Opinion
Index No. 453275/2022 Motion Seq. No. 001
01-12-2024
TICO INVESTMENT VEHICLE VIII, LP, Plaintiff, v. GOJKO BARICEVIC, MARCIA BARICEVIC Defendant.
Unpublished Opinion
PRESENT: HON. FRANCIS A. KAHN, III, Justice.
DECISION + ORDER ON MOTION
HON. FRANCIS A. KAHN, III, Justice.
The following e-filed documents, listed by NYSCEF document number (Motion 001) 29, 30, 31, 32, 33, 34, 35, 36, 37, 38, 39, 40, 41,42, 43, 44, 45, 46, 47, 48, 49, 50, 51, 52, 53, 54, 55, 56, 57, 58, 59, 60, 61, 62, 63, 64, 65, 66, 67, 68, 69, 70, 71, 72, 73, 74, 75, 76, 77, 78, 79 were read on this motion to/for JUDGMENT - SUMMARY_. Upon the foregoing documents, the motion is determined as follows:
The within action is to foreclose on a consolidated, extended and modified mortgage encumbering a parcel of real property located at 198-32 32nd Avenue, Flushing, New York. The mortgage, dated January 20, 2016, was given by Defendants Gojko Baricevic and Marcia Baricevic ("Baricevic") to Plaintiff. The mortgage secures an indebtedness of $1,000,000.00, which is part of a loan with an original principal amount of $2,950,000.00. The indebtedness is evidenced by a credit and security agreement between Plaintiff and non-party Project Tri-Force LLC ("Project") of the same date as the mortgage. This agreement was executed by non-party Robert Baricevic as Chief Operating Officer of Project. Concomitantly with these documents, Defendants Baricevic signed a non-recourse guaranty of the indebtedness.
Despite the mandate in CPLR §507 that the venue of actions which affect title to real property "shall'' be in the county where the property is situated, which in this case is Queens County, the parties stipulated to venue in this County.
Plaintiff commenced this action to foreclose on the Queens County property alleging inter alia Defendants defaulted in repayment under the notes. Defendants Baricevic answered jointly and pled fifteen [15] affirmative defenses, including failure to comply with RPAPL §1304, as well as two counterclaims. Now, Plaintiff moves for inter alia summary judgment against Defendants Baricevic, for a default judgment against the non-appearing parties, striking the appearing Defendants' affirmative defenses, appointing a referee to compute and to amend the caption. Defendants Baricevic oppose the 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 Defendants' 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]). Also, based on the affirmative defenses pled, Plaintiff was required to demonstrate, prima facie, its strict compliance with RPAPL §§1304 (see U.S. Bank, NA v Nathan, 173 A.D.3d 1112 [2d Dept 2019]; HSBC Bank USA, NA. v Bermudez, 175 A.D.3d 667, 669 [2d Dept 2019]) or that this ? provision is inapplicable under the circumstances. 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 III, 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 relied upon (see eg Citigroup v Kopelowitz, 147 A.D.3d 1014, 1015 [2d Dept 2017]).
Plaintiffs motion was supported with an affidavit from Stephen Schifrin ("Schifrin"), who averred he was "the General Counsel and Chief Compliance Officer of the investment manager of Plaintiff TICO Investment Vehicle VIII, LP since January 1, 2013." Schifrin avers he "oversaw outside counsel's documentation of the loans at issue". However, affiant does not indicate his affidavit is based solely upon personal knowledge, a review of documents or both (see Bank of N.Y.Mellon v Gordon, 171 A.D.3d 197, 206 [2d Dept 2019]["a witness may always testify as to matters which are within his or her personal knowledge through personal observation"]).
