Opinion
Index No. 150358/2021
07-05-2023
The Board of Managers of Cove Club Condominium, Plaintiff, v. Jade Car Park, LLC, and JOHN DOE NO. 1 THROUGH JOHN DOE NO. 5, Defendants.
Mitofsky, Shapiro, Neville & Hazen, LLP, New York, NY (Scot Mackoff of counsel), for plaintiff. Moses & Singer LLP, New York, NY (Megan H. Daneshrad and Ruth C. Haber of counsel), for defendant.
Unpublished Opinion
Mitofsky, Shapiro, Neville & Hazen, LLP, New York, NY (Scot Mackoff of counsel), for plaintiff.
Moses & Singer LLP, New York, NY (Megan H. Daneshrad and Ruth C. Haber of counsel), for defendant.
Gerald Lebovits, J.
In this lien-foreclosure action, plaintiff, the Board of Managers of the Cove Club Condominium, moves (1) under CPLR 3025 to amend the caption of the action to reflect defendant, Jade Car Park, LLC, as Cove Club Car Park f/k/a Jade Car Park, LLC; (2) under CPLR 3212 for summary judgment, awarding a judgment of foreclosure and sale of defendant's property; (3) under CPLR 3211(b) to dismiss defendant's affirmative defenses from its answer; (4) under RPAPL 1321 to appoint a referee to compute; (5) to award plaintiff a money judgment; (6) to appoint a receiver to collect rent from defendant during the pendency of the action; and (7) to strike "John Doe No. 1" through "John Doe No. 10" from the caption. The motion is granted.
BACKGROUND
Plaintiff governs the affairs of the Cove Club Condominium. Defendant owns unit G1 (Block 16, Lot 8001) within the condominium pursuant to a deed dated May 15, 1997. (NYSCEF No. 13 at ¶ 13.) Defendant's rights, duties, and obligations are provided in the condominium's declaration and by-laws. Defendants "John Doe No.1" through "John Doe No.5" include persons or entities unknown to plaintiff who may have an interest in the unit.
According to Article VI, Section 6.2 of the by-laws, all unit owners are required to pay common charges and special assessments for their unit in advance of the first day of each month. (NYSCEF No. 14 at 43 [By-Laws of the Cove Club Condominium].) Article VI, Section 6.4 (B) explains that in the event a unit owner fails to make full and timely payment of the common charges, interest will accrue from the date those charges are due. (Id. at 44.) This section also provides that the unit owner will be responsible for reimbursing the Board for all expenses, including attorney fees, incurred while collecting such unpaid common charges and/or foreclosing the lien securing such charges.
Defendant has not paid common charges, assessments, interest, or other charges due since March 2020. (NYSCEF No. 13 at ¶ 28.) As a result, plaintiff filed a notice of lien for unpaid common charges on September 24, 2020, which was recorded in the Office of the City Register of the City of New York on October 9, 2020. (Id.)
Plaintiff filed this action on January 12, 2021, seeking to foreclose upon plaintiff's common-charge lien against defendant's unit. Plaintiff is also seeking a judgment for the amounts set forth in the lien and the additional costs that have come due after the lien, as calculated by the referee. On February 1, 2023, plaintiff brought this motion.
DISCUSSION
As an initial matter, plaintiff moves under CPLR 3025 (b) to amend the caption to reflect defendant as Cove Club Car Park f/k/a Jade Car Park, LLC; and asks this court to strike from the caption defendants "John Doe No. 1" through "John Doe No. 5." These branches of plaintiff's motion are granted as unopposed.
I. Dismissing Defendant's Affirmative Defenses
Plaintiff also moves under CPLR 3211 (b) to dismiss defendant's seven affirmative defenses. "The standard of review on a motion to dismiss an affirmative defense pursuant to CPLR 3211 (b) is akin to that used under CPLR 3211 (a) (7), i.e., whether there is any legal or factual basis for the assertion of the defense." (Matter of Ideal Mut. Ins. Co., 140 A.D.2d 62, 67 [1st Dept 1988].)
