Courchevel 1850 LLC v. Pinto-Bedoya et al

Filing 17

ORDER ADOPTING REPORT AND RECOMMENDATIONS, the court adopts the 15 R&R to the extent consistent with the foregoing. The court GRANTS a default judgment against Pinto-Bedoya, Y & S Development, and the Creditor Defendants. The court ORDERS Pinto -Bedoya to pay Plaintiff $ 144,018.10 plus $19.18 per day between March 8,2017, and the date of entry of judgment. The court also ORDERS the foreclosure and sale of the property in question and will appoint a referee to conduct the sale. By no later than December 1, 2017, Plaintiff is DIRECTED to provide the court with a list of five prospective referees, including their curriculum vitae, demonstrating their qualifications for appointment as referee in this matter. Plaintiff is also DI RECTED to submit a revised Proposed Judgment of Foreclosure and Sale that (1) identifies the newspaper in which notice of the foreclosure sale will be made; and (2) revises the amount due to include additional accrued interest from March 8,2017, to t he date of entry of this judgment, at the per diem rate of $19.18, if Plaintiff intends to recover such interest. (Cf Mem. of Law in Supp. of Default J. (Dkt. 14-2) at ECF p.4.) The court ORDERS the John Doe Defendants dismissed from the action. So Ordered by Judge Nicholas G. Garaufis on 11/6/2017. (Lee, Tiffeny)

P/-P

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF NEW YORK
-X

COURCHEVEL 1850 LLC,
ORDER

Plaintiff,

16-CV-6716(NGG)
-againstMARIA PINTO-BEDOYA; Y & S DEVELOPMENT OF NY,
INC.; DEPARTMENT OF HOUSING PRESERVATION AND
DEVELOPMENT;NEW YORK STATE DEPARTMENT OF
TAXATION AND FINANCE; NEW YORK CITY
ENVIRONMENTAL CONTROL BOARD; and JOHN DOES 1
THROUGH 12,
Defendants.
-X

NICHOLAS G. GARAUFIS,United States District Judge.

Plaintiff Courchevel 1850 LLC has moved for a defaultjudgment against Defendants in

this foreclosure action. (PI. Mot. for Default J.("Mot.")(Dkt. 14).) The court referred
Plaintiffs motion to Magistrate Judge Ramon E. Reyes, Jr., who thereafter submitted a Report
and Recommendations("R&R")that the court grant Plaintiffs motion as to Defendants Maria

Pinto-Bedoya, Y & S Development ofNY,Inc.("Y & S Development"), and three governmental
entities with junior liens against the property in question: the New York State Department of

Taxation and Finance("NYSDTF"),the New York City Department of Housing Preservation
and Development("NYCDHPD"),and the New York City Environmental Control Board (the
'NYCECB," and,together with the NYSDTF and the NYCDHPD,the "Creditor Defendants").

Plaintiff also named twelve John Doe Defendants, who were alleged to have unspecified liens

against the property in question. Because no parties have objected to the R&R and more than
fourteen days have elapsed since the R&R was filed, the court reviews the R&R for clear error.
See Fed. R. Civ. P. 72(b)(2); Gesualdi v. Mack Excavation & Trailer Serv.. Inc.. No.09-CV-

1

2502(KAM)
(JO),2010 WL 985294, at * 1 (E.D.N.Y. Mar 15, 2010). The court ADOPTS the
R&R,to the extent stated below and for the reasons that follow.
The court finds no clear error in the R&R's conclusion that the transfer ofthe deed to the

property to Defendant Y & S Development in April 2006 did not extinguish Plaintiffs mortgage
interest, which was only recorded in February 2007. (Compl.(Dkt. 1)

6,14; R&R at 3-4.) As

Judge Reyes correctly notes, under New York law, an unrecorded conveyance ofreal property,

such as a mortgage,is void as against a subsequent bona fide purchaser. N.Y. Real Prop. L.
§ 291; Provident Bank v. Cmtv. Home Mortg. Corp.. 498 F. Supp. 2d 558,567(E.D.N.Y. 2007).
But as Judge Reyes also observes, a subsequent grantee bears the burden of establishing that it
purchased the property in question in good faith and for valuable consideration. See Provident
Bank.498 F. Supp. 2d at 568; see also Hood v. Webster. 2 N.E.2d 43,44(N.Y. 1936). Because

Y & S Development has not proffered any evidence that it lacked actual or constructive
knowledge ofthe mortgage, it has not rebutted Plaintiffs prima facie case, and the court cannot

conclude that its deed has priority over Plaintiffs mortgage interest. Plaintiff has therefore
established that it is entitled to foreclosure.

