 2003 U.S. Dist. LEXIS 6881, at *5 (S.D.N.Y. Apr. 28, 2003)). [w]hen a defendant is continually and entirely Applying this standard, the Court finds that a default judgment should be entered unresponsive, [the] defendant s failure to respond is considered willful. against Citibank. First, in this District, Fed. Ins. Co. v. CAC of NY, Inc., No. 14-cv-4132, 2015 U.S. Dist. LEXIS 32098, at *13 (E.D.N.Y. Feb. 5, 2015) (Report and Recommendation), adopted, 2015 U.S. Dist. LEXIS 31923 (E.D.N.Y. Mar. 16, 2015) (quoting Ferrara v. PFJ Trucking, LLC, No. 13-cv-7191, 2014 U.S. Dist. LEXIS 134095, LEXIS 133723 (E.D.N.Y. Sept. 22, 2014)). Thus, in the Court s view, Citibank s total failure at *12 (E.D.N.Y. Aug. 14, 2014) (Report and Recommendation), adopted, 2014 U.S. Dist. Second, due to Citibank s non-appearance, the Court is unable to determine whether to participate in this action, despite receiving ample notice, is considered willful. it has a meritorious defense to any of the Bank s allegations. 21 prejudice the Bank in this case because there is no other method by which it can obtain Third, the Court finds that denying the motion for a default judgment would relief from the Court. Fed. Ins. Co., 2015 U.S. Dist. LEXIS 32098, at *14-*15 (citing Trustees v. JREM Const. Corp., No. 12-cv-3877, 2013 U.S. Dist. LEXIS 23962, at *12 prejudiced by a denial of the motion for a default judgment because there [were] no (E.D.N.Y. Jan. 19, 2013) (Report and Recommendation) (holding that the plaintiff would be additional steps available to secure relief in this Court , adopted, 2013 U.S. Dist. LEXIS Accordingly, the Court grants the Plaintiff s motion pursuant to Fed. R. Civ. P. 55 for 22321 (E.D.N.Y. Feb. 12, 2013)). the entry of a default judgment against the Defendant Citibank, NA. C. The Homeowners’ Motion for Sanctions Against the Bank under CPLR § 3408 Finally, the Homeowners move under the provisions of CPLR § 3408 for unspecified sanctions against the Bank on the ground that the Bank failed to negotiate a loan modification with them in good faith. Alternatively, they seek an order requiring the Bank provides that, the court shall hold a mandatory to engage in further settlement negotiations. In relevant part, CPLR § clerk, or such adjourned date as has been agreed to by the parties in any residential conference within sixty days after the date when proof of service is filed with the county provides that, at this mandatory conference, [b]oth the plaintiff and defendant shall foreclosure action involving a home loan. See CPLR § 3408(a). The statute further modification, if possible. Id. § 3408(f). (owever, [u]nder New York law, a borrower has negotiate in good faith to reach a mutually agreeable resolution, including a loan no entitlement to a permanent mortgage loan modification. Miller v. HSBC Bank USA, N.A., 22 No. 13-cv-7500, 2015 U.S. Dist. LEXIS 16736, at *4 (S.D.N.Y. Feb. 11, 2015) (citation The (omeowners argue, based solely on John O Sullivan s affidavit, that the Bank omitted), has failed to negotiate a loan modification in good faith because, in 2010, during a trial modification period, an unidentified representative of IndyMac named Donna incorrectly advised the Homeowners that they had been denied a permanent modification and needed not make the third and final trial modification payment. Then, according to the Homeowners, the Bank improperly relied on their failure to complete the prior trial modification as a basis for refusing to modify the loan at a later date. This argument is without merit. s Initially, [c]ourts in this Circuit have held that, in this context, Rule 16 provides a mandatory settlement conference requirement inapplicable. E. Sav. Bank, FSB v. Aufiero, sufficient alternative mechanism for facilitating settlement, rendering CPLR § No. 14-cv-0256, 2016 U.S. Dist. LEXIS 32470, at *26 (E.D.N.Y. Mar. 14, 2016) (citing Rule is sufficiently broad to cover the issue of holding a conference for the purpose of Kondaur Capital Corp. v. Cajuste, 849 F. Supp. 2d 363, 370 (E.D.N.Y. 2012) (holding that facilitating settlement ). Thus, the Homeowners have failed to articulate a viable basis for relief because the statutory rule they seek to invoke is generally inapplicable in federal court. Further, even if this state procedural rule were applied, it would not provide a narrowly to the parties conduct at the mandatory settlement conference – in the Court s source of relief for the Homeowners because its requirement to act in good faith relates view, it does not create a broader right of action for sanctions based on allegations that a 23 lender has generally failed to act in good faith throughout the course of the lending relationship. In any event, the Court finds that CPLR § 3408 was clearly satisfied in this case by the multiple rounds of pre-trial settlement negotiations conducted at the direction of , at * [T]he parties have already engaged in settlement discussions on multiple United States Magistrate Judges Locke and Shields. See Aufiero, 2016 U.S. Dist. LEXIS conference would have a meaningful impact on the parties ability to reach a settlement previous occasions to no avail, and the Court notes not believe a further mandated agreement . There is no indication that, over the course of several months and multiple conferences, the Homeowners ever brought their allegations of bad faith negotiations to the attention of the assigned Magistrates, or sought to resolve that issue prior to engaging in dispositive motion practice. In fact, even now, as the Homeowners raise this issue for the first time at the John s unsupported assertions that, on an unspecified date approximately six years ago, an summary judgment stage, there is no evidence of any bad faith in the record, other than payment on the (omeowners trial modification – advice be admittedly took. However, unidentified agent of IndyMac named Donna falsely advised him not to make the final insufficient to warrant the relief sought. In this regard, the Court rejects the (omeowners these bare hearsay assertions, unsupported by any admissible evidence, are plainly contention that the Bank has unjustifiably withheld relevant evidence from them, including an audio recording of the phone call with Donna, as there is no indication that they made any motion during more than a year of discovery to compel the production of such evidence. 24 modify the Subject Loan with the plaintiff since , there is no evidence of any specific Further, despite conclusorily stating that he and Filomena have been trying to efforts to do so, other than a notice from the Bank – which is dated approximately seven Homeowners first defaulted on their mortgage – advising them that, after multiple reviews, months after this action was commenced and approximately eight years after the their loan remained ineligible for a permanent modification. There is no evidence that the Homeowners made, or were prevented by the Bank from making any other attempts throughout this time to cure their default. Thus, under the facts and circumstances of this case, the Court discerns no rational basis for awarding the Homeowners relief under Accordingly, the Court denies the (omeowners motion for sanctions under CPLR § 3408. CPLR § 3408 in all respects. III. Conclusion Based on the foregoing, the Court grants summary judgment in favor of the Plaintiff the Defendants John O Sullivan and Filomena O Sullivan. CIT Bank, N.A. and dismisses with prejudice the affirmative defenses and counterclaim of Further, the Court grants the Bank s motion for a default judgment against Citibank. judgment in their favor, and also denies the (omeowners motion for sanctions against the Finally, the Court denies the cross-motion by the Homeowners for summary Bank in its entirety. Within 30 days of the date of this Order, the Bank shall submit, on notice, a proposed judgment of foreclosure and sale consistent with this opinion. 25 It is SO ORDERED. Dated: Central Islip, New York May 10, 2016 /s/ Arthur D. Spatt_________________________________ ARTHUR D. SPATT United States District Judge 26

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