Community Preserv. Corp. v Wadsworth Condos, LLC

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Community Preserv. Corp. v Wadsworth Condos, LLC 2012 NY Slip Op 30686(U) March 9, 2012 Supreme Court, New York County Docket Number: 114865/2009 Judge: Lucy Billings Republished from New York State Unified Court System's E-Courts Service. Search E-Courts (http://www.nycourts.gov/ecourts) for any additional information on this case. This opinion is uncorrected and not selected for official publication. [* 1] SUPREME COURT OF THE STATE OF NEW YORK - NEW YORK COUNTY c PART 44 Justice MOTION CAL. NO. I. The following papers, numbered 1 ta were read on thls motion tf/for PAPERS NIJMEERER Notice of Motion/ Order to Show Cause .. Answerlng Affldavlts - Affldavlts - Exhlbits ... I - Exhibits t 0 j - si z Repiyhg Affidavita 3 Cross-Motion: . . 1 0 0 Yes @No U MAR 202m2 I Dated: 319 11% I Check one: 0 FINAL DISPOSITION Check if appropriate: - dNON- [3 DONOTPOST [* 2] COMMUNITY PRESERVATION CORPORATION, Index No. 1 1 4 8 6 5 / 2 0 0 9 Plaintiff -against- DECISION AND ORDER WADSWORTH CONDOS, LLC, CARNEGIE HOLDINGS, LLC, 43 PARK OWNERS GROUP, LLC, INWOOD EQUITIES GROUP, INC., SPARROW CONSTRUCTION CORP., PERRY FINKELMAN, MARK ENGEL, ELI BOBKER, BEN BOBKER, and JOHN DOE #l through JOHN DOE #12, the l a s t twelve names being fictitious and unknown to plaintiff, the persons or parties intended being the tenants, occupants, persons, or corporations, if any, having or claiming an i n t e r e s t in or lien upon the premises described in the complaint, Defendants FILED SPARROW CONSTRUCTION CORP., Third Party Plaintiff -against- ADG WADSWORTH CONSTRUCTION GROUP, LLC, NEW YORK COUNV CLERKS OFFICE Third Party Defendant LUCY BILLINGS, J.S.C.: I. BACKGROUND This action, for foreclosure of 1 Wadeworth Terrace, New York, New York, f i r s t requires untangling the parties complicated relationships and claims. Defendants Wadsworth Condos, LLC, and Carnegie Holdings, LLC, were the sole owners of cpc. 138 1 [* 3] the property until J u l y 6 , 2005, when they conveyed a 20% interest in the property to defendant 43 Park Owners Group, LLC. These three defendants entered a management agreement to govern the development of condominiums on the property. Wadaworth Condos, Carnegie Holdings, and their guarantors E l i and Ben Bobker (Bobker defendants) interpret the management agreement as imposing responsibility on 43 Park Owners Group's principals, defendants Perry Finkelman and Mark Engel, for managing the projectla construction activities, records, and accounts. Later in 2005 Wadsworth Condos, Carnegie Holdings, and 43 Park Owners Group executed notes and mortgages on the property separately with plaintiff and with defendant Inwood Equities Group, Inc. Inwood Equities Group concedes i t s mortgage is subordinate to plaintiff's. E l i Bobker, a managing member, and Ben Bobker, an owner of a beneficial share, of Wadsworth Condos, and Finkelman and Engel, managing members of 43 Park Owners Group, each personally guaranteed the notes. 11. THE PARTIES' CLAIMS AND POSITIONS Along with the Bobker defendants' affirmative defenses to plaintiff's foreclosure action, the Bobker defendants cross-claim against 43 Park Owners Group, Finkelman, and Engel (43 Park Owners defendants). Junior mortgagee Inwood Equities crossclaims for foreclosure against defendants Wadsworth Condos, Carnegie Holdings, E l i Bobker, Ben Bobker, 43 Park Owners Group, P e r r y Finkelman, and Mark Engel. Defendant Sparrow Construction C o r p . , holder of a mechanic's lien on the property, impleaded cpc. 138 2 [* 4] third party defendant ADG Wadsworth Construction Group, LLC, claiming i t s breach of a contract that formed the basis for Sparrow Construction's lien. Sparrow Construction also counterclaims and cross-claims for foreclosure of that mechanic,s lien against plaintiff, defendants Wadsworth Condos, Carnegie Holdings, and 43 Park Owners Group, LLC, and third party defendant ADG Wadsworth Construction Group. 