Wilmington PT Corp. v. Bonilla

UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF NEW YORK

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WILMINGTON PT CORP., :

:

Plaintiff, :

:

-against- : MEMORANDUM & ORDER

: REJECTING IN PART REPORT

DENNIS P. BONILLA; MIKE8951 CORP.; : AND RECOMMENDATIONS

NYC ENVIRONMENTAL CONTROL BOARD; :

NYC PARKING VIOLATIONS BUREAU; NY : 19-cv-2684(DLI)(ST)

STATE DEPARTMENT OF TAXATION AND :

FINANCE; and JOHN DOE & JANE DOE, :

:

Defendants. :

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DORA L. IRIZARRY, United States District Judge:

On May 7, 2019, Wilmington PT Corp. (“Plaintiff”) commenced this diversity action

against Dennis P. Bonilla (“Bonilla”), Mike8951 Corp., NYC Environmental Control Board, NYC

Parking Violations Bureau, NY State Department of Taxation and Finance, John Doe, and Jane

Doe1 (collectively, “Defendants”), seeking to foreclose on a mortgage encumbering a property

located at 89-51 121st Street, Richmond Hill, New York 11418 (the “Property”), pursuant to New

York Real Property Actions and Proceedings Law (“RPAPL”) §§ 1301 et seq. See, Compl.,

Docket (“Dkt.”) Entry No. 1. After Defendants Bonilla, Mike8951 Corp., NYC Environmental

Control Board, NYC Parking Violations Bureau, and NY State Department of Taxation and

Finance failed to appear, the Clerk of the Court entered a notation of default against them on June

24, 2019. See, Dkt. Entry No. 18.

On July 8, 2019, Plaintiff filed a motion for default judgment, which the Court referred to

the Honorable Steven Tiscione, U.S. Magistrate Judge, for a Report and Recommendation (“R &

1 John Doe and Jane Doe are fictitious parties representing “tenants, occupants, persons, or corporation[s], if

any, having or claiming an interest in or lien upon the [Property].” See, Compl. at ¶ 9.

R”). See, Dkt. Entry No. 19; Order dated July 9, 2019. On March 3, 2020, the magistrate judge

issued an R & R recommending that the motion be denied. See, R & R, Dkt. Entry No. 22. Plaintiff

timely objected to the R & R. See, Pl. Wilmington PT Corp.’s Mem. of Law in Obj. to the R & R

Dated March 3, 2020 (“Pl. Obj.”), Dkt. Entry No. 24. Defendants did not respond to Plaintiff’s

objections. For the reasons set forth below, the objections are overruled in part and sustained in

part and ruling on the motion for default judgment is deferred as it is returned to the magistrate

judge with instructions consistent with this Memorandum and Order.

BACKGROUND

In September 2007, Bonilla executed and delivered a mortgage agreement to JPMorgan

Chase Bank, N.A. (the “Mortgage”) and executed a Home Equity Line of Credit Agreement

and Disclosure Statement (the “Note”) under the Mortgage, securing a loan in the amount of

$105,000.00 from JPMorgan Chase Bank, N.A. See, R & R at 2. The Mortgage and Note

provide that failure to make payments on the loan constitutes a default, permitting JPMorgan

Chase Bank, N.A. or its assignees to foreclose on the Property. Id. at 3.

Plaintiff alleges that Bonilla defaulted on the Mortgage and Note in May 2011. Id. In

October 2018, following a series of assignments, Plaintiff became the holder of the Mortgage and

Note. Id. at 2-3. On May 7, 2019, Plaintiff commenced this action to foreclose on the Property.

See, Compl.

On May 13, 2019, Plaintiff filed a copy of the notice of foreclosure required under RPAPL

§ 1303. See, Dkt. Entry No. 6. On June 11, 2019, Plaintiff filed an Affidavit of Service, stating

that on May 23, 2019, it had served Bonilla with “THE SUMMONS IN A CIVIL ACTION AND

COMPLAINT, NOTICE PURSUANT TO RPAPL ON BLUE COLORED PAPER bearing Index

# 19-CV-2684 DLI-ST[.]” See, Dkt. Entry No. 8. The Affidavit of Service further provided that

Bonilla was served personally at 20209 100th Avenue, Hollis, New York 11423, rather than at the

Property. Id.

