United States of America v. Estate of Marcella Cook et al

UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF NEW YORK
UNITED STATES
Plaintiff,
V.
ESTATE OF MARCELLA COOK, et al.,
Defendants.
ES DIST
f=ILED
LOEWENGU1
N DI ST RI
1:24-CV-848 JLS (MJR)
REPORT AND
RECOMMENDATION
This case has been referred to the undersigned pursuant to Section 636(b)(1) of
Title 28 of the United States Code, by the Honorable John L. Sinatra, Jr., for hearing and
reporting on dispositive motions for consideration by the District Court. (Dkt. No. 11)
Before the Court is plaintiff's motion for default judgment of foreclosure and sale. (Dkt.
No. 10) For the following reasons , it is recommended that plaintiff's motion be denied
without prejudice.
FACTS AND BACKGROUND
On 	September 11, 	2024, 	plaintiff United 	States filed 	a complaint seeking 	a
judgment of foreclosure and sale on mortgages encumbering 410 Maple Manor Drive,
Southport, New York, 14904, pursuant to Article 13 of the New York Real Property Actions
and Proceedings Law ("RPAPL"). (Dkt. No. 1) According to the complaint, on March 10,
2006, John W. Cook and Marcella Cook executed an adjustable rate note in conjunction
with a home equity conversion loan (the "Adjustable Rate Note"), by which they promised
to pay to the lender, Elmira Savings & Loan, F.A., all loan advances in the amount of
$126,000 plus interest at the rate of 6.2400% per year, in specified monthly installments.
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(Dkt. No. 1, ,-J 2, Exh. A) As security for repayment of the note, the Cooks executed an
adjustable 	rate 	home 	equity 	conversion 	mortgage 	(the 	"Home 	Equity 	Conversion
Mortgage") as to real property located at 410 Maple Manor Drive, Southport, New York,
14904 (the "Property"). (Id. at ,-J 3; Exh. B) The Home Equity Conversion Mortgage was
recorded on March 17, 2006 in the Chemung County Clerk's Office. (Id. at ,-J 4) On or
about March 10, 2006, the Home Equity Conversion Mortgage was assigned from Elmira
Savings & Loan, F.A. to Financial Freedom Senior Funding Corporation. (Id. at ,-J 5, Exh.
C) The assignment was recorded in the Chemung County Clerk's Office on March 17,
2006. (Id. at ,-J 6)
On January 20, 2010, the Home Equity Conversion Mortgage was assigned from
Financial 	Freedom 	Senior Funding 	Corporation 	to 	Mortgage Electronic 	Registration
Systems, Inc., as nominee for Financial Freedom Acquisition, LLC ("MERS"). (Id. at ,-J 7,
Exh. D) The assignment was recorded in the Chemung County Clerk's Office on February
3, 2010. (Id. at ,-J 8) On May 31, 2016, the Home Equity Conversion Mortgage was
assigned from MERS to the United States Secretary of Housing and Urban Development
("HUD"). (Id. at ,-J 9, Exh. E) The assignment was recorded in the Chemung County Clerk's
Office on July 1, 2016. (Id. at,-J 10)
On or about March 10, 2006, the Cooks executed an adjustable rate second note
in conjunction with a home equity conversion loan (the "Adjustable Rate Second Note"),
in which they agreed to pay the lender, HUD, all loan advances made plus interest at the
rate of 6.2400% per year, in specified monthly installments. (Id. at ,-J 11, Exh. F) As
security for repayment of the Adjustable Rate Second Note, the Cooks executed an
adjustable rate home equity conversion second mortgage (the "Home Equity Conversion
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Second Mortgage") as to the Property. (Id. at ,i 12, Exh. G) The Home Equity Conversion
Second Mortgage was recorded on March 17, 2006 in the Chemung County Clerk's
Office. (Id. at ,i 13) HUD is presently the owner and holder of the Adjustable Rate Note,
the Adjustable Rate Second Note, the Home Equity Conversion Mortgage, and the Home
Equity Conversion Second Mortgage. (Id. at ,i 14)
Plaintiff alleges, upon information and belief, that John Cook passed away on
November 23, 2007 and that Marcella Cook passed away on December 27, 2016. (Id. at
,i 15) Plaintiff alleges that the Home Equity Conversion Mortgage and the Home Equity
Conversion Second Mortgage are in default because the borrowers died and the Property
is not the principal residence of at least one surviving borrower. (Id. at ,i 15, Exh. H)
Plaintiff alleges that HUD is now entitled to accelerate its security interest obligation and
to collect the amount due and owing to HUD, as of August 19, 2024, pursuant to the
Adjustable Rate Note, the Adjustable Rate Second Note, the Home Equity Conversion
Mortgage, and the Home Equity Conversion Second Mortgage. (Id. at ,i 16-17)
Plaintiff seeks sale of the property and the recovery of the principal unpaid balance
due on the mortgage liens, together with unpaid interest, service charges and mortgage
insurance premiums, for a total of $159,581.84, together with costs and fees associated
with bringing this action and the sale of the property. (Id. at ,i,i 17-18) Plaintiff filed a notice
of pendency with this Court, indicating that the Wyoming County Clerk was also directed
to index a notice showing that a foreclosure action had been commenced with respect to
the Property. (Dkt. No. 2)
The complaint names the following defendants: Estate of Marcella Cook; Estate of
John W. Cook; Unknown Heirs of Marcella Cook; and Unknown Heirs of John W. Cook.
