Opinion
1:23-cv-00524 (JHR)
01-19-2024
WELLS FARGO BANK, NATIONAL ASSOCIATION, as Trustee for the benefit of the registered holders of JPMBB Commercial Mortgage Securities Trust 2015-C27, Commercial Mortgage Pass-Through Certificates, Series 2015-C27, acting by and through its special servicer, LNR Partners, LLC, Plaintiff, v. 15 WEST 55TH ST. PROPERTY LLC; SALIM ASSA; STEVEN FINKELSTEIN; MARILYN FINKELSTEIN; NEW YORK CITY DEPARTMENT OF FINANCE; NEW YORK CITY ENVIRONMENTAL CONTROL BOARD; NEW YORK CITY CRIMINAL COURT; and JOHN DOES #1-50, said John Doe defendants being fictitious and unknown to Plaintiff, it being intended to name all other parties who may have some interest in or lien upon the premises sought to be foreclosed. Defendants.
VENABLE LLP Rishi Kapoor Attorneys for Plaintiff MORRISON COHEN LLP David E. Ross Attorneys for Defendants 15 West 55th St. Property LLC, Salim Assa, Steven Finkelstein, and Marilyn Finkelstein
VENABLE LLP Rishi Kapoor Attorneys for Plaintiff
MORRISON COHEN LLP David E. Ross Attorneys for Defendants 15 West 55th St. Property LLC, Salim Assa, Steven Finkelstein, and Marilyn Finkelstein
STIPULATION CONSENTING TO FINAL JUDGMENT OF FORECLOSURE AND SALE
HON. JENNIFER H. REARDEN UNITED STATES DISTRICT JUDGE
Plaintiff Wells Fargo Bank, National Association, as trustee for the registered holders of JPMBB Commercial Mortgage Securities Trust, Commercial Mortgage Pass-Through Certificates, Series 2015-C27 (“Plaintiff”), acting by and through its special servicer. LNR Partners, LLC, and 15 West 55th St. Property LLC (“Borrower") (Plaintiff and Borrower are collectively referred to herein as the “Parties”), by and through their respective counsel of record, hereby stipulate and agree, and upon being So-Ordered by the Court, it hereby is adjudged and ordered, as follows:
RECITALS
A. The Property and Loan
A. By Loan Agreement dated as of January 13, 2015 (the “Loan Agreement”). Barclays Bank PLC, a public company registered in England and Wales (“Original Lender”), agreed to make a loan to Borrower in the amount of $73,000,000.00 (the “Loan"). Capitalized terms used but not otherwise defined herein shall have the meanings given to such terms in the Loan Agreement. The Loan Agreement was filed to the docket in this action under ECF No. 1-4.
Due to a scrivener's error at origination of the Loan, the Loan Agreement is dated as of January 13, 2014, rather than the correct date of January 13, 2015. Such scrivener's error does not render the Loan Agreement, or any other Loan Document (as defined herein), unenforceable either in whole or in part and Borrower has no defenses, claims or counterclaims to the enforceability of its obligations thereunder based on such scrivener's error.
B. The Loan is evidenced by, inter alia, an Amended, Restated and Consolidated Promissory Note, dated January 13, 2015, in the original principal amount of $73,000,000.00, executed and delivered by Borrower in favor of Original Lender (the “Note"). Pursuant to the Note, Borrower, inter alia, agreed to pay Original Lender, its successors or assigns, the sum of $73,000,000.00 plus interest thereon at the rates set forth therein The Note was filed to the docket in this action under ECF No. 1 -1.