Plaintiff filed additional Affidavits of Service on June 11 and 14, 2019, indicating that it

had served: (1) the Summons and Complaint on Defendants NYC Parking Violations Bureau,

NYC Environmental Control Board, Mike 8951 Corp., and New York State Department of

Taxation and Finance; (2) the Summons, Complaint, and “Notice Pursuant to RPAPL on Blue

Colored Paper” on Defendants Jane Doe and John Doe at the Property; (3) the Summons,

Complaint, and “Notice Pursuant to RPAPL 1303(b) Tenant Foreclosure Notice on Green Colored

Paper” on Defendants Jane Doe and John Doe at the Property; and (4) the Summons, Complaint,

and “Notice Pursuant to RPAPL on Blue Colored Paper” on an unnamed “Occupant” at the

Property. See, Dkt. Entry Nos. 9–12-1, 13–13-2, 14–16.

LEGAL STANDARD

When a party objects to a Report and Recommendation, a district judge must make a de

novo determination with respect to those portions of the Report and Recommendation to which the

party objects. See, Fed. R. Civ. P. 72(b)(3); 28 U.S.C. § 636(b)(1); See also, United States v. Male

Juvenile, 121 F.3d 34, 38 (2d Cir. 1997) (citation omitted). If, however, a party makes conclusory

or general objections, or attempts to relitigate the party’s original arguments, the court will review

the Report and Recommendation for clear error. See, Robinson v. Superintendent, Green Haven

Corr. Facility, 2012 WL 123263, at *1 (E.D.N.Y. Jan. 17, 2012) (internal quotation marks and

citation omitted).

Even upon de novo review, the court does not “consider arguments, case law and/or

evidentiary material which could have been, but were not, presented to the magistrate judge in the

first instance.” E. Sav. Bank, FSB v. Johnson, 2020 WL 1452461, at *1 (E.D.N.Y. Mar. 25, 2020)

(internal quotation marks and citations omitted). After its review, the district court may then

“accept, reject, or modify the recommended disposition; receive further evidence; or return the

matter to the magistrate judge with instructions.” Fed. R. Civ. P. 72(b)(3); See also, 28 U.S.C. §

636(b)(1).

DISCUSSION

The magistrate judge recommended that Plaintiff’s motion for default judgment be denied

based on Plaintiff’s noncompliance with RPAPL § 1304. See, R & R at 6. RPAPL § 1304 provides

that “with regard to a home loan,” at least 90 days prior to commencing a foreclosure proceeding,

a lender must transmit a notice, containing prescribed content, to the borrower. See, N.Y. Real

Prop. Acts. Law § 1304. The magistrate judge found that the Note constitutes a “home loan”

subject to the notice requirements of RPAPL § 1304 and that compliance with RPAPL § 1304, is

a “condition precedent” to commencing a foreclosure action. Id. at 3, 6, 6 n.2.

In support of its objections to the R & R, Plaintiff has submitted numerous exhibits that it

had not submitted previously to the magistrate judge in support of its motion for default judgment.

Compare, Dkt. Entry No. 19-3–19-10 with, Dkt. Entry No. 24-2–24-6. The Court will not consider

evidence presented for the first time in response to the R & R. See, Iacob v. http://re.brooklyn-

flatbush.com/midtown-renter-hit-with-300k-lawsuit-for-using-airbnb/, 2020 WL 2570358, at *2

(S.D.N.Y. May 21, 2020) (noting that “it would be inappropriate and risk undermining the

authority of the Magistrate Judge” for the court to consider information that should have been, but

was not, presented to the magistrate judge) (citation omitted); Faison v. Comm’r of Soc. Sec., 2020

WL 1528152, at *2 (S.D.N.Y. Mar. 31, 2020) (noting that “litigants are required to make all

arguments before the magistrate judge in the first instance[]” and refusing to consider arguments

raised for the first time after the issuance of the R & R) (citation omitted).

Initially, Plaintiff contends that it was inappropriate for the magistrate judge to raise the

issue of compliance with RPAPL § 1304 sua sponte, because, by virtue of their nonappearance,

Defendants have waived any such argument. See, Pl. Obj. at 3-4. However, proper service of a

RPAPL § 1304 notice on the borrower “is a condition precedent to the commencement of a

foreclosure action[]” and a plaintiff has “the affirmative obligation to establish strict compliance

with RPAPL § 1304[.]” Gustavia Home, LLC v. Hoyer, 362 F. Supp.3d 71, 83 (E.D.N.Y. 2019)

(internal quotation marks and citations omitted). Accordingly, it was proper for the magistrate

judge to examine whether Plaintiff complied with the notice requirements, and Plaintiff’s first

objection is overruled.

