Weinstein v. Cardis Enterprises International N.V. et al

Filing 61

ORDER - For the reasons set forth herein, Magistrate Judge Locke's Report is modified to the extent set forth herein; as modified, the Report is otherwise accepted in its entirety; and, for the reasons set forth herein and in the Report, Cardis NV's cross motion to set aside the default pursuant to Rule 55(c) of the Federal Rules of Civil Procedure is granted and plaintiff's motion for a default judgment pursuant to Rule 55(b)(2) of the Federal Rules of Civil Procedure is denied as moot. SO Ordered by Judge Sandra J. Feuerstein on 1/24/2017. (Tirado, Chelsea)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF NEW YORK
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DVORA WEINSTEIN,

FILED 
CLERK 

3:07 pm, Jan 24, 2017

U.S. DISTRICT COURT 
EASTERN DISTRICT OF NEW YORK 
LONG ISLAND OFFICE 

Plaintiff,
ORDER
16-CV-2661 (SJF)(SIL)

-againstCARDIS ENTERPRISES INTERNATIONAL N.V.,
AARON DAVID FISCHMAN, STEVE BROWN,
AVI TOKAYER, LAWRENCE KATZ, CHOSHEN
ISRAEL GROUP, LLC, and CARDIS ENTERPRISES
INTERNATIONAL (U.S.A.),
Defendants.
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FEUERSTEIN, District Judge:

Pending before the Court are the objections of plaintiff Dvora Weinstein (“plaintiff”) to
the Report and Recommendation of the Honorable Steven I. Locke, United States Magistrate
Judge, dated December 22, 2016 (“the Report”), recommending (1) that the cross motion of
defendant Cardis Enterprises International N.V. (“Cardis NV”) seeking to set aside the entry of
default against it pursuant to Rule 55(c) of the Federal Rules of Civil Procedure be granted; and
(2) that plaintiff’s motion pursuant to Rule 55(b)(2) of the Federal Rules of Civil Procedure for a
default judgment against Cardis NV be denied as moot. For the reasons stated herein, Magistrate
Judge Locke’s Report is modified as set forth herein and, as modified, is otherwise accepted in
its entirety.

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I.

DISCUSSION
A.

Standard of Review

Any party may serve and file written objections to a report and recommendation of a
magistrate judge on a dispositive matter within fourteen (14) days after being served with a copy
thereof. 28 U.S.C. § 636(b)(1); Fed. R. Civ. P. 72(b)(2). Any portion of such a report and
recommendation to which a timely objection has been made is reviewed de novo. See 28 U.S.C.
§ 636(b)(1); Fed. R. Civ. P. 72(b)(3).
However, the court is not required to review the factual findings or legal conclusions of
the magistrate judge as to which no proper objections are interposed. See Thomas v. Arn, 474
U.S. 140, 150, 106 S. Ct. 466, 88 L. Ed. 2d 435 (1985). Where a party “received clear notice of
the consequences of the failure to object” to a report and recommendation on a dispositive
matter, Frank v. Johnson, 968 F.2d 298, 300 (2d Cir. 1992) (quotations and citation omitted);
accord Small v. Secretary of Health and Human Svcs., 892 F.2d 15, 16 (2d Cir. 1989), his
“failure to object timely to [that] report waives any further judicial review of the report.” Frank,
968 F.2d at 16; see also Smith v. Campbell, 782 F.3d 93, 102 (2d Cir. 2015); Caidor v.
Onondago County, 517 F.3d 601, 604 (2d Cir. 2008).
Nonetheless, the waiver rule is “nonjurisdictional” and, thus, the Court may excuse a
violation thereof “in the interests of justice.” King v. City of New York, Dep’t of Corr., 419 F.
App’x 25, 27 (2d Cir. Apr. 4, 2011) (summary order) (quoting Roldan v. Racette, 984 F.2d 85, 89
(2d Cir. 1993)); see also DeLeon v. Strack, 234 F.3d 84, 86 (2d Cir. 2000). “Such discretion is
exercised based on, among other factors, whether the defaulted argument has substantial merit or,
put otherwise, whether the magistrate judge committed plain error in ruling against the defaulting
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party.” Spence v. Superintendent, Great Meadow Corr. Facility, 219 F.3d 162, 174 (2d Cir.
2000); accord King, 419 F. App’x at 27.
Whether or not proper objections have been filed, the district judge may, after review,
accept, reject, or modify any of the magistrate judge’s findings or recommendations. 28 U.S.C. §
636(b)(1); Fed. R. Civ. P. 72(b).

