Ceparano v. United States of America, et al
ORDER - The Court modifies Judge Lindsays Report and Recommendation in that it adopts the recommendation to deny the motion for default judgment, but not because the Plaintiff has indicated that she cannot support her request for relief at this time. Rather, the Plaintiffs motion for a default judgment as against Wells Fargo and Pinkowski is denied because it appears that she is not entitled to relief against these two Defendants, as a matter of law. Thus, the claims by the Plaintiff against the Defendants Wells Fargo and Pinkowski are dismissed, and the Clerk of the Court is directed to mark this case as closed. Ordered by Judge Arthur D. Spatt on 6/19/2012. (Coleman, Laurie)
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF NEW YORK
-againstWELLS FARGO & COMPANY and TOM
Zinker & Herzberg, LLP
Attorneys for the Plaintiff
278 East Main Street, Suite C
PO Box 866
Smithtown, NY 11787
Jeffrey Herzberg, Esq., of Counsel
Pro Se Defendant
3703 Calle Fino Clarete
San Clemente, CA 92673
Wells Fargo & Company
SPATT, District Judge.
The Plaintiff commenced this action on or about February 18, 2010, seeking a
declaratory judgment that the Defendants have no claim, interest or right to the net
proceeds the Plaintiff received from the sale of property at 17 Lipson Court, East Northport, New
York 11731 (the “Property”). As explained in several previous orders, this case has a
complicated procedural history. Essentially, on July 21, 2011, the Court granted a motion to
dismiss that was filed by a previous defendant, the United States of America. What is now
before the Court is a third motion for a default judgment as against the two remaining
Defendants, Wells Fargo & Company (“Wells Fargo”) and Tom Pinkowski. On March 24, 2012,
the Court referred the matter of the default judgments to United States Magistrate Judge Arlene
R. Lindsay for a recommendation as to whether the motion should be granted. Upon receipt of
the referral order, Judge Lindsay issued an order directing the Plaintiff to serve and file papers in
support of the relief she was seeking and permitting the defaulting Defendants to submit
In response, the Plaintiff informed the Court that she could not file a “non-frivolous
memorandum of law in support of her request for declaratory relief, until and unless the Second
Circuit reverses the holding in [this Court’s order granting the Government’s motion to
dismiss].” Stated otherwise, the Plaintiff contends that she cannot provide support for her
current motion for a declaratory judgment against Wells Fargo and Pinkowski, because she
would be required to make the same arguments that this Court has already rejected. The Plaintiff
indicated to both Judge Lindsay and to this Court that the only reason she is now seeking a
default judgment against Wells Fargo and Pinkowski is so she can appeal this Court’s previous
decision to the Second Circuit Court of Appeals. Accordingly, the Plaintiff has stated that she
would not be opposed to the Court denying the motions for a default judgment against Wells
Fargo and Pinkowski if it is a “final order.” Therefore, on April 20, 2012, Judge Lindsay
recommended that the motion for a default judgment be denied as the Plaintiff has indicated that
she cannot support her request for relief at this time.
On April 23, 2012, after the Report and Recommendation was issued by Judge Lindsay,
the Plaintiff filed an affidavit in further support of her motion for default judgment. However,
Ceparano did not articulate any specific objections to Judge Lindsay’s report. Rather, the
Plaintiff attempted through this filing to provide a basis to support its relief against the two
As an initial matter, the Court will not consider this affidavit as a basis to grant the
requested declaratory relief against Wells Fargo and Pinkowski. Cf. Wesley v. Alexander, No.
99 Civ. 2168, 2005 U.S. Dist. LEXIS 43457, at *16-17 (S.D.N.Y. April 25, 2005) (noting that
where counsel sought to introduce evidence and arguments he failed to raise before the
magistrate judge, in a supplemental report and recommendation the magistrate judge observed
that “it would be fundamentally unfair to permit a litigant to set its case in motion before the
magistrate, wait to see which way the wind was blowing, and — having received an unfavorable
recommendation — shift gears before the district judge”); Paterson-Leitch Co. v. Mass.
