Wells Fargo Bank National Association v. 366 Realty LLC

UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF NEW YORK

--------------------------------------X

WELLS FARGO BANK NATIONAL ASSOCIATION

AS TRUSTEE FOR THE HOLDERS OF COMM

2014-UBS6 MORTGAGE TRUST COMMERCIAL

MOTRGAGE PASS-THROUGH CERTIFICATES, BY

AND THROUGH ITS SPECIAL SERVICER, LNR

PARTNERS LLC

,

Plaintiff,

-against-

MEMORANDUM AND ORDER

17-CV-3570 (KAM)(JAM)

366 REALTY LLC; JOSHUA MIZRAHI;

CRIMINAL COURT OF THE CITY OF NEW YORK;

NEW YORK CITY ENVIRONMENTAL CONTROL

BOARD; NEW YORK CITY DEPARTMENT OF

FINANCE; and KASSIN SABBAGH REALTY LLC,

Defendants.

--------------------------------------X

MATSUMOTO, United States District Judge:

On June 13, 2017, Wells Fargo Bank National Association, as

Trustee for the Holders of COMM 2014-UBS6 Mortgage Trust

Commercial Pass-Through Certificates, by and through its special

service, LNR Partners LLC (“Wells Fargo” or “Plaintiff”)

commenced this foreclosure action against 366 Realty LLC

(“Borrower”), Joshua Mizrahi, the Criminal Court of the City of

New York, the New York City Environmental Control Board, and

John Doe Nos. I–X, as well as several other defendants who were

thought to possess or claim an interest in or lien upon the real

property located at 366 Knickerbocker Avenue, Brooklyn, New York

11237 (the “Subject Property”). See generally (ECF No. 1,

“Compl.”)

On March 16, 2021, Judge Sterling Johnson, Jr. granted

Plaintiff’s motion for summary judgment after finding that

Plaintiff made a prima facie showing of its entitlement to

foreclosure. (ECF No. 58, “M&O” at 7-10.) Judge Johnson denied

Plaintiff’s motion to appoint a receiver in the same order.

(M&O at 10-11.) Subsequently, on April 19, 2023, Plaintiff

filed an Amended Complaint to remove the defendants that were no

longer believed to possess or claim an interest in or lien upon

the Subject Property, and to add Defendants Kassin Sabbagh

Realty LLC and the New York City Department of Finance in light

of Plaintiff’s discovery that the two additional entities had

obtained liens to the Subject Premises subsequent to the

commencement of the action. See generally (ECF No. 70, “AC”.)

Plaintiff also requested that Defendants John Doe Nos. I–X be

removed from the caption. (ECF No. 97.)1 Finally, the Clerk of

Court entered default with respect to Defendants Joshua Mizrahi,

the New York City Environmental Control Board, the New York City

Department of Finance, the Criminal Court of the City of New

York, and Kassin Sabbagh Realty LLC. (ECF No. 93.)

1 The Court hereby amends the caption to remove John Doe Nos. I-X as named

defendants. See Fed. R. Civ. P. 21 (“On motion or on its own, the court may

at any time, on just terms, add or drop a party.”)

On July 21, 2023, Plaintiff filed a Motion to Fix

Indebtedness pursuant to Fed. R. Civ. P. 7(b) and Local Civil

Rule 7.1. (ECF No. 87, “Ptf. Mot.”) By order dated September

11, 2023, this Court referred Plaintiff’s motion to fix

indebtedness to Magistrate Judge Ramon E. Reyes for a report and

recommendation pursuant to 28 U.S.C. § 636(b). On November 16,

2023, this case was reassigned to Magistrate Judge Joseph A.

Marutollo.

