Opinion
Index No. 64541, Index No. 64591
11-14-2018
BPS LOT 3, LLC and BPS Lot 13, LLC, in the Right of Bell Point Shores Homeowners Association, Inc., on Behalf of All Other Members of Said Corporation Similarly Situated, Plaintiffs, v. NORTHWEST BAY PARTNERS, LTD., Northwest Bay Funding, Inc., Michael O'Brien, Lake George Park Commission and Bell Point Shores Homeowners Association, Inc., Defendants. (Action No. 1) BPS Lot 3, LLC and BPS Lot 13, LLC, in the Right of Bell Point Shores Homeowners Association, Inc., on Behalf of All Other Members of Said Corporation Similarly Situated, Plaintiffs, v. Northwest Bay Partners, Ltd. and Michael O'Brien, Defendants. (Action No. 2)
The Murray Law Firm, PLLC, Clifton Park (Jacqueline Phillips Murray and Joshua A. Silver of counsel), for plaintiffs in action Nos. 1 and 2. Walsh & Walsh LLP, Saratoga Springs (Jesse P. Schwartz of counsel), for defendants Northwest Bay Partners, Ltd., Northwest Bay Funding, Inc. and Michael O'Brien in action No. 1 and defendants Northwest Bay Partners, Ltd. and Michael O'Brien in action No. 2. Barbara D. Underwood, Attorney General, Albany (Stephen M. Nagle of counsel), for defendant Lake George Park Commission in action No. 1. Abrams Garfinkel Margolis Bergson, LLP, New York (Barry G. Margolis of counsel) and Little O'Connor and Borie, P.C., Glens Falls (Michael J. O'Connor of counsel), for defendant Bell Point Homeowners Association, Inc. in action No. 1.
The Murray Law Firm, PLLC, Clifton Park (Jacqueline Phillips Murray and Joshua A. Silver of counsel), for plaintiffs in action Nos. 1 and 2.
Walsh & Walsh LLP, Saratoga Springs (Jesse P. Schwartz of counsel), for defendants Northwest Bay Partners, Ltd., Northwest Bay Funding, Inc. and Michael O'Brien in action No. 1 and defendants Northwest Bay Partners, Ltd. and Michael O'Brien in action No. 2.
Barbara D. Underwood, Attorney General, Albany (Stephen M. Nagle of counsel), for defendant Lake George Park Commission in action No. 1.
Abrams Garfinkel Margolis Bergson, LLP, New York (Barry G. Margolis of counsel) and Little O'Connor and Borie, P.C., Glens Falls (Michael J. O'Connor of counsel), for defendant Bell Point Homeowners Association, Inc. in action No. 1.
Robert J. Muller, J.
BPS Lot 3, LLC and BPS Lot 13, LLC (hereinafter collectively referred to as BPS) are the owners of Lots 2 and 13, respectively, in the Bell Point Shores Subdivision (hereinafter the Subdivision) on the shores of Lake George in the Town of Bolton, Warren County. Defendant Northwest Bay Partners, Ltd. (hereinafter NBP) is the owner of Lots 3, 4, 5, 7, 9, 10, 11, 15, 16, 17 and 18. All Lots in the Subdivision are subject to a certain "Declaration of Covenants, Conditions, Restrictions, Easements, Charges and Liens" (hereinafter the Declaration) enforced by Bell Point Shores Homeowners Association, Inc. (hereinafter the HOA), a non-profit corporation formed for that sole purpose. Section 5.01 (a) of the Declaration provides that "each [o]wner of any Lot, by acceptance of a deed therefore, whether or not it shall be expressed in any such deed or other conveyance, shall be deemed to covenant and agree to pay to the [HOA a]nnual [a]ssessments of charges for the maintenance and operation of the [Subdivision]." Section 5.07 further provides:
"The [a]ssessments shall be paid when due. All sums assessed by the Board of Directors, but unpaid, together with any accelerated installments, late charges (not exceeding one and ½ percent per month of the amount of the overdue [a]ssessment or portion thereto) and ... interest thereon at such rate as may be fixed by the Board of Directors from time to time (such rate not to exceed the maximum rate of interest then permitted by law), shall be the personal obligation of an [o]wner and shall constitute a lien upon the [o]wner's Lot prior to all other liens except: (i) tax or assessment liens on the Lot by the taxing subdivision of any governmental authority, including, but not limited to, state, county, city, town and school district taxing agencies; and (ii) all sums unpaid on any [f]irst [m]ortgage of record encumbering any Lot."
Pursuant to section 1.01 (e) of the Declaration, "[t]he Board of Directors [is] elected by the [m]embers [of the HOA] to administer the affairs of the [HOA]."
From 2001 to 2017, the HOA charged the following annual assessments to each Lot owner:
| Year | Annual Assessment |
|---|---|
| 2001 | $1,080.00 |
| 2002 | $1,200.00 |
| 2003 | $1,250.00 |
| 2004 | $1,330.00 |
| 2005 | $1,450.00 |
| 2006 | $1,550.00 |
| 2007 | $1,600.00 |
| 2008 | $1,730.00 |
| 2009 | $1,730.00 |
| 2010 | $1,200.00 |
| 2011 | $1,200.00 |
| 2012 | $1,200.00 |
| 2013 | $1,200.00 |
| 2014 | $1,333.00 |
| 2015 | $1,313.33 |
| 2016 | $1,402.22 |
| 2017 | $1,480.00 |
NBP failed to pay these 17 assessments relative to each of its 11 Lots, contending that it was entitled to certain offsets for the value of work performed on the Subdivision by its sole shareholder, Michael O'Brien. Over the years the HOA has filed several liens against NBP's Lots and more recently it commenced settlement discussions with NBP as to the precise amount due and owing. At a special meeting on September 12, 2016, the HOA resolved "to spend $7,500.00 to retain [counsel] to proceed with [a] lien foreclosure" against NBP for each of its 11 Lots. The HOA further resolved, however, that "[u]ntil negotiations [were] completed the HOA [would] not engage in any lien foreclosure action[.]" To date, the HOA has neither resolved the issues pertaining to the assessments nor commenced a lien foreclosure action against NBP.
On October 6, 2017, BPS filed notices of lien "in the right of" the HOA against Lots 11, 16, 17 and 18 and then, on October 12, 2017, BPS commenced an action "in the [r]ight of" the HOA to foreclosure upon the liens (hereinafter action No. 1). In addition to NBP and O'Brien, BPS included Northwest Bay Funding, Inc. (hereinafter NBF), the Lake George Park Commission (hereinafter the LGPC) and the HOA as defendants. NBF was included because it apparently holds a mortgage on one of the Lots and the LGPC was included because it holds two money judgments against NBP and O'Brien, one entered on December 16, 2011 in the amount of $49,832.91 and a second entered on February 6, 2012 in the amount of $5,000.00. The HOA was named so as "to ensure that it was afforded ... notice and [an] opportunity" to be heard. Issue has been joined in action No. 1 as to all defendants except the HOA, which served a limited notice of appearance.
On October 27, 2017, BPS commenced a second action "in the [r]ight of" the HOA for a money judgment in the amount of $902,325.76 for those annual assessments allegedly due and owing on Lots 3, 4, 5, 7, 9, 10 and 15 (hereinafter action No. 2). Only NBP and O'Brien are named as defendants in action No. 2 and issue has been joined as to O'Brien, with NBP's answer rejected by BPS as untimely. BPS has apparently commenced a third action against the Board of Directors of the HOA for breach of fiduciary duty, but a request for judicial intervention has not yet been filed in that action.
