American Community Bank v 419 County Rd. 39 Corp.

[*1] American Community Bank v 419 County Rd. 39 Corp. 2009 NY Slip Op 51042(U) [23 Misc 3d 1132(A)] Decided on May 22, 2009 Supreme Court, Suffolk County Whelan, 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 This opinion is uncorrected and will not be published in the printed Official Reports.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 May 22, 2009
Supreme Court, Suffolk County

American Community Bank, Plaintiff,

against

419 County Road 39 Corp., Lyle Pike, Gary Pike, Lance Nill, et al., Defendants.



4903-09



PINKS, ARBEIT & NEMETH, ESQS.

Attys. For Plaintiff

140 Fell Ct.

Hauppauge, NY 11788

JOSEPH A. SALVI, ESQ.

Atty. For Defendants

295 No. Sea Rd. Southampton, NY 11968

Thomas F. Whelan, J.

ORDERED that this motion (#

002) by the defendants, 419 County Road 39 Corp., Lyle Pike, Gary Pike and Lance Nill, for summary judgment dismissing the plaintiff's complaint is considered under CPLR 3212 and RPAPL Article 13 and is granted; and it is further

ORDERED that the cross motion (#

003) by the plaintiff for summary judgment on its complaint is considered under CPLR 3212 and RPAPL Article 13 and is denied; and it is further

ORDERED that the separate motion (#

001) by the plaintiff for dismissal of the defendants' counterclaim is consolidated with those listed above for purposes of this decision and is granted.

This action arises from a $1,350,000.00 loan given on September 27, 2007 by the plaintiff to the defendant, 419 County Road 39 Corp. (hereinafter "corporate defendant"), which is secured by a mortgage on commercial property owned by said corporate defendant and the personal guarantees of payment and performance by defendants, Lyle Pike, Gary Pike and Lance Nill. By the summons and complaint served and filed herein, the plaintiff denominates this action as one for the foreclosure of commercial investment property. The plaintiff alleges that pursuant to the terms of the mortgage, the plaintiff, as mortgagee, is entitled "to foreclose the mortgage in case of any default in payment or performance of the terms of said mortgage" (see ¶ 5 of the complaint). The plaintiff further alleges that the corporate mortgagor/defendant and its guarantors defaulted in the performance of the obligations imposed by Article 2.1(c)(u) of the mortgage by "failing to complete all work associated with obtaining a certificate of occupancy pursuant to a commitment letter dated August 15, 2007," which is incorporated by reference into the mortgage.

By their motion-in-chief, the corporate defendant and its guarantors, defendants Pike and Nill, move for summary judgment dismissing the plaintiff's complaint. The motion is predicated upon the moving defendants' claims that the plaintiff is not entitled to a judgment of foreclosure and sale as there has been no default in payment or in any obligation imposed upon the defendants under the terms of the loan documents or the mortgage. The defendants assert that all pre-closing conditions imposed by the commitment letter were timely met by the defendants, including the establishment of a reserve account for the completion of all work associated with obtaining certificates of occupancy. The defendants further assert that "there exists no requirement in the commitment letter or in any of the loan documents, which requires the defendants to obtain a certificate of occupancy, nor is there any provision which requires that any construction work be commenced at any particular time." The moving defendants argue that since the sole basis of the plaintiff's claim is the defendants' failure to complete all work associated with obtaining certificates of occupancy, which was not an obligation imposed upon the defendants under the terms of the mortgage or other documents, the plaintiff's complaint should be dismissed. [*2]

The plaintiff opposes the defendants' motion and cross moves (#

003) for summary judgment on its complaint. While the plaintiff admits that no express term set forth in the mortgage or the note requires the moving defendants to complete all work necessary to obtain certificates of occupancy for the existing, unfinished buildings on the premises, the plaintiff argues "that implicit in the terms of the commitment letter was the requirement that the defendants complete all work necessary to obtain the requisite certificates of occupancy." Continuing, the plaintiff asserts that "the express language of the conditions set forth in the commitment letter (i.e. that monies be held in escrow as set forth above) give rise to the implied language of [a] promise on the part of defendants to complete the necessary work and obtain the certificates of occupancy." The plaintiff argues that by agreeing to fund the necessary escrows called for in the commitment letter, the defendants implicitly promised to use their best faith efforts to improve the premises and obtain the certificates of occupancy. For the reasons set forth below, the defendants' motion is granted and the plaintiff's cross motion is denied.

