Opinion
16046/08.
October 18, 2011.
Plaintiiff's Attorney is Harris Beach PLLC, by Herbert Wolowitz, Uniondale, NY.
Defendants Daskal Attorney is Heller, Horowitz Feit, P.C. by Allen M. Eisenberg, New York, NY.
Defendant Teitelbaum's Attorney is Alexander Singer, Brooklyn, NY.
The following papers numbered 1 to 9 read herein: Papers Numbered
Notice of Motion/Order to Show Cause/ Petition/Cross Motion and Affidavits (Affirmations) Annexed 1—4 Opposing Affidavits (Affirmations) 5—8 Reply Affidavits (Affirmations) 9 Affidavit (Affirmation) Other PapersUpon the foregoing papers, in this action to foreclose a mortgage on real property, plaintiffs Madison Park Investors, LLC and Elmar Associates, LLC (collectively Madison), move for an order, (1) granting summary judgment, pursuant to CPLR 3212, against answering defendants Atlantic Lofts Corp., 53 Spencer Realty LLC, Sarah Teitelbaum, Av Cochov LLC, Abraham Wurtzberger, Elimelech Daskal, Rena Daskal, 192 Schaeffer LLC, Adar B. Realty LLC, Emanuel Schwartz and Lieb Liectog, (2) granting a default judgment, pursuant to CPLR 3215, against non-answering defendants 523 Willoughby Avenue LLC, New York City Department of Finance, New York State Department of Taxation and Finance, NYC Environmental Control Board, NYC Parking Violations Bureau, Department of Housing Preservation Development, (3) appointing a referee to compute the amount due plaintiffs for principal, interest and other costs associated with the note and mortgage set forth in the complaint, (4) adjudging that defendants Atlantic Lofts Corp., 53 Spencer Realty LLC, Sarah Teitelbaum, Av Cochov LLC, Abraham Wurtzberger, Elimelech Daskal, Rena Daskal, 192 Schaeffer LLC, Adar B. Realty LLC, 523 Willoughby Avenue LLC, Emanuel Schwartz and Lieb Liectog pay any deficiency that may remain after the sale of the mortgaged premises and the application of the proceeds of such sale to the debt, and (5) amending the caption of this action by omitting the names of John Doe Nos. 1 through 10 inclusive.
Plaintiff seeks a separate order of default for defendants New York City Department of Finance and New York State Department of Taxation and Finance predicated upon the fact that these two defendants, unlike the others allegedly in default, have filed appearances and waivers in response to the complaint. For the purpose of addressing the plaintiffs' request for an order of default, this distinction has no bearing. The court will address the request for a default judgment as it relates to all of the alleged defaulting defendants.
BACKGROUND
On July 10, 2006, Emanuel Schwartz (Schwartz), as president of Atlantic Lofts Corp., as the sole member of 53 Spencer Realty LLC, as attorney in fact for Sarah Teitelbaum, as a member of Av Cochov LLC, as attorney in fact for Abraham Wurtzberger, as attorney in fact for Elimelech Daskal, as attorney in fact for Rena Daskal, as a member of 192 Schaeffer LLC, as a member of Adar B. Realty LLC, and as a member of 523 Willoughby Avenue LLC (collectively mortgagors), executed and delivered a note, whereby the mortgagors promised to pay $2,750,000 on July 10, 2007, together with interest to be computed from July 10, 2007 at the initial rate of 12 ½ percent per annum and to be paid August 10, 2006 and monthly thereafter. Also on that day, the mortgagors, through Schwartz in his above referenced capacities, executed and delivered a mortgage, upon the same terms as the aforementioned note, which mortgaged nine separate parcels located at 2518 Atlantic Avenue, in Brooklyn, New York, 53 Spencer Street, in Brooklyn, New York, 55 Spencer Street, in Brooklyn, New York, 472 Park Avenue, in Brooklyn, New York, 266 Heyward Street, Unit 4C, in Brooklyn, New York, 108 Wallabout Street, Unit 1B, in Brooklyn, New York, 192 Schaeffer Street, Unit 6, in Brooklyn, New York, 1719 Pitkin Avenue, in Brooklyn, New York, and 523 Willoughby Avenue, in Brooklyn, New York, as collateral security for the note. The mortgage was duly recorded in the Office of the City Register of the City of New York on August 7, 2006.
Plaintiffs have alleged that certain defendants herein are the record owners of the mortgaged parcels, however, absent evidence to substantiate this claim, the court takes no position on this issue and merely addresses the motion based upon the allegation.