A. First and Second Affirmative Defenses: The Complaint Fails to State a Cause of Action
Defendant alleges that the complaint fails to state a cause of action, because plaintiff violated the condominium's by-laws (first affirmative defense) and plaintiff lacked legal authority to impose common charges, assessments, late charges, and attorney fees on defendant (second affirmative defense). An affirmative defense of failure to state a cause of action is mere surplusage and "should not be subject to a motion to strike or provide a basis to test the sufficiency of the complaint." (Riland v Todman & Co., 56 A.D.2d 350, 353 [1st Dept 1977].) Only where all "other affirmative defenses are found to be legally insufficient" may a court dismiss this affirmative defense. (Tribbs v 326-338 E 100th LLC, 215 A.D.3d 480, 482 [1st Dept 2023.])
Because this court grants plaintiff's summary-judgment motion (see infra Section IV), it follows that the complaint states a cause of action. Plaintiff's motion to dismiss this affirmative defense is granted.
B. Third Affirmative Defense: Plaintiff Failed to Obtain Proper Authorization to Bring the Instant Foreclosure Action
Defendant argues that plaintiff failed to obtain proper authorization to commence this action at a noticed meeting of the Board. (NYSCEF No. 28 at 5.) Plaintiff, however, submits an affidavit from its managing agent, Landon Cole, in which he asserts that the Board "did meet and due to Defendant at that time being in default in its payment obligations, determined to commence the within Action." (NYSCEF No. 33 at ¶ 29.) This court therefore grants plaintiff's motion to dismiss defendant's third affirmative defense.
C. Fourth Affirmative Defense: Hardship as a Direct Result of COVID-19
Defendant's fourth affirmative defense alleges that defendant's income was significantly impacted by the government restrictions imposed in response to COVID-19. But the First Department has determined "that the pandemic cannot serve to excuse a party's lease obligations on the grounds of frustration of purpose or impossibility." (Fives 160th, LLC v Qing Zhao, 204 A.D.3d 439, 440 [1st Dept 2022].) And, as in Fives 160th, defendants do not assert that they were ever prevented from using the unit or operating their garage. (Id.) Thus, this affirmative defense is dismissed.
D. Fifth Affirmative Defense: Failure to Settle the Case
Defendant argues that equity prohibits plaintiff from recovering interests and costs because plaintiff caused the delay by refusing to proceed with an expeditious foreclosure. In opposition, plaintiff asserts that its decision to not accept the deed in lieu was based upon its business judgment. (NYSCEF No. 12 at ¶ 57.) According to plaintiff's managing agent, the Board concluded that it would not "be a good decision" for the condominium to operate defendant's business or to take ownership of the unit and risk having to pay defendant's outstanding sums to BPCA. (NYSCEF No. 33 at ¶ 11.) Once plaintiff's potential purchaser backed out, plaintiff "could not accept the only terms upon [which] Defendant would agree to settle the Action." (Id. at ¶ 13.)
The business-judgment rule prohibits court inquiry into a corporate board's good-faith decisionmaking. (See Matter of Levandusky v One Fifth Ave. Apt. Corp., 75 N.Y.2d 530, 537-538 [1990].) As long as "the corporation's directors have not breached their fiduciary obligation to the corporation, the exercise of [their powers] for the common and general interests of the corporation may not be questioned, although the results show that what they did was unwise or inexpedient." (Id. at 538 [internal quotation marks omitted].) The Court of Appeals has extended the application of this doctrine to condominium boards. (See id. at 537-538.)
This court agrees with plaintiff that the Board "acted for a legitimate business reason in rejecting to accept the deed in lieu," and that its determination is therefore protected from further inquiry. (NYSCEF No. 12 at ¶ 62.)
