Six Gramercy LLC v. Westside Units 18th St.

Full title: SIX GRAMERCY LLC, Plaintiff, v. WESTSIDE UNITS 18TH STREET LLC, MORDECHAI…

Court: Supreme Court, New York County

Date published: Dec 1, 2023

2023 N.Y. Slip Op. 34347 (N.Y. Sup. Ct. 2023)

Opinion

Index No. 850085/2022 Motion Seq. No. 004

12-01-2023

SIX GRAMERCY LLC, Plaintiff, v. WESTSIDE UNITS 18TH STREET LLC, MORDECHAI WEISZ, BOARD OF MANAGERS OF THE 305 CONDOMINIUM, THE CITY OF NEW YORK, NEW YORK CITY DEPARTMENT OF FINANCE, NEW YORK STATE DEPARTMENT OF TAXATION & FINANCE, JOHN DOE #1 THROUGH JOHN DOE #50, Defendant.

FRANCIS A. KAHN, III, Justice

Unpublished Opinion

DECISION + ORDER ON MOTION

FRANCIS A. KAHN, III, Justice

The following e-filed documents, listed by NYSCEF document number (Motion 004) 93, 94, 95, 96, 97, 98, 99, 100, 101, 102, 103, 104, 105, 106, 107, 108, 109, 110, 111, 112, 113, 114, 115, 116, 117, 118, 119, 120, 121, 122, 123, 124, 125, 126, 127, 128, 129, 130, 131, 132, 133, 134 were read on this motion to/for SUMMARY JUDGMENT AFTER JOINDER

Upon the foregoing documents, the motion is determined as follows:

The within action is to foreclose on a commercial mortgage encumbering a parcel of real property located 305 West 18th Street, Unit 2F, New York, New York. The mortgage, dated June 7, 2018, was given by Defendant Westside Units 18^th Street LLC ("Westside") to non-party Mortgage Electronic Registration Systems ("MERS") as nominee for non-party East West Bank. The mortgage secures a loan with an original principal amount of $550,000.00 which is evidenced by a note of the same date as the mortgage. Concomitantly with these documents. Defendant Mordechai Weisz ("Weisz"), the managing member of Westside who executed the loan documents, also executed a commercial guaranty of the indebtedness.

East West commenced this action and alleged that Defendants Westside and Weisz defaulted in repayment of the indebtedness. Westside and Weisz answered jointly and pled eight [8] affirmative defenses, including lack of standing and failure to abide by a contractual condition precedent to foreclosure. Now, Plaintiff moves for summary judgment against Defendants Westside and Weisz, striking their answer and affirmative defenses, a default judgment against all non-appearing parties, to appoint a Referee to compute and to amend the caption.

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 U.S. Bank, N.A. v James, 180 A.D.3d 594 [1^st Dept 2020J; Bank of NY v Knowles, 151 A.D.3d 596 [1^st Dept 2017]; Fortress Credit Corp, v Hudson Yards, LLC, 78 A.D.3d 577 [1^st Dept 2010]). Based on the affirmative defenses in the answer, Plaintiff was also required to demonstrate, prima facie, its standing (see eg Wells Fargo Bank, N.A. v Tricario, 180 A.D.3d 848 [2^nd Dept 2020]) and its substantial compliance with any contractual pre-foreclosure notice requirements (see eg Wells Fargo Bank, N.A. v McKenzie, 186 A.D.3d 1582, 1584 [2d Dept 2020]). 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 [1^st Dept 2019]). In support of such a cause of action for foreclosure, 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]).

Here, Plaintiff established the note, mortgage and Defendants' default with the affidavit of Bryan Kang ("Kang"), the managing member of Plaintiff, and the documents annexed thereto. Kang's affidavit laid a proper foundation for the admission of the records of Plaintiff into evidence under CPLR §4518 (see Bank of N.Y.Mellon v Gordon, 171 A.D.3d 197 [2d Dept 2019]). The records of other entities were also admissible since Kang sufficiently established that those records were received from the makers and incorporated into the records Plaintiff kept and that it routinely relied upon such documents in its business (see U.S. Bank N.A. v Kropp-Somoza, 191 A.D.3d 918 [2d Dept 2021]). Further, annexed to the motion were records referenced by Kang (cf. Deutsche Bank Natl. Trust do. v Kirschenbaum, 187 A.D.3d 569 [1^st Dept 2020]). As to the Mortgagor's 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]). Here, Kang's review of the attached account records demonstrated that the Mortgagor defaulted in repayment under the note (see eg ING Real Estate Fin. (USA) LLC v Park Ave. Hotel Acquisition, LLC, 89 A.D.3d 506 [1^st Dept 2011]).

