# Administrator of the U.S. Small Business Administration v. Contessa

> District Court, E.D. New York · March 29, 2023

URL: https://www.frixlaw.com/law-library/cases/10309482

## Case

- **Court:** District Court, E.D. New York
- **Decided:** March 29, 2023
- **Opinion:** 100trialcourt
- **Cited by:** 0 later opinions in the Frix Law Library

## Citator (automated)

- No negative treatment found by the automated citator. That is not the same as a confirmation that the case is good law; read the citing cases.
- Full citator and citing cases: https://www.frixlaw.com/law-library/cases/10309482

## How later opinions describe it (automated extraction)

- holding that to successfully oppose summary judgment, “[i]t is not sufficient merely to assert a conclusion without supplying supporting arguments or facts”
- rejecting failure-to-state-a-claim defense where Plaintiff “ha[d] established its prima facie case”
- rejecting a defense that plaintiff “intentionally exercised improper, inadequate or nonexistent due diligence regarding defendants’ ability to repay the amounts due” for lack of evidence in support of that claim

## Opinion text

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF NEW YORK
-------------------------------------------------------x
ADMINISTRATOR OF THE U.S. SMALL
BUSINESS ADMINISTRATION, an Agency
of the Government of the United States of
America, MEMORANDUM & ORDER
19-CV-6127 (PKC) (ST)
Plaintiff,

- against -

ANDREA CONTESSA, GERARD
CONTESSA, CBL MOTOR CAR CORP.,
DESIGN PLUMBING & HEATING
SERVICES, NEW YORK STATE
DEPARTMENT OF TAXATION AND
FINANCE, NEW YORK CITY
DEPARTMENT OF FINANCE PARKING
VIOLATIONS BUREAU, BOARD OF
DIRECTORS OF THE PRINCESS
ESTATES II HOMEOWNERS
ASSOCIATION, JOHN DOE 1–5, and
JANE DOE 1–5,

Defendants.
-------------------------------------------------------x
PAMELA K. CHEN, United States District Judge:
On October 30, 2019, the Administrator of the United States Small Business
Administration (“Plaintiff” or the “SBA”) commenced this action under Article 13 of the New
York Real Property Actions and Proceedings Law (“RPAPL”), seeking to foreclose on a mortgage
encumbering the property located at 18 Sylvan Court, Staten Island, NY 10307 (“the Property”).
(Compl., Dkt. 1, ¶¶ 8, 15, 16.) The lawsuit was brought against CBL Motor Car Corp., Andrea
Contessa and Gerard Contessa (collectively, “Contessa Defendants”); Wells Fargo Bank, N.A.
s/b/m Wells Fargo Home Mortgage Inc. (“Wells Fargo”), as a subordinate mortgagee; and several
other entities that the SBA alleged were possible subordinate lienors (“Subordinate Lienor
Defendants”). (See generally Compl., Dkt. 1.)1
Currently before this Court is Plaintiff’s Motion for Summary Judgment that seeks the
following: (1) an order granting summary judgment in the SBA’s favor pursuant to Fed. R. Civ.

P. 56(a) and striking the Contessa Defendants’ answer, affirmative defenses, counterclaims, and
counter-statement of material facts; (2) a judgment of foreclosure and sale as to the Property; (3)
an order of default judgment as to the Subordinate Lienor Defendants; and (4) leave to amend the
pleadings to dismiss the “John Does” and “Jane Does” from this case. (See Plaintiff’s
Memorandum of Law in Support of Motion for Summary Judgment (“Pl. Mem.”), Dkt. 80, ¶¶ 2,
140, 144.)
For the reasons explained below, the Court finds that Plaintiff has met its burden of proof
to establish a prima facie case for foreclosure, while Defendants have failed to adduce evidence to
rebut that prima facie case. Accordingly, Plaintiff’s motion for summary judgment is granted, and
Plaintiff’s motion to strike the Contessa Defendants’ answer and affirmative defenses, and its
motion for leave to amend the pleadings, are denied as moot.2

1 The Subordinate Lienor Defendants include Design Plumbing and Heating Services, New
York State Department of Taxation and Finance, New York City Department of Finance Parking
Violations Bureau, and the Board of Directors of the Princess Estates II Homeowners Association,
Inc. (Compl., Dkt. 1, ¶¶ 28–31.) Plaintiff also added as defendants “John Doe #1-5” and “Jane
Doe #1-5,” with the intent to designate tenants, occupants, or other persons who could claim any
estate or interest in possession upon the Property. (Id. ¶ 32.)
2 To the extent Plaintiff seeks default judgment against the Subordinate Lienor Defendants,
it must make a separate motion for default judgment in accordance with Local Rules of this District
and Rule 55 of the Federal Rules of Civil Procedure.
BACKGROUND
A. Relevant Facts3

Since 1994, Gerard and Andrea Contessa have primarily resided at the Property. (Contessa
Defendants’ Rule 56.1 Counterstatement of Facts (“Defs. Rule 56.1”), Dkt. 81-2, ¶¶ 1, 10;
Plaintiff’s Rule 56.1 Statement of Facts (“Pl. Rule 56.1”), Dkt. 78, ¶ 6.) In September 2001, Gerard
Contessa ran a retail automobile sales company, operating under the name of CBL Motor Car
Corp. (“CBL Motor”). (Defs. Rule 56.1, Dkt. 81-2, ¶ 3.) In the months after the 9/11 attacks, the
Small Business Administration offered “Disaster Area” loans to small businesses in the area where
Gerard Contessa lived and where CBL Motor was located. (Id. ¶¶ 6–8.)
On or around April 20, 2002, CBL Motor executed a Promissory Note (“Note”) for a
“Disaster Area” loan from Plaintiff for $426,000 at an annual interest rate of 4%. (Pl. Rule 56.1,
Dkt. 78, ¶ 1.) As security for the Note, the Contessa Defendants executed a mortgage (the
“Mortgage”) on the Property. (Id. ¶ 2.) In addition, Gerard and Andrea Contessa each signed
personal, unconditional guarantees for repayment “to SBA of all amounts owing under the Note.”

3 Unless otherwise noted, a standalone citation to Plaintiff’s 56.1 Statement of Facts or the
Contessa Defendants’ 56.1 Counterstatement of Facts, denotes that this Court has deemed the
underlying factual allegation undisputed and incorporates by reference the documents cited
therein. Where relevant, however, the Court may cite directly to the underlying document.
Furthermore, the Court has deemed facts averred in a party’s 56.1 statement or factual submission
to which the opposing party cites no admissible evidence in rebuttal as undisputed. See
Lumbermens Mut. Cas. Co. v. Dinow, No. 06-CV-3881 (TCP), 2012 WL 4498827, at *2 n.2
(E.D.N.Y. Sept. 12, 2012) (“Eastern District Local Rule 56.1 requires . . . that disputed facts be
specifically controverted by admissible evidence. Mere denial of an opposing party’s statement or
denial by general reference to an exhibit or affidavit does not specifically controvert anything.”
(emphasis in original)). Additionally, to the extent a party’s 56.1 statement or factual submission
“improperly interjects arguments and/or immaterial facts in response to facts asserted by [the
opposing party], without specifically controverting those facts[,]” the Court has disregarded the
statement. Risco v. McHugh, 868 F. Supp. 2d 75, 87 n.2 (S.D.N.Y. 2012).
(See Gerard Contessa Guaranty, Ex. C, Dkt. 80-5, ¶ 2; Andrea Contessa Guaranty, Ex. D, Dkt. 80-
6, ¶ 2; Pl. Rule 56.1, Dkt. 78, ¶ 3.)
CBL Motor and Gerard Contessa defaulted on the Note by failing to make a payment on
or about June 28, 2008. (Pl. Rule 56.1, Dkt. 78, ¶ 4.) Sometime in October 2008, Gerard Contessa

attempted to negotiate with Plaintiff over his defaulted loan. (Pl. Response to Defs. Rule 56.1,
Dkt. 82-1, ¶ 20.) As of February 16, 2022, the principal balance due on the Note is $402,508.10.
(Pl. Rule 56.1, Dkt. 78, ¶ 5; see also Affidavit of Jeffrey H. Schervone, Ex. D, Dkt. 81-1, ¶ 15.)
B. Procedural History

