Federal National Mortgage Association v. 2120 Tiebout LLC

Background

Fannie Mae filed an omnibus motion in this mortgage foreclosure action. It sought summary judgment against 11 LLCs referred to as the Borrower Defendants; severance of claims concerning the personal liability of those LLCs and three guarantors, Douglas Peterson, Maurice Arlos, and Michael Fordham; default judgment against lienholders Aremye Realty Corporation, the New York City Environmental Control Board, and the New York City Department of Housing Preservation and Development; a calculation of amounts due under the loan documents; and removal of the John Doe defendants.

The Borrower Defendants did not oppose summary judgment or severance. The Guarantor Defendants took no position on severance. The lienholder defendants had been served but had not answered or otherwise responded. The court stated that Fannie Mae’s omnibus motion was granted in part and denied without prejudice in part.

Summary judgment against the Borrower Defendants

The court granted summary judgment against the Borrower Defendants. Summary judgment is a decision without a trial when the evidence shows that no genuine dispute over an important fact exists and the moving party is entitled to judgment under the law. In a New York mortgage foreclosure action, the plaintiff generally must show the mortgage, the unpaid note, and the borrower’s default.

The court found that the loan documents established the Borrower Defendants’ mortgage obligations, that the Borrower Defendants admitted default, and that Fannie Mae provided sufficient evidence that it held the mortgages and notes through assignment. Because the Borrower Defendants did not make an affirmative showing against Fannie Mae’s claim, the court granted the motion.

Severance of personal-liability claims

The court granted Fannie Mae’s motion to sever its claims concerning the personal liability of the Borrower Defendants and Guarantor Defendants. Severance separates claims into distinct parts of the litigation. The court found that severance would promote efficient case management and would not prejudice the parties because foreclosure proceeds might satisfy the mortgage debt, making the personal-liability claims unnecessary. If foreclosure did not fully satisfy a particular debt, further discovery might be needed regarding the remaining personal liability.

Default judgments against lienholders

The court granted default judgment against Aremye Realty Corporation. A default judgment may be entered when a defendant fails to defend, but the court must still determine whether the pleaded facts establish liability as a matter of law. The court found that Aremye’s lien on the 522 West 148th Street property was subordinate to Fannie Mae’s mortgage because Aremye’s lien was recorded later. The court ordered that Aremye be barred and foreclosed from its interest, claim, lien, and right of redemption in that property, and directed the Clerk to enter default judgment against Aremye.

The court denied without prejudice Fannie Mae’s motion for default judgment against the New York City Environmental Control Board and the New York City Department of Housing Preservation and Development. New York law requires more detailed allegations and supporting proof when a city department or board is named in an action affecting real property. The court found that Fannie Mae had provided only unsupported allegations rather than documentary evidence showing the particular nature of the agencies’ liens or interests. The court stated that a renewed motion must include documentary evidence of the Environmental Control Board’s fines and the Department’s default judgment.

Amounts confirmed and amounts reserved

The court granted in part Fannie Mae’s request to confirm amounts due under the mortgages. As of January 31, 2024, it confirmed the following combined amounts for unpaid principal, contract-rate interest, and default-rate interest:

- 2120 Tiebout Avenue: $12,886,101.97 - 452 West 164th Street: $3,411,908.70 - 522 West 148th Street: $7,036,481.91 - 712 West 180th Street: $5,975,607.88 - 554 West 148th Street: $8,520,648.33 - 505 West 135th Street: $5,915,380.07 - 503 West 169th Street: $3,781,306.16 - 561 West 144th Street: $6,439,319.75 - 2705 Morris Avenue: $4,816,492.76 - 2707 Morris Avenue: $4,929,642.26 - 622 East 169th Street: $4,899,782.04 - 66 & 72 E 190th Street: $3,846,676.23

The court reserved judgment pending further briefing on tax advances, prepayment premiums, broker’s price opinions, not-sufficient-funds fees, inspection fees, and credits for payments into tax, insurance, holdback, replacement-reserve, and debt-service-reserve accounts. Fannie Mae must provide documentary support and applicable case law for those claimed amounts and credits. For prepayment premiums, it must also show that it used the formula in Schedule 4 of each mortgage’s loan documents.

The court granted Fannie Mae’s request for attorney’s fees and costs as to its entitlement to recover them, but reserved judgment on the amount. Fannie Mae must provide a chart identifying each attorney, the hours billed, the work performed, and the hourly rates; descriptions of the attorneys’ relevant skills and qualifications; and a detailed accounting of costs and expenses.

John Doe defendants and final directions

The court granted Fannie Mae’s motion to amend the caption and directed the Clerk to terminate all John Doe defendants because Fannie Mae had identified no additional parties with subordinate interests or liens in the properties. The Clerk was directed to enter judgment consistent with the order and terminate the omnibus motion.