1077 Madison Street, LLC v. March, 954 F.3d 460

Background

In 2007 Donovan March took a $211,000 mortgage on a Hollis, NY mixed‑use property; March allegedly defaulted as of February 1, 2008.
The mortgage was assigned several times and, by June 2014, 1077 Madison Street, LLC (Madison Street) owned the note and commenced foreclosure in July 2014.
March failed to submit a responsive counterstatement of facts on Madison Street’s summary‑judgment motion; the District Court deemed Madison Street’s facts admitted and granted summary judgment and then denied reconsideration.
A court‑appointed Referee computed amounts due as of January 15, 2016: principal and fees totaling $596,715.05, including $383,736 in interest calculated at a 24% default rate and per diem interest thereafter; the District Court largely confirmed the Report.
March challenged standing, denial of discovery, a NYC debt‑collection licensing defense, the 24% default interest rate (arguing usury and that interest should run from acceleration), and the Referee’s failure to hold a hearing on the default date; the District Court rejected these arguments and entered a judgment of foreclosure and sale.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Standing to foreclose	Madison Street was holder of the note and produced note plus allonge and affidavit	March argued Madison Street failed to prove it held the mortgage/note when suit began	Held: Madison Street established standing as note holder; summary judgment on this ground affirmed
Denial of additional discovery (Rule 56(d))	No further discovery required; evidence was sufficient	March argued refusal prevented him from rebutting ownership and default date	Held: March failed to submit a 56(d) affidavit; denial was not an abuse of discretion
NYC debt‑collection license defense	Madison Street is a debt collection agency and unlicensed — action barred	March sought to bar foreclosure under Admin. Code licensing scheme	Held: Licensing statute prescribes monetary penalties, not bar to collection; defense fails (and was not properly pleaded)
Default interest rate (24%) / Usury	Contract permits default rate; Madison Street entitled to default rate from default date	March argued 24% violates NY usury caps or should run only from acceleration	Held: Usury defense inapplicable to defaulted obligations; loan documents permit default rate from default date; Referee's calculation confirmed
Referee hearing on default date	Referee properly followed record and admissions	March said hearing required to determine Feb 1, 2008 default date	Held: March admitted default date in his answer and offered no contrary evidence at summary judgment; hearing unnecessary
Per diem interest adjustment for delay in entry of judgment	Madison Street’s brief delay in submitting revised judgment was not unreasonable	March sought reduction of per diem interest for delay	Held: District Court did not abuse discretion; no adjustment warranted

Key Cases Cited

OneWest Bank, N.A. v. Melina, 827 F.3d 214 (2d Cir. 2016) (plaintiff in foreclosure must be holder or assignee of the note to establish standing)
Bethpage Water Dist. v. Northrop Grumman Corp., 884 F.3d 118 (2d Cir. 2018) (standard of review for summary judgment: de novo, view facts in light most favorable to nonmoving party)
Paddington Partners v. Bouchard, 34 F.3d 1132 (2d Cir. 1994) (requirements and review for Rule 56(d) requests for additional discovery)
Manfra, Tordella & Brookes, Inc. v. Bunge, 794 F.2d 61 (2d Cir. 1986) (usury doctrine does not apply to defaulted obligations)
Blueberry Inv’rs Co. v. Ilana Realty Inc., 585 N.Y.S.2d 564 (App. Div. 3d Dep’t 1992) (hearing unnecessary where defendant admitted interest from a date certain)
Kraus v. Mendelsohn, 948 N.Y.S.2d 119 (App. Div. 2d Dep’t 2012) (usury defense inapplicable where higher rate applies only after default)
NYCTL 1998‑2 Tr. v. Wagner, 876 N.Y.S.2d 522 (App. Div. 2d Dep’t 2009) (discretion to adjust per diem interest for delays in judgment entry)