On October 30, 2019, Plaintiff initiated this action to foreclose on the Property. (Compl.,
Dkt. 1.) Plaintiff filed a letter on January 30, 2020, notifying the Court that it was in negotiations
with Andrea and Gerard Contessa to resolve the litigation. (Dkt. 26.) On March 17, 2020, Plaintiff
requested certificates of default as to Andrea and Gerard Contessa, and thereafter reported that it
was “unable to reach an amicable resolution” with these Defendants. (Dkts. 27, 28, 29.) Following
a months-long adjournment of the deadline for Plaintiff to move for default judgment as to the
Contessa Defendants due to the Covid-19 pandemic (see 5/21/2020 Order), Plaintiff and the
Contessa Defendants engaged in a series of settlement negotiations before the Magistrate Judge,
the Honorable Steven L. Tiscione (see, e.g., 10/28/2020 Minute Entry for Settlement Conference;
5/3/2021 Minute Entry for Settlement Conference; 8/16/2021 Minute Entry for Settlement
Conference; 11/23/2021 Minute Entry for Settlement Conference). While settlement discussions
were ongoing, Plaintiff and the Contessa Defendants completed discovery. (See Dkt. 56.)
On March 1, 2022, Plaintiff moved for summary judgment against CBL Motor, the
Contessa Defendants, Wells Fargo, and the Subordinate Lienor Defendants, with briefing
completed on May 20, 2022. (See Plaintiff’s Motion for Summary Judgment, Dkt. 77; see also
Contessa Defendants’ Opposition (“Contessa Opp.”) Dkt. 81-3; Plaintiff’s Reply Brief in Support
of Summary Judgment (“Pl. Rep.”), Dkt. 82.)4
On October 31, 2022, the Court dismissed Wells Fargo from this case following a
stipulation of dismissal filed by Plaintiff as to that Defendant. (See Dkt. 87; see also 10/31/2022

Order.) To date, none of the Subordinate Lienor Defendants have entered an appearance in this
case or filed an answer to the Complaint, leaving only the Contessa Defendants to respond to
Plaintiff’s summary judgment motion.
LEGAL STANDARD
Summary judgment is appropriate where the submissions of the parties, taken together,
“show[] that there is no genuine dispute as to any material fact and the movant is entitled to
judgment as a matter of law.” Fed. R. Civ. P. 56(a); see also Anderson v. Liberty Lobby Inc., 477
U.S. 242, 251–52 (1986) (The summary judgment inquiry is “whether the evidence presents a
sufficient disagreement to require submission to a jury or whether it is so one-sided that one party
must prevail as a matter of law.”). A factual dispute is “genuine” if “the [record] evidence is such
that a reasonable jury could return a verdict for the nonmoving party.” Anderson, 477 U.S. at 248.

“The moving party bears the burden to demonstrate the absence of any genuine issues of
material fact[.]” New York v. Mountain Tobacco Co., 942 F.3d 536, 541 (2d Cir. 2019) (citations
and quotation marks omitted). “Once this burden is met, the burden shifts to the nonmoving party
to proffer some evidence establishing the existence of a question of material fact that must be
resolved at trial.” See Dorsey v. Gannon, No. 20-CV-1525 (PKC) (PK), 2022 WL 4660555, at *2
(E.D.N.Y. Sept. 30, 2022) (citation omitted); see also Celotex Corp. v. Catrett, 477 U.S. 317, 322–

4 Although the Contessa Defendants had anticipated filing their own motion for summary
judgment, they later decided against doing so. (See Dkt. 74 (Contessa Defendants’ letter indicating
that they “have decided against making a summary judgment motion”).)
23 (1986). A mere “scintilla of evidence” in support of the non-moving party is insufficient; rather,
“there must be evidence on which the jury could reasonably find for the non-movant.” Hayut v.
State Univ. of New York, 352 F.3d 733, 743 (2d Cir. 2003) (cleaned up). In other words, “[t]he
nonmoving party must come forward with specific facts showing that there is a genuine issue for

trial.” Caldarola v. Calabrese, 298 F.3d 156, 160 (2d Cir. 2002) (cleaned up).
“An affirmative defense can be dismissed on summary judgment when that defense is
unsupported by any evidence in the record.” Eastern Sav. Bank, FSB v. Johnson, No. 13-CV-6070
(AMD) (SLT), 2022 WL 877781, at *4 (E.D.N.Y. Jan. 31, 2022) (quoting Lifeguard Licensing
Corp. v. Ann Arbor T-Shirt Co., LLC, No. 15-CV-8459 (LGS), 2018 WL 3364388, at *1 (S.D.N.Y.
July 9, 2018) (internal quotation marks and citation omitted)). When “a plaintiff uses a summary
judgment motion, in part, to challenge the legal sufficiency of an affirmative defense . . . a plaintiff
may satisfy its Rule 56 burden by showing that there is an absence of evidence to support [an
essential element] of the [non-moving party’s] case.” Id. (quoting F.D.I.C. v. Giammettei, 34 F.3d
51, 54 (2d Cir. 1994) (alterations in original)). “Conversely, if an affirmative defense is supported

by evidence from which a reasonable jury could find the defense applicable, then summary
judgment must be denied.” Lifeguard Licensing Corp., 2018 WL 3364388, at *1 (citing Celotex,
477 U.S. at 323).
When determining whether a genuine issue of fact exists, the Court “must resolve all
ambiguities and draw all justifiable factual inferences in favor of the party against whom summary
judgment is sought.” Major League Baseball Props., Inc. v. Salvino, Inc., 542 F.3d 290, 309 (2d
Cir. 2008) (citing Anderson, 477 U.S. at 255); see also Knight v. U.S. Fire Ins. Co., 804 F.2d 9, 11
(2d Cir. 1986) (“[T]he court’s responsibility [at the summary judgment stage] is not to resolve
disputed issues of fact but to assess whether there are any factual issues to be tried, while resolving
ambiguities and drawing reasonable inferences against the moving party.”) (citation omitted).
“Summary judgment is appropriate when, after drawing all reasonable inferences in favor of the
party against whom summary judgment is sought, no reasonable trier of fact could find in favor of
the non-moving party.” Horn & Hardart Co. v. Pillsbury Co., 888 F.2d 8, 10 (2d Cir. 1989)

(citation omitted). “[T]he mere existence of some alleged factual dispute between the parties will
not defeat an otherwise properly supported motion for summary judgment.” Anderson, 477 U.S.
at 247–48 (emphasis omitted); see also BellSouth Telecomms., Inc. v. W.R. Grace & Co-Conn., 77
F.3d 603, 615 (2d Cir. 1996) (holding that to successfully oppose summary judgment, “[i]t is not
sufficient merely to assert a conclusion without supplying supporting arguments or facts”)
(citations omitted).
DISCUSSION
I. Foreclosure Claims Under New York Law

