OneWest Bank, NA v. Vaval et al

Filing 53

MEMORANDUM AND ORDER: Accordingly, the Court GRANTS IN PART and DENIES IN PART Plaintiff s request for damages, costs, and fees, and the Court DENIES Plaintiff s construed motion for reconsideration of the June 18, 2016, M&O. The Court DENIES WITH P REJUDICE Plaintiff s request for attorney's fees. The Court AWARDS Plaintiff damages of $580,018.70 of unpaid principal, $214,606.92 of unpaid interest, $90,293.20 in escrow advances, $400.00 in litigation fees, and$ ;97.48 in costs. The Court DIRECTS Plaintiff no later than February 14, 2018, both to submit a new proposed Judgment of Foreclosure and Sale that specifies the conditions for sale and otherwise is consistent with this Memorandum and Order, and to choose a referee for the foreclosure and sale. Ordered by Judge Carol Bagley Amon on 1/31/2018. (Fernandez, Erica)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF NEW YORK
-X

JAN 312018

CIT BANK,N.A.,formerly known as

OneWest Bank, N.A.,'

S^Stm<smaE

Plaintiff,

-againstFRANTZ VAVAL,KETLY VAVAL,

NOT FOR PUBLICATION

MORTGAGE ELECTRONIC

MEMORANDUM & ORDER

REGISTRATION SYSTEMS,INC. as

14-CV-3437(CBA)
(PK)

nominee for FRANKLIN FIRST

FINANCIAL, LTD., NEW YORK CITY
TRANSIT ADJUDICATION BUREAU,
NEW YORK CITY ENVIRONMENTAL

CONTROL BOARD,JEANINE ALTENOR,
LISTON ALTENOR,and JANE DOE,
Defendants.
-X

AMON,United States Distriet Judge:

Plaintiff CIT Bank, N.A., brings the instant action to seek foreclosure and sale of a

mortgage encumbering a property in Brooklyn, because the mortgagor defaulted on payments
starting September 1, 2009. (D.E. # 14 T[T| 1^, 18.) When Plaintiff filed the instant action.
Defendants were the owners of, tenants at, or holders of security interests in the property. (Id. TITf

5-10.) In a Memorandum and Order dated July 18,2016("M&O"),the Court dismissed the claims
against Defendant Jane Doe, who no longer is a tenant, and granted Plaintiffs motion for default

'Plaintiff files its Complaint and Amended Complaint as OneWest Bank, N.A. (See D.E. # 1 at 1; D.E. # 14 at 1.)
On August 13,2015,Plaintiff filed a Notice of Change ofPlaintiffs Name,notifying the Court that its parent company
had been acquired and that it "survives as an entity but has changed its name as a part of the acquisition and is now
known as CIT Bank, N.A." (D.E. # 37.) In the Notice, Plaintiff also modified the caption, listing its name as "CIT
BANK, N.A., FORMERLY KNOWN AS ONEWEST BANK[,] N.A." (Id) The Court construes the Notice as a

motion to substitute parties under Rule 25(c) of the Federal Rules of Civil Procedure. Ordinarily, such motions must
be served to all parties.
Fed. R. Civ. P. 25(c). However, the Court has dismissed all claims against Defendant
Jane Doe, who was never served process but no longer has an interest in the property at issue,(see D.E.# 46 at 2; see
also D.E. # 39 at 3), and the Clerk has entered a certificate of default against the other Defendants,(see D.E. dated
Jan. 22, 2015). Therefore, Plaintiff need not serve the substitution motion on the remaining Defendants in this case.
See Fed. R. Civ. P. 5(a)(2). Accordingly, the Court grants Plaintiffs construed motion and directs the Clerk of Court
to amend the docket to reflect the caption above.
1

judgment against the other Defendants, against which the Clerk of Court had entered a certificate
of default. (See D.E. # 46 at 2, 10; see also D.E. # 39 at 3.) However, the Court denied without

prejudice Plaintiffs motion forjudgment offoreclosure and sale and its request for damages,costs,

and fees. (D.E. # 46 at 10.) Before the Court are, as construed. Plaintiffs renewed motion and

request, as well as a motion for reconsideration of part ofthe M&O. (D.E.#51.) For the reasons
set forth below,the Court grants in part and denies in part the request for damages,costs, and fees;
denies the construed reconsideration motion; and directs Plaintiff to submit a new proposed

judgment offoreclosure and sale that is consistent with this Memorandum and Order.
DISCUSSION