Plaintiff’s second objection is that the RPAPL § 1304 notice requirements do not apply

because the Note does not constitute a “home loan.” See, Pl. Obj. at 5-6. Pursuant to RPAPL §

1304, a “home loan” is a loan in which:

(i) The borrower is a natural person; (ii) The debt is incurred by the borrower

primarily for personal, family, or household purposes; (iii) The loan is secured by

a mortgage or deed of trust on real estate improved by a one to four family dwelling,

or a condominium unit, in either case, used or occupied, or intended to be used or

occupied wholly or partly, as the home or residence of one or more persons and

which is or will be occupied by the borrower as the borrower’s principal dwelling;

and (iv) The property is located in [New York] state.

N.Y. Real Prop. Acts. Law § 1304(6)(a)(1). The magistrate judge found that the Note constitutes

a “home loan” because: (1) Bonilla is alleged to be a natural person whose address is alleged to

be at the Property; and (2) The Mortgage describes the Property as one to be “improved by a one

or two family residence or dwelling only.” R & R at 6 n.2.

However, there is no evidence that Bonilla incurred the debt “primarily for personal,

family, or household purposes.” Moreover, there is no evidence that Bonilla used the Property as

his principal dwelling. On the contrary, the evidence indicates that the Property was not Bonilla’s

principal dwelling. As set forth above, Bonilla was served at an address that is not the Property.

See, Dkt. Entry No. 8 (indicating that Bonilla was served personally at 20209 100th Avenue, Hollis,

New York 11423). Additionally, Plaintiff’s attempt to serve Bonilla at the Property was

unsuccessful because he was not there and the Property’s “current occupant” did not know him.

See, Affidavit of Attempted Service, Dkt. Entry No. 19-8. Finally, the Note does not refer to the

Property as Bonilla’s principal dwelling or indicate his intent to reside at the Property. See, Home

Equity Line of Credit Agreement and Disclosure Statement, Dkt. Entry No. 19-3; Contra, West

Coast 2014-7, LLC v. Tolson, 2017 WL 3405517, at *8 (E.D.N.Y. Aug. 7, 2017) (finding that

mortgage constituted a “home loan” where it contained a “definitional requirement” that borrower

occupy subject property as principal dwelling for at least one year). Indeed, Plaintiff alleges that

in 2014, Bonilla entered into an agreement with Defendant Mike8951 Corp., which provides that

Bonilla, “having an address at 202-09 100th Avenue, Hollis, New York 11423,” has agreed to give

Mike8951 Corp. title to the Property. See, Compl., Ex. A, Dkt. Entry No. 1-3; Compl. at ¶ 5.

Based on the foregoing, the Court concurs with Plaintiff in finding that the Note does not

constitute a “home loan,” and the notice requirements of RPAPL § 1304 are inapplicable, contrary

to the finding of the magistrate judge. See, Gustavia Home, LLC v. Rutty, 2018 WL 2198742, at

*4 (E.D.N.Y. May 14, 2018), aff’d on other grounds, 785 F. App’x 11 (2d Cir. 2019) (Summary

Order) (“[T]he notice required by RPAPL § 1304 does not apply to [Plaintiff] because the

mortgaged property is not [Defendant’s] primary residence.”); HSBC Bank USA, N.A. v. Ozcan,

154 A.D.3d 822, 825 (2d Dep’t 2017) (holding that where loan was for a commercial property and

defendant resided elsewhere, loan was not a home loan and, therefore, notice provisions of RPAPL

§ 1304 did not apply). Accordingly, Plaintiff’s second objection is sustained.

CONCLUSION

For the reasons set forth above, Plaintiff’s objections to the R & R are overruled in part

and sustained in part and ruling on the motion for default judgment is deferred as it is returned to

the magistrate judge to evaluate, based on the additional evidence presented by Plaintiff, whether

Plaintiff has complied with the notice requirements pursuant to RPAPL § 1303, and, if so, whether

it is entitled to a default judgment against Defendants. Plaintiff is directed to serve a copy of this

Memorandum and Order upon all Defendants at their last known addresses and file proof of service

with the Court within five days of the date of this Memorandum and Order.

SO ORDERED.

Dated: Brooklyn, New York

March 31, 2021

/s/

DORA L. IRIZARRY

United States District Judge