“Under New York state law, three elements must be established in order to sustain a
foreclosure claim: (1) the proof of the existence of an obligation secured by a mortgage; (2) a
default on that obligation by the debtor; and (3) notice to the debtor of that default.” Gustavia
Home LLC v. Hoyer, 362 F. Supp. 3d 71, 79 (E.D.N.Y. 2019) (quoting United States v. Paugh,
332 F. Supp. 2d 679, 680 (S.D.N.Y. 2004)); see also CIT Bank, N.A., v. Portfolio Recovery Assocs.,
LLC, No. 15-CV-8618 (KMK), 2017 WL 2819867, at *3 (E.D.N.Y. June 28, 2017) (“A plaintiff
mortgagee in a foreclosure action establishes a prima facie case by presenting a note, a mortgage,
and proof of default.”) (citations and quotation marks omitted). The parties do not contest that
Plaintiff has established the first two elements. (See Contessa Opp., Dkt. 81-3, ¶ 16 (Contessa
“Defendants admit the underlying loan was made by Plaintiff, execution of the Note [and] of [the]
Mortgage, and their default.”).) Therefore, Plaintiff’s prima facie case rests entirely on whether it
provided proper notice of default.5
A. Notice Requirement Under RPAPL

Section 1304 of RPAPL provides, in relevant part, that “at least ninety days before a lender,
an assignee, or a mortgage loan servicer commences legal action against the borrower, including
mortgage foreclosure, [that entity] shall give notice to the borrower” of the debt owed and the
amounts due to cure the default. RPAPL § 1304(1). “RPAPL 1304 does not indicate what proof
a lender must submit in a foreclosure action to demonstrate compliance with the notice
requirement.” CIT Bank N.A. v. Schiffman, 168 N.E.3d 1138, 1142 (N.Y. 2021). However, New
York courts have recognized two ways for a party seeking foreclosure to demonstrate compliance
with the notice requirements of RPAPL Section 1304.
First, a plaintiff may demonstrate compliance with Section 1304 by providing a sworn
statement that the notice was “mailed by a particular person, or that a particular process, which
resulted in mailing, was uniformly and diligently followed.” OneWest Bank, N.A. v. Guerrero,

5 Some courts have held that the prima facie case can be established with just proof of the
“note, mortgage, and proof of default,” and consider the failure to provide “notice of default” to
be an affirmative defense to be raised by the mortgagor opposing foreclosure. See Portfolio
Recovery Assocs., LLC, 2017 WL 2819867, at *3–4. However, in light of the Second Circuit’s
recent statement that “[p]roper service of [an] RPAPL 1304 notice on the borrower . . . is a
condition precedent to the commencement of a foreclosure action, and the plaintiff has the burden
of establishing satisfaction of that condition,” see CIT Bank N.A. v. Schiffman, 999 F.3d 113, 116
(2d Cir. 2021), this Court finds that the “notice of default” is more appropriately understood as
one of the elements of the prima facie case. See Freedom Mortg. Corp., No. 19-CV-410 (RJD)
(SJB), 2022 WL 4274936, at *7 (E.D.N.Y. Sept. 15, 2022) (“As an initial matter, it is not at all
clear that section 1304 compliance is an ‘affirmative defense,’ as opposed to an element of a
foreclosure claim that must be pled.”); see also Wells Fargo Bank, N.A. v. Watts, No. 16-CV-6919
(ENV) (RER), 2020 WL 6370057, at *1 n.2 (E.D.N.Y. May 27, 2020) (“Regardless of whether
such proof [of notice under RPAPL Section1304] is a prima facie element, here Defendant has
asserted this affirmative defense and it is Plaintiff’s obligation on summary judgment to establish
the sufficiency of the § 1304 notice.”), report and recommendation adopted, 2020 WL 5200903
(E.D.N.Y. Sept. 1, 2020).
No. 14-CV-3754 (NSR), 2018 WL 2727891, at *7 (S.D.N.Y. June 6, 2018) (internal quotation
marks and citation omitted). This method of satisfying the notice requirements of RPAPL is
premised on the “longstanding doctrine of [‘]presumption of regularity[’]; that is, ‘a letter or notice
that is mailed is presumed to be received by the addressee.’” CIT Bank, N.A. v. Valerio, No. 16-

CV-6644 (DRH) (SIL), 2018 WL 4268913, at *5 (E.D.N.Y. Aug. 15, 2018) (citations omitted),
report and recommendation adopted, 2018 WL 4265869 (E.D.N.Y. Sept. 5, 2018).
Second, and alternatively, “a foreclosure plaintiff could . . . establish compliance with
Section 1304 through ‘proof of the actual mailings, such as affidavits of mailing or domestic return
receipts with attendant signatures.’” See CIT Bank N.A. v. Schiffman, 999 F.3d 113, 116 n.3 (2d
Cir. 2021) (quoting Citibank, N.A. v. Conti-Scheurer, 98 N.Y.S.3d 273, 276–77 (N.Y. App. Div.
2019)). Therefore, “[i]n lieu of such an affidavit, courts have accepted as sufficient evidence of
mailing ‘uncontroverted United States Postal Service records.’” United States v. Starr, No. 16-
CV-1431 (NSR), 2017 WL 4402573, at *4 (S.D.N.Y. Sept. 29, 2017) (quoting CIT Bank, N.A. v.
O’Sullivan, No. 14-CV-5966 (ADS) (AYS), 2016 WL 2732185, at *5 (E.D.N.Y. May 10, 2016)).

B. The Contessa Defendants Received Adequate Notice Under RPAPL § 1304

The Contessa Defendants argue that Plaintiff SBA failed to state, “who supposedly sent”
the acceleration letter or the notice of default “or when they were sent.” (Contessa Opp., Dkt. 81-
3, ¶ 17.) They further argue that the SBA cannot benefit from a “presumption of regularity”
because the SBA has “offered no evidence as to its standard office practices for mailing” and the
SBA has not submitted an affidavit that states the affiant “actually mailed” the RPAPL Section
1304 notice. (Id. ¶ 21 (citations omitted)).
The Contessa Defendants are correct that the SBA has not submitted any sworn affidavits
explaining the standard office procedure “used to create, mail and store data regarding the 90-day
pre-foreclosure notice,” submitted by an affiant who is personally familiar with this procedure.
See Schiffman, 999 F.3d at 116. Plaintiff’s counsel explains—in the reply brief, not an affidavit—
that “the SBA . . . cannot provide an affidavit of mailing” because he (Plaintiff’s counsel) was the
one who mailed the RPAPL Section 1304 foreclosure notices to the Contessa Defendants. (Pl.

Rep., Dkt. 82, ¶ 82.) He further explains that he is a solo-practitioner, and that he “personally
draft[s] and review[s] the RPAPL 90-day foreclosures notices for the SBA to execute” and
“personally handle[s] mailing said 1304 letters prior to commencing any foreclosure lawsuit.” (Id.
¶¶ 83–85.) However, the case law is clear that compliance with RPAPL Section 1304 through
proof of “standard office procedures” requires “a sworn statement” to attest to these facts.
Guerrero, 2018 WL 2727891, at *7. Even if Plaintiff’s counsel handled these procedures himself,
New York courts have not recognized a solo-practitioner exception to this requirement.6
Nonetheless, as discussed above, “[i]n lieu of such an affidavit, courts have accepted as
sufficient evidence of mailing uncontroverted United States Postal Service records.” See Starr,
2017 WL 4402573, at *4 (citation and internal quotation marks omitted). For example, courts

have accepted “certified mailing receipts or certificates of first-class mailing” as proof of mailing.
See Wilmington Sav. Fund Soc’y, FSB v. White, No. 17-CV-2288 (RRM) (SIL), 2019 WL
4014842, at *4 (E.D.N.Y. May 28, 2019). To satisfy the service provision of RPAPL Section
1304, the copies of certified mail receipts submitted by the party moving for foreclosure must
contain some “marking evidencing an actual mailing by the United States Postal Service[.]” See
Freedom Mortg. Corp. v. Monteleone, No. 19-CV-410 (RJD) (SJB), 2022 WL 4274936, at *6