Municipal Wholesale Elec. Co., 840 F.2d 985, 991 (1st Cir. 1988) (“Systemic efficiencies would
be frustrated and the magistrate’s role reduced to that of a mere dress rehearser if a party were
allowed to feint and weave at the initial hearing, and save its knockout punch for the second
Permitting the Plaintiff to contravene the Magistrate Judge’s direction to support its claim
for relief and have the Magistrate Judge issue a Report and Recommendation, and then afterward
submit its arguments to this Court as to why it is entitled to relief, would undermine the purposes
of promoting efficiency and fairness in the expeditious administration of justice that Congress
sought to achieve through the Federal Magistrates Act, 28 U.S.C. §§ 631 et seq. See Thomas v.
Arn, 474 U.S. 140, 145, 106 S. Ct. 466, 88 L.Ed.2d 435 (1985) (observing that the “fundamental
congressional policy underlying the Magistrate’s Act” is “to improve access to the federal courts
and aid the efficient administration of justice”). Magistrate judges exist “to assume some of the
burden imposed [on the district courts] by a burgeoning caseload.” Wesley, 2005 U.S. Dist.
LEXIS 43457, at *16 (quoting Chamblee v. Schweiker, 518 F. Supp. 519, 520 (N.D. Ga. 1981));
see id. (discussing the “important” role played by magistrate judges “within the federal judicial
framework”); H.R. Rep. No. 1629, 90th Cong., 2d Sess., reprinted in 1968 U.S. Code Cong. &
Admin. News 4252, 4257; Federal Magistrates Act: Hearings before Subcomm. No. 4 of the
House Comm. on the Judiciary, 90th Cong., 2d Sess. 81 (1968) (testimony of Sen. Tydings)
(“We hope and think that innovative, imaginative judges who want to clean up their caseload
backlog will utilize the U.S. magistrates in these areas [enumerated in 28 U.S.C. § 636(b)] and
perhaps even come up with new areas to increase the efficiency of their courts.”).
In reviewing a report and recommendation, a court “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)(1)(C). “To accept the report and recommendation of a magistrate, to which no timely
objection has been made, a district court need only satisfy itself that there is no clear error on the
face of the record.” Wilds v. United Parcel Serv., 262 F. Supp. 2d 163, 169 (S.D.N.Y. 2003)
(citing Nelson v. Smith, 618 F. Supp. 1186, 1189 (S.D.N.Y. 1985)).
“A party is not entitled to a default judgment as a matter of right simply because its
adversary fails to answer or otherwise respond to a complaint.” First Specialty Ins. Corp. v.
Diontech Consulting, Inc., No. 10 Civ. 2559, 2012 WL 748619, at *3 (E.D.N.Y. March 7, 2012)
(citing Erwin DeMarino Trucking Co. v. Jackson, 838 F. Supp. 160, 162 (S.D.N.Y. 1993)).
Instead, the resolution of a motion for a default judgment is “left to the sound discretion of the
district court.” Rodriguez v. Almighty Cleaning, Inc., 784 F. Supp. 2d 114, 123 (E.D.N.Y.
2011). The Second Circuit has identified three considerations as especially relevant to the
question of whether entry of a default judgment is appropriate: (a) the willfulness of the default;
(b) the existence of a meritorious defense; and (c) the level of prejudice that the non-defaulting
party may suffer should the motion be denied. Pecarsky v. Galaxiworld.com Ltd., 249 F.3d 167,
171 (2d Cir. 2001); Rodriguez, 784 F. Supp. 2d at 114. When a district court believes a default
judgment is warranted, the Court must then determine what if any relief the moving party should
be awarded. In making this determination, the Court accepts the factual allegations as true;
draws all reasonable inferences in the moving party’s favor; and determines whether the
allegations establish liability as a matter of law. Finkel v. Romanowicz, 577 F.3d 79, 84 (2d Cir.
2009) (“In light of [the defendant's] default, a court is required to accept all of the [plaintiff's]
factual allegations as true and draw all reasonable inferences in its favor.”).
In the present case, even taking the Plaintiff’s allegations as true and drawing all
reasonable inferences in its favor, the Court cannot say that Ceparano is entitled to declaratory
relief against Wells Fargo and Pinkowski, as a matter of law. The Plaintiff contends that the
statute of limitations has expired for the named Defendants to seek the enforcement of their
restitution rights against Ceparano in the event that her husband, Stephen Ceparano, defaults on
his restitution obligations. According to Ceparano, neither the Government nor the two
individual Defendants, Wells Fargo & Company and Tom Pinkowski, commenced an action, no
less a timely action, to avoid the transfer of the property from Stephen Ceparano to Dorothy
Ceparano individually, in 1990.