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(0kt. No. 1) The complaint indicates that each of these parties, including the Unknown
Heirs of Marcella Cook and the Unknown Heirs of John Cook, if any, may have, or claim
to have, an interest in the Property. (Id. at ,i 21) Plaintiff served the Estate of Marcella
Cook and the Estate of John W. Cook ("the Cook Estates") with the summons and
complaint on November 20, 2024. (0kt. No. 7) The Cook Estates failed to answer or
otherwise move against the complaint. Plaintiff requested an entry of default against the
Cook Estates on January 27, 2025. (0kt. No. 8) On January 28, 2025, the Clerk of the
Court entered default against the Cook Estates. (0kt. No. 9)
On February 10, 2025, plaintiff filed the instant motion for default judgment of
foreclosure and sale pursuant to Rule 55 of the Federal Rules of Civil Procedure. (0kt.
No. 10) Plaintiff served the motion on the Estate of Marcella Cook and the Estate of John
C. Cook. (0kt. No. 10-17) This Court set a briefing schedule which was mailed to the
Cook Estates at the respective addresses listed in plaintiff's certificate of service. (0kt.
No. 	12) 	The 	Court 	informed 	defendants 	that 	failure 	to 	respond 	may 	result 	in 	a
recommendation to the District Court that a default judgment be entered against them.
To date, none of the named defendants have filed a response to plaintiff's motion for
default judgment or otherwise contacted the Court.
DISCUSSION
Liabilitv
Rule 55 of the Federal Rules of Civil Procedure provides a two-step process for
default judgments. See Fed. R. Civ. P. 55. First, the moving party must obtain a certificate
of default from the Clerk of Court. Id. Then, the moving party may apply for entry of default,
and, where default occurs, the well-pleaded factual allegations set forth in the complaint
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related to liability are deemed true. See Greyhound Exhibitgroup, Inc. v. E.L. UL. Realty
Corp., 973 F.2d 	155 , 158 (2d Cir. 	1992). In determining whether to grant a default
judgment, the court must determine whether the plaintiff's allegations establish liability as
a matter of law. City of New York v. Mickalis Pawn Shop, LLC, 645 F.3d 114, 137 (2d Cir.
2011).
Under New York law, a plaintiff seeking to foreclose upon a mortgage must
demonstrate "the 	existence 	of the 	mortgage, 	ownership 	of the 	mortgage, 	and 	the
defendant's default in payment on the loan [secured by the mortgage]. " Gustavia Home,
LLC v. Alvarez, 16-CV-06633, 2017 U.S. Dist. LEXIS 86016 (E.D.N.Y. June 2, 2017)
(internal citations omitted). Thus, "once the plaintiff submits the mortgage, the unpaid
note, and evidence of the default, it has established a prima facie entitlement of judgment,
and the burden shifts to defendant to rebut the plaintiff's evidence ." Id. See also U.S. v.
Watts , 13-CV-3211, 2014 U.S. Dist. LEXIS 120994 (E.D.N.Y. May 28 , 2014) ("[O]nce a
plaintiff mortgagee 	in 	a foreclosure 	action 	has established 	a prima 	facie 	case 	by
presenting a note, a mortgage, and proof of default, it has a presumptive right to foreclose
that can only be overcome by an affirmative showing by the mortgagor.").
Plaintiff has submitted evidence that it is the holder of the Adjustable Rate Note,
the Adjustable Rate Second Note, the Home Equity Conversion Mortgage, and the Home
Equity Conversion Second Mortgage. (0kt. No . 10-1, Exhs. A, B, E, F, G). The Adjustable
Rate Note and the Adjustable Rate Second Note provide that in the event a borrower dies
and the Property is not the principal residence of at least one surviving borrower, the
lender may require immediate payment in full of all outstanding principal and accrued
interest. (0kt. No. 10-1, Exhs. A, F) The Home Equity Conversion Mortgage and the Home
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Equity 	Conversion 	Second 	Mortgage 	both 	provide 	that 	the 	"[!]ender 	may 	require
immediate payment in full of all sums secured by [the security instrument] if. .. [a] borrower
dies and the Property is not the principal residence of at least one surviving Borrower."
