Allison Lending LLC v. Croton Development LLC
7:24-cv-07956
S.D.N.Y.Jun 16, 2025Background
- Allison Lending LLC sued Croton Development LLC and Vasel Balbona to foreclose on a mortgage executed by Croton and guaranteed by Balbona.
- The parties entered a Forbearance Agreement, which became a part of the loan documents; default under the agreement triggered an event of default for the loan.
- Defendants defaulted on payments due January 1, 2025; certificates of default were entered by the Clerk.
- Defendants filed a late response with nine affirmative defenses and moved to vacate the default under Rule 55(c); Plaintiff sought default judgment.
- The court consolidated briefing: treating Defendants' opposition both as opposition to default judgment and as a cross-motion to vacate default.
- The court analyzed if Defendants presented a meritorious defense, whether the default was willful, and whether vacating would prejudice Plaintiff.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Good cause to vacate default under Rule 55(c) | Defendants failed to show a meritorious defense | Presented several affirmative defenses (e.g., accord and satisfaction; improper service) | No meritorious defense shown; default not vacated |
| Failure to state a claim | Plaintiff met all elements for foreclosure | Plaintiff failed to state a claim | No explanation or valid defense provided by Defendants |
| Accord and satisfaction defense | Forbearance Agreement payment was only a down payment | Payment of $38,000 fulfilled obligations | Payment evidence supports Plaintiff, not Defendants; defense fails |
| Proper service | Proper affidavits of service filed | Balbona unaware of service due to hospitalization | Conclusory denial; no evidence to rebut affidavits; defense fails |
| Compliance with statutory preconditions (RPAPL §§ 1304/1306) | Not applicable to LLC borrowers | Plaintiff failed to comply with preconditions | Law applies only to natural persons, not LLCs; defense fails |
Key Cases Cited
- Enron Oil Corp. v. Diakuhara, 10 F.3d 90 (2d Cir. 1993) (sets standards for vacating defaults – three-factor test and evidence required for meritorious defense)
- U.S. Bank, N.A. v. Squadron VCD, LLC, 504 F. App’x 30 (2d Cir. 2012) (elements required for foreclosure under New York law)
- Au Bon Pain Corp. v. Artect, Inc., 653 F.2d 61 (2d Cir. 1981) (court's discretion in default judgment and need for proof of damages)