Presently before the Court in action No. 1 are
(1) NBP and O'Brien's motion for summary judgment dismissing the complaint and discharging the liens or, alternatively, for an Order
(a) dismissing the complaint to the extent that it seeks amounts which accrued prior to October 2011;
(b) dismissing the complaint to the extent that it seeks interest, fines and penalties which are confiscatory in nature; and
(c) granting a declaratory judgment that the amounts which accrued prior to October 2011 are not collectable and the interest, fines and penalties are not recoverable;
(2) BPS's cross motion for summary judgment as against NBP;
(3) LGPC's motion for summary judgment dismissing the complaint and discharging the liens or, alternatively, for an Order
(a) dismissing the complaint to the extent that it seeks amounts which accrued prior to October 2011;
(b) dismissing the complaint to the extent that it claims the liens have priority over the LGPC's money judgments; and
(4) BPS's motion for leave to amend the complaint.
Also pending in action No. 2 are
(1) BPS's motion for a default judgment as against NBP;
(2) NBP's cross motion to compel BPS to accept its answer nunc pro tunc and for costs and sanctions;
(3) NBP and O'Brien's motion for summary judgment dismissing the complaint or, alternatively, for an Order
(a) dismissing the complaint to the extent that it seeks amounts which accrued prior to October 2011;
(b) dismissing the complaint to the extent that it seeks interest, fines and penalties which are confiscatory in nature;
(c) granting a declaratory judgment that the amounts which accrued prior to October 2011 are not collectable and the interest, fines and penalties are not recoverable; and
(d) directing BPS to add the HOA as a necessary party under CPLR 1001 ;
(4) BPS's cross motion for summary judgment as against NBP; and
(5) BPS's motion for leave to amend the amended complaint.
The Court will first address the motions and cross motions pending in action No. 2, beginning with BPS's motion for a default judgment as against NBP and NBP's cross motion to compel BPS to accept its answer nunc pro tunc and for costs and sanctions.
Motions and Cross Motions in Action No. 2
" ‘Supreme Court is vested with the discretionary authority to permit late service of an answer upon a showing of a reasonable excuse for the delay and a meritorious [defense]’ " ( Rickert v. Chestara , 56 AD3d 941, 942 [2008], quoting Huckle v. CDH Corp. , 30 AD3d 878, 879 [2006] [citations omitted]; see CPLR 3012 [d] ; Watson v. Pollacchi , 32 AD3d 565, 565 [2006] ; Planck v. SUNY Bd. of Trustees , 18 AD3d 988, 992 [2005], lv dismissed 5 NY3d 844 [2005] ; De Nooyer Chevrolet v. Polsinello Fuels , 251 AD2d 871, 871-872 [1998] ). "To that end, ‘[w]hether there is a reasonable excuse for a default is a discretionary, sui generis determination to be made by the court based on all relevant factors, including the extent of the delay, whether there has been prejudice to the opposing party, whether there has been willfulness, and the strong public policy in favor of resolving cases on the merits’ " ( Rickert v. Chestara , 56 AD3d at 942, quoting Harcztark v. Drive Variety, Inc. , 21 AD3d 876, 876-877 [2005] ; see Aquilar v. Nassau Health Care Corp. , 40 AD3d 788, 789 [2007] ).
Here, NBP was served pursuant to Business Corporation Law § 306 on November 9, 2017 and, as such, had until December 9, 2017 to serve an answer (see CPLR 320 [a], 3012 [c] ). Its answer, however, was not served until December 29, 2017. In this regard, O'Brien states that neither he nor NBP were ever "served with, nor did [they] receive a copy in the mail, of the summons and complaint" in either action No. 1 or action No. 2. They became aware of the actions, however, based upon conversations between their counsel and counsel for BPS. Specifically, on October 23, 2017, counsel for BPS — Joshua A. Silver, Esq. — called counsel for NBP — Joseph Walsh, Esq. — to inquire whether his firm would accept service of process on behalf of O'Brien in action No. 1. Mr. Walsh advised that his firm had not yet been retained by O'Brien but would contact him to advise of the request. O'Brien thereafter retained Mr. Walsh's firm and obtained a copy of the summons and complaint in action No. 1 from the Warren County Clerk's office.
On November 10, 2017, Mr. Walsh's colleague — Jesse P. Schwartz, Esq. — called Mr. Silver to inquire whether NBP had been served and, if so, to request a brief extension of time to prepare and file an answer. According to Mr. Schwartz, "Mr. Silver indicated [that] NBP had been served via the Secretary of State" and that "he would agree to an extension provided that [Mr. Schwartz's firm] accept[ed] service of process on behalf of O'Brien." Mr. Schwartz "indicated that would likely not be an issue, but that [he] needed O'Brien's permission first." During that conversation, Mr. Silver informed Mr. Schwartz that BPS was in the process of commencing action No. 2.
On November 15, 2017, Mr. Schwartz called Mr. Silver to advise that he was permitted to accept service of process on behalf of O'Brien and to discuss a due date for the answer in action No. 1. At that time Mr. Silver advised Mr. Schwartz that, "after speaking to his client[, BPS] would no longer agree to provide any additional time to answer under any circumstances and [would] not grant any courtesies or accommodations ... during the course of the litigation." NBP and O'Brien thus "scrambled to quickly draft and file an answer" in action No. 1. Mr. Schwartz then sent an email to Mr. Silver on December 7, 2017 stating as follows:
"When we spoke a couple of weeks ago, you mentioned that you were in the process of filing a new action against Mike O'Brien and his entities related to the other lots. Has that second action been filed? If so, can you please email the summons and complaint to me."
Mr. Silver never responded to this email and, as such, Mr. Schwartz "called the Warren County Clerk to inquire whether [action No. 2] had, in fact, been filed by [BPS], and [he] was told that it had been commenced." O'Brien then traveled to the Warren County Clerk's office in mid-December to obtain a copy of the pleadings in that case and an answer was served shortly thereafter on behalf of both NBP and O'Brien. By correspondence dated January 4, 2018, Mr. Silver rejected the answer as untimely with respect to NBP.
Under the circumstances, the Court finds that NBP has amply established a reasonable excuse for the delay. Although unclear why NBP did not receive a copy of the pleadings from the Secretary of State, counsel for NBP made substantial efforts to obtain a copy of the pleadings and attempted to serve the answer in a timely fashion. Furthermore, BPS cannot and indeed did not claim any prejudice as a result of NBP's 20-day delay in serving the answer.
The Court further finds that NBP has established a meritorious defense as more fully set forth below in the discussion relative to its motion for summary judgment in action No. 2. BPS therefore is not entitled to a default judgment and is hereby directed to accept NBP's answer nunc pro tunc to the date of service.
Insofar as NBP's request for costs and sanctions is concerned, the Court may impose discretionary costs or sanctions against a party or attorney — or both — who engages in "frivolous conduct" ( 22 NYCRR 130-1.1 [a], [b] ). Conduct will be deemed frivolous if "(1) it is completely without merit in law and cannot be supported by a reasonable argument for an extension, modification or reversal of existing law; (2) it is undertaken primarily to delay or prolong the resolution of the litigation, or to harass or maliciously injure another; or (3) it asserts material factual statements that are false" ( 22 NYCRR 130-1.1 [c]; see Kinge v. State of New York , 302 AD2d 667, 670 [2003] ).
Here, while Mr. Silver's conduct perhaps reflected a lack of professional courtesy, it did not rise to the level of frivolous conduct (see Matter of Frank M. v. Siobahn N. , 268 AD2d 808, 809 [2000] ; Brocklebank v. City of Lockport , 198 AD2d 906, 906 [1993] ).
Briefly, to the extent that BPS requests counsel fees in the event NBP's cross motion is granted, this request is denied in its entirety.
