U.S. Bank, National Association v. RNR Management, LLC et al

Filing 77

ORDER ADOPTING REPORT AND RECOMMENDATION: Judge Scanlon's report and recommendation dated January 5, 2015, is adopted. RNR is directed to pay back rent to the newly appointed Receiver, Jeffrey Saltiel, in the amount of $86,200 for the perio d from November 6, 2012, to January 5, 2016, and the amount of $2,400 per month for each full month thereafter. The Court will delay entering an order relating to the fine to be paid for the contempt until June 20, 2016, so as to give Defendants time to move for reconsideration of the Contempt Order and to demonstrate a good faith effort to cause the back rents to be paid to the Receiver. Mr. McCaffrey and Mr. Sharma are directed to appear in Room 4B of the Courthouse, 225 Cadman Plaza East , Brooklyn, New York, for an in-person conference at 11:00 a.m. on June 20, 2016. Unless the attorneys agree that Mr. McCaffrey does not represent RNR, Defendants shall provide the Court with a copy of RNR' s articles of incorporation, operating agreement, and any other documents bearing on the question of who has the power to choose a legal representative for RNR. Ordered by Judge Sandra L. Townes on 5/20/2016. (Brucella, Michelle)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF NEW YORK

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U.S. BANK, NATIONAL ASSOCIATION, AS TRUSTEE
FOR THE REGISTERED HOLDERS OF WAMU
COMMERCIAL MORTGAGE SECURITIES TRUST
2007-SL2, COMMERCIAL MORTGAGE PASSTHROUGH CERTIFICATES, SERIES 2007-SL2,
Plaintiff,

ORDER ADOPTING REPORT
AND RECOMMENDATION
12-CV-1899 (SLT)(VMS)

-againstRNR MANAGEMENT, LLC, a New York limited liability
company; CHITRAH RAMKISSOON, an individual; NEW
YORK CITY DEPARTMENT OF FINANCE; and NEW
YORK STATE DEPARTMENT OF TAXATION AND
FINANCE,
Defendants.

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TOWNES, United States District Judge:
In April 2012, plaintiff U.S. Bank, National Association, as trustee for the registered
holders of WaMu Commercial Mortgage Securities Trust 2007-SL2, Commercial Mortgage
Pass-Through Certificates, Series 2007-SL2 ("Plaintiff'), commenced this diversity action
against defendant RNR Management, LLC ("RNR") and one of its principals, Chitrah
Ramkissoon (collectively, "Defendants"), seeking to foreclose its mortgage on real property
owned by RNR (the "Property"). On November 2, 2012, this Court entered an "Order
Appointing a Receiver" (hereafter, the "Order"), which appointed Isak David Maryl as a
temporary receiver for the Property and empowered him to, among other things, take possession
of the Property, review the books and records relating to the Property, and collect rents and other
income generated by the Property. 1
In an Order Appointing Substitute Receiver, executed herewith, the Court substituted
Jeffrey Saltiel as Receiver in this case.
1

Defendants did not tum over the Property or the income generated by the Property to the
Receiver. On July 7, 2014, at Plaintiffs request, the Court issued an order directing Defendants
to show cause why they should not be held in contempt for failing to comply with the Order.
That Order to Show Cause stated, among other things:
[U]nless all rents collected by Defendants or their agents between
November 6, 2012, and July 18, 2014, are turned over to Plaintiff
by July 18, 2014, Defendants shall show cause why they should not
be fined in an amount not less than the amount of rent collected
from November 6, 2012, through the date of any order granting the
relief requested by the pending motion or, ifthere are no records of
the rents collected during this period, fined an amount based on the
highest amount of rent that could have been received during the
relevant period.
In response to the Order to Show Cause, the Court received a declaration from Brian
McCaffrey, an attorney who claimed to represent Defendants. In his declaration, Mr. McCaffrey
stated that Plaintiff had not contacted him regarding Defendants' failure to comply with the
Court's Order and that compliance "could have been attained through a simple phone call to [his]
office." Declaration of Brian McCaffrey (ECF Doc. 39), ~~ 6-7. Notwithstanding these
assurances, however, Defendants failed to tum over the rents by the July 18 deadline or to
provide an explanation for their failure to do so.
On October 7, 2014, the Court entered a "Contempt Order" finding Defendants in
contempt of Court for failing to comply with the terms of the Order and directing Defendants to
"pay to Plaintiff a fine in the amount of all rents collected between November 6, 2012, and the
date on which they become fully compliant with the Order .... " Contempt Order, p. 3. The
Contempt Order directed defendant Chitrah Ramkissoon to appear in Court on October 24, 2014,
with "books and records relating to the collection of such rents, including copies of leases,