Defendant argues that plaintiff "failed to promptly respond to settlement communications," which resulted in an unconscionable delay in resolution of the negotiations. (NYSCEF No. 28 at 8.) Defendant asserts that summary judgment should be denied because questions remain concerning the extent that plaintiff's dilatory conduct "unnecessarily increased Defendant's costs." (Id. at 8-9.) But as plaintiff notes, the cases to which defendant cites state only that "the recovery of interest is within the court's discretion" and may be modified based on a party's allegedly wrongful conduct. (Dayan v York, 51 A.D.3d 964, 965 [2d Dept 2008] [emphasis added].) Although plaintiff's alleged improper delay will not preclude summary judgment, defendant should be permitted to present evidence and information to refute the referee's calculation of the amount in interest due to plaintiff.
E. Sixth Affirmative Defense: Notice of Lien Filed by Plaintiff is Defective
Defendant argues that plaintiff's notice of lien is defective because it incorrectly identifies Jade Car Park LLC as the record owner of the unit. (See NYSCEF No. 9 at ¶ 46 [answer] [claiming that "on the date of the filing, and for years prior, the record owner was Cove Club Car Park LLC"].) Plaintiff, however, asserts that both the ACRIS website and the report on the ownership history of the unit reveals that the only Condominium Unit Assignment Agreement on record is with Jade Car Park, LLC. (NYSCEF No. 12 at ¶ 64; see NYSCEF No. 20 at 1 [ACRIS search results].) Further, as defendant admits, Cove Club Car Park LLC is simply the new name for Jade Car Park, LLC. (See NYSCEF No. 29 at ¶ 1 [Grossman affidavit] ["I am Vice President of Cove Club LLC, formerly known as Jade Car Park LLC."].)
The motion to dismiss this affirmative defense is granted.
F. Seventh Affirmative Defense: Failure to Join Battery Park City Authority as a Necessary Party
Pursuant to RPAPL 1311, necessary parties in a foreclosure action include "persons holding title to the premises or acquiring any right to or lien on the property subsequent to the mortgage should be made parties in the foreclosure action." (New Falls Corp. v Board of Mgrs. of Parkchester N. Condominium, Inc., 10 A.D.3d 574, 576 [1st Dept 2004].) Defendant argues that the complaint should be dismissed because plaintiff failed to name BPCA as a necessary party to the action. Defendant argues that BPCA, as the condominium's landlord, has a subordinate interest in the property arising from defendant's default in ground-rent payments to BPCA. But even if BPCA is a necessary party, BPCA is not indispensable because a lien foreclosure in its absence will simply leave its rights unaffected. (HSBC Bank USA, N.A. v Proctor, 190 A.D.3d 603, 603 [1st Dept 2021].)
Thus, defendant's seventh affirmative defense is also dismissed.
II. Motion for Summary Judgment to Award a Judgment of Foreclosure and Sale Against Defendant
Plaintiff moves for summary judgment under CPLR 3212 on its claim seeking a judgment of foreclosure and sale against defendant. CPLR 3212 (b) requires a movant to show "the absence of genuine issues of material fact on every relevant issue raised by the pleadings, including any affirmative defenses." (Aimatop Rest. v Liberty Mut. Fire Ins. Co., 74 A.D.2d 516, 517 [1st Dept 1980].) Where there are no issues of fact, summary judgment should be granted. (Id.)
Under Article 6 of the by-laws, unit owners are bound and obligated to pay
common charges for their respective units. (NYSCEF No. 14 at 42 [by-laws].) And under Section 6.4, in the event a unit owner defaults on its payments, the owner will be required to pay (a) interest on outstanding common charges and assessments; and (b) all costs and expenses, including reasonable attorney fees, incurred by the Board in bringing an action to collect the unpaid charges or to foreclose the lien on the unit. (Id. at 44.) Due to defendant's failure to pay common charges, assessments, interest, and fees, plaintiff properly filed a lien against the unit. Plaintiff asserts, and defendant does not dispute, that defendant has not satisfied any portion of the lien nor paid the common charges, assessments, interest, and fees that have become due since the filing.
