Summary
finding that where a sale of collateral to a secured party was commercially reasonable, a debtor cannot rely on UCC § 9–615[f], because "while the statute refers to ‘calculation,’ it addresses the commercial reasonableness of the sale price"
Summary of this case from In re FuttermanOpinion
2012-02-23
CITIBANK, N.A., Plaintiff–Respondent, v. Sheldon H. SOLOW, Defendant–Appellant.
Lowenstein Sandler PC, New York (Donald A. Corbett of counsel), for appellant. Hughes Hubbard & Reed LLP, New York (Marc A. Weinstein of counsel), for respondent.
Lowenstein Sandler PC, New York (Donald A. Corbett of counsel), for appellant. Hughes Hubbard & Reed LLP, New York (Marc A. Weinstein of counsel), for respondent.
SAXE, J.P., DeGRASSE, FREEDMAN, ROMÁN, JJ.
Judgment, Supreme Court, New York County (Bernard J. Fried, J.), entered March 24, 2011, awarding plaintiff the principal amount of $98,854,072.27, unanimously affirmed, with costs. Orders, same court and Justice, entered March 29, 2010, which granted plaintiff's motion for summary judgment as to liability and directed a reference as to damages; June 28, 2010, which granted defendant's motion to renew and adhered to the March 29, 2010 determination; January 5, 2011, which denied defendant's second motion to renew and January 11, 2001, which granted plaintiff's motion to confirm the report of the Special Referee and denied defendant's cross motion to reject said report, unanimously dismissed, without costs, as subsumed in the appeal from the judgment.
The court properly relied on the affidavit of plaintiff's executive who was personally involved in enforcing defendant's obligations. The affidavit was not hearsay, because it was not submitted to show that the value of defendant's collateral had fallen below the required amount, but, rather, that the method employed in determining the shortfall was reasonable, as required by the governing documents. Defendant did not support his claim that the value of the collateral was determined in bad faith ( see generally Dalton v. Educational Testing Serv., 87 N.Y.2d 384, 388–389, 639 N.Y.S.2d 977, 663 N.E.2d 289 [1995] ). It did not evince bad faith for plaintiff to refuse to accept additional collateral to cure defendant's default based on a shortfall, despite having accepted additional collateral in the past, since extension of the cure period and acceptance of the proposed non-liquid interest in realty as collateral, rather than the required cash and securities, would have been inconsistent with express terms of the governing agreements ( see id.).
The sale of defendant's municipal bond collateral through regular market channels immunized the method of sale from attack on the ground of commercial unreasonableness ( see Bankers Trust Co. v. Dowler & Co., 47 N.Y.2d 128, 135, 417 N.Y.S.2d 47, 390 N.E.2d 766 [1979] ). With regard to other aspects of commercial reasonableness, the timing was commercially reasonable because plaintiff was not bound to wait and undertake the risk of a declining market ( see Sumner v. Extebank, 88 A.D.2d 887, 888, 452 N.Y.S.2d 873 [1982], mod on other grounds 58 N.Y.2d 1087, 462 N.Y.S.2d 810, 449 N.E.2d 704 [1983] ), and the sale price was not significantly lower than the market value ( see DeRosa v. Chase Manhattan Mtge. Corp., 10 A.D.3d 317, 322, 782 N.Y.S.2d 5 [2004]; Weinsten v. Fleet Factors Corp., 210 A.D.2d 74, 620 N.Y.S.2d 946 [1994] ). In light of the motion court finding that the sale of collateral was commercially reasonable, testimony regarding the price obtained when plaintiff purchased a portion of the collateral was properly precluded ( see UCC § 9–615[f] ). Contrary to defendant's contention, while the statute refers to “calculation,” it addresses the commercial reasonableness of the sale price.
We have considered defendant's other contentions, including those involving the calculation of the deficiency judgment and his claimed need for discovery, and find them unavailing.