Opinion
Index No. LT-314628-23/BX
10-13-2023
Williamsbridge-3067 Realty LLC, Petitioner, v. Guillermo Ramos, Respondent.
Florek & Counsel, LLC, by Stephen A. Florek III, Esq., for petitioner Law Offices of Morris Fateha, Morris Fateha, Esq., for respondent
Florek & Counsel, LLC, by Stephen A. Florek III, Esq., for petitioner
Law Offices of Morris Fateha, Morris Fateha, Esq., for respondent
ASHLEE CRAWFORD, J.
Recitation as required by CPLR §2219(a): The following papers were read on this Motion
Papers Numbered
Petitioner's Order to Show Cause, Verified Petition, and Exhibits in Support 1
Respondent's Notice of Cross-Motion, Affirmation, Affidavit and Exhibits in Support 2
Petitioner's Affirmation, Affidavits, and Exhibits in Opposition to Cross-Motion 3
Respondent's Affirmation and Exhibits in Reply 4
The Court declines to consider the arguments respondent raises for the first time in his reply papers (Erdey v City of New York, 129 A.D.3d 546, 546-47 [1st Dept 2015]; Harvey S. Miller v Icon Group LLC, 107 A.D.3d 585 [1st Dept 2013]).
Petitioner Williamsbridge-3067 Realty LLC ("Williamsbridge") commenced this illegal lockout proceeding pursuant to RPAPL §§ 713(10), 721(4), and 721(6), alleging that it owns and was in possession of the premises located at 3067 Williamsbridge Road, Bronx, New York, until on or about March 17, 2023, when respondent Guillermo Ramos, with whom it does not have a landlord-tenant relationship, changed the locks to the premises and unlawfully excluded Williamsbridge therefrom. Williamsbridge seeks to be restored to possession and to recover treble damages and sanctions.
Ramos cross-moves to dismiss the petition pursuant to CPLR §§ 3211(a)(8) and (a)(4), RPAPL § 713(5), and UCC § 9-604 on the grounds that: (1) he has not been served with the petition and notice of petition; (2) he has not been served with a 90-day notice and other predicate notices; (3) Williamsbridge has not acquired or exhibited a referee's deed; (4) Williamsbridge cannot evict Ramos following a Uniform Commercial Code ("UCC") Article 9 foreclosure sale; and (5) there is a related action pending in Bronx Supreme Court.
Background: Secured Commercial Loan and Ownership Interests Pledge
In or about March 2021, non-party RealFi Real Estate Investment Trust LLC ("RealFi") extended a $190,000.00 commercial loan to Williamsbridge, a limited liability company whose sole member at that time was Ramos. In connection with the loan transaction, RealFi, as lender, and Ramos, as pledgor, entered into a written "Ownership Interests Pledge and Security Agreement" dated March 5, 2021 ("ownership pledge"), executed contemporaneously with a secured promissory note, mortgage, assignment of leases and rents, and security agreement. Under the ownership pledge, Ramos irrevocably and unconditionally pledged and assigned to RealFi, as security for the loan, all his rights, title and interest in certain collateral, including all of Ramos' membership interest in Williamsbridge, of which he held a sole, 100% interest (Florek Affirm. in Opp. to Cross-Motion, Ex. H [ownership pledge] at ¶¶ 1, 2[j], 5[d], 6[b][vi], Sched. A).