The Court notes that the Decision and Order relied upon by BPS in support of this request — namely, Langley/Empire Candle, LLC v. Lavender Fundraising Co., Inc. (Sup Ct, Warren County, Apr. 1, 2014, Krogmann, J., index No. 52450) — is wholly inapposite, having been decided by a different Justice of this Court under very different circumstances.
Based upon the foregoing, BPS's motion for a default judgment as against NBP is denied in its entirety and NBP's cross motion is granted to the extent that BPS is compelled to accept its answer nunc pro tunc to the date of service and the cross motion is otherwise denied.
With issue now joined as to both NBP and O'Brien in action No. 2, the Court will proceed with consideration of NBP and O'Brien's motion for summary judgment and BPS's cross motion for summary judgment as against NBP, as well as BPS's motion for leave to amend the amended complaint — which must necessarily be considered in the context of the motion and cross motion.
On a motion for summary judgment, the movant must establish, by admissible proof, its entitlement to judgment as a matter of law (see Gilbert Frank Corp. v. Federal Ins. Co. , 70 NY2d 966, 967 [1988] ; Alvarez v. Prospect Hosp. , 68 NY2d 320, 324 [1986] ). Once the movant has met this initial burden, the burden then shifts to the opponent of the motion to establish, by admissible proof, the existence of genuine issues of fact (see Zuckerman v. City of New York , 49 NY2d 557, 560 [1980] ).
NBP and O'Brien first contend that they are entitled to summary judgment dismissing the complaint because BPS lacks standing. Specifically, NBP and O'Brien contend that BPS is without standing because it failed to comply with N-PCL § 623 (c).
N-PCL § 623 — entitled "Members' derivative action brought in the right of the corporation to procure a judgment in its favor" — provides, in pertinent part:
"(a) An action may be brought in the right of a domestic ... corporation to procure a judgment in its favor by five percent or more of any class of members ... of such corporation.
"(b) In any such action, it shall be made to appear that each plaintiff is such a member, holder or owner at the time of bringing the action.
"(c) In any such action, the complaint shall set forth with particularity the efforts of the plaintiff or plaintiffs to secure the initiation of such action by the board [or] the reason for not making such effort."
There is no dispute that BPS constitutes more than 5% of the HOA's members.
N-PCL § 623 (c) was modeled upon Business Corporation Law § 626 (c), which similarly provides that in any shareholders' derivative action, "the complaint shall set forth with particularity the efforts of the plaintiff to secure the initiation of such action by the board or the reasons for not making such effort" (see Pall v. McKenzie Homeowners' Assn., Inc. , 121 AD3d 1446, 1447 [2014] ). With that said, in analyzing Business Corporation Law § 626 (c) the Court of Appeals has stated as follows:
"The demand requirement rests on basic principles of corporate control — that the management of the corporation is entrusted to its board of directors, who have primary responsibility for acting in the name of the corporation and who are often in a position to correct alleged abuses without resort to the courts. The demand requirement thus relieves courts of unduly intruding into matters of corporate governance by first allowing the directors themselves to address the alleged abuses. The requirement also provides boards with reasonable protection from harassment on matters clearly within their discretion, and it discourages strike suits commenced by shareholders for personal rather than corporate benefit" ( Bansbach v. Zinn , 1 NY3d 1, 9 [2003] [citations and internal quotation marks omitted] ).
The demand requirement is excused as futile "when the directors are incapable of making an impartial decision as to whether to bring suit" (id. ). That occurs in three circumstances:
"(1) [A] complaint alleges with particularity that a majority of the board of directors is interested in the challenged transaction. Director interest may either be self-interest in the transaction at issue, or a loss of independence because a director with no direct interest in a transaction is controlled by a self-interested director. (2) [A] complaint alleges with particularity that the board of directors did not fully inform themselves about the challenged transaction to the extent reasonably appropriate under the circumstances. The long-standing rule is that a director does not exempt himself from liability by failing to do more than passively rubber-stamp the decisions of the active managers. (3) [A] complaint alleges with particularity that the challenged transaction was so egregious on its face that it could not have been the product of sound business judgment of the directors" ( Marx v. Akers , 88 NY2d 189, 200-201 [1996] [citations and internal quotation marks omitted]; accord Bansbach v. Zinn , 1 NY3d at 9).
Here, the amended complaint in action No. 2 states as follows:
"At a special meeting of the HOA on September 12, 2016, [BPS] requested and the HOA authorized the commencement of a foreclosure action against ... NBP in respect to the HOA's liens for HOA assessments that ... NBP failed to pay and that remain unpaid. To date, the HOA has failed to commence said foreclosure action against ... NBP to enforce its liens for unpaid assessments by ... NBP. Moreover, the HOA failed to commence any action to foreclose on its liens or otherwise obtain a money judgment against ... NBP for unpaid assessments from 2001 to present."
The Court finds that such allegations fail to set forth with particularity any efforts undertaken by BPS to secure the initiation of an action by the HOA for a money judgment in the amount of $902,325.76 for the annual assessments due and owing on Lots 3, 4, 5, 7, 9, 10 and 15. Indeed, there is no allegation whatsoever that BPS ever requested that the HOA commence an action against NBP and O'Brien for a money judgment. Rather, BPS requested that it commence a foreclosure action, which it agreed to do upon the conclusion of negotiations with NBP and O'Brien. It does not appear — or at least it is not alleged — that BPS had any further contact with the HOA between September 12, 2016 and the date of commencement of action No. 2, nor that it advised the HOA of its intention to commence action No. 2. It must also be noted that BPS has not alleged or otherwise suggested that the demand requirement should be excused as futile.
Under the circumstances, NBP and O'Brien have established by admissible proof that BPS failed to comply with N-PCL § 623 (c) prior to commencing action No. 2 and, as such, is without standing to proceed with the action (see Schaefer v. Chautauqua Escapes Assn., Inc. , 150 AD3d 1186, 1187 [2018], lv denied 32 NY3d 902 [2018] ; Tae Hwa Yoon v. New York Hahn Wolee Church, Inc. , 56 AD3d 752, 755 [2008] ). The burden has therefore shifted to BPS to raise a triable issue of fact.
In this regard, BPS first contends — in conclusory fashion — that it has standing because the allegations in the amended verified complaint are sufficient to satisfy the requirements of N-PCL § 623 (c). For the reasons set forth above, however, the Court finds this contention to be without merit.
BPS next contends that it has standing based upon section 9.02 of the Declaration, which provides as follows:
"The provisions of [the] Declaration shall bind the [p]roperty [within the Subdivision] and shall be construed as running with the land and shall inure to the benefit of and be enforceable by ... the [HOA] (being hereby deemed the agent for all of the [o]wners), and by any [o]wner, their respective legal representatives, heirs, successors and assigns, by actions at law or by suits in equity. As it may be impossible to measure monetarily the damages which may accrue to the beneficiaries hereof by reason of a violation of this Declaration, and monetary damages won't adequately compensate for violations of this Declaration, any beneficiary hereof shall be entitled to relief by way of injunction or specific performance, as well as any other relief available at law or in equity, to enforce the provisions hereof."
According to BPS, section 9.02 authorizes the owner of any Lot in the Subdivision to commence an action to enforce the provisions of the Declaration.
At the outset, the Court is not persuaded that BPS's broad interpretation of section 9.02 of the Declaration is correct. If the owner of any Lot in the Subdivision could commence an action to enforce any provision of the Declaration, absurd and impractical results would abound. A Lot owner could, for example, decide to fine his or her neighbor for violating the HOA's Rules and Regulations and then — if the fine was not paid — commence an action to foreclose upon the lien created by the fine. BPS's interpretation of section 9.02 also appears to conflict with section 5.08 of the Declaration, which provides that "[t]he lien for past due [a]ssessments may be foreclosed by the [HOA] in accordance with the Laws of the State of New York." Under the circumstances, the Court finds it far more likely that section 9.02 of the Declaration was intended to grant each Lot owner the authority to enforce the Declaration to the extent that violations thereof implicate the owner's individual property rights.
