MAE A. D'AGOSTINO, District Judge.
Plaintiff Ditech Financial LLC ("Plaintiff") commenced this action on December 8, 2015 pursuant to Article 13 of the New York Real Property Actions and Proceedings Law ("RPAPL") to foreclose a mortgage encumbering 4523 Broad Road, Syracuse, New York 13215, together with the land, buildings, and other improvements on the property (the "Mortgaged Property"). See Dkt. No. 1 ¶ 1. Defendants Devon Sterly, also known as Devon Bailey ("Defendant Sterly"), and Synchrony Bank, formerly known as GE Capital Bank, formerly known as GE Money Bank ("Defendant Synchrony Bank"), (collectively, "Defendants") have not appeared in this action.
Currently before the Court is Plaintiff's motion for default judgment and for judgment of foreclosure and sale of the Mortgaged Property. See Dkt. No. 20.
According to Plaintiff's complaint, on or about August 30, 2006, Defendant Sterly executed and delivered a note promising to pay $210,600.00 plus interest. See Dkt. No. 1 ¶ 9. Defendant Sterly also executed and delivered a mortgage on the property as security for payment of the note. Id. ¶ 10. Through a series of assignments, the mortgage was ultimately assigned to Plaintiff.
Plaintiff claims that Defendant Sterly owes a principal balance of $203,826.88 with 6.75% interest accruing from July 1, 2009 ($37.69 per day). Id. ¶ 14; Dkt. No 21-8 at 2. In addition, Defendant Sterly owes late charges, monies advanced for taxes, inspection fees, insurance disbursements, and the costs, allowances, expenses of sale, and reasonable attorney's fees for the foreclosure. See Dkt. No. 1 ¶ 14. Plaintiff claims that it complied with the notice provisions of the mortgage and RPAPL § 1304 and filed the information required by RPAPL § 1306. See id. ¶ 17.
On January 6, 2016, Plaintiff filed with the Court affidavits of service, attesting that the summons and complaint, together with an RPAPL § 1303 notice, an RPAPL § 1320 notice, a debt validation letter, and a certificate of merit were properly served on Defendant Sterly. See Dkt. No. 9 at 1. Defendant Sterly was served on December 29, 2015 by a process server taping each of these documents to the door of Defendant Sterly's place of residence and by first class mailing them to her place of residence. See Dkt. No. 21-3 at 1. On December 28, 2015, Defendant Synchrony Bank was served by a process server delivering a copy of the summons, complaint, and certificate of merit on an agent authorized to accept service on behalf of Defendant Synchrony Bank. See id. at 3.
Although Defendants failed to respond to the complaint or otherwise formally appear in this action, Defendant Sterly's attorney filed a letter indicating that Defendant Sterly had surrendered the Mortgaged Property in a bankruptcy proceeding in 2010. See Dkt. No. 8. The letter also indicated that Defendant Sterly does not oppose the present foreclosure action, but Defendant Sterly's attorney asserted that there should be no deficiency judgment against her since her obligations under the note were discharged in bankruptcy. See id.
On February 12, 2016, Plaintiff requested that the Clerk of the Court enter a certificate of entry of default pursuant to Rule 55(a) of the Federal Rules of Civil Procedure. See Dkt. No. 11. On February 16, 2016, the Clerk of the Court entered the requested default. See Dkt. No. 12. Plaintiff now asks the Court for entry of default judgment and judgment of foreclosure and sale. See Dkt. No. 20.
"Rule 55 sets forth a two-step process that first requires the entry of a default through a notation on the record that the party has defaulted, and then entry of a default judgment, which is the final action in the case." La Barbera v. Fed. Metal & Glass Corp., 666 F.Supp.2d 341, 346 (E.D.N.Y. 2009) (citing Enron Oil Corp. v. Diakuhara, 10 F.3d 90, 95-96 (2d Cir. 1993)). The court clerk must enter the default pursuant to Rule 55(a) of the Federal Rules of Civil Procedure, "[w]hen a party against whom a judgment for affirmative relief is sought has failed to plead or otherwise defend, and that failure is shown by affidavit or otherwise." In addition, Local Rule 55.1 requires that
N.D.N.Y. Local Rule 55.1.
