Case 1:19-cv-00514-KAM-JRC Document 323 Filed 07/08/24 Page 1 of 53 PageID #: 5150
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`United States District Court
`Eastern District of New York
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`Carla Barker,
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`-----------------------------------X
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`Plaintiff,
`- against -
`Izia Rokosz,
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`Defendant.
`-----------------------------------X
`Izia Rokosz,
`
`Memorandum and Order
`No. 19-cr-514 (KAM) (JRC)
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`Counter-Plaintiff,
`- against –
`Carla Barker, et al.,
`Counter-Defendants.
`-----------------------------------X
`Kiyo A. Matsumoto, United States District Judge:
`Plaintiff Carla Barker commenced this action against
`Defendants Izia Rokosz, Janelle Defreitas, Steven Legum, Frank
`Richard Hurley, Gregg Telsey, Robert Fishbein, Betty Hingle,
`Royce LLC, Jackie Marketing LLC, and Lockdeco (a/k/a Lodeco)
`based on an allegedly unlawful home mortgage loan on which she
`defaulted. All the defendants either settled with Barker or
`have been dismissed from the case except for the lender, Rokosz,
`who continues to contest liability and also has counterclaimed
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`
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`United States District Court
`Eastern District of New York
`
`Carla Barker,
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`-----------------------------------X
`
`Plaintiff,
`- against -
`Izia Rokosz,
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`Defendant.
`-----------------------------------X
`Izia Rokosz,
`
`Memorandum and Order
`No. 19-cr-514 (KAM) (JRC)
`
`Counter-Plaintiff,
`- against –
`Carla Barker, et al.,
`Counter-Defendants.
`-----------------------------------X
`Kiyo A. Matsumoto, United States District Judge:
`Plaintiff Carla Barker commenced this action against
`Defendants Izia Rokosz, Janelle Defreitas, Steven Legum, Frank
`Richard Hurley, Gregg Telsey, Robert Fishbein, Betty Hingle,
`Royce LLC, Jackie Marketing LLC, and Lockdeco (a/k/a Lodeco)
`based on an allegedly unlawful home mortgage loan on which she
`defaulted. All the defendants either settled with Barker or
`have been dismissed from the case except for the lender, Rokosz,
`who continues to contest liability and also has counterclaimed
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`to foreclose on Barker’s home. Barker now moves for summary
`judgment establishing Rokosz’s liability with respect to her
`claims, which she also asserts as defenses to Rokosz’s
`foreclosure counterclaim. Rokosz cross-moves for summary
`judgment rejecting Barker’s defenses and establishing his
`entitlement to foreclosure.
`For the reasons below, the Court finds no genuine disputes
`of material fact and grants Barker’s motion for summary judgment
`with respect to all her claims except her usury claim, which is
`dismissed with prejudice. The Court further denies Rokosz’s
`motion for summary judgment and dismisses his foreclosure claim
`with prejudice.
`
`Background
`
`I.
`
`Statutory Background
`Barker’s claims arise under the Truth in Lending Act
`(“TILA”), an amendment to TILA titled the Home Ownership and
`Equity Protection Act (“HOEPA”), Section 6-l of the New York
`Banking Law, and New York’s usury statute.
`A.
`TILA and HOEPA
`Congress passed TILA, 15 U.S.C. §§ 1601–67f, to “assure a
`meaningful disclosure of credit terms” so “consumer[s] will be
`able to compare more readily the various credit terms available”
`and “avoid the uninformed use of credit.” Pub. L. No. 90-321,
`82 Stat. 146; see 15 U.S.C. § 1601(a). To that end, TILA
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`requires creditors to disclose certain information when they
`offer or extend consumer credit, including the amount financed,
`itemization of the amount financed, finance charge, annual
`percentage rate, payment schedule, late payment penalty, and
`interest rate. See 15 U.S.C. § 1638. Congress has authorized
`the Consumer Financial Protection Bureau (“CFPB”) to issue rules
`to implement TILA, 15 U.S.C. § 1604(a), which are known as
`“Regulation Z,” 12 C.F.R. § 1026.1(a).
