Mid Atlantic Framing, LLC v. Varish Construction, Inc. et al
MEMORANDUM-DECISION AND ORDER: The Court hereby ORDERS that Plaintiff's appeal of Magistrate Judge Peebles' December 7, 2016 order is DENIED; and the Court further ORDERS that Plaintiff's motion for default judgment against Defendant V arish as to the fourth, fifth, sixth, seventh, eighth and tenth causes of action (Dkt. No. 117 ) is GRANTED as to liability; and the Court furtherORDERS that Plaintiff's motion for default judgment against Defendant 359 Hospitality Associates, LLC as to the ninth cause of action (Dkt. No. 118 ) is GRANTED as to liability; and the Court further ORDERS that the Clerk of the Court shall serve a copy of this Memorandum-Decision and Order on the parties in accordance with the Local Rules. Signed by U.S. District Judge Mae A. D'Agostino on 9/11/2017. (ban)
UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF NEW YORK
MID ATLANTIC FRAMING, LLC,
on behalf of itself and all other similarly situated
beneficiaries of trust funds received, or to be
received by defendant Varish Construction, Inc.
Under Article 3-A of the New York Lien Law,
VARISH CONSTRUCTION, INC.; AVA REALTY
ITHACA, LLC; AVA DEVELOPMENT, LLC;
TOM VARISH, individually: AJESH PATEL, individually;
359 HOSPITALITY ASSOCIATES, LLC; SENECA
SUPPLY, LLC d/b/a THE DUKE COMPANY;
and "JOHN DOE NO. 1" through "JOHN DOE NO. 20",
inclusive, as those persons and entities having an interest in
real property located at 359 Elmira Road, Ithaca, New York,
and being designated as Tax Parcel Nos.: 128.-1-8 and
129.-1-9 on the Land and Tax Map of the City of Ithaca,
Tompkins County, New York, and a portion of Tax Parcel
Nos.: 129-1-10.2, 129.-1-1-1, 129.-1-6.2 and 129.-1-7.2 on the
Land and Tax Map of the City of Ithaca, Tompkins County,
New York, and/or the trust funds received, or to be received by
VARISH CONSTRUCTION, INC. for the improvement of
MARCO & SITARAS, PLLC
33 Whitehall Street, 16th Floor
New York, New York 10004
Attorneys for Plaintiff
GEORGE SITARAS, ESQ.
CORWIN & CORWIN, LLP
600 Unicorn Park
Woburn, Massachusetts 01801
Attorneys for Plaintiff
CHARLES F. AHERN, ESQ.
Mae A. D'Agostino, U.S. District Judge:
MEMORANDUM-DECISION AND ORDER
Plaintiff commenced this action on November 5, 2013, seeking damages in connection
with a construction project in which Plaintiff performed work as a subcontractor of Varish
Construction, Inc. (together with owner/principal, Tom Varish) on property owned at the time by
AVA Realty Ithaca, LLC (together with AVA Development LLC and Ajesh Patel, collectively
"AVA"). See Dkt. No. 1. In a July 24, 2015 Memorandum-Decision and Order, the Court
granted in part and denied in part AVA's motion for judgment on pleadings and granted Plaintiff's
cross motion for leave to file a second amended verified complaint. See Dkt. No. 68.
On August 4, 2015, Plaintiff filed its second amended complaint. See Dkt. No. 69. In the
second amended complaint, Plaintiff added Wilmington Savings Fund Society, FSB ("WSFS") as
a Defendant in this action. See id. Currently before the Court is Defendant WSFS's motion to
dismiss the claims asserted against it in the second amended complaint. See Dkt. No. 82.
Thereafter, Plaintiff sought leave to file a third amended complaint. See Dkt. No. 115. On
December 7, 2016, Magistrate Judge Peebles heard oral argument in connection with the motion.
See Dkt. No. 129. At the close of argument, Magistrate Judge Peebles issued an oral decision
denying Plaintiff's motion to amend and to join a party. See id.; see also Dkt. No. 128. Plaintiff
has since appealed Magistrate Judge Peebles' December 7, 2016 decision. See Dkt. No. 130.