"After a default has been entered against a party, if that party fails to appear or otherwise move to set aside the default pursuant to Rule 55(c), a default judgment may be entered." La Barbera, 666 F. Supp. 2d at 347 (citing Fed. R. Civ. P. 55(b)). Further procedural requisites are imposed by Local Rule 55.2, requiring a party to submit the clerk's certificate of entry of default, a proposed form of default judgment, a copy of their pleading, and an affidavit setting forth the following:
N.D.N.Y. Local Rules 55.2(a) — 55.2(b).
Here, Plaintiff has complied with the procedural requirements for default judgment. Plaintiff requested a certificate of default and met all the requirements in Fed. R. Civ. P. 55(a) and Local Rule 55.1, see Dkt. No. 11, and the Clerk of the Court entered the default on February 16, 2016, see Dkt. No. 12. Further, Plaintiff has complied with Fed. R. Civ. P. 55(b) and Local Rule 55.2(b). Plaintiff submitted the Clerk's entry of default, see Dkt. No. 21-4, a copy of the summons and complaint, see Dkt. No. 21-1, a proposed form of default judgment, see Dkt. No. 21-8, and affidavits setting forth all the requirements in Local Rule 55.2(a), see Dkt. Nos. 21-3, 21-6, 21-7. Plaintiff has sufficiently demonstrated that Defendants are not in military service or incompetent, and that service was proper under Fed. R. Civ. P. 4. See Dkt. No. 21-3 at 1-3; Dkt. No. 11 ¶ 6. Specifically, Defendant Sterly was properly served pursuant to Fed R. Civ. P. 4(e)(1) in conjunction with N.Y. C.P.L.R. ("CPLR") § 308(4),
As long as a plaintiff meets the procedural requirements, "the decision to grant a motion for a default judgment lies in the sound discretion of the trial court." O'Callaghan v. Sifre, 242 F.R.D. 69, 73 (S.D.N.Y. 2007) (citing Shah v. New York State Dep't of Civil Serv., 168 F.3d 610, 615 (2d Cir. 1999)). There are several factors that a court may consider when deciding a default judgment motion, including "whether plaintiff has been substantially prejudiced by the delay involved[] and whether the grounds for default are clearly established or are in doubt." Id. (citation and internal quotation marks omitted). "The [C]ourt is also guided by the same factors that apply to a motion to set aside entry of default: (1) whether the default was willful; (2) whether the plaintiffs would be prejudiced by the denial of the motion for default judgment; and (3) whether there are meritorious defenses to plaintiff's claims." Id. (citing Percarsky v. Galaxiworld.com Ltd., 249 F.3d 167, 170-71 (2d Cir. 2001)) (other citations omitted). The Court notes that "default judgments are disfavored" and that "[a] clear preference exists for cases to be adjudicated on the merits." See Percarsky, 249 F.3d at 175 (citing Cody v. Mello, 59 F.3d 13, 15 (2d Cir. 1995)).
"In a mortgage foreclosure action under New York law, a lender must prove (1) the existence of a debt, (2) secured by a mortgage, and (3) a default on that debt." U.S. Bank, N.A. v. Squadron VCD, LLC, 504 Fed. Appx. 30, 32 (2d Cir. 2012) (citing R.B. Ventures, Ltd. v. Shane, 112 F.3d 54, 59 n.2 (2d Cir. 1997)). The RPAPL also sets forth procedural requirements in sections 1303 (service of a statutory notice to mortgagor with the summons and complaint), 1304 (prior notice to mortgagor before a lender or assignee commences a legal action), 1306 (lender must file certain information with the superintendent of the New York State Department of Financial Services), 1320 (summons must contain a statutory notice), and 1331 (the filing of a notice of pendency). See N.Y. R.P.A.P.L. §§ 1303, 1304, 1306, 1320, 1331. Section 1331 of the RPAPL requires that "[t]he plaintiff, at least twenty days before a final judgment directing a sale is rendered, shall file in the clerk's office of each county where the mortgaged property is situated a notice of the pendency of the action, which shall specify, in addition to other particulars required by law, the date of the mortgage, the parties thereto and the time and place of recording." Id. § 1331. In addition, the notice of pendency must be filed with a copy of the complaint, unless the complaint has already been filed in that county. See N.Y. C.P.L.R. § 6511(a).