`HOEPA, Pub. L. No. 103-325, 108 Stat. 2190, requires
`additional disclosures for high-cost mortgage loans and
`restricts the terms on which such loans can be offered. See
`15 U.S.C. § 1639. For example, HOEPA forbids increasing the
`interest rate after default, scheduling balloon payments, paying
`a contractor directly out of the loan proceeds, and excessively
`financing points and fees. See id. It also requires the lender
`to provide a pre-closing notice to the borrower and to receive
`certification from a federally approved counselor that the
`borrower received counseling with respect to the advisability of
`the loan. 15 U.S.C. §§ 1639(a), 1639(u).
`TILA and HOEPA apply only to “consumer credit
`transactions.” 15 U.S.C. §§ 1638–39. A consumer credit
`transaction is a transaction where “the party to whom credit is
`offered or extended is a natural person” and “the money,
`property, or services which are the subject of the transaction
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`are primarily for personal, family, or household purposes.”
`15 U.S.C. § 1602(i). Transactions “involving extensions of
`credit primarily for business” or “commercial” purposes and
`transactions involving extensions of credit “to organizations”
`are exempt from coverage. 15 U.S.C. § 1603(1).
`B.
`New York Banking Law
`Like HOEPA, Section 6-l of the New York Banking Law
`“imposes limitations and prohibits certain ‘practices for high-
`cost home loans.’” See Aries Fin., LLC v. 12005 142nd St., LLC,
`7 N.Y.S.3d 372, 375 (2d Dep’t 2015) (quoting N.Y. Banking Law
`§ 6-l(2)). Section 6-l similarly limits its coverage to
`transactions where “[t]he borrower is a natural person.” N.Y.
`Banking Law § 6-l(1)(e)(ii). It also explicitly states that it
`“shall apply to any person who in bad faith attempts to avoid
`the application of [the statute] by any subterfuge.” N.Y.
`Banking Law § 6-l(3).
`C.
`Usury
`New York’s usury statute forbids charging, taking, or
`receiving interest at a rate beyond sixteen percent per year.
`N.Y. Gen. Oblig. Law § 5-501(1)–(2); N.Y. Banking Law § 14-a(1).
`Usurious contracts are void under New York law. N.Y. Gen.
`Oblig. Law § 5-511(1).
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`II. Factual Background1
`This case stems from Defendant Izia Rokosz’s $450,000 loan
`to Plaintiff Carla Barker (the “subject loan”) through “J&M
`Holdings, Inc.,” a corporation that Rokosz required Barker to
`form as a condition of issuing the loan. The subject loan was
`issued through two closings that occurred on February 6, 2017,
`and February 16, 2017, and was secured by a mortgage on Barker’s
`home.
`It is undisputed that Barker defaulted on the loan. (ECF
`No. 312-2, Mem. Law Supp. Pl.’s Mot. Summ. J. (“Pl.’s Mem.”),
`5.) It also is undisputed that Rokosz never attempted to comply
`with TILA, HOEPA, Section 6-l of the New York Banking Law, or
`New York’s usury statute in issuing the loan. (ECF No. 295,
`Def.’s Resps. to Pl.’s Statement Undisputed Material Facts
`(“Def.’s Counter-56.1.”), ¶¶ 100, 106–08.) The central dispute
`in this case is whether those statutes apply at all because
`Rokosz’s loan to Barker required the creation of a corporation
`(i.e., an “organization” and not a “natural person”) that took
`title to Barker’s home, signed the mortgage, and had its shares
`assigned to Rokosz.
`A.
`The Subject Loan
`Since she was eleven years old, Carla Barker, a fifty-six-
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`1 Except as otherwise noted, the following facts are not in dispute and are
`based on the parties’ statements filed pursuant to Local Civil Rule 56.1.
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`year-old high school graduate and home health aide, has lived in
`a two-family residential home in the East Flatbush neighborhood
`of Brooklyn, New York (the “subject property”). (Def.’s
`Counter-56.1. ¶¶ 1–3, 31.) Barker’s mother, who owned the home,
`died without a will in 2004, causing title to the home pass to
`Barker and her sister, Sandra Vaughan. (Id. ¶¶ 32-33.)
`Vaughan, who lived out of state, sued Barker to partition the
`home and obtained a judgment against her in 2008. (Id. ¶¶ 33-
`34.) Feeling pressure from the partition judgment, Barker
`sought a loan to buy out her sister’s interest in the property
`and remain in the home. (Id. ¶ 36.)