According to the affidavit of Herbert Wolowitz (Wolowitz), co-managing member of Madison Park Investors LLC, the mortgagors have defaulted under the terms of the note and mortgage by, among other things, failing to make full payment of the indebtedness upon its maturity on July 10, 2007. Consequently, on June 4, 2008, Madison commenced this action to foreclose the lien of its mortgage by the filing of a summons, verified complaint, and notice of pendency. All named defendants were duly served with the summons and verified complaint. Defendants Atlantic Lofts Corp.,
53 Spencer Realty LLC, Sarah Teitelbaum, Av Cochov LLC, Abraham Wurtzberger, Elimelech Daskal, Rena Daskal, 192 Schaeffer LLC, Adar B. Realty LLC, Emanuel Schwartz and Lieb Liectog have answered the complaint. Defendants New York City Department of Finance and New York State Department of Taxation and Finance have appeared by notice of appearance and waiver, but have not answered the complaint. Defendants 523 Willoughby Avenue LLC, NYC Environmental Control Board, NYC Parking Violations Bureau, and Department of Housing Preservation Development have neither answered the complaint nor appeared in this action.
Madison submits an affirmation of counsel and a second sworn affidavit from Wolowitz, attesting that this action does not meet the criteria for the residential foreclosure program because (1) the mortgaged premises are not owned by natural persons under Banking Law 6 — L [e] [ii], and/or (2) the mortgaged premises are not owner-occupied pursuant to Banking Law 6 — L [e] [iv], and/or (3) the loan was not incurred "primarily for personal, family or household purposes" pursuant to Banking Law 6 — L [e] [iii]. Thus, this action is exempt from the conferences required under CPLR 3408 and RPAPL § 1304.
Wolowitz's affidavit in support of the motion avers that the mortgagors defaulted under the terms of the note and mortgage, remain in default, and owe the principal sum of $2,750,000.00, plus accrued interest, sums advanced by the plaintiffs to protect their interest in the property, late charges and attorneys' fees. According to Wolowitz, the entire amount secured remains outstanding. Plaintiffs' exhibits also include the note and mortgage at issue in this action.
Sarah Teitelbaum (Teitelbaum), Elimelech Daskal and Rena Daskal (the Daskals) are the only defendants opposing the instant motion for summary judgment. In her opposition, Teitelbaum avers that her husband, Jacob, suggested she should contact Schwartz, "an individual with whom he had dealings with [ sic]" to aid her in operating and maintaining 55 Spencer Street on account of her, "not being a business woman." Teitelbaum states sheonly signed the power of attorney for the purpose of allowing Schwartz to manage the premises and never intended that Schwartz would have the power to mortgage same. Further, Teitelbaum claims that there was no one else present when she signed except she and Schwartz, therefore the notary's acknowledgment on the document is false and the document should be considered defective. By extension, Teitelbaum alleges that all actions taken by Schwartz as her attorney in fact should likewise be nullified. Teitelbaum contends that the plaintiffs never contacted her to verify the power of attorney prior to the loan closing, and that the closing itself took place outside of normal business hours. As a result, Teitelbaum alleges collusion between the plaintiffs and Schwartz and that Schwartz's actions constituted an outright fraud. Teitelbaum asks for depositions to proceed because she "submit[s] that the conducting of depositions will substantiate [her] contentions of fraud." Teitelbaum summarizes that a triable issue of fact exists as to the validity of the power of attorney and through her answer, she interposes seven affirmative defenses to the action.
The court notes that Teitelbaum has not interposed any cross claims against Schwartz, nor has she sought to implead the notary into this action. In her opposition papers, Teitelbaum alleges that she is, "a Hasidic Jewess and pursuant to [her] religious convictions, [she] is barred from suing another Jew in Civil Court." Teitelbaum signed a revocation of her power of attorney on February 22, 2008 that was subsequently filed with the City Register on March 5, 2008.
In their joint opposition, the Daskals, allege that Schwartz is Elimelech Daskal's uncle and the property was placed in their names solely as a courtesy to and at the request of, Schwartz. That both signed the powers of attorney for Schwartz so he could "engage in activities with respect to" the property, lending their names, "and only their names," to Schwartz. Elimelech Daskal alleges that Schwartz was not authorized to execute the loan documents on their behalf. Daskal alleges that the document, itself, did not authorize banking transactions thus it could not have been used to execute the note and mortgage. Elimelech Daskal "does not specifically recall" if a notary was present, but alleges that he was asked to bring home Rena's power of attorney for her to sign and there was no notary. Like Teitelbaum, Daskal alleges that the plaintiffs never verified the powers of attorney with him or his wife prior to the transaction, nor did the Daskals realize any of the proceeds from the mortgage transaction. Moreover, Daskal alleges that the mortgage transaction was "highly suspicious" on its face because Schwartz executed documents as attorney in fact for multiple borrowers. Based upon these allegations, he concludes that the transaction should be nullified.
Elimelech Daskal opposes on behalf of both himself and his wife, a separately named defendant.