"A plaintiff is entitled to foreclose on a property if it demonstrates the existence of an
obligation secured by a mortgage, and a default on that obligation." (D.E.# 46 at 4(quoting H
Sav. Bank. FSB v. Beach. No. 13-CV-341 (JS), 2014 WL 923151, at *15 (E.D.N.Y. Mar. 10,

2014)).) In the M&O, the Court held that Plaintiff was entitled to foreclosure and sale of the
Brooklyn property. (D.E. # 46 at 4.) However, "[wjhile a default judgment constitutes an
admission of liability, the quantum of damages remains to be established by proof in this case.
Flaks V. Koegel.504 F.3d 702,707(2d Cir. 1974). Plaintiff must prove damages"in an evidentiary

proceeding in which the defendant has the opportunity to contest the amount." Grevhound
Exhibitgroup. Inc. v. E.L.U.L. Realtv Corp.. 973 F.3d 155, 158 (2d Cir. 1992); see also Fed. R.
Civ. P. 55(b)(2) (noting that a district court may "conduct hearings" when it "needs to . . .
determine the amount of damages" to "effectuate judgment"). "[EJven when the defendant
defaults and is not present to object, damages must be based on admissible evidence." House v.
Kent Worldwide Machine Works.Inc.. 359 F. App'x 206,207(2d Cir. 2010). And the Court must

"ascertain the amount of damages with reasonable certainty." Credit Lvonnais Sec.(USA). Inc.
V. Alcantara. 183 F.3d 151,155(2d Cir. 1999).

Although Defendants failed to appear and rebut damages, the Court in its M&O declined
to order foreclosure and sale because Plaintiff failed to provide sufficient records to support its

requested amount of$580,018.70 in unpaid principal,$60,040.81 in escrow advances for insurance

and tax payments, $2,555.00 in fees related to the default, $2,998.20 in litigation costs,^ and
$3,500.00 in attorney's fees. (D.E.# 46 at 5-10.) Still, the Court approved Plaintiffs requested
interest rates on the principal: 3,75% starting February 1, 2009; 4.75% starting February 1, 2014;
and 5.125% starting February 1,2015. (Id. at 6.)

On December 2, 2016, Plaintiff filed a Supplemental Affirmation for Default Judgment

and Judgment of Foreclosure and Sale (the "Supplemental Affirmation"). (D.E. #51.) The Court
construes the Supplemental Affirmation as a renewed motion for foreclosure and sale and request
for damages, costs, and fees. Defendants once again have failed to appear and oppose the motion.
With respect to the unpaid principal, the Court in its M&O found that the unpaid principal
was $587,733.97 as of January 8,2009, but that Plaintiff failed to provide support for the amoimt
$580,018.70 at the time of mortgage default. (See D.E. # 46 at 5-6.) In its renewed motion.
Plaintiff offers a swom affidavit from one of its directors testifying that the unpaid principal was

indeed $580,018.70. (See D.E.# 51-3 18.) Attached to the affidavit are purported bank records,

which Plaintiff did not provide in the original motion. The director testified to their admissibility
and authenticity as business records. (Id.^^3,8.) The records show that, as ofSeptember 1,2009,

the unpaid principal indeed was $580,018.70. They reflect that none ofthe principal has been paid

^ The Court notes that Plaintiff itemized the litigation fees in a September 14, 2015, Attorney Affirmation, which the
Plaintiff had provided the Court before it issued its M&O. (See D.E. # 33-3 at 2.) Although Plaintiff asserted the

litigation fees to total $2,908.20, and the Court so noted in its M&O,
(s^ D.E. # 46 at 7), Plaintiff had incorrectly
added the itemized amounts. Plaintiff instead was seeking $2,998.20 in litigation fees.

as of August 16, 2016. (Id., Ex. C.) Upon review of the records, the Court finds that Plaintiff
"adequately support[s]" $580,018.70 of unpaid principal,(D.E.# 46 at 5).