`In 2016, after undergoing cancer treatment, becoming
`unemployed, and failing to qualify for traditional financing,
`Barker discussed her need for a loan with a family friend, who
`put Barker in touch with Defendant Janelle Defreitas.2 (Id.
`¶¶ 37–39; see ECF No. 281, 2d Am. Compl. & Jury Demand (“2d Am.
`Compl.”), ¶ 22.) Defreitas spoke to a mortgage loan officer,
`Defendant Robert Fishbein, about Barker’s need for a loan.
`(Def.’s Counter-56.1 ¶ 43.) Fishbein contacted a “residential
`mortgage loan originator,” Defendant Gregg Telsey, about
`Barker’s need for financing. (Id. ¶¶ 6, 44.)
`Telsey is the sole broker for Defendant Izia Rokosz, a
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`2 Defreitas was later convicted for her role in a mortgage fraud conspiracy.
`See https://nysdoccslookup.doccs.ny.gov/ (NYSID #18G0949).
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`private “hard money” lender who has been in the lending business
`for over forty years.3 (Id. ¶¶ 4–5, 10.) Rokosz lends to people
`who want to fix up their property, rent it, and then obtain
`standard home loans from banks. (Id. ¶ 54.) He prefers to lend
`to business entities rather than to individual homeowners, and
`most of his loans are to such entities. (See id. ¶¶ 55, 57-58.)
`If a prospective borrower seeks to finance an owner-occupied
`property, Rokosz may require the borrower, as he did with
`Barker, to form a business entity to serve as the formal
`borrower. (Id. ¶ 56.) Rokosz requires that all stock in the
`business entity be assigned to him and held in escrow as further
`security in case the borrower defaults. (Id. ¶ 59.)
`When Telsey informed Rokosz that “a lady” wanted a loan to
`fix her house, to be secured by Barker’s property, Rokosz
`expressed interest. (Id. ¶¶ 45–47.) Telsey took Rokosz to
`Barker’s home, where she was present, to inspect the premises,
`verify the house’s existence, and assess the debt-value ratio.
`(Id. ¶ 48.) After Telsey advised Fishbein that Rokosz was
`interested in lending to Barker, Fishbein initiated a title
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`3 A “hard money” loan is a loan secured by real property where the lender
`approves the borrower based on the value of the collateral rather than based
`on the borrower’s creditworthiness. Troy Segal, Hard Money Loan:
`Definition, Uses, and Pros & Cons, Investopedia (updated May 7, 2024),
`https://www.investopedia.com/terms/h/hard_money_loan.asp
`[https://perma.cc/NTE2-J9BJ]. They are considered loans of “last resort” and
`typically have higher interest rates than traditional mortgages do. Id.
`Because such loans are considered riskier than traditional loans, they are
`typically issued by individuals and private companies rather than by banks.
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`order for the property. (Id. ¶ 49.) Telsey then informed
`Fishbein that Rokosz was interested in making the loan, but only
`if a business entity took title to the property to serve as the
`formal borrower. (Id. ¶ 50.) Fishbein advised Defreitas of
`that condition, and Defreitas so advised Barker. (Id. ¶¶ 52–
`53.) Defreitas then incorporated J&M Property Holdings, Inc.,
`on January 13, 2017, to purchase Barker’s property from Barker
`and Vaughan and to borrow money from Rokosz. (Id. ¶¶ 61–65,
`68.) The “J&M” name apparently derived from Defreitas’s first
`initial and Barker’s middle initial. (See ECF No. 292-1,
`Defreitas Dep. 66:14–19.) J&M has no identified purpose other
`than borrowing funds from Rokosz and has never held any assets
`other than Barker’s property. (Def.’s Counter-56.1 ¶¶ 67, 70.)
`B.
`The Closings and Distribution of the Proceeds
`Defreitas contacted Defendant Frank Richard Hurley, a
`criminal defense attorney with no apparent real estate
`experience, to represent Barker in the loan closing. (See id.
`¶¶ 28, 87–88.) Hurley agreed to represent Barker and understood
`she was seeking to refinance the property where she lived. (Id.
