Opinion
Index No. 850151/2021
05-19-2023
1S REO OPPORTUNITY 1, LLC, Plaintiff, v. HARLEM PREMIER RESIDENCE LLC.DOUNGRAT EAMTRAKUL, JOHN DOE #1 THROUGH JOHN DOE #12 Defendant.
Unpublished Opinion
PRESENT: HON. FRANCIS A. KAHN, III Justice.
DECISION + ORDER ON MOTION
HON. FRANCIS A. KAHN J.S.C.
The following e-filed documents, listed by NYSCEF document number (Motion 001) 15, 16, 17, 18, 19, 20, 21, 22, 23, 24, 25, 26, 27, 28, 29, 30, 31, 32, 33, 34, 35, 36, 37, 38, 39, 40, 41, 42, 43, 44, 45, 46, 47, 48, 49, 50 were read on this motion to/for JUDGMENT - SUMMARY.
Upon the foregoing documents, the motion and cross-motion are determined as follows:
This is an action to foreclose on a mortgage encumbering commercial real property located at 210 W 122nd Street, New York, New York, given by Defendant Harlem Premier Residence LLC ("Harlem") to nonparty Realty Closing Solution, LLC ("Realty"). The mortgage secures a promissory note which evidences a loan with an original principal amount of $2,050,000.00. The note and mortgage, both dated June 8, 2019, wen executed by Defendant Doungrat Eamtrakul ("Eamtrakul") as Managing Member of Harlem. Concomitantly with these documents, Eamtrakul executed a guaranty of the indebtedness. Plaintiff commenced this action wherein it is alleged Defendant Harlem defaulted in repayment under the loan. Defendants Harlem and Eamtrakul answered jointly and pled five affirmative defenses including lack of standing.
Now, Plaintiff moves for inter alia summary judgment against the appearing Defendants, for a default judgment against the non-appearing parties, appointing a referee to compute and to amend the caption. Defendants oppose the motion and cross-move to dismiss the complaint pursuant to CPLR §3211 [a][3]. Plaintiff opposes the cross-motion.
In moving for summary judgment, Plaintiff was required to establish prima facie entitlement to judgment as a matter of law though proof of the mortgage, the note, and evidence of Defendants' default in repayment (see eg U.S. Bank, N.A. v James, 180 A.D.3d 594 [1st Dept 2020]; Bank of NY v Knowles, 151 A.D.3d 596 [1st Dept 2017]; Fortress Credit Corp. v Hudson Yards, LLC, 78 A.D.3d 577 [1st Dept 2010]). Based upon the above affirmative defense, Plaintiff was also required to demonstrate it had standing when this action was commenced (see eg Wells Fargo Bank, N.A. v Tricario, 180 A.D.3d 848 [2nd Dept 2020]).
Proof supporting a prima facie case on a motion for summary judgment must be in admissible form (see CPLR §3212[b]; Tri-State Loan Acquisitions 111, LLC v Litkowski, 172 A.D.3d 780 [1st Dept 2019]). A plaintiff may rely on evidence from persons with personal knowledge of the facts, documents in admissible form and/or persons with knowledge derived from produced admissible records (see eg U.S. Bank N.A. v Moulton, 179 A.D.3d 734, 738 [2d Dept 2020]). No particular set of business records must be proffered, as long as the admissibility requirements of CPLR 4518[a] are fulfilled and the records evince the facts for which they are j relied upon (see eg Citigroup v Kopelowitz, 147 A.D.3d 1014, 1015 [2d Dept 2017]).
Plaintiffs motion was supported with an affidavit from Stacey Talton ("Talton"), the Foreclosure Supervisor of FCI Lender Service, Inc. ("FCI"), the alleged servicing agent for Sharpe Opportunity Intermediate Trust ("1 Sharpe"), the sole member of Plaintiff. Talton's affidavit laid a proper foundation for the admission of FCI's records into evidence under CPLR §4518 (see Bank of N.Y.Mellon v Gordon, 171 A.D.3d 197 [2d Dept 2019]). The records of other entities were also admissible since Talton sufficiently established that those records were received from the makers and incorporated into the records FCI kept and routinely relied upon such documents in its business (see U.S. Bank N.A. v Kropp-Somoza, 191 A.D.3d 918 [2d Dept 2021]). Annexed to the motion were records referenced by Talton (cf. Deutsche Bank Natl. Trust Co. v Kirschenbaum, 187 A.D.3d 569 [1st Dept 2020]). Further, the servicing agreement between FCI and Sharpe as well as Plaintiffs operating agreement demonstrating the authority of FCI to act herein were submitted (see Deutsche Bank Natl. Trust Co. v Silverman, 178 A.D.3d 898, 901 [2d Dept 2019]).