The ownership pledge provides that in the event of default, RealFi "shall have the right [...] in its discretion and without notice to [Ramos], to transfer to or to register (if not already so registered) in the name of [RealFi] [...] any or all of the Collateral" (Ownership Pledge at ¶ 4[b]). Moreover, in the event of default, RealFi was expressly permitted to "file any claims or take any action or institute any proceedings that [RealFi] may reasonably deem necessary or desirable for the collection of any of the Collateral or otherwise to enforce the rights of [RealFi] with respect to any of the Collateral" (id. at ¶ 8[c]). Paragraph 11(a) of the ownership pledge sets forth some of the remedies available to RealFi in the event of default, and provides in relevant part that:
If any Event of Default shall have occurred and be continuing, then [RealFi] may exercise in respect of the Collateral, in addition to all other rights and remedies provided for herein or otherwise available to it, all the rights and remedies of a secured party on default under the UCC (whether or not the UCC applies to the affected Collateral), inclusive of the management rights of [Ramos] in [Williamsbridge] [...] and [RealFi] may also in its sole discretion, without notice except as specified below, sell the Collateral or any part thereof in one or more parts at public or private sale [...] for cash, on credit, or for future delivery, at such time or times and at such price or prices and upon such other terms as [RealFi] may reasonably deem commercially reasonable. [RealFi] may be the purchaser of any or all of the Collateral at any such sale [...]. Each purchaser at any such sale shall hold the property sold absolutely free from any claim or right on the part of [Ramos], and [Ramos] hereby waives all rights of redemption which [Ramos] now has or may at any time in the future have under any rule of law or statute now existing or hereafter enacted which might otherwise have been applicable subsequent to a UCC sale of the Collateral in accordance herewith. In addition, [Ramos] hereby waives all rights of stay, and/or appraisal which [Ramos] now has or may at any time in the future have under any rule of law or statute now existing or hereafter enacted. [Ramos] agrees that, to the extent notice of sale shall be required by law, at least twenty (20) days' notice to [Ramos] of the time and place of any public sale or the time after which any private sale is to be made shall constitute reasonable notification [Ownership Pledge at ¶ 11(a)(emphasis added)].
It is undisputed that Williamsbridge defaulted under the loan documents. As a result, RealFi enforced its rights to the collateral as discussed below.
Williamsbridge's Illegal Lockout Petition
Williamsbridge states in its verified illegal lockout petition that non-party RealFi acquired all rights, title, and interest in Williamsbridge through a public UCC foreclosure sale held on February 22, 2023 (Pet. ¶ 3; Florek Affirm at Ex. B [deed]; Mannion Aff. in Opp. to Cross-Motion at Ex. A [public notice of UCC sale], Ex. B [terms of sale], Ex. C [memo of sale]). From the date of the UCC sale through about March 16, 2023, petitioner Williamsbridge was in lawful possession of the premises, during which time the premises was unoccupied, vacant, and under construction by Williamsbridge's agent (Pet. ¶¶ 7, 13; Florek Affirm. in Opp. to Cross-Motion, ¶¶ 26-30; Tellone Aff. in Opp. to Cross-Motion, ¶¶ 3-5). As both parties confirmed during oral argument, no certificate of occupancy has been issued for the property (see Florek Affirm. in Opp. to Cross-Motion, ¶¶ 26, 29; Tellone Aff. in Opp. to Cross-Motion, ¶ 3).
In her sworn affidavit, Michelle Tellone states that Williamsbridge retained her construction company to remedy violations at the property so that a certificate of occupancy could be obtained. During regular business hours between March 1 and March 17, 2023, Tellone and her crew were at the premises, which was "unfinished, under active construction and wholly vacant." Tellone further observed that "[t]here were no personal belongings at the Property at that time and clear no one was living or residing there" (Tellone Aff. in Opp. to Cross-Motion, ¶¶ 2-5).
On or about March 17, 2023, Ramos allegedly removed Williamsbridge's locks from the property and replaced them with new locks, forcibly excluding Williamsbridge from the property (Pet. ¶¶ 8-9; Tellone Aff. in Opp. to Cross-Motion, ¶ 4). Williamsbridge sent Ramos a cease-and-desist letter dated March 2, 2023, but he remains in the premises, to Williamsbridge's exclusion (Pet. ¶ 11; Florek Affirm at Ex. [cease and desist letter]). Williamsbridge asserts that, as the deed owner of the property, it - and not Ramos individually - had been in quiet possession of the property within the three years before Ramos' forcible entry. It, thus, concludes that it need not have served Ramos with a notice to quit and has met its prima facie burden in this lockout proceeding (Pet. ¶¶ 15-16, citing RPAPL § 713[10]; Florek Affirm. in Opp. to Cross-Motion, ¶¶ 19-20, 22, 42; Florek Affirm. at Ex. A [memo of sale], Ex. B [deed]).
The Court finds that Williamsbridge has met its initial burden under RPAPL § 713(10), by demonstrating, prima facie, that no landlord-tenant relationship exists between the parties; Williamsbridge was peaceably in actual possession of the premises when Ramos unlawfully and forcibly entered; Williamsbridge was in possession for three years before the time of Ramos' unlawful entry; and Ramos remains in possession by force and unlawful means.