Currently before the Court is Plaintiff's appeal of Magistrate Judge Peebles' December 7,
2016 order and Plaintiff's motions for default judgment against Defendants Tom Varish and 359
Hospitality. See Dkt. Nos. 117-118, 130.
This action arises out of the construction of a Fairfield Inn & Suites hotel in Ithaca, New
York (the "Project"). Defendant AVA was the owner of the Project. AVA hired Varish as its
general contractor which, in turn, hired Mid Atlantic to construct the building frame and shell.
In 2012, Defendant Varish, as general contractor, entered into a contract with Defendants
AVA and AVA Development, as owner, for the construction of the Fairfield Inn & Suites. See
Dkt. No. 69 at ¶ 17. In furtherance of the Project, in September 2012, Varish hired Plaintiff Mid
Atlantic pursuant to a written subcontract, wherein Mid Atlantic agreed to furnish and install
certain framing and/or carpentry work at the Property for the agreed upon subcontract price of
$721,000.00 (the "Subcontract"). See id. at ¶ 18. According to Mid Atlantic, during the course of
the Project, Varish directed Mid Atlantic to perform extra work in the amount of $11,740.00,
thereby adjusting the contract price upward to $732,740.00. See id. at ¶ 19. Mid Atlantic
contends that it "duly performed its agreement with Varish and substantially completed all of the
work required of it under the subcontract, including the extra work, no part of which has been
paid except the sum of $115,000.00, thereby leaving a balance due and owing Mid Atlantic in the
sum of $617,740.00." Id. at ¶ 20; see also Dkt. No. 117-5 at ¶¶ 3-7.
Motion for Leave to File a Third Amended Complaint
The standard of review employed by this Court when considering appeals from the
decision of a magistrate judge depends upon whether the challenged order is dispositive or
nondispositive. Compare Fed. R. Civ. P. 72(a) (providing that "clearly erroneous" or "contrary to
law" standard applies to review of nondispositive determinations by a magistrate judge), with Fed.
R. Civ. P. 72(b) (providing that a magistrate judge's determination on dispositive matters subject
to de novo review); see also 28 U.S.C. § 636(b)(1)(A) & (C). Courts in the Second Circuit have
generally considered motions to amend a complaint as nondispositive. See Fielding v. Tolkaksen,
510 F.3d 175, 178 (2d Cir. 2007) (noting in dicta that a motion to amend is nondispositive that
may be referred to a magistrate judge without the parties' consent and that a magistrate judge's
order on such a motion is to be set aside only if it is clearly erroneous or contrary to law); Point 4
Data Corp. v. Tri-State Surgical Supply & Equipment, LTD., No. 11 CV 726, 2012 WL 3306612,
*1 (E.D.N.Y. Aug. 13, 2012) (collecting cases and noting that cases treating motions to amend as
dispositive predated Fielding); Miles v. Levac, No. 11-cv-671, 2014 WL 1338808, *1 n.2
(W.D.N.Y. Mar. 31, 2014).1
In its appeal, Plaintiff contends that Magistrate Judge Peebles order is clearly erroneous or
contrary to law in the following respects:
The Magistrate Judge disregarded the proper legal standard
used to determine when leave to amend should be granted
under Fed. R. Civ. P. 15(a) (Dkt. No. 128: Order, at page 2;
The Magistrate Judge improperly found that "the status of
the case" warranted denial of the motion, when "the status of
the case" is not a proper consideration under Fed. R. Civ. P.
15(a)(2) (Dkt. No. 128: Order, at page 2; Tr. 20);
Even assuming arguendo that by referencing "the status of
the case", the Magistrate Judge was implying that there was
some undue delay, prejudice or bad faith on the part of the
movant, the Magistrate Judge never identified any undue
Some courts in the Second Circuit have found that whether a motion to amend is
dispositive or nondispositive is not a settled issue. See Charlot v. Ecolab, Inc., 97 F. Supp. 3d 40,
46 n.5 (E.D.N.Y. 2015) (citing cases). Further, some courts have suggested that such a motion is
dispositive when it is denied, yet nondispositive when it is granted. See id. While the Court
acknowledges this line of authority, the majority of caselaw since Fielding has held that motions
to amend are nondispositive. The Court agrees with the majority view that motions to amend are
nondispositive because it does not adjudicate or otherwise dispose of any pending claim or
defense but instead merely prevents different and/or additional claims or defenses from being
asserted. See Hall v. Norfolk S. Ry. Co., 469 F.3d 590, 594-95 (7th Cir. 2006).
