Wilmington Tr. v. Ironwood Realty Corp.

Full title: WILMINGTON TRUST, NATIONAL ASSOCIATION, Plaintiff, v. IRONWOOD REALTY…

Court: Supreme Court, New York County

Date published: Apr 4, 2023

2023 N.Y. Slip Op. 31088 (N.Y. Sup. Ct. 2023)

Opinion

Index No. 850274/2021 Motion Seq. No. 001

04-04-2023

WILMINGTON TRUST, NATIONAL ASSOCIATION, Plaintiff, v. IRONWOOD REALTY CORPORATION, BEN ASHKENAZY, NEW YORK STATE DEPARTMENT OF TAXATION AND FINANCE, NEW YORK CITY DEPARTMENT OF FINANCE, ENVIRONMENTAL CONTROL BOARD OF THE CITY OF NEW YORK, THE CITY OF NEW YORK, PEOPLE OF THE STATE OF NEW YORK, JOHN DOE Defendant.

HON. FRANCIS A. KAHN, III JUSTICE

Unpublished Opinion

DECISION + ORDER ON MOTION

HON. FRANCIS A. KAHN, III JUSTICE

The following e-filed documents, listed by NYSCEF document number (Motion 001) 26, 27, 28, 29, 30, 31, 32, 33, 34, 35, 36, 37, 38, 39, 40, 41,42, 43, 44, 45, 46, 47, 48, 49, 50, 51, 52, 53, 55, 56, 57, 58, 59, 60 were read on this motion to/for _JUDGMENT - SUMMARY. Upon the foregoing documents, the motion and cross-motion are decided as follows:

In this action, Plaintiff seeks to foreclose on an amended, restated and consolidated mortgage on commercial real property located at 635 Madison Avenue, New York, New York given by Defendant Ironwood Realty Corporation ("Ironwood") to non-party JP Morgan Chase Bank, NA. The mortgage secures an amended, restated and consolidated promissory note which evidences a loan with an original principal amount of $90,000,000.00. The note and mortgage, both dated September 23, 2014, were executed by Defendant Ben Ashkenazy ("Ashkenazy") as President of Ironwood. Concomitantly with these documents, Ashkenazy executed a guaranty of payment of the note. Plaintiff commenced this action wherein it is alleged Defendant Ironwood defaulted in repayment of the loan. Defendants Ironwood and Ashkenazy answered and pled five [5] affirmative defenses, including Plaintiffs lack of standing, as well a counterclaim.

Now, Plaintiff moves for summary judgment against Ironwood and Ashkenazy, a default judgment against all other Defendants, an order of reference and to amend the caption. Defendants Ironwood and Ashkenazy oppose the motion.

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 eg U.S. Bank, N.A. v James, 180 A.D.3d 594 [1^st Dept 2020]; 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 [l^sl Dept 2010]). Based upon Defendants' affirmative defense, Plaintiff was also required to demonstrate it had standing when this action was commenced (see eg Wells Fargo Bank, N.A. v Tricario, 180 A.D.3d 848 [2^nd Dept 2020]).

Proof supporting aprima 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]). 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]).

Plaintiffs motion was supported with an affirmation from John Yee ("Yee"), an Asset Manager of LNR Partners, LLC ("LNR"), the alleged "special servicer" for Plaintiff. Yee stated that his affidavit was based upon both his personal knowledge and examination of business records. His affidavit laid a proper foundation for the admission of both the records of Plaintiff and LNR 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 Yee sufficiently established that those records were received from the makers and incorporated into the records LNR 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 Yee (cf. Deutsche Bank Natl. Trust Co. v Kirschenbaum, 187 A.D.3d 569 [1^st Dept 2020])

Yee's affidavit and the referenced documents sufficiently evidenced the note and mortgage. 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, Yee's personal knowledge and the attached account records demonstrated that the Mortgagor defaulted in repayment under the notes (see eg ING Real Estate Fin. (USA) LLC v Park Ave. Hotel Acquisition, LLC, 89 A.D.3d 506 [1^st Dept 2011]).

On the issue of standing, in a foreclosure action it is established in one of three ways: [1] direct privity between mortgagor and mortgagee, [2] holder status via physical possession of the note prior to commencement of the action which 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] written 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]). As to the latter two circumstances, transfer of the note, not the mortgage, is dispositive (see Aurora Loan Servs., LLC v Taylor, 25 N.Y.3d 355, 361-362 [2015]). Here, an assignment of the note was annexed to Yee's affidavit which demonstrated that JP Morgan assigned all its interest in the loan, including all documents related thereto, to Plaintiff on October 24, 2014. This evidence sufficiently established its standing to commence this action (see U.S. Bank Natl. Assn, v Ezugwu, 162 A.D.3d 613 [1^st Dept 2018]; GRP Loan, LLC v Taylor, 95 A.D.3d 1172 [2d Dept 2012]).