43 P a r k Owners Group cross-claims against Sparrow Construction for wilful exaggeration of the lien. Plaintiff has moved for summary judgment on plaintiff's foreclosure claim, to discontinue its action against the Doe defendants, to sever the cross-claims and third party claims, and to appoint a referee. The Bobker defendants oppose plaintiff's motion for summary judgment as premature because the parties have not yet conducted disclosure. Inwood Equities opposes severance, but does not oppose summary judgment. Sparrow Construction has released its lien and supports severance. At oral argument, Sparrow Construction asked the court to search the record to grant summary judgment dismissing 43 Park Owners Group's cross-claim against Sparrow Construction for wilful exaggeration of a lien. 43 Park Owners Group opposes dismissal of its cross-claim, b u t does not oppose plaintiff's motion. Although no party originally submitted 4 3 Park Owner Group's amended answer to cross-claims containing its own cross- claim against Sparrow Construction, t h e appearing parties have stipulated that t h e court may consider 43 Park Owners Groupls cpc.138 3 [* 5] recent submission of that pleading as if submitted with plaintiff's motion. After submission of plaintiff's motion, t h e Bobker defendants moved to reopen the record for summary judgment, to include new documentary evidence they had uncovered through disclosure in a separate but related action against the 43 Park Owners defendants. The court grants this second motion, includes the new evidence in the record for summary judgment, and considers that evidence f o r that purpose. Tiernev v. Girardi, 86 A.D.3d 447, 448 (1st Dep't 2011); Ashton v. D.Q,C .S. Continuum Med. G r ~ u p , A.D.3d 613 (1st Dep't 2009). 68 111. SUMMARY JUDGMENT A. Standvda To obtain summary judgment, plaintiff must make a prima facie showing of entitlement to judgment as a matter of law, through admissible evidence eliminating all material issues of fact. C.P.L.R. § 3212(b); Smalls v. AJI Indue,, I n c . , 10 N.Y.3d 733, 735 (2008); JMD Holdinq Corn. v. Conqresa Fin. Corp., 4 N.Y.3d 373, 384 (2005); Giuffrida v. Citibank C o y p , , 100 N.Y.2d 72, 81 (2003). If plaintiff satisfies this standard, the burden shifts to defendants to rebut that prirnsl facie showing, by producing evidence, in admissible form, sufficient to require a trial of material factual issues. Morale8 v. D & A Food Serv,, 10 N.Y.3d 911, 913 (2008); Hyman v. Queen8 County Bancorp, Inc., 3 N.Y.3d 743, 744 (2004). In evaluating the evidence for plaintiff's motion, the court must construe the evidence in the cpc - 13 8 4 [* 6] light most favorable to defendants and accept their version of the facts as true. Cahill v. Triborouqh Bridqe & Tunnel Auth., 4 N.Y.3d 35, 37 (2004). In deciding a summary judgment motion on any issues, the court may search the record and grant summary judgment on those issues to any party entitled to judgment even if that party has not moved for that relief. C.P.L.R. § 3212(b); MaheBhwari v . Citv of New York, 2 N.Y.3d 288, 2 9 3 n.2 (2004); Werritt Hill Vineyards v. Windv Hqte. Vinevard, 61 N.Y.2d 106, 111 (1984); JPMorqan Chase Bank, N.A. v. Rocar Realty Ngrtheast, Inc., 80 A . D . 