6 Although the Court appreciates that Plaintiff’s counsel is a solo practitioner, he could
have avoided any doubt about proof of adequate notice by having the SBA send out the notices
itself. Had the SBA done so, it could have submitted a sworn affidavit from an SBA employee
with actual knowledge that these notices were mailed.
(E.D.N.Y. Sept. 15, 2022) (citing cases); cf. V.A. v. City of New York, No. 20-CV-989 (EK) (RML),
2022 WL 1469394, at *10 (E.D.N.Y. May 10, 2022) (a “certified mail receipt bear[ing] a postmark
date” is insufficient as proof of mailing if “there was no evidence that the [document] was mailed
under that certified receipt number”) (quoting Bank of Am. v. Guillaume, 94 N.Y.S.3d 114, 115–

16 (N.Y. App. Div. 2019)). Thus, courts have found that evidence in the form of copies of mailing
labels, see Wilmington Sav., 2019 WL 4014842, at *5, or copies of letters and envelopes with 20-
digit United States Postal Services (“USPS”) tracking numbers—but lacking any “marking
evidencing actual mailing,” Freedom Mortg. Corp., 2022 WL 4274936, at *6 —are “insufficient
to eliminate all triable issues of fact as to whether the certified mailing actually occurred,” see
Deutsche Bank Nat’l Tr. Co. v. Feeney, 137 N.Y.S.3d 405, 407 (N.Y. App. Div. 2020).
The Court finds that Plaintiff has satisfied the notice requirement of RPAPL Section 1304
by providing proof of certified mailing receipts. Plaintiff affixed to its Complaint and its motion
for summary judgment copies of identical letters to Gerard Contessa and Andrea Contessa, each
dated July 8, 2009, informing each that their “mortgage loan is in default as of June 28, 2008.”
(Pl. Mem., Ex. F, Dkt. 80-8, at ECF7 2–3, 4–5.) In addition, Plaintiff submitted two certified mail

receipts addressed to Andrea and Gerard Contessa, dated July 9, 2009, which Plaintiff submits are
the certified mailing receipts for the July 8th notices of foreclosure. (Id. at ECF 6; see also Pl.
Rep., Dkt. 82, ¶¶ 76–77.) Upon examination of these receipts, the Court finds that these certified
mail receipts contain postmark seals and stamps reading “OFFICIAL USE”—which are exactly
the type of “marking[s] evidencing an actual mailing” by USPS. Freedom Mortg. Corp., 2022
WL 4274936, at *6. Because these official markings are “uncontroverted USPS records,” see id.,

7 Citations to “ECF” refer to the pagination generated by the Court’s CM/ECF docketing
system and not the document’s internal pagination.
the Court finds that there are no triable issues of fact as to whether the certified mailing actually
occurred.
Accordingly, Plaintiff has established a prima facie case for summary judgment in favor
of foreclosure.

II. Defendants’ Affirmative Defenses Fail to Create a Triable Issue of Fact

The Court now turns to Defendants’ affirmative defenses. “Once the mortgagee’s prima
facie case is established, the mortgagor must make an affirmative showing that a defense to the
action existed.” Builder Banks v. Charm Devs. II, LLC, Nos. 09-CV-3395, 09-CV-4410 (JG) (LB),
2010 WL 3463142, at *3 (E.D.N.Y. Aug. 30, 2010). Generally, defendants bear the burden to
establish their affirmative defenses. See U.S. Bank Nat’l Ass’n v. McDermott, No. 20-CV-352
(KMK), 2022 WL 2392522, at *5 (S.D.N.Y. July 1, 2022) (citations omitted).8
The Contessa Defendants’ Answer raises 16 affirmative defenses. (Am. Answer, Dkt. 50,
at 10–12.) Over the course of summary judgment briefing, the Contessa Defendants voluntarily
withdrew the second, fourth, and eleventh affirmative defenses. (Contessa Opp., Dkt. 81-3, ¶ 32.)
Therefore, the Court addresses only the remaining 13 affirmative defenses. As explained below,
all of the remaining affirmative defenses are without merit.
A. First Affirmative Defense: Failure to State a Claim

The Contessa Defendants’ first affirmative defense is that “Plaintiff fails in each and every
cause of action to state a claim upon which relief can be granted against the Defendants.” (Am.

8 For certain affirmative defenses, such as Plaintiff’s lack of standing to initiate the lawsuit,
Plaintiff bears the burden. See Avail Holding, LLC v. Nanda, No. 15-CV-486 (ADS) (SIL), 2017
WL 9485717, at *4 (E.D.N.Y. Jan. 11, 2017) (“Where standing is raised as a defense by a
defendant, the plaintiff is required to prove its standing before it may be determined whether the
plaintiff is entitled to relief.”) (citations and brackets omitted), report and recommendation
adopted, 2017 WL 543206 (E.D.N.Y. Feb. 10, 2017).
Answer, Dkt. 50, at 10.) Specifically, they claim that Plaintiff has “not satisfactory [sic] prove[n]
that the conditions precedent are satisfied,” and argue that Plaintiff has provided “no details as to
the service of the default and RPAPL 1304 notices.” (Contessa Opp., Dkt. 81-3, ¶ 34.) Because
the Court has determined that Plaintiff has established its prima facie case for summary judgment,

this defense must fail. See Hoyer, 362 F. Supp. 3d at 81 (rejecting failure-to-state-a-claim defense
where Plaintiff “ha[d] established its prima facie case”).
B. Third Affirmative Defense: Failure to Comply with Contractual Conditions
Precedent

The Contessa Defendants’ third affirmative defense is that “Plaintiff has not complied with
all applicable notices and/or acceleration requirements in the alleged note and mortgage[,]” and
therefore has “failed to properly accelerate the note and mortgage.” (Am. Answer, Dkt. 50, at 10.)
In support of this defense, the Contessa Defendants offer no evidence and argue only that the “SBA
claims it served a default notice in 2008 but has provided no details as to who served it and no
affidavit of service.” (Contessa Opp., Dkt. 81-3, ¶ 36.) Because the Contessa Defendants have
failed to point out any particular “contractual condition” in the Note or Mortgage that Plaintiff
allegedly violated (see id.; Am. Answer, Dkt. 50, at 10), they have failed to meet their burden to
prove this affirmative defense. In fact, the Note explicitly states that in the event of CBL Motor
and Gerard Contessa’s default, Plaintiff can “[w]ithout notice or demand or without giving up any
of its rights . . . [r]equire immediate payments of all amounts owing under this Note.” (See Note,
Ex. A, Dkt. 80-3, at 1, ¶ 5(A).) Accordingly, the Court rejects this defense.
C. Fifth Affirmative Defense: Contributory Negligence

For their fifth affirmative defense, the Contessa Defendants assert that “[t]he damages, if
any, that were allegedly sustained by Plaintiff as a result of the facts contained in the complaint
were caused in whole or in part, or were contributed to by reasons of the acts, omissions,
negligence and/or intentional misconduct of Plaintiff.” (Am. Answer, Dkt. 50, at 10.) The
Contessa Defendants claim “[u]pon information and belief [that] no other lender would have lent
money to Gerard Contessa or CBL [Motor], based upon their grave financial circumstances and
their inability to pay back the loan.” (Id. ¶ 51 (cited in Contessa Opp., Dkt. 81-3, ¶ 40).) The

Contessa Defendants also argue that Plaintiff has not presented evidence to support or rebut this
defense. (Contessa Opp., Dkt. 81-3, ¶ 37.)
As the Court has already explained, the party asserting the affirmative defense bears the
burden of proving it. Here, the Contessa Defendants point only to their Amended Answer, and not
to any undisputed facts that were proven by evidence, as they must at the summary judgment stage.
See Fitzgerald v. Henderson, 251 F.3d 345, 360–61 (2d Cir. 2001) (“In general, a party opposing
a properly supported motion for summary judgment is not entitled to rely solely on the allegations
of [their] pleading, but must show that there is admissible evidence sufficient to support a finding
in [their] favor on the issue that is the basis for the motion.”) (citation omitted). The Contessa
Defendants cannot assert this affirmative defense based solely on the allegation in their Amended