In opposition, Plaintiff failed to raise an issue of fact on any point. Any assertion that a question exists as to the allonge, and its attachment is unavailing considering based upon the finding that Plaintiffs standing exists via written assignment. Further, the claim that sufficient funds existed in the cash management account is belied by the admissible evidence.

As to the branch of the motion to dismiss Defendants' affirmative defenses, CPLR §3211 [b] provides that "[a] party may move for judgment dismissing one or more defenses, on the ground that a defense is not stated or has no merit". For example, affirmative defenses that are without factual foundation, conclusory or duplicative cannot stand (see Countrywide Home Loans Servicing, L.P. v Vorobyov, 188 A.D.3d 803, 805 [2d Dept 2020]; Emigrant Bank v Myers, 147 A.D.3d 1027, 1028 [2d Dept 2017]). When evaluating such a motion, a "defendant is entitled to the benefit of every reasonable intendment of its pleading, which is to be liberally construed. If there is any doubt as to the availability of a defense, it should not be dismissed" (Federici v Metropolis Night Club, Inc., 48 A.D.3d 741, 743 [2d Dept 2008]).

As pled, all the affirmative defenses are entirely conclusory and unsupported by any facts in the answer. As such, these affirmative defenses are nothing more than unsubstantiated legal conclusions which are insufficiently pled as a matter of law (see Board of Mgrs. of Ruppert Yorkville Towers Condominium v Hayden, 169 A.D.3d 569 [1^st Dept 2019]; see also Bosco Credit V Trust Series 2012-1 v. Johnson, 177 A.D.3d 561 [1^st Dept 2020]; 170 W. Vil. Assoc, v. G &E Realty, Inc., 56 A.D.3d 372 [1st Dept 2008]; see also Becher v Feller, 64 A.D.3d 672 [2d Dept 2009]; Cohen Fashion Opt., Inc. v V& M Opt., Inc., 51 A.D.3d 619 [2d Dept 2008]). Reliance on the stay provision of COVID-19 Emergency Protect Our Small Business Act of 2021 (L. 2021, c. 73) ("CEPOSBA") is without merit as that act expired on January 15, 2022, eight months before this motion was made (Administrative Order 35/22). To the extent Defendants failed to raise specific legal arguments in rebuttal, those affirmative defenses were abandoned (see U.S. Bank N.A. v Gonzalez, 172 A.D.3d 1273, 1275 [2d Dept 2019]; Flagstar Bank v Bellafiore, 94 A.D.3d 1044 [2d Dept 2012]; Wells Fargo Bank Minnesota, N.A v Perez, 41 A.D.3d 590 [2d Dept 2007]).

The assertion the motion must be denied because no discovery has been conducted is unavailing as Defendants offered nothing to demonstrate Plaintiff is in exclusive possession of facts which would i establish a viable defense to summary judgment (see Island Fed. Credit Union v. l&D Hacking Corp., 194 A.D.3d 482 [1^st Dept 2021]).

The branch of Plaintiff s motion for a default judgment against the non-appearing parties is granted without opposition (see CPLR §3215; SRMOFII 2012-1 Trust v Telia, 139 A.D.3d 599, 600 [1^stDept 2016]).

The branch of Plaintiff s motion to amend the 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 against the appearing parties and a default judgment against the non-appearing defendants; and it is further

ORDERED that that Matthew D. Hunter III, Esq., 108-18 Queens Blvd Forest Hills, NY 10016 (718) 309-1660 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 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 plaintiff's 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 i

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 plaintiffs failure to move this litigation forward; and it further

ORDERED, that the caption of this action be amended to strike the defendants sued herein as "John Doe Nos. 1-25," so that the action is discontinued as against them, all without prejudice to any of the proceedings heretofore had herein or to be had herein; and it is further

ORDERED that the caption shall read as follows:

SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF NEW YORK

WILMINGTON TRUST, NATIONAL ASSOCIATION, AS TRUSTEE FOR THE BENEFIT OF THE REGISTERED HOLDERS OF JPMBB COMMERCIAL MORTGAGE SECURITIES TRUST 2014-C24, COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES, SERIES 2014-C24, BY AND THROUGH ITS SPECIAL SERVICER, LNR PARTNERS, LL Plaintiff,

against

IRONWOOD REALTY CORPORATION, BEN ASHKENAZY, NEW YORK STATE DEPARTMENT OF TAXATION AND FINANCE, NEW YORK CITY DEPARTMENT OF FINANCE, ENVIRONMENTAL CONTROL BOARD OF THE CITY OF NEW YORK, THE CITY OF NEW YORK, PEOPLE OF THE STATE OF NEW YORK 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 August 2, 2023, at 10:20 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.