Case 1:15-cv-06815-BCM Document 62 Filed 08/24/18 Page 1 of 8
`USDC SDNY
`DOCUMENT
`ELECTRO NI CALLY FILED
`DOC #: -----,.-----
`DATE FILED: <{/Uf /11
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`UNITED STATES DISTRICT COURT
`SOUTHERN DISTRICT OF NEW YORK
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`RICK RODRIGUES,
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`Plaintiff,
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`-against-
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`l 5-CV-6815 (BCM)
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`CORONA ADVANCES, INC., et al.,
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`OPINION AND ORDER
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`Defendants.
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`BARBARA MOSES, United States Magistrate Judge.
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`Plaintiff Rick Rodrigues seeks the entry of a judgment by confession. (Dkt. No. 61.) For
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`the reasons that follow the Court will deny the motion - without prejudice as to renewal as to the
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`non-defaulted defendants - because plaintiff has not shown that this Court has subject matter
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`jurisdiction over this action.
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`Background
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`This is a breach of contract action. Subject matter jurisdiction is premised on diversity of
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`citizenship pursuant to 28 U.S.C. § 1332. The case was originally assigned to the Hon. John G.
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`Koeltl, United States District Judge, but on December 23, 2016, plaintiff Rodrigues and defendants
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`CB4 and Orlando consented to the jurisdiction of the undersigned Magistrate Judge for all
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`purposes, including entry ofa final judgment, pursuant to 28 U.S.C. § 636(c). (Dkt. No. 55.)
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`On May 1, 2018, plaintiff advised the Court by letter that the case was settled (Dkt. No.
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`58), and filed a Stipulation of Dismissal, without prejudice, pursuant to Fed. R. Civ. P.
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`41 (a)(l )(A)(2). (Dkt. No . 59.) The Stipulation of Dismissal was signed by Louis M. DiLuzio,
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`counsel for plaintiff Rodrigues, and by Mark R. Smith, counsel for defendants CB4 and Orlando.
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`The settling parties did not submit any written settlement agreement to the Court, nor otherwise
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`disclose the terms on which they had resolved their dispute.
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`Case 1:15-cv-06815-BCM Document 62 Filed 08/24/18 Page 2 of 8
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`On August 14, 2018, plaintiff filed a proposed judgment in the amount of $155,392.50,
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`plus costs and disbursements in the amount of $495.00, running against CB4, Orlando and
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`defaulted defendant Corona Advances, Inc. (Corona). (Dkt. No. 68.) 1 Along with the proposed
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`judgment, plaintiff filed affidavits of confession of judgment signed by or on behalf of CB4,
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`Orlando, and Corona.
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`The affidavits were all signed and notarized in Nevada. They bear various dates in May of
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`2017 ( one year prior to the Stipulation of Dismissal). One is signed by Willadys Castillo, a
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`managing Member of CB4, on CB4's behalf. (Dkt. No. 68, at ECF pages 2-6.) Another is signed
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`by Orlando on his own behalf. (Id., at ECF pages 7-11.) A third is signed by Orlando in his capacity
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`as an "Officer and Primary Shareholder" of defaulted defendant Corona. (Id., at ECF pages 12-
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`16.) All three affidavits: (1) consent to the jurisdiction of this Court (as well as the Supreme Court
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`of the State ofNew York, County ofNew York, and the courts of the State ofNevada); (2) confess
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`judgment in favor of plaintiff Rodrigues for the sum of $217,392.50, plus interest from the date of
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`the affidavit "less any payments hereafter made"; and (3) attest that the confession of judgment is
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`for a debt "justly due" to plaintiff Rodrigues, in the same amount, arising out of the breach by
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`CB4, Orlando, and Corona of the contract originally at issue in this action. The affidavits further
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`attest that they are given as security "for amounts justly due and owed to the Plaintiff under the
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`terms of a settlement agreement entered into." See, e.g., CB4 Aff. ~ 8.
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`In addition to the proposed judgment and the affidavits of confession of judgment, plaintiff
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`filed the Certification of Louis M. DiLuzio (Dkt. No. 61 ), which I construe as a motion for entry
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`of judgment in accordance with N.Y. C.P.L.R. (CPLR) § 3218. Attorney DiLuzio: (1) attests that
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`1 Corona never appeared in this action, prompting plaintiff to obtain a clerk's certificate of default
`(Dkt. No. 26) and pursue a damages inquest. (Dkt. No. 42.) That inquest was pending and
`undecided when the non-defaulted parties filed their Stipulation of Dismissal.