3 d 429, 430 (1st Dep't 2011). A s discussed below, however, summary judgment to any p a r t y may be premature when disclosure has not been conducted and evidence raising questions of fact may be in the exclusive control of the party seeking summary judgment. C.P.L.R. 5 3212(f). Farm, Inc., 70 A.D.3d 514 (1st Dep't B. E.q., Nramson v. Eden 2010). The Evidence Swmortinq Plaiptiff's Claims and Defendants' Defenses Plaintiff establishes a prima facie claim for foreclosure by presenting evidence, authenticated on personal knowledge, Aff. of Helen Rudolph (Feb. 5, 2 0 1 0 ) , of plaintiff's mortgage, defendant mortgagors' underlying promissory notes, and the mortgagors' default of each. Red Tulip, LLC v , Neiva, 44 A.D.3d 204, 209 (1st Dep't 2007); Witelson v, Jamaica Estate8 Holdinq Corp. I, 40 A.D.3d 284 (1st Dep't 2007); Citidress I1 v . 2 0 7 Second Ave. Realty C o r p . , 21 A.D.3d 774, 776 (1st Dep't 2005). Plaintiff's prima facie claim a l s o disposes of the Bobker defendants' first affirmative defense of failure to state a claim. Red TuliD, LLC cpc. 138 5 [* 7] v. Neiva, 44 A.D.3d at 209; Citidreas I1 v. 207 Second Ave. Realty Corp., 21 A.D.3d at 7 7 6 ; Cochran Inv, C o . , Inc. v. Jackson, 38 A.D.3d 704, 7 0 5 (2d Dep't 2007). The Bobker defendants' second and third affirmative defenses claim plaintiff's action and omissions diminished t h e Bobker defendants' ownership interest, barring plaintiff from recovering based on ita unclean hands. Alden State Bank v. Sunrise B l d r a . , Inc., 4 8 A.D.3d 1162, 1165 (4th Dep't 2008); Canterbury Realty & Equip. Corp. v Pouqhkeepsie Sav. B a n k , 135 A.Q.2d 1 0 2 , 107 (3d Dep't 1998). See Connecticut Natl. Bank v. P e w h Lake Plaza, 204 Plaintiff's alleged conduct A.D.2d 909, 9 1 1 (3d Dep't 1994). directly relates to the mortgage plaintiff seeks to foreclose, to the reason for the initial loan, and to the Bobker defendants' claimed reasons for their inability to repay the loans. Blueberry Invs, C o . v. Tlana Realty, 184 A.D.2d 9 0 6 , 907 (3d Dep't 1992). Although a g u a r a n t y expressly waiving all defenses other than actual payment would bar the defense of unclean hands against a foreclosure, plaintiff does not claim such a blanket waiver of defenses in this case. & Red Tulip, LLC v , Neiva, 44 A.D.3d at 2 0 7 . A showing that plaintiff wrongfully caused defendants' default, moreover, may survive even a waiver of defenses. I . at d 211; Canterbury R e 8 l t . v & Equip. Corp., 135 A.D.2d at 106. Nonetheless, the Bobker defendants present no evidence that plaintiff colluded with the 43 Park Owners defendants or otherwise wrongfully caused the mortgagors' default. The emails cpc. 138 6 [* 8] with which the court has permitted the Bobker defendants to supplement the record show o n l y that defendants Finkelman and Engel communicated w i t h plaintiff regarding the financing of the project. The Bobker defendants themselves claim that Finkelman and Engel undertook managerial responsibilities for the project. The affidavit of Eli Bobker, part of the Bobker defendants' original opposition to plaintiff's motion for summary judgment, similarly attests only that Finkelman and Engel worked with plaintiff fulfilling the very managerial responsibilities t h a t the Bobker defendants ascribe to Finkelman and Engel. Aff. of Eli Bobker 17 4, 6 (Mar. 11, 2 0 1 0 ) . The Bobker defendants present no evidence that they were harmed by any of plaintiff's actions or by defendants Finkelman and Engel communicating with plaintiff. Even if plaintiff, Finkelman, and Engel discussed or made unauthorized changes to the development plan, the Bobker defendants do not show that such changes caused the default. Similarly, no evidence supports the Bobker defendants' fourth affirmative defense of equitable estoppel, which requires defendants to show they relied on plaintiff's promise or actions to defendants' detriment. 