Presently before the Court is the Report and Recommendation

issued on January 15, 2024 by Magistrate Judge Marutollo,

recommending that this Court grant Plaintiff’s Motion to Fix

Indebtedness in part, and deny the motion in part without

prejudice. (ECF No. 95, “R&R”.) Specifically, Magistrate

Judge Marutollo recommended that Plaintiff be awarded the unpaid

principal amount under the Loan Documents2 in the amount of

$2,071,999.91, the total contract interest accrued at the

Interest Rate in the amount of $528,315.54, the total default

interest accrued at the Default Rate in the amount of

$741,227.18, late fees in the amount of $109,595.84, and fees

relating to missing financial statements in the total amount of

$35,000, less a credit in the amount of $715.45. (R&R at 9-13,

17-18, 20.) With respect to advances and applicable interest on

2 All capitalized terms not explicitly defined herein correspond to the

definitions set forth in Magistrate Judge Marutollo’s R&R.

advances, Magistrate Judge Marutollo recommended that Plaintiff

be awarded $117,756.86 for real estate and insurance advances.

(R&R at 16.) Magistrate Judge Marutollo recommended that the

Court decline to award advances related to appraisal expenses,

inspection fees, and other miscellaneous items, and that the

Court decline to award interest on advances because Plaintiff

failed to provide supporting documentation. (R&R at 16.)

Magistrate Judge Marutollo further recommended that the Court

decline to award special servicer and liquidation fees also

because Plaintiff failed to provide supporting documentation.

(R&R at 17.) Finally, Magistrate Judge Marutollo recommended

that the Court deny Plaintiff’s request for attorney’s fees,

pending Plaintiff’s provision of supporting documentation.

In total, Magistrate Judge Marutollo recommended that

Plaintiff be awarded $3,603,179.68 plus interest accruing at a

daily rate of $622.58 from July 31, 2023 through the entry of

Judgement of Foreclosure. (R&R at 20.)

Objections to the R&R were timely and jointly filed by

Borrower and Defendant Mizrahi (ECF No. 99, “Def. Obj.”),

Plaintiff Responded to Defendants’ Objections (ECF No. 100,

“Ptf. Resp.”), and filed Plaintiff’s Motion for Order of Sale.

(ECF No. 97.) No other party has filed any objection to

Magistrate Judge Marutollo’s R&R. For the reasons stated below,

upon de novo review, the Court respectfully overrules

Defendants’ Objections, and adopts and affirms Magistrate Judge

Marutollo’s meticulous and well-reasoned R&R in its entirety.

BACKGROUND

The Court assumes the parties’ familiarity with the

extensive facts thoroughly recounted in the R&R. See (R&R at 1-

4.) The Court has reviewed the facts de novo and adopts the

detailed facts from the R&R.

LEGAL STANDARD

In considering the recommendations of a Magistrate Judge,

as outlined in an R&R, the Court may “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). When a party

makes a timely objection to an R&R, the Court must review de

novo those recommendations in the R&R to which the party

objects. See Fed. R. Civ. P. 72(b)(3); United States v. Male

Juvenile, 121 F.3d 34, 38 (2d Cir. 1997). However, even on de

novo review, “a district [court] judge will [] ‘ordinarily

refuse to consider arguments, case law and/or evidentiary

material which could have been, but [were] not, presented to the

magistrate judge in the first instance.” Kennedy v. Adamo, No.

02-cv-1776 (ENV), 2006 WL 3704784, at *1 (E.D.N.Y. Sep. 1,

2006), aff’d 323 F. App’x 34 (2d Cir. 2009) (quoting Haynes v.

Quality Markets, No. 02-cv-250 (KES), 2003 WL 23610575, at *3

(E.D.N.Y. Sep. 22, 2003).

As to the portions of the R&R to which no party objects,

the Court “need only satisfy itself that there is no clear error

on the face of the record.” Galvez v. Aspen Corp., 967 F. Supp.

2d 615, 617 (E.D.N.Y. 2013) (internal quotation marks and

citations omitted). If “‘the [objecting] party makes only

frivolous, conclusory or general objections, or simply

reiterates [] original arguments, the Court reviews the report

and recommendation only for clear error.’” Velez v. DNF

Assocs., LLC, No. 19-CV-11138 (GHW), 2020 WL 6946513, at *2

(S.D.N.Y. Nov. 25, 2020) (internal citations omitted).