Nor does the court find clear error in the R&R's conclusion that Plaintiff has established

that it is entitled to a defaultjudgment against the Creditor Defendants. Under New York law,in
order to extinguish junior liens against a property subject to a mortgage, the mortgagee must
name junior lienholders as parties to the foreclosure action. N.Y. Real Prop. Acts. L. § 1311(3).
When the State ofNew York, New York City, or "any department, bureau, board, commission,
council, officer, agency[,] or instrumentality thereofis defendant in an action affecting real

property, the complaint[must] set forth...[djetailed facts showing the particular nature ofthe
interest in or lien on the real property and the reason for making the state [or city] a party

defendant." Id. §§ 202,202-a. The Complaint named the Creditor Defendants and identified
their interests in the property in question. (Compl. TIH 7-9.) Although the Complaint's
allegations are somewhat sparse regarding the NYCECB's liens on the property(id ^ 9),
Plaintiff attached to the Complaint a 30-page list of citations the NYCECB has issued against

other Y & S Development properties(id Ex. E), which courts in this district have deemed
sufficient to meet a plaintifPs pleading obligations under Sections 202 and 202-a ofthe New

York Real Property Actions and Proceedings Law. See, e.g., Cit Bank v. Dambra,No. 14-CV3951 (SLT)(VMS),2015 WL 7422348, at *6(E.D.N.Y. Sept. 25, 2015).
The court clarifies the R&R regarding the availability of a deficiency judgment against
Pinto-Bedoya. The R&R recommends that the court award Plaintiff a deficiency judgment

against Pinto-Bedoya in the amount of(1)the current outstanding loan balance ($200,000); plus
(2) accrued interest as of March 8,2017($44,018.10); and(3)interest of$19.18 per day between
March 8, 2017, and the date ofthe foreclosure sale; minus(4)the return on the sale ofthe

property in question after recovery ofreasonable costs and fees. (R&R at 4.) Although the
R&R's recommendation that Pinto-Bedoya should be held liable for a deficiency is not clearly
erroneous,the recommendation that the court should grant a deficiency judgment is premature.

As Plaintiff acknowledges in its Proposed Judgment of Foreclosure and Sale ((Dkt. 14-6), at ECF

p.4), in order to obtain a deficiencyjudgment, it must file a separate motion after the foreclosure
sale has been consummated. SeeN.Y. Real Prop. Acts. L. § 1371; Fed. Home Loan Mortg.

Corp. V. Stratford Realtv Assocs., No. 90-CV-7216(SAS), 1995 WL 406083, at *3(S.D.N.Y.

July 10,1995)("Sections 1371(2) and(3)ofthe[New York Real Property Actions and
Proceedings Law] make it eminently clear that a separate judgment must be secured within a

specific time in order to collect a deficiency, even ifthe foreclosure judgment clearly states that

defendants are liable for any deficiency following the sale ofthe premises."). If such a motion is
timely made,the amount ofthe deficiency judgment will be calculated in accordance with the
statute. S^N.Y.Real Prop. Acts. L. § 1371(2).

Accordingly,the court adopts the R&R to the extent consistent with the foregoing. The
court GRANTS a defaultjudgment against Pinto-Bedoya, Y & S Development,and the Creditor
Defendants. The court ORDERS Pinto-Bedoya to pay Plaintiff$144,018.10 plus $19.18 per day
between March 8,2017, and the date of entry ofjudgment. The court also ORDERS the
foreclosure and sale ofthe property in question and will appoint a referee to conduct the sale. By
no later than December 1, 2017, Plaintiff is DIRECTED to provide the court with a list offive

prospective referees, including their curriculum vitae. demonstrating their qualifications for

appointment as referee in this matter. Plaintiff is also DIRECTED to submit a revised Proposed
Judgment ofForeclosure and Sale that(1)identifies the newspaper in which notice ofthe
foreclosure sale will be made; and(2)revises the amount due to include additional accrued
interest firom March 8,2017,to the date ofentry ofthis judgment, at the per diem rate of$19.18,
ifPlaintiff intends to recover such interest. (Cf Mem. of Law in Supp. of Default J.(Dkt. 14-2)

at ECF p.4.) The court ORDERS the John Doe Defendants dismissed firom the action.
SO ORDERED.

s/Nicholas G. Garaufis
Dated: Brooklyn, New York

NICHOLAS G. GARAUFE

November ^ ,2017

United States District Judge