U.S. Bank National Association v. Chenango Place, LLC et al

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UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF NEW YORK
____________________________________________
U.S. BANK NATIONAL ASSOCIATION,
as Trustee for the Registered Holders of J.P. Morgan
Chase Commercial Mortgage Securities Corp.,
Multifamily Mortgage Pass-Through Certificates,
Series 2018-KX03,
Plaintiff,
vs. 	3:23-CV-928
(MAD/ML)
CHENANGO PLACE, LLC, RACHEL SCHIFF,
ABRAHAM GROSS, and BROOME COUNTY
INDUSTRIAL DEVELOPMENT AGENCY,
Defendants.
____________________________________________
APPEARANCES: 	OF COUNSEL:
BALLARD SPAHR LLP 	MARJORIE J. PEERCE, ESQ.
1675 Broadway, 19th Floor 	CELIA A. COHEN, ESQ.
New York, New York 10019
Attorneys for Plaintiff
BALLARD SPAHR LLP 	RAYMOND A. QUAGLIA, ESQ.
1735 Market Street, 51st Floor
Philadelphia, Pennsylvania 19103
Attorney for Plaintiff
HINMAN, HOWARD & KATTELL, LLP 	HARVEY D. MERVIS, ESQ.
P.O. Box 5250
80 Exchange Street
700 Security Mutual Building
Binghamton, New York 13902
Attorney for Defendants Chenango Place, LLC,
Rachel Schiff, and Abraham Gross
Mae A. D'Agostino, U.S. District Judge:
ORDER
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This diversity action arises out of a commercial mortgage foreclosure. See Dkt. No. 1.
Plaintiff U.S. Bank National Association commenced the action on July 31, 2023, seeking to
foreclose a mortgage on which Defendant Chenango Place, LLC ("Chenango Place") had been in
default. See id. The mortgage encumbered Defendant Chenango Place's property at 7-9 Court
Street in Binghamton, New York, see id. at ¶ 8, which was used as a student housing complex, see
Dkt. No. 72 at 2 (citing Dkt. No. 68-1 at ¶ 5). Defendants Rachel Schiff and Abraham Gross are
members of Chenango Place. See Dkt. No. 1 at ¶ 2. On April 26, 2024, as stipulated by the
parties, Magistrate Judge Miroslav Lovric ordered the appointment of a receiver, Gregg Williams,
to operate and manage Defendant Chenango Place's property. See Dkt. No. 53.
On November 1, 2024, Plaintiff moved for summary judgment, as well as a default
judgment against Defendant Broome County Industrial Development Agency, see Dkt. No. 68, a
public benefit corporation with a leasehold interest in the property at the time Plaintiff
commenced the action, see Dkt. No. 1 at ¶ 5. Defendants did not oppose the motions. On
January 10, 2025, this Court granted both motions and ordered foreclosure and sale of the
property. See Dkt. No. 72 at 21. Judgment was entered in Plaintiff's favor, and the case was
closed. See Dkt. No. 73. On April 24, 2025, Plaintiff purchased the property at the ordered
foreclosure sale. See Dkt. No. 78 at ¶¶ 1-2. For a full recitation of the factual background, the
parties are referred to this Court's Memorandum-Decision and Order dated January 10, 2025. See
Dkt. No. 72.
On May 22, 2025, Plaintiff filed a motion to terminate the receivership and discharge the
receiver. See Dkt. No. 77. Once again, the motion is unopposed. Plaintiff sought Defendants'
consent to the receiver's removal, but Defendants did not respond. See id. at ¶ 7. Subsequently,
on August 21, 2025, Plaintiff provided the Court with the receiver's final accounting concerning
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his administration of the receivership. See Dkt. No. 79. Plaintiff's motion to terminate the
receivership and discharge the receiver is now before the Court.
In diversity actions, it is well settled that the appointment of receivers is a procedural
matter governed by federal law. See, e.g., Greystone Bank v. Tavarez, No. 9-CV-5192, 2009 WL
10712899, *1 (E.D.N.Y. Dec. 17, 2009) (quoting Bristol Oaks, L.P. v. Werczberger, No. 95-CV-
3973, 1996 WL 19207, *1 (E.D.N.Y. Jan. 2, 1996)); U.S. Bank Nat'l Ass'n v. Nesbitt Bellevue
Prop. LLC, 866 F. Supp. 2d 247, 249 (S.D.N.Y. 2012) (citing Varsames v. Palazzolo, 96 F. Supp.
