Assets Recovery 23, LLC v. Gasper

1

ASSETS RECOVERY 23, LLC, Plaintiff, v. KAHLIL GASPER, MARLENA GASPER, and John Doe "1" through John Doe "10" inclusive, the names of the last named Defendants being fictitious, real names unknown to the Plaintiff, die parties intended being persons or corporations having an interest in, or tenants or persons in possession of, portion of the mortgaged premises described in the Complaint, Defendants.

No. 19-CV-2628 (NGG) (CLP)

United States District Court, E.D. New York

March 5, 2024

MEMORANDUM & ORDER

NICHOLAS G. GARAUFIS, UNITED STATES DISTRICT JUDGE

Pending before the court are Magistrate Judge Cheryl L. Pollack's Report and Recommendation ("R&R") recommending that the district court deny Plaintiff Assets Recovery 23 LLC's motion for summary judgment as to Defendant Kahlil Gasper and to strike Gasper's affirmative defenses and counterclaims (R&R (Dkt. 65)), and Plaintiffs objections to the R&R. (Pi. Objections to R&R ("PL Obj.") (Dkt. 69); Mem. of Law in Support of Pl's Mot. for Summ. J. ("Mot.") (Dkt. 60-1); PL 56.1 St (Dkt. 60-2); Defs. Aff. in Opp. ("Opp.") (Dkt 64).)

As discussed herein, the R&R is ADOPTED IN PART and REJECTED IN PART. The court REJECTS the finding that Almitra Gasper is a necessary party but otherwise ADOPTS the R&R in full. The motion for summary judgment is DENIED without prejudice. The Plaintiff may renew its motion for summary judgment or file an amended complaint within 45 days of this Order. The Clerk of Court is respectfully DIRECTED to send a copy of this Order by certified mail, return receipt requested, to pro se Defendant Gasper at his address of record.

I. BACKGROUND

The court assumes familiarity with the background of this action brought by Plaintiff Assets Recovery 23 LLC against Defendants Kahlil Gasper, Marlena Gasper (collectively "Gasper Defendants") and various unknown defendants ("John Doe Defendants" and, together with Gasper Defendants, "Defendants") in which Plaintiff seeks to foreclose on a mortgage in the amount of $345,000 on the property known as 187-40 Sullivan Road, Saint Albans, NY 11412 (the "Property"). The annexed R&R details the relevant factual and procedural background preceding Plaintiffs summary judgment motion. (R&R. at 2-8.)

On October 21, 2022, a briefing schedule was ordered for Plaintiffs present motion seedling summary judgment as to Defendant Kahlil Gasper. (See MSJ Briefing Order (Dkt. 51).)^[1] On March 10, 2023, while the briefing was pending, Judge Raymond J. Dearie referred the motion to Magistrate Judge Pollack for a report and recommendation and the case was reassigned to this court. (See Min. Entries dated March 10, 2023.)

Plaintiff filed its motion on April 13,2023. (See Mot.) Defendant, who is pro se, filed his response on June 20, 2023. (See generally Opp.)^[2] On March 5, 2024, Magistrate Judge Pollack issued the annexed R&R recommending that the court dismiss Plaintiffs motion without prejudice. (See generally R&R.) Plaintiff then objected to the R&R on April 2, 2024. (See generally Pl. Obj.)

II. LEGAL STANDARD

A. Review of Objection to a Report and Recommendation

A district court "may accept, reject, or modify, in whole or in part, the findings or recommendations made" by a magistrate judge in an R&R. 28 U.S.C. § 636(b)(1)(C). "Where a party timely and specifically objects, the court conducts a de novo review of the contested portions of the R&R." Piligian v. Icahn Sch. of Med. at Mount Sinai, 490 F.Supp.3d 707, 715 (S.D.N.Y. 2020).^[3] "Although a district judge may receive further evidence upon de novo review, courts generally do not consider new evidence raised in objections to a magistrate judge's report and recommendation absent a compelling justification for failure to present such evidence to the magistrate judge." Condoleo v. Guangzhou Jindo Container Co., 427 F.Supp.3d 316, 319 (E.D.N.Y. 2019) (citing 28 U.S.C. § 636(b)(1) and Fed.R.Civ.P. 72(b)(3)).

B. Summary Judgment

Summary judgment is warranted where "the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(a); see also Celotex Corp. v. Catrett, 477 U.S. 317, 322-23 (1986). "An issue of fact is material for these purposes if it might affect the outcome of the suit under the governing law." Konikoff v. Prudential Ins. Co. of Am., 234 F.3d 92, 97 (2d Cir. 2000). A "genuine" issue of fact is one where "the evidence is such that a reasonable jury could return a verdict for the non-moving party." Id. "Where the record taken as a whole could not lead a rational trier of fact to find for the non-moving party, there is no genuine issue for trial." Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986). "jT]he party opposing summary judgment must identify specific facts and affirmative evidence that contradict those offered by the moving party to demonstrate that there is a genuine issue for trial." Am. Empire Surplus Lines Ins. Co. v. Certain Underwriters at Lloyd's London, No. 16-CV-5664 (AMD) (JO), 2018 WL 10456838, at -4 (E.D.N.Y. July 23, 2018). All evidence is construed in the light most favorable to the non-moving party, with all reasonable inferences drawn in that party's favor. Kerzer v. Kingly Mfg., 156 F.3d 396, 400 (2d Cir. 1998).