To the extent Schifrin's knowledge is based upon a review records, the affiant failed to establish a foundation for the admission of any of these documents as business records under CPLR §4518 (see e.g. Wells Fargo Bank, N.A. v Yesmin, 186 A.D.3d 1761, 1762 [2d Dept 2020]). Contrary to Plaintiff s assertion, the affiant failed to state, in any respect, that the records "reflect a routine, regularly conducted business activity, and that it be needed and relied on in the performance of functions of the business", "that the record be made pursuant to established procedures for the routine, habitual, systematic making of such a record" and "that the record be made at or about the time of the event being recorded" (Bank of N.Y. Mellon v Gordon, 171 A.D.3d 197, 204 [2d Dept 2019]; see also Bank of Am v Brannon, 156 A.D.3d 1 [1st Dept 2017]). Even more fundamentally, affiant failed to state he was familiar with the record keeping practices of Plaintiff or the "outside counsel" which created the documents (see Bank of IndyMac Fed. Bank, FSB v Vantassell, 187 A.D.3d 725 [2d Dept 2020]). If any part of the affidavit is founded in the records, it demonstrated, at most, a naked "review of records maintained in the normal course of business [which] does not vest an affiant with personal knowledge" (JPMorgan Chase Bank, N.A. v Grennan, 175 A.D.3d 1513, 1517 [2d Dept 2019]). Schifrin's uncorroborated assertion that he is an officer of "the investment manager of Plaintiff' suggests he is employed by a separate entity, and he failed to identify same or demonstrate its authority to act for Plaintiff (see U.S. Bank v Tesoriero, 204 A.D.3d 1066, 1068 [2d Dept 2022]; US Bank N.A. v Cusati, 185 A.D.3d 870 [2d Dept 2020]).
As to Defendants' 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]). Schifrin's allegations regarding Defendants' default were similarly deficient as he does not indicate whether his knowledge on this point is personal or founded in records. To the extent that it was based on records, the records evidencing the default (ie. an account ledger or similar records) were not proffered (see e.g. U.S. Bank v Rowe, 194 A.D.3d 978 [2d Dept 2021]). The annexed default notices, even if admissible, are insufficient to establish the default in payment (see Bank of N.Y.Mellon v Mannino, 209 A.D.3d 707 [2d Dept 2022]). Accordingly, since none of the documentary evidence proffered to demonstrate the note, I mortgage, guaranty and Defendants' default is admissible, Movant failed to establish any of the prima facie elements of the cause of action for foreclosure or for summary judgment on the guaranty (see Federal Natl. Mtge. Assn, v Allanah, 200 A.D.3d 947 [2d Dept 2021]). To the extent Plaintiff may have i attempted to cure these defects with a further affidavit submitted in reply, it is inappropriate and may not be considered by the Court (see Deutsche Bank Natl. Trust Co. v Adler stein, 171 A.D.3d 868, 870 [2d Dept 2019]; see also Ditech Fin., LLC v Cummings, 208 A.D.3d 634, 636 [2d Dept 2022]).
As to the branch of Plaintiff s 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]).
I The first affirmative defense of venue is moot based upon the presence of the action in this court.
The second affirmative defense alleging the action is barred by the statute of limitations, is conclusory and meritless. Defendants failed to offer any facts, or simply allegations, to support that the indebtedness under the note was accelerated more than six-years before this action was commenced (cf. U.S. Bank N.A. v Salvodon, 189 A.D.3d 925 [2d Dept 2020]; 21st Mtge. Corp, v Balliraj, 177 A.D.3d 687 [2d Dept 2019]).
The third, ninth and eleventh affirmatives defenses claiming laches, estoppel waiver, unconscionability and breached the implied duty of good faith and fair dealing are entirely conclusory and unsupported by any facts in the answer or by the papers submitted in opposition. As such, these affirmative defenses are nothing more than an unsubstantiated legal conclusion which is 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 [1stDept 2020]; 170 JV. 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]).