With that said, even if BPS's interpretation of section 9.02 of the Declaration was correct, it would still be required to comply with N-PCL § 623 (c) — which it did not. In Schaefer v. Chautauqua Escapes Assn., Inc. (53 Misc 3d 1218[A], 2016 NY Slip Op 51719[U] [Sup Ct, Chautauqua County 2016], affd 150 AD3d 1186 [2018], lv denied 32 NY3d 902 [2018] ) — which also involved a Declaration "enforceable by ... any member or owner" (id. at *2) and a Lot owner seeking, inter alia , a money judgment from a neighboring Lot owner based upon assessments due and owing — the Appellate Division, Fourth Department expressly found that the Lot owner lacked standing based upon his failure to comply with N-PCL § 623 (c) (see 150 AD3d at 1187 ).
Finally, BPS contends that it has standing based upon the July 10, 2018 "Unanimous Written Consent" of the Directors of the HOA. BPS further seeks to amend the amended complaint in action No. 2 so as to allege, inter alia , standing based upon the Consent, which states as follows:
"We, the undersigned, being the sole Directors of [the HOA,] hereby authorize our attorney, Michael J. O'Connor, [Esq.,] to support the motion of [BPS] to join the [HOA] as a [p]laintiff in the aforesaid action and to affirm that the HOA has consented to and expressly authorized [BPS's] commencement and prosecution of the aforesaid action to foreclose certain lien[s] against [NBP] for unpaid association dues."
The Court notes that this reference to an "aforesaid action" is unclear, as the Consent includes only the language quoted above.
BPS has also submitted the affidavit of Mr. O'Connor which states that "the HOA has consented to and expressly authorized [BPS's] commencement and prosecution of [an] action to foreclose certain liens against [NBP] for unpaid association dues."
There is no doubt that both the Unanimous Written Consent and the affidavit of Mr. O'Connor are referencing action No. 1, the only pending action to "foreclose certain lien[s] against [NBP] for unpaid association dues." Indeed, neither makes any reference to action No. 2, which seeks a money judgment against NBP for unpaid association dues. The Court thus declines to find that BPS has standing in action No. 2 based upon the July 10, 2018 Unanimous Written Consent.
To the extent that BPS has failed to raise a question of fact on the issue of standing, NBP and O'Brien's motion for summary judgment is granted and the complaint in action No. 2 dismissed in its entirety. There is no need to address the remaining issues raised in the motion, many of which will be addressed below in any event in the context of action No. 1.
In view of the foregoing, BPS's cross motion for summary judgment as against NBP in action No. 2 is necessarily denied, as is its motion for leave to amend the amended complaint.
Motions and Cross Motion in Action No. 1
The Court now turns to NBP and O'Brien's motion for summary judgment and BPS's cross motion for summary judgment as against NBP in action No. 1.
NBP and O'Brien first contend that they are entitled to summary judgment dismissing the complaint because BPS again failed to comply with N-PCL § 623 (c) and, as such, is without standing.
The complaint in action No. 1 includes a paragraph identical to that included in the amended complaint in action No. 2 and quoted above. While BPS has again failed to allege any further contact with the HOA between September 12, 2016 and the date of commencement of action No. 1, the Court finds that there is at least a question of fact as to whether BPS's September 12, 2016 request that the HOA commence a lien foreclosure action was sufficient to comply with N-PCL § 623 (c).
NBP and O'Brien next contend that they are entitled to summary judgment dismissing the complaint because BPS was without authority to sign and file the notices of lien, and valid notices of lien are a condition precedent to the action.
Pursuant to Real Property Law § 339-aa, a lien does not become effective until a verified notice of lien has been filed with the County Clerk in the County where the subject premises is located. With that said, however, Real Property Law § 339-aa is part of the Condominium Act and an HOA is not governed by this Act (see Real Property Law § 339-f ; Board of Directors of Squire Green at Pawling Homeowners Assn., Inc. v. Bell , 89 AD3d 657, 658 [2011] ; Board of Directors of Hunt Club at Coram Homeowners Assn., Inc. v. Hebb , 72 AD3d 997, 998 [2010] ). Rather, the right of an HOA to foreclose upon a lien for unpaid assessments arises from its governing Declaration (see Board of Directors of Hunt Club at Coram Homeowners Assn., Inc. v. Hebb , 72 AD3d at 998 ; cf. Board of Directors of House Beautiful at Woodbury Homeowners Assn., Inc. v. Godt , 96 AD3d 983, 985 [2012] ).
As set forth above, section 5.07 of the Declaration expressly provides that "[a]ll sums assessed by the Board of Directors, but unpaid, ... shall constitute a lien upon the [o]wner's Lot" and section 5.08 then provides that "[t]he lien for past due [a]ssessments may be foreclosed by the [HOA] in accordance with the Laws of the Sate of New York." The Court therefore finds that the filing of valid notices of lien was not a condition precedent to action No. 1.
NBP and O'Brien next contend that they are entitled to summary judgment dismissing those claims which seek to recover amounts due and owing prior to October 12, 2011, as such amounts are barred by the applicable statute of limitations.
"A cause of action to recover damages for breach of contract accrues, and the relevant six-year statute of limitations begins to run, at the time of the alleged breach" ( Meadowbrook Farms Homeowners Assn., Inc. v. JZG Resources, Inc. , 105 AD3d 820, 822 [2013] ; see CPLR 213 [2] ; see Schaefer v. Chautauqua Escapes Assn., Inc. , 150 AD3d at 1187 ; Senter v. Gitlitz , 97 AD3d 808, 808 [2012] ). Where "the alleged breach is of the defendant's obligation to pay annual assessments to the plaintiff[,] a new breach occur[s] for statute of limitations purposes each year the defendant fail[s] to make an allegedly required payment to the plaintiff" ( Meadowbrook Farms Homeowners Assn., Inc. v. JZG Resources, Inc. , 105 AD3d at 822 ; see Westchester County Correction Officers Benevolent Assn., Inc. v. County of Westchester , 65 AD3d 1226, 1228 [2009] ; CSEA Empl. Benefit Fund v. Warwick Val. Cent. School Dist. , 36 AD3d 582, 584 [2007] ).
Here, a new breach occurred for statute of limitations purposes each time that NBP failed to pay its annual assessments. To the extent that action No. 1 was commenced on October 12, 2017, it would appear that the six-year statute of limitations has expired relative to those breaches which occurred prior to October 12, 2011 (see CPLR 213 [2] ; see Schaefer v. Chautauqua Escapes Assn., Inc. , 150 AD3d at 1187 ; Meadowbrook Farms Homeowners Assn., Inc. v. JZG Resources, Inc. , 105 AD3d at 822 ; Senter v. Gitlitz , 97 AD3d at 808 ). The Court therefore finds that NBP and O'Brien have satisfied their initial burden of demonstrating their entitlement to summary judgment dismissing those claims which seek to recover amounts due and owing prior to October 12, 2011, thus shifting the burden to BPS to raise a triable issue of fact.
