Opinion
Index No. 17611-2006
09-28-2017
MURLAR EQUITIES PARTNERSHIP Plaintiff, v. FRANKLIN JIMANEZ, NYC ENVIRONMENTAL CONTROL BOARD, ALL'S WELL THAT ENDS WELL, LLC, MARIZA COLON, and J&J DRY CLEANERS Defendants
NEW YORK SUPREME COURT -- COUNTY OF BRONX IAS PART 4 SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF BRONX MURLAR EQUITIES Plaintiff(s) -against- FRANKLIN JIMANEZ ET AL Defendant(s) Present: Howard H. Sherman Justice. The following papers numbered 1 to ___ Read on this motion,........ No. ___ on Calendar of __________.
| PAPERS NUMBERED | |
|---|---|
| Notice of Motion-Exhibits & Affidavits Annexed | |
| Order to Show Cause-Exhibits & Affidavits Annexed | |
| Answering Affidavit and Exhibits | |
| Replying Affidavit and Exhibits | |
| ___ Affidavit Pleadings -- Exhibit | |
| Stipulation(s)-Referee's Report-Minutes | |
| Filed Papers |
Motion is decided in accordance with the attached memorandum decision. Dated: September 28, 2017
/s/_________
HOWARD H. SHERMAN J.S.C. HON. HOWARD H. SHERMAN:
This motion by the plaintiff Murlar Equities Partnership ("Murlar") for an order granting renewal and reargument of this Court's decision dated September 1, 2016, which granted the motion by the defendant Franklin Jimanez for summary judgment dismissing the complaint and vacated the Judgment of Foreclosure and Sale, and upon renewal and reargument, denying defendant's motion, restoring the Summons and Complaint, and the Order of Reference, and directing the Referee to re-compute and ascertain the amounts due under the note and mortgage, and for other relief, is decided as follows:
In its decision dated September 1, 2016, this Court granted the motion by defendant Franklin Jimanez for summary judgment dismissing the complaint, upon the grounds that the underlying mortgage is criminally usurious and unenforceable, and vacating the Judgment of Foreclosure and lis pendens. This decision concluded with a clear and unambiguous directive to "settle order." It appears that no party has settled an order in compliance with the Court's decision. Instead, the counsel for the plaintiff served this decision "with notice of entry" [sic] on September 30, 2016.
This motion to renew and reargue was brought on by order to show cause dated October 6, 2016. The defendant filed opposition, and this motion was submitted on March 16, 2017. Neither party makes reference to the fact that no order was settled or entered pursuant to the Court's decision resolving the prior motion.
Just as no appeal lies from a decision Matteson v. Matteson, 40 A.D. 2d 1079 [4th Dept 1972]; Wells v. Sinning, 34 A.D. 2d 682 [2nd Dept 1970]; Thorn v. Sylvester, 237 A.D.2d 430 [2nd Dept 1997) a motion to reargue or renew pertains to an order, not a decision. CPLR §2221, entitled "Motion Affecting Prior Order" provides in pertinent part:
A motion for leave to renew or to reargue a prior motion, for leave to appeal from, or to stay, vacate or modify, an order shall be made, on notice, to the judge who signed the order, unless he or she is for any reason unable to hear it, except that: 1. if the order was made upon a default such motion may be made, on notice, to any judge of the court; and 2. if the order was made without notice such motion may be made, without notice, to the judge who signed it, or, on notice, to any other judge of the court, [emphasis supplied].
Nonetheless, it is well-settled that the Court has the inherent power, sua sponte or at the behest of one of the parties, to reconsider and amend an earlier decision before issuing an order thereon. Manocherian v. Lenox Hill Hospital, 229 A.D. 2d 197 [1st Dept 1997]; Hulett v. Niagara Mohawk Power Corp., 1 A.D. 3d 999 [4th Dept 2003]; Scrithfield v. Perry, 245 A.D. 2d 1054 [4th Dept 1997]; Rostant v. Swersky, 79 A.D. 3d 456 [1st Dept 2010]. Under such circumstances, where an order has not yet been issued, the strict requirements of CPLR §2221 with respect to motions affecting a prior order are not applicable. Vinciguerra v. Jameson, 153 A.D. 2d 452 [3rd Dept 1990] Levinger v. General Motors Corp., 122 A.D. 2d 419 [3rd Dept 1986].