delay, undue prejudice or bad faith to support denying the
motion (Dkt. No. 128: Order, at page 2; Tr. 19-20);
The Magistrate Judge failed to consider the good cause
shown for amending the scheduling order in this case -including Plaintiff's diligence in seeking amendment and
lack of undue prejudice to the non-moving parties, and
particularly in view of the fact that the deadlines set forth in
the scheduling order had expired while the case was stayed
as a result of the Varish Bankruptcy, and a new date for
impleading parties was never set by the court (Dkt. No. 128:
Order, at page 2; Tr. 19-20);
The Magistrate Judge improperly denied joinder of the Lien
Discharge Bond Surety, Aegis, a necessary party under the
New York Lien Law, without any consideration of the New
York Lien Law, the liberal standard for joinder of a party, or
regard for judicial economy, where the absence of Aegis
means that the Court cannot accord complete relief to the
parties on Plaintiff's cause of action for foreclosure of
mechanic's lien (Dkt. No. 128: Order, at page 2; Tr. 20); and
The Magistrate Judge overlooked and failed to make any
determination with respect to Plaintiff's request to amend its
complaint to delete claims and parties dismissed since the
filing of the Second Amended Complaint, including
amending the caption of the case accordingly pursuant to
Fed. R. Civ. P. 10(a) (Dkt. No. 128: Order, at page 2).
Dkt. No. 130-1 at 7.
Initially, Plaintiff argues that Magistrate Judge Peebles failed to follow Rule 15(a)(2)'s
standard requiring courts to "freely give leave [to amend] when justice so requires," where, as
here, there is no prejudice or bad faith. Dkt. No. 130-1 at 8.
Leave to amend should be "freely give[n] . . . when justice so requires." Fed. R. Civ. P.
15(a)(2). Notwithstanding this lenient standard, the decision to grant or deny leave to amend is
within the discretion of the district court. See Foman v. Davis, 371 U.S. 178, 182 (1962). A
district court may properly deny leave to amend for "undue delay, bad faith or dilatory motive on
the part of the movant, repeated failure to cure deficiencies by amendments previously allowed,
undue prejudice to the opposing party by virtue of allowance of the amendment, futility of
amendment, etc." Id.; see also SCS Commc'ns, Inc. v. Herrick Co., Inc., 360 F.3d 329, 345 (2d
Cir. 2004) ("[U]nder Fed. R. Civ. P. 15(a), leave to amend a pleading may only be given when
factors such as undue delay or undue prejudice to the opposing party are absent"). However,
"mere delay is not, of itself, sufficient to justify denial of a Rule 15(a) motion." Parker v.
Columbia Pictures Indus., 204 F.3d 326, 339 (2d Cir. 2000).
"Although Rule 15(a) governs the amendment of pleadings, Rule 16(b) also may limit the
ability of a party to amend a pleading if the deadline specified in the scheduling order for
amendment of the pleadings has passed." Kassner v. 2nd Ave. Delicatessen Inc., 496 F.3d 229,
243 (2d Cir. 2007). Rule 16(b)(4) provides that "[a] schedule may be modified only for good
cause [.]" The Second Circuit has held that, where a district court has set a deadline for amending
pleadings, "the Rule 16(b) 'good cause' standard, rather than the more liberal standard of Rule
15(a), governs a motion to amend filed after the deadline[.]" Parker, 204 F.3d at 340.
"A finding of good cause depends on the diligence of the moving party." Grochowski v.
Phoenix Constr., 318 F.3d 80, 86 (2d Cir. 2003) (affirming denial of leave to amend where the
plaintiffs delayed more than one year, discovery had been completed and a summary judgment
motion was pending). "[T]he good cause standard is not satisfied when the proposed amendment
rests on information 'that the party knew, or should have known, in advance of the deadline.'"