Furthermore, “where the objections are merely perfunctory

responses, argued in an attempt to engage the district court in

a rehashing of the same arguments set forth in the original

petition, [district] courts should review [the R&R] for clear

error” only. Chen v. New Trend Apparel, Inc., 8 F. Supp. 3d

406, 416 (S.D.N.Y. 2014) (quoting Silva v. Peninsular Hotel, 509

F. Supp. 2d 364, 366 (S.D.N.Y. 2007)).

DISCUSSION

As an initial matter, the parties agree that Plaintiff is

entitled to an award for the unpaid principal amount of

$2,071,999.91, contract interest accrued at the Interest Rate in

the amount of $528,315.54, late fees in the amount of

$109,595.84, and real estate and insurance advances in the

amount of $117,756.86. See (Def. Obj. at 13; Ptf. Resp. at 5.)

The parties further agree that a credit in the amount of $715.45

is applicable to the total amount owed. (Id.) Accordingly, it

is undisputed that Plaintiff is owed damages totaling at least

$2,826,952.70.

As set forth previously, “[t]he court may adopt those

portions of the [R&R] to which no objection is made ‘as long as

no clear error is apparent from the face of the record.’”

Argenti v. Saul, No. 18-cv-9345 (AT), 2020 WL 1503171 (S.D.N.Y.

Mar. 30, 2020) (internal citation omitted). The Court has

reviewed the portions of the R&R to which no party objects,

namely the calculation of the unpaid principal amount, contract

interest amount, late fees, and real estate and insurance

advances, less a credit in the amount of $715.45, for a total

amount of $2,826,952.50, and the Court is satisfied that there

is no clear error.

Defendants’ Objections focus on three aspects of Magistrate

Judge Marutollo’s R&R. First, Defendants object to the portion

of the R&R recommendation to award fees associated with

Borrower’s failure to adhere to the applicable financial

reporting requirements in the amount of $35,000. Instead,

Defendants contend that Plaintiff is entitled to a maximum of

$5,000 in connection with Borrower’s failure to adhere to the

applicable financial reporting requirements. Second, Defendants

object to the portion of the R&R finding that Plaintiff is

entitled to default interest accrued at the Default Rate in the

amount of $741,227.18. Instead, Defendants ask this Court to

decline to enforce the applicable default interest rate as

unjust and unconscionable. Finally, Defendants object to

Magistrate Judge Marutollo’s determination that the affidavit

and supporting exhibits submitted by Plaintiff in support of

Plaintiff’s Motion to Fix Indebtedness are admissible under Fed.

R. Evid. 803(6) and constitute adequate proof of Plaintiff’s

entitlement to damages. Instead, Defendants argue that the

Court should find that the Federal Rules of Evidence are

inapplicable, and that Plaintiff’s records are inadmissible

under New York state law.

The Court finds that Defendants’ Objections are of a

conclusory nature, and either largely restate Defendants’

previously articulated arguments or raise arguments that could

have been raised, but were not raised, before Magistrate Judge

Marutollo. Objections of this nature trigger the Court’s review

of the R&R for clear error. See Brown v. Smith, No. 09-cv-4522

(WFK), 2012 WL 511581, at *1 (E.D.N.Y. Feb. 15, 2012) (finding

that “even in a de novo review of a party’s specific objections,

the court will not consider arguments . . . which could have

been, but were not, presented to the magistrate judge”)(internal

quotation marks and citation omitted); Amaya v. Ballyshear LLC,

No. 17-cv-1596 (JS), 2023 WL 2596031, at *3 (E.D.N.Y. Mar. 22,

2023) (“[W]here a party ‘makes only conclusory or general

objections, or simply reiterates the original arguments, the

Court reviews the [R&R] only for clear error.’”) (internal

citation omitted); Barratt v. Joie, No. 96-CV-0324 (LTS), 2002

WL 335014, at *1 (S.D.N.Y. Mar. 4, 2002) (“[O]bjections stating

the magistrate judge’s decisions are wrong and unjust, and

restating relief sought and facts upon which complaint grounded,

are conclusory”). Nevertheless, the Court applies both clear

error and de novo review to Defendants’ Objections and

respectfully overrules Defendants’ Objections as follows.