The opposition papers contain no affidavit from Rena Daskal attesting to the circumstances surrounding her execution of the power of attorney. As both Elimelech and Rena are represented by the same attorney, and as Elimelech Daskal is the only party to offer an affidavit, the court shall use the singular "Daskal" and plural "Daskals" interchangeably as necessary.
In their answer, the Daskals assert eight affirmative defenses to the action. In addition they assert two cross claims against codefendant Schwartz, one for indemnification should the plaintiffs prove successful and the second for damages in the form of the Daskals' share of the proceeds from the underlying mortgage transaction. The Daskals also assert one cross claim collectively against codefendants — Atlantic Lofts Corp., 53 Spencer Realty LLC, Sarah Teitelbaum, Av Cochov LLC, Abraham Wurtzberger, 192 Schaeffer LLC, Adar B. Realty LLC, and 523 Willoughby Avenue LLC — for indemnification should the plaintiffs prove successful to the extent that the Daskals suffer more than their equitable share as the result of a money judgment or through the foreclosure of the premises. As with Teitelbaum the Daskals have not sought to implead the notary into this action. The Daskals each signed revocations of their powers of attorney on January 29, 2008. Both were subsequently filed with the City Register on January 31, 2008.
DISCUSSION
I. Plaintiffs' Request for Summary Judgment Pursuant to CPLR 3212
a. Plaintiffs' Initial Burden on its Motion:
The proponent of a motion for summary judgment must demonstrate entitlement to judgment as a matter of law, tendering sufficient evidence to eliminate any material issues of fact ( Alvarez v Prospect Hosp., 68 NY2d 320, 324; Winegrad v New York Univ. Med. Ctr., 64 NY2d 851, 853; Zuckerman v City of New York, 49 NY2d 557, 562; Sillman v Twentieth Century-Fox Film Corp., 3 NY2d 395, 404). To establish its prima facie burden for judgment as a matter of law in a foreclosure action, plaintiffs must produce the mortgage, the unpaid note, and undisputed evidence of default ( see Washington Mut. Bank, F.A. v O'Connor , 63 AD3d 832 , 833; Daniel Perla Assoc., LP v 101 Kent Assoc., Inc. , 40 AD3d 677 , 677; LPP Mtge., Ltd. v Card Corp. , 17 AD3d 103 , 104; US Bank Trust N.A. Trustee v Butti , 16 AD3d 408, 408; Republic Natl. Bank of NY v O'Kane, 308 AD2d 482, 482; Hypo Holdings v Chalasani, 280 AD2d 386, 387). Once such a showing is made, the burden shifts to defendants to raise a triable issue of fact regarding the affirmative defenses and counterclaims asserted by them in opposition to plaintiffs' motion seeking foreclosure ( see Washington Mut. Bank, F.A., 63 AD3d at 833; US Bank Trust N.A. Trustee, 16 AD3d at 408).
Here, plaintiff has established its prima facie burden by producing the mortgage, note, and uncontroverted evidence of the default and that same remains unpaid, as set forth in the affidavit of Wolowitz. Thus, plaintiff, as the movant, has met its initial burden of demonstrating entitlement to judgment as a matter of law in this foreclosure action. Consequently, the burden shifted to defendants to raise a triable issue of fact regarding the affirmative defenses and counterclaims asserted by them in opposition to plaintiffs' motion seeking foreclosure ( see Washington Mut. Bank, F.A., 63 AD3d at 833; US Bank Trust N.A. Trustee, 16 AD3d at 408).
b. Summary Judgment as against unopposing defendants:
Defendants Atlantic Lofts Corp., 53 Spencer Realty LLC, Av Cochov LLC, Abraham Wurtzberger, 192 Schaeffer LLC, Adar B. Realty LLC, Emanuel Schwartz and Lieb Liectog have all answered the complaint, however, offer no opposition to plaintiffs' motion for summary judgment.
In instances where a respondent fails to oppose a motion for summary judgment, the facts, as alleged in the movants papers, may be deemed admitted and there is, in effect, a concession that no question of fact exists ( see generally Kuehne Nagel, Inc. v Baiden, 36 NY2d 539, 544; Argent Mortg. Co., LLC v Mentesana , 79 AD3d 1079 ). Accordingly, the plaintiff is entitled to summary judgment as against these unopposing defendants.
c. Summary Judgment as against Sarah Teitelbaum:
The plaintiffs having met their burden, it was then incumbent upon Teitelbaum to raise a triable issue of fact regarding her affirmative defenses to defeat summary judgment ( see Washington Mut. Bank, F.A., 63 AD3d at 833; US Bank Trust N.A. Trustee, 16 AD3d at 408).
