Wilmington Trust, National Association v. Winta Asset Management LLC
- John Koeltl
- 1:20-cv-05309
- U.S. District Court · Southern District of New York
- 11
Wilmington Trust v. Winta Asset Management, Judge Koeltl adopted foreclosure recommendations and overruled Winta’s objections to interest, fees, and advances.
Wilmington Trust, National Association, the plaintiff trustee, was positioned to receive the recommended foreclosure-related amounts and proceed toward a property sale. Winta Asset Management LLC and Shuigun Chen were affected by the overruled objections and the recommended judgment, including default interest, fees, costs, advances, and foreclosure-related sale proceedings.
What happened
In Wilmington Trust, National Association v. Winta Asset Management LLC, the plaintiff sought a foreclosure judgment against Winta Asset Management LLC and Shuigun Chen. A magistrate judge recommended awarding the plaintiff unpaid loan amounts, interest, fees, costs, and other expenses, and appointing a referee to sell the property.
Winta objected to the recommended default-interest calculation, attorney’s fees, and certain tax, insurance, and property-protection advances. It argued that the default interest was an improper penalty, that the fee request lacked adequate billing records, and that the advances were not sufficiently supported.
Judge John G. Koeltl rejected the objections, adopted the magistrate judge’s recommendation in its entirety, and directed the plaintiff to submit a proposed judgment with updated interest calculations. The defendants could object to those calculations under the schedule set by the court.
The detailed version
- Wilmington Trust, National Association v. Winta Asset Management LLC · No. 1:20-cv-05309
- John Koeltl
- Apr. 18, 2024
Background
Wilmington Trust, National Association, acting as trustee for the registered holders of Wells Fargo Commercial Mortgage Trust 2015-NXS2, Commercial Mortgage Pass-Through Certificates, Series 2015-NXS2, and acting through Rialto Capital Advisors, LLC, sought a foreclosure judgment against Winta Asset Management LLC and Shuigun Chen. The plaintiff moved for a final foreclosure judgment under Federal Rule of Civil Procedure 54(b).
Magistrate Judge Valerie Figueredo recommended that the court enter the plaintiff’s proposed judgment with modifications to the interest and other monetary calculations. She recommended awarding:
- $15,000,000 in unpaid principal; - $1,853,467.92 in accumulated interest at the 4.169% non-default rate; - $6,447,188.63 in accumulated interest at the 9.169% default rate from June 1, 2018, through February 6, 2023; - $7,622.11 in late fees; - $122,500 in special servicing fees; - $1,357,834.89 in tax and insurance advances; - $426,578.19 in property-protection advances; - $1,200 in payoff-processing fees; - $85.23 in Uniform Commercial Code filing fees; - $150,000 in a yield-maintenance premium; and - $249,410.61 in interest on advances.
She also recommended $5,110.56 in attorney’s fees, $5,891.07 in costs, and the appointment of Ian V. Lagowitz as referee to conduct the property sale.
Winta’s objections
Winta raised three objections. First, it argued that the default interest rate was an improper penalty and should not apply, or should be reduced. The court explained that a May 2018 default occurred because Winta misrepresented the building’s occupancy and provided fictitious rent rolls, even though the defendants continued making the required loan payments. Under the loan documents, that nonpayment-related default triggered the additional 5% default rate, producing a combined rate of 9.169%.
The court held that the default rate was not an improper penalty. It was well below New York’s 25% criminal-usury threshold, and the court cited New York authorities enforcing higher default rates. The court also rejected Winta’s arguments that default interest should stop when the court determined foreclosure was warranted or should not apply before April 2020. The court found that the delay was not sufficiently long or attributable to bad faith, and that the loan documents applied default interest to all defaults, not only missed payments.
Second, Winta challenged the attorney’s-fee award, arguing that the plaintiff’s attorneys had not initially supplied detailed billing records. The court found that the plaintiff later submitted invoices identifying the attorneys, tasks, and time spent. It also found that the records were sufficiently detailed despite the use of block billing, that the amount of work was not excessive, and that the billing rates were reasonable. The court noted that Winta had not raised specific objections after receiving the records or during two later arguments.
Third, Winta challenged the tax and insurance advances, interest on those advances, and property-protection advances as inadequately supported. The court found that the plaintiff had submitted details and proof of the disbursements with a supporting declaration. Because Winta presented no specific evidence or argument showing that the amounts were inaccurate or unnecessary, the court found no basis to vacate them.
Ruling
Judge John G. Koeltl reviewed the portions of the Report and Recommendation to which Winta made specific objections under a fresh review standard. He found that the objections had no merit and that the recommendation was amply supported. The court adopted the Report and Recommendation in its entirety and overruled Winta’s objections.
The court directed the clerk to close all pending motions. Because the judgment required updated interest calculations, the plaintiff was directed to submit a proposed judgment by April 25, 2024. The defendants could object to the calculations by April 30, 2024, and the plaintiff could reply by May 3, 2024.
Read the full 11-page opinion on CourtListener, the free public archive maintained by the Free Law Project.