I. Fees Relating to Financial Reporting Requirements

Although the parties agree that Plaintiff is entitled to

fees in connection with Borrower’s failure to adhere to the

financial reporting requirements in Section 5.1.11 of the Loan

Agreement, the parties disagree about the amount. Defendants

argue that the provision of the Loan Agreement relating to

financial reporting requirements was only operable until the

2017 maturity of the Loan such that Plaintiff has no claim to

fees or penalties beyond 2017. Defendants further argue that in

light of the 2017 cutoff date, Plaintiff is only owed $5,000 in

fees relating to Borrower’s failure to adhere to financial

reporting requirements, as opposed to $35,000.

First, Defendants failed to raise this argument before

Magistrate Judge Marutollo and offer no reason for their failure

to do so. Ordinarily, district courts will “not consider

arguments . . . which could have been, but were not, presented

to the magistrate judge in the first instance.” Saada v. Golan,

No. 18-CV-5292 (AMD), 2023 WL 1993538, at *2 (E.D.N.Y. Feb. 13,

2023) (internal quotation marks and citation omitted).

In any event, Defendants’ argument that the financial

reporting requirements in Section 5.1.11 of the Loan Agreement

“[were] operable until the 2017 maturity of the loan . . . and,

by extension, [that] no penalty [was] due thereafter[]” (Def.

Obj. at 14), does not in any way undermine Magistrate Judge

Marutollo’s finding that the total applicable penalty amounts to

$35,000. As noted by Magistrate Judge Marutollo, “Section

5.1.11 of the Loan Agreement provides that “[i]f Borrower fails

to furnish [the required] information, Plaintiff has the option

to demand $5,000 for each required record.” (R&R at 16) (citing

Nunez Aff. Ex. A at 48-51.) In accordance with this provision,

on February 19, 2016, Borrower was notified that it was not in

compliance with the financial reporting requirement outlined in

Section 5.1.11 of the Loan Agreement, and that Borrower would be

subject to a $5,000 penalty for each required record that it

failed to report. (Nunez Aff. Ex. G at 3.) On April 20, 2016,

Borrower was notified that, as of that date, it had failed to

comply with the financial reporting requirement on four separate

occasions and was therefore subject to a total late penalty of

$20,000. (Nunez Aff. Ex. G at 5-6.) On July 21, 2016, Borrower

was notified that it had again failed to comply with an

applicable financial reporting requirement, increasing the total

penalty to $25,0000. (Nunez Aff. Ex. G at 7.) Finally, on

August 11, 2016, Borrower was notified that, pursuant to Section

5.1.11 of the Loan Agreement, a late penalty of $5,000 applied

to each of seven failures to adhere to the financial reporting

requirements, such that the outstanding late penalty for

Borrower’s failure to adhere to Section 5.1.11 of the Loan

Agreement totaled $35,000. (Nunez Aff. Ex. G. at 9.) Even

assuming, arguendo, that any failures to furnish the required

information were only operable until 2017, Borrower had already

accumulated $35,000 in fees by August 11, 2016.

Accordingly, Defendants’ argument that, based on the 2017

Loan maturity date, the penalty for Borrower’s failure to

fulfill its Section 5.1.11 financial reporting requirements

should total $5,000, as opposed to $35,000, is unavailing. Upon

de novo review, the Court overrules Defendants’ Objection and

adopts Magistrate Judge Marutollo’s recommendation that

“Plaintiff be awarded $35,000 in fees relating to the missing

financial statements.” (R&R at 17.)

II. Default Interest Fee

Defendants next object to Magistrate Judge Marutollo’s

recommendation that the Court award Plaintiff default interest

accrued at the Default Rate in the amount of $741,227.18.

Defendants urge this Court to apply the “doctrine of

unconscionability” and decline to uphold the “unjust enforcement

of onerous contractual terms which one party is able to impose

[upon] the other because of a significant disparity in

bargaining power.” (Def. Obj. at 15) (citing Rowe v. Great Atl.

& Pac. Tea Co., 385 N.E.2d 566, 569 (N.Y. 1978)).

It is not clear whether Defendants object to the term of

the Loan Agreement that sets the default rate at “the lesser of

(a) the Maximum Legal Rate and (b) five percent (5%) above the

[5.817% per annum] Interest Rate[]” (Nunez Aff. Ex. A at 11), or

if Defendants object to the term of the Loan Agreement that

provides for default interest at all.

