Wilmington PT Corp. v. Bonilla
1:19-cv-02684
E.D.N.YMar 31, 2021Background
- Wilmington PT Corp. (Plaintiff) sued to foreclose a 2007 mortgage/home equity line against property at 89-51 121st St., Richmond Hill, NY, after acquiring the mortgage in 2018.
- Defendants (including borrower Dennis Bonilla and Mike8951 Corp.) did not appear; clerk entered notation of default and Plaintiff moved for default judgment.
- Magistrate Judge recommended denying default judgment based on Plaintiff’s alleged noncompliance with RPAPL § 1304 (90‑day pre‑foreclosure notice for “home loans”).
- Plaintiff submitted new evidentiary exhibits with its objections; the district court declined to consider evidence presented first to the district court.
- The district court held the magistrate properly raised § 1304 sua sponte and required strict compliance, but concluded the loan was not a “home loan” because the record showed Bonilla did not occupy the property as his principal residence and the debt was not shown to be for personal/family/household purposes.
- The court sustained Plaintiff’s objection to the § 1304 finding, returned the matter to the magistrate to assess RPAPL § 1303 notice compliance and entitlement to default judgment, and directed Plaintiff to serve this order on defendants.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the magistrate could raise RPAPL § 1304 compliance sua sponte | Magistrate should not raise §1304 because nonappearing defendants waived defenses | Waiver by default cannot relieve Plaintiff of its burden to prove statutory conditions precedent | Magistrate properly examined §1304; court overruled Plaintiff’s objection on this point |
| Whether the Note/mortgage is a “home loan” subject to RPAPL § 1304 | The loan is a home equity line tied to the property and §1304 applies | Evidence shows Bonilla did not occupy the property as his principal residence and debt was not shown to be for personal/household purposes | Loan is not a “home loan”; §1304 inapplicable; Plaintiff’s objection sustained |
| Whether the district court may consider evidence submitted for first time with objections to R&R | New exhibits cure deficiencies and should be considered now | New evidence was not presented to the magistrate and should not be considered on de novo review | Court refused to consider evidence first presented after R&R |
| Whether default judgment should be entered now | Plaintiff seeks default judgment based on defendants’ default | Defendants’ absence does not excuse statutory notice or service defects | Ruling deferred; matter returned to magistrate to evaluate RPAPL §1303 compliance and default-judgment entitlement |
Key Cases Cited
- United States v. Male Juvenile, 121 F.3d 34 (2d Cir. 1997) (standard of review for objections to magistrate judge reports)
- Gustavia Home, LLC v. Hoyer, 362 F. Supp. 3d 71 (E.D.N.Y. 2019) (plaintiff must establish strict compliance with RPAPL §1304)
- HSBC Bank USA, N. A. v. Ozcan, 154 A.D.3d 822 (N.Y. App. Div. 2d Dep’t) (loan not a “home loan” where defendant resided elsewhere)