Answer that only the SBA was willing to extend a loan to CBL Motor and Gerard Contessa,
because this “factual allegation” is based on an “information and belief” pleading, which violates
Rule 56’s requirement that affidavits be made on personal knowledge. See Patterson v. Cnty. of
Oneida, New York, 375 F.3d 206, 219 (2d Cir. 2004) (citing Sellers v. M.C. Floor Crafters, Inc.,
842 F.2d 639, 643 (2d Cir. 1998)). Therefore, this affirmative defense is denied.9

9 This affirmative defense also fails because comparative negligence or culpable conduct
are tort law doctrines that cannot be asserted as affirmatives defenses in this action, which alleges
breach of contract. See Eastern Sav. Bank, FSB, 2022 WL 877781, at *10 (rejecting affirmative
defense “that plaintiff’s action is barred by the doctrine of comparative negligence and culpable
conduct” as such “doctrines apply to tort cases,” whereas “the plaintiff’s causes of action arise out
of an alleged breach of contract”).
D. Sixth Affirmative Defense: Estoppel

The Contessa Defendants’ sixth affirmative defense is that “Plaintiff is estopped by its own
actions from asserting any claims against Defendants.” (Am. Answer, Dkt. 50, at 10.) In their
motion papers, the Contessa Defendants refer to Gerard Contessa’s allegations set forth in his
Affidavit that Plaintiff “employed unfair and deceptive practices” by lending to CBL Motors even
though “Plaintiff knew or should have known [CBL Motors] was about to fail” and by “requiring
a [p]ersonal [g]uaranty” despite knowing that CBL Motors was about to fail. (Contessa Aff., Dkt.
81, ¶ 6 (cited in Contessa Opp., Dkt. 81-3, ¶ 46).) The Contessa Defendants further argue that
Plaintiff is estopped from pursuing this foreclosure because “Plaintiff, its agents, representatives,
and employees, or its predecessors failed to verify [the Contessa Defendants’] incomes, assets,
[and] employment” and “employed improper, inadequate or nonexistent” due diligence about the
Contessa Defendants’ ability to repay the loan secured by the Mortgage. (Contessa Aff., Dkt. 81,
¶¶ 8–9 (cited in Contessa Opp., Dkt. 81-3, ¶ 46).)
“A mortgage lender may be estopped from asserting rights under a mortgage to prevent a

fraud or injustice to the person against whom enforcement is sought, who in justifiable reliance
upon the lender’s words or conduct has been misled to his detriment.” CIT Bank, N.A. v.
Nwanganga, 328 F. Supp. 3d 189, 203–04 (S.D.N.Y. 2018) (quoting First Union Nat’l Bank v.
Tecklenburg, 769 N.Y.S.2d 573, 574 (N.Y. App. Div. 2003)). To successfully assert an estoppel
affirmative defense, defendant has the burden of showing “(1) conduct by plaintiff which amounts
to a false representation or concealment of material facts; (2) intention that such conduct will be
acted upon by the other party; and (3) knowledge of the real facts by plaintiff.” See Gustavia
Home, LLC v. Cudjoe, No. 16-CV-3992 (DLI) (CLP), 2019 WL 13171158, at *5 (E.D.N.Y. Mar.
1, 2019) (cleaned up). In addition, the Contessa Defendants must also prove their own “(1) lack
of knowledge of the true facts; (2) [their] reliance upon the conduct of the [SBA]; and (3) a
prejudicial change in their position.” Id.
Here, the Contessa Defendants have failed to point to any facts or evidence in the record
that satisfy these requirements. Again, they simply rely on their own allegations or assertions,

made in opposition to the summary judgment motion. Indeed, an estoppel defense makes no sense
in this case. The Contessa Defendants’ assertion that the SBA “knew or should have known” that
CBL Motor “was about to fail” and that the Contessa Defendants concealed material facts about
CBL Motor’s financial situation cannot be squared with the requirement for an estoppel affirmative
defense that the Contessa Defendants themselves “lack[ed] knowledge” of those material facts
about CBL Motor’s financial troubles. See id. Therefore, this affirmative defense is dismissed.10
E. Seventh Affirmative Defense: Waiver

For their seventh affirmative defense, the Contessa Defendants assert that “Plaintiff has
waived any rights that it may have had to relief from this Court” (see Am. Answer, Dkt. 50 at 10),
because the SBA “accept[ed] at least one payment from Defendants[] [o]n or about October 20,
200[8], after the acceleration note was supposedly sent[.]” (Contessa Opp., Dkt. 81-3, ¶ 50).11 To
successfully assert a waiver affirmative defense, a defendant must meet their “burden of proving

10 The Contessa Defendants cite Golden Eagle Capital Corp. v. Paramount Mgt. Corp., 88
A.D.3d 646 (N.Y. App. Div. 2011), for the proposition that “[c]ourts have allowed the affirmative
defense of estoppel in foreclosure actions.” (Contessa Opp., Dkt. 81-3, ¶ 47.) The question here,
however, is not whether the Contessa Defendants can assert equitable estoppel, but rather whether
they have produced sufficient evidence from which a jury could find this affirmative defense
proved. As explained above, the Court concludes that the Contessa Defendants have failed to
produce any evidence, no less sufficient evidence to assert the estoppel defense. Therefore, Golden
Eagle Capital is inapposite.
11 Although the Contessa Defendants claim that they made a payment “on or about October
20, 2009,” based on the context and the underlying documents submitted to establish that alleged
payment, the Court understands that they are actually claiming that this payment occurred on or
about October 20, 2008.
that plaintiff intentionally relinquished a known right.” Cudjoe, 2019 WL 13171158, at *5
(citation omitted); see also Secured Asset Mgmt., LLC v. Cong. Beth Joseph Zwi Dushinsky, No.
17-CV-5588 (DLI) (CLP), 2019 WL 4861411, at *8 (E.D.N.Y. Sept. 30, 2019) (denying waiver
defense where “the evidence shows that [a] [p]laintiff never knowingly or intentionally waived its

rights to collect the Mortgage payments due under the Note, and timely commenced foreclosure
proceedings to vindicate its rights under the Mortgage”). “Waiver is an intentional relinquishment
of a known right and should not be lightly presumed.” Gilbert Frank Corp. v. Fed. Ins. Co., 520
N.E.2d 512, 514 (N.Y. 1988) (citation omitted). Accordingly, New York courts have “stringently
enforced” the “particularly elevated” burden of “pointing to specific contested facts in opposing a
motion for summary judgment” that is imposed on a party asserting the affirmative defense of
waiver. See Sec. Pac. Mortg. & Real Estate Servs., Inc. v. Canadian Land Co. of Am., 690 F.
Supp. 1214, 1219 (S.D.N.Y. 1988) (citing cases); see also N.Y. State Urb. Dev. v. Marcus Gravey
Brownstone Houses, 469 N.Y.S.2d 789, 795 (N.Y. App. Div. 1983) (“The bare assertion that
certain representatives of the mortgagee made [] a promise [to forgo or delay foreclosure] is not

enough to create an issue of fact.”).
To meet that high burden, the Contessa Defendants assert in their Rule 56.1
Counterstatement: “In October of 2008, [Gerard] Contessa was in negotiations with the SBA to
resolve this issue. After the date of the acceleration letter, [Gerard] Contessa made at least one
payment of $2,021 on or about October 20, 2008, which was accepted by the SBA.” (Defs. Rule
56.1, Dkt. 81-2, ¶ 20.) To support this factual assertion, the Contessa Defendants offer Gerard
Contessa’s affidavit (see Contessa Aff., Dkt. 81, ¶ 11), and an exhibit attached to their opposition
papers, which they assert “is a true and accurate copy of paperwork showing [the Contessa]
Defendants made a payment to the SBA after the date of the alleged acceleration” (see Declaration
of Robert E. Brown for Contessa Defendants’ Opposition, Dkt. 81-1, ¶ 9). This exhibit (“Exhibit
H”) consists of two one-page documents. (See Ex. H, Dkt. 81-1, at ECF 92–93.) The first
document in Exhibit H is an undated and unsigned letter purportedly from an SBA loan officer
(hereinafter, “SBA letter”) to Gerard Contessa “to confirm the terms of the workout arrangement