III. DISCUSSION

Plaintiff objects to both grounds for dismissal identified by Magistrate Judge Pollack. Specifically, Plaintiff objects to the findings that it has not demonstrated that it served "all necessary parties" under New York Real Property Actions and Proceedings Law ("NY RPAPL") § 1311 (PL Obj. at ECF 1-2; see also R&R at 12-14), and that there is a genuine dispute of material fact that Plaintiff has standing to bring this foreclosure action. (Pi. Obj. at ECF 3-4; see also R&R at 15-16.) The court considers each objection in turn.

A. Objection to Necessary Parties Analysis

Under New York Law, a foreclosure action must include "[e] very-person having any lien or incumbrance upon the real property which is claimed to be subject and subordinate to the lien of the plaintiff," NY RPAPL § 1311 (3), as well as "[e] very person having an estate or interest in possession, or otherwise, in the property as tenant in fee, for life, by the curtesy, or for years, and every person entided to the reversion, remainder, or inheritance of the real property, or of any interest therein or undivided share thereof," id. § 1311(1). The rule that non-mortgagor defendants be joined "derives from the underlying objective of foreclosure actions-to extinguish the rights of redemption of all those who have a subordinate interest in the property and to vest complete title in the purchaser at the judicial sale." Bank of Am., N.A. v. 3301 Atl, LLC, No. 10-CV-5204 (FB) (SMG), 2012 WL 2529196, at *14 (E.D.N.Y. June 29,, 2012), report and recommendation adopted, 2018 WL 1640591 (E.D.N.Y. Apr. 5, 2018) (quoting N.C. Venture I, L.P. v. Complete Analysis, Inc., 830 N.Y.S.2d 95, 98 (App. Div. 2005)).

Courts disagree on whether NY RPAPL § 1311 is jurisdictional. "Some courts have stated that the failure to join a necessary party warrants dismissal of a foreclosure action" while others "have taken the approach that the failure to join a necessary party means that party's rights are unaffected by judgment of foreclosure and sale... and the foreclosure sale maybe considered void as to the excluded party." Toiny LLC v. Gill, No. 18-CV-40 (NGG) (VMS), 2022 WL 4118520, at *4 (E.D.N.Y. Sept 9, 2022) (collecting cases).

Here, Magistrate Judge Pollack found that the court was unable to determine whether the New York City Environmental Control Board ("ECB") and Almitra Gasper were necessary parties and that a failure to join these parties provided grounds for dismissal. CR&R at 13 (citing Assets Recovery 23, LLC v. Gasper, No. 15-CV-5049 (RJD) (CLP), 2018 WL 5849763, at *5 (E.D.N.Y. Sept. 11, 2018), report and recommendation adopted, No. 15-CV-5049 (RJD) (CLP), 2018 WL 5847102 (E.D.N.Y. Nov. 8, 2018) [hereinafter "Gasper ]"]).) Plaintiff Assets Recovery objected. (PL Obj. at ECF 1-2.)

On de novo review, the court agrees as to the ECB and disagrees as to Almitra Gasper. The court also agrees that a failure to join the ECB is grounds for dismissal without prejudice in this case.

As discussed in the R&R, the ECB was named as a necessary party in a 2015 action that involved the same parties. (R&R at 13 (citing Gasper I, 2018 WL 5849763, at *5).) Plaintiff provided no discussion or evidence of a change in the ECB's status as a subordinate lienholder in the memorandum of law in support of its motion, the accompanying 56.1 statement, or anywhere else in the record. (See generally Mot.; PL 56.1 St.) The court agrees with Judge Pollack that "[a]bsent any evidence to the contrary, that lien is presumably still in place." (R&R at 13.) When objecting to the R&R, Plaintiff attached a document identified as "Schedule C" listing "Necessary Defendants" which Plaintiff asserts it obtained in a foreclosure title search prior to commencement of this action. (See Pl. Obj. at ECF 3; see also Schedule C (Dkt 69-1).) Plaintiff argues that it did not name the ECB because Schedule C does not recite that there were ECB violations against the Property at the time the search was conducted and therefore ECB did not show up in this list of necessary defendants. (See Pl. Obj. at ECF 2; Schedule C.) However, Schedule C was not included with Plaintiffs original motion and Plaintiff does not provide a compelling reason for excluding it; it is therefore not properly before the court on review of Plaintiffs R&R objections. See Condoleo, 427 F.Supp.3d at 319. And, even if included, Plaintiff states only that they relied on the Schedule C when deciding not to name the ECB in its complaint. Pl...