C. As collateral security for the payment of the Note, Borrower, inter alia, executed, acknowledged, and delivered to Original Lender an Amended, Restated and Consolidated Mortgage, Assignment of Leases and Rents, Security Agreement and Fixture Filing, dated as of January 13, 2015 (the “Mortgage"). The Mortgage consolidated certain pre-existing mortgages to create a single first-priority mortgage lien and security interest in and to certain real and personal property owned by Borrower in the Borough of Manhattan, and within the City, County, and State of New York, located at 15 West 55th Street, New York, New York 10019, and designated as Block 1271, Lot 27 on the Tax Map for the County of New York (as more particularly described in the Mortgage, the “Property”) in favor of Original Lender, its successors or assigns, to secure Borrower's obligations under the Loan, including its obligations under the Note and Mortgage. The Mortgage was duly recorded against the Property in the Office of the City Register of the City of New York (the “City Register's Office”) on January 20, 2015 as City Register File Number (“CRFN”) 2015000022559 and the mortgage recording tax was duly paid. The Mortgage was filed to the docket in this action under ECF No. 1-2.
D. As further security for the payment of the Note, Borrower, inter alia, executed, acknowledged, and delivered to Original Lender an Assignment of Leases and Rents dated as of January 13,2015 (the “ALR”). pursuant to which Borrower, inter alia, assigned to Original Lender, its successors or assigns, all of Borrower's right, title, and interest in and to the Leases and Rents (as those terms are defined therein). The ALR was duly recorded on January 20, 2015 in the City Register's Office as CRFN 2015000022560. The ALR was filed to the docket in this action under ECF No. 1-3.
E. In order to induce Original Lender to make the Loan to Borrower, defendants Steven Finkelstein, Mary Finkelstein and Salim Assa (collectively, the “Guarantors”) executed in favor of Original Lender, its successors or assigns, a certain Guaranty of Recourse Obligations of Borrower dated as of January 13, 2015 (the “Recourse Guaranty”). The Recourse Guaranty was filed to the docket in this action under ECF No. 1-5.
F. By (1) Assignment of Mortgage dated as of February 25, 2015, and duly recorded in the City Register's Office on March 26, 2015 as CRFN 2015000103411, (2) Assignment of ALR dated as of February 25, 2015, and duly recorded in the City Register's Office on March 26, 2015 as CRFN 2015000103412, and (3) allonge firmly affixed to the Note, Original Lender transferred and assigned all of its right, title and interest in and to the Note, Mortgage and ALR to Plaintiff. The Assignment of Mortgage, Assignment of ALR, and the allonge affixed to the Note were filed to the docket in this action under ECF Nos. 1-6, 1-7, 1-1 (at p. 9), respectively.
Capitalized terms not defined herein are defined in Plaintiffs Complaint filed under ECF No. I (the “Complaint”).
G. Plaintiff is the current holder of the Note, Mortgage, ALR, Recourse Guaranty and other documents and agreements executed by Borrower in connection with the Loan (collectively, together with all amendments or modifications thereto, the “Loan Documents”) and all rights relating thereto.
B. The Initial Default and Modification
H. Borrower defaulted on its obligations under the Loan Documents by, inter alia, (i) following Domenico Vacca's default on its obligations under the Domenico Vacca Lease/ failing to pay the full $2,000,000.00 amount of the Domenico Vacca Letter(s) of Credit and pay all such sums to Plaintiff for deposit in the Rollover Reserve Account in accordance with the requirements of Section 5.1.17(f) of the Loan Agreement; (ii) failing to maintain the full $2,000,000.00 face amount of the Domenico Vacca Letter(s) of Credit in accordance with the requirements of Section 5.1.17(f) of the Loan Agreement; (iii) terminating the Domenica Vacca Lease, which is a Major Lease, without Lender's prior written consent in violation of Section 5.1.17(b) of the Loan Agreement (the “Lease Termination Event of Default”); (iv) failing to pay the Monthly Debt Service Payment Amount due under the Loan Documents on each of the Payment Dates commencing on March 6, 2020 and continuing to January 6, 2021; and (v) failing to fund the Monthly Tax Deposit resulting in Plaintiff funding $113,699.57 to pay for Taxes on or before the date when Taxes became delinquent (collectively, the “Initial Default”).
I. Pursuant to Section 9.4(b)(xiii) of the Loan Agreement, Borrower and the Guarantors are personally liable to Lender for the Losses that Lender incurs arising out of or in connection with the Lease Termination Event of Default (“Major Lease Recourse Claim”).