Either way, Defendants’ arguments regarding the doctrine of

unconscionability are outside the purview of the underlying

motion, which relates only to damages. At the summary judgment

stage, once Plaintiff established a prima facie entitlement to

summary judgment by “producing evidence of the mortgage, the

unpaid note, and the defendant’s default,” Defendants bore the

burden “to demonstrate the existence of a triable issue of fact

as to a bona fide defense to the action, such as . . .

unconscionable conduct on the part of the plaintiff.” (M&O at

7) (quoting Gustavia Home, LLC v. Rutty, 785 F. App'x 11, 14 (2d

Cir. 2019)). Defendants failed to raise this argument, which

relates to the validity of the underlying Loan Agreement, or to

provide any support for this argument at the summary judgment

stage. Nor did Defendants raise this argument before Magistrate

Judge Marutollo with respect to the instant motion for damages.

See Brown, 2012 WL 511581, at *1 (noting that “even in a de novo

review of a party’s specific objections, the court will not

consider arguments . . . which could have been, but were not,

presented to the magistrate judge”) (internal citation omitted).

The Court finds that Defendants’ last-ditch effort to

assert the extraordinary contract defense of unconscionability

for the first time at this stage in the litigation is “frivolous

[and] conclusory[.]” Chen, 8 F. Sup. 3d at 416 (“If ‘the party

makes only frivolous, conclusory or general objections . . . the

Court reviews the report and recommendation only for clear

error.’”) (internal citation omitted). Nevertheless, the Court

“retain[s] the power to engage in sua sponte review” of

Defendants’ Objections, notwithstanding their frivolous nature,

and finds that neither the provision of the Loan Agreement

allowing for the accrual of default interest, the Default Rate

at which default interest accrued, nor the total amount of

$741,227.18 in default interest are unconscionable. Guerrero v.

Comm’r of Soc. Sec., No. 16-cv-3290 (RJS), 2017 WL 4084051, at

*4 (S.D.N.Y. Sep. 13, 2017) (quoting Greene v. WCI Holdings

Corp., 956 F. Supp. 509, 514 (S.D.N.Y. 1997)).

“Under New York law, a contract is unconscionable when it

is ‘so grossly unreasonable or unconscionable in the light of

the mores of business practices of the time and place as to be

unenforceable according to its literal terms.’” Ragone v. Atl.

Video at Manhattan Ctr., 595 F.3d 115, 121 (2d Cir. 2010)

(citing Gillman v. Chase Manhattan Bank, N.A., 534 N.E.2d 824,

828 (N.Y. 1988)). Generally, in order to demonstrate that a

contract is unconscionable, a party must show both that “there

[was] an ‘absence of meaningful choice on the part of one of the

parties together with contract terms which are unreasonably

favorable to the other party.’” Desiderio v. Ntn’l. Ass’n of

Sec. Dealers, Inc., 191 F.3d 198, 207 (2d Cir. 1999) (internal

citation omitted). Defendants have made no such showing.

Defendants, who were represented by counsel during the Loan

Agreement negotiation and closing, allege in a conclusory

fashion that they suffered from “a significant disparity in

bargaining power” (Def. Obj. at 15) (citing Rowe v. Great Atl. &

Pac. Tea Co., 385 N.E.2d 566, 569 (N.Y. 1978)), but provide no

support or explanation for this allegation. The

unconscionability defense is meant “to prevent oppression and

unfair surprise, not to readjust the agreed allocation of the

risks in the light of some perceived imbalance in the parties’

bargaining power.” Gillman, 534 N.E.2d at 830.

Defendants only point to the total default interest figure

of $741,227.18 as evidence of unconscionability. Absent any

argument regarding procedural unconscionability, the Court is

left to interpret Defendants’ focus on the total default

interest amount as an argument that the substantive provisions

of the Loan Agreement providing for default interest are “so

outrageous as to warrant holding [the relevant terms]

unenforceable on the ground of substantive unconscionability

alone.” Ragone, 595 F.3d at 122 (quoting Gillman, 534 N.E.2d at

824). Defendants’ argument is similarly unavailing. Defendants

have provided no evidence or factual support for the argument

that either the provision of the Loan Agreement allowing for the

accrual of default interest or the Default Rate itself is so

unreasonable as to warrant nullification based on substantive

unconscionability alone.

