Mochkin v Mochkin

[*1] Mochkin v Mochkin 2012 NY Slip Op 52480(U) Decided on November 28, 2012 Supreme Court, Kings County Schmidt, 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 This opinion is uncorrected and will not be published in the printed Official Reports.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 November 28, 2012
Supreme Court, Kings County

Joseph Mochkin and 513 PROPERTIES INC., Plaintiffs,

against

Juda Mochkin, a/k/a JUDA MOCKIN, a/k/a JUDAH MOCKIN, a/k/a LEIB MOTZKIN, a/k/a LEIB MOTCHKIN, Defendant.



36459/2006



Plaintiff's Attorney:

Theodore P. Kaplan, Esq.

Chronakis Siachos & Kaplan, LLC

260 Madison Avenue, 18th Floor

New York, NY 10016

Defendants' Attorneys:

Sheldon Eisenberger, Esq.

Daniel Steinberg, Esq.

The Law Office of Sheldon Eisenberger

30 Broad Street, 27th Floor

New York, NY 10004

David Schmidt, J.

Pending before the court are two orders to show cause:

First, by order to show cause, dated August 21, 2012, defendant Juda Mochkin seeks, inter alia, an order: (1) adjudicating plaintiff, Joseph Mochkin, in violation of the terms of the "so-ordered" stipulation of settlement in this action, dated July 25, 2011 (the Settlement Agreement or Agreement); (2) scheduling a hearing to determine damages owed to defendant as a direct result of the violation of the terms of the so-ordered Settlement Agreement; (3) modifying the Settlement Agreement to allow for: (i) the payment of $700,000 to plaintiff to be held in escrow pending a hearing on damages and the amount by which the payment should be reduced due to plaintiff's wrongful actions; (ii) general releases to be exchanged upon release of the escrow, and (iii) plaintiff's confirmation that he has vacated and surrendered the subject property.

Second, by order to show cause, dated August 23, 2012, defendant seeks an order permitting him additional time to pay the final settlement payment of $700,000 on account of [*2]actions taken by plaintiff to impede defendant's performance of the settlement including plaintiff's refusal to attend a closing and execute documentation acknowledging the waiver and release of his claims.

For the reasons that follow, defendant's applications are granted to the extent set forth herein.

I.Relevant Factual and Procedural Background

This action arises out of a bitter family dispute over the ownership and control of the property located at 838-840 Montgomery Street, Brooklyn, New York. Plaintiff commenced this action against his father, the defendant, claiming he is a 50% shareholder in 513 Properties, Inc. (513), which owns the property. The property is a mixed use building containing residential units and commercial space. The property is encumbered, since September 16, 2003, with a mortgage held by Astoria Federal Savings and Loan (Astoria).

To help resolve the parties' dispute, this court, over the course of numerous conferences, supervised and helped fashion a so-ordered and stipulated-to settlement agreement signed by both parties on July 25, 2011. See affirmation of Juda Mochkin, dated August 20, 2012 (defendant's aff.), Ex. A. The terms of the Agreement provided, inter alia, that plaintiff would relinquish all of his claims in exchange for a settlement amount of $750,000. The settlement amount was to be paid in two installments, as follows: $50,000 on or before September 26, 2011 and the remaining $700,000 was to be paid on or before July 25, 2012 . Id., Ex. A, ¶ 1(a) and (b). With respect to both payments, the Settlement Agreement provided that "time [was] of the essence." Id. Defendant made the initial payment of $50,000 to plaintiff in the fall of 2011. Id., ¶ 6.

Relevant to this discussion, the Settlement Agreement contemplated that the funds for the settlement payment might be raised from either a sale or refinancing of the property. Id., Ex. A, ¶ 3. Upon payment of the settlement amount, the parties were to exchange general releases. Id., Ex. A, ¶ 5. The Agreement further provided that, in the event of defendant's default of his payment obligations, "plaintiff shall have the right to buy defendant's interests in 513 Properties Inc. for $200,000 within six months after the default." Id., Ex. A, ¶ 2. At the request of the parties, this court retained jurisdiction in all matters related to the agreement. Id., Ex. A, ¶ 6.

