Capital One, National Association v. AF&NR LLC et al

Filing 39

MEMORANDUM AND ORDER ADOPTING REPORT AND RECOMMENDATIONS: The Court adopts Judge Levy's R&R in its entirety. Plaintiff's proposed Judgment of Foreclosure and Sale is approved as modified by the R&R. Plaintiff is awarded a total of $8,273,787.81 against Answering Defendants. (see order for details). Ordered by Judge Eric N. Vitaliano on 8/20/2014. (fwd for judgment) (Fernandez, Erica)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF NEW YORK

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SDF9 COBK LLC,

Plaintiff,
MEMORANDUM & ORDER
-against12-cv-3078 (ENV) (RML)
AF & NR LLC, ALBERT ZA VUROV,
CONGREGATION TIFERETH TORNOR
DVORA SFARD, INC., Y. ZAVUROV, E
BUSINESS SERVICES, F. ZA VUROVA, N.
ZA VUROVA, NEW YORK CITY
ENVIRONMENTAL CONTROL BOARD
BUREAU, AND "JOHN DOE #1" to "JOHN
DOE #10" inclusive, et al.
Defendants.

FILED

IN CLERff's OFFICE
U.S. DISTRICT COIJRT E.O.N .,

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AUG 2 6 2014

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BROOKLYN OFFICE

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VITALIANO, D.J.,
Plaintiff SDF9 COBK LLC commenced this action on June 20, 2012, seeking
to foreclose on a commercial mortgage encumbering a parcel of real property
located in Brooklyn. Defendants AF & NR LLC and Albert Zavurov ("Answering
Defendants") timely responded to the complaint, while defendants Congregation
Tifereth Tornor Dvora Seard, Inc., Y Zavurov, E Business Services, F. Zavurova, N.
Zavurova and New York City Environmental Control Board Bureau ("Defaulting
Defendants") failed to respond. By Memorandum & Order, dated November 13,
2013, the Court granted plaintiff's motions for default judgment against Defaulting
Defendants and for a judgment of foreclosure against Answering Defendants, and
referred the case to Magistrate Judge Levy for a Report & Recommendation
("R&R") as to the appropriate terms of foreclosure and a calculation of damages.
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On July 8, 2014, Judge Levy issued his R&R, which recommended that a
judgment of foreclosure be entered and that plaintiff's Proposed Order (Feuerstein
Declaration, Ex. 8, dkt. # 30) be approved in all respects except for a small reduction
in attorney's fees. Specifically, Judge Levy recommended: (1) that plaintiff be
awarded a total of $8,273,787.81 against Answering Defendants, consisting of
$8,259,473.15 in damages-representing the sum of outstanding principal, nominal
interest, default interest, prepayment premiums and fees receivable, less credit for
payments received-plus $13,470 in attorney's fees and $844.66 in costs; (2) that
plaintiff be awarded additional interest payments from Answering Defendants from
October 1, 2013 through the date of entry of judgment at a per diem rate of
$3,198.07; (3) that John and/or Jane Doe Defendants #1 through #10 be
discontinued and excised from the caption of this action; (4) that the mortgage be
reformed to correct a clerical error; and (5) that plaintiff be granted leave to file a
motion to amend the judgment to seek additional attorney's fees in the future.
In reviewing an R&R of a magistrate judge, a district judge "may accept,
reject, or modify, in whole or in part, the findings or recommendations made by the
magistrate judge." 28 U.S.C. § 636(b)(l). A district judge is required to "make a de

novo determination upon the record, or after additional evidence, of any portion of
the magistrate judge's disposition to which specific written objection has been
made" by any party, Fed. R. Civ. P. 72(b). But, where no timely objection has been
made, the "district court need only satisfy itself that there is no clear error on the
face of the record" to accept a magistrate judge's report and recommendation.

Urena v. New York, 160 F. Supp. 2d 606, 609-10 (S.D.N.Y. 2001) (quoting Nelson v.

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Smith, 618 F. Supp. 1186, 1189 (S.D.N.Y. 1985)).
The R&R gave proper notice that any objection must have been filed within
14 days. The window closed on July 23, 2014. Defendants, unsurprisingly, did not
file any objection. Plaintiff, however, filed what it termed an "objection", which
stated, in its entirety:
Your Honor recommended that plaintiff be awarded $3,799,309.24 in
default interest, and an additional $3,198.07 per day in default interest
from October 1, 2013 through the date of entry of judgment. Thereafter,
it is our assumption that interest will assume at the statutory rate. This
is concerning because if there is a delay in conducting the foreclosure
sale interest will continue to accrue at a rate that is significantly less than
what is provided for in the loan docs. Therefore, we respectfully request
that the court grant default interest through the transfer of the Referee's
Deed.
In other words, plaintiff seeks to ensure that it receives the default interest rate
instead of the (lower) statutory rate for the as-yet undetermined period of time
between the date of entry of judgment and the ultimate foreclosure sale.
A review of the record reveals that plaintiff never clearly presented this
argument to Judge Levy before the R&R was issued. More significantly, plaintiff
has not pointed to any loan documents or applicable caselaw that would authorize
the imposition of any rate of post-judgment interest other than that provided by
statute. As plaintiff clearly recognized that is precisely the intent of the
recommendation Judge Levy made to the Court in his R&R. Upon de novo review
of the written objection plaintiff filed, the Court finds no reversible error in Judge
Levy's recommendation that the judgment earn interest after its entry at the
statutory rate. There being no other objection, and in accord with the applicable

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standard of review, the Court finds Judge Levy's R&R to be correct, well-reasoned,
and free of any clear error. The Court, therefore, adopts it in its entirety as the
opinion of the Court.
Finally, on June 12, 2014, prior to Judge Levy's issuance of his R&R, plaintiff
moved ex parte for appointment of a receiver. That motion has been largely
resolved by Judge Levy's R&R approving plaintiff's proposed Judgment of
Foreclosure and Sale, which covers the terms of the appointment of a receiver. In
addition, the Court approves the appointment of Andrew H. Kulak as Receiver in
this matter, as requested in plaintiff's June 12 motion. The motion itself is now
denied as academic.
Conclusion
The Court adopts Judge Levy's R&R in its entirety. Plaintiff's proposed
Judgment of Foreclosure and Sale is approved as modified by the R&R.
Plaintiff is awarded a total of $8,273, 787.81 against Answering Defendants.
Plaintiff is awarded additional interest payments from Answering Defendants from
October 1, 2013 through the date of entry of judgment at a per diem rate of
$3,198.07. Default judgment against the Defaulting Defendants is ordered entered.
The action against John and/or Jane Doe Defendants #1 through #10 is dismissed.
Collaterally, the Consolidation Agreement is re-formed so that "westerly side
of Ocean Parkway" now reads "easterly side of Ocean Parkway." The Court
appoints Andrew H. Kulak, Fiduciary ID #162548 of Kulak & Zaslowsky, as
Receiver in this matter.
Finally, plaintiff is granted leave to file a motion seeking to amend the

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judgment to add attorney's fees should there be any post-judgment litigation in this
matter.
The Clerk of Court is directed to enter judgment and the order of foreclosure
sale as well as to close this case for administrative purposes.
SO ORDERED.
Dated:

Brooklyn, New York
August 20, 2014

s/Eric N. Vitaliano

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ERIC N. VITALIANO
United States District Judge

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