In this regard, BPS relies upon CPLR 206 (d), which provides that "[i]n an action based upon a mutual, open and current account, where there have been reciprocal demands between the parties, the time within which the action must be commenced shall be computed from the time of the last transaction in the account on either side." According to BPS, NBP and the HOA had a mutual, open and current account with respect to the HOA's unpaid assessments and NBP's in-kind credits. With that said, on November 25, 2015, then counsel for NBP and O'Brien — Mark C. Rehm, Esq. — delivered a check to the HOA in the amount of $5,412.00 for "partial payment of dues" owed by his clients. BPS contends that this payment constitutes the last transaction on the account and the statute of limitations thus began to run on November 25, 2015.
A mutual, open and current account "exists ... where there is an express or implied agreement between two parties to set off their mutual debts against each other" ( McCoy Assoc., Inc. v. Nulux, Inc. , 218 F Supp 2d 286, 291 [ED NY 2002] [internal quotation marks and citation omitted] ). "Accordingly, a condition precedent to finding such an account is mutual obligations between two parties" (id. [citations omitted]; see Green v. Disbrow , 79 NY 1, 13 [1879] ["to constitute a mutual account of reciprocal demands, a defendant, when sued, must have an account against the plaintiff, which he can interpose as a set-off to the extent thereof"]; Szelega v. O'Hara , 159 AD2d 890, 891 [1990] ["The claim that there was a mutual or open running account between the corporation and O'Hara is also unsupported by the record, ... since there was no evidence of offsetting claims or mutual debits and credits."]; Donahue-Halverson, Inc. v. Wissing Constr. & Bldg. Servs. Corp. , 95 AD2d 953, 954 [1983] [fact that the record was "devoid of any suggestion that there were offsetting claims by defendant against plaintiff ... negate[d] the existence of any mutual, open account"] ).
Here, NBP contends that it has not paid the assessments due and owing for each of its 11 Lots because it is entitled to certain offsets as a result of work performed on the Subdivision by O'Brien. Indeed, in their answer in action No. 1, NBP, NBF and O'Brien have asserted cross claims against the HOA for these offsets. More significantly, the minutes from the HOA's meetings between December 7, 2001 and September 12, 2016 — which minutes were attached to the affidavit submitted by O'Brien in support of the motion for summary judgment in action No. 1 — clearly reflect NBP's ongoing assertions that it was entitled to offsets for O'Brien's "sweat equity." For example, at the September 12, 2016 meeting, when Joseph Russell — the managing member of BPS — asked "what total fees [were] owed" by NBP, Tom Damiani — a member of the Board of Directors of the HOA — responded that "some items [were] discounted for work performed ... by Mike O'Brien."
"[W]hen considering summary judgment motions, [the Court] must ‘focus on issue finding rather than issue determination, and deny the drastic remedy of summary judgment if there is any doubt as to whether a material factual issue exists or if such an issue is even arguable’ " ( Matter of Giaquinto , 164 AD3d 1527, 1534 [2018, Rumsey, J., concurring], quoting Lacasse v. Sorbello , 121 AD3d 1241, 1242 [2014] [internal quotation marks and citation omitted] ). Mindful of this standard, the Court finds that BPS has succeeded in raising a triable issue of fact as to whether the statute of limitations has expired relative to those claims which seek amounts due and owing prior to October 12, 2011. The evidence in the record supports at least the possibility that the HOA and NBP had an implied agreement to set off their mutual debts against each other and that the statute of limitations therefore did not begin to run until the date of the last transaction between the parties — November 25, 2015.
NBP and O'Brien next contend that they are entitled to summary judgment dismissing the complaint in action No. 1 to the extent that it seeks interest, penalties and fees which are confiscatory in nature. Specifically, NBP and O'Brien contend that "the liens charge exorbitant penalties which [BPS] appear[s] to have compounded annually, resulting in total interest and penalties which exceed 25% per annum."
Under Penal Law § 190.40, it is a crime to knowingly charge interest in excess of 25% per annum. To that end, there are numerous cases wherein the Court has found that charges — while not technically interest — are nonetheless "unreasonable and confiscatory in nature and therefore unenforceable when examined in the light of the public policy expressed in Penal Law § 190.40" ( Sandra's Jewel Box v. 401 Hotel , 273 AD2d 1, 3 [2000] ; see e.g. 176 PM, LLC v. Heights Stor. Garage, Inc. , 157 AD3d 490, 495 [2018] ; Cleo Realty Assoc., L.P. v. Papagiannakis , 151 AD3d 418, 419 [2017] ; Clean Air Options, LLC v. Humanscale Corp. , 142 AD3d 923, 924 [2016] ; Gabriel v. Bd. of Mgrs. of Gallery House Condominium , 130 AD3d 482, 483 [2015] ).
Here, the HOA issued an Assessment Certificate on October 6, 2017 which enumerated total unpaid assessments of $128,903.67 — including interest and late fees — due and owing on NBP's Lots from 2001 to 2017. The Assessment Certificate states that a "[l]ate [c]harge equals 10% in 2001 and 16% in 2002 and [is] thereafter[ ] compounded annually." It further states that "[i]nterest [is] calculated upon unpaid [a]ssessments at a rate of 10% in 2001 and 9% in 2002 and thereafter." By way of example, the Assessment Certificate provided as follows for the year 2012:
Year Assessment Late Annual Interest Total Total Late Fees Plus Total Unpaid Assessment, Charge Amount Interest Assessment Late Fee and Interest 2012 $1,200.00 $192.00 $108.00 $648.00 $2,923.98 $3,571.68
According to NBP and O'Brien, by compounding the penalties for 2012, the liens charge total penalties of $2,371.68 ($3,571.68 — $1,200.00) on an unpaid assessment of $1,200.00 — which equates to $474.37 in penalties per year ($2,371.68 / 5 years) or an effective annual penalty rate of 39.5%.
While the Court does not purport to be an expert on the calculation of interest and late fees which compound annually, it is not entirely persuaded by NBP and O'Brien's calculations. The concept of compounding annually means just that — the amount of interest and late charges compounds each year, with the amount due and owing on the $1,200.00 in 2013 being less than the amount due and owing in 2014, and so on and so forth. NBP and O'Brien have simply taken the total accumulation of interest and late fees over the entire five year period and divided it up equally. While the Court agrees that the HOA cannot charge interest and late fees in excess of 25% per annum, it questions whether the "effective annual penalty rate of 39.5%" calculated by NBP and O'Brien is accurate. Under the circumstances, there remain questions as to whether the charges assessed by the HOA are unenforceable. The Court therefore finds that NBP and O'Brien have failed to satisfy their initial burden of demonstrating their entitlement to summary judgment dismissing the complaint in action No. 1 to the extent that it seeks interest, penalties and fees which are confiscatory in nature.
While the Court need not consider BPS's opposition to this aspect of NBP and O'Brien's motion (see Vogler v. Perrault , 149 AD3d 1298, 1299 [2017] ), it will briefly note that BPS has arguably raised a triable issue of fact in asserting that if NBP's "unpaid assessments appear inflated, it is primarily due to the extraordinary period that they have remained in arrears."
Finally, for the reasons set forth above, the Court finds that NBP and O'Brien are not entitled to a declaratory judgment that the amounts which accrued prior to October 2011 are not collectable and the interest, fines and penalties are not recoverable.
Based upon the foregoing, NBP and O'Brien's motion for summary judgment in action No. 1 is denied in its entirety.
Turning now to BPS's cross motion for summary judgment as against NBP in action No. 1, BPS contends — in essence — that it is entitled to summary judgment as against NBP on the issue of liability. As stated by counsel for BPS during oral argument:
"[W]hat is undisputed in this case is that there has never been a check written in payment of the [HOA] assessment[s] for 17 years in full and counting.... As a matter of law, [the] Declaration renders [NBP] liable for all of those unpaid assessments. [T]o the extent that [NBP] alleges set-offs and the like, those are all questions of fact. And those are questions of fact that go to damages, not to liability."
