Toiny LLC v. Gill et al

Filing 39

ORDER ADOPTING REPORT AND RECOMMENDATIONS, Finding no clear error in the R&R, the court ADOPTS the R&R (Dkt. 37) in full. Accordingly, the certificates of default as to all Defendants are VACATED and Plaintiff's motion for default judgment (Dkt. 28) is DENIED as premature, without prejudice and withleave to renew should circumstances warrant doing so in the future. So Ordered by Judge Nicholas G. Garaufis on 3/27/2019. (Lee, Tiffeny)

Dip
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF NEW YORK
-X

TOINYLLC,
ORDER

PlaintijBf,

18-CV-40(NGG)
(VMS)
-againstCAROL GILL,as heir and distributee ofthe Estate of

Eugene Clement also known as Eugene Robert Clement,
JARED CLEMENT,as heir and distributee ofthe Estate of

Eugene Clement also known as Eugene Robert Clement,
NEKISHA CLEMENT,as heir and distributee of the Estate

of Eugene Clement also known as Eugene Robert Clement,
JEWEL CLEMENT,as heir and distributee ofthe Estate of

Eugene Clement also known as Eugene Robert Clement,
CRIMINAL COURT OF THE CITY OF NEW YORK,
SUPREME COURT OF THE CITY OF NEW YORK,
COUNTY OF KINGS,NEW YORK CITY
ENVIRONMENTAL CONTROL BOARD,NEW YORK
CITY TRANSIT ADJUDICATION BUREAU,585 LEX
CORP.,FANTASIA HUNT,and PUBLIC
ADMINISTRATOR OF KINGS COUNTY,
Defendants.
-X

NICHOLAS G. GARAUFIS,United States District Judge.

Plaintiff Toiny LLC brings this action against the above-captioned Defendants, pursuant

to New York Real Property Actions Proceeding Law("RPAPL")§ 1301,to foreclose a mortgage

encumbering property at 585 Lexington Avenue, Brooklyn, New York 11221 (the "Property").
(See Am. Compl. K 1 (Dkt. 7).) Plaintiff claims to be the owner and holder ofa note (the "Note")
and mortgage (the "Mortgage")that was originally executed by non-party Eugene Clement. (Id.
34-38.) After Clement's death in 2011, Defendants Carol Gill, Jared Clement, Nekisha
Clement, and Jewel Clement were allegedly "named as Heirs to Mortgagor in the Petition for
Administration filed with the Kings County Surrogate's Court." (Id ^ 38.) According to
Plaintiff, Eugene Clement defaulted on the Note and Mortgage and his estate is indebted to

1

Plaintifffor unpaid principal, accrued and unpaid interest, and late charges, which collectively
totaled $241,615.90 as of August 4,2016. (Id. ^ 43.)
On January 3,2018,Plaintiffconunenced this action against the individuals and entities

that may have an interest in Eugene Clement's estate, including heirs and distributees. (See
Compl.(Dkt. 1).) None of Defendants answered or otherwise responded to the amended
complaint within 21 days of service. (See Feb. 25,2019 R&R("R&R")(Dkt. 37)at 3.) In June

and July 2018,Plaintiff secured certificates of default against each Defendant. (First Certificate
of Default(Dkt. 24); Second Certificate ofDefault(Dkt. 27).) Plaintiff then moved for default

judgment(Mot.(Dkt. 28)), and this court referred the motion to Magistrate Judge Vera M.
Scanlon (Oct. 18, 2018 Order), who scheduled a status conference for November 15,2018(Nov.
1,2018 Order).

Plaintiff served Defendants with a copy ofthe referral order and the scheduling order for
the status conference before Judge Scanlon. (Certificate of Service(Dkt. 32).) Defendants Carol
Gill and Jared Clement appeared at the November 15 conference and explained that they had not
been served with any documents in connection with this case until the court's scheduling order
for the status conference. (See Nov. 15,2018 Order(Dkt. 33); R&R at 4.) At a follow-up

conference on February 1,2019, Gill's attorney informed Judge Scanlon that he represents Gill
in ongoing state-court proceedings regarding the administration ofEugene Clement's estate, and
that he anticipates that Gill will be appointed as the administrator ofEugene Clement's estate
without restriction. (See R&R at 5.)

