United States District Court, D. Connecticut
MEMORANDUM AND ORDER
MICHAEL P. SHEA, U.S.D.J.
Bank of America, N.A. (“BOA”) brought this action
against Defendants Jonathan Malkin and Philippa Malkin
(“the Malkins”) and Country Bank
(“Country”), seeking to foreclose a mortgage
given by the Malkins to secure a Note given by them and to
recover damages arising from the alleged default on the Note.
See Second Amended Complaint (ECF No. 35.)
Malkins failed to appear or respond to the Second Amended
Complaint, and on October 11, 2016, the Court granted
BOA's motion for entry of default, entered default with
respect to the Malkins under Federal Rule of Civil Procedure
55(a), and directed BOA to file a motion for default judgment
under Federal Rule of Civil Procedure 55(b). (ECF No. 37.) On
April 18, 2017, BOA moved for judgment of strict foreclosure.
(ECF No. 42.) Country responded to BOA's motion,
indicating that while it did not object to the entry of
judgment of foreclosure, Country requested that the Court
enter judgment of foreclosure by sale, rather than strict
foreclosure. (ECF Nos. 46, 47.)
reasons discussed below, the motion for judgment of strict
foreclosure is DENIED and Country's motion for judgment
of foreclosure by sale is GRANTED.
following facts are taken from the Second Amended Complaint
and the exhibits. (ECF No. 35.) On June 19, 1997, Mr. Malkin
became indebted to NationsBank, N.A.
(“NationsBank”) in the amount of $1, 190, 000.00,
with interest thereon (“the $1.19 MM Loan”),
evidenced by a note executed by Mr. Malkin (“the $1.19
MM Note”). (Id. ¶¶ 9-10.) As
security for the $1.19 MM Loan and Note, Mr. Malkin granted
to NationsBank a mortgage (“the Mortgage”)
encumbering his interest in the premises located at 177
Roxbury Road, Washington Depot, Connecticut (“the
Property”). (Id. ¶¶ 8, 12; ECF No.
35-1.) The Mortgage was recorded on June 13, 1997, in the
Washington, Connecticut Land Records. (ECF No. 35 ¶ 13.)
NationsBank later merged with BOA and assigned the Mortgage
to BOA. (Id. ¶ 15.)
September 13, 1999, Mr. Malkin entered into a Modification
and Extension Agreement with NationsBank agreeing to modify
certain terms of the $1.19 MM Note and the Mortgage, which
was recorded in the Land Records. (Id. ¶¶
16-17; ECF No. 35-2.) The Malkins entered into a second
Modification and Extension Agreement with BOA on January 23,
2002, again agreeing to modify certain terms under the $1.19
MM Note and Mortgage. (ECF No. 35 ¶ 18.) The second
modification agreement was recorded in the Land Records.
(Id. ¶ 19; ECF No. 35-3.) Under the second
modification agreement, the principal amount of the
Malkins' debt to BOA was increased to $1, 500, 000.00
(“the $1.5 MM Loan”). (ECF No. 35 ¶ 21.) The
Malkins executed a note evidencing the $1.5 MM Loan
(“the $1.5 MM Note”). (Id. ¶ 22;
ECF No. 35-4.) The $1.5 MM Note provided that all of the
terms, covenants, and conditions contained in the Mortgage
were made to protect BOA from a potential default. (ECF No.
35 ¶ 24.)
October 1, 2002 and March 1, 2009 the Malkins entered into
four modification agreements with BOA, agreeing to modify
certain terms under the $1.5 MM Note and the Mortgage. (ECF
No. 35 ¶¶ 28-37; ECF Nos. 35-5 to 35-8.) The fourth
modification agreement was recorded on April 21, 2009 in the
Land Records. (ECF No. 35 ¶ 37.) Under the fourth
modification agreement, the interest rate was modified to an
annual rate of 4.45% and the maturity date was extended to
March 1, 2014. (Id. ¶ 36.) The interest rate
could change on March 1, 2012 and every twelfth month
thereafter, but could never be greater than 10.45% or less
than 2.75%. (Id.)
Malkins failed to pay the then-outstanding balance of the
principal and all accrued and unpaid interest, and all other
charges on the maturity date, as required by the $1.5 MM
Note. (ECF No. 35 ¶¶ 38-39.) Under Section 6 of the
1.5 MM Note, the Malkins' failure to pay these amounts
constitutes a default. (Id. ¶ 39.)
sent the Malkins a letter notifying them that they had
defaulted on the $1.5 MM Loan on January 23, 2015.
(Id. ¶ 40; ECF No. 35-9.) BOA informed the
Malkins that they could cure the default by paying $1, 476,
758.52 by February 23, 2015. (ECF No. 35 ¶ 41.) BOA also
informed the Malkins that if they did not cure the default by
paying the amount due in full by that date, then BOA would
continue to pursue its rights and remedies, including a
foreclosure action and sale of the Property. (Id.)
The Malkins remained in default and the past due amount,
additional interest, and costs remained unpaid. (Id.
elected to declare the entire unpaid balance of the principal
sum immediately due and payable. As of March 9, 2016, the
Malkins owed the principal sum of $1, 438, 637.00 plus $85,
465.68 in interest accruing at the default rate, plus fees,
late charges, and attorneys' fees and expenses.
(Id. ¶ 43.)
light of the Malkins' default, the Court must
“accept as true all of the factual allegations of the
complaint, except those relating to damages.” Au
Bon Pain Corp. v. Artect, Inc., 653 F.2d 61, 65 (2d Cir.
1981). The Court must draw all reasonable inferences in the
plaintiff's favor. Finkel v.
Romanowicz, 577 F.3d 79, 84 (2d Cir. 2009). The
plaintiff seeking default judgment has the burden to
establish damages with reasonable certainty. Norcia v.
Dieber's Castle Tavern, Ltd., 980 F.Supp.2d 492, 500