BPS similarly contends that the issues raised as to whether the interest and late fees are confiscatory in nature are also questions of fact that go to damages and not liability.
While BPS may be correct that any alleged offsets and confiscatory charges create questions of fact as to damages and not liability, there nonetheless remain questions of fact on the issue of liability. Specifically, the Court has found questions of fact with respect to whether BPS complied with N-PCL § 623 (c) prior to commencing action No. 1. The Court has further found questions of fact with respect to whether those claims which seek to recover amounts due and owing prior to October 2011 are barred by the statute of limitations.
The Court therefore denies BPS's cross motion for summary judgment as against NBP in action No. 1 in its entirety.
Turning now to the LGPC's motion for summary judgment in action No. 1, the LGPC first contends that it is entitled to summary judgment dismissing the complaint because BPS lacks standing. While the LGPC makes several of the same arguments as NBP and O'Brien — which arguments are addressed in detail above — there are two novel arguments which require analysis. First, the LGPC contends that BPS lacks standing because it was not incorporated until October 18, 2016 and, further, did not acquire title to Lots 2 and 13 until January 3, 2017. More specifically, the LGPC contends that BPS could not possibly have complied with N-PCL § 623 (c) by attending the HOA's meeting on September 12, 2016 and demanding the commencement of a foreclosure action against NBP — because BPS neither existed nor owned any Lots in the Subdivision on that date. Indeed, based upon this the Court finds that the LGPC has succeeded in establishing its entitlement to judgment as a matter of law on the issue of standing.
With that said, the Court further finds that BPS has succeeded in raising a triable issue of fact in opposition. On September 12, 2016, Lot 2 was owned by Bolton Claire, LLC and Lot 13 was owned by Bolton Carmela, LLC. By deeds dated January 3, 2017, Bolton Claire conveyed Lot 2 to BPS Lot 3 and Bolton Carmela conveyed Lot 13 to BPS Lot 13. Russell is the managing member of both Bolton Claire and Bolton Carmela and signed the deeds. As stated above, he is also the managing member of BPS Lot 3 and BPS Lot 13. Russell was present at the September 12, 2016 meeting and — as discussed below — BPS is seeking to amend the complaint in action No. 1 so as to clarify that BPS Lot 3 and BPS Lot 13 are successors in interest to Bolton Claire and Bolton Carmela, respectively, and that "such entities have and continue to share the same managing member." Under the circumstances, there exists a question of fact as to whether BPS complied with N-PCL § 623 (c).
Second, the LGPC contends that BPS lacks standing because it failed to comply with certain condition precedents to the commencement of an action as set forth in article X of the Declaration, entitled "Compliance and Arbitration." The Court, however, is not persuaded. Section 10.01 of the Declaration states, in pertinent part:
"Should any [o]wner, members of such [o]wner's family, his employees, guests, lessees, licensees or other invitees fail to comply with any of the provisions of this Declaration, the By-Laws, or Certificate of Incorporation or the [R]ules and [R]egulations, and as such may be amended from time to time, the following procedures may be followed to obtain compliance" [emphasis added].
Given the use of the word "may" and not "shall," the Court declines to find that the procedures set forth in article X of the Declaration constitute conditions precedent to the commencement of a lawsuit (see Matter of Woods v. New York City Dept. of Citywide Admin. Servs. , 16 NY3d 505, 508 [2011] ; Matter of Gadway v. Connelie , 101 AD2d 974, 974 [1984] ).
The LGPC next contends that it is entitled to summary judgment dismissing those claims which seek to recover charges due prior to October 12, 2011, as such charges are barred by the applicable statute of limitations. The LGPC makes the same arguments as NBP and O'Brien and, for the reasons set forth above, the Court finds a question of fact as to whether the statute of limitations has expired.
Finally, the LGPC contends that it is entitled to summary judgment dismissing any claims that the HOA's liens have priority over its money judgments. In this regard, the LGPC first contends that the liens filed by BPS are invalid because it was without authority to file them on behalf of the HOA. As set forth above, however, the right of an HOA to foreclose upon a lien for unpaid assessments arises from its governing Declaration and, here, section 5.07 of the Declaration expressly provides that "[a]ll sums assessed by the Board of Directors, but unpaid, ... shall constitute a lien upon the [o]wner's Lot." The validity of the liens filed by BPS is therefore irrelevant.
The LGPC next contends that its money judgments have priority under the common law principle of "first in time, first in right" (see Roberson v. Roberson , 45 AD3d 1494, 1495 [2007] ; Matter of Sanford v. Bennett , 11 AD3d 758, 759-760 [2004] ). Indeed, even assuming that the liens filed by BPS are valid — a question the Court has not reached — because the LGPC's money judgments were filed first in time, the LGPC has satisfied its burden of establishing as a matter of law that they are first in right.
In opposition to this aspect of the motion, BPS has submitted copies of several liens filed by the HOA prior to the filing of the LGPC's money judgments. Specifically, BPS has submitted copies of (1) a lien filed by the HOA against Lot 3 on July 6, 2005 in the amount of $5,120.80; (2) a lien filed by the HOA against Lot 4 on July 6, 2005 in the amount of $5,120.80; (3) a lien filed by the HOA against Lot 11 on July 6, 2005 in the amount of $5,120.80; (4) a lien filed by the HOA against Lot 14 on July 6, 2005 in the amount of $5,120.80; (5) a lien filed by the HOA against Lot 14 on January 3, 2007 in the amount of $7,150.80; and (6) a lien filed by the HOA against Lot 9 on January 3, 2007 in the amount of $7,150.80. Given the filing of these liens, the Court finds that BPS has succeeded in raising a question of fact as to whether the LGPC's money judgments have priority under the common law principle of "first in time, first in right."
Lastly, the LGPC contends that its money judgments have priority under section 5.07 of the Declaration, as quoted above. The Court, however, is not persuaded. Section 5.07 provides that all sums assessed by the Board of Directors shall constitute a lien on the owner's Lot prior to all other liens except tax or assessment liens on the Lot by the taxing subdivision of any governmental authority, including but not limited to state, county, city, town and school district taxing agencies. The LGPC — while part of the Department of Environmental Conservation, a governmental authority — is not a taxing subdivision. Rather, the LGPC was formed to
"preserve, protect, conserve and enhance the unique natural scenic beauty and to promote the study of the history, natural science, and lore of Lake George and the area near or adjacent thereto and to provide means whereby owners of real property near or adjacent to the lake, other interested individuals, corporations, associations, organizations, and municipalities bordering on the lake may preserve, protect and enhance the natural scenic beauty of the lake and its surrounding countryside and regulate the use of the lake and the area near or adjacent thereto for appropriate residential, conservation, health, recreational, and educational purposes" ( ECL 43-0101 ).
Indeed, the imposition of taxes is not included among the LGPC's specifically enumerated powers (see ECL 43-0107 ).
Based upon the foregoing, the LGPC's motion for summary judgment in action No. 1 is denied in its entirety.
Turning now to BPS's motion to amend the complaint in action No. 1, BPS seeks to amend the complaint so as to (1) allege that BPS Lot 3 and BPS Lot 13 are plaintiffs in their individual capacities as well as in the right of the HOA; (2) allege that BPS Lot 3 and BPS Lot 13 are successors in interest to Bolton Claire and Bolton Carmela, respectively, and that such entities have and continue to share the same managing member, namely Russell; and (3) allege standing based upon the July 10, 2018 Unanimous Written Consent of the Directors of the HOA.