`¶ 88.) He was not aware of J&M’s existence or the structure of
`the loans before closing. (Id. ¶ 89.) Neither he nor Barker
`were provided any of the closing documents to review before the
`closings occurred. (Id. ¶¶ 91–97.) On the day of the first
`closing, Hurley sent Barker a letter stating, “DO NOT BORROW
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`FROM THIS PRIVATE LENDER.” (ECF No. 302, Pl.’s Counterstatement
`Material Facts (“Pl.’s Counter-56.1”), ¶¶ 26–27.)
`Before the closings, Rokosz did not request, obtain, or
`review a loan application or any other documents from Barker,
`either in her individual capacity or in her capacity as J&M’s
`president. (Def.’s Counter-56.1 ¶¶ 71–74.) He also had not
`reviewed Barker’s finances or J&M’s finances. (Id. ¶¶ 75–76.)
`Rokosz never provided any notices, disclosures, or other
`documents setting forth the amount financed, finance charges,
`points and fees, payment schedule, or annual percentage rate of
`the loan beyond what was already stated in the closing
`documents. (Id. ¶¶ 97, 100.)
`At a February 6, 2017, closing, Rokosz issued a $330,000
`mortgage loan secured by Barker’s home. (Id. ¶ 111.) At the
`closing, Rokosz’s attorney, Defendant Steven Legum, provided the
`closing documents, which he had prepared, (id. ¶¶ 24–25, 84,
`113, 115), and explained the documents to Hurley, who
`interpreted Legum’s explanations for Barker, (id. ¶ 114). The
`closing documents included:
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`a deed signed by Barker (individually) and Vaughan
`transferring the subject property to J&M in exchange
`for ten dollars;
`a corporate resolution signed by Barker (as J&M’s
`president and secretary) authorizing J&M to borrow
`$330,000 from Rokosz in exchange for a security
`interest in the subject property;
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`a mortgage note signed by Barker (as J&M’s president)
`promising to pay Rokosz a principal sum of $330,000;
`a mortgage signed by Barker (as J&M’s president)
`securing a sum of $330,000 against the subject
`property;
`an escrow agreement between J&M as borrower (signed by
`Barker as J&M’s president), Rokosz as lender, and
`Legum as escrow agent;
`a correction of errors statement signed by Barker (as
`J&M’s president and secretary) authorizing Rokosz to
`execute any new documents or make corrections as he
`deemed necessary;
`an assignment and security agreement signed by Barker
`(individually and as J&M’s president) and Legum (as
`escrow agent) assigning all Barker’s interest and
`stock in J&M to Rokosz;
`a fund disbursements sheet signed by Barker
`(individually) and another party purporting to be
`Rokosz;4
`a promissory note signed by Barker (individually)
`promising to pay Telsey and Fishbein a principal sum
`of $10,000 for closing fees and providing that any
`default under this note would also be a default on the
`mortgage loan; and
`a guarantee signed by Barker (individually)
`guaranteeing J&M’s obligations in the principal amount
`of $330,000.
`(Id. ¶ 115; Pl.’s Counter-56.1 ¶ 17; see ECF Nos. 293-41,
`293-66, 293-48, 293-37, 293-67, 293-68, 293-54, 293-72, 293-69,
`300-4.)
`Ten days later, at a second closing on February 16, 2017,
`Rokosz issued a $120,000 mortgage loan to J&M, also secured by
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`4 The parties dispute whether Rokosz’s signatures on the fund disbursements
`sheets were genuine. (See Def.’s Counter-56.1 ¶¶ 117.)
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`Barker’s home. (Def.’s Counter-56.1 ¶ 116.) The closing
`documents included a similar corporate resolution, note,
`mortgage, escrow agreement, correction of errors statement,
`assignment and security agreement, fund disbursement sheet, and
`guarantee. (Id. ¶ 117; see ECF Nos. 293-56, 293-55, 293-38,
`293-58, 293-61, 293-60, 293-57, 293-59.)
`The $450,000 total subject loan provided for a fixed
`interest rate of twelve percent and monthly interest-only
`payments of $4,500, with the entire principal and interest due
`after a year. (Def.’s Counter-56.1 ¶¶ 121–23.) In the event of
`a default, Rokosz could increase the interest rate to the
`maximum rate permitted by law. (Id. ¶ 124.)