Enzymotec Ltd. v. NBTY, Inc., 754 F. Supp. 2d 527, 536 (E.D.N.Y. 2010) (citation omitted)
(finding that the plaintiff acted with diligence in seeking leave to amend within two months of
discovering the facts underlying its new cause of action); but see Jackson v. Roslyn Bd. of Educ.,
596 F. Supp. 2d 581, 586 (E.D.N.Y. 2009) (finding that the plaintiff's delay of nearly five months
to evince "a lack of diligence").
Although the moving party's diligence is a district court's "primary consideration" in its
Rule 16(b) good cause inquiry, a court "also may consider other relevant factors including, in
particular, whether allowing the amendment of the pleading at this stage of the litigation will
prejudice defendants." Kassner, 496 F.3d at 244. An amendment is prejudicial to the non-moving
party if it "would 'require the opponent to expend significant additional resources to conduct
discovery and prepare for trial' or 'significantly delay the resolution of the dispute.'" Ruotolo v.
City of New York, 514 F.3d 184, 192 (2d Cir. 2008) (quotation omitted).
In the present matter, Magistrate Judge Peebles held that, although the standard under
Rule 16 applies to Plaintiff's motion, Plaintiff failed to satisfy even the less rigorous standard
under Rule 15. See Dkt. No. 129 at 19-21. Specifically, Magistrate Judge Peebles ruled as
All right, Counsel, I've given the matter a great deal of
thought. Just a little history. This case, as I indicated, was filed on
November 5, 2013, we are now -- the operative pleading in this case
which was filed on August 4, 2015 is the second amended
complaint. There have been two motions filed in the case. The first
was filed in June of 2014 and decided in July of 2015. We also had
a motion brought by the Wilmington Savings Fund Society that was
decided by Judge D'Agostino in September of 2016.
The uniform pretrial scheduling order that I issued in the
case on April 4, 2014 set a joinder and amendment deadline of July
1, 2014. That was never extended by the court, so plaintiff's motion
first implicates Rule 16 of the Federal Rules of Civil Procedure and
under that rule, in order to extend a deadline that is set by a court in
a scheduling order, the party requesting relief from the deadline
must establish good cause. In this case, I do not believe that good
cause has been established.
But going beyond that and applying the analysis under 15(a)
of the Federal Rules of Civil Procedure and also Rule 21 which
governs joinder of parties, but basically applies the same generous
standard, I must look then to whether, assuming I did grant relief
from the joinder and amendment deadline, leave to amend and join
a party should be granted at this late date, and in making that
analysis, I look at several relevant factors including undue delay,
bad faith, dilatory tactics, undue prejudice, and futility.
I think there is a strong argument to be made on the issue of
futility but I am not going to base my decision on futility. Instead, I
am basing it, in addition to the Rule 16 issue which I just alluded to,
I am basing it on the status of the case. The case was filed in
November of 2013. As I mentioned during oral argument, it's my
belief that if the motion was granted, the amended complaint will be
met with a motion to dismiss, which will take several months to
decide, there will be additional discovery potentially implicated,
there will surely be one or two dispositive summary judgment
motions or cross motions in the case which will delay the case even
further, and I foresee that this case will still be pending in 2019 if I
permit the amendment, which is unacceptable to me. So -- and as
counsel indicated, if I deny the motion, plaintiff has every right to
commence a separate action against the surety. Whether or not that
action is ultimately consolidated into this case is a matter to be
decided in the future. I understand that it may make sense to do
that, but on the other hand, if it is going to unduly delay disposition
of the merits of this case, then I or whoever deals with that motion
may decide that consolidation is not appropriate.
In any event, applying the Rule 15(a) and Rule 21 standards,
I also find that plaintiff's motion should be denied.
Having reviewed Magistrate Judge Peebles' oral decision, the Court finds that he correctly
determined that Plaintiff failed to demonstrate good cause. Plaintiff's counsel admitted during
oral argument that they first learned about the existence of the lien discharge bond in August or
September of 2015. See Dkt. No. 129 at 10. Despite this knowledge, Plaintiff did not file its
motion seeking leave to file a third amended complaint until October 31, 2016. Such a lengthy
delay does not demonstrate diligence by Plaintiff.