Ramos' Motion to Dismiss
Ramos responds by cross-moving pursuant to CPLR § 3211 to dismiss the lockout petition on various grounds, which the Court will address in turn.
On a motion to dismiss pursuant to CPLR § 3211, the pleading is to be afforded a liberal construction, the facts as alleged in the complaint are deemed to be true, and the plaintiff is accorded the benefit of every possible favorable inference (Leon v Martinez, 84 N.Y.2d 83, 87 [1994]). This standard applies equally to motions to dismiss an illegal lockout petition (see Mondrow v Days Inn Worldwide, Inc., 48 Misc.3d 95, 96 [App Term, 1st Dept, 2015]).
I. Service of Process
Ramos argues that this matter must be dismissed pursuant to CPLR § 3211(a)(8), because he was never served with the petition. He claims that he does not fit the physical description in the affidavit of service: he is 48 years old, 150 lbs. and 5'11" tall, whereas the affidavit of service describes a 50-year-old man, between 5'4" - 5'8", weighing between 161-200 lbs. (Ramos Aff. ¶¶ 8, 18-19, 21-22; Fateha Affirm. ¶¶ 18-19, 22, 34-41). In the alternative, Ramos seeks a traverse hearing.
It is well settled that the affidavit of a process server is prima facie evidence of proper service, and a mere conclusory denial of service is insufficient to rebut the presumption of proper service (Perlbinder Holdings LLC v. Patel, 202 A.D.3d 578 [1st Dept 2022]; Bank of America, N.A. v Budhan, 171 A.D.3d 622 [1st Dept 2019]; Grinshpun v Borokhovich, 100 A.D.3d 551, 552 [1st Dept 2012], lv denied 21 N.Y.3d 857 [2013]). Here, the affidavit of petitioner's process server establishes, prima facie, that on April 1, 2023, Ramos was personally served with a copy of petitioner's order to show cause, petition, and exhibits, including the memorandum of sale of the collateral, the deed, and a March 2, 2023, cease and desist letter from Williamsbridge's counsel to Ramos (Dkt. No. 7). Ramos' arguments challenging service are insufficient to rebut the presumption of proper service, insofar as the differences he raises between his physical appearance and the description of the person served are so slight and immaterial as to lack legal weight. Thus, that part of respondent's motion to dismiss based on lack of service of process is denied.
II. Service of Predicate Notices
Ramos next argues that the petition should be dismissed, because he was not served with a 30-day notice to quit, 10-day notice to vacate, or 90-day notice of termination of tenancy as required under RPAPL § 713 (Ramos Aff. ¶¶ 18, 20; Fateha Affirm. ¶¶ 18, 20, 40, 42-46). This argument is unavailing.
While Ramos strenuously attempts to reframe this proceeding as a holdover, it is, in fact, an illegal lockout proceeding, not dependent or premised on the existence of a landlord-tenant relationship between the parties (see RPAPL § 713[10]; Fateha Affirm. ¶ 3; Fateha Reply Affirm. ¶ 15). RPAPL § 713(10), pursuant to which Williamsbridge brings this proceeding, expressly provides that "no notice to quit shall be required in order to maintain a proceeding under this subdivision," and the Court discerns no basis for the service of any other predicate notices here. Dismissal on this ground is, accordingly, denied.
Ramos may not unilaterally amend the caption, as he did in his motion papers, to add landlord-tenant-undertenant designations. Moreover, he presents absolutely no proof of a landlord-tenant relationship between him and Williamsbridge.
III. Whether Petitioner Must Acquire and Exhibit a Referee's Deed
Ramos insists that the lockout petition must be dismissed because Williamsbridge failed to acquire and exhibit a referee's deed following a real estate foreclosure sale, as required under RPAPL § 713(5) (Fateha Affirm. ¶ 47-58; Fateha Reply Affirm. at ¶ 17). This argument also fails. Again, Ramos is attempting to paint himself as a tenant facing eviction following a real estate foreclosure, which is inaccurate. Williamsbridge brought this lockout proceeding under RPAPL § 713(10) following a UCC Art. 9 foreclosure sale of Ramos' membership interest in Williamsbridge, and not under RPAPL § 713(5) following a real estate foreclosure. The Court denies dismissal on this basis.