The fourth affirmative defense alleging non-compliance with RPRPL §1304 fails as the encumbrance is not a residential mortgage, to wit the debt was not incurred by the borrower primarily for "personal, family, or household purposes" (see RPAPL § 1304[6][a] [ 1 ] [ii]; Bernstein v Dubrovsky, 169 A.D.3d 410 [1st Dept 2019J; Independence Bankv Valentine, 113 A.D.3d 62 [2d Dept 2013]).
The fifth affirmative defense which relates to the legal sufficiency of Plaintiff s complaint, is unnecessary as a general matter since dismissal cannot be effectuated without a motion pursuant to CPLR 321 l[a][7] (see Riland v Frederick S. Todman &Co., 56 A.D.2d 350 [1st Dept 1977]). Normally, this defense is nothing more than "'harmless surplusage,' and ... a motion by the plaintiff to strike the same should be denied" (Butler v Catinella, 58 A.D.3d 145 [2d Dept 2008]). However, where all other affirmative defenses fail as a matter of law, it may be dismissed (Raine v Allied Artists Productions, /MC., 63 A.D.2d 914, 915 [1st Dept 1978]).
The sixth, seventh and twelfth affirmative defenses are unnecessary as the claims relate to an aspect of Plaintiff s causes of action which only require denials (see CPLR §3018[a]).
The tenth affirmative defense of usury fails as it is not available to an individual guarantor of a limited liability company's debt (see General Obligations Law 5-521 [1]; LLCL § 1104[a]; Schneider v Phelps, 41 N.Y.2d 238, 242; Bankers Trust Co. v Braten, 184 A.D.2d 239 [1st Dept 1992]). In any event, the credit agreement contains a maximum interest rate of 13.00%, well below the statutory maximum, and Plaintiff pleads no explanation or calculation demonstrating that the interest rate charged by the lender was usurious. Further, the default rate of interest is expressly limited to 2.0% above the contract rate.
The fourteenth affirmative defense is unnecessary as it relates to the amount due and owing under the mortgage (see 1855 E. Tremont Corp, v Collado Holdings LLC, 102 A.D.3d 567, 568 [1st Dept 2013]). Even a mortgagor that has defaulted in appearing in a foreclosure action can appear and contest the amount due and owing under the mortgage (see Wilmington Sav. Fund Socy., FSB v Moriarty-Gentile, 190 A.D.3d 890, 892-893 [2d Dept 2021]). Parenthetically the Court notes the credit agreement provides that "Borrower waives any right it may have to require Lender to pursue any third Person for any of the Obligations".
The fifteenth affirmative defense to compel an accounting is not viable. In an arm's length commercial contractual relationship, a mortgagor is entitled to an accounting only if it is required by the mortgage documents (see 2 Bergman on New York Mortgage Foreclosures § 23.52). Here, the loan agreement, and mortgage fail to mandate Plaintiff provide same under the circumstances.
The attempt to reserve the right to assert further affirmative defenses during this action is incomprehensible and inadequately pled. Any rights in this regard are contained in the applicable sections of the Civil Practice Law and Rules.
With respect to the counterclaims, Plaintiff failed to proffer any argument to support dismissal of these claims.
The branch of Plaintiff s motion for a default judgment against the non-appearing parties is granted without opposition (see CPLR §3215; SRMOFII2012-1 Trust v Telia, 139 A.D.3d 599, 600 [1stDept 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 Plaintiff s motion for summary judgment on its causes of action for foreclosure, appointment of a referee and dismissal of the counterclaims are denied, and it is
ORDERED that all the affirmative defenses in Defendants' answer are stricken, and it is
ORDERED that the Defendants captioned as "JOHN DOE" are hereby stricken from the caption, and it is further
ORDERED the caption is amended as follows:
SUPREME COURT STATE OF NEW YORK COUNTY OF NEW YORK
TICO INVESTMENT VEHICLE VIII, LP, Plaintiff, -against- GOJKO BARICEVIC, MARCIA BARICEVIC, Defendants.
and it is
ORDERED that this matter is set down for a status conference on March 20, 2023 @11:40 am via Microsoft Teams.