To the extent Defendants object to the provision of the

Loan Agreement that allows for the accrual of default interest,

a contractual term providing for the accrual of interest in the

event of a borrower’s default is a widespread, common-sense

feature of loan agreements, and the Court can find no grounds on

which to rule that such a provision is inherently

unconscionable. See AXA Inv. Managers UK Ltd. v. Endeavor Cap.

Mgmt. LLC, 890 F. Supp. 2d 373, 387 (S.D.N.Y. 2012) (“Parties to

a contract have the right . . . to specify within a contract the

damages to be paid in the event of a breach . . . .”). To the

extent Defendants object to the Default Rate itself, as noted by

Plaintiff, “[a] default rate of 5% over the contract rate, or a

combined 10.817%, is far below the legal rate in New York” (Ptf.

Resp. at 11), and certainly does not approach the

unconscionability standard of “grossly unreasonable” or

“outrageous.” Gillman, 534 N.E.2d at 828-29. Federal courts

applying New York contract law routinely approve default

interest rates well above 10.817%. See AXA Inv. Managers UK

Ltd., 890 F. Supp. 2d at 387 n.9 (“[I]t is well established that

[New York] usuary statutes do not apply to defaulted

obligations[]” and “[c]ourts accordingly have upheld default

interest rates that exceed twenty-five percent”) (collecting

cases). Finally, to the extent Defendants object to the total

amount that has accrued in default interest, the accumulation of

$741,227.18 in default interest was the foreseeable consequence

of Borrower’s prolonged failure to abide by the terms of the

Loan Agreement and Borrower’s failure to fulfill the obligations

that were agreed to under the Loan Agreement. This Court “may

not relieve a defaulting debtor from the consequences of [its

own] act merely because the results are harsh.” Fed. Home Loan

Mtg. Corp. v. 141st St. & Broadway Realty, No. 92-cv-1433 (MBM),

1994 WL 9686, at *5 (S.D.N.Y. Jan. 7, 1994) (quoting Shell Oil

Co. v. McGraw, 368 N.Y.S.2d 610, 613 (N.Y. App. Div. 1975)).

Accordingly, Defendants’ Objection, with respect to the

portion of the R&R finding that Plaintiff is entitled to default

interest accrued at the Default Rate in the amount of

$741,227.18, is respectfully overruled.

III. Authentication of Records

Finally, Defendants object to Magistrate Judge Marutollo’s

application of the Federal Rules of Evidence, rather than New

York law. See (R&R at 6) (“The admissibility of hearsay is a

procedural issue, so the Federal Rules of Evidence apply, not

New York law.”). Defendants assert that because “Plaintiff was

required to prove [Borrower’s] default as an element of proof

under New York substantive law . . . the admissibility of the

documents relied upon by the Magistrate Judge should have

likewise been determined under state law.” (Def. Obj. at 10.)

As an initial matter, Defendants’ arguments were reviewed

and rejected by Magistrate Judge Marutollo. Here, Defendants

repeat an identical argument, even conceding that the same

argument has previously been evaluated by Magistrate Judge

Marutollo. See (Def. Obj. at 10-11) (arguing that the

purportedly unauthenticated records submitted by Plaintiff

“should have been stricken” and acknowledging that this argument

was also “raised in Defendants’ opposition papers” and that “the

Magistrate Judge . . . reject[ed] this argument”). The Court

need not review the portions of an R&R to which a party objects

de novo “where [that] party . . . simply reiterates the original

arguments” stated in the briefing before the Magistrate Judge.

Saada, 2023 WL 1993538, at *2 (internal citation omitted). In

such circumstances, the Court reviews for clear error. Id.

Importantly, however, Defendants’ argument represents a

misunderstanding of the relevant law. It is long settled that

in a diversity of citizenship case, state law applies to

substantive issues and federal laws applies to procedural

issues. See Erie R.R. Co. v. Tompkins, 304 U.S. 64 (1938). In

particular, “[r]ules of evidence” are generally considered

“procedural in their nature” Salsburg v. Maryland, 346 U.S. 545,

550 (1954), such that “an action removed to federal court” is

governed by “federal procedural and evidentiary law . . . .”