As to standing in a foreclosure action, it is established in one of three way's: [1] direct privity between mortgagor and mortgagee, [2] physical possession of the note prior to commencement of the action that contains an indorsement in blank or bears a special indorsement payable to the order of the plaintiff either on its face or by allonge, and [3] assignment of the note to Plaintiff prior to commencement of the action (see eg Wells Fargo Bank, N.A. v Tricario, 180 A.D.3d 848 [2d Dept 2020]; Wells Fargo Bank, NA v Ostiguy, 127 A.D.3d 1375 [3d Dept 2015]).

In the second and third instances, the note is the dispositive instrument (Aurora Loan Servs., LLC v Taylor, 25 N.Y.3d 355, 361-362 [2015]). "'Either a written assignment of the underlying note or the physical delivery of the note prior to the commencement of the foreclosure action is sufficient to transfer the obligation, and the mortgage passes with the debt as an inseparable incident'" (U.S. Bank N.A. v Carnivale, 138 A.D.3d 1220, 1221 [2d Dept 2016], quoting Onewest Bank, F.S.B. v Mazzone, 130 A.D.3d 1399, 1400 [2d Dept 2015]). However, "mere physical possession of a note at the commencement of a foreclosure action is insufficient to confer standing or to make a plaintiff the lawful holder of a negotiable instrument for the purposes of enforcing the note" (U.S. Bank N.A. v Moulton, 179 A.D.3d 734, 737 [2d Dept 2020]). "Holder status is established where the plaintiff possesses a note that, on its face or by allonge, contains an indorsement in blank or bears a special indorsement payable to the order of the plaintiff' (Wells Fargo Bank, NA v Ostiguy, 127 A.D.3d 1375, 1376 [2d Dept 2015] [citations omitted]). The indorsement must be made either on the face of the note or on an allonge "so firmly affixed thereto as to become a part thereof' (UCC §3-202 [2]). "The attachment of a properly endorsed note to the complaint may be sufficient to establish, prima facie, that the plaintiff is the holder of the note at the time of commencement" (Deutsche Bank Natl. Trust Co. v Webster, 142 A.D.3d 636, 638 [2d Dept 2016]; cf. JPMorgan Chase Bank, N.A. v Grennan, supra).

In support of the motion, Plaintiff posits that its standing is established through a written assignment of the mortgage from MERS to East West dated April 1, 2022. After the action was commenced, Plaintiff claims it obtained physical possession of the note with a firmly affixed allonge containing an endorsement dated July 27, 2022. Plaintiff also asserts that a written assignment of the mortgage from East West dated July 27, 2022, was executed.

Contrary to Defendants' assertions, the language in the written assignment of the mortgage from MERS to East West contained sufficiently broad language that the note was assigned thereby under that document (see Deutsche Bank Natl. Trust Co. v Romano, 147 A.D.3d 1021 [2d Dept 2017]). Specifically, the operative phrases in assignment indicate that the mortgage was "given to secure the payment of a promissory note in the original amount of Five Hundred and Fifty Thousand and xx/100 Dollars ($550,000.00) (emphasis added)" and that the "Assignor does hereby assign and transfer to Assignee all rights accrued under said Mortgage and all indebtedness secured thereby (emphasis added)" (see Chase Home Fin., LLC v Miciotta, 101 A.D.3d 1307 [3d Dept 2012]). Since standing is assessed when an action is commenced (see Aurora Loan Servs., LLC v Taylor, supra) and East West was the Plaintiff when this action was commenced, standing is demonstrated. With respect to the transfer from East West to Plaintiff after this action was commenced, CPLR §1018 controls and provides that either the transferee or transferor is authorized to continue prosecution of the action (see CPLR §1018; Wells Fargo Bank, NA v McKenzie, 183 A.D.3d 574 [2d Dept 2020]; B &HFla. Notes LLC v Ashkenazi, 149 A.D.3d 401 [1^st Dept 2017]). Thus, any claim Plaintiff lacks capacity fails.

On the issue of the default notice, the only possibly applicable affirmative defense was the third which provides, in total, "Plaintiff has failed to comply with the RPAPL and all condition precedents". This language is patently "insufficient to raise the issue of the plaintiffs compliance with either statutory or contractual notice requirements" (One W. Bank, FSB v Rosenberg, 189 A.D.3d 1600, 1602 [2d Dept 2020]). Therefore, the issue of Plaintiff s satisfaction of the contractual pre-foreclosure notices was waived.