B.

Objections

Plaintiff alleges, inter alia, that Magistrate Judge Locke erred: (1) in finding (a) that
plaintiff’s reliance on Bricklayers & Allied Craftworkers Local 2, Albany, N.Y. Pension Fund v.
Moulton Masonry & Const., LLC, 779 F.3d 182, 184 (2d Cir. 2015) (per curiam), is unavailing,
and (b) “that defense counsel was acting by and through a valid belief of law regarding improper
service, when there are a multitude of facts evincing otherwise[,]” (Pl.’s Obj., at 2); and (2) in
“graciously address[ing] potential defenses, . . . [that] were not raised on behalf of Cardis [NV]
itself.” (Id.)
The Report indicates, in relevant part:
“Moreover, Plaintiff’s reliance on Bricklayers & Allied Craftworkers Local 2,
Albany, N.Y. Pension Fund v. Moulton Masonry & Const., LLC is unavailing. 779
F.3d 182, 184 (2d Cir. 2015) (per curiam). There, the Court found that an
individual defendant and his company’s default was willful where the individual
defendant ‘was aware of the legal action pending against him and his company
based on his own admissions and the fact that the corporate defendant requested,
through counsel, an extension of time to respond.’ Id. at 186. [Plaintiff] likens
this to the motion for extension of time to answer filed in this action on July 27,
2016. See Pl.’s Opp. at 7. This motion, however, was filed by Cardis USA,
Choshen, Fischman, Brown, and Katz. See DE [15]. As Cardis NV did not join
in the motion for extension of time to answer, Plaintiff’s reliance on the
Bricklayers decision is unpersuasive.”

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(Report at 15-16) (emphasis added). However, contrary to Magistrate Judge Locke’s finding,
plaintiff did not refer to the July 27, 2016 motion for extension of time to answer in the section
of her opposition asserting that Cardis NV’s default was willful. Rather, plaintiff asserted, in
pertinent part:
“While in [Bricklayers], the extension was for a responsive pleading, here [Cardis
NV’s] counsel executed a stipulation for an extension to respond to Plaintiff’s
Motion. It is absolute fact that [Cardis NV] was aware of this action close in time
to its filing on May 26, 2016, yet, Defendant willfully chose to do nothing.”
(Pl.’s Opp. at 7). Accordingly, the Report is modified to strike Magistrate Judge Locke’s
finding:
“that Weinstein likens this to the motion for extension of time to answer filed in
this action on July 27, 2016. See Pl.’s Opp. at 7. This motion, however, was filed
by Cardis USA, Choshen, Fischman, Brown, and Katz, See DE [15]. As Cardis
NV did not join in the motion for extension of time to answer, Plaintiff’s reliance
on the Bricklayers decision is unpersuasive.”
Plaintiff’s reliance on Bricklayers is nonetheless unavailing. In Bricklayers, the corporate
defendant requested an extension of time to file an answer approximately one (1) week after its
time to answer had expired and before the plaintiffs requested the court to enter the defendants’
default. 779 F.3d at 185. Moreover, despite the defendants’ knowledge of the action against
them, they “failed to file a responsive pleading for over nine months after the receipt of the
summons and complaint, nearly eight months after the[y] . . . were informed that the plaintiffs
had requested an entry for default, and six months after they were served with discovery
demands.” Id. To the contrary, the stipulation extending Cardis NV’s time to respond to
plaintiff’s motion for a default judgment, upon which plaintiff relies to establish Cardis NV’s
knowledge of this action, was executed and filed on August 8, 2016, (DE 21), six (6) days after
the Clerk of the Court had entered Cardis NV’s default on August 2, 2016, and five (5) days after
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plaintiff had served her motion for a default judgment upon it. (DE 17 and 18). Moreover,
Cardis NV served its cross motion to set aside the default upon plaintiff in accordance with my
individual rules approximately seven (7) weeks after it executed the stipulation extending its time
to respond to the motion for a default judgment. (See DE 21, 33, 37). Thus, Bricklayers is
inapposite and plaintiff’s reliance thereon is unavailing and unpersuasive.
Furthermore, contrary to plaintiff’s contention, there are not “a multitude of facts
evincing” that service upon Cardis NV was proper in this case, so as to render Cardis NV’s belief
that service was improper invalid. Indeed, this Court’s determination in the case Honig v. Cardis
Enters. Int’l N.V., No. 14-cv-7548, that Fischman functioned as Cardis NV’s CEO at all relevant
times and, thus, that Cardis NV was effectively served with process via service upon Fischman in
New York pursuant to Rule 4(h)(1)(B) of the Federal Rules of Civil Procedure, was not rendered
until October 27, 2016, after Cardis NV appeared in this action and moved to set aside the
default against it.1 14-cv-7548, DE 43. The fact that Cardis NV “did answer in the Honig . . .
matter[,]” (Pl.’s Obj. at 2), also does not demonstrate that its “belief of law regarding improper
service,” (id.), was invalid. Cardis NV responded to the complaint and amended complaint in
Honig by filing motions to dismiss on the grounds, inter alia, that service of process was
improper, relying on one (1) of the same state court affidavits submitted by plaintiff in this
action. See Honig, 14-cv-7548, DE 43. It was not egregious, deliberately willful or in bad faith
for Cardis NV to continue believing that service of process was insufficient upon it, and to defer