"Pursuant to CPLR 3025 (b), a party may amend its pleadings ‘at any time by leave of [the] court,’ which ‘shall be freely given upon such terms as may be just’ " ( NYAHSA Servs., Inc., Self-Ins. Trust v. People Care Inc. , 156 AD3d 99, 101 [2017] ; see Kimso Apts., LLC v. Gandhi , 24 NY3d 403, 411 [2014] ). The Appellate Division, Third Department "previously adhered to a rule requiring the proponent of a motion for leave to amend a pleading to make a sufficient evidentiary showing to support the proposed claim'" ( NYAHSA Servs., Inc., Self-Ins. Trust v. People Care Inc. , 156 AD3d at 101-102, quoting Cowsert v. Macy's E., Inc. , 74 AD3d 1444, 1445 [2010] ). In other words, the movant had "to make an ‘evidentiary showing that the proposed amendments have merit’ " ( NYAHSA Servs., Inc., Self-Ins. Trust v. People Care Inc. , 156 AD3d at 102, quoting Dinstber v. Allstate Ins. Co. , 110 AD3d 1410, 1412 [2013] ). Recently, however, the Third Department "depart[ed] from that line of authority and follow[ed] the lead of the other three Departments, ... hold[ing] that ‘[n]o evidentiary showing of merit is required under CPLR 3025 (b) ’ " ( NYAHSA Servs., Inc., Self-Ins. Trust v. People Care Inc. , 156 AD3d at 102, quoting Lucido v. Mancuso , 49 AD3d 220, 229 [2008] ; see Cruz v. Brown , 129 AD3d 455, 456 [2015] ; Holst v. Liberatore , 105 AD3d 1374, 1374-1375 [2013] ).
"Thus, the rule on a motion for leave to amend a pleading is that the movant need not establish the merits of the proposed amendment and, ‘[i]n the absence of prejudice or surprise resulting directly from the delay in seeking leave, such applications are to be freely granted unless the proposed amendment is palpably insufficient or patently devoid of merit’ " ( NYAHSA Servs., Inc., Self-Ins. Trust v. People Care Inc. , 156 AD3d at 102, quoting Lucido v. Mancuso , 49 AD3d at 222 ; see Kimso Apts., LLC v. Gandhi , 24 NY3d at 411 ; LaLima v. Consolidated Edison Co. of NY, Inc. , 151 AD3d 832, 834 [2017] ; Cruz v. Brown , 129 AD3d at 456 ). As stated by the Third Department, "[t]he rationale for adopting this rule is that the liberal standard for leave to amend that was adopted by the drafters of the CPLR is inconsistent with requiring an evidentiary showing of merit on such a motion" ( NYAHSA Servs., Inc., Self-Ins. Trust v. People Care Inc. , 156 AD3d at 102 ). " ‘If the opposing party [on a motion to amend] wishes to test the merits of the proposed added cause of action or defense, that party may later move for summary judgment [or to dismiss] upon a proper showing’ " ( NYAHSA Servs., Inc., Self-Ins. Trust v. People Care Inc. , 156 AD3d at 102, quoting Lucido v. Mancuso , 49 AD3d at 229 [citation omitted] ).
At the outset, the Court finds the proposed amendment alleging that BPS Lot 3 and BPS Lot 13 are plaintiffs in their individual capacities to be palpably insufficient and patently devoid of merit. As discussed above, the Court is not persuaded that section 9.02 of the Declaration authorizes the owner of any Lot in the Subdivision to commence an action to enforce to provisions of the Declaration. Furthermore, there are simply no allegations asserted by BPS Lot 3 and BPS Lot 13 as plaintiffs in their individual capacities. Indeed, even counsel for BPS appeared to concede this point during oral argument, stating as follows:
"The plaintiffs in no way, shape or form are seeking to personally recover from the defendants in this case. Everything that the plaintiffs are doing in this case is on behalf of the [HOA]. So, the Judgment — when asked for a Judgment in favor of the plaintiffs, it's for the benefit of the HOA."
The Court therefore declines to permit BPS to amend the complaint so as to allege that BPS Lot 3 and BPS Lot 13 are plaintiffs in their individual capacities as well as in the right of the HOA.
With that said, however, the Court will permit the other proposed amendments to the complaint. While the LGPC contends that Bolton Claire and Bolton Carmela were formed in New Jersey and are not authorized to conduct business in New York, these contentions are not sufficient to preclude the proposed amendment. The same can be said of NBP and O'Brien's contention that the Unanimous Written Consent is not sufficient to confer standing because standing cannot be conferred retroactively. If the LGPC, NBP and O'Brien wish to test the merits of the proposed amendments, they may make the appropriate motion.
Based upon the foregoing, BPS's motion to amend the complaint in action No. 1 is granted to the extent that it may add the requested allegations that BPS Lot 3 and BPS Lot 13 are successors in interest to Bolton Claire and Bolton Carmela, respectively, and that such entities have and continue to share the same managing member, namely Russell, and that it has standing based upon the July 10, 2018 Unanimous Written Consent of the Directors of the HOA, and the motion is otherwise denied.
BPS shall serve its amended complaint in action No. 1 upon counsel for defendants within thirty (30) days of the date of this Decision and Order.
Counsel for the parties in action No. 1 are hereby directed to appear for a preliminary conference on January 7, 2019 at 11:00 A.M. at the Warren County Courthouse in Lake George, New York.
The parties' remaining contentions, to the extent not specifically addressed herein, have been considered and are either academic in light of this decision or without merit.
