HSBC Bank, N.A. v. PAKs Holdings, LLC

Background

HSBC Bank (USA), N.A. sued PAKS Holdings LLC, Anthony Riccardi, and Patricia Riccardi for breach of contract. On November 6, 2018, HSBC provided PAKS Holdings with a $553,884 term loan, documented by a term note. Anthony and Patricia Riccardi each signed an unlimited guaranty related to that note. On November 7, 2018, HSBC provided PAKS Holdings with a $350,000 revolving loan, documented by a demand note, and each Riccardi also signed an unlimited guaranty related to that loan.

HSBC alleged that PAKS Holdings defaulted by failing to make payments due in July 2019 and thereafter. The action was originally filed in New York state court and was removed to the Southern District of New York based on diversity jurisdiction. PAKS Holdings and Patricia Riccardi filed an answer, but Anthony Riccardi did not respond or otherwise appear.

The court entered an order of default against Anthony Riccardi after he failed to appear at an August 27, 2020, hearing. PAKS Holdings and Patricia Riccardi also failed to appear at that hearing and later failed to appear at an October 22, 2020, hearing. The court then entered orders of default against them as well and referred the case to Magistrate Judge James L. Cott to determine damages.

Report and Recommendation

Judge Cott recommended awarding HSBC $924,471.71 for outstanding principal and late fees, consisting of $498,278.09 in principal under the term note, $350,000 in principal under the demand note, and $73,193.62 in late fees. He also recommended $18,202.50 in attorneys’ fees, $768.10 in costs, and $68,042.09 in prejudgment interest. The recommendation included additional daily interest of $86.51 on the term note and $36.46 on the demand note from November 19, 2020, until final judgment.

The parties were given fourteen days to object to the report and recommendation, with notice that failing to object would waive judicial review and prevent appellate review. No party filed an objection.

Court’s Review and Ruling

Because there were no objections, the court reviewed the report and recommendation for clear error on the face of the record. The court found it thorough, well-reasoned, and free of clear error, and adopted it in its entirety.

The court awarded HSBC $1,008,484.40 in damages, inclusive of attorneys’ fees, costs, and prejudgment interest through November 18, 2020. It also awarded continuing daily interest at $86.51 for the term note and $36.46 for the demand note from November 19, 2020, through the date final judgment is entered. The Clerk of Court was directed to enter judgment and close the case.