J. To resolve the Initial Default and the Major Lease Recourse Claim. Lender, Borrower and the Guarantors executed certain documents dated January 11,2021, and effective as of March 6, 2020 (the “Effective Dale”), that modified the Loan Documents, including, among other documents, a Loan Modification Agreement executed by Plaintiff and Borrower (the “Modification Agreement”). The Modification Agreement provides, among other things, that upon the occurrence of an Event of Default under the Loan Documents (including, without limitation, the Modification Agreement) after the Effective Dated: (1) Borrower shall execute and deliver to Lender an affidavit consenting to final judgment of foreclosure and sale (as defined in the Modification Agreement, the “Foreclosure Judgement Affidavit”), (2) Lender is entitled to file the Foreclosure Judgement Affidavit with the Court, (3) Borrower shall execute and deliver to Lender, and shall consent to the filing of, a joint or agreed stipulation providing for the immediate entry of a final and non-appealable judgment of foreclosure and sale with respect to the Property and specifying the total amount due from Borrower under the Loan Documents, and (4) Borrower shall fully cooperate with Lender's right to obtain entry of and the relief specified in the judgment of foreclosure and sale.
C. The Instant Foreclosure Action
K. On January 20, 2023, Plaintiff commenced the above-captioned action by filing the Complaint with exhibits 1-18 thereto under ECF No. 1, a Civil Cover Sheet under ECF No. 2, and a Rule 7.1 Statement under ECF No. 3. The Complaint asserts five (5) causes of action, including the First Cause of Action against Borrower for foreclosure of the Mortgage based on the occurrence of one or more Event(s) of Default after the Effective Date.
D. Acknowledgements and Consents of Borrower
L. As required by the Modification Agreement, Borrower, through its authorized representative and signatory, executed and delivered to Plaintiff the Foreclosure Judgment Affidavit, dated as of September 23, 2022, pursuant to which Borrower, inter alia, agreed and acknowledged that: (i) Plaintiff is the current holder and owner of the Loan and the Loan Documents, including the Note and Mortgage; (ii) Borrower committed one or more Events of Default under the Loan Documents after the Effective Date, including without limitation, failing to pay the Monthly Debt Service Payment Amount due on the August 6, 2021 Payment Date and on each Payment Date thereafter (the “Payment Defaults”); and (iii) Borrower consents to all of the relief sought against Borrower in the Complaint, and to the entry of a final judgment of foreclosure and sale. The Foreclosure Judgment Affidavit was filed to the docket in this action under ECF No. 1-12, and is being re-submitted and attached hereto as Exhibit 2.
M. The material allegations of the Complaint supporting Plaintiffs entitlement to judgment of foreclosure and sale are deemed admitted by Borrower.
N. Borrower hereby reaffirms that it consents to all of the relief sought against Borrower in the Complaint, and hereby reaffirms that its representations, acknowledgements, agreements, and other statements in the Foreclosure Judgment Affidavit are true and accurate and continue to be binding on Borrower, subject to updating the Outstanding Indebtedness (defined below).
O. Borrower hereby consents and agrees to the immediate entry of a final and non-appealable judgment of foreclosure and sale in the proposed form attached hereto as Exhibit 1 (the “Foreclosure Judgment”).
E. The Proceedings Before the Court
P. On January 24, 2023, the Clerk of the Court issued a Summons with respect to each of the named defendants (ECF Nos. 13-19).
Q. Between January 31, 2023 and February 7, 2023, the Complaint with exhibits 1-18 thereto and the respective Summons were duly served on each of the defendants in accordance with the Federal Rules of Civil Procedure, and the related Affidavits of Service were filed to the docket in this action under ECF Nos. 21-28.
R. On March 9, 2023, Plaintiff filed a Notice of Pendency in the New York County Clerk's Office against each of the named defendants in this action and the real property known as 15 West 55th Street, New York, New York 10019 and situated in the Borough of Manhattan, Block 1271, Lot 27, on the land and tax map of the County, City, and State of New York. A true and correct copy of the as-filed Notice of Pendency is attached hereto as Exhibit 3.