for [Defendants’] SBA disaster loan,” referencing a “conversation of October 20, 2008, [in which
Defendants] agreed to make (3) three consecutive monthly payments of $2021.00[.]” (Id. at ECF
92.) The letter also explains that the “workout arrangement does not alter the terms of [the] Note
and Loan Authorization Agreement and [that] all amounts outstanding on [the] SBA loan remain
owing.” (Id.) The second document in Exhibit H is a handwritten letter dated October 20, 2008,
from Gerard Contessa to the same loan officer reading: “As per our phone conversations, here is
the first of 3 installments. Then we will fill out the papers you have sent for a full release of the
loan for a 50% in full payment of the outstanding balance.” (Id. at ECF 93.) Importantly, nothing
in this letter indicates proof of payment, such as a confirmation number for a bank transfer or a
reference to a check made out to the SBA.

The Court finds that Exhibit H and the affidavit from Gerard Contessa are woefully
insufficient to show that Plaintiff “intentionally relinquished a known right.” See Cudjoe, 2019
WL 13171158, at *5. First, even if the Court assumes that the parties entered into the “workout
arrangement” alluded to in Exhibit H, the Contessa Defendants have failed to provide evidence
that they satisfied the terms of the agreement (which required three payments of $2021), as they
have provided no documentary evidence of any payment of $2021—such as proof of a wire
transfer or a deposited check—let alone proof of three timely payments.12 More importantly,

12 The Court has reason to doubt the authenticity of the SBA letter because it is neither
signed nor dated. But because Plaintiff has only made a general objection to Contessa Defendants’
Rule 56.1 statement and has not contested the authenticity of Exhibit H, the Court assumes for the
Exhibit H does not indicate a waiver of any of Plaintiff’s rights; in fact, the SBA letter makes clear
that the purported “workout arrangement” “[did] not alter the terms of [the] Note and Loan
Authorization Agreement.” (Ex. H, Dkt. 81-1, at ECF 92.)
The cases cited by the Contessa Defendants in support of the waiver defense are unavailing.

For example, the Contessa Defendants argue that in Scelza v. Ryba, a New York State trial court
dismissed a foreclosure action after “determining[] plaintiff had accepted late payment [and]
thereby waived the acceleration clause” in its loan agreement with the defendants. (See Contessa
Opp., Dkt. 81-3, ¶ 27 (citing Scelza, 169 N.Y.S.2d 462 (N.Y. Sup. Ct. 1957).) In Scelza, the
plaintiff argued that because defendants’ check for a payment in July 1957 was not received until
14 days after a grace period had expired, the “lateness in itself constituted a breach sufficient to
warrant an acceleration of the balance on the principal.” 169 N.Y.S.2d at 463. The court in Scelza
rejected this argument because for each of the immediately preceding four months, the plaintiff
had accepted payments that were made after the grace period “without protest,” which led the court
to find that “a course of conduct was established with his acquiescence.” Id. at 463–64. By

contrast, there is no record in this case of Plaintiff accepting several late payments, so as to
establish a “course of conduct” that could constitute clear evidence of Plaintiff “knowingly or

purposes of this analysis that the letter is authentic. Overall, the Court finds Plaintiff’s response
to paragraph 20 of Contessa Defendants’ Rule 56.1 Counterstatement to be inadequate. It is clear
that a central part of Defendants’ argument is that Plaintiff accepted a payment of $2021 on or
about October 20, 2008, after the acceleration letter was sent by Plaintiff. The Court finds
Plaintiff’s statement that it “cannot dispute that Gerard Contessa made a payment to the SBA in
2008” to be unresponsive and utterly unhelpful in determining whether the payment was made and
received after the acceleration letter. (See Pl. Response to Defs. Rule 56.1, Dkt. 82-1, ¶ 20.) The
Court expects Plaintiff’s counsel and the SBA to be more forthcoming in future submissions to
this Court.
intentionally waiv[ing] its rights” under the mortgage agreement.13 See Secured Asset Mgmt.,
LLC, 2019 WL 4861411, at *8.14
F. Eighth Affirmative Defense: Attorneys’ Fees

Next, the Contessa Defendants argue as their eighth affirmative defense that it “has been
necessary for Defendants to employ the services of an attorney to defend this action, and
[therefore] a reasonable sum should be awarded to [them] for attorneys’ fees, together with costs
expended in this action.” (Am. Answer, Dkt. 50, at 10–11.) This plainly is not an affirmative
defense, but a request for relief. See Nwanganga, 328 F. Supp. 3d at 204. Regardless, because
the Court is granting Plaintiff’s motion for summary judgment, the Contessa Defendants are not
entitled to fees and costs. Id.; see also Hoyer, 362 F. Supp. 3d at 92–93 (“Because the Court has
concluded that Plaintiff is entitled to summary judgment, the counterclaim [for attorneys’ fees and
costs] is necessarily dismissed.”) (citation omitted).

13 As noted above, Plaintiff states in his response to Contessa Defendants’ Rule 56.1
Counterstatement that it “cannot dispute that Gerard Contessa made a payment to the SBA in
2008.” (See Pl. Response to Defs. Rule 56.1, Dkt. 82-1, ¶ 20.) But Plaintiff has never
acknowledged receiving three monthly payments.
14 The Contessa Defendants also cite the Third Circuit’s decision in Security Mut. Life Ins.
Co v. Contemporary Real Estate Assocs., 979 F.2d 329 (3d Cir. 1992), for the proposition that if
“a mortgagee accept[s] a lesser amount, such mortgagee waives its right to acceleration and to
proceed with the foreclosure action.” (Contessa Opp., Dkt. 81-3, ¶ 28.) Although it is true that
the Third Circuit observed that if the plaintiff in that case had “accepted monthly payments after
the acceleration[,] it may well have waived the default,” this decision is entirely inapposite because
“Pennsylvania substantive law control[ed] the disposition of the late charge issue presented” in
that case, see 979 F.2d at 331, whereas New York law applies here. Furthermore, as previously
discussed, the Contessa Defendants offer no evidence of a post-acceleration payment to Plaintiff,
and the purported SBA letter offered by Defendants made clear that the SBA was not waiving any
of its rights under “Note and Loan Authorization Agreement.” (Ex. H, Dkt. 81-1, at ECF 92.)
G. Ninth Affirmative Defense: Good Faith

The Contessa Defendants’ ninth affirmative defense is that “[a]t all times mentioned in the
complaint, [they] were acting in good faith belief that their actions were legally justifiable.” (Am.
Answer, Dkt. 50, at 11.) Citing to Gerard Contessa’s Affidavit and to their Amended Answer, the
Contessa Defendants explain that they have “clearly identif[ied] the Plaintiff’s actions” that
constitute the basis of this affirmative defense. (See Contessa Opp., Dkt. 81-3, ¶¶ 55–56 (citing
Am. Answer, Dkt. 50, ¶¶ 55–61 and Contessa Aff., Dkt. 81, ¶¶ 6–9).) The Court construes the
Contessa Defendants to be arguing that they were “acting in good faith” with respect to repaying
the SBA loan, as evidenced by (1) Gerard Contessa’s efforts to negotiate a settlement to his default;
(2) his inability to recall “ever receiving the SBA’s purported acceleration letter . . . and 90 day
notice”; and (3) Gerard Contessa making at least one payment on October 20, 2008, after the
acceleration letter. (See Defs. Rule 56.1, Dkt. 81-2, ¶¶ 18–20.)
Defendants cite no authority, and the Court is unaware of any case, establishing a “good
faith” affirmative defense to a foreclosure action. The Court therefore finds it irrelevant whether

