GE Commercial Fin. Bus. Prop. Corp. v Ross Network, Inc.

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GE Commercial Fin. Bus. Prop. Corp. v Ross Network, Inc. 2012 NY Slip Op 30701(U) March 5, 2012 Supreme Court, Nassau County Docket Number: 010089-11 Judge: Timothy S. Driscoll 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- STATE OF NEW YORK SHORT FORM ORDER Present: HON. TIMOTHY S. DRISCOLL Justice Supreme Court ------------------------------------------------------------------- x GE COMMERCIAL FINANCE BUSINESS PROPERTY CORPORATION Plaintiff TRIAL/IAS PART: 16 NASSAU COUNTY Index No: 010089- Motion Seq. No: -against- Submission Date: 2/2/12 ROSS NETWORK, INC., PAUL R. ROSENBLIT, JA Y E. SCHARF, THOMAS M. WHITE, CENTURY CAPIT AL COMPANY , LLC, DYNAIRE SERVICE CORP., NEW YORK STATE DEPARTMENT OF TAXATION AND FINANCE NEW YORK STATE DEPARTMENT OF LABOR UNEMPLOYMENT INSURANCE DIVISION, NU- MERIT ELECTRICAL SUPPLY CO. INC. REMCOL INC d/b/a JANCO PRESS , and JOHN DOE#1 through JOHN DOE #10 (said John Doe defendants being fictitious , it being intended to name all other parties who may have some interest in or lien upon the premises sought to be foreclosed), Defendants. -------------------------------------------------------------------- x Papers Read on this Motion: Notice of Motion , Affidavit in Support , Affirmation in Support and Exhibits.... This matter is before the court on the motion fied by Plaintiff GE Commercial Finance Business Property Corporation (" GE" or " Plaintiff' ) on Januar 18 , 2012 and submitted on Februar 2 2012. For the reasons set forth below , the Cour grants the motion. [* 2] BACKGROUND Relief Sought A. Plaintiff moves for an Order 1) pursuant to CPLR 93215 and New York Real Propert Actions and Proceedings Law (" RP APL" ) 9 1321 , declaring the Defendants Ross Network , Inc. Ross Network" or " Borrower ), Paul R. Rosenblit (" Rosenblit" ), Jay E. Scharf (" Scharf' Thomas M. White (" White ), Centur Capital Company, LLC (" Century Capital" ), Dynaire Service Corp. (" Dynaire ), New York State Deparment of Taxation and Finance , New York State Departent of Labor Unemployment Insurance Division , Nu- Merit Electrical Supply Co. Inc. ("Nu- Merit") and Remcol Inc. d//a Janco Press (" Remcol" ), to be in default with respect to this action and granting Plaintiff judgment by default against the Defendants for all of the relied requested in the Verified Complaint (" Complaint" ); b) pursuant to RP APL 9 1321 , appointing a referee to ascertain and compute the amount due upon the note and the mortgage being foreclosed in this action and to determine whether the mortgaged premises can be sold in parcels; and c) amending the caption in the above-entitled action to delete the names of the "John Doe Defendants. B. The Paries ' History The Complaint (Ex. 1 to Benko Aff. in Supp. ) is verified by Steven Benko (" Benko who attests that 1) he is an offcer of Plaintiff; 2) he is authorized to verify the Complaint; and 3) the Complaint is true to his own knowledge , except as to matters therein stated to be alleged upon information and belief and , as to those matters , he believes them to be true. Plaintiff also filed a Notice of Pendency regarding the propert at issue (id. at Ex. 2). The Complaint alleges as follows: GE brings this action to foreclose on a mortgage (" Mortgage ), as Mortgagee under the Mortgage. Ross Network is the Mortgagor under the Mortgage. Rosenblit , Scharf and White are the guarantors (" Guarantors ) of the Mortgage. Century Capital is a named Defendant because upon information and belief, it is the holder of a Blanet Second Mortgage on the mortgaged premises (" Mortgaged Premises ) which consists of real propert located in the Vilage of Freeport , County of Nassau , State of New York , known as 8 Maple Place and 27 St. Johns Place Freeport , New York 11520. Dynaire is a named Defendant because , on or about August 20 [* 3] 2010 , Dynaire fied a notice of mechanic s lien against a portion of the Mortgaged Premises in the amount of $126 788.16 , which lien is subject to and subordinate to the lien of the Mortgage. Defendants New York State Deparment of Taxation and Finance (" Tax Department" ), New York State Deparment of Labor Unemployment Insurance Division (" Labor Deparment" Nu- Merit and Remcol are named Defendants because they are judgment creditors of the Mortgagor. On or about October 25 2004 , Ross Network , for good and valuable consideration executed and delivered to Plaintiff a Second Amended and Restated Promissory Note to evidence its obligations to Plaintiff for a loan (" Loan ) in the principal amount of $2 550 000. 