Talton's affidavit and the referenced documents sufficiently evidenced the note and mortgage. As to the Mortgagor's default, it "is established by (1) an admission made in response to a notice to admit, (2) an affidavit from a person having personal knowledge of the facts, or (3) other evidence in admissible form" (Deutsche Bank Natl. Trust Co. v McGann, 183 A.D.3d 700, 702 [2d Dept 2020]). Here, Talton's review of the attached ';account records demonstrated that the Mortgagor defaulted in repayment under the note (see eg ING Real Estate Fin. (USA) LLC v Park Ave. Hotel Acquisition, LLC, 89 A.D.3d 506 [1st Dept 2011]).
Accordingly, Plaintiff established the mortgage, note, and evidence of mortgagor's default (see eg Bank of NY v Knowles, supra; Fortress Credit Corp. v Hudson Yards, LLC, supra).
As to standing in a foreclosure action, the note is the dispositive instrument (Aurora Loan Servs., LLC v Taylor, 25 N.Y.3d 355, 361-362 [2015]). '"Either a written assignment of the underlying note or the physical delivery of the note prior to the commencement of the foreclosure action is sufficient to transfer the obligation, and the mortgage passes with the debt as an inseparable incident'" (U.S. Bank N.A. v Carnivale, 138 A.D.3d 1220, 1221 [2d Dept 2016], quoting Onewest Bank, FSB. v Mazzone, 130 A.D.3d 1399, 1400 [2d Dept 2015]). However, "mere physical possession of a note at the commencement of a foreclosure action is insufficient to confer standing or to make a plaintiff the lawful holder of a negotiable instrument for the purposes of enforcing the note" (U.S. Bank N.A. v Moulton, 179 A.D.3d 734, 737 [2d Dept 2020]). "Holder status is established where the plaintiff possesses a note that, on its face or by allonge, contains an indorsement in blank or bears a special indorsement payable to the order of the plaintiff (Wells Fargo Bank, NA v Ostiguy, 127 A.D.3d 1375, 1376 [2d Dept 2015] [citations omitted]). The indorsement must be made either on the face of the note or on an allonge "so firmly affixed thereto as to become a part thereof (UCC §3-202[2]). "The attachment of a properly i endorsed note to the complaint may be sufficient to establish, prima facie, that the plaintiff is the holder of the note at the time of commencement" (Deutsche Bank Natl. Trust Co. v Webster, 142 A.D.3d 636, 638 [2d Dept 2016]; cf. JPMorgan Chase Bank, N.A. v Grennan, supra).
Here, the note was attached to the complaint, but the endorsements are contained in two allonges on separate pages which reveals no discernable evidence of firm attachment from a visual inspection (cf. U.S. Bank NA v Hunte, ___A.D.3d ___, 2023 NY Slip Op 02022 [2d Dept 2023]). Resultantly, Plaintiff was required, but failed, to establish the allonge was "firmly affixed" to the original note (see Nationstar Mtge., LLC v Calomarde, 201 A.D.3d 940, 942 [2d Dept 2022]; JPMorgan Chase Bank, N.A. v Grennan, supra at 1516). The allegations regarding Plaintiffs holder status contained in Shen's affidavit are conclusory and insufficient (see Wells Fargo Bank, N.A. v Jones, 139 A.D.3d 520, 524 [1st Dept 2016]; Deutsche Bank Natl. Trust Co. v Weiss, 133 A.D.3d 704, 705 [2d Dept 2015]). Not every attachment can satisfy UCC §3-202[2] and Talton offered no description of the nature of the attachment (see HSBC Bank, USA, N.A. v Roumiantseva, 130 A.D.3d 983 [2d Dept 2015]; Slutsky v Blooming Grove Inn, 147 A.D.2d 208 [2d Dept 1989]).
Accordingly, Plaintiff failed to establish, prima facie, it had standing when this action was commenced.