The Mandatory Victims Restitution Act of 1996 (Restitution Act), Pub. L. No. 104-132,
§§ 201-211, 110 Stat. 1227-1241, made victim restitution a mandatory component of the
sentence for many federal crimes and provided for enhanced post-conviction enforcement of
such orders by the federal government. 18 U.S.C. §§ 3663A, 3664. Prior to the Restitution Act,
restitution orders in federal criminal sentences could be enforced by either the crime victim or
the United States. 18 U.S.C. 3663(h) (1994). The Restitution Act strengthened enforcement by
providing that the Attorney General “shall be responsible for collection of an unpaid fine or
restitution,” including victim restitution. 18 U.S.C. 3612(c). 18 U.S.C. § 3613 provides that
“[t]he United States may enforce a judgment imposing a fine in accordance with the practices
and procedures for the enforcement of a civil judgment under Federal law or State law.” 18
U.S.C. § 3613(a). These same enforcement options are available to the Government for the
enforcement of an order of restitution. 18 U.S.C. § 3613(f).
Previously, this Court found that the Government was not precluded by the statute of
limitations from pursuing an action to void the 1990 transfer. See generally Ceparano v. United
States, 798 F. Supp. 2d 462 (E.D.N.Y. 2000). The Government acts in its governmental capacity
when it makes efforts to collect restitution. While Pinkowski and Wells Fargo will ultimately
benefit from the Government’s collection of restitution, the weight of authority provides that the
Government is not an agent of the persons who will ultimately receive the proceeds of restitution
payments. As such, the Government would not be reinstating stale civil claims by Pinkowski or
Wells Fargo, but rather pursuing its independent sovereign interest in seeking to collect
restitution from Stephen Ceparano. Thus, this Court has held that the Government is free to seek
to show that the 1990 transfer of the Lipson Court Property was fraudulent, and that Stephen
Ceparano therefore had an interest in the Lipson Court Property even after the 1990 transfer.
Moreover, the Government is also free to seek to show that Stephen Ceparano has an interest in
the $450,000 sale proceeds from that property.
As a result, whether or not Wells Fargo and/or Pinkowski may independently seek to
pursue their entitlement to restitution benefits is not relevant for purposes of this declaratory
judgment action. Cf. Lyndonville Sav. Bank & Trust Co. v. Lussier, 211 F.3d 697 (2d Cir. 2000)
(“Congress intended to make restitution an element of the criminal sentencing process and not an
independent action civil in nature.”). All that is relevant at this juncture is that this Court has
previously found that the Government may continue in its efforts to collect restitution, and thus
the Court cannot enter a declaratory judgment that the beneficiaries of that restitution have no
claim, interest or right to the net proceeds of the property. If the Government is entitled to
pursue collection of the proceeds, the Plaintiff does not explain and the Court sees no reason why
Wells Fargo and/or Pinkowski would not be entitled to those funds as described in the restitution
order. See U.S. v. Bihn, 98-cr-922, Dec. 19, 2006 (Docket Entry No. 44) (listing Pinkowski and
Wells Fargo as payees under criminal monetary penalties, and stating that the restitution
obligation “shall continue until the full amount of restitution is paid even after the defendant’s
term of supervised release has terminated”).
Therefore, the Court modifies Judge Lindsay’s Report and Recommendation in that it
adopts the recommendation to deny the motion for default judgment, but not because the
Plaintiff has indicated that she cannot support her request for relief at this time. Rather, the
Plaintiff’s motion for a default judgment as against Wells Fargo and Pinkowski is denied because
it appears that she is not entitled to relief against these two Defendants, as a matter of law. Thus,
the claims by the Plaintiff against the Defendants Wells Fargo and Pinkowski are dismissed, and
the Clerk of the Court is directed to mark this case as closed.
Dated: Central Islip, New York
June 19, 2012
____Arthur D. Spatt_______
ARTHUR D. SPATT
United States District Judge
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