00 (together with any amendments and/or modifications , the "Note ) (Ex. A to Compl.). Pursuant to the terms of the Note , Ross Network promised to pay monthly installments of principal and interest until November 1 2018. Pursuant to a Loan and Mortgage Modification Agreement between the Borrower Guarantors and Plaintiff dated October 25 2004 (" Modification Agreement" ) (Ex. B to Compl.), the liens of certain existing mortgages were modified , extended and consolidated into a single first mortgage lien on the Mortgaged Premises as security for payment of the Note. The Modification Agreement was duly recorded , and the required mortgage recording tax was paid. As per the Modification Agreement , the Borrower and Plaintiff agreed that the terms of certain existing mortgages were consolidated , modified and extended pursuant to the Second Amended and Restated Credit Line Mortgage , Security Agreement , Assignment of Leases and Rents and Fixture Filing dated as of October 25 2004 , which served as security for payment of the Note. The Mortgage consists of the Second Amended and Restated Credit Line Mortgage , Security Agreement , Assignment of Leases and Rents and Fixture Filing, together with any amendments and or modifications. Pursuant to the Mortgage (Compl. at Ex. C), Ross Network irrevocably mortgaged to Mortgagee/Plaintiff, with power of sale , all of Ross Network' s right , title and interest in the Mortgaged Premises. The Mortgage was duly recorded , and the mortgage tax paid To induce Plaintiff to make the Loan evidenced by the Note and secured by the Mortgage Guarantors guaranteed to Plaintiff the full payment of all amounts due and owing from the Borrower to Plaintiff under the Note and Mortgage. The amounts due and owing include [* 4] attorney s fees , expenses and costs incurred by Plaintiff in enforcing its rights under the Note and Mortgage. Plaintiff is the sole , true and lawful owner and holder of the Note and Mortgage. The Mortgage provides that the Borrower s filing of a voluntar petition in bankruptcy is an Event of Default under the Mortgage. Upon such an Event of Default , Plaintiff may institute foreclosure proceedings and sell the Mortgaged Premises. The Mortgage also provides that the filing of a petition against the Borrower seeking reorganization , liquidation or similar relief under any existing law is an Event of Default triggering Plaintiffs right to institute foreclosure proceedings and sell the Mortgaged Premises. On July 21 2010 , an involuntar petition under Chapter 7 of Title 11 of the United States Code (" Banptcy Code ) was commenced against the Borrower in the United States Banptcy Cour for the Southern District of New York (" Banptcy Court" ), which was assigned Case Number 10- 13929. By motion dated August 30 , 2010 , the Borrower moved to convert the involuntar case to a case under Chapter 11 of the Banptcy Court approved that conversion on September 27 Banptcy Code , and the 2010. On October 14 2010 , the Borrower moved to convert the Chapter 11 case to a case under Chapter 7 of the Bankruptcy Code and the Banuptcy Court approved that conversion on October 28 , 2010. An Interim Chapter 7 Trustee (" Trustee ) was appointed in the Banptcy Court on October 29 2010. By reason of these Banptcy Cour proceedings , one or more Events of Default have occured under the Note and Mortgage. Pursuant to the Note and Mortgage , upon the occurrence of an Event of Default , Plaintiff may declare the entire amount of principal and interest due immediately due and payable In addition , pursuant to the Mortgage , Borrower is responsible for all costs and expenses , including attorney s fees and costs , incurred by Plaintiff in enforcing its rights under the Mortgage. As of Februar 11 2001 , Borrower was indebted to Plaintiff for the . aggregate amount of$1 769 145.43 , not including legal and appraisal fees incurred in connection with the Bankruptcy matter , consisting of principal , unpaid interest , late fees , customer loan services fees and a processing fee. The Mortgage also authorizes Plaintiff, in the event of Default , to have a receiver appointed. On or about Februar 14 2011 , Plaintiff fied a motion in the Bankptcy Cour to lift the automatic stay provision of the Bankptcy Code (" Motion ), to permit Plaintiff to commence [* 5] this foreclosure action. The Trustee consented to the Motion and on March 17 , 2011 , the Banptcy Cour issued an Order (Ex. D to Compl.) vacating and terminating the stay provided by the Banuptcy Code and permitting Plaintiff to commence this foreclosure action. To protect its security, Plaintiff may, during the pendency of this action, be compelled to pay SUms for insurance premiums , taxes , assessments and other charges affecting the Mortgaged Premises. Plaintiff requests that any sums paid , together with interest at the default rate set forth in the Note and Mortgage from the date of such payments , as well as Plaintiff s costs and expenses including reasonable attorney s