The parties have had ample opportunity to address the issues raised on this motion to renew and reargue, with no objection having been raised to the failure of any party to settle an order. Since the plaintiff has nonetheless complied with all of the procedural requirements of CPLR §2221 - aside from the submission of an order - the Court will proceed to entertain this motion as if an order had been settled in compliance with its directive, and to reconsider its prior determination in the light of the new materials furnished by the plaintiff.
The Prior Motion
In granting defendant's motion for summary judgment, the Court found the mortgage and note, as documented on that application, to be criminally usurious and unenforceable. Moreover, the defendant's valid usury claim implicated sufficient public policy considerations so as to justify the vacatur of the defendant's default in the interest of justice, and without the need to demonstrate good cause for the defendant's initial failure to timely assert the usury defense:
"In this case, the defendant has moved for vacatur of the judgment of foreclosure on one single ground: namely, that a claim of usury, in and of itself, sufficiently implicates public policy considerations to justify the vacatur of a default in the interest of justice, and without the need to demonstrate good cause. This is the holding in several judicial departments, which have all vacated defaults granted to lenders based upon the usury defense. Rockefeller v. Jeckel, 161 A.D. 2d 1090 [3rd Dept 1990); Vega Capital Corp. v. W.K.R. Dev. Corp., 98 A.D.2d 627 [1st Dept 1983]; Blue Wolf Capital Fund II, L.P. v. American Stevedoring Inc., 105 A.D. 3d 178 [1st Dept. 2013]; Mutual Home Dealers Corp. V. Alves, 23 A.D.2d 791 [2nd Dept 1965]; Anamdi v. Anugo, 229 A.D. 2d 408 [2nd Dept 1996]. Since the terms of the loan violate the criminal usury law, the loan transaction, and associated note and mortgage are void and unenforceable. General Obligations Law §5-511."
The Court further found that the interest rate of this loan, which had a term of only 6 months, exceeded the criminal usury rate, utilizing the following computation:
"Applying the Band Realty formula [Band Realty Co. v. North Brewster Inc., 37 N.Y.2d 460 [1975] to this matter, one must utilize twice the amount of the discount ($7500 divided by 50% = $15,000.00), and add this amount to the interest incurred over a one year period ($2000 X 12 = $24,000), thus arriving at the sum of $39,000.00.
The net loan funds advanced i.e. the loan principal [$150,000] minus the retained interest [$7500] equals $142,500.00. Expressed as a percentage of the net loan funds advanced, the $39,000 in total annual interest equals approximately 27.5% of $142,500. This percentage is clearly in excess of the legally permissive maximum of 25% as set forth in Penal Law §190.40. The Court therefore concludes that the interest rate of this loan exceeds the criminal usury rate, as contended by defendant."
In moving for renewal and reargument, the plaintiff does not contest the Court's calculation, and it is thus conceded that the interest rate for this mortgage loan, as presented for the Court's review and analysis on the initial motion, exceeded the legally permissible rate set forth in the Penal Law.
New Evidence
The renewal aspect of this motion relies on 'new matter' furnished for the first time by the plaintiff, which consists of a letter of intent ("the side agreement)" executed by the defendant Jimanez, apparently concurrently with the note and mortgage. Paragraph 10 of this side agreement reads as follows:
"10. It is the intention of Lender, Borrower and Guarantor(s) to comply with the usury laws applicable to the Loan and all sums due under the Note, security agreement and mortgage. It is agreed that notwithstanding any provision to the contrary in the Note, mortgage and security agreement, or any other document securing the payment of sums due, no provisions shall require the payment of sums due, no provisions shall require the payment or permit the collection of interest or other sums in excess of the maximum permitted by law. If any excess of interest or other sums, whether contracted, charged or received under the Note or any other document, is determined by a Court of competent jurisdiction to be in excess of the maximum permitted by law, then the provisions of this paragraph shall govern and control, and neither the Borrower nor any other party liable for the payment of such sums shall be obligation to pay the amount determined to be in excess of permitted by law. [sic] Any such excess interest or other excess sums, which may have been collected, shall be, at the Lender's option, either applied as a credit against the unpaid principal balance or refunded to the Borrower. The effective rate of interest and other sums charged under the Note or other documents securing the payment of the sums due under the Note or other documents shall be automatically subject to reduction to the maximum lawful rate permitted under the usury or other applicable laws."