(Dkt. No. 10-1, Exh. B, pg. 5; Dkt. No. 10-1, Exh. G, pg. 5) Plaintiff has also produced A
Notice 	of Intent to 	Foreclose 	and 	Accelerate 	Mortgage 	Balance 	in 	the 	amount of
$94,855.93, which was mailed to the Cook Estates on March 1, 2018 (the "Acceleration
Notice"). (Dkt. No. 10-1, Exh. H)
The Acceleration Notice sent to the Cook Estates indicated that the security
interest was in default status because the borrower died and the property was not the
principal residence of at least one surviving 	borrower. 	(Dkt. 	No. 	10-1, Exh. H) The
Acceleration Notice directed the Cook Estates to take one of the following actions in order
to cure the default: (1) correct the matter which resulted in the security instrument coming
due and payable; (2) pay the balance of $95,190.51 in full by March 31, 2018; (3) sell the
Property for the lesser of the balance of 95% of the appraised value and apply the net
proceeds of the sale to the balance; or (4) provide HUD with a deed in lieu of foreclosure.
(Id.) The Acceleration Notice further stated that if defendants did not cure the default by
complying 	with 	one 	of these 	enumerated 	conditions 	within 	thirty 	days, 	HUD 	may
accelerate, without further notice, its security interest obligation by declaring the entire
security 	instrument and 	note due and 	payable 	immediately. 	HUD 	has 	produced 	a
Statement 	of Account 	indicating 	that, 	as 	of August 	19, 	2024, 	a total 	amount 	of
$159,581.84 remains due and owing to HUD, which includes unpaid principal, unpaid
interest, service charges, and mortgage insurance premiums. (Dkt. No. 10-1, ,-J 17; Exh.
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I) In light of this evidence, plaintiff has produced sufficient proof of default as to the
mortgage obligation.
However, the Court finds that a default judgment of foreclosure and sale cannot
proceed, at this time, because plaintiff has not sufficiently demonstrated that it has
properly identified and served all necessary defendants to this action. Plaintiff indicates
that "a [s]ummons with a copy of the [c]omplaint was duly served pursuant to Rule 4(e)
of the Federal Rules of Civil Procedure upon each of the named defendants in the original
[c]omplaint in this action." (0kt. No. 8, ,I 3) The record shows that process was served on
the Cook Estates through delivery of a summons and complaint to Kevin Cook. (0kt. No .
7) The proof of service forms indicate that Kevin Cook is the son of Marcella Cook and
John W. Cook. (Id.) The Court questions whether this constitutes proper service on the
Cook 	Estates, 	since 	there 	is 	no 	indication 	in 	the 	record 	that 	Kevin 	Cook 	is 	the
administrator of either the Estate of Marcella Cook or the Estate of John W. Cook. And
plaintiff provides no statutory authority or case law demonstrating that service on the Cook
Estates was properly effectuated in this manner.
Further, there is no indication in the record that plaintiff served either the summons
and complaint, or the motion for default judgment and foreclosure , on the Unknown Heirs
of Marcella Cook and the Unknown Heirs of John W. Cook (the "Unknown Heirs"), the
two other named defendants in this lawsuit. In addition, default has only been entered as
to the Cook Estates. No entry of default has been entered as to the Unknown Heirs. Thus,
the 	procedural 	prerequisites 	of Rule 	55 	have 	not 	been 	satisfied 	as to 	all 	named
defendants. See Gunderson Amazing Fireworks, LLC v. Merrick Bank, 12-CV-3869, 2016
U.S. Dist. LEXIS 21406 (E .D.N.Y. Feb . 19, 2016) ("[A] district court therefore must ensure
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that the defaulting defendants received notice of the claims against them and were
provided an opportunity to answer those allegations before entering default judgment[.]")
(internal citation omitted); Lliviganay v. Cipriani 110 LLC, 09-CV-737, 2009 U. S. Dist.
LEXIS 37052 (S .D.N.Y. Apr. 14, 2009) (denying default judgment because "it is not clear
that these defendants were properly served"); Francis v. Major World Car Dealership, 19-
CV-189, 2019 U.S. Dist. LEXIS 143924 (E.D.N .Y. Aug. 22, 2019) (default judgment
inappropriate where plaintiff failed to adhere to Rule 55(a)); Torres v. Exec. Officer BF/
Waste Sys., 95-CV-1068 , 1996 U.S. Dist. LEXIS 8194 (W.D.N.Y. June 11, 1996) (denying
a motion for default judgment as "premature" because there had been no entry of default) ;
Carrera v. OT Hospital Group , 19-CV-435, 2021 U.S. Dist. LEXIS 58250 (S.D.N.Y. Mar.