fees , be added to Plaintiffs claim as secured by the Mortgage , and be adjudged a valid lien on the Mortgaged Premises such that Plaintiff be paid such sums out of the proceeds of the sale of the Mortgaged Premises. The Defendants have , claim to have or may claim to have some interest in or lien upon the Mortgaged Premises or some par thereof, which interest or lien , if any, accrued subsequent , and is subject and subordinate to , the lien of Plaintiffs Mortgages. No other action or proceeding has been commenced for the foreclosure of the Mortgage or for recovery of the sums secured by the Note and Mortgage. In the event that Plaintiff possesses any other lien against the Mortgaged Premises either by way of judgment , junior mortgage or otherwise , Plaintiff requests that such other lien(s) not be merged in Plaintiffs causes of action herein , but that Plaintiff be permitted to enforce said other lien(s) and/or seek determination of priority thereof in any independent action(s) or proceeding(s) including, without . limitation , any surplus money proceedings. Plaintiff requests an Order inter alia 1) granting a judgment of foreclosure; 2) directing that the Mortgaged Premises may be decreed to be sold and that the monies from that sale be brought into Cour; 3) directing that Plaintiff be paid the amount due on the Note and Mortgage with interest , late charges , attorney s fees , costs , allowances and disbursements; and 4) appointing a Receiver. The specific relief requested by Plaintiff is set forth on pages 8- 9 of the Complaint. In his Affidavit in Support , Benko affirms the truth of the allegations in the Complaint regarding the Note , Mortgage , Banptcy action , Defendants ' default and the sums owed by Borrower under the Note as of Februar 11 2011. Benko also affirms that , as of September 21 [* 6] 2011 , Plaintiff s total attorney s fees and costs related to the Banptcy action and the instant action totaled $27 559. 94. Benko submits that Plaintiff is entitled to judgment by default against the Defendants. Plaintiff requests that the Court , pursuant to RPAPL 1321 , appoint a referee and direct the referee to 1) ascertain and compute the amounts due Plaintiff on the Note and Mortgage including principal , interest , late fees , administrative costs , water and sewer rents , any applicable taxes , insurance premiums , reasonable attorney s fees and any other charges on the Note and the Mortgage; and 2) to examine and report whether the Mortgaged Premises can be sold in one or more parcels. In his Affirmation in Support , Plaintiff s counsel provides Affdavits of Service reflecting the service of the Notice of Pendency, and Summons and Complaint on Defendants Ross Network , Rosenblit , Scharf, White , Century Capital , Dynaire , Tax Department , Labor Deparment , Nu- Merit and Remcol (Exs. A- J to Lynch Aff. in Supp. ). In addition , Plaintiff served Defendants Ross Network , Rosenblit , Scharf, White , Centur Capital, Dynaire , Tax Department , Labor Deparment , Nu- Merit and Remcol with an additional copy of the Notice of Pendency, and Summons and Complaint , pursuant to CPLR of its Affidavit of Additional Mailing under CPLR affirms , 3215 , and Plaintiff provides a copy 3215 (id. at Ex. K). Plaintiffs counsel fuher , that based on a search of publicly available information as to militar status (see Lynch Aff. in Supp. at Ex. L), neither Defendant Rosenblit , Scharf or White is a person in the militar service as defined in the Soldiers ' and Sailors ' Civil Relief Act of 1940 , as amended. Plaintiff s counsel affirms that Plaintiff has not received a notice of appearance , answer or motion in responSe to the Complaint from any of the Defendants , no Defendant has requested or been granted an extension of time , and their time to appear , answer or move with respect to the Complaint has now expired. C. The Paries ' Positions Plaintiff submits that it has demonstrated its right to judgment by default against the Defendants for all of the relief requested in the Complaint by establishing an Event of Default under the Note and Mortgage whose terms authorize Plaintiff inter alia to 1) declare all outstanding indebtedness , together with accrued interest , due immediately due and payable; y. [* 7] 2) collect from Defendants attorney s fees and costs incured by Plaintiff in enforcing its rights under the Note and Mortgage; 3) institute foreclosure proceedings and sell the Mortgaged Premises; and 4) have a receiver appointed. Plaintiff has also established that it served Defendants with the Summons and Complaint , and Notice of Pendency, Defendants have failed to appear or move in this action , and their time to do so has expired. RULING OF THE COURT Default Judgment On a motion for leave to enter a default judgment pursuant to CPLR 9 3215 , the movant is