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ledgers, rent receipts, and any other documents necessary to enable the Court to calculate the
amount of all rents collected between November 6, 2012, and the date on which Defendants
become fully compliant with the Order .... " Id., p. 4. The Contempt Order also stated:
[I]f [D]efendants cannot provide satisfactory records of the rents
collected during this period, this Court will refer this matter to
Magistrate Judge Scanlon to conduct an inquest to determine the
highest amount of rent which could reasonably have been received
during the relevant period, considering all relevant market
conditions .... " Id.
Defendants did not move for reconsideration of the Contempt Order. Although
defendant Ramkissoon appeared before the Court on two subsequent occasions, she never
provided any records. Accordingly, at a conference on November 7, 2014, the Court referred the
case to Magistrate Judge Vera M. Scanlon to conduct the inquest described in the Contempt
Order.
Judge Scanlon conducted the inquest and on January 5, 2016, issued a report and
recommendation (hereafter, "the R&R") in which she concluded that the maximum rent which
could have been received was $2,400 per month. Using that figure, Judge Scanlon calculated
that Defendants owed the Receiver $86, 200 in back rent: $2,400 for each of the 38 months
between November 6, 2012, and January 5, 2016, less $5,000 which Defendants had already
turned over. The R&R also included a suggestion as to how to proceed, stating: "the District
Judge may wish to order the Defendants to pay the back rent owing; determine any fine (as
compared to back rent) owed by Defendants for their contempt; and assess whether Defendants
are in compliance." R&R at 21.

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On January 19, 2016, Defendants filed a six-page document entitled "Partial Objection to
Report and Recommendation" (hereafter, "the Objection"). That document specifically states
that Defendants "do not object to Justice [sic] Scanlon's finding that the maximum monthly rent
should be set at $2,400," as this finding "was based on sound and fair reasoning." Objection, p.
2. Rather, Defendants principally object to Judge Scanlon's failure "to find that nonparty
Debidin [Ramkissoon] should be held liable for the entire contempt amount,'' arguing that it
would be unnecessary and unjust to assess a fine against Defendants. In addition, Defendants
object to Judge Scanlon's characterization of an affirmation submitted by Mr. McCaffrey as an
opposition submitted by RNR. Defendants assert that Mr. McCaffrey represents only Debidin
Ramkissoon, who owns 19 percent of RNR, and not RNR itself.
Defendants objections misapprehend the scope of the reference to Judge Scanlon. This
case was referred to magistrate judge solely to conduct an inquest and to determine the highest
rent that could be received on the Property. Judge Scanlon held the inquest and made that
determination. Since Defendants not only do not object to that determination, but also
affirmatively state that it was "based on sound and fair reasoning," the Court will adopt Judge
Scanlon's report and recommendation.
The Court did not request, and Judge Scanlon did not make, a recommendation
concerning the issue of who should be sanctioned for the contempt of court. The Contempt
Order addressed that issue, directing Defendants to "pay to Plaintiff a fine in the amount of all
rents collected between November 6, 2012, and the date on which they become fully compliant
with the Order .... " Contempt Order, p. 3. To the extent that Defendants have a basis for seeking
reconsideration of the Contempt Order, they should make that motion to the Court before June
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20, 2016. However, Defendants are advised that "[t]he standard for granting such a motion is
strict, and reconsideration will generally be denied unless the moving party can point to
controlling decisions or data that the court overlooked - matters, in other words, that might
reasonably be expected to alter the conclusion reached by the court." Shrader v. CSX Transp.,
Inc., 70 F.3d 255, 257 (2d Cir. 1995) (citing cases).

The Court will conduct a conference on Monday, June 20, 2016, to determine who, if
anyone, Mr. McCaffrey represents in this action. Unless Defendants and Mr. McCaffrey agree
before the conference that Mr. McCaffrey does not represent RNR, Defendants shall bring to the
conference a copy ofRNR's articles of incorporation, operating agreement, and any other
documents bearing on the question of who has the power to choose a legal representative for
RNR. If Defendants and McCaffrey agree, or the Court determines, that Mr. McCaffrey
represents only nonparty Debidin Ramkissoon, Plaintiffs request for permission to amend the
complaint will be granted on consent.

CONCLUSION
For the reasons set forth above, Judge Scanlon's report and recommendation dated
January 5, 2015, is adopted. RNR is directed to pay back rent to the newly appointed Receiver,
Jeffrey Saltiel, in the amount of $86,200 for the period from November 6, 2012, to January 5,
2016, and the amount of $2,400 per month for each full month thereafter. The Court will delay
entering an order relating to the fine to be paid for the contempt until June 20, 2016, so as to give
Defendants time to move for reconsideration of the Contempt Order and to demonstrate a good
faith effort to cause the back rents to be paid to the Receiver.

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s/SLT