Moreover, on October 23, 2015, a telephone conference was held before Magistrate Judge
Peebles to discuss the status of the case. In the text minute entry, it states that Plaintiff's counsel
expressed his intent to amend the complaint to, among other things, add the surety as a party in
this action and that Plaintiff's counsel anticipates filing the proposed amended complaint "within
the next week to 10 days." As noted above, Plaintiff did not file its motion for leave to amend
until October 31, 2016, some 374 days after Plaintiff first indicated its intention to add the surety
as a party to this action. Plaintiff fails to provide any sufficient explanation for its delay.
Additionally, the record also makes clear that the nonmoving parties would be prejudiced
if the Court were to permit Plaintiff to file a third amended complaint and add a new defendant.
As Magistrate Judge Peebles noted, this case is nearly four-years old and amending the complaint
at this stage will undoubtedly lead to another motion to dismiss and additional discovery by the
newly added party. Such a course of action would undoubtedly result in months, if not years of
delay in reaching a final resolution of this matter. Requiring the nonmoving parties to expend
considerable additional resources and the significant delay would be unduly prejudicial. See
Ruotolo, 514 F.3d at 192 (quotation omitted).
Finally, the Court finds that, even if the more liberal standard under Rule 15 applied to the
present matter, Magistrate Judge Peebles still correctly determined that Plaintiff's motion should
be denied. As discussed, Plaintiff's considerable delay after its discovery of the lien discharge
bond and the prejudice that the nonmoving parties would suffer warrant denying Plaintiff's
Based on the foregoing, the Court finds that Magistrate Judge Peebles did not clearly err
in denying Plaintiff's motion for leave to file a third amended complaint.
Motions for Default Judgment
"Generally, 'Federal Rule of Civil Procedure 55 provides a two-step process that the Court
must follow before it may enter a default judgment against a defendant.'" United States v.
Carpineta, No. 3:14-CV-0517, 2015 WL 500815, *1 (N.D.N.Y. Feb. 5, 2015) (quotation
omitted). "'First, under Rule 55(a), when a party fails to "plead or otherwise defend . . . the clerk
must enter the party's default."'" Id. (quotation omitted); Fed. R. Civ. P. 55(a). "Second, under
Fed. R. Civ. P. 55(b)(1), '[u]pon request of the plaintiff, a default judgment may be entered by the
clerk when (1) the plaintiff's claim against the defendant is for a sum certain, (2) the plaintiff has
submitted an affidavit of the amount due, and (3) the defendant has been defaulted for failure to
When entry by the clerk is inappropriate, "'pursuant to Rule 55(b)(2), the party seeking
default is required to present its application for entry of judgment to the court.'" United States v.
Simmons, No. 5:10-CV-1272, 2008 WL 685498, *2 (N.D.N.Y. Mar. 2, 2012) (quotation omitted).
"'Notice of the application must be sent to the defaulting party so that it has an opportunity to
show cause why the court should not enter a default judgment.'" Id. (quotation omitted); see also
Fed. R. Civ. P. 55(b)(2).
When seeking a default judgment, the Local Rules require the party to submit an affidavit
attesting to the following:
1. The party against whom it seeks judgment is not an infant or an
2. The party against whom it seeks judgment is not in the military
service, or if unable to set forth this fact, the affidavit shall state that
the party against whom the moving party seeks judgment by default
is in the military service or that the party seeking a default judgment
is not able to determine whether or not the party against whom it
seeks judgment by default is in the military service;
3. The party has defaulted in appearance in the action;
4. Service was properly effected under Fed. R. Civ. P. 4;
5. The amount shown in the statement is justly due and owing and
that no part has been paid except as set forth in the statement this
Rule requires; and
6. The disbursements sought to be taxed have been made in the
action or will necessarily be made or incurred.
N.D.N.Y. L.R. 55.2(a).
"When a default is entered, the defendant is deemed to have admitted all of the wellpleaded factual allegations in the complaint pertaining to liability." Bravado Int'l Group Merch.