required to submit proof of service of the summons and complaint , proof of the facts constituting the claim , and proof of the defaulting part' s Atlantic Casualty Ins. Co. v. CPLR ~ 3215(f) and Joosten v. B. RJNJ Services, Inc. 89 AD. 3d 649 651 (2d Dept. 2011), citing Allstate Ins. Co. pary must also make a default in answering or appearing. v. Austin 48 ADJd 720 (2d Dept. 2008). The moving showing of a cause of action against the defaulting par. prima facie Gale 129 AD. 2d 531 (1 st Dept. 1987). Foreclosure In an action to foreclose a mortgage , a plaintiff establishes its case as a matter of law through the production of the mortgage , the unpaid note , and evidence of default. Webster 61 A. 2d 482 3d 856 Republic Natl. Bank olN 856 (2d Dept. 2009), citing 482 (2d Dept. 2003), quoting Wells Fargo v. v. Kane , 308 196 AD. 2d Vilage Bankv. Wild Oaks Holding, 812 812 (2d Dept. 1993). C. Appointment of Referee Real Property Actions and Proceedings Law (" RP APL" ) ~ 1361 (2) provides that the Supreme Court , by reference or otherwise , shall ascertain the amount due to any claimants and American Holdings the priority of any liens for purposes of the distribution of surplus money. Invest Corp. v. Josey, 2010 N. Y. App. Div. LEXIS 2457 (2d Dept. 2010). A referee may inquire into and determine all questions of law and fact , and every question tending to show the equities of the claimant , to decide to whom surlus money belongs. Misc. 351 , 352- 353 (Sup. Ct. N. Y. County, 1901), aff' Id. quoting Wilcox v. Drought , 36 71 App. Div. 402 (1st Dept. 1902). [* 8] D. Deficiency Judgment RP APL ~ 1371 , titled" Deficiency judgment " provides , in pertinent par , as follows: 1. If a person who is liable to the plaintiff for the payment of the debt secured by the mortgage is made a defendant in the action , and has appeared or has been personally served with the summons , the final judgment may award payment by him of the whole residue , or so much thereof as the court may determine to be just and equitable , of the debt remaining unsatisfied , after a sale of the mortgaged propert and the application of the proceeds , pursuant to the directions contained in such judgment , the amount thereof to be determined by the cour as herein provided. 2. Simultaneously with the making of a motion for an order confirming the sale, provided such motion is made within ninety days after the date of the consumation of the sale by the delivery of the proper deed of conveyance to the purchaser , the pary to whom such residue shall be owing may make a motion in the action for leave to enter a deficiency judgment upon notice to the par against whom such judgment is sought or the attorney who shall have appeared for such pary in such action. Such notice shall be served personally or in such other manner as the court may direct. Upon such motion the court , whether or not the respondent appears , shall determine upon affdavit or otherwise as it shall direct , the fair and reasonable market value of the mortgaged premises as of the date such premises were bid in at auction or such nearest earlier date as there shall have been any market value thereof and shall make an order directing the entry of a deficiency judgment. Such deficiency judgment shall be for an amount equal to the sum of the amount owing by the par liable as determined by the judgment with interest , plus the amount owing on all prior liens and encumbrances with interest, plus costs and disbursements ofthe action including the referee s fee and disbursements , less the market value as determined by the court or the sale price of the propert whichever E. shall be the higher. Application of these Principles to the Instant Action The Cour concludes that Plaintiff has demonstrated its entitlement to judgment for the relief demanded in the Complaint by 1) establishing its service of the Complaint on Defendants and their failure to appear in this action; and 2) demonstrating its right to judgment by establishing that Plaintiff is the holder and owner of the Mortgage and Note , which Plaintiff has produced , and demonstrating that there has been an Event of Default entitling Plaintiff to the requested relief pursuant to the Mortgage and Note. The Cour also grants Plaintiffs application to amend the caption to delete the " John Doe " Defendants. The Court directs Plaintiff to submit judgment on notice , as well as proposed orders , on notice , with respect to the appointment of a Referee and other relief granted herein. [* 9] All matters not decided herein are hereby denied. This constitutes the decision and order of the Court. Submit judgment and orders on ten (10) days notice. ENTER DA TED: Mineola , NY March 5 , 2012 ENTERED MAR 14 2012 NASSAU COUNTY COUNTY CLERK' S OFfiCE

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