As to the cross-motion to dismiss, Defendants waived any reliance on the defense of lack of capacity by not including it in their answer or in a pre-answer motion to dismiss (see CPLR §3211 [e]; Security Pac. Natl. Bank v Evans, 31 A.D.3d 278, 280 [1st Dept 2006]). Even if true, this type of deficiency is curable as Limited Liability Company Law §808[a] only effects a suspension of the ability to prosecute an action "unless and until such limited liability company shall have received a certificate of authority in this state" (cf. 1700 First Ave. LLC v Parsons-Novak, 46 Misc.3d 30, 32 [App Term 1st Dept 2014]; Acquisition Am. VI, LLC v Lamadore, Misc.3d 461, 462 [Sup Ct NY Cty 2004]).
The argument concerning choice of law is a red-herring as paragraph 49 mortgage clearly states that an action to enforce the mortgage shall be "governed" and "construed" according to the law where the property is located, to wit New York State.
As to the branch of the motion to dismiss Defendants' affirmative defenses, CPLR §3211 [b] provides that "[a] party may move for judgment dismissing one or more defenses, on the ground that a defense is not stated or has no merit" For example, affirmative defenses that are without factual foundation, conclusory or duplicative cannot stand (see Countrywide Home Loans Servicing, L.P. v Vorobyov, 188 A.D.3d 803, 805 [2d Dept 2020]; Emigrant Bank v Myers, 147 A.D.3d 1027, 1028 [2d Dept 2017]). When evaluating such a motion, a "defendant is entitled to the benefit of every reasonable intendment of its pleading, which is to be liberally construed. If there is any doubt as to the availability of a defense, it should not be dismissed" (Federici v Metropolis Night Club, Inc., 48 A.D.3d 741, 743 [2d Dept 2008]).
As pled, all the affirmative defenses, except the third, are entirely conclusory and unsupported by any facts in the answer. As such, these affirmative defenses are nothing more than unsubstantiated legal conclusions which are insufficiently pled as a matter of law (see Board of Mgrs. Of Ruppert Yorkville Towers Condominium v Hayden, 169 A.D.3d 569 [1st Dept 2019]; see also Bosco Credit V Trust Series 2012-1 v. Johnson, 177 A.D.3d 561 [1st Dept 2020]; 170 W. Vil. Assoc. v. G&E Realty, Inc., 56 A.D.3d 372 [1st Dept 2008]; see also Becher v Feller, 64 A.D.3d 672 [2d Dept 2009]; Cohen Fashion Opt., Inc. v V& MOpt., Inc., 51 A.D.3d 619 [2d Dept 2008]). Further, to the extent that specific legal arguments were not proffered in support of any affirmative defense, those defenses were abandoned (see U.S. Bank N.A. v Gonzalez, 172 A.D.3d 1273, 1275 [2d Dept 2019]; Flagstar Bank v Bellafiore, 94 A.D.3d 1044 [2d Dept 2012]; Wells Fargo Bank Minnesota, N.A v Perez, 41 A.D.3d 590 [2d Dept 2007]).
The branch of Plaintiffs motion for a default judgment against the non-appearing parties is granted without opposition (see CPLR §3215; SRMOFII2012-1Trust v Telia, 139 A.D.3d 599, 600 [1st Dept 2016]).
The branch of Plaintiff s motion to amend the caption is granted without opposition (see generally CPLR §3025; JP Morgan Chase Bank, N.A. v Laszio, 169 A.D.3d 885, 887 [2d Dept 2019]).
Accordingly, it is
ORDERED that the branch of Plaintiffs motion for summary judgment on its causes of action for foreclosure and appointment of a referee are denied, and it is
ORDERED that Defendants' cross-motion is denied in its entirety, and it is
ORDERED that all the affirmative defenses in Defendants' answer, except the third, are stricken, and it is
ORDERED that the Defendants captioned as "JOHN DOE" and "JANE DOE" are neither necessary nor proper party defendants and their names are hereby stricken from the caption of the action and that the caption shall read as follows:
ORDERED the caption is amended as follows:
SUPREME COURT STATE OF NEW YORK COUNTY OF NEW YORK
IS REO OPPORTUNITY 1, LLC Plaintiff, -against
HARLEM PREMIER RESIDENCE, LLC, DOUNGRAT EAMTRAKUL; NORTHERN LIGHTS MANSION CORP., Defendants.
Index No. 850151/2021
and it is
ORDERED that this matter is set down for a status conference on July 19, 2023 @ 11:00 am via Microsoft Teams.