S. The Summons, Complaint, and Notice of Pendency were in the form prescribed by the applicable Federal Rules of Civil Procedure and New York Consolidated Laws, Civil Practice Law and Rules, and contain all the particulars required by law to be stated in such documents.
T. Pursuant to a Notice of Appearance and Waiver in Foreclosure dated February 6, 2023, and filed to the docket in this action under ECF No. 20, defendants New York City Department of Finance (“DOF”) and New York City Environmental Control Board (“ECB”) waived service of all papers in the action except “amended complaint, notice of discontinuance of action, notice of sale, Referee's report of sale, and notice of proceedings to obtain surplus moneys.”
U. The proceedings in this action have been regular and in accordance with the rules and practice of this Court, all defendants have been provided the statutorily required amount of time to file an answer to the Complaint and appear and defend their interests, and defendants DOF, ECB, and New York City Criminal Court have defaulted in this action by failing to answer the Complaint. Upon information and belief, no defendant in this action is an infant, incompetent, or an absentee.
F. The Outstanding Indebtedness
V. As of May 1, 2023, the total amount due under the Loan Documents is $88,260,179.77 (the “Outstanding Indebtedness”):
Unpaid Principal Balance
$73,000,000.00
Interest at Pay Rate (3.00%) from November 6, 2021 to May 1,2023 (Per diem $6,083.33):
$3,291,083.29
Interest at Default Rate (5.00%) from November 1, 2021 to May 1, 2023 (Per diem $13,368.77):
$6,586,447.07
Late Fees from August 6, 2021 to November 6,2021
$37,412.51
Prepayment Premium
$730,000.00
Deferred Interest
$3,123,791.52
Advances
$780,701.57
Bank Account Maintenance Fees
$8,800.00
Payoff Processing Fee
$5,500.00
Cash Management Administrative Fee
$7,700.00
Interest on Advances
$106,721.38
Special Servicing Fee
$572,714.94
Workout Fee
$9,307.49
TOTAL
$88,260,179.77
Less certain amounts (as of May 1,2023):
In addition to the foregoing, Borrower acknowledges and agrees that it is indebted to Plaintiff for additional fees and costs, including without limitation any property protection advances and attorneys' fees and costs incurred by Plaintiff after May 1, 2023, which amounts shall be added to the Outstanding Indebtedness. Borrower also acknowledges and agrees that the amount of any reduction for amounts held by Plaintiff as credit suspense, reserve, and escrow funds, or deposited in the Lockbox Account shall be updated and revised based on the actual amounts available in such accounts as of the date of transfer of title of the Property pursuant to a foreclosure sale, as further specified below.
Credit Suspense, Reserve, and Escrow Funds
($1,044,074.74)
Lockbox Funds
($612,829.29)
Total Amount Due
$86,603,275.74
STIPULATION AND ORDER
I. The Recitals set forth above are hereby incorporated by reference in this Stipulation and Order as though fully set forth herein, and are agreed and consented to in fill I by the Parties
2. This Court has jurisdiction of the Parties and the subject matter of this action.
3. None of the defendants herein are infants, incompetents, or absentees.
4. The Parties are not aware of any third parties not named as defendants herein that hold any interest in the Property subordinate to Borrower's interest and which would be affected by this action, and the caption shall be amended to strike the fictitious defendants referred to as •'John Does #1-50.”
5. As of May 1, 2023, the amount of $88,260,179.77 is due and owing by Borrower to Plaintiff under the Loan Documents, which includes the following sums (less amounts deposited in the Lockbox Account and/or amounts held by Plaintiff in reserve, escrow, or suspense accounts, which, as of May 1, 2023, totaled $1,656,904.03):
a. the outstanding principal balance of $73,000,000.00 (the “Principal Balance”);
b. accrued and unpaid interest on the Principal Balance at the contractual nondefault Pay Rate of 3.00% per annum (the “Pay Rat-e”) from November 6, 2021 to May 1,2023, in the amount of $3,291,083.29;
c. accrued and unpaid default interest on the Principal Balance at the additional default rate of 5.00% per annum (the “Default Rale”) from November 1, 2021 to May 1, 2023, in the amount of $6,586,447.07;
d. late fees due under the Loan Documents in the amount of $37,412.51;
e. prepayment premium in the amount of $730,000.00;
f. deferred interest in the amount of $3,123,791.52; and
g. accrued and unpaid fees, expenses (including without limitation attorneys' fees and expenses), protective advances, and other charges recoverable under the Loan Documents that were incurred by Plaintiff or its servicers on its behalf, on or before May 1, 2023, in the aggregate amount of $1,491,445.38.
