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Sovereign Bank, For Itself and As Successor In Interest By Merger To v. Rci Plumbing Corp.

July 23, 2012

SOVEREIGN BANK, FOR ITSELF AND AS SUCCESSOR IN INTEREST BY MERGER TO INDEPENDENCE COMMUNITY BANK, PLAINTIFF,
v.
RCI PLUMBING CORP., ROBERT CUCUZZA, RELIABLE PLUMBING & HEATING CORP., STATE OF NEW YORK DEPARTMENT OF TAXATION AND FINANCE, NEW YORK CITY TRANSIT ADJUDICATION BUREAU, NEW YORK CITY PARKING VIOLATIONS BUREAU, NEW YORK CITY DEPARTMENT OF FINANCE, COMMISSIONER OF LABOR STATE OF NEW YORK DEPARTMENT OF LABOR, NEW YORK CITY ENVIRONMENTAL CONTROL BOARD, DAVIS & WARSHOW, INC., AND JOHN DOES 1-10, INCLUSIVE, DEFENDANTS. ROBERT CUCUZZA AND LISA CUCUZZA, PLAINTIFFS,
v.
SOVEREIGN BANK AND DAVIS & WARSHOW, INC. DEFENDANTS.



The opinion of the court was delivered by: Block, Senior District Judge:

MEMORANDUM AND ORDER

These two consolidated actions involve debt incurred by Robert Cucuzza ("Cucuzza") and two corporate entities with which he was affiliated, RCI Plumbing Corp. ("RCI") and Reliable Plumbing & Heating Corp. ("Reliable"; the three collectively are "the RCI parties"). In the first action, plaintiff Sovereign Bank ("Sovereign" or "the bank") moves for partial summary judgment on its two foreclosure claims and summary judgment on a note; it also moves to dismiss a counterclaim brought by defendant Davis & Warshow, Inc. ("D&W"). In the second action, Cucuzza and his wife, Lisa Cucuzza (collectively, "the Cucuzzas"), move to remand the case to state court.

For the reasons stated below, Sovereign's motion is granted, and the Cucuzzas' motion for remand is granted.

I.

The following facts are drawn from the parties' summary judgment submissions and are uncontested.

A. The Federal Claims

Sovereign seeks to collect on three loans, two of which are secured by mortgages. The first, a credit line extended to Cucuzza, is secured by a mortgage encumbering real property at 553 Lincoln Avenue, on Staten Island (the "Lincoln Avenue mortgage").*fn1 The second loan was made to RCI, with Cucuzza and Reliable as guarantors.*fn2 It is secured by a mortgage encumbering real property at 545 Midland Avenue, on Staten Island (the "Midland Avenue mortgage").*fn3 The third loan was also to RCI, with Cucuzza and Reliable again acting as guarantors. As of December 7, 2010, $1,001,497.74 remained due on that promissory note ("the RCI note").

Sovereign commenced this action on February 25, 2011, seeking judgment in the amount of the RCI note, plus interest and costs; foreclosure of the two mortgages and judgment in the amount left unsatisfied by the sales.*fn4 The RCI parties do not contest that the mortgages and note are due and owing. They seek to avoid payment by asserting counterclaims of bad faith negotiation and fraudulent inducement. They also raise defenses: latches, equitable estoppel, detrimental reliance, unclean hands and breach of the implied covenant of good faith and fair dealing.

In addition to the RCI parties, Sovereign named as defendants various entities with potential interest in the subject properties and the RCI parties' assets. One of these defendants is D&W, a plumbing supply company which obtained a judgment in the amount of $443,573.46 against Cucuzza and RCI in New York Supreme Court. D&W has attempted to collect on the judgment by accessing funds the Cucuzzas hold in Sovereign bank accounts. The bank, however, has refused to release any funds to D&W. D&W filed a counterclaim seeking an order directing Sovereign to release $297,527.87 from one of the Cucuzzas' accounts to D&W.

B. The State Court Action

On April 19, 2011, the Cucuzzas commenced an action in New York State Supreme Court, Queens County, seeking to enjoin Sovereign and D&W from restraining funds in their Sovereign account. On April 28, 2011, Sovereign removed the action to this Court pursuant to 28 U.S.C. § 1332. The two cases were consolidated on June 29, 2011.

II.

A. The Federal Court Action

1. Sovereign's motion for foreclosure and ...


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