`The loan proceeds were distributed as follows:
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`$150,000 was paid to Vaughan to settle the partition
`dispute;
`$92,557.37 was paid to Defendant Lockdeco, a purported
`contractor engaged by Defreitas, for anticipated
`repair work on the subject property;
`$71,126.85 was paid to New York City to satisfy
`property tax liens;
`$60,192.68 was retained in escrow by Legum as
`additional security for Rokosz in case Barker
`defaulted;
`$40,289.68 was paid to EastCor Land Services for title
`company services and title insurance;
`$14,926.67 was paid to Fishbein through Defendant
`Jackie Marketing LLC, a company owned by Fishbein’s
`wife, for Fishbein’s involvement in the transaction;
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`$8,713.33 was paid to Telsey through Defendant Royce
`LLC, an entity exclusively owned and controlled by
`Telsey that he used as an income pass-through vehicle,
`for Telsey’s involvement in the transaction;
`$6,500 was paid to Legum for his legal services on
`behalf of Rokosz;
`$3,000 was paid to Hurley for his legal services on
`behalf of Barker;
`$1,193.42 was paid to Rokosz for interest accrued on
`the loan between the first and second closings;
`$1,000 was paid to Defendant Betty Hingle for her
`services as a closing agent.
`$350 was paid to Ronald Ifraimov for his services as a
`closing agent; and
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`$150 was paid to New York State for child support;
`(Def.’s Counter-56.1 ¶¶ 7–8, 19, 127–37, 139, 143.) None of
`this money was paid directly to J&M.
`C.
`Barker’s Default
`In April 2017, two months after the closings, Telsey left a
`note for Barker at the subject property advising her that she
`missed her first payment. (Id. ¶ 166.) The next month, Telsey
`texted Barker asking for proof of insurance. (Id. ¶ 167.) Two
`days later, Legum mailed a letter to Barker, dated May 18, 2017,
`declaring that Barker had defaulted on the subject loan and
`failed to maintain property insurance. (Id. ¶ 168.) The letter
`further advised that Rokosz was accelerating the debt and
`demanding immediate payment in full. (Id.) Finally, the letter
`advised that J&M’s shares, which Legum held in escrow, would be
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`released to Rokosz and that Rokosz now owned J&M. (Id.)
`In November 2017, J&M filed two eviction petitions against
`Barker in state court. (Id. ¶ 169.) The state court dismissed
`the petitions on July 10, 2018, and Rokosz filed a notice of
`appeal on July 27, 2018. (Id.; see ECF No. 293-16, Notice of
`Appeal.) Rokosz never perfected the appeal, however, and the
`appeal was dismissed on February 19, 2019. See Order of
`Dismissal, J&M Props. Holdings, Inc. v. Barker,
`No. 2018-01732-KC (N.Y. App. Term Feb. 19, 2019).
`III. Procedural Background
`A.
`Preliminary Injunction
`Several events in 2017 and 2018 prompted Barker to commence
`this action. First, in the summer of 2017, two men entered
`Barker’s house through her unlocked door while she was in her
`backyard and told her that she did not own the house and had to
`leave. (ECF No. 2 pp. 102–12, Decl. C. Barker Supp. Order Show
`Cause, ¶ 38.) On at least two other occasions in the spring or
`summer of 2018, men came to Barker’s house to tell her they
`owned the property and that Barker was trespassing. (Id. ¶ 39.)
`Then, in July 2018, someone placed a “For Sale” sign on Barker’s
`property. (Id. ¶ 40.) In October 2018, a man with a key to
`Barker’s house unlocked the bottom lock on her front door and
`was prevented from entering only by Barker’s deadbolt. (Id.
`¶ 41.) Through the door, he told Barker that he was advised the
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`house was available for rent and that he had rented her upstairs
`unit. (Id.) Finally, on December 22, 2018, a fire broke out in
`Barker’s home, forcing Barker and her son to temporarily live
`with friends and relatives. (Id. ¶ 44.) After the fire, Barker
`worried that her home was not secure from intruders due to her
`and her son’s absence and the damage the fire did to the house’s
`windows and doors. (Id. ¶ 45.) She also feared Rokosz or his
`agents would capitalize on her absence to initiate another
`housing court proceeding or claim she abandoned her interest in
`the property. (Id.)