IV. The Propriety of the UCC Art. 9 Sale
Ramos' main argument is that Williamsbridge cannot evict him following a UCC Article 9 sale, because such sale does not implicate real property and should not be the basis for interfering with his alleged right to enjoy and remain in the premises. Ramos, therefore, urges that the petition be dismissed (Fateha Affirm. ¶¶ 59-70). That request is denied.
As discussed, Ramos specifically agreed in the ownership pledge that, in the event of default under the loan documents, RealFi would have "all the rights and remedies of a secured party on default under the UCC (whether or not the UCC applies to the affected Collateral)," including the power to assume or sell Ramos' interest in Williamsbridge (Ownership Pledge at ¶ 11[a]).
At no point in this proceeding has Ramos denied the occurrence of an event of default.
UCC article 9, part 6, governs default and enforcement of secured interests. More particularly, UCC § 9-604(a)(1) provides that if a security agreement covers both personal and real property, "a secured party may proceed under this part as to the personal property without prejudicing any rights with respect to the real property." Ramos errs in his application of this provision insofar as he views the foreclosed collateral as real property; it is not. The collateral Ramos pledged as security for the loan to Williamsbridge was Ramos' membership interest in Williamsbridge, which is personal property subject to the foreclosure processes set forth in the UCC (see, 893 4th Avenue Lofts LLC v 5AIF Nutmeg, LLC, 2020 WL 6940968, *1 [Sup Ct, Kings Co., Nov. 25, 2020][rejecting argument that ownership in an entity that owns property is considered an interest in real property]; see also Hotel 71 Mezz Lender LLC v Falor, 14 N.Y.3d 303, fn 1 [2010][a mezzanine loan generally "is secured not by the real property itself, but by stock of some ownership interest in the company that owns the real property"]). Under analogous circumstances, shares of stock issued in connection with cooperative apartments, offered to secure a loan, have been found to be personal property subject to the UCC article 9 procedures for enforcement of a security interest, rather than to the procedures to enforce a security interest in real property set forth in the RPAPL (see Walsh v Ocwen Loan Servicing, LLC, 217 A.D.3d 802, 804 [2d Dept 2023]; Chase v Wells Fargo Bank, N.A., 135 A.D.3d 751, 753 [2d Dept 2016]).
Here, Williamsbridge provides proof that the UCC sale of its membership interests comported with the parties' agreement (Ownership Pledge at ¶ 11[a]), as well as with the UCC itself (UCC §§ 9-604, 9-607, 9-609, 9-610, 9-612). Williamsbridge published notice of the sale in various publications, including the Wall Street Journal and the Daily News, at least 20 days before the sale took place on February 22, 2023 (Florek Affirm. in Opp. to Cross-Motion, Ex. B). Thereafter, the UCC sale took place and caused Ramos' entire pledged interest in Williamsbridge to transfer to RealFi, and permitted RealFi to exercise its ownership and control of the premises through Williamsbridge (id. at Exs. B - C).
Ramos contends that the UCC sale lacked fair consideration (Fateha Affirm ¶ 15), but that argument is belied by the express terms of the ownership pledge (id. at ¶ 11[a][RealFi may sell the collateral "at such price or prices and upon such other terms as [it] may reasonably deem commercially reasonable."]).
Ramos' efforts to portray himself as having an individual right to remain in the property, separate from his prior membership interest in Williamsbridge, is entirely unsupported and rejected by the Court. Neither is the Court moved by Ramos' vague attempt to claim that he had been living at the premises prior to the lockout: he merely states that he "moved in and out [of the premises] freely with [his] family, accepted mail, and made payments to the NYC Water Board and other utilities" (Ramos Aff., 6). This unsupported assertion, even if true, is insufficient to rebut Williamsbridge's compelling proof that the premises was empty and under construction at the time of the lockout (see Tellone Aff.).
While Ramos is correct that the lack of a certificate of occupancy is not dispositive as to the issue of possession, it is another factor weighing in Williamsbridge's favor on this CPLR 3211 motion to dismiss.
Accordingly, dismissal based on the UCC foreclosure sale is denied.