It is well established that in an action to foreclose a mortgage, a prima facie case is made by the plaintiff's production of the note and mortgage and proof on the part of the defendant/mortgagor and any guarantors of a default in payment or other material forums set forth in the mortgage (see Wells Fargo Bank Minnesota v Perez, 41 AD3d 590, 837 NYS2d 877 [2d Dept 2007]; Household Fin. Realty Corp. of New York v Winn, 19 AD3d 545, 796 NYS2d 533 [2d Dept 2005]; Ocwen Fed. Bank v Miller, 18 AD3d 527, 794 NYS2d 650 [2d Dept 2005]; Tower Funding Ltd. v David Benny Realty, Inc., 302 AD2d 513, 755 NYS2d 413 [2d Dept 2003]). It is equally well established that when parties set down their agreement in a clear and complete document, their writing should be enforced according to its terms (see WWW Assoc., Inc. v Giacontieri, 77 NY2d 157, 565 NYS2d 440 [1990]). In the absence of ambiguity or incompleteness, evidence outside the four corners of the document regarding what was really intended but unstated or misstated is inadmissable to add to or vary the writing, as the courts may not, by construction, add or excise terms nor distort the meaning of those used and thereby make a new commitment for the parties (see Consedine v Portville Cent. School Dist., ____ NY3d ____, 2009 WL 909701 [Ct of App 2009]; Vermont Teddy Bear Co. v 538 Madison Realty Co., 1 NY3d 470, 775 NYS2d 765 [2004]; Greenfield v Phillies Records, Inc., 98 NY2d 562, 750 NYS2d 565 [2002]).

The courts have emphasized that the foregoing rules have special import in the context of real property transactions where commercial certainty is a paramount concern and where the agreement was negotiated between sophisticated, counseled business people negotiating at arms length (see South Rd. Assoc., 4 NY3d 272, 793 NYS2d 835 [2005]; Rocar Realty NE, Inc. v Jefferson Valley Mall, 38 AD3d 744, 833 NYS2d 522 [2d Dept 2007]; Vermont Teddy Bear Co. v 538 Madison Realty Co., 1 NY3d 470, supra ; Matter of Wallace v 600 Partners Co., 86 NY2d 543, 634 NYS2d 669 [1995]). In such circumstances, the "courts should be extremely reluctant to interpret an agreement as impliedly stating something which the parties have neglected to specifically include" (Vermont Teddy Bear Co. v 538 Madison Realty Co., 1 NY3d 470, supra , quoting Rowe v Great Atl. & Pac. Tea Co., 46 NY2d 62 at 72, 412 NYS2d 827 [1978]). In this regard, silence as to a particular matter or term does not equate with ambiguity or [*3]indefiniteness (see Reiss v Financial Performance Corp., 97 NY2d 195, 738 NYS2d 658 [2001]).

Here, the court finds that neither the note nor the mortgage, which incorporated the terms of the commitment letter by reference, are incomplete or ambiguous. The court further finds that neither the note nor the mortgage included a term which imposed upon the defendants any obligation to complete all work necessary to obtain certificates of occupancy. That the plaintiff may have expected this obligation would have been included as a material term of the mortgage, does not justify judicial insertion of such obligation as a contract term, the breach of which is now alleged to have put the defendants in default of the mortgage. The plaintiff could have negotiated and included the defendants' procurement of certificates of occupancy as an express term of the subject mortgage or as a pre-closing condition, such as those set forth in the commitment letter. Under these circumstances, the case authorities relied upon by the plaintiff are not controlling (see e.g. Stendig, Inc. v Thom Rock Realty, Co., 163 AD2d 46, 558 NYS2d 917 [1st Dept 1990]). The defendants' motion for summary judgment is thus granted while the plaintiff's cross motion is denied.

The separate motion by the plaintiff (#

001) for an order dismissing the counterclaim asserted in the moving defendants' answer has not been opposed by said defendants. Accordingly, that motion (#

001) is granted.

In view of the foregoing, the defendants' motion (#

002) for summary judgment dismissing the plaintiff's complaint is granted. The plaintiff's cross motion (#

003) for summary judgment in its favor is denied and the plaintiff's separate motion (#

001) for dismissal of the moving defendants' counterclaim is granted without opposition.

DATED: _May 22, 2009________________________________

THOMAS F. WHELAN, J.S.C.