With respect to unpaid interest, the Court in its M&O declined to calculate a figure in light

of "uncertainty regarding the amount of unpaid principal." (D.E. # 46 at 5-6.) In the instant
motion, the business records showing the unpaid principal also establish the unpaid interest. The

admissible records state that the unpaid interest is $172,135.51 as of August 27,2016. (D.E. #51-

3, Ex. C.) Moreover, the records also show that, every month since August 2016, interest has

increased by $2,477.16—consistent with the annual rate of 5.125% approved by this Court in its
M&O,(see D.E. # 46 at 6.) In light of the documentary evidence, the Court finds that Plaintiff
earned another $42,471.41 in unpaid interest after August 27, 2016, for a total of $214,606.92 of
unpaid interest.

With respect to the escrow advances, the director testifies that $60,040.81 was the correct

amount as of February 10, 2015, when the Court referred the motion for default judgment to the

Honorable Viktor V. Pohorelsky, United States Magistrate Judge.^ However, the attached
documents, which the director testifies are business records, show that Defendants now owe

Plaintiff more. (^ D.E. # 5T-3, Exs. C-D.) According to the document. Defendants owe
$90,293.20 in escrow advances as of August 17,2016. (See id.. Ex. C.) In particular. Plaintiff has

provided $62,097.35 for tax disbursements and $31,102.08 for insurance disbursements. (Id., Ex.
D.) The Court subtracts from the sum $2,906.23 in escrow credits. (Id.) Upon review of the
records, the Court finds that Plaintiff "adequately support[s]" $90,293.20 in escrow advances,
(D.E.# 46 at 5).

^ The case has been reassigned to the Honorable Peggy Kuo, United States Magistrate Judge. (D.E. dated Oct. 17,
2015.)
4

Plaintiff also provides sufficient documentary evidence for the costs. The director testifies
to the admissibility of relevant business records, which show that Plaintiff has spent $2,555 in
broker price opinions and property inspections. (See D.E. #51-3, Ex. E.) However,the director
concedes that "$2,457.52 [is] credited to the recoverable balance." (Id.) The Court subtracts
$2,457.52 and finds that Plaintiff establishes only $97.48 in costs.

With respect to litigation fees, the Court awards $400 to Plaintiff. To prove the fees.
Plaintiff offers a so-called "Statement of Damages," which is deficient in three ways. (See D.E.

# 51-6.) First, the total has changed—^to $2,868.20 from $2,998.20—apparently because the fees

for "[sjerving copy of Summons and Complaint" was slashed by $130. (Compare D.E. # 51-6 at
1-2, with D.E.# 33-3 at 2.) But Plaintifffails to explain why the amount, which should have been

stable throughout the course of litigation, had changed. Second, attached to the Statement of

Damages are purported business records with no testimony authenticating them or proving that
they qualify as hearsay exceptions. (See D.E.# 51-6 at 4-9.) Third,even ifthe attached documents
were admissible, they would prove only that Plaintiff spent $2,363.20. Plaintiff does not provide
documentation as to how it incurred the remaining $505 in fees. Because the evidence is

inadmissible and in any event contains confusing inconsistencies and gaps, the Court does not
consider the Statement ofDamages and its accompanying exhibits. Nonetheless,Plaintiff initially
filed this action in federal court, and the Court takes judicial notice of the costs associated with a
federal action. The docket reflects that Plaintiff paid $400 in filing fees at the start. (D.E. #1);
see also Court Fees, U.S. Dist. Ct.- E. Dist. of N.Y., https://www.nyed.uscourts.gov/court-fees

(last visited Jan. 31, 2018). Therefore, in light of the judicially noticeable evidence, the Court
finds that Plaintiff is entitled to $400 in litigation fees.

