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Nationstar Mortgage LLC v. Mohr

United States District Court, N.D. New York

April 13, 2017

NATIONSTAR MORTGAGE LLC, Plaintiff,
v.
RONALD T. MOHR, et al., Defendant.

          MEMORANDUM-DECISION AND ORDER

          Lawrence E. Kahn, U.S. District Judge

         I. INTRODUCTION

         Before the Court is plaintiff Nationstar Mortgage LLC's motion for default judgment, seeking the foreclosure and sale of real property owned by defendant Ronald Mohr. Dkt. No. 12 (“Motion”); see also Dkt. No. 13 (“Attorney Affidavit”). For the following reasons, Nationstar's Motion is denied and its complaint is dismissed for lack of subject matter jurisdiction.

         II. BACKGROUND

         In this case, Nationstar seeks a judgment for unpaid amounts on Mohr's home mortgage, along with the foreclosure and sale of the property in order to satisfy this debt. Dkt. No. 1 (“Complaint”) ¶¶ 1, 9-12. Nationstar claims that this Court has subject matter jurisdiction based on diversity of the parties' citizenships. Id. ¶ 7. Specifically, the Complaint alleges that Nationstar is a citizen of Delaware (by way of a tortuous chain of ownership), that Mohr is a citizen of Indiana, and that Mortgage Electronic Registration Systems, Inc. (“MERS”)-which is named as a defendant here due to its holding a subordinate mortgage on the property-is a citizen of Rhode Island. Id. ¶¶ 2-4. Importantly, the Complaint notes that MERS “is named solely as nominee for Advanced Financial Services, Inc.” and that “[a]ll substantive interest in the mortgage remains in the hand of Advanced Financial Services.” Id. ¶ 4.

         Mohr and MERS failed to appear in this action, and the Clerk of the Court entered their default on September 28, 2016. Dkt. No. 10. Nationstar then moved for default judgment. Mot. Pursuant to the Local Rules, Nationstar's counsel supplied an Attorney Affidavit with the Motion, which included a copy of the Complaint, a proposed judgment, the entry of default, calculations of damages and fees, and sworn statements attesting that the defendants were properly served but nonetheless failed to appear. Attorney Aff. ¶¶ 3-4, 7, 9; Dkt. Nos. 13-1 to -8. But the Attorney Affidavit did not include sworn statements that Mohr is not an infant or otherwise incompetent, that he is not in the military service, that the amount sought “is justly due and owing, ” “that no part has been paid, ” and that the “disbursements sought to be taxed” either have been or necessarily will be made. L.R. 55.2(a). Additionally, Nationstar's request for attorney's fees states that because counsel plans to charge Nationstar “a flat fee for foreclosure work, individual time sheets are not maintained.” Dkt. No. 13-5 (“Fees Affirmation”) ¶ 4.

         III. LEGAL STANDARD

         A. Subject Matter Jurisdiction

         Subject matter jurisdiction is a fundamental predicate to judgment in the federal courts. “Dismissal of a case for lack of subject matter jurisdiction . . . is proper ‘when the district court lacks the statutory or constitutional power to adjudicate it.'” Ford v. D.C. 37 Union Local 1549, 579 F.3d 187, 188 (2d Cir. 2009) (per curiam) (quoting Makarova v. United States, 201 F.3d 110, 113 (2d Cir. 2000)). A lack of subject matter jurisdiction cannot be waived, and may be raised by motion or sua sponte at any time. E.g., Transatlantic Marine Claims Agency, Inc. v. Ace Shipping Corp., 109 F.3d 105, 107 (2d Cir. 1997); see also Fed.R.Civ.P. 12(h)(3) (“If the court determines at any time that it lacks subject-matter jurisdiction, the court must dismiss the action.”). The party asserting subject matter jurisdiction must show the basis for jurisdiction on the face of its pleading, and-if challenged-must prove its existence by a preponderance of the evidence. E.g., Makarova, 201 F.3d at 113; Augienello v. FDIC, 310 F.Supp.2d 582, 587-88 (S.D.N.Y. 2004). This is true even on a motion for default judgment, since the principle that a default deems the well-pleaded allegations of the complaint to be admitted is inapplicable when a court doubts the existence of subject matter jurisdiction. Transatlantic Marine, 109 F.3d at 108.

         B. Default Judgment

         “Federal Rule of Civil Procedure 55 provides a two-step process that the Court must follow before it may enter a default judgment against a defendant.” Elec. Creations Corp. v. Gigahertz, Inc., No. 12-CV-1423, 2013 WL 3229125, at *3 (N.D.N.Y. June 25, 2013) (quoting Robertson v. Doe, No. 05-CV-7046, 2008 WL 2519894, at *3 (S.D.N.Y. June 19, 2008)). “First, under Rule 55(a), when a party fails to ‘plead or otherwise defend . . . the clerk must enter the party's default.'” Id. (alteration in original) (quoting Robertson, 2008 WL 2519894, at *3). Second, under Federal Rule of Civil Procedure 55(b)(2), “the party seeking default judgment is required to present its application for entry of judgment to the court.” Id. (quoting Robertson, 2008 WL 2519894, at *3).

         “When a default is entered, the defendant is deemed to have admitted all of the well-pleaded factual allegations in the complaint pertaining to liability. . . .” Bravado Int'l Grp. Merch. Servs., Inc. v. Ninna, Inc., 655 F.Supp.2d 177, 188 (E.D.N.Y. 2009) (citing Greyhound Exhibitgroup, Inc. v. E.L.U.L. Realty Corp., 973 F.2d 155, 158 (2d Cir. 1992)). “While a default judgment constitutes an admission of liability, the quantum of damages remains to be established by proof unless the amount is liquidated or susceptible of mathematical computation.” Flaks v. Koegel, 504 F.2d 702, 707 (2d Cir. 1974); accord, e.g., Bravado Int'l, 655 F.Supp.2d at 189-90. “[E]ven upon default, a court may not rubber-stamp the non-defaulting party's damages calculation, but rather must ensure that there is a basis for the damages that are sought.” United States v. Hill, No. 12-CV-1413, 2013 WL 474535, at *1 (N.D.N.Y. Feb. 7, 2013) (alteration in original) (quoting Overcash v. United Abstract Grp., Inc., 549 F.Supp.2d 193, 196 (N.D.N.Y. 2008)). “The burden is on the plaintiff to establish its entitlement to recovery.” Bravado Int'l, 655 F.Supp.2d at 189. “While ‘the court must ensure that there is a basis for the damages specified in a default judgment, it may, but need not, make the determination through a hearing.'” Id. at 190 (quoting Fustok v. Conticommodity Servs., Inc., 122 F.R.D. 151, 156 (S.D.N.Y. 1988), aff'd, 873 F.2d 38 (2d Cir. 1989)).

         Under Local Rule 55.2(b), the moving party must submit with its motion for default judgment: (1) a clerk's certificate of entry of default, (2) a proposed form of default judgment, (3) a copy of the pleading to which no response has been made, and (4) an affidavit. L.R. 55.2(b). The affidavit must set forth that: (1) the party against whom judgment is sought is not an infant, incompetent, or in military service; (2) the party against whom judgment is sought “has defaulted in appearance in the action”; (3) service was properly effected under Federal Rule of Civil Procedure 4; (4) the amount sought “is justly due and owing, ” and no part has been paid; and (5) “[t]he disbursements sought to be taxed have been made in the action or will necessarily be made or incurred.” L.R. 55.2(a).

         IV. ...


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