United States District Court, E.D. New York
REPORT AND RECOMMENDATION
Kuo, United States Magistrate Judge
SAC Fund II 0826, LLC brought this action against Defendants
Burnell's Enterprises, Inc.
(“Burnell's”), American Bug Company, Inc.
(“American Bug”), Ronald Bassett, individually
and as the Executor of the Estate of Adell D. Bassett, the
New York City Department of Finance (“DOF”), the
New York City Environmental Control Board
(“ECB”), and American Express Centurion Bank
(“American Express”),  pursuant to N.Y. Real Prop.
Acts. Law §§ 1301 et seq. (McKinney,
2019), to foreclose a mortgage encumbering four separate
properties located at (1) 193-02 Linden Boulevard., St.
Albans, New York, (2) 110-11 Sutphin Boulevard., Jamaica, New
York, (3) 111-21 Farmer's Boulevard., St. Albans, New
York, and (4) 112-13 Francis Lewis Boulevard., Jamaica, New
York (collectively, the “Properties”).
(See Compl., Dkt. 1.) Plaintiff is the owner and
holder of the note secured by the mortgage on the Properties.
(Compl. ¶¶ 24-26; see also Compl., Ex. A,
this Court on referral from the Honorable Eric N. Vitaliano
is Plaintiff's Motion for Default Judgment (the
“Motion”). (See Dkt. 22; Oct. 10, 2018
Order.) For the reasons stated herein, the undersigned
respectfully recommends that the Motion be granted as to
Defendants, American Bug, Ronald Bassett, and American
Express, but denied as to Defendants DOF and ECB.
Agreements between the Parties
Properties were encumbered through various instruments,
including mortgages, notes, guaranties, and consolidation
agreements (collectively, the “Loan Documents”)
over the course of several years, as follows:
16, 2002 “Mortgage and Security
April 16, 2002, Burnell's, American Bug and Luke Bassett
executed a credit line mortgage, secured by a credit note,
mortgaging the Properties and thereby securing a
non-revolving credit line of $499, 000. Burnell's owned
the property located at 193-02 Linden Boulevard, American Bug
owned the properties located at 110-11 Sutphin Boulevard and
111-21 Farmers Boulevard, and Luke Bassett owned the property
located at 112-13 Francis Lewis Boulevard. (Compl., Ex. G.)
The mortgage was guaranteed “unconditionally” by
American Bug and Luke Bassett, and was recorded in the Office
of the City Register of the City of New York, Queens County
(“Queens County Recording Office”). (Compl., Ex.
B, C, I.)
4, 2004 “Loan and Mortgage Modification
Agreement”, “Gap Mortgage” &
“Consolidation, Modification, and Extension
March 4, 2004, a modification agreement converted the 2002
credit line into a term loan, and the credit line mortgage
into a term mortgage. Luke Bassett had died, and Adell D.
Bassett was named Executor of his Estate,  which assumed
ownership of the mortgaged property at 112-13 Francis Lewis
Boulevard (Compl., Ex. C). Under the agreement, his Estate
assumed all of Luke Bassett's obligations under the
guaranty and mortgage. Adell D. Bassett also assumed the role
of “Unsecured Guarantor, ” and together with the
mortgagors (Burnell's, American Bug, and the Estate of
Luke Bassett), agreed to be jointly and severally liable
under the mortgage and related notes. The agreement was
recorded in the Queens County Recording Office.
same date, a “gap” mortgage added an additional
$251, 000 of indebtedness to the original mortgage. (Compl.,
Ex. D.) The agreement provides for joint and several
liability among the mortgagors and Adell D. Bassett as an
American Bug, and the Estate of Luke Bassett also executed an
agreement restating the mortgagors' responsibilities in
both the 2002 mortgage and the “gap” mortgage,
and clarifying that the total principal mortgage had become
$750, 000. (Compl. Ex. E.) An affidavit signed by Adell Doris
Bassett noted that none of the $750, 000 had yet been repaid.
1, 2005 “Gap Mortgage”, “Consolidation,
Modification, and Extension Agreement”, “Restated
Promissory Note” & “Guaranty of
October 1, 2005, the mortgagors entered into a second
“gap” mortgage in the amount of $200, 000.
(Compl., Ex. F.) At the same time, an agreement acknowledged
that the prior mortgages, plus the second “gap”
mortgage, brought the total indebtedness on the properties to
$950, 000 in a single mortgage. (Compl., Ex. G.) The
mortgagors agreed they would be jointly and severally liable
for the debt. The mortgagors also agreed that mortgagee could
pursue a deficiency judgment in the event that a foreclosure
action is brought. (Id., Ex. A, Section 10.9.) The
gap mortgage and this agreement were recorded on March 15,
2006 in the Queens County Recording Office.
as the named Borrower, also executed a Restated Promissory
Note, which includes a security clause stating that payment
under the loan is guaranteed jointly and severally by
American Bug and Adell D. Bassett in her individual capacity
and as Executor of the Estate of Luke Bassett. (Compl., Ex.
“Guaranty of Payment” states that the mortgagee
was willing to make the loan to Burnell's only if Adell
D. Bassett, American Bug, and the Estate of Luke Bassett
jointly and severally guaranteed payment of the debt to
Community Capital Bank and its “successors and
assigns.” (Compl., Ex. H., at ¶ 11.) The guaranty
also bound “the heirs, executors, administrators, legal
representatives, successors and assigns” of the
guarantors to the agreement. (Id.)
Succession of Ownership of the Loan Documents
original mortgagee on the Properties and holder of the Loan
Documents, Community Capital Bank, merged with Carver Federal
Savings Bank (“Carver”), which became the owner
and holder of the Loan Documents. (Compl. ¶¶ 13;
23; Compl., Ex. I.) Carver subsequently assigned the Loan
Documents to Plaintiff on September 24, 2015. (Compl.
¶¶ 24-26; see also Compl., Exs. A, I.) The
assignment of the mortgages was duly recorded in the Queens
County Recording Office on December 28, 2015. (Compl. ¶
27; see also Compl., Ex. I.)