Therefore, having considered with respect to action No. 1 the Affirmation of Jesse P. Schwartz, Esq. with exhibits attached thereto, dated March 21, 2018, submitted in support of NBP and O'Brien's motion for summary judgment; Affidavit of Michael J. O'Brien, Jr. with exhibits attached thereto, sworn to March 19, 2018, submitted in support of NBP and O'Brien's motion for summary judgment; Memorandum of Law of Jesse P. Schwartz, Esq., dated March 21, 2018, submitted in support of NBP and O'Brien's motion for summary judgment; Affirmation of Joshua A. Silver, Esq. with exhibits attached thereto, dated April 18, 2018, submitted in opposition to NBP and O'Brien's motion for summary judgment and in support of BPS's cross motion for summary judgment; Affidavit of Joseph Russell with exhibits attached thereto, sworn to April 18, 2018, submitted in opposition to NBP and O'Brien's motion for summary judgment and in support of BPS's cross motion for summary judgment; Memorandum of Law of Joshua A. Silver, Esq., dated April 18, 2018, submitted in opposition to NBP and O'Brien's motion for summary judgment and in support of BPS's cross motion for summary judgment; Affirmation of Jesse P. Schwartz, Esq. with exhibits attached thereto, dated April 24, 2018, submitted in further support of NBP and O'Brien's motion for summary judgment and in opposition to BPS's cross motion for summary judgment; Affidavit of Michael J. O'Brien, Jr. with exhibits attached thereto, sworn to April 24, 2018, submitted in opposition to NBP and O'Brien's motion for summary judgment and in support of BPS's cross motion for summary judgment; Affirmation of Stephen M. Nagle, Esq. with exhibits attached thereto, dated April 17, 2018, submitted in support of the LGPC's motion for summary judgment; Memorandum of Law of Stephen M. Nagle, Esq., dated April 17, 2018, submitted in support of the LGPC's motion for summary judgment; Affirmation of Joshua A. Silver, Esq. with exhibits attached thereto, dated April 24, 2018, submitted in opposition to the LGPC's motion for summary judgment; Affirmation of Stephen M. Nagle, Esq., dated April 25, 2018, submitted in further support of the LGPC's motion for summary judgment; Affirmation of Joshua A. Silver, Esq. with exhibit attached thereto, dated August 3, 2018, submitted in support of BPS's motion to amend the complaint; Affirmation of Michael J. O'Connor, Esq. with exhibit attached thereto, dated July 11, 2018, submitted in support of BPS's motion to amend the complaint; Affirmation of Jesse P. Schwartz, Esq. with exhibits attached thereto, dated August 22, 2018, submitted in opposition to BPS's motion to amend the complaint; Memorandum of Law of Jesse P. Schwartz, Esq., dated August 22, 2018, submitted in opposition to BPS's motion to amend the complaint; Affirmation of Stephen M. Nagle, Esq. with exhibits attached thereto, dated August 23, 2018, submitted in opposition to BPS's motion to amend the complaint; Memorandum of Law of Stephen M. Nagle, Esq., dated August 23, 2018, submitted in opposition to BPS's motion to amend the complaint; Affirmation of Joshua A. Silver, Esq., dated August 29, 2018, submitted in further support of BPS's motion to amend the complaint; Memorandum of Law of Joshua A. Silver, Esq. with proposed amended complaint attached thereto, dated August 29, 2018, submitted in further support of BPS's motion to amend the complaint;
And having considered with respect to action No. 2 the Affidavit of Joshua A. Silver, Esq. with exhibits attached thereto, sworn to March 1, 2018, submitted in support of BPS's motion for default judgment; Affidavit of Joseph Russell with exhibits attached thereto, sworn to February 16, 2018, submitted in support of BPS's motion for default judgment; Affirmation of Jesse P. Schwartz., Esq. with exhibits attached thereto, dated March 21, 2018, submitted in opposition to BPS's motion for default judgment and in support of NBP's cross motion to compel acceptance of answer; Affidavit of Michael J. O'Brien, Jr. with exhibits attached thereto, sworn to March 19, 2018, submitted in opposition to BPS's motion for default judgment and in support of NBP's cross motion to compel acceptance of answer; Affirmation of Jacqueline Phillips Murray, Esq., dated March 27, 2018, submitted in further support of BPS's motion for default judgment and in opposition to NBP's cross motion to compel acceptance of answer; Affirmation of Jesse P. Schwartz, Esq. with exhibits attached thereto, dated March 21, 2018, submitted in support of NBP and O'Brien's motion for summary judgment; Affidavit of Michael J. O'Brien, Jr. with exhibits attached thereto, sworn to March 19, 2018, submitted in support of NBP and O'Brien's motion for summary judgment; Memorandum of Law of Jesse P. Schwartz, Esq., dated March 21, 2018, submitted in support of NBP and O'Brien's motion for summary judgment; Affirmation of Joshua A. Silver, Esq. with exhibits attached thereto, dated April 18, 2018, submitted in opposition to NBP and O'Brien's motion for summary judgment and in support of BPS's cross motion for summary judgment; Affidavit of Joseph Russell with exhibits attached thereto, sworn to April 18, 2018, submitted in opposition to NBP and O'Brien's motion for summary judgment and in support of BPS's cross motion for summary judgment; Memorandum of Law of Joshua A. Silver, Esq., dated April 18, 2018, submitted in opposition to NBP and O'Brien's motion for summary judgment and in support of BPS's cross motion for summary judgment; Affirmation of Jesse P. Schwartz, Esq. with exhibits attached thereto, submitted in further support of NBP and O'Brien's motion for summary judgment and in opposition to BPS's cross motion for summary judgment; Affidavit of Michael J. O'Brien, Jr. with exhibits attached thereto, sworn to April 24, 2018, submitted in further support of NBP and O'Brien's motion for summary judgment and in opposition to BPS's cross motion for summary judgment; Affirmation of Joshua A. Silver, Esq. with exhibit attached thereto, dated August 3, 2018, submitted in support of BPS's motion to amend the complaint; Affirmation of Michael J. O'Connor, Esq. with exhibit attached thereto, dated July 11, 2018, submitted in support of BPS's motion to amend the complaint; Affirmation of Jesse P. Schwartz, Esq. with exhibits attached thereto, dated August 22, 2018, submitted in opposition to BPS's motion to amend the complaint; Memorandum of Law of Jesse P. Schwartz, Esq., dated August 22, 2018, submitted in opposition to BPS's motion to amend the complaint; Affirmation of Joshua A. Silver, Esq., dated August 29, 2018, submitted in further support of BPS's motion to amend the complaint; Memorandum of Law of Joshua A. Silver, Esq. with proposed second amended complaint attached thereto, dated August 29, 2018, submitted in further support of BPS's motion to amend the complaint;
And oral argument having been heard relative to all motions and cross motions on October 12, 2018 with Jacqueline Phillips Murray, Esq. and Joshua A. Silver, Esq. appearing on behalf of BPS, Jesse P. Schwartz, Esq. appearing on behalf of NBP, NBF and O'Brien, Stephen M. Nagle, Esq. appearing on behalf of the LGPC and Michael J. O'Connor, Esq. appearing on behalf of the HOA, it is hereby
ORDERED, with respect to action No. 1, that NBP and O'Brien's motion for summary judgment is denied in its entirety; and it is further
ORDERED, with respect to action No. 1, that BPS's cross motion for summary judgment as against NBP is denied in its entirety; and it is further
ORDERED, with respect to action No. 1, that the LGPC's motion for summary judgment is denied in its entirety; and it is further
ORDERED, with respect to action No. 1, that BPS's motion to amend the complaint is granted to the extent that it may add the requested allegations that BPS Lot 3 and BPS Lot 13 are successors in interest to Bolton Claire and Bolton Carmela, respectively, and that such entities have and continue to share the same managing member, namely Russell, and that it has standing based upon the July 10, 2018 Unanimous Written Consent of the Directors of the HOA, and the motion is otherwise denied; and it is further
ORDERED, with respect to action No. 1, that BPS shall serve its amended complaint upon counsel for defendants within thirty (30) days of the date of this Decision and Order; and it is further
ORDERED, with respect to action No. 1, that counsel for the parties shall appear for a preliminary conference on January 7, 2019 at 11:00 A.M. at the Warren County Courthouse in Lake George, New York; and it is further
ORDERED, with respect to action No. 2, that BPS's motion for a default judgment as against NBP is denied in its entirety and NBP's cross motion is granted to the extent that BPS is compelled to accept its answer nunc pro tunc to the date of service and the cross motion is otherwise denied; and it is further
ORDERED, with respect to action No. 2, that NBP and O'Brien's motion for summary judgment is granted and the complaint dismissed in its entirety; and it is further
ORDERED, with respect to action No. 2, that BPS's cross motion for summary judgment as against NBP is necessarily denied, as is its motion for leave to amend the amended complaint.
The original of this Decision and Order has been filed by the Court together with the Notice of Motion for Summary Judgment in action No. 1, dated March 21, 2018, Notice of Cross Motion for Summary Judgment in action No. 2, dated April 18, 2018, Notice of Motion for Summary Judgment in action No. 1, dated April 17, 2018; Notice of Motion to Amend Complaint in action No. 1, dated August 3, 2018, Notice of Motion for Default Judgment in action No. 2, dated March 1, 2018, Notice of Cross Motion to Extend Time to Answer and for Costs and Sanctions in action No. 2, dated March 19, 2018, Notice of Motion for Summary Judgment Dismissing Complaint in action No. 2, dated March 21, 2018, Notice of Cross Motion for Summary Judgment in action No. 2, dated April 18, 2018, Notice of Motion to Amend Complaint in action No. 2, dated August 3, 2018, and the submissions enumerated above. Counsel for NBP, NBF and O'Brien is hereby directed to obtain a filed copy of the Decision and Order for service with notice of entry in accordance with CPLR 5513.