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Although in a prior order entered in Honig on November 12, 2015, this Court denied a
previous motion by Cardis NV to dismiss the complaint for insufficient service of process, the
Court found only that Cardis NV had been properly served in that case pursuant to the Hague
Convention, 14-cv-7548, DE 20, which is irrelevant in this case. That prior order did not address
whether service of process upon Fischman in New York constituted proper service.
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appearing in this action based upon that belief, pending a decision in Honig on the same issue of
whether Cardis NV was properly served with process via service upon Fischman in New York,
rather than appearing in this action and making an identical motion in this case, thereby causing
the parties to expend additional time and incur additional costs. Thus, Magistrate Judge Locke
correctly found “that [Cardis NV’s] behavior was not willful, as it mistakenly believed that
service upon it was improper.”2 (Report at 14).
In addition, contrary to plaintiff’s contention, Magistrate Judge Locke did not err in
considering the defenses to the amended complaint raised by some of Cardis NV’s co-defendants
in their pending motions to dismiss in this case, which Cardis NV incorporated by reference in its
cross motion, to find that “Cardis NV has established meritorious defenses to [plaintiff’s] claims
[in the amended complaint].” (Report at 22). The pending motions to dismiss do more than
“mere[ly] mention . . . possible meritorious defenses,” (Pl.’s Obj. at 2-3), and nothing more
would have been gained by requiring Cardis NV merely to reiterate the identical arguments in its
submissions on the cross motion to set aside the default, other than causing it to expend
additional time and incur additional costs.
Accordingly, upon de novo review of the Report, the operative pleadings and all motion
papers, and consideration of plaintiff’s objections to the Report and Cardis NV’s responses
thereto, the Report is modified to strike Magistrate Judge Locke’s finding:
“that Weinstein likens this to the motion for extension of time to answer filed in
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Plaintiff’s only objection with respect to Magistrate Judge Locke’s finding that plaintiff
will not be prejudiced by Cardis NV’s delay in answering the amended complaint is that with the
finding of willfulness propounded by her, “prejudice is not necessary.” (Pl.’s Obj. at 2). Since
the Court does not find Cardis NV’s default to be willful, and Magistrate Judge Locke’s findings
regarding the absence of prejudice are not otherwise plainly erroneous or contrary to law, that
branch of the Report is accepted in its entirety.
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this action on July 27, 2016. See Pl.’s Opp. at 7. This motion, however, was filed
by Cardis USA, Choshen, Fischman, Brown, and Katz, See DE [15]. As Cardis
NV did not join in the motion for extension of time to answer, Plaintiff’s reliance
on the Bricklayers decision is unpersuasive.”
(Report at 16). As so modified, the Report is otherwise accepted in its entirety and, for the
reasons set forth herein and in the Report, Cardis NV’s cross motion to set aside the default
pursuant to Rule 55(c) of the Federal Rules of Civil Procedure is granted and plaintiff’s motion
for a default judgment pursuant to Rule 55(b)(2) of the Federal Rules of Civil Procedure is
denied as moot.

II.

CONCLUSION
For the reasons set forth herein, Magistrate Judge Locke’s Report is modified to the

extent set forth herein; as modified, the Report is otherwise accepted in its entirety; and, for the
reasons set forth herein and in the Report, Cardis NV’s cross motion to set aside the default
pursuant to Rule 55(c) of the Federal Rules of Civil Procedure is granted and plaintiff’s motion
for a default judgment pursuant to Rule 55(b)(2) of the Federal Rules of Civil Procedure is
denied as moot.
SO ORDERED.

/s/
SANDRA J. FEUERSTEIN
United States District Judge
Dated: January 24, 2017
Central Islip, New York

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