Servs. v. Ninna, Inc., 655 F. Supp. 2d 177, 188 (E.D.N.Y. 2009) (citing Greyhound Exhibitgroup,
Inc. v. E.L.U.L. Realty Corp., 973 F.2d 155, 158 (2d Cir. 1992)). "While a default judgment
constitutes an admission of liability, the quantum of damages remains to be established by proof
unless the amount is liquidated or susceptible of mathematical computation." Flaks v. Koegel,
504 F.2d 702, 707 (2d Cir. 1974) (citations omitted); see also Bravado Int'l, 655 F. Supp. 2d at
189-90 (citation omitted). "[E]ven upon default, a court may not rubber-stamp the non-defaulting
party's damages calculation, but rather must ensure that there is a basis for the damages that are
sought." Overcash v. United Abstract Group, Inc., 549 F. Supp. 2d 193, 196 (N.D.N.Y. 2008)
(citing Credit Lyonnais Sec. (USA), Inc. v. Alcantara, 183 F.3d 151, 155 (2d Cir. 1999)). "The
burden is on the plaintiff to establish its entitlement to recovery." Bravado Int'l, 655 F. Supp. 2d
at 189 (citing Greyhound Exhibitgroup, Inc., 973 F.2d at 158). "While 'the court must ensure that
there is a basis for the damages specified in a default judgment, it may, but need not, make the
determination through a hearing.'" Id. at 190 (quotation omitted).
1. Defendant Tom Varish
As to Defendant Tom Varish, Plaintiff has established through its complaint and moving
papers that it is entitled to judgment in its favor. According to the second amended complaint,
Plaintiff was hired by Varish Construction, Inc. to perform wood framing for the Project, for the
base contract price of $721,000.00, which was later increased to $732,740.00. See Dkt. No. 69 at
¶¶ 18-19. Defendant Varish was a direct, officer and/or shareholder of Varish Construction at all
On March 28, 28, 2013, Plaintiff filed a mechanic's lien on the property where the Project
was located in the amount of $600,960.00 outstanding and due Plaintiff (the "Mechanic's Lien").
See Dkt. No. 117-1 at ¶ 6. According to the Affidavit of Plaintiff's Regional General Manager of
Operations Gerald Simmer, sworn to on July 26, 2013, submitted in support of Plaintiff's motion
to dismiss the petition of AVA Realty for summary discharge of Plaintiff's mechanic's lien,
Plaintiff performed all of the work under the contract with the exception of minor punchlist work,
as well as extra work. See id. at ¶ 7; Dkt. No. 117-5. Further, Plaintiff contends that the total
value of work performed was $732,740.00, but Defendant Varish paid Plaintiff only $115,000.00.
See id. As such, Plaintiff claims that the outstanding contract balance owed to it is $617,740.00.
Additionally, Plaintiff alleges that the "total amount invoiced by [P]laintiff was $715,960.00, of
which Varish paid [P]laintiff only $115,000.00, leaving a balance due and owing to [P]laintiff of
$600,960.00. See id.; see also Dkt. No. 117-5 at ¶ 4.
The allegations in the second amended complaint are sufficient to establish Defendant
Varish's liability as a matter of law.2 Plaintiff's fourth, sixth and seventh causes of action
sufficiently allege the improper diversion of trust funds, breach of fiduciary duty and constructive
fraud under Article 3-A of the New York Lien Law in that Plaintiff contends that Varish
Construction received funds in connection with a contract to improve real property and that these
funds were trust assets that were required to be used to pay those who performed the work to
improve the property. See Dkt. No. 69 at ¶¶ 34-49, 64-81. The complaint plausibly alleges that
The Court notes that Plaintiff has only moved for default judgment against Defendant
Varish as to the fourth, fifth, sixth, seventh, eighth and tenth causes of action. See Dkt. No. 117-2
Defendant Varish, as an officer of Varish Construction, improperly diverted those funds. See id.;
see also In re Lehr Const. Corp., No. 11-10723, 2015 WL 5174467, *7-*8 (S.D.N.Y. Sept. 2,
2015) (citations omitted). Further, the Court finds that default judgment is proper as to the fifth
cause of action alleging fraud, relating to misrepresentations made by Defendant Varish regarding
payments that were never made that induced Plaintiff to perform work. Similarly, Plaintiff is
entitled to judgment on the eighth count, which seeks an accounting of trust assets established
under the Lien Law. Finally, the Court finds that Plaintiff has plausibly alleged the fraud set forth
in the tenth count in that the second amended complaint contends that Defendant Varish made
false statements with the intent to fraudulently procure a discharge of Plaintiff's mechanic's lien
by reason of payment in full by AVA and AVA Development to Varish Construction for all work
performed by Plaintiff.