326 ShondeJ J. v. Mark D., 7 N.Y.3d 320, (2006); Fundamental P9rtfo;lio Advisors, Inc. v. Tocqyeville fieset Mqt., Ltd., 7 N.Y.3d 96, 106-107 ( 2 0 0 6 ) ; PrQvident Loan socy. of ~y v. 1 9 0 E , 72nd St. C o r p , , 7 8 A.D.3d 501, 5 0 3 (1st Dep't 2010); Siqer v. Rich, 3 0 8 A.D.2d 2 3 5 , 242 (1st Dep't 2 0 0 3 ) E l i Bobker does attest that he and Ben Bobker relied on an engineering report, prepared by an engineer w h o m plaintiff cpc. 138 7 [* 9] retained, that turned out to be inaccurate. Bobker A f f . 8. Eli Bobker does not attest, however, and no other evidence indicates, that the inaccurate report caused or was linked in any way to the default. The Bobker defendants' related fifth affirmative defense of waiver fails because plaintiff's mortgage and its underlying notes expressly preclude waiver of the terms of the mortgage or notes. C. The Bobker Defendants Have Not Shown an Entitlement to Further DiprlosLIre. The Bobker defendants may not forestall summary judgment to conduct further disclosure, because they have made no showing exclusive control regarding its relationship or collusion with the 43 Park Owners defendants or otherwise supporting the Bobker defendants' defenses. Ehrenhalt v. Kinder, 85 A.D.3d 553 (1st Dep't 2011); Duane Morris LLP v, Astor Holdinqa Inc., 61 A.D.3d 418 (1st Dep't 2009); Volute Ventures, J , L C v. Jenkens & Gilchrist Parker Chapin LLP, 44 A.D.3d 557 (1st Dep't 2007); S w a t o q a Assoc. Landscape Architects, Architects, E n q r g . & Planners, P.C. v, Lauter Dev, Group, 77 A.D.3d 1219, 1222 (3d Dep't 2010). This conclusion is all the more warranted after the Bobker defendants already obtained disclosure, in a related action, of evidence they insisted was relevant to a relationship or collusion between plaintiff and the 43 Park Owners defendants; were allowed to supplement this summary judgment record with that disclosure; and still failed to mount a defense. cpc.138 8 [* 10] Fireman, 275 A.D.2d 162, 169 (1st Dep't 2000); Saratoqa Aesoc. Landecape Architects, Architects, Epqrs. & Planners, P.C. v.Lauter Dev. Group, 77 A . D . 3 d at 1 2 2 3 ; Guzman v , Estate of Fluker, 226 A.D.2d 676, 678 (2d Dep't 1996). The court may not award damages for wilful exaggeration of a lien unless it has been discharged or vacated for that reason. N . Y . Lien Law 5 s 39, 39-a; Wellbilt Emipment C o r n . v. Fireman, 275 A.D.2d a t 167; Saratoqa Aesoc. Landscape Architects, Architects, Enqrs, & Planners, P.C. v.L+uter Dev, Group, 77 A.D.3d at 1 2 2 3 ; Gwzman v. Estate of Fluker, 226 A.D.2d at 678. Damages are unauthorized both when the parties have stipulated to release the lien, exaggeration claim. Saratoqa A S ~ Q C . Landscape Architect@, Architects, Enqrs. Planners, P.C. v. Lauter Dev. Group, 77 & A.D.3d at 1223; G u z m m v. Estgte of Fluker, 226 A.D.2d at 678. If t h e lienor avoids a wilful exaggeration claim through an involuntary vacatur of the lien for a reason other than wilful exaggeration, then Sparrow Construction's voluntary relaeaseof its lien may not be accorded any less effect. Upon a search of t h e record, Sparrow Construction's voluntary release of the lien provides grounds to grant summary judgment to Sparrow Construction dismissing 43 Park Owners cpc. 138 9 [* 11] Group's cross-claim against Sparrow Construction for wilful exaggeration of a lien. C.P.L.R. § 3212(b); N.Y. L i e n Law §§ 39, 39-a; Wellbilt Equipment Corp. v. Fireman, 2 7 5 A.D.2d at 1 6 9 ; Saratoqa Assoc. Landscape Architects, Architectg, Enqrs. & Planners, P.C. v. Laucer Dev. Group, 7 7 A.D.3d at 1 2 2 3 ; Guzman v. Estate of Fluker, 226 A.D.2d at 678. Because Sparrow Construction voluntarily released the lien, it was not discharged based on wilful exaggeration, rendering further disclosure regarding wilful exaggeration purposeless. 