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`2
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`Case 1:15-cv-06815-BCM Document 62 Filed 08/24/18 Page 3 of 8
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`plaintiff and "Defendants" settled this action on May 1, 2016 (two years prior to the Stipulation of
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`Dismissal); (2) explains that the settlement agreement called for the "Defendants" to execute
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`affidavits of confession of judgment in the sum of $217,392.50, which was the full amount sued
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`upon in this action (and apparently the full amount of the settlement2); (3) asserts that "Defendants"
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`paid a total of $62,000 towards their settlement obligations but then defaulted, leaving $155,392.50
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`due and owing; and ( 4) attaches a default notice and demand for cure sent to defendants C4 B and
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`Orlando on June 6, 2018, which was returned as undeliverable. DeLuzio Cert. ,i 7 & Exs. A-B.
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`DiLuzio explains that "[s]ince Defendant Corona Advances (which had been in default in pleading
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`and had been subject to a separate default judgment that was not pursued per the settlement
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`agreement in lieu of a confession of judgment) was defunct and no longer possessed a valid
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`business address, notice to cure was effectively sent to it via service on Defendant Luis Orlando,
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`[who] was the Principal of Coronoa Advances, Inc. and the only person to whom notice could be
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`sent." Id. ,i 7 (footnote omitted). The DeLuzio Certification concludes with a prayer for the entry
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`of judgment in the amount of $155,392.50, plus $495.00 in costs and disbursements. Id. ,i 12.
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`Discussion
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`A United States District Court has the power to enter judgment by confession, in
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`accordance with New York law, "so long as subject-matter jurisdiction exists and the confession
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`of judgment was voluntarily, knowingly, and intelligently made." Xerox Corp. v. West Coast Litho,
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`Inc ., 251 F. Supp. 3d 534, 537-38 (W.D.N.Y. 2017) (quoting LOL Fin. Co. v. Carrigan, 2016 WL
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`4254339, at *2 (D. Minn. Aug. 5, 2016), and collecting cases). Although state law (in this case
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`CPLR § 3218(a)) governs the adequacy of the affidavits of confession of judgment, "the entry of
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`a confessed judgment is a matter of procedure where the federal rules govern." Alland v.
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`2 Once again, plaintiff did not submit any written settlement agreement to the Court.
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`3
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`Case 1:15-cv-06815-BCM Document 62 Filed 08/24/18 Page 4 of 8
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`Consumers Credit Corp., 476 F.2d 951, 954 (2d Cir. 1973). Thus, while the New York courts
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`permit the entry of judgment on a proper affidavit of confession by the clerk of the county in which
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`entry of judgment is authorized, "without an action," see CPLR § 32 l 8(a)-(b ), the federal courts
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`generally require the party seeking entry of a confessed judgment to make a motion, see Xerox
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`Corp. , 251 F. Supp. 3d at 53 7 n.3, or (if there is no extant action in which such a motion can be
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`made) "file[] a new lawsuit." Id. at 536 n.2.
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`In this case, the affidavits appear to contain the information required by CPLR § 3218(a).
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`Further, by filing the proposed judgment, the affidavits, and the DiLuzio Certification on the
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`electronic docket of this action - and thereby causing service to be made on all counsel of record,
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`including attorney Smith- plaintiff has effectively provided notice to defendant CB4 and Orlando.