Other than its affirmative defenses, defendant has not submitted any defenses to refute plaintiff's claims. Because this court concludes that defendant's affirmative defenses must be dismissed, no issues of material fact remain to preclude summary judgment. This branch of plaintiff's motion is granted.
III. Appointing a Referee to Compute Amounts Owed to Plaintiff
Plaintiff requests that this court appoint a referee to compute the amounts owed to plaintiff under the condominium's declaration and by-laws and determine whether defendant's property (unit G1) may be sold in one or more parcels. This branch of plaintiff's motion is granted as unopposed.
IV. Awarding a Money Judgment in favor of Plaintiff
Plaintiff seeks a money judgment against defendant in an amount that to be determined by the referee, including those charges and fees that may subsequently come due through the date of the unit's auction. This branch of plaintiff's motion is granted as unopposed.
V. Appointing a Receiver to Collect Rent from Defendant
Plaintiff seeks appointment of a receiver to collect rent from defendant, in an amount not less than the monthly common charges, for the use of the unit since the commencement of the action through the date of the auction of the unit. This branch of plaintiff's motion is granted as unopposed.
Accordingly, it is
ORDERED that plaintiff's motion under CPLR 3025 for leave to amend the caption of the action to describe defendant as "Cove Club Car Park f/k/a Jade Car Park, LLC, rather than as "Jade Car Park, LLC," is granted, and the caption is amended accordingly; and it is further
ORDERED that plaintiff's motion to strike defendants "John Doe No. 1" through "John Doe No. 10" from the caption is granted, and those defendants shall be stricken from the caption of this action, and the action shall be discontinued as against them; and it is further
ORDERED that plaintiff's motion to strike under CPLR 3211 (b) defendant's affirmative defenses is granted; and it is further
ORDERED that plaintiff's motion for summary judgment under CPLR 3212, awarding a judgment of foreclosure and sale of the property is granted; and it is further
ORDERED that plaintiff's motion under RPAPL 1321 to appoint a referee to compute the amounts owed to plaintiff under the declaration and by-laws and to determine whether the property may be sold in one or more parcels is granted; and it is further
ORDERED that Hayley R. Greenberg, with an office at 521 5th Avenue, Suite 1700, New York, NY 10175, is hereby appointed Referee to ascertain and compute the amount to due plaintiff for common charges, assessments, miscellaneous charges, late fees, fines, penalties, legal fees and additional charges incurred by plaintiff as a result of the default by unit owner in the payment of common charges, assessments, storage fees, late fees, legal fees and additional charges, and other monies due under the Condominium Documents from April 1, 2020 along with statutorily permitted interest from April 1, 2020, as well as the amount of ongoing monthly common charges, assessments, interest, legal fees and additional charges; and to examine whether the subject premises can be sold in one or more parcels; and it is further
ORDERED that by accepting this appointment, the Referee certifies that she is in compliance with Part 36 of the Rules of the Chief Judge, 22 NYCRR Part 36, including but not limited to, § 36.2 ("Disqualification from Appointment") and § 36.2 (d) ("Limitation on Appointments Based upon Compensation"); and it is further
ORDERED that pursuant to CPLR 8003 (a), the court directs in its discretion that a fee of $400 shall be paid to Referee for the computation stage and upon the filing of her report; and it is further
ORDERED that plaintiff's motion to award a money judgment in favor of plaintiff and against defendant is granted, and plaintiff is awarded a judgment against defendant in an amount to be determined by the referee, including charges and fees that may subsequently come due through the date of the unit's auction; and it is further
ORDERED that plaintiff's motion to appoint a receiver to collect rent from defendant is granted, and plaintiff shall within 14 days of entry of this order submit to this court (by e-filing and email to SFC-Part7-Clerk@nycourts.gov) a proposed order providing for the appointment of a receiver; and it is further
ORDERED that plaintiff shall serve a copy of this order with notice of its entry on the Referee appointed herein; the owner of the equity of redemption; on the office of the County Clerk, which shall update its records accordingly; and on the office of the General Clerk, which shall amend the caption and update its records accordingly.