Capital One, National Association v. 48-52 Franklin, LLC et al
ORDER ADOPTING REPORT AND RECOMMENDATIONS for 18 Motion for Judgment filed by Capital One, National Association, 38 Motion to Vacate, Motion to Dismiss/Lack of Jurisdiction filed by 48-52 Franklin, LLC, Marshall Weisman, 45 Report and Recommend ations. The Court adopts Magistrate Judge Foxs Report in its entirety. The Clerk of Court is directed to close the motions at Dkt. Nos. 18 and 38. The Defendant shall answer or otherwise respond to the Complaint by September 4, 2013. The parties shall appear for a status conference at 11:10 a.m. on September 5, 2013. (Signed by Judge Lorna G. Schofield on 08/21/2013) (jcs)
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
CAPITAL ONE NATIONAL ASSOCIATION,
48-52 FRANKLIN, LLC, MARSHALL
WEISMAN, THE NEW YORK CITY BUREAU X
OF HIGHWAY OPERATIONS, CREATIVE
HABITATS, INC., and CM & ASSOCIATES
12 Civ. 3366 (LGS)
LORNA G. SCHOFIELD, District Judge:
Before the Court is Plaintiff Capital One National Association's (“Capital One”) motion
for the entry of final judgment of foreclosure and sale with respect to two condominium units
and seven parking spaces in located in New York County; and Defendants 48–52 Franklin,
LLC's (“48–52 Franklin”) and Marshall Weisman's (“Weisman”) cross-motion to dismiss the
action for lack of jurisdiction and/or for a Court Order to vacate their default. On July 29, 2013,
Magistrate Judge Nathaniel Fox issued a Report and Recommendation (the “Report”) to the
Court. The Report recommended that the default entered against 48–52 Franklin be set aside, the
default judgment entered against Weisman be vacated, and the motion for entry of final
judgment of foreclosure and sale be denied without prejudice. For the reasons stated below, the
Court adopts the Report in its entirety.
The Report contains a more comprehensive summary of the case. Familiarity with that
summary is assumed.
I. Standard of Review for a Magistrate Judge's Report and Recommendation
When reviewing a report and recommendation by a magistrate judge, a district 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). The Court reviews the report strictly for clear error
when no objection has been made, and makes a de novo determination regarding those parts of
the report to which objections have been made. McDonaugh v. Astrue, 672 F. Supp. 2d 542, 547
(S.D.N.Y. 2009) (citation omitted). Objections that are merely perfunctory responses argued in
an attempt to engage the district court in a rehashing of the same arguments set forth in the
original petition will not suffice to invoke de novo review of the magistrate judge's
recommendations. Further, the objections must be specific and clearly aimed at particular
findings in the magistrate judge's proposal. Id. (citations and quotation marks omitted).
When a party makes only conclusory or general objections, or simply reiterates the
original arguments, the Court will review the report strictly for clear error. Crowell v. Astrue,
No. 08 Civ. 8019, 2011 WL 4863537, at *2 (S.D.N.Y. Oct. 12, 2011) (citing Pearson–Fraser v.
Bell Atl., No. 01 Civ. 2343, 2003 WL 43367, at *1 (S.D.N.Y. Jan. 6, 2003)). De novo review of
a magistrate judge's report does not require the Court to conduct a de novo hearing on the
underlying issues. Marine v. Barnhart, No. 00 Civ. 9392, 2003 WL 22434094, at *1 (S.D.N.Y.
Oct. 24, 2003) (citing United States v. Raddatz, 447 U.S. 667, 676 (1980)). Rather, Congress
intended “to permit whatever reliance a district judge, in the exercise of sound judicial discretion,
chose to place on a magistrate's proposed findings and recommendations.” Raddatz, 447 U.S. at
676. Further, courts have held that even when exercising de novo review, “[t]he district court
need not . . . specifically articulate its reasons for rejecting a party's objections.” LaBarbera v.
D. & R. Materials Inc., 588 F. Supp. 2d 342, 344 (E.D.N.Y. 2008) (quoting Morris v. Local 804,
Int'l Bhd. of Teamsters, 167 Fed. Appx. 230, 232 (2d Cir. 2006)).
Plaintiff Capital One objects to the Report and urges entry of final judgment on two
grounds. First, Plaintiff contends that the Report erred in finding that Defendants did not act
willfully in failing to respond to the pleadings. Second, Plaintiff contends that the Report erred
in vacating default without finding that the Defendants had raised a meritorious defense to the
underlying claims. The Court reviews these objections de novo.
When considering whether good cause exists for relieving a party from a finding of
default, a court must consider three factors: “the willfulness of the default, the existence of a
meritorious defense, and the level of prejudice that the non-defaulting party may suffer should
relief be granted.” Pecarsky v. Galaxiworld.com Ltd., 249 F.3d 167, 171 (2d Cir. 2001). The
Court conducts this review mindful that, “because defaults are generally disfavored and are
reserved for rare occasions, when doubt exists as to whether a default should be granted or
vacated, the doubt should be resolved in favor of the defaulting party.” Enron Oil Corp. v.
Diakuhara, 10 F.3d 90, 96 (2d Cir. 1993).
With regard to the willfulness of the default, Plaintiff makes strong arguments that
Defendants Weisman and 48-52 Franklin were more than merely negligent in their actions.
According to Mr. Weisman, he was not initially aware of this case because he and 48-52
Franklin were not served directly -- even though service was proper in May 2012, as Magistrate
Judge Fox correctly determined in the Report. Mr. Weisman claims to have discovered the case
in June 2012, after being contacted by another Defendant in the case. At that point, he hired an
attorney who sought from the Plaintiff, but was unable to obtain, an extension of time to answer
or respond to the Complaint. Mr. Weisman does not explain why he and 48-52 Franklin did not
appear in this action until November 2012, four months after Plaintiff moved for an entry of
default. Nonetheless, keeping in mind the Court’s duty to resolve doubt in favor of the
defaulting party, the Court does not find enough in the record to find that the default was willful.
While the Court agrees with Magistrate Judge Fox’s conclusion that service was proper
and that the Court has personal jurisdiction, the Court does not agree with Plaintiff’s argument
that Defendants on the current record plainly are lacking any meritorious defense. Defendants
have raised at least some factual issues regarding Plaintiff’s motion for judgment of foreclosure
and sale. At the same time, Plaintiff Weisman’s affirmation makes clear that he does not dispute
that moneys are owed to Capital One. Keeping in mind that default judgments are disfavored,
and that the Second Circuit urges courts to decide cases on their merits, the Court does not find
that the potential lack of a meritorious defense here is sufficient to prevent the Court from
vacating the entry of default. If Defendants truly lack a meritorious defense, Plaintiff will be
able to make a motion on the merits in short order.
The Court has reviewed the other portions of Magistrate Judge Fox’s Report to which
there was no objection and finds no clear error.
The Court adopts Magistrate Judge Fox’s Report in its entirety. The Clerk of Court is
directed to close the motions at Dkt. Nos. 18 and 38. The Defendant shall answer or otherwise
respond to the Complaint by September 4, 2013. The parties shall appear for a status conference
at 11:10 a.m. on September 5, 2013.
Dated: August 21, 2013
New York, New York
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