V. Whether this Proceeding is Duplicative of the Supreme Court Action
Finally, Ramos moves to dismiss the lockout petition pursuant to CPLR § 3211(a)(4), arguing that this case and a related Supreme Court case both involve the same parties, share a common nucleus of operative facts, and address the "fraudulent" transfer of the premises. Ramos maintains that Supreme Court, unlike Civil Court, has jurisdiction to render all the relief the parties seek (Fateha Affirm. ¶¶ 7, 24-33).
The related Supreme Court case Ramos refers to is Realfi Real Estate Inv. Trust LLC v Williamsbridge-3067 Realty LLC (Index No. 807994/2022E), pending in Bronx Supreme Court since 2022. There, Realfi, as lender, sues Williamsbridge, as borrower, and Ramos, as guarantor, to enforce its rights under the loan documents following Williamsbridge's default. Realfi asserts four causes of action to: (1) enforce a 2020 consolidated note and consolidated mortgage ($383,869.24); (2) enforce a 2021 note and second position mortgage ($208,385.62); (3) obtain possession of the premises as provided for under the consolidated mortgage and second position mortgage; and (4) foreclose on the mortgages and obtain possession of the property.
Various John Does and Jane Does are also named as defendants in the Supreme Court action.
Williamsbridge opposes, asserting that the identity-of-claims requirement of CPLR § 3211(a)(4) is not satisfied (Florek Affirm. in Opp. to Cross-Motion ¶¶ 43-48). Specifically, Williamsbridge maintains that Ramos has not shown that this lockout proceeding and the Supreme Court case both involve the same causes of action, arise out of the same set of facts, seek substantially the same relief, or are brought in the same capacity for the same purpose (id.).
Courts have broad discretion to dismiss an action on the ground that another action is pending between the same parties arising out of the same subject matter or series of alleged wrongs (Shah v RBC Capital Markets LLC, 115 A.D.3d 444, 444-45 [1st Dept 2014]; CPLR § 3211[a][4]). Here, the Court declines to exercise its discretion to dismiss this illegal lockout proceeding in favor of the pending Supreme Court action for several reasons. First, there does not exist the requisite substantial identity of parties between the two cases, insofar as there is no overlap in plaintiffs (Sprecher v Thibodeau, 148 A.D.3d 654, 656 [1st Dept 2017]; Mason ESC, LLC v Michael Anthony Contracting Corp., 172 A.D.3d 1195, 1196 [2d Dept 2019]). Second, the subject matter of the two suits, although related, is not sufficiently similar to merit dismissal (Sprecher v Thibodeau, 148 A.D.3d at 656). Further, the relief sought in the two cases is not the same or substantially the same (Anonymous v Anonymous, 136 A.D.3d 506, 507 [1st Dept 2016]). Finally, while New York courts generally follow the "first-in-time" rule (Syncora Guarantee Inc. v J.P. Morgan Securities LLC, 110 A.D.3d 87, 96-97 [1st Dept 2013]; see also Resorts Group, Inc. v Cerberus Capital Management, Inc., 213 A.D.3d 621, 622 [1st Dept 2023]), the fact the Supreme Court case was first-filed is not dispositive, particularly given that Ramos has yet to be served in that case (ED & F Man Sugar Limited v Gellert, 202 A.D.3d 475, 475-76 [1st Dept 2022]). Accordingly, that part of Ramos' motion seeking dismissal under CPLR § 3211(a)(4) is denied.
Sanctions and Treble Damages
Although the Court questions Ramos' good faith in bringing his motion to dismiss, in which he asserts numerous unsupported, flimsy arguments, the Court denies Williamsbridge's request for sanctions at this time (see 22 NYCRR § 130-1.1).
Finally, because no damages have been assessed in this proceeding, plaintiff's request for treble damages is denied without prejudice (Mayes v UVI Holdings, Inc., 280 A.D.2d 153, 161 [1st Dept 2001]; cf. Hood v Koziej, 140 A.D.3d 563, 566 [1st Dept 2016]; RPAPL § 853).
Accordingly, it is hereby
ORDERED that respondent Ramos' motion to dismiss the illegal lockout petition is DENIED; and it is further
ORDERED that petitioner Williamsbridge's illegal lockout petition is GRANTED and petitioner is hereby restored to possession forthwith; and it is further
ORDERED that the clerk issue a warrant of eviction forthwith, execution forthwith, earliest execution on October 27, 2023.
This constitutes the decision and order of the Court.