U.S. Bank National Association, as Trustee for the Registered Holders of WaMu Commercial Mortgage Securities Trust 2007-SL3, Commercial Mortgage Pass-Through Certificates, Series 2007-SL3 v. Yhun et al
ORDER granting in part and denying in part 15 Motion to Vacate. "[D]efendants cross motion is granted in part and denied in part. The Clerk of the Court is directed to vacate entry of default. The late-filed answer is allowed and the motion to dismiss is denied." The parties are directed to complete discovery under the following schedule: (1) fact discovery, including deposition, by June 3, 2016; (2) expert disclosures by July 1, 2016; (3) rebuttal expert disclosures by July 29, 2016; (4) expert depositions by August 26, 2016; (5) premotion letters are due on September 2, 2016, response are due on September 9, 2016. Ordered by Magistrate Judge Ramon E. Reyes, Jr on 3/14/2016. (Reyes, Ramon)
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF NEW YORK
No 14-cv-7376 (FB)(RER)
U.S. BANK NATIONAL ASSOCIATION, AS TRUSTEE FOR THE REGISTERED HOLDERS OF
WAMU COMMERCIAL MORTGAGE SECURITIES TRUST 2007-SL3, COMMERCIAL
MORTGAGE PASS-THROUGH CERTIFICATES, SERIES 2007-SL3,
DIANE YHUN, ET AL.,
Summary Opinion & Order
Galaxiworld.com, Ltd., 249 F.3d 167, 171
(2d Cir. 2001). No one factor is dispositive.
E.g., Murray Eng'g, P.C. v. Windermere
Props LLC, No. 12 Civ. 0052, 2013 WL
1809637, at *4 (S.D.N.Y. Apr. 30, 2014).
Because entry of default is generally
disfavored and is considered an “extreme
sanction” that “must remain a weapon of
last, rather than first resort,” Meehan, 652
F.2d at 277, any doubt “as to whether a
default should be granted or vacated” must
be “resolved in favor of the defaulting
party,” Enron Oil Corp. v. Diakuhara, 10
F.3d 90, 96 (2d Cir. 1993); see also Brady v.
W. Overseas Corp., No. 04–CV–2878, 2008
WL 4936875, at *4 (E.D.N.Y. Nov. 14,
RAMON E. REYES, JR., U.S.M.J.:
Before the Court is defendant Diane
Yhun’s motion to vacate entry of default and
to dismiss the complaint, or in the
alternative to file a late answer. (Dkt. Nos.
15-23). Senior United States District Judge
Frederick Block referred the motion to me
for decision. (Dkt. Entry dated 10/5/15).
For the reasons which follow, the motion is
granted in part and denied in part.
Vacatur of Entry of Default
& Late-Filed Answer
When determining whether there is
“good cause” to vacate entry of default
under Rule 55(c), a court must consider
three factors: (1) the willfulness of the
default; (2) the existence of a meritorious
defense to the defaulted claims; and (3)
prejudice to the non-defaulting party should
It is arguable that the default was willful,
or at the very least due to attorney neglect.
In addition, there has been little to no
showing of a meritorious defense,
defendant’s contention that plaintiff lacks
standing due to improper assignments of the
note and mortgage cannot be taken
seriously, at least on the current record.
Nevertheless, plaintiff will suffer very little,
if any, prejudice were default to be vacated.
A receiver has already been appointed and is
managing the property, collecting rents and
paying the taxes and insurance.1 There is no
indication in the record that the value of the
property is less than the amount currently
owed under the note and mortgage. Any
additional costs and fees under the note and
mortgage incurred to date or hereafter can
be recovered in a foreclosure sale if plaintiff
Even if Yhun is correct that there are
assignments, that is not grounds to dismiss
the complaint at this juncture. Notably,
Yhun does not cite to the Federal Rule of
Civil Procedure upon which she seeks
dismissal. If it is under Rule 12, dismissal
must be predicated on the complaint itself,
not affidavits filed in connection with the
motion. If it is under Rule 56, that time has
not yet arrived as discovery has not been
The Court is unwilling to
dismiss a complaint based on the purported
forged assignments when plaintiff has not
been afforded the opportunity to complete
Given that default is a drastic remedy and
the preference of the federal courts to
resolve cases on their merits, the motion to
vacate entry of default is granted. Because
the motion to vacate entry of default has
been granted, the motion to permit a latefiled answer is granted as well.
Accordingly, defendant’s cross motion is
granted in part and denied in part. The
Clerk of the Court is directed to vacate entry
of default. The late-filed answer is allowed
and the motion to dismiss is denied.
Motion to Dismiss
Yhun seeks dismissal of the complaint
based almost entirely on two affidavits of
Chuck Noell, a purported expert in reading
and analyzing title reports. According to
Noell there are several irregularities in the
title history of the subject property, which he
contends depart from the accepted practice
of the industry. Included among them are
several purportedly forged signatures of
bank officials on various assignments.
Based largely on these purported forgeries,
Yhun argues that plaintiff lacks standing to
pursue this action.
The parties are directed to complete
discovery under the following schedule: (1)
fact discovery, including deposition, by June
3, 2016; (2) expert disclosures by July 1,
2016; (3) rebuttal expert disclosures by July
29, 2016; (4) expert depositions by August
26, 2016; (5) premotion letters are due on
September 2, 2016, response are due on
September 9, 2016.
Ramon E. Reyes, Jr.
United States Magistrate Judge
Defendant’s belated attempt to undo the
appointment of the receiver is rejected.
appointment of the receiver will continue until further
Dated: March 14, 2016
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