Amtrust Bank v. Malik et al

Filing 163

ORDER ADOPTING REPORT AND RECOMMENDATIONS: For the reasons set forth in the attached Memorandum and Order, the court adopts Judge Azrack's Report and Recommendation as to defendants' liability in its entirety. Accordingly, plaintiff' s motion for default judgment as to liability is granted in part and denied in part. Plaintiff shall serve a copy of this Memorandum and Order on defendants and file a certificate of service via ECF within two business days of the date of this Order. Plaintiff shall advise the court whether it will proceed with a motion to enter default judgment on damages as to the defaulting defendants. Ordered by Judge Kiyo A. Matsumoto on 2/25/2014. (Tsai, Denise)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF NEW YORK
------------------------------------- X
FEDERAL DEPOSIT INSURANCE CORPORATION
as Receiver for AmTrust Bank,

ORDER ADOPTING REPORT
AND RECOMMENDATION

Plaintiff,
09-cv-4805(KAM)(JMA)
-againstPANKAJ MALIK; MALIK & ASSOCIATES,
P.C.; ARTISAN MORTGAGE COMPANY, INC.;
STREAMLINE MORTGAGE CORP.; LINK ONE
MORTGAGE BANKERS LLC; GLOBAL
FINANCIAL, INC.; RESOURCE ONE, INC.;
ACORN FUNDING GROUP, INC.; SI
MORTGAGE COMPANY; NMR ADVANTAGE
ABSTRACT LTD.; GEORGE ALDERDICE;
NICHOLAS A. PELLEGRINI; ANTONIETTA
RUSSO; and JOHN DOES 1-10,
Defendants.
------------------------------------X
MATSUMOTO, United States District Judge:
On November 4, 2009, plaintiff AmTrust Bank
(“AmTrust”) filed this action against various defendants to
recover losses stemming from fraudulent mortgage loan
transactions.

(ECF No. 1, Complaint filed 11/4/09 (“Compl.”).)

Specifically, the complaint alleges that defendants, including
mortgage brokers, seller’s attorneys, a closing attorney, and a
title agent, fraudulently procured mortgage loans from AmTrust
through “flip” transactions.

(Compl. at 1-4.)

On January 8,

2010, the court granted AmTrust’s motion to substitute the
Federal Deposit Insurance Corporation (“FDIC” or “plaintiff”) as
plaintiff for AmTrust pursuant to 12 U.S.C. § 1821.

On April

19, 2013, the Clerk of Court entered a certificate of default
against six defendants: George Alderdice, Esq. (“Alderdice”),
who acted as the seller’s attorney; and mortgage brokers Genesis
Home Mortgage Corp. (“Genesis”); Global Financial, Inc.
(“Global”); Link One Mortgage Bankers LLC (“Link One”); Resource
One, Inc. (“Resource One”); and Streamline Mortgage Corporation
(“Streamline”) (collectively, the “Brokers”). 1
Entry of Default dated 4/19/13.)

(ECF No. 148,

Currently pending is

plaintiff’s motion for default judgment as to liability against
the six defaulting defendants. 2
Judgment filed 6/4/13.)

(ECF No. 149, Mot. for Default

On August 29, 2013, the court referred

plaintiff’s motion for default judgment to Magistrate Judge Joan
M. Azrack for a report and recommendation.

(Order Referring

Motion, dated 8/29/13.)
DISCUSSION
Presently before the court is a Report and
Recommendation issued by Magistrate Judge Azrack on January 24,
1

The complaint alleges that Alderdice, an attorney, represented the
seller in two loan transactions, and actively assisted defendants’ fraudulent
transactions by using a falsified earnest money check. (Compl. ¶¶ 46-47,
138, 142, 300-327.) As the R&R accurately notes, although the complaint
alleges that Alderdice participated in two loan transactions, it provides
details of only one loan transaction that Alderdice participated in, the loan
for 697 Hempstead Boulevard, Uniondale (the “697 Hempstead Loan”). (R&R at
4-5.)
The complaint further alleges that the Brokers entered into a Master
Broker Agreement (“Agreement”) with AmTrust for fifteen loans (the “Subject
Loans”) and violated the terms of the Agreement by, inter alia, submitting
false information and documents to AmTrust to secure loans and refusing to
repurchase the fraudulent loans they originated. (See R&R at 7-8.)
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Plaintiff’s motion only seeks a default judgment on the issue of
liability. Plaintiff has reserved its right to move for a default judgment
on damages at a later stage in the proceedings.

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2014, recommending that the court grant in part and deny in part
plaintiff’s motion for default judgment on the defaulting
defendants’ liability.