In her opposition, Teitelbaum alleges that she signed the power of attorney so that Schwartz could act on her behalf in dealing with the tenants and governmental agencies and that she was unaware that the document she signed would be used by Schwartz to obtain a loan using 55 Spencer Street as collateral. As previously stated, she alleged that Schwartz had no authority to take such action; he was only permitted to manage the property. She makes this allegation again as part of her fourth affirmative defense concluding that since he executed the mortgage without her consent, he "nullified" the power of attorney and thus, the mortgage too should be a nullity. These arguments, as plaintiffs point out, make allegations in support of a cross claim against Schwartz but are insufficient to defeat a summary judgment motion. As courts have held:
"A party is under an obligation to read a document before [she] signs it, and a party cannot generally avoid the effect of a [document] on the ground that [she] did not read it or know its contents ( see Pimpinello v Swift Co., 253 NY 159; Touloumis v Chalem, 156 AD2d 230. Thus, "'a party will not be excused from [her] failure to read and understand the contents of a [document]'" ( Sofio v Hughes, 162 AD2d 518, 519), and a party who signs a [document] without any valid excuse for having failed to read it is conclusively bound by its terms ( Gillman v Chase Manhattan Bank, 73 NY2d 1, 11; Sofio v Hughes, supra)."
( Martino v Kaschak, 208 AD2d 698)
The very first paragraph of Teitelbaum's power of attorney is bold-faced and reads as follows:
"Caution: This is an important document. It gives the person whom you designate (your "Agent") broad powers to handle your property during your lifetime, which may include powers to mortgage, sell, or otherwise dispose of any real or personal property without advance notice to you or approval by you . . . [T]hese powers are explained more fully in New York General Obligations Law, Article 5, Title 15, Sections 5 — 1502A through 5 — 1503 . . . [I]f there is anything about this form that you do not understand, you should ask a lawyer to explain it to you." ( emphasis added)
Based upon the foregoing, while Teitelbaum was unaware that Schwartz would mortgage the property and never intended he do so, it is clear that Schwartz was permitted to do just that, without advance notice to Teitelbaum and without her approval. The warning language of the power is clear and unambiguous such that Teitelbaum was on notice of the potential actions that could be undertaken, on her behalf. Further, Teitelbaum initialed the box adjacent to "Real Estate Transactions." Pursuant to General Obligations Law (GOL) § 5-1502A:
"Construction-real estate transactions. In a statutory short form power of attorney, the language conferring general authority with respect to "real estate transactions," must be construed to mean that the principal authorizes the agent:
To sell, to exchange, to convey either with or without covenants, to quit-claim, to release, to surrender, to mortgage . . ." ( emphasis added) With knowledge of the potential powers, Teitelbaum granted Schwartz specific powers, including the power to mortgage the premises enumerated in GOL § 5-1502A. As a result, Schwartz's actions cannot be claimed to have nullified the power of attorney and Teitelbaum's argument, premised upon lack of intent or awareness on her part, is insufficient to defeat summary judgment in this action.
In her first affirmative defense, Teitelbaum alleges that Schwartz did not tell her that she was giving him authority to place a mortgage on the property. Indeed, Teitelbaum maintains that Schwartz misrepresented to her the "nature and extent of the document." As stated above, the power of attorney document clearly cautioned that such actions were possible and admonishes the signatory to seek legal counsel if there is an issue with understanding. The document also directs the signatory to the precise location of the statute that explains what each power conveys.
Teitelbaum alleges that, "this is an outright fraud" and that the closing did not take place during working hours but late in the evening. Teitelbaum asserts that neither the lender bank, the title company, nor the notary called to verify that the power was still in force. As part of her third affirmative defense, Teitelbaum claims she received no call because "obviously there was collusion between Mr. Schwartz and the title company and/ or the lender."
In the absence of proof of revocation, plaintiffs were clearly authorized to rely upon the power of attorney ( see GOL §§ 5-1501, 5-1502A; § 5 — 1504; Real Property Law § 326) which Teitelbaum executed and which was not revoked until February 22, 2008. The power of attorney was valid on its face and the "circumstances surrounding its presentation would not have put a reasonable person on notice that something was amiss" ( Hudson Enterprises, Ltd. v Wasserman, 256 AD2d 550, 550-551; Neildan Constr. Corp. v Angona,, 209 AD2d 389, 390). Further, contrary to Teitelbaum's contention, she was owed no duty to be contacted prior to the loan closing ( see Crandall v. Personal Mortg. Corp., 210 AD2d 981, 982). Moreover. Teitelbaum's conclusory and unsubstantiated allegations that the parties to the transaction behaved in a fraudulent and collusive manner are insufficient to create an issue of fact which would warrant a trial ( see LBV Properties v Greenport Development Co., 188 AD2d 588; Metropolitan Distrib. Servs. v DiLascio, 176 AD2d 312). Teitelbaum contends that if the court allows discovery to take place, "that discovery will substantiate that . . . the power of attorney. . . was procured by fraud." Opposition to summary judgment claiming a need for discovery is insufficient to raise a triable issue of fact when the opponent presents only speculation as to what additional relevant evidence would be uncovered ( see Leeds, Morelli Brown, P.C. v Hernandez , 55 AD3d 794 ). Indeed the mere hope that evidence sufficient to defeat a motion for summary judgment may be uncovered during the discovery process is insufficient to deny such a motion ( see Clochessy v Gagnon, 58 AD3d 1008; Flores v City of New York , 66 AD3d 599 ).