On February 25, 2019, Judge Scanlon issued an order and report and recommendation

("R&R")regarding Plaintiffs motion for defaultjudgment. (R&R.) She noted that, under
Federal Rule of Civil Procedure 55(c), courts "may set aside an entry of default for good cause."

(Id. at 5(quoting Fed. R. Civ. P. 55(c)).) "As Rule 55(c) does not define 'good cause,' the
Second Circuit has established the following criteria for deciding whether to vacate an entry of
default:(1) whether the defendant's default was willful;(2) whether defendant has a meritorious

defense to plaintiffs claims; and(3)the level ofprejudice the non-defaulting party would suffer

as a result ofthe denial ofthe motion for default judgment." (Id. at 6(quotation marks omitted)
(citing Team Kasa. LLC v. Humphrev. No. 17-CV-1074(JS)(AKT),2018 WL 1867117, at *2
(E.D.N.Y. Jan. 24,2018),report & recommendation adopted. 2018 WL 1083958(E.D.N.Y. Feb.

26,2018)).) Judge Scanlon found that all three factors weigh in favor of vacating Defendants'
defaults. (Id at 6-9.) Specifically, she found that(1)Gill's default was not willful because she

has complied with every directive issued by Judge Scanlon;(2)Defendants may have several
meritorious defenses; and(3)Plaintiff will not suffer prejudice as a result of vacating the defaults
because Plaintiff did not commence this action until seven years after Eugene Clement allegedly

first failed to make a necessary payment. (Id.J

Judge Scanlon also found that additional factors weigh in favor of vacating the defaults.
In her view, it would be premature to try to resolve issues related to Eugene Clement's estate

prior to Gill's appointment as its administrator and without permitting Gill to explore settlement
and presentation of defenses. (Id at 10.) Moreover, she explained, vacating all Defendants'
defaults will grant the parties flexibility in coordinating any interests ofthe first lienholder ofthe
Property with those ofPlaintiffin this action. (IdJ She further noted that defaultjudgements are
generally disfavored in the Second Circuit. (Id (citing, inter alia. Meehan v. Snow.652 F.2d

274,277(2d Cir. 1981)).) Accordingly, Judge Scanlon sua sponte^ vacated the certificates of

^ As Judge Scanlon noted(R«&R at 5 n.3), courts may vacate certificates of default sua sponte. See Tr. ofEmpire
State Carpenters Annuity. Apprenticeship. Labor-Msmt. Coon.. Pension & Welfare Funds v. Penco United. LLC.

No. 13-CV-4745 (SJF),2015 WL 518623, at *2(E.D.N.Y. Feb. 5,2015); see also IT S, rommnditv Futures Trading
Comm'n v. Lamarco. No. 17-CV-4087(ADS),2018 WL 2103208, at *1 (E.D.N.Y. May 7, 2018).

default as to the two appearing Defendants—Carol Gill and Jared Clement—and recommended

that this court vacate the defaults of all non-appearing Defendants and deny Plaintiffs motion for
defaultjudgment as premature, without prejudice and with leave to renew should circumstances
warrant doing so in the future. (Id.)

No party has objected to the R&R and the time in which to do so has passed. Fed. R.
Civ. P. 72(b)(2). The court therefore reviews the R&R for clear error. Fed. R. Civ. P. 72, 1983

Advisory Committee's Notes; s^ Colvin v. Berrvhill. 734 F. App'x 756, 758(2d Cir. 2018)
(summary order); Wider v. Colvin. 245 F. Supp. 3d 381, 385(E.D.N.Y. 2017).
Finding no clear error in the R&R,the court ADOPTS the R&R(Dkt. 37)in full.
Accordingly,the certificates of default as to all Defendants are VACATED and Plaintiff's

motion for defaultjudgment(Dkt. 28)is DENIED as premature, without prejudice and with
leave to renew should circumstances warrant doing so in the future.

SO ORDERED.

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

March'37, 2019

NICHOLAS G. GARAUFIS

United States District Judge