The Court turns last to attorney's fees. Plaintiff requests $3,500 based on a flat-fee
agreement with its counsel. (See D.E.# 46 at 8.) In the M&O,the Court held that it will "decline[]

to award attorney's fees pursuant to a flat-rate agreement unless the request is accompanied by

supporting documentation sufficient to allow the court to 'calculat[e] the presumptively

reasonable]fee via the lodestar method^^^^ and compar[e] it to the flat fee amoimt.'" (Id. at 9(first
and fourth alterations in original)(collecting cases).) The Court also held that it would require
Plaintiff"to submit'contemporaneous time records specifying relevant dates,time spent,and work
done.'" (Id. at 8(quoting Gen. Nutrition Inv. Co. v. Gen. Vitamin Ctrs.. Inc.. 817 F. Supp. 2d 66,
76 n.2(E.D.N.Y. 2011)).)

In the Supplemental Affirmation, counsel for Plaintifftestifies that he "is unable to submit

contemporaneous time records[,] as a flat fee of $3,500.00 [wa]s charged based upon the work
involved

"(D.E.# 51 T[ 10.) Counsel adds that "there have been decisions in this District that

have allowed for the collection of a flat fee without contemporaneous records." (Id t 9 (citing
OneWest Bank. N.A. v. Raehunath. No. 14-CV-3310(RJD),2015 WL 5774784, at *6(E.D.N.Y.

Sept. 8, 2015) (collecting cases), report and recommendation adopted. 2015 WL 5774784
(E.D.N.Y. Sept. 29,2015).)

The Court construes the Supplemental Affirmation as a motion for reconsideration under
Local Civil Rule 6.3, and the Court denies the motion. First, Plaintiff violates the rule, having

failed to file the motion within 14 days after the Court had issued its M&O. In any event, the
motion is denied on the merits. Under the local rule, a movant is required to "set[] forth concisely

the matters or controlling decisions which counsel believes the Court has overlooked." Plaintiff
cites only to OneWest Bank, a nonbinding magistrate judge's report and recommendation. In

'' The lodestar is "the product of a reasonable hourly rate and the reasonable number of hours required by the case."
Millea v. Metro-North R.R. Co.. 653 F.3d 154, 166(2d Cir. 2011).
6

addition, the magistrate judge in OneWest Bank noted that district courts in this Circuit are split
on whether to give attorney's fees despite the lack of contemporaneous records. See 2015 WL

5774784, at *6. The case fails to persuade this Court to change sides in the debate. The Court
thus denies Plaintiffs construed motion for reconsideration.

Because Plaintiffs counsel lacks any contemporaneous records, the Court denies
Plaintiffs request for attorney's fees with prejudice.
CONCLUSION

Accordingly, the Court GRANTS IN PART and DENIES IN PART Plaintiffs request for
damages, costs, and fees, and the Court DENIES Plaintiffs construed motion for reconsideration
of the June 18, 2016, M&O. The Court DENIES WITH PREJUDICE Plaintiffs request for

attorney's fees. The Court AWARDS Plaintiff damages of $580,018.70 of unpaid principal,
$214,606.92 of unpaid interest, $90,293.20 in escrow advances, $400.00 in litigation fees, and
$97.48 in costs. The Court DIRECTS Plaintiff no later than February 14, 2018, both to submit a

new proposed Judgment of Foreclosure and Sale that specifies the conditions for sale and
otherwise is consistent with this Memorandum and Order, and to choose a referee for the
foreclosure and sale.
SO ORDERED.

Dated: January 31, 2018
Brooklyn, New York

s/Carol Bagley Amon
Carol Bagiey Amon
United States District Judge