Additionally, the Court finds that Defendant Varish has not answered or otherwise
responded to the summons and complaint and the time to do so has since long expired. Further,
Plaintiff personally served Defendant Varish with the summons, complaint and amended
complaint at his dwelling. See Dkt. No. 20.3 Additionally, the affidavit in support of the motion
for default judgment provides that Defendant Varish is not an infant, not an incompetent person,
and is not in military service. See Dkt. No. 117-1 at ¶ 16. Accordingly, the Court finds that
Plaintiff is entitled to default judgment as to liability against Defendant Varish.
In addition to seeking default judgment as to liability against Defendant Varish, Plaintiff
argues that "there is no just reason to delay holding an inquest to determine damages to be
Although Defendant Varish was not served with the second amended complaint, service
was not required under Rule 5(a)(2) of the Federal Rules of Civil Procedure since Defendant
Varish was in default and the second amended complaint did assert any new claims for relief
against him. See Fed. R. Civ. P. 5(a)(2); see also MacIntyre v. JP Morgan Chase, Nat. Assoc.,
No. 13-cv-1647, 2014 WL 128032, *3-*4 (D. Col. Jan. 14, 2014).
assessed against defendant Tom Varish." Dkt. No. 117-1 at ¶ 26. The Court disagrees. Courts
regularly defer the damages inquest when default is entered against some but not all of the named
defendants. See, e.g., Pacific M. Intern. Corp. v. Raman Intern. Gems, Ltd., 888 F. Supp. 2d 385,
399-400 (S.D.N.Y. 2012); Miele v. Greyling, No. 94 Civ. 3674, 1995 WL 217554, *2-*3
(S.D.N.Y. Apr. 13, 1995). In addition to the desire to avoid inconsistent judgment, deferring the
damages inquest pursuant to Rule 55(b)(2) with the damages aspect of the trial against the nondefaulting party is generally in the interests of judicial economy. See id. (quoting 6 Moore's
Federal Practice, ¶ 55-06 at 55 n.22). Accordingly, the Court denies Plaintiff's request for a
damages inquest at this time.
2. Defendant 359 Hospitality Associates, LLC
Defendant 359 Hospitality is a limited liability company organized and existing under the
laws of the State of New York, with its principal place of business at 359 Elmira Road, Ithaca,
New York 14850. See Dkt. No. 118-1 at ¶ 5. Defendant 359 Hospitality is or was the fee owner
of the Property, having an ownership interest in the Property by virtue of a deed made by AVA
Realty as grantor, and 359 Hospitality as grantee, made on August 22, 2013, and recorded on
September 30, 2013, in the Office of the Clerk of Tompkins County, New York. See id.
On March 28, 2013, Plaintiff filed a mechanic's lien on the property where the Project was
located, i.e., upon certain real property and premises situated at 359 Elmira Road, Ithaca, New
York and which is known as Tax Parcel Nos.: 129.-1-8 and 129.-1-9 on the Land and Tax Map of
the City of Ithaca, Tompkins County, New York, and a portion of Tax Parcel Nos.: 129.-1-10.2,
129.-1-1-1, 129.-1-6.2 and 129.-1-7.2 on the Land and Tax Map of the City of Ithaca, Tompkins
County, New York (the "Property") in the amount of $600,960.00 outstanding and due Plaintiff
(the "Mechanic's Lien"). See id. at ¶ 6; Dkt. No. 69 at ¶¶ 89-100. As discussed above, the second
amended complaint provides that Plaintiff provided materials and services for the improvement of
the Property, which Plaintiff alleges are valued at $732,740.00. See Dkt. No. 69 at ¶ 90. To date,
only $115,000.00 has been paid, leaving an mount due and owing to Plaintiff of $617,740.00, plus
interest. See id. at ¶ 91.