Teitelbaum asserts within her second affirmative defense, that no one else was present when she signed the power but she and Schwartz. She contends that the notary, Natan N. Katz, was not present when she signed nor has she ever met him or spoken with him therefore his acknowledgment is a fabrication. The court notes that neither Teitelbaum, nor the other answering defendants have sought to implead the notary into this action despite the multiple conclusory accusations that he is complicit in some alleged deception. As stated previously, on its face, the power of attorney was valid and, except for the unsubstantiated allegations within Teitelbaum's own affidavit, there is no evidence to the contrary. Bald, conclusory allegations, devoid of evidentiary facts, are not enough to defeat a motion for summary judgment ( see Jones v Gameray, 153 AD2d 550, 551; Grullon v City of New York 297 AD2d 261, 263-264). Moreover, Teitelbaum admits she readily signed the power of attorney granting Schwartz the authority to act. She does not allege that her signature was forged and subsequently acknowledged. The thrust of Teitelbaum's opposition is that Schwartz was not permitted to mortgage the property on her behalf despite the documentary, statutory and case evidence to the contrary. As a result, the answer to whether a notary was present when she signed the powers of attorney will not change the facts, to wit, that Teitelbaum intended to grant powers to Schwartz, she intended to affix her signature to the power of attorney and she did so sign.
Teitelbaum's fifth affirmative defense is a restatement of her fourth and, as has already been addressed above, does not defeat plaintiffs' motion for summary judgment.
Teitelbaum's sixth affirmative defense makes the same argument as both her fourth and fifth except it demands that the mortgage itself be declared a nullity. As has been previously addressed, these arguments do not defeat plaintiffs' motion for summary judgment.
Teitelbaum's seventh affirmative defense alleges that since she received no proceeds from the loan, there was a lack of consideration that renders the note and mortgage a nullity. As Teitelbaum's counsel's affirmation clearly points out in his opposition, the defense of a lack of consideration will be denied where it is merely a conclusory, unsupported, allegation (citing to Signature Bank v Galit Prop. , 80 AD3d 689 , J.A. Grammas Assoc., Architectural Eng'g Servs. v Ehrlich, 229 AD2d 517 and Gullery v Imburgio , 74 AD3d 1022 ). Counsel directs the court's attention to the disbursement of proceeds sheet attached to plaintiffs' motion as exhibit 17. Counsel then points out that Teitelbaum's name does not appear therein as receiving a disbursement. He asserts that this constitutes incontrovertible proof that Teitelbaum received no consideration for the loan, thus, her defense has the requisite evidentiary support to survive denial. Counsel misapprehends the circumstances herein. While Teitelbaum's name does not appear, Schwartz's name appears as having personally received a disbursement of funds (HSBC bank draft # 444210484, dated July 10, 2006, in the amount of $528,700.00). Schwartz was acting as Teitelbaum's attorney in fact under a power of attorney that has already been adjudicated as being valid on its face. Whether or not Schwartz forwarded any funds to Teitelbaum cannot be ascertained by anything contained in the disbursement sheet. The only fact that is incontrovertible is that Teitelbaum's attorney in fact received funds at the time he mortgaged the premises. Any allegations regarding Teitelbaum's failure to receive the loan proceeds may support a possible cross claim between the two parties, but it does not support her opposition to plaintiffs' motion for summary judgment.
Teitelbaum attempts to bolster her position by citing to allegations in codefendants' pleadings, particularly the Daskals' answer and affirmative defenses. To defeat summary judgment the party opposing the motion must tender evidentiary proof, in admissible form, sufficient to establish the existence of material issues of fact which would require a trial ( see Zuckerman at 557). In opposition to a motion for summary judgment, a party must assemble and lay bare affirmative proof to establish that the matters alleged are real and can be proven at trial ( see Fallon v Berney, 189 AD2d 1028). The arguments Teitelbaum has raised are not evidentiary proof, they are merely allegations that the Daskals have made and for which they must offer competent proof if they are to overcome the plaintiffs' motion. Accordingly, these allegations do not support her opposition to the plaintiffs' motion for summary judgment.