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`However, plaintiff did not serve those papers (nor attempt to serve them) upon defaulted
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`defendant Corona. Moreover, the power of a United States Magistrate Judge to direct the entry of
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`judgment, or otherwise dispose of a party's claim or defense, is dependent on the consent of all
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`affected parties. See 28 U.S.C. § 636(c)(l); Fed. R. Civ. P. 73(a). "The consent of each party is
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`essential to the validity of the statutory system that allows a magistrate judge to make binding
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`adjudications." New York Chinese TV Programs, Inc. v. UE. Enterprises, Inc., 996 F.2d 21, 24
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`(2d Cir. 1993) (holding that a magistrate judge "was not authorized to enter a final order denying
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`intervention" absent the consent of the would-be intervenors). "[T]he lack of consent is a
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`jurisdictional defect that cannot be waived." Yeldon v. Fisher, 710 F.3d 452, 453 (2d Cir. 2013)
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`(holding that a magistrate judge lacked jurisdiction to enter summary judgment against pro se
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`plaintiff who did not consent pursuant to § 636(c)); Laboratorios Rivas, SRL v. Ugly & Beauty,
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`Inc., 2013 WL 5977440, at *1 n.1
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`(S.D.N.Y. Nov. 12, 2013) (submitting report and
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`recommendation on motion for default judgment in case where all parties had consented except
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`4
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`Case 1:15-cv-06815-BCM Document 62 Filed 08/24/18 Page 5 of 8
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`single defaulting party because "the defaulting party[] has not consented
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`to my
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`jurisdiction"), report and recommendation adopted, 2014 WL 112397 (S.D.N.Y. Jan. 8, 2014).
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`Citing New York Chinese TV, Magistrate Judge John M. Conroy concluded in Revision
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`Military Ltd. v. Gideon Servs. , Inc. , 2017 WL 5632700 (D. Vt. Oct. 31, 2017), report and
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`recommendation adopted, 2017 WL 5634872 (D. Vt. Nov. 21, 2017), that he could not enter a
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`default judgment against defendant Gideon, because "the defaulting party[ ] has not consented to
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`jurisdiction by the Magistrate Judge." Id. at *1.3 Accord Jack Tyler Eng 'g Co. v. Colfax Corp.,
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`2011 WL 384614 at *4 (W.D. Tenn. Feb. 3, 2011) (magistrate judge lacked statutory authority to
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`enter default judgment absent consent of defaulting party); Barrett v. D.J Knight & Co., 2009 WL
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`3294769, at* 1 (S.D.N.Y. Oct. 6, 2009) (since third-party defendant did not "return the § 636(c)
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`consent form," defendant/third-party plaintiff's motion for entry of a default judgment against
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`third-party defendant would be returnable before the district judge, not the magistrate judge);
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`Victoria 's Secret Stores v. Artco Equip. Co., 194 F. Supp. 2d 704, 715 (S.D. Ohio 2002)
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`(magistrate judge may only issue recommended disposition with respect to motion for default
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`judgment against defendant who never appeared and therefore never consented to magistrate
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`judge's jurisdiction); De Ponce v. Buxbaum, 1995 WL 51098, at *5 (S.D.N.Y. Feb. 9, 1995)
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`(noting in dictum that magistrate judge "could not have entered default judgment" against
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`defendant which did not execute§ 636(c) consent, "even with the consent of the others").
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`Here, all of the non-defaulted parties expressly consented to the jurisdiction of the
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`Magistrate Judge, but - insofar as it can be determined from the record before me - Corona did
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`3 Judge Conroy went on to recommend that the default judgment be entered. 2017 WL 5634872,
`at *4. Three weeks later, United States District Judge William K. Sessions III adopted Judge
`Conroy's recommendation and entered the judgment. Revision Military Ltd. v. Gideon Servs., Inc.,
`2017 WL 5634872, at *1 (D. Vt. Nov. 21 , 2017).
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`5
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`Case 1:15-cv-06815-BCM Document 62 Filed 08/24/18 Page 6 of 8
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`not. 4 Nor could its consent be inferred from its conduct, since it was not present before the Court
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`at any time during the life of this action. Cf Roell v. Withrow, 538 U.S . 580, 583 (2003) (holding
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`that consent could be implied from the parties' conduct where, although they never executed a
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`written consent form pursuant to § 636( c ), they "proceeded in front of the Magistrate Judge, all
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`the way to a jury verdict and judgment for the petitioners"). 5
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`Consequently, I am without power to enter a confessed judgment against Corona in this
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`action. Plaintiff remains free to seek a confessed judgment against Corona in state court or - if he
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`chooses - to file a new action in this Court, which will be assigned to a United States District
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`Judge, for that purpose.
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`As to the remaining defendants, who have consented to the jurisdiction of the Magistrate
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`Judge, I possess the power to enter a judgment by confession, but first must be satisfied that the
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`Court has subject matter jurisdiction over the action. Xerox Corp., 251 F. Supp. 3d at 538.