Defendants acted in good faith in trying to settle the loan. Any purported “good faith” efforts to
resolve the dispute do not undermine Plaintiff’s prima facie showing that summary judgment in
this foreclosure action is warranted, and the Contessa Defendants have not directed the Court’s
attention to any legal authority to the contrary. In addition, it is unclear to the Court how
Defendants claim that Gerard Contessa “has no recollection of ever receiving” the acceleration
letter or the 90-day notice—suggesting that he would not have defaulted if he had received those
notices—is relevant or appropriate as a “good faith” defense to the mortgage default.15

15 The Contessa Defendants appear to be conflating this good faith defense with an
argument that Plaintiff breached an implied covenant of good faith and fair dealing, as they assert
that Plaintiff “employed unfair and deceptive practices, including” the fact that Plaintiff “len[t] to
H. Tenth Affirmative Defense: Conduct of Other Named Defendants and/or
Third Parties

The Contessa Defendants’ tenth affirmative defense is that “[a]ny injuries that Plaintiff
may have sustained . . . were not caused by any act or failure to act on the part of the Defendants,
but rather, through the acts, omissions, negligence and/or intentional misconduct of other named
defendants and/or third parties over which Defendants have no control.” (Am. Answer, Dkt. 50,
at 11.)
Not surprisingly, Plaintiff notes that it knows neither the identities of the third parties
referenced in this defense, nor the “acts, omission and negligence [of which] Defendants are
referring to” because the Contessa Defendants have not provided any detail as to this defense. (See
Pl. Mem., Dkt. 80, ¶¶ 88–89.) Indeed, the defense has failed to identify any such “other named
defendants and/or third parties” or put forth any proof that “other named defendants and/or third
parties over which” they have no control caused Plaintiff’s alleged injuries. See U.S. Bank Nat’l
Ass’n, 2022 WL 2392522, at *5 (holding that defendants bear the burden of proof for their
affirmative defenses).

a business that [it] knew or should have known was about to fail” and that Plaintiff “requir[ed] a
Personal Guaranty on a Note” for that “business that Plaintiff allegedly knew or should have
known was about to fail.” (See Am. Answer, Dkt. 50, ¶ 55; Contessa Aff., Dkt. 81, ¶ 6.) To the
extent the Contessa Defendants are proceeding on this theory of the SBA’s lack of good faith and
fair dealing, they must point to some “facts which tend to show that Plaintiff sought to prevent
performance of the contract or to withhold its benefits from [the Contessa] Defendant.” See
Nwanganga, 328 F. Supp. 3d at 200 (brackets and citations omitted). But here, the Contessa
Defendants have neither alleged, nor pointed to any evidence in the record, demonstrating that the
SBA “knew or should have known” that CBL Motor was about to fail. See id. (denying affirmative
defense that plaintiff violated the implied duty of good faith and fair dealing because “[d]efendant
[has] not allege[d], let alone provide[d] evidence, that” plaintiff sought to prevent performance of
the contract or withhold its benefits from defendants); see also Hoyer, 362 F. Supp. 3d at 86
(rejecting a defense that plaintiff “intentionally exercised improper, inadequate or nonexistent due
diligence regarding defendants’ ability to repay the amounts due” for lack of evidence in support
of that claim).
In response to Plaintiff’s argument that none of the third parties or other named defendants
were identified, the Contessa Defendants confusingly state that they have identified “‘Plaintiff, its
agents, representatives, and employees, or its predecessors’ as the parties alleged to have engaged
in fraud and negligence.” (See Contessa Opp., Dkt. 81-3, ¶ 57 (citing Contessa Aff., Dkt. 81, ¶¶

6–9); see also Defs. Rule 56.1, Dkt. 81-2, ¶¶ 11–17.) That admission alone dooms this affirmative
defense. If the “the other named defendants” or “third parties” that the Contessa Defendants refer
to are Plaintiff’s “agents, representatives, employees, or predecessors,” this affirmative defense is
no different from the fifth affirmative defense, and accordingly is denied on the same grounds.
I. Twelfth Affirmative Defense: Failure to Comply with RPAPL 1301 and 1304
Notice Requirements

The Contessa Defendants assert as their twelfth affirmative defense Plaintiff’s alleged
failure to comply with RPAPL 1301 and 1304 requirements. (Am. Answer, Dkt. 50, at 11.)
Because the Court has already determined that Plaintiff’s copies of certified mailing are sufficient
proof of its compliance with RPAPL Section 1304 and Contessa Defendants do not point any
additional evidence in the record to rebut the presumption of regularity, this affirmative defense
fails.
J. Thirteenth Affirmative Defense: Wrongful Foreclosure

In their Amended Answer, the Contessa Defendants assert as their thirteenth affirmative
defense that “Plaintiff is proceeding to conduct a wrongful foreclosure against Defendants.” (Am.
Answer, Dkt. 50, at 11.) But the Contessa Defendants did not address this affirmative defense in
their opposition papers, and the Court deems them to have abandoned it. See Dunkin’ Donuts
Franchised Rest. LLC v. Tim & Tab Donuts, Inc., No. 07-CV-3662 (KAM) (MDG), 2009 WL
2997382, at *2 (E.D.N.Y. Sept. 15, 2009) (deeming affirmative defense and counterclaims
abandoned “[a]s a result of defendants’ failure to oppose plaintiffs’ motion as to their defenses and
counterclaims”). The Court will address the merits of the Contessa Defendants’ argument that
Plaintiff has engaged in a wrongful foreclosure below because they have raised “Wrongful
Foreclosure” as a separate counterclaim.
K. Fourteenth Affirmative Defense: Marital Property

As their fourteenth affirmative defense, the Contessa Defendants claim that since the
Property “is deemed to be marital property under New York’s Domestic Relations Law” and
“Andrea Contessa did not execute the Note,” she is entitled to “her equity in the [Property] as a
non-borrower Spouse.” (See Am. Answer, Dkt. 50, at 11; see also Contessa Opp., Dkt. 81-3, ¶
65.) The Contessa Defendants cite no legal authority to support this “marital property” theory
affirmative defense, and the Court is not aware of any case law in support of that position. While
it is true that Andrea Contessa’s name and signature are not on the Note, her signature is clearly
on the Mortgage. (See Compl., Ex. B, at 4). Moreover, the Contessa Defendants admit that Andrea
Contessa signed an unconditional guaranty agreement for the Note. (See Defs. Resp. to Pl. First
Set of Requests for Admission, Ex. I, Dkt. 80-11, ¶ 3; see also Andrea Contessa Guaranty, Ex. D,

Dkt. 80-6, at 5.) Therefore, the Court rejects this affirmative defense because the Contessa
Defendants have not shown “by admissible evidence a genuine and substantial issue rebutting”
their own admission. Camofi Master LDC v. Coll. P’ship, Inc., 452 F. Supp. 2d 462, 471 (S.D.N.Y.
2006) (quotation omitted).
L. Fifteenth Affirmative Defense: Unclean Hands

The Contessa Defendants’ final affirmative defense is that Plaintiff “has unclean hands in
this matter because [it] wrongfully lent funds to a business that was failing, and had little chance
of surviving” and, accordingly, Plaintiff’s alleged failure “to determine the creditworthiness of
CBL [Motor] is the cause of the alleged default in the subject Note and Mortgage.” (Am. Answer,
Dkt. 50, at 11.) New York law requires a party asserting the doctrine of unclean hands “to prove
that (1) the offending party is guilty of immoral, unconscionable conduct; (2) the conduct was
relied upon by the asserting party; and (3) the asserting party was injured as a result.” Sheehy v.
New Century Mortg. Corp., 690 F. Supp. 2d 51, 68 (E.D.N.Y. 2010) (citing Kopsidas v. Krokos,