In support of Teitelbaum's motion, her counsel's affirmation reiterates most of the points alleged by Teitelbaum (and addressed by this court above) expanding on the notary law for the purpose of establishing how the notary's alleged actions render the power of attorney a nullity. However, this court has addressed in great detail the circumstances regarding both the validity of the power of attorney document, and the notary's alleged actions, as they relate to Teitelbaum and the plaintiffs' instant motion. While Teitelbaum may have the basis for a cross claim against Schwartz, the notary public, or both, this issue is not presently before this court and consequently lends no support to the defendant's opposition.
Lastly, counsel's affirmation alleges, "I further submit to the court that after the conducting of depositions, there is a strong likelihood that claims would be interposed by the defendant Teitelbaum against Natan N. Katz and even conceivably against the title company who was involved in the transaction" ( emphasis added). The court, after reviewing the allegations leveled in the complaint, as well as the affidavit and affirmation in opposition to the plaintiffs' motion, does not share counsel's contention that evidence adduced through depositions is the determinative factor in deciding to cross claim against either the notary or the title company. As has been stated, the mere hope that evidence sufficient to defeat a motion for summary judgment may be uncovered during the discovery process is insufficient to deny such a motion ( see Clochessy at 1008; Flores at 599).
Accordingly, as Teitelbaum has failed to raise a triable issue of fact regarding her affirmative defenses ( see Washington Mut. Bank, F.A., at 833; US Bank Trust N.A. Trustee, 16 AD3d at 408) Madison's motion for summary judgment as against Teitelbaum is granted.
d. Summary Judgment as against Elimelech and Rena Daskal:
The plaintiffs having met their burden, it was then incumbent upon the Daskals to raise a triable issue of fact regarding their affirmative defenses to defeat summary judgment ( see Washington Mut. Bank, F.A., at 833; US Bank Trust N.A. Trustee, at 408).
Daskal alleges that he and his wife are the owners of 108 Wallabout Street, Unit 1B (the property), at the behest of Schwartz, lending their names, "and only their names" to the deed. Daskal further states that Schwartz asked them to sign a power of attorney so he could "operate" the property. Daskal admits that both he and his wife signed the powers because Schwartz was "a close family member." Daskal alleges, in several places, "We never intended that Schwartz would utilize the powers of attorney to execute any loan documents on our behalf" and that if they knew what he was going to do, they would have revoked the powers. However, just as with Teitelbaum, the Daksals initialed the box adjacent to "Real Estate Transactions." As we have seen in the section addressing Teitelbaum's opposition above (citing the Martino court and the language of the power of attorney), GOL § 5-1502A grants an agent the power "To sell, to exchange, to convey either with or without covenants, to quit-claim, to release, to surrender, to mortgage . . ." ( emphasis added). Despite the allegations that the Daskals were unaware that Schwartz would mortgage the property and never intended for him to do so, the Martino court, the actual language at the top of the power attorney, and GOL § 5-1502A, clearly support the proposition that Schwartz was acting within the powers granted unto him by the power of attorney document. That he was permitted to act without advance notice to the Daskals and without their approval. As a result, the Daskals' argument, premised upon lack of intent or awareness on their part, is insufficient to defeat the plaintiffs' motion summary judgment.Similarly with Teitelbaum, Daskal alleges irregularities with the notarization of the powers. With respect to his own power, Elimelech does "not specifically recall whether [his] signature on the document was acknowledged by a notary public at the time of execution." Further, he avers that Schwartz asked him to bring home his wife's power so she could execute it. He goes on further to allege that "the power of attorney executed at our home by Rena Daskal was not signed in the presence of a notary public. There is no explanation as to why Rena Daskal has not submitted her own affidavit to explain the circumstances concerning the execution of her power of attorney. As discussed above, in regard to Teitelbaum's opposition, the court notes that neither the Daskals, nor the other answering defendants have sought to implead the notary into this action despite the multiple conclusory accusations that he is complicit in some kind of deception. As stated previously, on its face, the power of attorney was valid and, except for the unsubstantiated allegations within Daskal's own affidavit, there is no evidence to the contrary. Bald, conclusory allegations, devoid of evidentiary facts, are not enough to defeat a motion for summary judgment ( see Jones at 551; Grullon at 263-264). Moreover, Daskal admits he and his wife readily signed the power of attorney granting Schwartz the authority to act, as they allegedly had no personal investment in the premises whatsoever. He does not allege that his signature was forged and subsequently acknowledged. As with Teitelbaum, the thrust of Daskal's opposition is that Schwartz was not permitted to mortgage the property on his behalf despite the documentary, statutory and case evidence to the contrary. As a result, the answer to whether a notary was present when each signed the powers of attorney will not change the facts, to wit, that the Daskals intended to grant powers to Schwartz, they intended to affix their signatures to the powers of attorney and they did so sign.
Schwartz is in fact, Elimelech Daskal's uncle.
Nor does he allege it was signed in front of himself.
