# Wells Fargo Bank National Association v. 366 Realty LLC

> District Court, E.D. New York · March 26, 2024

URL: https://www.frixlaw.com/law-library/cases/10311445

## Case

- **Court:** District Court, E.D. New York
- **Decided:** March 26, 2024
- **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/10311445

## Opinion text

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

---

Source: Frix Law Library, https://www.frixlaw.com/law-library/cases/10311445. Public record. Not legal advice.