26, 2021) ("It is axiomatic that a default judgment may not be granted if the defendant has
not been effectively served with process .").
The complaint acknowledges that the Unknown Heirs may have, or claim to have,
an interest in the Property. And under New York law, "heirs of deceased mortgagors" are
"[n]ecessary parties to a foreclosure action." United States v. Battle, 20-CV-82, 2022 U.S.
Dist. LEXIS 117825 (W.D.N.Y. July 5, 2022) (accord Salomon Bros. Realty Corp. v.
Alvarez, 22 A.D .3d 482 (2d Dep't 2005); see also N.Y. RPAPL § 1311. Yet there appears
to have been no attempt by plaintiff to identify or serve the Unknown Heirs here. 1 See
Battle, 2022 U.S . Dist. LEXIS 117825, *3 (instructing that in the event there are missing
heirs who will be affected by the judgment, it is the obl igation of the plaintiff to ascertain
the whereabouts of these defendants and in the event their whereabouts cannot be
1 As noted previously, plaintiff served the summons and complaint on Kevin Cook, who apparently
identified himself as the son of Marcella Cook and John W. Cook. But there is no evidence in the record
that Kevin Cook is the legal heir, or one of the legal heirs, of either Marcella or John Cook nor is there
evidence in the record that he is the administrator of either of the Cook Estat es.
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ascertained, 	plaintiff should "seek the appointment of a guardian and/or temporary
administrator to ensure [that the missing heirs'] interests are protected" and service of the
foreclosure action can then be effected on that guardian or administrator) 	(internal
citations and quotations omitted); Sec'y of the United States HUD v. Estate of Ella Mae
Key, 394 F. Supp. 3d 311 (E.D.N.Y. 2019) (noting that HUD "cannot use a federal notice
provision to avoid its obligation to identify the potential heirs and estate representative of
the deceased mortgagor ... [t]hose persons must first be identified, or a representative
must be appointed to represent their interests ... [a]nd to do that, HUD should have availed
itself of New York Surrogate's Court.").
Plaintiff has offered no factual information or legal authority that would support
either dismissal of the Unknown Heirs as defendants or the issuance of a default judgment
against them, based upon the record currently before the Court. Stated another way,
plaintiff has not demonstrated its right to foreclose on all defendants who may have an
outstanding interest in the Property. See Freedom Mortg. Corp. v. Elmore-Hernandez,
18-CV-1840, 2019 U.S. Dist. LEXIS 78835 (E.D.N .Y. May 8, 2019) (denying a judgment
of foreclosure and sale until defendants fully demonstrated their rights to foreclosure
against all defendants).
CONCLUSION
For the foregoing reasons, it is recommended that the District Court deny plaintiff's
motion for default judgment of foreclosure and sale (Dkt. No. 10) without prejudice to
plaintiff's ability to correct the deficiencies discussed herein.
Pursuant to 28 U.S .C. §636(b)(1 ), it is hereby ORDERED that this Report and
Recommendation be filed with the Clerk of Court.
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Unless otherwise ordered by Judge Sinatra, any objections to this Report and
Recommendation must be filed with the Clerk of Court within fourteen days of service of
this Report and Recommendation in accordance with the above statute, Rules 72(b), 6(a),
and 6(d) of the Federal Rules of Civil Procedure, and W.D.N.Y. L. R. Civ. P. 72. 	Any
requests for an extension of this deadline must be made to Judge Sinatra.
Failure to file objections, or to request an extension of time to file objections,
within fourteen days of service of this Report and Recommendation WAIVES THE
RIGHT TO APPEAL THE DISTRICT COURT'S ORDER. 	See Small v. Sec'y of Health
& Human Servs., 892 F.2d 15 (2d Cir. 1989).
The District Court will ordinarily refuse to consider de nova arguments, case law
and/or evidentiary material which could 	have been, 	but were not, 	presented to the
Magistrate Judge in the first instance. See Paterson-Leitch Co. v. Mass. Mun. Wholesale
Elec. Co., 840 F.2d 985, 990-91 (1st Cir. 1988).
Finally, 	the parties are reminded that, pursuant to WD.N. Y. 	L.R. Civ.P. 	72(b),
written objections "shall specifically identify the portions of the proposed findings and
recommendations to which objection is made and the basis for each objection, and shall
be supported by legal authority." Failure to comply with these provisions may result
in the District Court's refusal to consider the objection.
SO ORDERED.
DATED: 	September 16, 2025
Buffalo, New York
NORABLE
United States Magistrate Judge
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