Plaintiff duly filed a Notice of Mechanic's Lien in the Office of the County Clerk,
Tompkins County, against the Property in the sum of $600,960.00. See id. at ¶ 92. Copies of the
Mechanic's Lien were served upon AVA Realty Ithaca, LLC, as well as Varish Construction by
certified mail and first class mail. See id. at ¶ 93. The Mechanic's Lien contains all of the
information required by the relevant sections of the Lien Law of the State of New York. See id.
at ¶ 94. According to the Second Amended Complaint, to date, Defendants have not paid
$600,960.00 which is currently due and owing to Plaintiff and the Mechanic's Lien has not been
paid, discharged, satisfied or cancelled. See id. at ¶ 95. By reason of the foregoing, Plaintiff
"Mid Atlantic demands judgment declaring that it has a just and valid lien upon the Property in
the amount of $600,960.00 with interest from March 1, 2013, and that the equities of all
defendants named in this action, and all persons claiming an interest in the Property be foreclosed
of all equity or redemption or other interest in the Property; that the Property be sold as provided
by law, and that, from the proceeds of such sale, Mid Atlantic be paid the amount of $600,960.00,
plus interest thereon from March 1, 2013, and have judgment against defendant, Barish, AVA and
359 Hospitality for any deficiency." Id. at ¶ 100. Having reviewed the well-pleaded allegations
in the second amended complaint, the Court finds that Plaintiff has sufficiently alleged Defendant
359 Hospitality's liability as to the ninth cause of action. See Macquesten Gen. Contracting, Inc.
v. HCE, Inc., 128 Fed. Appx. 782, 787 (2d Cir. 2005).
Further, the Court finds that Defendant 359 Hospitality has not answered or otherwise
responded to the summons and complaint and the time to do so has since long expired.
Additionally, since Defendant 359 Hospitality is a domestic limited liability company, Plaintiff
properly effected service by personally serving the New York Secretary of State on November 19,
2013, with duplicate copies of the summons, complaint, amended complaint, and other case
initiating documents, together with the statutory fee. See N.Y. Limited Liability Law § 303(a);
Dkt. No. 15. Moreover, the affidavit in support of the motion for default judgment attests that
Defendant 359 Hospitality is not an infant, not in military service, and not an incompetent person.
See Dkt. No. 118-1 at ¶ 16. Finally, the Clerk of the Court entered default on October 13, 2016.
See Dkt. No. 108. As such, the Court finds that Plaintiff has established that it is entitled to
judgment as to liability at this point. Although it will enter judgment as to liability against
Defendant 359 Hospitality as to the ninth cause of action, the Court finds that an assessment of
damages is inappropriate at this time.4
Accordingly, the Court grants Plaintiff's motion for default judgment as to liability against
Defendant 359 Hospitality as to the ninth cause of action.
After carefully reviewing the entire record in this matter, the parties' submissions and the
applicable law, and for the reasons set forth above, the Court hereby
ORDERS that Plaintiff's appeal of Magistrate Judge Peebles' December 7, 2016 order is
DENIED; and the Court further
Although Plaintiff mentions the possibility of the Court immediately assessing damages,
it provides no arguments why the Court should do so at this time. See Dkt. No. 118-1 at ¶¶ 23-26.
ORDERS that Plaintiff's motion for default judgment against Defendant Varish as to the
fourth, fifth, sixth, seventh, eighth and tenth causes of action (Dkt. No. 117) is GRANTED as to
liability; and the Court further
ORDERS that Plaintiff's motion for default judgment against Defendant 359 Hospitality
Associates, LLC as to the ninth cause of action (Dkt. No. 118) is GRANTED as to liability; and
the Court further
ORDERS that the Clerk of the Court shall serve a copy of this Memorandum-Decision
and Order on the parties in accordance with the Local Rules.
IT IS SO ORDERED.
Dated: September 11, 2017
Albany, New York
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