`On January 25, 2019, Barker filed her Complaint and a
`proposed temporary restraining order, which the Court signed and
`issued with modifications. (ECF No. 1, Compl. & Jury Demand
`(“Compl.”); ECF No. 2 pp. 1–2, Order Show Cause Prelim. Inj. &
`TRO.; ECF No. 5, Order Show Cause Prelim. Inj. & TRO.) The
`parties then stipulated to a preliminary injunction on
`February 1, 2019, which remains in force, prohibiting Rokosz or
`his agents from exercising any interest in the subject property,
`transferring any claimed interest or ownership in J&M, or
`attempting to collect the subject loan from Barker. (See ECF
`No. 15, Stip. Prelim. Inj.)
`B.
`Settlements with Other Defendants
`Barker’s original Complaint asserted claims against Rokosz
`for violations of TILA, HOEPA, Section 6-l of the New York
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`Banking Law, and New York’s usury statute. (Compl. ¶¶ 126–81.)
`She also asserted a claim under Section 349 of the New York
`General Business Law against Rokosz, Defreitas, Legum, Hurley,
`Telsey, Fishbein, and Hingle and a claim under the Racketeer
`Influenced and Corrupt Organizations Act (“RICO”) against all
`those defendants plus Royce, Jackie Marketing, Lockdeco (a/k/a
`Lodeco), and nominal John Doe defendants. (Id. ¶¶ 182–219.)
`On February 22, 2019, Barker voluntarily dismissed her
`claims against Hingle. (ECF No. 18.) Barker settled her claims
`against Fishbein and Jackie Marketing and then dismissed her
`claims against them on August 23, 2019. (ECF No. 89.)
`The Court dismissed Barker’s Section 349 and RICO claims
`for failure to state a claim on January 2, 2020. (ECF No. 119,
`Mem. & Order.) Barker then amended her complaint on March 24,
`2021, omitting Hurley as a defendant and re-pleading her
`Section 349 and RICO claims. (ECF No. 174, 1st Am. Compl. &
`Jury Demand.) Rokosz, Legum, Telsey, and Royce answered the
`Amended Complaint, (ECF Nos. 178–79, 181), and Rokosz brought a
`counterclaim against Barker for foreclosure, joining as counter-
`defendants J&M, the New York State Department of Taxation and
`Finance, and the New York City Environmental Control Board (ECF
`No. 181; see Order, June 7, 2021 (granting Rokosz’s motion to
`join counter-defendants)).
`Barker notified the Court on March 17, 2022, that she
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`settled with Telsey and Royce, (ECF No. 243, Mar. 17, 2022, Ltr.
`from K. Richman & B. Luu), and she dismissed her claims against
`them on April 12, 2022, (ECF No. 254). Barker and Legum settled
`in a conference before Magistrate Judge Cho on May 2, 2022,
`(Minute Entry, May 2, 2022), and those parties filed their
`stipulation of dismissal on August 12, 2022, (ECF No. 267).
`Meanwhile, Defreitas failed to respond to the Amended
`Complaint, and the Clerk of Court entered a certificate of her
`default on March 24, 2022. (ECF No. 245, Cert. Default.)
`Because Defreitas had been incarcerated from October 2018 to
`July 2021 for her role in a mortgage fraud conspiracy, see
`https://nysdoccslookup.doccs.ny.gov/ (NYSID #18G0949), and was
`proceeding pro se, the Court vacated her default on October 11,
`2022, (ECF No. 274, Order). Barker and Defreitas notified
`Magistrate Judge Cho at a January 26, 2023, hearing that they
`had settled, (Minute Entry, Jan. 26, 2023), and they filed their
`stipulation of dismissal on February 2, 2023, (ECF No. 279).
`C.
`Barker’s Remaining Claims Against Rokosz
`On February 6, 2023, Barker filed the operative Second
`Amended Complaint, which omits her Section 349 and RICO claims
`and omits Lockdeco and the Does as defendants, thus leaving
`Rokosz the only remaining defendant. (See 2d Am. Compl.)
