Green Mountain Holdings (Cayman) Ltd. v. 501 Lafayette Ave.

Docket Number21-CV-5844 (MKB) (TAM)
Decision Date18 August 2023
PartiesGREEN MOUNTAIN HOLDINGS (CAYMAN) LTD., Plaintiff, v. 501 LAFAYETTE AVE LLC, SHANITA JONES, Defendants.
CourtU.S. District Court — Eastern District of New York

REPORT AND RECOMMENDATION

TARYN A. MERKL, UNITED STATES MAGISTRATE JUDGE

Green Mountain Holdings (Cayman) LTD (“Green Mountain” or Plaintiff) initiated this action on October 20, 2021, against Defendants 501 Lafayette Ave LLC (501 Lafayette LLC) and Shanita Jones. (Complaint (“Compl.”), ECF No. 1.) Plaintiff seeks to foreclose on a mortgage encumbering the property at 501 Lafayette Avenue, Rockville Centre, New York 11570 (known on the Nassau County Tax Map as Section 38, Block 110, Lots 480-83) (referred to herein as the “501 Lafayette Avenue Property” or the “Property”) pursuant to the New York Real Property Actions and Proceedings Law (RPAPL) § 1301 et seq. (Id. ¶ 1.)[1] Plaintiff also alleges damages, including unpaid principal in the amount of $265,000, plus accrued interest. (Aff. of Amounts Due, ECF No. 21-6, ¶ 5.)

Currently pending before this Court is Plaintiff's motion for default judgment, which the Honorable Margo K. Brodie referred to the undersigned magistrate judge for a report and recommendation. (See Second Mot. for Default J., ECF No. 21; May 18, 2023 ECF Order Referring Motions.) For the reasons set forth below, this Court respectfully recommends that Plaintiff's motion for default judgment be denied.

FACTUAL BACKGROUND AND PROCEDURAL HISTORY
I. Factual Background

Plaintiff alleges that on August 3, 2020, Defendant 501 Lafayette LLC executed a Consolidated Mortgage in favor of Golden Bridge LLC, doing business as Golden Bridge Funding LLC (“Golden Bridge”), for $265,000 plus interest secured by the 501 Lafayette Avenue Property. (Compl., ECF No. 1, ¶ 8; Consolidation, Extension, and Modification Agreement (“Consolidated Mortgage”), ECF No. 1-1, at ECF pp. 3-12.) Plaintiff states that the agreement was recorded in the Nassau County Clerk's Office on November 17, 2020, at Liber 44735, Page 920. (Compl., ECF No. 1, ¶ 8; Consolidated Mortgage, ECF No. 1-1, at ECF p. 4.) Also on August 3, 2020, Plaintiff alleges that Defendant 501 Lafayette LLC executed and delivered a Consolidated, Restated and Amended Note to Golden Bridge for $265,000. (Compl., ECF No. 1, ¶ 9; Consolidated Note and Addenda, ECF No. 1-1, at ECF pp. 13-16.) Plaintiff claims that Defendant Jones executed a guaranty of payment on August 3, 2020, personally guaranteeing payment of the note and mortgage to the lender, its successors, and assigns. (Compl., ECF No. 1, ¶ 9; Consolidated Note and Addenda, ECF No. 1-1, at ECF pp. 13-16.)[2]Plaintiff states that the Consolidated Mortgage was assigned from Golden Bridge to Plaintiff on August 13, 2021. (Compl., ECF No. 1, ¶ 10; Assignment of Mortgage, ECF No. 1-1, at ECF pp. 68-69.)

Plaintiff further claims that Defendant 501 Lafayette LLC did not comply with the terms of the mortgage by failing to remit the payment due on June 1, 2021, and that the default continues to date. (Compl., ECF No. 1, ¶ 13.) Plaintiff states that it sent a “Default Notice” to both Defendants, advising them of the acceleration of the loan, in August 2021. (Id. ¶ 14; Default Notice, ECF No. 1-1, at ECF pp. 71-73 (default notice), ECF p. 74 (affidavit of mailing).)[3]

II. Procedural History

As noted, Plaintiff commenced this action on October 20, 2021. (Compl., ECF No. 1.) Plaintiff brings this action under diversity jurisdiction; Plaintiff states that it is a corporation organized under the laws of the Cayman Islands with a principal place of business in Miami, Florida. (Id. ¶¶ 2, 6.) Plaintiff further avers that Defendant 501 Lafayette LLC is a single-member LLC (whose sole member is Defendant Jones), and that both Jones and 501 Lafayette LLC are citizens of New York. (Id. ¶¶ 3-4.) On November 11, 2021, Plaintiff filed proof of service as to Defendant 501 Lafayette LLC, indicating it had been served through the New York Secretary of State on October 28, 2021.