Here, Plaintiff has met the common law requirements to foreclose its mortgage. Plaintiff has sufficiently demonstrated that Defendant Sterly executed a note secured by a mortgage on the Mortgaged Property, and that Defendant Sterly subsequently defaulted on that note. See Dkt. No. 1 ¶¶ 9-13; Dkt. No. 1 at 7. However, Plaintiff has not met all the procedural requirements set forth in Article 13 of the RPAPL. Plaintiff sent a prior notice pursuant to RPAPL § 1304, see Dkt. No. 21-6 at 4-5, and filed the information required by RPAPL § 1306, see id. at 12-13. Plaintiff also served, with the summons and complaint, notices pursuant to RPAPL § 1303 and § 1320. See Dkt. No. 21-3 at 1. Plaintiff also served a debt validation letter and a certificate of merit. See id. Plaintiff filed a notice of pendency pursuant to RPAPL § 1331 with the Onondaga County Clerk in the State of New York. See Dkt. No. 21-2 at 1. The notice states that a foreclosure action has been commenced against Defendants in the United States District Court for the Northern District of New York. See id. However, there is no indication that Plaintiff filed the complaint with the notice of pendency as required by CPLR § 6511(a). See Dkt. No. 14. The only document attached to the notice of pendency is a legal description of the property, see id., and Plaintiff has provided no proof that the complaint was filed with the notice of pendency.
The purpose of a notice of pendency is to provide constructive notice to a purchaser from any defendant named in the notice and bind a purchaser by all proceedings taken in the action after such filing. See N.Y. C.P.L.R. § 6501. The notice of pendency is "`an extraordinary privilege,'" which permits a party to hinder the transfer of another's property without judicial intervention. See Richard J. Zitz, Inc. v. Pereira, 965 F.Supp. 350, 354 (E.D.N.Y. 1997) (quoting Israelson v. Bradley, 308 N.Y. 511, 516 (1955)). "[T]he New York Court of Appeals has required strict compliance with the statutory procedural requirements" of the notice of pendency. Richard J. Zitz, 965 F. Supp. at 354 (internal quotation marks omitted) (citing 5303 Realty Corp. v. O & Y Equity Corp., 64 N.Y.2d 313, 320-21 (1984)).
The Court finds that Plaintiff's notice of pendency is ineffective. The failure to file a complaint with the notice renders Plaintiff's notice defective and void. See Chateau Rive Corp. v. Riverview Partners, LP, 18 A.D.3d 492, 493 (3rd Dep't 2005) ("[W]here, as here, no complaint was filed with the notice of pendency, it follows that the notice was defective and void from the beginning . . . .)." However, successive notices of pendency are permitted to be filed when prosecuting a foreclosure action to final judgment. See Slutsky v. Blooming Grove Inn, Inc., 147 A.D.2d 208, 212 (2d Dep't 1989).
In consideration of whether there are clearly established grounds for the foreclosure of the mortgage, the Court finds that Plaintiff's motion must be denied without prejudice. The failure to file a complaint with the notice of pendency, as statutorily required, rendered Plaintiff's notice defective and void. Accordingly, the Court directs that the notice of pendency filed with the Clerk of Onondaga County in the State of New York is vacated.
After carefully reviewing Plaintiff's submissions and the applicable law, and for the reasons stated herein, the Court hereby