`Rokosz answered the Second Amended Complaint and re-pleaded his
`foreclosure counterclaim against Barker and the other counter-
`
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`
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`defendants on March 8, 2023. (ECF No. 285, Answer with
`Countercls. (“Answer”).) Barker and Rokosz unsuccessfully
`attempted to settle several times. (See ECF Nos. 49, 70, 193;
`Minute Entry, June 28, 2022; Minute Entry, July 26, 2022; Minute
`Entry, Aug. 22, 2022; Minute Entry, Sept. 21, 2022; Minute
`Entry, Mar. 17, 2023.) Finally, on March 31, 2023, the parties
`submitted a status report stating that they did not believe
`further settlement efforts would be productive. (ECF No. 288,
`Mar. 31, 2023, Ltr. from M. Litrownik & J. Doberman.)
`On May 30, 2023, the parties requested a pre-motion
`conference to move for summary judgment on their respective
`claims and counterclaim. (ECF No. 291, May 30, 2023, Ltr. from
`B. Luu; ECF No. 297, May 30, Ltr. from J. Doberman.) After a
`June 15, 2023, pre-motion conference where the Court advised the
`parties of the risks of pressing forward, (see Minute Entry,
`June 15, 2023), the parties filed the instant cross-motions for
`summary judgment, which were fully submitted on September 11,
`2023, (ECF No. 312, Sept. 11, 2023, Ltr. from B. Luu; ECF
`No. 316, Sept. 11, 2023, Ltr. from J. Doberman).
`Legal Standard
`Summary judgment is proper when there are no genuine
`disputes of material fact and the undisputed facts entitle the
`moving party to judgment as a matter of law. Fed. R. Civ. P.
`56(a). A factual dispute is “genuine” if a reasonable jury
`
`
`
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`could return a verdict for the non-moving party. Anderson v.
`Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). A fact is
`“material” if it might affect the outcome of the case under the
`governing law. Id. In resolving a motion for summary judgment,
`the court views the evidence in the light most favorable to the
`non-moving party and draws all reasonable inferences in the non-
`moving party’s favor. Bart v. Golub Corp., 96 F.4th 566, 567
`(2d Cir. 2024).
`The party moving for summary judgment has the initial
`burden to show that there are no genuine disputes of material
`fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986).
`Where the non-moving party would have the burden of proof at
`trial, its burden at the summary judgment stage is only to
`“point out” that there is insufficient evidence to create a
`genuine dispute of material fact. Id. at 325. Where the moving
`party would have the burden of proof at trial, however, its
`burden at the summary judgment stage is to submit evidence
`conclusively establishing the absence of any genuine disputes of
`material fact. Albee Tomato, Inc. v. A.B. Shalom Produce Corp.,
`155 F.3d 612, 618 (2d Cir. 1998); Gov’t Emps. Ins. Co. v.
`Jacobson, No. 15-cv-7236 (ERK) (RML), 2021 WL 2589717, at *8
`(E.D.N.Y. June 24, 2021). If the moving party meets that
`burden, the non-moving party must respond by submitting its own
`evidence sufficient to create a genuine dispute of material fact
`
`
`
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`in order to avoid summary judgment and proceed to trial. Souza
`v. Exotic Island Enters., Inc., 68 F.4th 99, 108 (2d Cir. 2023).
`Discussion
`Barker moves for summary judgment on her TILA, HOEPA,
`Section 6-l, and usury claims, (Pl.’s Mem. 30.) Rokosz does not
`dispute that he did not comply with the substantive requirements
`of TILA, HOEPA, Section 6-l, or the usury statute. (Def.’s
`Counter-56.1 ¶¶ 71–76, 97–108.) Rather, he argues that he was
`not required to do so because those statutes do not apply to the
`subject loan. (ECF No. 313, Mem. Law Opp’n Pl.’s Mot. Summ. J.
`(“Def.’s Opp’n”), 7–24.) Thus, for Barker to prevail on her
`motion, she has the burden to produce evidence conclusively
`establishing a lack of genuine disputes of material fact that
`the relevant statutes apply. See Albee Tomato, 155 F.3d at 618.
