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Allstate Indemnity Company v. Collura

United States District Court, E.D. New York

March 22, 2017

ALLSTATE INDEMNITY COMPANY, Plaintiff,
v.
PAUL COLLURA, CHRISTINE COLLURA, BANK OF NEW YORK MELLON f/k/a BANK OF NEW YORK AS TRUSTEE FOR CERTIFICATE HOLDER CWALT, INC., UNITED STATES OF AMERICA, CAPITAL ONE HOME LOANS, LLC, and COUNTRYWIDE HOME LOANS, INC., Defendants.

          For Plaintiff: Karen Maria Berberich, Esq. Rosa M. Feeney, Esq. Caroline Knoepffler Hock, Esq. Lewis Johs Avallone Aviles, LLP

          For Defendants: Paul and Christine Collura Lloyd M. Eisenberg, Esq. Donna Rosanne Ruggiero, Esq.

          Bank of New York Mellon: Sarah Joanne Greenberg, Esq.

          United States of America: Wallace D. Dennis, Esq.

          Capital One Home Loans, LLC and Countrywide Home Loans, Inc.: No appearances

          MEMORANDUM & ORDER

          Joanna Seybert, U.S.D.J.

         Plaintiff Allstate Indemnity Company (“Plaintiff” or “Allstate”) commenced this interpleader action against Paul and Christine Collura (the “Colluras”), Bank of New York Mellon (“BNY”), the United States of America (the “United States” or the “Government”), Capital One Home Loans, LLC (“Capital One”), Bank of America (“Bank of America”) and Countrywide Home Loans, Inc. (“Countrywide” and collectively, “Defendants”) on August 28, 2015. (Compl., Docket Entry 1.) Currently pending before the Court is Magistrate A. Kathleen Tomlinson's Report and Recommendation dated February 7, 2017 (the “R&R”, Docket Entry 83) with respect to Plaintiff's motion to deposit proceeds from a homeowner's insurance policy with the Court (Docket Entry 56) and Plaintiff's motion for a default judgment against Capital One and Countrywide (Docket Entry 59). Judge Tomlinson recommends that this Court grant Plaintiff's motions. (R&R at 2.) Defendant BNY filed objections to the R&R, (BNY Obj., Docket Entry 86), and the United States responded to those objections (U.S. Reply, Docket Entry 87). For the following reasons, BNY's objections are OVERRULED, and the R&R is ADOPTED IN PART and REJECTED IN PART. Plaintiff's motion to deposit funds is GRANTED IN PART and DENIED IN PART, and Plaintiff's motion for a default judgment is GRANTED.

         BACKGROUND

         I. Relevant Facts

         Plaintiff issued a homeowners insurance policy (the “Policy”) on a property owned by the Colluras (the “Property”) in Southhampton, New York. (Compl. ¶ 12.) On March 16, 2015, the Property sustained damage, and the Colluras subsequently filed a claim. (Compl. ¶¶ 2-3, 15.) Plaintiff inspected the damage and estimated the replacement cost value to be $75, 460.04. (Estimate, Compl. Ex. B, at 85.) Plaintiff further estimated that the actual cash value of the net claim was $65, 582.18, after reductions for depreciation of $4, 013.86 and prior payments of $5, 864.00. (Estimate at 85.) On August 11, 2015, Plaintiff provided the estimate to the Colluras and advised that it would settle the claim for $65, 582.18. (Settlement Ltr., Compl. Ex. C, at 92.) Pursuant to the terms of the Policy, if the insured does not repair the damage, payment will be made on an actual cash value basis and depreciation is not recoverable. (Policy, Compl. Ex. A, at 22-64, at 40, ¶ 5(b).) Conversely, the Policy provides that if the insured repairs the damage within 180 days of receiving the actual cash value payment, Plaintiff will “make additional payment to reimburse [the insured] for cost in excess of actual cash value” and depreciation is recoverable.[1] (Policy at 40, ¶ 5(c).)

         After forwarding the estimate to the Colluras, Plaintiff discovered that there were multiple lienholders with potential claims to the settlement proceeds, including: (1) Capital One, which issued a mortgage and was on the deed for the Property; (2) BNY, to which the mortgage was assigned by Capital One; (3) Bank of America, the mortgage servicer; (4) the United States, which had two federal tax liens on the Property of $75, 690.80 and $80, 537.52; and (5) a third party who filed a Notice of Pendency against the Colluras. (Compl. ¶ 18.) Plaintiff alleges that it cannot determine which lienholders, if any, are entitled to the proceeds and commenced this action to resolve the competing claims.

         II. Procedural History

         As stated, Plaintiff filed the Complaint on August 28, 2015. The Government answered the Complaint on November 15, 2015 and acknowledged the tax liens. (U.S. Answer, Docket Entry 21.) Bank of America answered the Complaint on November 30, 2015 and disclaimed any right to the settlement proceeds. (Bank of America Answer, Docket Entry 25.) BNY filed its answer on November 30, 2015 and asserted cross-claims against each of the Defendants. (BNY Answer, Docket Entry 24.) The same day, the Colluras answered the Complaint and asserted a counter-claim against Plaintiff and cross-claims against each of the Defendants. (Collura Answer, Docket Entry 26.) On April 6, 2016, Bank of America was dismissed from the case. (Stip. & Order, Docket Entry 54.)

         On April 15, 2016, Plaintiff filed a motion to deposit the proceeds with the Court and be released from this litigation. (Mot. to Deposit, Docket Entry 56; Pl.'s Deposit Br., Docket Entry 58.) Specifically, Plaintiff seeks to deposit $65, 582.18 immediately, and $4, 013.86 at a later date should proof of repairs be submitted (the “Settlement Amount”). (Pl.'s Deposit Br. at 2.) Finally, Plaintiff seeks dismissal of the Colluras' counterclaim against it. (Pl.'s Deposit Br. at 2.) BNY opposed the motion and requested that the Court award the Settlement Amount to BNY. (BNY Opp., Docket Entry 63, at 14-15.) The Colluras filed a response on May 19, 2016, advising that while they did not object to Plaintiff's motion, they opposed disbursement of the Settlement Amount to BNY. (Collura Reply, Docket Entry 70.) On June 14, 2016, the Government also opposed BNY's request for affirmative relief. (U.S. Reply, Docket Entry 74.) Plaintiff filed its reply in further support of its motion on May 17, 2016. (Pl.'s Reply, Docket Entry 69.)

         On April 18, 2016, Plaintiff filed a motion for a default judgment against Capital One and Countrywide. (Default Mot., Docket Entry 59.) None of the parties opposed the motion.

         On October 24, 2016, the undersigned referred both motions to Judge Tomlinson for an R&R on whether the motions should be granted. (Referral Order, Docket Entry 82.) On February 7, 2017, Judge Tomlinson issued her R&R recommending that Plaintiff's motions be granted. (R&R at 2.) BNY has objected to Judge Tomlinson's recommendation that Plaintiff be permitted to deposit the Settlement Amount with the Court and be discharged from the case. (See, BNY Obj.) The Government filed a response to BNY's objections. (See, U.S. Reply.) None of ...


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