742 N.Y.S.2d 342, 344 (N.Y. App. Div. 2002)). Courts are “reluctant to apply the [unclean hands]
doctrine in all but the most egregious situations.” Avail Holding, LLC. v. Nanda, No. 15-CV-486
(ADS) (SIL), 2017 WL 9485717, at *6 (E.D.N.Y. Jan. 11. 2017) (ellipses omitted), report and
recommendation adopted, 2017 WL 543206 (E.D.N.Y. Feb. 10, 2017).
The Court rejects this affirmative defense, which is, in reality, another re-packaging of the
Contessa Defendants’ fifth, sixth, tenth, and thirteenth affirmative defenses. First, as the party
invoking unclean hands, the Contessa Defendants bears the burden of proof. See Sheehy, 690 F.
Supp. 2d at 68; see also U.S. Bank Nat’l Ass’n, 2022 WL 2392522, at *5 (“The burden shifts to
Defendants to establish any affirmative defenses.”) (cleaned up). Therefore, the Contessa
Defendants’ assertion that “Plaintiff has provided no sworn testimony or admissible evidence to

rebut” the unclean hands doctrine is irrelevant. (Contessa Opp., Dkt. 81-3, ¶ 72.) In fact, it is the
Contessa Defendants who have failed to satisfy their burden, as they only cite to their Amended
Answer in support of this affirmative defense. However, this Court cannot rely on the allegations
in the Amended Answer to resolve this Rule 56 motion. See Fitzgerald, 251 F.3d at 360–61 (“In
general, a party opposing a properly supported motion for summary judgment is not entitled to
rely solely on the allegations of [their] pleading[.]”). Finally, as there has been no showing of
“immoral, unconscionable conduct” by Plaintiff, see Sheehy, 690 F. Supp. 2d at 68, the unclean
hands doctrine has no application here.16
III. Defendants’ Counterclaims

Although the Contessa Defendants’ Answer raises four counterclaims (see Am. Answer,
Dkt. 50, ¶¶ 70–101), they have since voluntarily withdrawn the third and fourth counterclaims (see
Contessa Opp., Dkt. 81-3, ¶ 33). Therefore, the Court only addresses the first two counterclaims.
A. First Counterclaim: Wrongful Foreclosure

The Contessa Defendants bring a counterclaim for wrongful foreclosure, premised entirely
on the notion that this suit was barred by the statute of limitations. (See Am. Answer, Dkt. 50, ¶¶
70–79.) However, the Contessa Defendants in their opposition papers abandon their statute of
limitations argument and simply assert that they have “clearly plead other facts to support a
wrongful foreclosure [counterclaim] separate and apart from the statute of limitations issue”—to
wit, reiterating the allegations that Plaintiff “employed unfair and deceptive practices” to execute
the Note and Mortgage (see Contessa Opp., Dkt. 81-3, ¶¶ 74, 76.) For the reasons already
addressed in the Court’s analysis of the Contessa Defendants’ sixth and ninth affirmative defenses

16 The Contessa Defendants again cite Golden Eagle, this time to assert that the New York
state trial court in that case committed “reversible error” by dismissing the unclean hands
affirmative defense in a foreclosure action. (See Contessa Opp., Dkt. 81-3, ¶ 72.) In that case, the
Appellate Division found in conclusory fashion that because the defendants’ “answer sufficiently
alleged that the plaintiff [had] engaged in concealment of material facts,” the lower court erred in
dismissing the unclean hands defense. See 88 A.D.3d at 648. However, the Contessa Defendants
provide no analysis of why the facts or holding of that case should apply here. As the Court has
explained, the Contessa Defendants have made only conclusory allegations without any showing
that Plaintiff engaged in any wrongful conduct that the Contessa Defendants relied upon and that
led to their injury.
relating to alleged unfair and deceptive practices, the Court concludes that these conclusory
allegations alone are insufficient to sustain this counterclaim.17
B. Second Counterclaim: Accounting

The Contessa Defendants allege that “Plaintiff and its agents charged [the Contessa]
Defendants excessive, inappropriate, inflated and/or unwarranted fees.” (See Am. Answer, Dkt.
50, ¶ 81.) Based solely on this allegation and without any citation to case law or any statutory
provision, the Contessa Defendants bring a counterclaim “demand[ing] that Plaintiff and their
respective agents account to [the Contessa] Defendants for all fees and expenses charged to [the
Contessa] Defendants and disgorge all such fees.” (Id. ¶ 82.)
The Court dismisses this counterclaim as improperly pled. The Contessa Defendants’
Answer does not contain any facts that can plausibly support the allegation that the SBA charged
“excessive, inappropriate, inflated and/or unwarranted fees,” let alone identify which “fees” this
counterclaim is targeting. (See Am. Answer, Dkt. 50, ¶ 81); see also Nwanganga, 328 F. Supp.

3d at 202 (denying counterclaims where defendants’ answer “is devoid of any facts plausibly
suggesting” the element of the counterclaims). On the other hand, if this counterclaim is intended
to challenge the remaining balance of the loan, that too would be unsuccessful because as Plaintiff

17 Moreover, the Court doubts whether the Contessa Defendants can even bring a cause of
action for “wrongful foreclosure” at this juncture. Several courts in this District and in the
Southern District have observed that a “wrongful foreclosure” claim cannot be brought before
“entry of judgment of foreclosure of the subject property or a sale.” Calizaire v. Mortgage Elec.
Registration Sys., Inc., No. 14-CV-1542 (CBA) (SMG), 2017 WL 895741, at *9 (E.D.N.Y. Mar.
6, 2017); see also Pawaroo v. Countrywide Bank, No. 09-CV-2924 (ARR) (SMG), 2010 WL
1048822, at *7 (E.D.N.Y. Mar. 18, 2010) (“Without some factual basis supporting an allegation
of foreclosure, a cause of action for wrongful foreclosure cannot survive.”) (citation omitted);
Guido v. Wells Fargo Bank, N.A., No. 16-CV-1568 (VSB), 2017 WL 5515859, at *4 (S.D.N.Y.
Mar. 21, 2017) (“[A]s the term ‘wrongful foreclosure’ suggests, an allegation that there was a
foreclosure would appear to be the sine qua non for a claim of wrongful foreclosure.”) (citation
omitted).
notes, the Contessa Defendants have already admitted “that the principal balance due under the
Note is $402,508.10.” (See Pl. 56.1, Dkt. 78, ¶ 5; see also Defs. Resp. to Pl. First Set of Requests
for Admission, Ex. I, Dkt. 80-11, ¶ 6.) In either event, this counterclaim is denied.
CONCLUSION
For the foregoing reasons, Plaintiff’s motion for summary judgment is granted. Plaintiff’s

motions to strike the Contessa Defendants’ answer and affirmative defenses and to amend the
complaint are denied as moot. Plaintiff is directed to submit a proposed judgment of foreclosure
providing for a sale of the Property consistent with this Memorandum & Order within 30 days.
The proposed judgment of foreclosure should provide for the appointment of a proposed referee
to effectuate the sale and to disperse funds from such a sale. Finally, the Court sua sponte
dismisses without prejudice all claims against the “John Doe” and “Jane Doe” nominal defendants.

SO ORDERED.
/s/ Pamela K. Chen
Pamela K. Chen
United States District Judge

Dated: March 29, 2023
Brooklyn, New York

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Source: Frix Law Library, https://www.frixlaw.com/law-library/cases/10309482. Public record. Not legal advice.