Rand v. Volvo Fin. N. Am., Inc., No. 04-cv-349 (DLI), 2007 WL

1351751, at *13 (E.D.N.Y. May 8, 2007). This Court agrees with

Magistrate Judge Marutollo’s finding that the Nunez Affidavit

and supporting exhibits are admissible as business records under

Fed. R. Evid. 803(6). See (R&R at 6-8.) Defendants have

erroneously pointed to this Court’s decision in Wilmington Sav.

Fund Soc’y, FSB as trustee of Aspen Holdings Tr. v. Fernandez,

No. 22-cv-6474 (KAM), 2024 WL 219092 (E.D.N.Y. Jan. 22, 2024) as

the lone legal authority to support their contention that New

York law governs the evidentiary issues in the instant case.

However, there is nothing in the Court’s ruling in Fernandez or

otherwise that contradicts well-established Supreme Court

precedent or that supports Defendants’ contention about the

applicability of New York evidentiary law. Finally, the Court

further agrees that “[e]ven if, arguendo, New York law did

apply, Plaintiff has established that . . . the records would

also be admissible under [New York law].” (R&R at 7 n.5.)

Defendants’ Objection, with respect to the applicable rules

of evidence and the admissibility of Plaintiff’s affidavit and

supporting exhibits, are respectfully overruled.

IV. Judgment of Foreclosure and Sale

In its Motion for Order of Foreclosure and Sale, Plaintiff

asks this Court to include Defendants Kassin Sabbagh Realty LLC,

Joshua Mizrahi, the Criminal Court of the City of New York, the

New York City Environmental Control Board, and the New York City

Department of Finance (the “Defaulting Defendants”) in the

foreclosure Judgment “such that they are each barred and

foreclosed from all right, claim, lien, title, interest and

equity of redemption in the” Subject Premises. (ECF No. 97 at

2.) In support of this request, Plaintiff points to the

“Certificate of Default [that] was issued against [the

Defaulting Defendants].” (ECF No. 97 at 2) (citing ECF No. 93.)

On December 7, 2023, the Clerk of Court noted the aforementioned

default pursuant to Fed. R. Civ. P. 55(a). See (ECF No. 93.)

However, the Clerk of Court’s entry of default cannot convert

into a default judgment unless and until Plaintiff “appl[ies] to

the court for a default judgment[]” pursuant to Fed. R. Civ. P.

55(b)(2).

The Court respectfully directs Plaintiff to apply, upon

motion, for an order of default judgment against the Defaulting

Defendants, pursuant to Fed. R. Civ. P. 55(b)(2). In light of

Plaintiff’s request that the Default Defendants be included in

the Judgment, the Court reserves ruling on Plaintiff’s Motion

for Order of Foreclosure and Sale until Plaintiff has secured an

entry of default judgment against the Defaulting Defendants,

pursuant to Fed. R. Civ. P. 55(b)(2).

CONCLUSION

For the foregoing reasons, the Court adopts and affirms the

well-reasoned and thorough R&R issued by Magistrate Judge

Marutollo in its entirety. Plaintiff’s motion to fix

indebtedness is GRANTED in part and DENIED in part in accordance

with the computation outlined in the R&R, as reproduced directly

below.

ewe

(RER at 20.)

Pursuant to Fed. R. Civ. P. 21, the Clerk of Court is

respectfully requested to amend the caption to reflect that John

Doe Nos. I-X are no longer Defendants.

Plaintiff is respectfully requested to serve a copy of this

Memorandum and Order upon all pro se Defendants and to file

proof of service within two (2) business days of this Memorandum

and Order.

Plaintiff is further requested to file a motion for default

judgment pursuant to Fed. R. Civ. P. 55(b) (2) with respect to

21

the Defaulting Defendants within thirty (30) days of this

Memorandum and Order.

SO ORDERED.

Dated: March 26, 2024

Brooklyn, New York b =

we ay e+ tae

avd A. MATSUMOTO

United States District Judge

Eastern District of New York

22