LaMarche v Lilly

[*1] LaMarche v Lilly 2009 NY Slip Op 50399(U) [22 Misc 3d 1131(A)] Decided on March 6, 2009 Supreme Court, Kings County Knipel, J. Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431. This opinion is uncorrected and will not be published in the printed Official Reports.

Decided on March 6, 2009
Supreme Court, Kings County

Louis LaMarche, Plaintiff,

against

Kathryn Lilly and Greenhouse 166 LLC, a/k/a Greenhouse 166 L.L.C., New York City Environmental Control Board, "John Doe One" to "John Doe Ten" the last ten, defendants being intended designate tenants or other persons having any interest in the herein described premises or portions thereof, if any there be, said names being fictitious, their true names being unknown to the plaintiff, Defendants.



18849/08



Attorney for Plaintiff

David Silberzweig, Esq.

Silberzweig & Sznitken, Esqs.

267 Flatbush Avenue

Brooklyn, NY 11217

(718) 783-6800

Attorney for Defendant

Philip J. Lavender, Esq.

Marcus Attorneys

13 Greene Avenue

Brooklyn, NY 11238

(718) 643-6555

Lawrence Knipel, J.

In this action to foreclose upon real property, plaintiff moves to strike the answers of defendants Kathryn Lilly and Greenhouse 166 LLC, and for summary judgment.

On January 31, 2008, Greenhouse 166 LLC and Kathryn Lilly executed a bond designating plaintiff as the obligee in the sum of $450,000, with $5625 due of the last day of February 2008 and on the last day of each month until January 31, 2009, when the entire principal and accrued interest would be due. Interest was to be computed at the rate of 15 % per annum. To secure the indebtedness, Greenhouse and Lilly executed a mortgage on land and improvements known as 166 DeKalb Avenue and 1255 Carroll Street, in Brooklyn. Both the bond and the mortgage allowed for the entire principal to be due at the option of the mortgagee upon default in the payment of any installment of principal or of interest for 10 days, or for other enumerated occurrences.

On June 27, 2008, plaintiff commenced this action to foreclose on the mortgage, alleging that defendants failed to pay the amount due on the last day of April 2008 and thereafter. Plaintiff, it is stated, elected to declare the entire principal sum to be immediately due and payable plus late charges. Each defendant served an answer, but they both allege the same affirmative defenses, such as lack of personal jurisdiction, failure to state a cause of action, waiver, and estoppel.

In this motion, plaintiff argues that the affirmative defenses in the answer should be stricken as they are without merit. In his supporting affidavit, plaintiff alleges that defendant Lilly "represented herself to be an experienced person in real estate owning a number of properties."

Defendants oppose the motion, arguing that plaintiff has failed to establish a prima facie case in that he failed to establish he filed a notice of pendency; he "has failed to establish that all parties to the action and all parties having any interest in the Premises were served;" an issue of fact exists whether plaintiff is barred from foreclosing for violating the Banking Law by making a "high cost home loan;" plaintiff's allegations are, allegedly, unsupported; plaintiff has not established default and if he could, such default resulted from his bad faith conduct; plaintiff does not, allegedly, live in this state, and therefore he purportedly has no personal knowledge of the facts; and a question of fact exists whether the interest rate was usurious since points were paid, purportedly to plaintiff's son-in-law.

Defendant Lilly avers in her affidavit that she owns and resides in the Carroll Street premises, and that she is the sole member of Greenhouse 166, LLC, the owner of the DeKalb Avenue property. The loan was, purportedly, "for personal and household purposes." Annexed to her affidavit is a copy of a check dated June 18, 2008, in the amount of $17,435, representing, she says, payments for March, April and May 2008. By letter dated June 20, 2008, plaintiff's attorney stated he was returning the check, since the mortgage was in default for more than 15 days and plaintiff has elected to declare the balance and accrued interest to be due and payable.

In reply, plaintiff's attorney alleges that a notice of pendency was filed; all named defendants were served; the motion papers were properly served; and that in any event any claim of improper service was waived. As for violations of the Banking Law, it is contended that the loan was made to an LLC on commercial property and defendant Lilly acted as guarantor. Defendant Lilly allegedly represented that she owned several properties, and that she was using the funds to purchase property in England. She also allegedly represented that she intended to sell the commercial building and pay off the loan in full, but the market dropped and she could not sell it. The complaint states a cause of action, it is argued, and there is no violation of the statute of frauds or the statute of limitations. [*2]Defendants' checks bounced for the third and fourth payments and they have not paid since. Once in default, plaintiff had no obligation to accept late payments. Plaintiff agreed to defendants' request to accept $75,000 and extend the loan for an additional six months, but plaintiff was advised that defendants could not pay. Plaintiff does live in New York, residing in Woodbury and having an office in Brooklyn for over 30 years. The interest rate was 15%, which was legal. Plaintiff, it is argued, did not charge or receive any points or origination fees, so that the allegation of payment of same has no effect.

Affidavits from plaintiff and Cesar Hidalgo are submitted. Mr. Hidalgo states he is a licensed broker and was paid a broker commission for finding someone to make the loan to defendants. Defendants' credit reports and financial records were reviewed before determining defendant Lilly had the ability to make monthly payments. Plaintiff states he lives in Woodbury and has an office in Brooklyn, and argues that because he has a house in the Dominican Republic should not entitle defendants to keep the $450,000 lent to them. Plaintiff agreed to defendants' requests, yet defendants accuse him of acting in bad faith.

In "further opposition" to the motion, defendants' attorney argues that plaintiff has a "habit or proclivity" of usurious intent; that there are issues of fact as to compliance with the Banking Law; and he reiterates that there is no affidavit from one with personal knowledge.

A plaintiff establishes its prima facie entitlement to a judgment of foreclosure by submitting the relevant mortgage, the unpaid note, and evidence of a default (see Marculescu v Ovanez, 27 AD3d 701; Household Finance Realty Corp. v Winn, 19 AD3d 545; Republic National Bank of New York v O'Kane, 308 AD2d 482). The burden then shifts to the mortgagor to raise a triable issue of fact regarding their defenses(see Charter One Bank, FSB v Leone, 45 AD3d 958 [Entitlement to a judgment of foreclosure may be established as a matter of law where a mortgagee produces the mortgage and unpaid note with evidence of default, thereby shifting the burden to the mortgagor to demonstrate, through competent and admissible evidence, any defense which could raise a question of fact]; Household Finance v Winn, supra; EMG Mortgage Corp. v Riverdale Assocs., 291 AD2d 370).

Here, plaintiff has established its prima facie entitlement to judgment against defendants by submitting the mortgage, the unpaid bond, and evidence of defendants' default. The burden then shifted to defendants to raise a triable issue of fact. They have failed to do so. Plaintiff submitted two affidavits in support of this motion. Defendants' conclusory suggestions that the motion is unsupported by one with personal knowledge are without support and lack credulity. Defendants' attempt to raise an issue as to whether the loan was usurious is without merit, since the bond does not provide for usurious interest on its face, and there is no evidence that defendant paid any points or origination fees to plaintiff. Nor does the conclusory statement by defendant Lilly that the loan was for "personal and household purposes" raise an issue of fact whether this loan runs afoul of Banking Law § 6-l, entitled "High-cost home loans." The record supports plaintiff's assertion that this was not a home loan and, and, in any event, defendants have not demonstrated which section was purportedly violated.

None of defendants' other defenses or arguments have merit.

Accordingly, plaintiff's motion for summary judgment is granted.

Settle order and judgment. [*3]

E N T E R,

J. S. C.