Daskal alleges that "the power of attorney we executed did not grant Schwartz the authority to borrow money on our behalf because it did not allow him to engage in banking transactions." Daskal has misapprehended the applicable law herein. As discussed above, both he and his wife initialed the box granting Schwartz the power to conduct "Real Estate Transactions" and, under GOL § 5-1502A, the power to mortgage is specifically delineated. Thus, this allegation fails to support Daskal's opposition.
Also in similar fashion to Teitelbaum, Daskal alleges "If the plaintiffs' bothered to simply inquire of us to verify that Schwartz was in fact so authorized (which they did not), we would have clarified the nature of the appointment . . ."and "Plaintiffs do not even dispute that they made no attempt to verify with the principals." As with Teitelbaum, Daskal misapprehends the plaintiffs' duty in regard to this point. In the absence of proof of revocation, plaintiffs were clearly authorized to rely upon the power of attorney ( see General Obligations Law §§ 5-1501, 5-1502A; § 5-1504; Real Property Law § 326). The power of attorney was valid on its face and the "circumstances surrounding its presentation would not have put a reasonable person on notice that something was amiss" ( Hudson Enterprises, Ltd. at 550-551; Neildan Constr. Corp. at 390). The Daskals were owed no duty to be contacted prior to the loan closing ( see Crandall at 982).
Daskal alleges "The loan transaction was highly suspicious on its face" since Schwartz was "attorney in fact for multiple borrowers — including me and my wife-with no apparent connection to the proceeds . . ." Following this logic, Daskal alleges that a fraud was perpetrated because just like he and his wife, there are several other parties who may also have willingly entered into a relationship with Schwartz. Daskal may not use this issue as both a sword and a shield. As has been previously determined above, such conclusory and unsubstantiated allegations of "fraudulent" and/ or "collusive" behavior are insufficient to create an issue of fact which would warrant a trial ( see LBV Properties at 588; Metropolitan Distrib. Servs. at 312). As a final argument, Daskal alleges "I did not receive any consideration for the loan transaction including . . . any portion of the mortgage proceeds." This issue, too, is mirrored from Teitelbaum's opposition and likewise has already been addressed. While the Daskals' names do not appear on the funds disbursement sheet, Schwartz's name does as he personally received a disbursement of $528,700.00 (HSBC bank draft # 444210484, dated July 10, 2006). Schwartz was acting as the Daskals' attorney in fact under the powers of attorney that have already been adjudicated as being valid on their face. Whether or not Schwartz forwarded any funds to the Daskals cannot be ascertained from the record in this action, however, such allegations may support the Daskals' cross claims. What the record unequivocally establishes is that the Daskals' attorney in fact received funds at the time he mortgaged the premises thus, Daskals' opposition on this point is insufficient to defeat plaintiffs' motion for summary judgment.
The Daskals' counsel's affirmation makes substantially the same arguments as Elimelech Daskal's opposition, therefore, said arguments have already been determined to be unavailing and need not be addressed herein except to the following extent. Counsel cites a federal court case from the Eastern District of New York, Spindel v Spindel ( 283 F Supp 797, 813) a forty-three year old action wherein the plaintiff, a resident of New Mexico, had alleged that the defendant, a New York resident, fraudulently induced the plaintiff to marry the defendant and that the plaintiff then, in turn, fraudulently procured a Mexican divorce. Counsel parenthetically states:
"plaintiff alleged that she "withdrew and revoked" a power of attorney prior to its exercise and that "defendant knew or should have known of such revocation"; on defendant's motion to dismiss plaintiffs' claim for declaratory relief, the court held that since it "must give the pleader every reasonable benefit of potential proof and plausible inference, the allegations of the complaint are sufficient to give rise to the inference that the power of attorney was effectively revoked prior to its exercise."
After citing the above language, counsel surmises "[t]he loan documents are accordingly void and unenforceable against the Daskals. Absent any elucidation from counsel as to what precedential value this action holds, the court shall attempt to ascertain how this case lends support to Daskal's opposition.
As an initial matter, Spindel is clearly distinguishable from the instant matter, not only based upon the plain facts at issue, but because in Spindel, the plaintiff sought to prevent the agent from acting in any capacity under the power. Herein, Daskal wanted the agent, Schwartz, to act, just not the acts Schwartz undertook. As stated quite clearly above, the power of attorney was valid on its face and the "circumstances surrounding its presentation would not have put a reasonable person on notice that something was amiss" ( Hudson Enterprises, Ltd. at 550-551; Neildan Constr. Corp. at 390). By the Daskals own hand, Schwartz was granted powers over real estate transactions which clearly include the power to mortgage the property (GOL § 5-1502A). There is absolutely no evidence adduced that would lead anyone to believe the powers were revoked prior to their exercise by Schwartz. In fact, while Daskal alleges that "[he] sought to revoke the powers by August 2006, but by then it was too late to undue the damage caused by Schwartz," he waited until January 29, 2008, some seventeen months later.