(ECF No. 161, Report and Recommendation

dated 1/24/14 (“R&R”) at 10-11.)

Specifically, Magistrate Judge

Azrack recommended that the court enter a default judgment on
the following liability issues: (1) Streamline is liable for
breach of contract for breaching Paragraphs 8.1 and 9.1 of the
Master Broker Agreement (“Agreement”) for each of the Streamline
loans; (2) Genesis is liable for breach of contract for
breaching Paragraphs 8.1 and 9.1 of the Agreement for each of
the Genesis loans; (3) Global is liable for breach of contract
for breaching Paragraphs 8.1 and 9.1 of the Agreement for each
of the Global loans; (4) Resource One is liable for breach of
contract for breaching Paragraphs 8.1 and 9.1 of the Master
Broker Agreement (“Agreement”) for each of the Resource One
loans; (5) Link One is liable for breach of contract for
breaching Paragraphs 8.1 and 9.1 of the Master Broker Agreement
(“Agreement”) for the Link One loan; and (6) Alderdice is liable
for fraud concerning the 697 Hempstead Loan.

Magistrate Judge

Azrack also recommended denying plaintiff’s motion, without
prejudice with leave to renew, on two minor issues: (1) whether
the Brokers breached Paragraph 7.3 of the Agreement for all of
the Subject Loans, and (2) whether Alderdice committed fraud in
connection with a second AmTrust loan.

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As explicitly noted at the end of Magistrate Judge
Azrack’s R&R, any objections to the R&R were to be filed within
fourteen days of receipt of the R&R.

(R&R at 11.)

The R&R was

mailed to defendants by plaintiff on January 30, 2014 (ECF No.
162, Affidavit of Service dated 1/30/14), and plaintiff’s
counsel was served via the ECF filing system.

The period for

filing objections has expired, and no objections to Magistrate
Judge Azrack’s R&R have been filed by either party.
In reviewing a Report and Recommendation, the district
court “may accept, reject, or modify, in whole or in part, the
findings or recommendations made by the magistrate judge.”
U.S.C. § 636(b)(1)(C).

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Where no objection to the Report and

Recommendation has been filed, the district court “need only
satisfy itself that that there is no clear error on the face of
the record.”

Urena v. New York, 160 F. Supp. 2d 606, 609-10

(S.D.N.Y. 2001) (quoting Nelson v. Smith, 618 F. Supp. 1186,
1189 (S.D.N.Y. 1985)).
Upon a careful review of Judge Azrack’s detailed R&R
and the record in this case, and finding no clear error, and
considering that neither party has objected to any of Judge
Azrack’s thorough and well-reasoned recommendations, the court
hereby adopts in full the R&R as the opinion of the court.
Accordingly, plaintiff’s motion for default judgment as to
liability is denied in part and granted in part as set forth in

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Judge Azrack’s Report and Recommendation dated January 24, 2014.
CONCLUSION
For the reasons set forth above, the court grants
plaintiff’s motion for default judgment declaring that: (1)
Streamline is liable for breach of contract for breaching
Paragraphs 8.1 and 9.1 of the Agreement for each of the
Streamline loans; (2) Genesis is liable for breach of contract
for breaching Paragraphs 8.1 and 9.1 of the Agreement for each
of the Genesis loans; (3) Global is liable for breach of
contract for breaching Paragraphs 8.1 and 9.1 of the Agreement
for each of the Global loans; (4) Resource One is liable for
breach of contract for breaching Paragraphs 8.1 and 9.1 of the
Agreement for each of the Resource One loans; (5) Link One is
liable for breach of contract for breaching Paragraphs 8.1 and
9.1 of the Agreement for the Link One loan; and (6) Alderdice is
liable for fraud concerning the 697 Hempstead Loan.

The court

denies without prejudice plaintiff’s motion for default judgment
on the issues of (1) whether the Brokers breached Paragraph 7.3
of the Agreement for all of the Subject Loans; and (2) whether
Alderdice committed fraud in connection with a second AmTrust
loan.

Plaintiff may renew its motion as to these issues and

present additional evidence and/or arguments in conjunction with
a motion on the issue of damages.
Plaintiff shall serve a copy of this Memorandum and

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Order upon defendants and file a certificate of service via ECF
within two business days of the date of this Order.

Plaintiff

shall advise the court whether it will proceed with a motion to
enter default judgment on damages as to the defaulting
defendants.

SO ORDERED.
Dated:

February 25, 2014
Brooklyn, New York
_________/s/
_____ _____
Kiyo A. Matsumoto
United States District Judge
Eastern District of New York

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