6. Plaintiff is entitled to the immediate entry of a judgment of foreclosure and sale in its favor and against Borrower in the amount of $88,260,179.77 as and for principal, interest, default interest, late fees, prepayment premium, deferred interest, accrued and unpaid fees, expenses (including without limitation attorneys' fees and expenses), protective advances, and other charges recoverable under the Loan Documents, as further specified in the proposed form of judgment attached hereto as Exhibit 1, together with:
a. interest accruing on the Principal Balance at the Pay Rate and default interest at the Default Rate from and after May 1, 2023, through and including the date of transfer of title of the Property pursuant to the foreclosure sale, in the amount of $19,452.11 per day; plus
b. all amounts paid or to be paid or advanced by Plaintiff during the pendency of the Foreclosure Action to maintain, protect, or preserve the Property and Plaintiffs Mortgage lien pending consummation of the foreclosure sale, enforce Plaintiffs remedies, as well as any other costs or expenses that are chargeable or reimbursable under the Loan Documents, including without limitation payments or advances for taxes, assessments, insurance premiums,
property inspections, and other charges or expenses of whatever kind, including without limitation attorneys' fees and related costs and expenses, together with interest and penalties accrued thereon; and
c. less amounts deposited in the Lockbox Account and/or amounts held by Plaintiff in reserve, escrow, or suspense accounts on the date of transfer of title of the Property pursuant to a foreclosure sale.
7. Borrower waives the right to request discovery or seek appointment of a referee or an inquest before the Court to compute the amounts due and owing under the Loan Documents, or the filing of a referee's report of computation in connection therewith, in connection with the First Cause of Action, this Stipulation, or entry of the Foreclosure Judgment.
8. Plaintiff is entitled to file this Stipulation with the Court, present the Court with the Foreclosure Judgment, and represent to the Court that Borrower has agreed to the immediate entry of the Foreclosure Judgment by the Court.
9. The Parties agree and consent to, and hereby request, the Court's immediate entry of the Foreclosure Judgment in the form annexed hereto as Exhibit 1 (as such form may be updated, adjusted, and/or corrected to reflect the actual amounts due as of the time of its submission or entry), which Foreclosure Judgment incorporates the amounts set forth in paragraphs 5 and 6 hereof, and the Clerk of the Court shall enter judgment accordingly.
10. The Property shall be offered for sale pursuant to the Foreclosure Judgment at public auction and as a single parcel, by and under the direction of the referee specified in the Foreclosure Judgment. The referee shall set the date for the sale after consulting with Plaintiff and its counsel, and shall give public notice of the time and place of said sale according to laws of the State of New York and the rules and practice of this Court by publishing the same in the New York Law Journal.
11. The Foreclosure Judgment shall be a final judgment with respect to Plaintiffs First Cause of Action only, and upon entry of the Foreclosure Judgment, the remaining causes of action in the Complaint shall be severed from the First Cause of Action and may continue to be prosecuted and adjudicated notwithstanding the entry of a final Foreclosure Judgment with respect to the First Cause of Action.
12. Borrower irrevocably waives the right to appeal the entry of the Foreclosure Judgment.
13. Upon being So-Ordered by the Court, the provisions of this Stipulation shall be deemed adjudged and ordered by the Court.
14. This Stipulation may be executed in counterparts. A signature transmitted by facsimile or email .pdf shall be deemed an original for all purposes
ORDERED AND ADJUDGED
EXHIBIT OMITTED