(Aff. of Service, ECF No. 8.) On January 7, 2022, Plaintiff filed a status report, requesting additional time to effectuate service on Defendant Shanita Jones; this request was granted on January 10, 2022, extending Plaintiff's deadline for service to February 8, 2022. (Jan. 7, 2022 Status Report, ECF No. 9; Jan. 10, 2022 ECF Order.) Plaintiff again requested an extension of time on February 7, 2022, which was granted, extending Plaintiff's deadline for service to March 25, 2022. (Pl.'s Mot. for Extension of Time to File, ECF No. 10; Feb. 8, 2022 ECF Order.) On March 2, 2022, Plaintiff filed proof of service as to Defendant Jones, indicating that Jones had been served at her “place of residence” on February 18, 2022, at the 501 Lafayette Avenue Property.[4] (Aff. of Service, ECF No. 11.) Defendant 501 Lafayette LLC's answer was due on November 18, 2021, and Defendant Jones's answer was due on March 11, 2022. (See Affs. of Service, ECF Nos. 8, 11.)

A. Plaintiff's First Motion for Default Judgment

On March 14, 2022, Plaintiff requested a certificate of default as to both Defendants. (Request for Certificate of Default, ECF No. 12.) On March 18, 2022, the Clerk of Court entered a certificate of default pursuant to Rule 55(a) of the Federal Rules of Civil Procedure, due to Defendants' failure to appear or otherwise defend this action. (Clerk's Entry of Default, ECF No. 13.) Plaintiff then moved for default judgment against Defendants on April 6, 2022, and the motion was referred to the undersigned magistrate judge for a report and recommendation by Judge Brodie that same day. (Mot. for Default J., ECF No. 14.; Apr. 6, 2022 ECF Order Referring Motion.) The Court then scheduled a telephonic default motion hearing for May 12, 2022, and directed the Clerk of Court to mail formal written notice to Defendants at all available addresses. (Apr. 13, 2022 ECF Scheduling Order; Notice to Defs., ECF No. 15.) On May 12, 2022, the Court held the telephonic default motion hearing. (May 12, 2022 ECF Minute Entry and Order.) Counsel for Plaintiff attended, but no appearance was made by Defendants. (Id.) The Court ordered that Plaintiff shall serve the Request for Certificate of Default [ECF No.] 12 and the Clerk's Entry of Default [ECF No.] 13 on Defendants and file proof of service on the docket by 5/13/2022,” and directed the Clerk of Court to mail a copy of the Order to Defendants. (Id. (emphasis omitted).) Plaintiff filed proof of service of the default motion on May 13, 2022. (Aff. of Service, ECF No. 17.)

On September 27, 2022, the Court entered an order seeking clarification of several details concerning Plaintiff's motion for default judgment and directing Plaintiff to file a letter or supplemental authority by October 14, 2022. (Sept. 27, 2022 ECF Order.) After the Court granted two motions for extensions of time, Plaintiff filed a letter, providing additional details, requesting that its initial motion for default judgment be withdrawn, and seeking leave to file a renewed motion for default judgment. (See Mots. for Extension of Time, ECF Nos. 18-19; Oct. 17, 2022 ECF Order; Nov. 15, 2022 ECF Order; Pl.'s Ltr., ECF No. 20.) The Court granted Plaintiff's request to withdraw the initial default motion and to file a renewed motion for default judgment by January 20, 2023. (Dec. 16, 2022 ECF Order.)

B. Plaintiff's Second Motion for Default Judgment

Plaintiff filed a second motion for default judgment on January 19, 2023. (Second Mot. for Default J., ECF No. 21.) On March 15, 2023, the Court scheduled a telephonic motion hearing for April 4, 2023, and again directed the Clerk of Court to mail a copy of the Order and a formal notice of the default motion hearing to Defendants at all available addresses. (Mar. 15, 2023 ECF Scheduling Order; Notice to Defs., ECF No. 22.)

At the April 4, 2023 hearing, Defendant Jones appeared pro se and indicated her intent to hire counsel for herself and Defendant 501 Lafayette LLC. (Apr. 4, 2023 ECF Minute Entry and Order.) The Court temporarily placed Plaintiff's motion in abeyance, set a deadline of April 28, 2023, for Defendants to have counsel enter a notice of appearance, and scheduled a status conference for May 11, 2023. (Id.) Counsel for Defendants entered a notice of appearance on April 27, 2023. (Notice of Appearance, ECF Nos. 23, 24.)

Counsel for all parties appeared at the May 11, 2023 status conference. (May 11, 2023 ECF Minute Entry.) The Court directed the parties to meet and confer and to file a joint status report by May 18, 2023, indicating “whether Plaintiff agrees to withdraw the pending motion and/or vacate the entry of default.” (Id.) On May 17, 2023, Plaintiff submitted a status report on consent of both Defendants, indicating that Defendants intended to file a motion to vacate the defaults and proposing a briefing schedule. (May 17, 2023 Status Report, ECF No. 25.) On May 18, 2023, Judge Brodie referred Plaintiff's second motion for default judgment and Defendants' anticipated motion to vacate the default to the undersigned magistrate judge for a report and recommendation. (May 18, 2023 ECF Order Referring Motions.) The Court adopted the parties' proposed briefing schedule, directing Defendants to serve their opening motion by June 28, 2023. (May 19, 2023 ECF Order.) No proof of service was filed by the stated deadline.

On July 12, 2023, the Court again directed Defendants to file proof of service of their opening motion, this time by July 14 2023. (July 12, 2023 ECF Order.) On the same day, Plaintiff filed a letter indicating it was never served with any motions from Defendants, and requesting that its second motion for default judgment “be decided by the Court.” (Pl.'s July 12, 2023 Ltr., ECF No. 26.) The next day,...

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