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`Plaintiff invokes this Court's diversity jurisdiction pursuant to 28 U.S.C. § 1332(a)(l),
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`which extends to cases where "the matter in controversy exceeds the sum or value of $75,000"
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`and is between "citizens of different states." Complaint (Dkt. No. 1) ~ 5. However, plaintiff has
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`not pleaded facts showing that the parties are "citizens of different states." Plaintiff Rodrigues
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`resides in Florida. Compl. ~ 1. Defendant Orlando is (or was) a resident of Nevada. Id. ~ 4.
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`Defaulted defendant Corona is (or was) a New York corporation with a last known address in New
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`4 Through its affidavit of confession of judgment, Corona consented to jurisdiction in this District,
`see Corona Aff. ~ 2, but did not consent to the disposition of the claims against by a Magistrate
`Judge. As noted above, plaintiff has never submitted the parties' written settlement agreement to
`the Court. I therefore cannot determine whether that document evidences the necessary consent.
`5 As the court explained in Jack Tyler Eng 'g Co., supra, a defaulting defendant that "was never
`notified of [its] right to refuse consent to the Magistrate Judge" and "did not act in any affirmative
`manner to consent to the Magistrate Judge ' s authority" "cannot be deemed to have implicitly
`consented to the Magistrate Judge ' s jurisdiction under Roell." 2011 WL 384614, at *3.
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`6
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`Case 1:15-cv-06815-BCM Document 62 Filed 08/24/18 Page 7 of 8
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`York, New York. Id. ,i 2. Defendant CB4 is (or was) a Nevada Limited Liability Company" (LLC),
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`with a last known address in Henderson, Nevada. Id. ,i 3.
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`"For diversity purposes, the citizenship of an LLC depends upon the citizenship of its
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`members." Boston Tea Co., LLC v. Bay Valley, LLC, 2017 WL 6887594, at* 1 (S.D.N.Y. Nov. 8,
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`2017). "A complaint premised upon diversity of citizenship must allege the citizenship of natural
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`persons who are members of a limited liability company and the place of incorporation and
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`principal place of business of any corporate entities who are members of the limited liability
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`company." Avant Capital Partners, LLC v. WJ08 Dev. LLC, 2016 WL 3660756, at *1 (S.D.N.Y.
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`June 30, 2016) (quoting New Millennium Capital Partners, IIL LLC v. Juniper Grp. Inc., 2010
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`WL 1257325, at* 1 (S.D.N.Y. Mar. 26, 2010); see also Handelsman v. Bedford Vil!. Assocs. Ltd.
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`P'ship, 213 F.3d 48, 51 (2d Cir. 2000) (Sotomayor, J.) (finding lack of diversity where defendant
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`LLC members had same citizenship as plaintiff). Thus, the Court must look to the citizenship of
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`CB4's members to determine whether diversity- and hence subject matter jurisdiction - exists in
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`this action.
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`Plaintiff has neither identified CB4' s members nor alleged their citizenship.6 Before this
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`Court can enter a confessed judgment against CB4 (or any other party), plaintiff must provide
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`information sufficient to permit the Court to conclude that none of those members is a resident of
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`Florida, which would destroy diversity. If plaintiff seeks a judgment on behalf of "LR Capital,
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`LLC," he must provide comparable information concerning its members, sufficient to assure the
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`Court that the parties are in fact diverse.
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`6 Nor has he identified the members of "LR Capital, LLC," which may or may not be a plaintiff in
`this action. See Compl. ,J 1 (referring to plaintiff as "Rick Rodrigues individually and d/b/a LR
`Capital, LLC"); see also id. at 13 ( demanding judgment on behalf of "plaintiffs").
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`7
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`Conclusion
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`For the foregoing reasons, the Court DENIES plaintiffs motion to enter judgment on the
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`affidavits of confession of judgment. The denial is WITHOUT PREJUDICE to renewal - as to
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`the non-defaulted defendants - within 30 days, if by that time plaintiff can satisfy its burden of
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`establishing the existence of subject matter jurisdiction.
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`Dated: New York, New York
`August 24, 2018
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`SO ORDERED.
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`B~
`United States Magistrate Judge
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`8
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