Federal National Mortgage Association v. ESOR Management LLC, et al.

Background

Federal National Mortgage Association filed a foreclosure action on August 6, 2025, against ESOR Management LLC, Jack Ndreu, the New York City Environmental Control Board (ECB), and John Does #1 through #21. The action concerns a mortgage on property at 265 East 176th Street, Bronx, New York. The mortgage secures a loan with a principal amount of $3,908,000, which the plaintiff alleged had been in default since March 1, 2025. The plaintiff stated that it was the current holder of the mortgage loan.

The plaintiff moved for default judgment against the ECB. The plaintiff served the ECB on August 12, 2025. The ECB did not appear, answer, or otherwise respond to the complaint, and the Clerk of Court issued a certificate of default on October 24, 2025. The ECB did not oppose the motion.

Legal standard

Federal Rule of Civil Procedure 55 establishes a two-step process for default judgment. First, the Clerk enters a default after a party fails to defend the case. Second, the court decides whether to enter a default judgment. Before doing so, the court must determine whether the complaint’s allegations establish the defendant’s liability as a matter of law. The court generally accepts the complaint’s factual allegations as true and considers whether the non-appearing defendant had notice of the lawsuit and an opportunity to be heard.

Under New York’s Real Property Actions and Proceedings Law, necessary parties to a foreclosure action include people or entities holding liens or other interests in the property that are claimed to be subordinate to the plaintiff’s mortgage lien. For a non-mortgagor defendant, default judgment may be appropriate when the complaint alleges nominal liability—meaning that the defendant’s judgments or liens are subordinate to the plaintiff’s lien. For a municipal defendant such as the ECB, the complaint must provide detailed facts showing the nature of the interest or lien and why the municipality was named as a defendant.

Court’s analysis

The court found that the plaintiff completed the first step because the Clerk issued a certificate of default after the ECB failed to respond. The court also found that the plaintiff established the ECB’s liability as a matter of law. The plaintiff alleged that the ECB held open judgments against the property and that the ECB’s interests accrued after, and were subordinate to, the plaintiff’s mortgage lien. The complaint identified a violation description, date, and penalty amount for each ECB violation, which the court found sufficiently detailed.

The court stated that the ECB liens were docketed after the plaintiff’s mortgage loan was recorded on November 15, 2019. A footnote noted that three ECB liens were docketed before the recording of the plaintiff’s consolidated mortgage lien; at the closing of title, the sale referee must determine what portion of the overall consolidated mortgage debt is senior to any ECB lien and make payment accordingly. The court also took judicial notice that the ECB violations listed as of June 25, 2026 totaled $16,539.53, although the court’s ruling rested on the alleged subordinate nature of the ECB’s liens.

Disposition

Judge Margaret M. Garnett granted the plaintiff’s motion for default judgment against the New York City Environmental Control Board. The plaintiff must serve the order on the ECB and file an affidavit showing service by July 22, 2026. The Clerk of Court was directed to enter judgment accordingly and terminate the motion at Docket No. 29.