Plaintiff has established that it is entitled to a default judgment against all non-appearing Defendants (see CPLR §3215; SRMOFII2012-1 Trust v Telia, 139 A.D.3d 599, 600 [1^st Dept 2016]).

The branch of Plaintiff s motion to amend 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 Plaintiff is awarded summary judgment on its causes of action for foreclosure against the appearing parties and a default judgment against the non-appearing defendants; and it is further

ORDERED that that Paul Sklar, Esq., 5515^th Avenue, Ste 2200, New York, New York 10176-0001- (212) 972-8845 is hereby appointed Referee in accordance with RPAPL § 1321 to compute the amount due to Plaintiff and examine whether the tax parcel can be sold in parcels; and it is further

ORDERED that in the discretion of the Referee, a hearing may be held, and testimony taken; and i it is further

ORDERED that by accepting this appointment the Referee certifies that he is in compliance with: Part 36 of the Rules of the Chief Judge (22 NYCRR Part 36), including, but not limited to §36.2 (c) ("Disqualifications from appointment"), and §36.2 (d) ("Limitations on appointments based upon compensation"), and, if the Referee is disqualified from receiving an appointment pursuant to the provisions of that Rule, the Referee shall immediately notify the Appointing Judge; and it is further

ORDERED that, pursuant to CPLR 8003(a), and in the discretion of the court, a fee of $350 shall be paid to the Referee for the computation of the amount due and upon the filing of his report and the Referee shall not request or accept additional compensation for the computation unless it has been fixed by the court in accordance with CPLR 8003(b); and it is further

ORDERED that the Referee is prohibited from accepting or retaining any funds for himself or paying funds to himself without compliance with Part 36 of the Rules of the Chief Administrative Judge; and it is further

ORDERED that if the Referee holds a hearing or is required to perform other significant services in issuing the report, the Referee may seek additional compensation at the Referee's usual and customary hourly rate; and it is further

ORDERED that plaintiff shall forward all necessary documents to the Referee and to defendants who have appeared in this case within 30 days of the date of this order and shall promptly respond to every inquiry made by the referee (promptly means within two business days); and it is further

ORDERED that if defendant(s) have objections, they must submit them to the referee within 14 days of the mailing of plaintiffs submissions; and include these objections to the Court if opposing the motion for a judgment of foreclosure and sale; and it is further

ORDERED the failure by defendants to submit objections to the referee shall be deemed a waiver of objections before the Court on an application for a judgment of foreclosure and sale; and it is further

ORDERED that plaintiff must bring a motion for a judgment of foreclosure and sale within 30 days of receipt of the referee's report; and it is further

ORDERED that if plaintiff fails to meet these deadlines, then the Court may sua sponte vacate this order and direct plaintiff to move again for an order of reference and the Court may sua sponte toll interest depending on whether the delays are due to plaintiff s failure to move this litigation forward; and it further

ORDERED that the caption of this action should be amended by substituting Sheila Jordan as John Doe #1, and striking John Doe #2 through #50; and it is further

ORDERED that the caption shall read as follows:

SUPREME COURT OF THE STATE OF NEW YORK

COUNTY OF NEW YORK SIX GRAMERCY LLC, Plaintiff,

against

WESTSIDE UNITS 18" STREET LLC. MORDECHAI WEISZ, BOARD OF MANAGERS OF THE 305 CONDOMINIUM, THE CITY OF NEW YORK, NEW YORK CITY DEPARTMENT OF FINANCE, NEW YORK STATE DEPARTMENT OF TAXATION &FINANCE, and SHEILA JORDAN, Defendants.

and it is further

ORDERED that counsel for plaintiff shall serve a copy of this order with notice of entry upon the County Clerk (60 Centre Street, Room 141B) and the General Clerk's Office (60 Centre Street, Room 119), who are directed to mark the court's records to reflect the parties being removed pursuant hereto; and it is further

ORDERED that such service upon the County Clerk and the Clerk of the General Clerk's Office shall be made in accordance with the procedures set forth in the Protocol on Courthouse and County Clerk Procedures for Electronically Filed Cases (accessible at the "E-Filing" page on the court's website at the address (www.nycourts.gov/supctmanh)]; and it is further

All parties are to appear for a virtual conference via Microsoft Teams on March 13, 2024, at 10:40 a.m. If a motion for judgment of foreclosure and sale has been filed Plaintiff may contact the Part Clerk Tamika Wright (tswright@nycourt.gov) in writing to request that the conference be cancelled. If a motion has not been made, then a conference is required to explore the reasons for the delay.