PATCH OF LAND LENDING, LLC v. KT NY GROUP, LLC
2:17-cv-00200
D.N.J.Oct 23, 2017Background
- POL (Patch of Land Lending, LLC) loaned KT NY Group, LLC $182,000 by promissory note dated July 2, 2015; Kenneth Tse personally guaranteed repayment.
- KT NY Group granted POL a mortgage and security agreement over 175 Banta Ave., Garfield, NJ, and POL perfected those interests by recording the mortgage and filing UCC financing statements.
- KT NY Group failed to pay required monthly interest and the principal due June/July 2016; POL notified KT NY Group of default on November 16, 2016 and gave ten days to cure; default was not cured.
- Both defendants were served in New York on January 25, 2017; neither answered; the clerk entered default on February 21, 2017.
- POL sought default judgment on claims for breach of the Note (against KT NY), breach of the Guaranty (against Tse), and foreclosure of the mortgage and security interest in the Garfield property and collateral.
- The court found jurisdiction under diversity, accepted POL’s well-pled allegations as true, and computed damages of $200,819.12 (plus per diem interest of $66.90) as of April 27, 2017; it ordered foreclosure sale with proceeds applied to the debt and deficiency owed jointly and severally by defendants.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Subject-matter & personal jurisdiction | Diversity jurisdiction exists; events and property in NJ give personal jurisdiction over defendants | No responsive pleading (no argument) | Court found diversity jurisdiction and personal jurisdiction over defendants |
| Service | Defendants were properly served in NY | No response | Service was proper; default entered |
| Liability for breach of Note and Guaranty | KT NY breached the Note by failing to pay principal and interest; Tse breached the Guaranty by failing to perform | No responsive pleading | Court accepted POL’s well-pled allegations and found defendants liable |
| Foreclosure and damages | POL is holder of the Note, perfected mortgage/security interest; entitled to foreclosure and money judgment of $200,819.12 plus per diem interest | No responsive pleading | Default judgment granted; foreclosure sale ordered; defendants jointly and severally liable for debt and any deficiency |
Key Cases Cited
- Animal Sci. Prods., Inc. v. China Nat’l Metals & Minerals Imp. & Exp. Corp., 596 F. Supp. 2d 842 (D.N.J.) (default-judgment entry is within district court’s discretion)
- Chanel, Inc. v. Gordashevsky, 558 F. Supp. 2d 532 (D.N.J.) (standards for considering default judgment procedures)
- Comdyne I, Inc. v. Corbin, 908 F.2d 1142 (3d Cir.) (well-pled allegations are taken as true for liability on default)
- Doug Brady, Inc. v. N.J. Bldg. Laborers Statewide Funds, 250 F.R.D. 171 (D.N.J.) (factors to consider before default judgment including meritorious defense, prejudice, and culpability)
- Nationwide Mut. Ins. Co. v. Starlight Ballroom Dance Club, Inc., [citation="175 F. App'x 519"] (3d Cir.) (failure to respond to communications can demonstrate culpability)
- Great Falls Bank v. Pardo, 263 N.J. Super. 388 (Ch. Div.) (in foreclosure, material issues are mortgage validity, indebtedness amount, and mortgagee’s right to foreclose)