`Rokosz cross-moves for summary judgment on his foreclosure
`claim. (ECF No. 316-2, Mem. Law Supp. Def.-Counterclaimant’s
`Mot. Summ. J. (“Def.’s Mem.”), 18.) Barker does not dispute
`that the common law elements of foreclosure, on which Rokosz
`would have the burden of proof at trial, are satisfied. (Pl.’s
`Counter-56.1 ¶¶ 14, 16, 30, 32, 44, 46.) Rather, she raises her
`own claims as defenses to Rokosz’s foreclosure claim. (ECF
`No. 317-1, Mem. Law Opp’n Def.’s Mot. Summ. J. (“Pl.’s Opp’n”),
`6–30.) At trial, Barker would have the burden of proof to
`establish these defenses. See Red Tree Invs., LLC v. Petróleos
`
`
`
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`de Venezuela, S.A., 82 F.4th 161, 171 (2d Cir. 2023). Thus, for
`Rokosz to prevail on his motion, he has the initial burden to
`“point out” that there is an absence of evidence to support
`Barker’s defenses. See Celotex, 477 U.S. at 325. If Rokosz
`clears that threshold, the burden shifts to Barker to produce
`sufficient evidence to create a genuine dispute of material fact
`and avoid summary judgment. See Souza, 68 F.4th at 108.
`I.
`TILA and HOEPA
`Rokosz’s primary argument that TILA and HOEPA do not apply
`to the subject loan is that the subject loan was not a “consumer
`credit transaction.” (Def.’s Opp’n 7–17.) He also argues that
`HOEPA does not apply because the subject loan was not a “high-
`cost mortgage,” that Barker’s damages claim is time barred, and
`that Rokosz was not a “creditor.” (Id. 17–19.)
`A.
`Consumer Credit Transaction
`The relevant provisions of TILA apply only to a “consumer
`credit transaction.” See 15 U.S.C. §§ 1638(a). HOEPA applies
`only to a “high-cost mortgage,” which itself is a “consumer
`credit transaction” secured by the consumer’s “principal
`dwelling” where the annual percentage rate of the transaction
`exceeds a certain threshold. See 15 U.S.C. §§ 1639, 1602(bb).5
`
`
`5 The cross-references in Section 1639(a) are to Section 1602(aa), which
`originally was the provision of TILA that defined “high-cost mortgage.”
`Since then, Congress renumbered the definitions in Section 1602 such that
`“high-cost mortgage” is now defined at Section 1602(bb). See Pub. L.
`No. 111-203, 124 Stat. 2107. The Court considers Section 1639(a)’s continued
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`Thus, TILA and HOEPA apply to the subject loan only if the
`subject loan was a ”consumer credit transaction.”
`The adjective “consumer” characterizes a credit transaction
`as a transaction where “the party to whom credit is offered or
`extended is a natural person” and “the money, property, or
`services which are the subject of the transaction are primarily
`for personal, family, or household purposes.” 15 U.S.C.
`§ 1602(i). Rokosz contends that the subject loan was not a
`consumer credit transaction on the grounds that (1) the loan was
`extended to J&M, which is an “organization” and not a “natural
`person,” and (2) the loan was not made for personal, family, or
`household purposes. (Def.’s Opp’n 7–17.)
`1.
`Party to Whom Credit was Offered or Extended
`Rokosz argues that J&M’s corporate status should “end [the]
`inquiry” as far as Barker’s TILA and HOEPA claims are concerned.
`(See Def.’s Opp’n 7.) That would be correct if the undisputed
`facts established that J&M was “the party to whom credit [was]
`offered or extended.” See 15 U.S.C. § 1602(i). There is no
`dispute that J&M is a corporation, (see ECF No. 292, Pl.’s
`Statement Undisputed Material Facts (“Pl.’s 56.1”), ¶ 60), and a
`corporation is not a “natural person” under TILA, 15 U.S.C.
`§§ 1602(d), 1602(e). If “the party to whom credit is offered or
`
`
`reference to Section 1602(aa) to be an error and construes Section 1639(a)
`instead to refer to Section 1602(bb).
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`extended” is not a “natural person,” the subject transaction is
`not a “consumer credit transaction,” see 15 U.S.C. § 1602(i),
`and the relevant provisions of TILA and HOEPA do not apply to
`that transaction, see 15 U.S.C. §§ 1638–39. The “party to whom
`credit is offered or extended” and the “purpose” of the
`transaction are two distinct elements of TILA’s definition of
`“consumer”; if either is not met, the transaction is not a
`“consumer credit transaction.” Am. Express Co. v. Koe
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