2d 361, 365 (S.D.N.Y. 2000)). It follows that federal law also governs termination of
receiverships. See Nat'l P'ship Inv. Corp. v. Nat'l Hous. Dev. Corp., 153 F.3d 1289, 1291-93
(11th Cir. 1998) (summarizing the consensus among federal courts that appointment of a receiver
is a procedural issue governed by federal law and discussing "the primacy of federal law" in
receivership cases). District courts have discretion on whether to terminate a receivership. See
S.E.C. v. Morgan Mezzanine Fund Manager LLC, No. 1:19-CV-661, 2023 WL 11988727, *2
(W.D.N.Y. Jan. 10, 2023) (quoting Baliga v. Link Motion Inc., No. 18-CV-11642, 2022 WL
2531535, *16 (S.D.N.Y. Mar. 9, 2022)). "The decision . . . turns on the facts and circumstances
of each case. It is generally held that a receivership should be dismissed when the reason for the
receivership ceases to exist." Id. (internal quotation marks omitted). Completion of the receiver's
duties is an indicator that the receivership has served its purpose and may be terminated. See id.
(terminating receivership where the receiver had completed the agreed-upon work and provided
the court with a final accounting).
Plaintiff and Defendant Chenango Place, then-owner of the property, were the named
parties to the stipulated appointment of the receiver. See Dkt. No. 53 at 1. The parties noted that
the receivership was "warranted by the circumstances[,]" id. at ¶ 1(b), and cited the applicable
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mortgage document, which gives the lender authority to appoint a receiver if the borrower
defaults on the secured loan, see Dkt. No. 1-2 at 26, ¶ 3(c)(ii). The parties also agreed that the
receiver's term would run until the Court ordered its termination. See Dkt. No. 53 at ¶ 2(a). The
receiver had the authority to, inter alia, collect rent from tenants on the property; take action to
maintain and manage the property; hire accountants, contractors, and other personnel to maintain
and manage the property; commence or defend lawsuits pertaining to the property; pay taxes and
insurance premiums related to the property; and keep a record of all expenses associated with the
property. See id. at ¶ 3. Likewise, Defendant Chenango Place agreed to turn over keys, service
contracts, ledgers, and other essential materials to the receiver. See id. at ¶ 4. It also agreed not to
interfere with the receiver's work. See id. at ¶ 5.
Plaintiff now owns the property and is the party seeking termination of the receivership,
see Dkt. No. 77; Dkt. No. 78 at ¶ 2, which Defendants do not oppose. The Court does not discern
from the record any reason why the receivership has not served its purpose. Therefore, the Court
determines that the receivership is no longer necessary, and termination is appropriate.
At the close of a court-appointed receivership, "'[a] receiver . . . who reasonably and
diligently discharges his duties is entitled to be fairly compensated for services rendered and
expenses incurred. The amount . . . is to be determined by the court in the exercise of its
reasonable discretion.'" Morgan Mezzanine, 2023 WL 11988727, at *1 (quoting S.E.C. v. Byers,
590 F. Supp. 2d 637, 644 (S.D.N.Y. 2008)); see also Baliga, 2022 WL 2531535, at *19 (citations
omitted) (recognizing that, to ensure the receiver is compensated, courts normally wait until after
the receiver has submitted an accounting to terminate the receivership). Courts consider factors
such as "the complexity of problems faced, the benefits to the receivership estate, the quality of
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the work performed, and the time records presented." Byers, 590 F. Supp. 2d at 644 (internal
quotation marks omitted).
When the receiver was appointed, the parties stipulated to "a monthly receiver fee not to
exceed $5,000.00," plus "reimbursement for any property management fees paid to an unaffiliated
property manager." Dkt. No. 53 at ¶ 1(c). The receiver requests $85,000 in fees: $5,000 per
month from April 2024 to August 2025. See Dkt. No. 79-2 at 2. However, the receiver's
accounting records span only from May 1, 2024, to July 31, 2025. See Dkt. No. 79-1 (detailing
rental income, utility costs, tax and insurance expenditures, contract service payments, and other
financial activity of the receivership account during the specified period). Thus, in light of the
stipulated monthly rate and Defendants' failure to object, the Court applies the $5,000 monthly
rate and multiplies it by fifteen, for a total receivership fee award of $75,000.
After carefully reviewing the entire record in this matter and the applicable law, the Court
hereby
ORDERS that Plaintiff's motion to terminate the receivership and discharge the receiver
(Dkt. No. 77) is GRANTED; and the Court further
ORDERS that $75,000 in receivership funds be paid to the receiver; and the Court further
ORDERS that the receivership is TERMINATED; and the Court further
ORDERS that the receiver is DISCHARGED of any further duties, obligations, or
liabilities related to the receivership, except for those necessary to make the payment approved by
the Court and to close the receivership account; and the Court further
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ORDERS that the Clerk of the Court shall serve a copy of this Order on the parties in
accordance with the Local Rules.
IT IS SO ORDERED.
Dated: February 27, 2026
Albany, New York
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