According to Lawrence Zucker, a partner of plaintiff Murlar Equities Partnership, the plaintiff did not submit the side agreement to the Court in conjunction with the original application because all of the partnership's documents had been transferred over the years, first to a New Jersey facility, and later to a "storage facility which is not readily accessible." Given the fact that this foreclosure proceeding concerns a financial transaction which took place in 2003, such an explanation is not at all unreasonable.
It is also noteworthy that the period of time between the service of the defendant's initial motion, and the submission of the motion to the Court, was not so extensive that the plaintiff should be deemed to have had ample time to make a comprehensive search for all pertinent documentation. The defendant's motion to vacate was first returnable on April 11, 2016, and fully submitted three months later, July 11, 2016.
The defendant does not contest the validity of this newly-disclosed document, which was executed on the same date as the note and mortgage, nor does he deny that he executed it. The defendant's opposition consists almost entirely of objections based on alleged technical deficiencies in the plaintiff's papers and the alleged lack of a valid excuse for presenting the side agreement earlier. However, as noted, where no order has been entered, the Court has the inherent authority to reconsider its earlier determination in the interest of justice, even where there has been inadequate compliance with the requirements of CPLR 2221.
Where the written agreement is complete, clear and unambiguous on its face, it must be enforced according to the plain meaning of its terms. Greenfield v. Philles Records, 98 NY 2d 562 (2002); R/S Associates v. New York Job Development Authority, 98 NY 2d 29 (2002).
The Court concludes that the side agreement clearly reflects the intention of the parties that any excess of interest or other sums charged or received under the note and mortgage, when it is determined by the court as being in excess of the maximum permitted by law, must could be applied as a credit against the unpaid principal balance and be refunded to the Defendant. There is no valid reason to deny enforcement of this mutually agreed- upon provision. The mortgage and note, when read in conjunction with the side agreement, cannot be considered criminally usurious, nor can this transaction be considered void and unenforceable. The production of this side agreement directly refutes the defendant's former contention with respect to this transaction being contrary to public policy, and as such, this Court's prior determination cannot stand.
Reargument and Conclusion
To the extent that the plaintiff additionally contends that the mortgage and note cannot be considered usurious in any event absent a showing of intent, the Court has now found, on renewal, that the entire loan transaction was not usurious. Moreover, the Court's computation of the true interest rate of this loan is not contested. As such, the issue of intent in determining usury is no longer of relevance.
To the extent that the plaintiff seeks reinstatement of the summons and complaint, this is not necessary, as the status quo that existed before the defendant moved for summary judgment remains unchanged due to the failure of the parties to settle an order. The summons and complaint, the order of reference, and the Judgment of Foreclosure all remain in full force and effect, as no order was entered vacating, amending or setting them aside. The appropriate relief, in view of this resolution of plaintiff's motion to renew, is to vacate the Judgment of Foreclosure dated January 20, 2009, and to remand this matter to the Referee to Compute for a new computation in light of the Court's ruling as to the modification of the mortgage and note by the side agreement, limiting the computation of interest to the legal rate.
Accordingly, the plaintiff is directed to settle an order denying the motion by defendant for summary judgment, vacating the Judgment of Foreclosure and Sale, and remanding this matter to the Referee to re-compute the amounts due to the plaintiff under the note and mortgage.
Settle order. Date:September 28, 2017
/s/_________
HOWARD H. SHERMAN J.S.C.