Accordingly, as the Daskals have failed to raise a triable issue of fact regarding their affirmative defenses ( see Washington Mut. Bank, F.A., at 833; US Bank Trust N.A. Trustee, 16 AD3d at 408) Madison's motion for summary judgment as against the Daskals is granted. The Daskals' cross claims as against codefendants, having not been placed before the court on the instant motion, shall remain.
II. Plaintiffs' Request for a Default Judgment, Pursuant to CPLR 3215
Regarding that branch of Madison's motion, seeking a default judgment as against defendants 523 Willoughby Avenue LLC, New York City Department of Finance, New York State Department of Taxation and Finance, NYC Environmental Control Board, NYC Parking Violations Bureau, Department of Housing Preservation Development, Madison has failed to move for a default within one year of the alleged default by the various defendants (CPLR 3215 [c], [d]). Despite this failure, through the evidence submitted in support of the instant summary judgment motion, Madison has shown merit to the instant action. Accordingly, the Court will not dismiss the complaint as against those defendants and allow Madison to renew that branch of its motion upon proper papers providing an excuse for its delay in moving for a default ( compare Dunne v Village Commons Health Racquet Club, Inc., 252 AD2d 535, 536 with Fallsburgh Lumber Co. v De Graw, 239 AD2d 846). This motion to renew must be made within 60 days of service of this decision with notice of entry.
III. Plaintiffs' Request for a Deficiency Judgment
With respect to that branch of plaintiffs' motion seeking a deficiency judgment as against defendants Atlantic Lofts Corp., 53 Spencer Realty LLC, Sarah Teitelbaum, Av Cochov LLC, Abraham Wurtzberger, Elimelech Daskal, Rena Daskal, 192 Schaeffer LLC, Adar B. Realty LLC, 523 Willoughby Avenue LLC, Emanuel Schwartz and Lieb Liectog, it is well established that the mortgagor is liable for any deficiency following the foreclosure and sale of the mortgaged property ( see RPAPL § 1371). RPAPL § 1371 expressly provides that "[i]f a person who is liable to the plaintiff for the payment of the debt secured by the mortgage is made a defendant in the action, and has appeared or has been personally served with the summons, the final judgment may award payment by him of the whole residue . . . of the debt remaining unsatisfied, after a sale of the mortgaged property and the application of the proceeds, pursuant to the directions contained in such judgment." Pursuant to RPAPL § 1371, "[s]imultaneously with the making of a motion for an order confirming the [foreclosure] sale, provided such motion is made within ninety days after the date of the consummation of the sale by the delivery of the proper deed of conveyance to the purchaser, the party to whom such residue shall be owing may make a motion in the action for leave to enter a deficiency judgment upon notice to the party against whom such judgment is sought or the attorney who shall have appeared for such party in such action." Thus, in accordance with RPAPL § 1371, plaintiff shall be entitled to recover a deficiency judgment (to the extent any residue shall remain owing) against the above named defendants, as the mortgagors, following the foreclosure and sale of the mortgaged property.
The fact that this court has denied that branch of plaintiffs' motion seeking a default judgment against mortgagor, 523 Willoughby Avenue LLC, has no bearing on plaintiffs' ability to seek a deficiency judgment against such mortgagor when procedurally allowable.
CONCLUSION
Accordingly, that branch of plaintiffs' motion for an order granting it summary judgment against defendants Atlantic Lofts Corp., 53 Spencer Realty LLC, Sarah Teitelbaum, Av Cochov LLC, Abraham Wurtzberger, Elimelech Daskal, Rena Daskal, 192 Schaeffer LLC, Adar B. Realty LLC, Emanuel Schwartz and Lieb Liectog is granted. Defendants Daskals' cross claims as against codefendants remain unaffected. That branch of plaintiffs' motion seeking a default judgment against defendants 523 Willoughby Avenue LLC, New York City Department of Finance, New York State Department of Taxation and Finance, NYC Environmental Control Board, NYC Parking Violations Bureau, Department of Housing Preservation Development is denied without prejudice to renew upon proper papers providing an excuse for its delay in timely moving for a default. That branch of plaintiffs' motion seeking a deficiency judgment is denied as premature without prejudice to renew pursuant to RPAPL § 1371. A referee shall be appointed to ascertain and compute the amount due under the mortgage to plaintiffs. The caption of this action shall be deemed amended to delete John Doe #1 through John Doe #10, without prejudice. Plaintiff is directed to submit a new order to the court, consistent with this decision and order, within 10 days of the date herein. The parties' remaining contentions are without merit. All relief not expressly granted herein is denied.
Settle order on notice.
The foregoing constitutes the decision and order of the court.