111. SEVERANCE A. Sparrow Constrwtioq Because Sparrow Construction has released its lien, this defendant is no l o n g e r a necessary party to this action. C.P.L.R. § 1001(a); R.P.A.P.L. 5 1311(3). Sparrow Construction no longer retains a lien on the property, nor does Sparrow Construction's claim f o r breach of contract against third party defendant ADG Wadsworth Construction arise out of the same transaction, occurrence, or series of transactions or occurrences as plaintiff's claim for foreclosure of its mortgage or f o r payment of ita note. C.P.L.R. § 1002; R.P.A.P.L. 5 1311(3). After this decision, Sparrow Construction's third party action against ADG Wadsworth Construction no longer even shares parties in common with the remaining main action. Requiring the third party claim to be tried with the remaining claims in this action would inconvenience and prejudice all parties by requiring them to litigate claims that bear no relation to their own claims. cpc. 138 10 [* 12] party action. B. I. d Inwood Equities A s a junior mortgagee, defendant Inwood Equities is a necessary party to plaintiff's action for foreclosure. C.P.L.R. 5 1001(a); R.P.A.P.L. 5 1311(3). Although Inwood Equities' cross-claim for foreclosure involves a different promissory note and mortgage, its cross-claim necessarily involves the same parties as plaintiff's action, R.P.A.P.L. § 1311(3), and involves common issues such as the valuation and sale of the mortgaged premises. It therefore serves the convenience of a11 remaining parties and p r e j u d i c e s no one to keep Inwood Equities' claims with the remaining claims and deny any severance. C.P.L.R. 5 603. C. T h e Bobker Defendante' Croes-Claims Aqainst the 43 Park Owners Defendants The Bobker defendants' cross-claims against the 43 Park Owners defendants do not involve any parties that are not also parties to plaintiff's action. Moreover, the Bobker defendants' cross-claims involve many of the same underlying facts as plaintiff's action for foreclosure. Keeping plaintiff's action and the Bobker defendants' cross-claims together in one action therefore serves all remaining parties' convenience and does not prejudice any party. cpc.138 C.P.L.R. § 603. 11 [* 13] IV. CONCLUSION For the foregoing reasons, after granting the motion by defendants Wadsworth Condos, LLC, Carnegie Holdings, LLC, Eli Bobker, and Ben Bobker to supplement the record, the court grants plaintiff's motion f o r summary judgment. C.P.L.R. 5 3212(b). The court a l s o grants plaintiff's motion for severance to the extent of severing the third p a r t y action against Sparrow Construction Corp., C.P.L.R. § § 6 0 3 , 1001(a), 1 0 0 2 ; R.P.A.P.L. § 1311(3), and for discontinuance of plaintiff's action against the Doe defendants, without opposition. C.P.L.R. § 3217 (b)* court otherwise d e n i e s plaintiff's motion. The Finally, the court grants summary judgment to defendant Sparrow Construction dismissing the cross-claim by 43 Park Owners Group, LLC, against Sparrow Construction. C.P.L.R. 5 3212(b). This decision constitutes the court's order. The court will provide copies to the parties' attorneys. DATED: March 9, 2012 LUCY BILLINGS, J.S.C. LUCY BUINGS FILED J.S.C, MAR 202012 NEW YQRK COUNTY OLERK'S OFFICE cpc.138 12

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