In April 2012, plaintiff claims that he received notice from counsel forAstoria that 513 had allegedly failed to submit payments pursuant to the note and outstanding mortgage. See affidavit of Joseph Mockin, sworn to August 14, 2012, ¶ 3 (annexed as Ex. C to the affidavit of Joseph Mochkin, sworn to October 17, 2012).[FN1] On April 6, 2012, after consulting with his own counsel, plaintiff commenced an action challenging the validity of the note and mortgage held by Astoria (the Astoria action). See affirmation of Edward N. Gerwitz, dated October 17, 2012 (Gerwitz aff.), ¶¶ 2, 8-9, Ex. A. Thereafter, on April 17, 2012, plaintiff filed an amended notice of pendency against Astoria and the property. Id., Ex. B.

To pay the balance of the settlement amount, defendant obtained a mortgage commitment from W Financial Fund, LP (W Financial), a lender, to refinance the property in advance of the July 25, 2012 deadline. Defendant's aff., ¶ 7. On July 5, 2012, Joseph Farber, the attorney [*3]charged with securing financing for defendant, received an e-mail with attached correspondence from counsel to W Financial. Id., Ex. C. The letter confirmed that W Financial was "ready willing and able" to fund a loan in the amount of $2.5 million to be secured by a first mortgage on the property. Id. The letter further states that, before a closing could occur, the issue of the outstanding lis pendens on the property needed to be cleared. Id.

Mr. Farber also received notice, via e-mail, from Fidelity National Title Insurance Services, LLC (Fidelity), the company engaged to insure the W Financial loan, that Fidelitywould not issue a policy until it had in its possession documents demonstrating that the cloud on title had been removed, i.e., the cancellation of the lis pendens and withdrawal of the Astoria action. See affidavit of Joseph Farber, sworn to October 25, 2012 (Farber aff. [attached to reply affirmation of Sheldon Eisenberger, dated October 25, 2012 (reply aff.)]), ¶ 9, Ex. E.

As a result of these developments, defendant moved, by order to show cause, dated July 9, 2012, for an order directing plaintiff to cancel the lis pendens and withdraw the Astoria action. By order dated July 12, 2012, this court extended the deadline for defendant to pay the settlement amount to August 24, 2012. See affirmation of Sheldon Eisenberger, dated August 23, 2012 (Eisenberger aff.), Ex. B. The court further indicated that the new deadline was "subject to defendant's right to seek a further extension if necessary due to plaintiff's conduct." Id.

Then, by order to show cause, dated August 8, 2012, defendant moved to this court to intervene in the Astoria action and hold a joint trial regarding both the Astoria action and the current action. On August 14, 2012, this court issued an order granting defendant's motion to intervene and merge the Astoria action with the instant action. Id., Ex. C. Additionally, the August 14th order directed plaintiff to immediately cancel the lis pendens and to discontinue the underlying action against Astoria with prejudice, subject to defendant's payment of the settlement amount. Id.

As the new deadline for full payment of the settlement amount was approaching, defendant sought plaintiff's cooperation to attend the closing and provide the releases sought by W Financial and Fidelity. Id., ¶ 2. Plaintiff refused, thereby, preventing the loan from closing. Id., ¶ 3.

The instant applications followed.

II.Discussion

A.Parties' Contentions

Defendant advances two alternative theories on which this court may extend the deadline for full payment of the settlement amount.

First, defendant maintains that plaintiff's filing of the Astoria action and related lis pendens prevented defendant from refinancing the property, which, in turn, interfered with defendant's ability to obtain the funds to pay the balance of the settlement amount. Essentially, defendant accuses plaintiff of violating the covenant of good faith and fair dealing implied in the Settlement Agreement by creating the conditions that would cause defendant to default on the settlement payment. Defendant further claims that plaintiff's actions are motivated by paragraph 2 of the Settlement Agreement, which provides that, in the event of defendant's default of his payment obligations, plaintiff can become sole owner of the property for the (bargain) price of $200,000.

Second, defendant asserts that this court has the inherent power to exercise its discretion [*4]to extend the time for defendant to pay the settlement amount.

In opposition, plaintiff contends that since the filing of the Astoria action "was not wrongful and since the lawsuit in no way impacted defendant's ability to obtain financing, defendant's entire claim must fail." Affirmation of Theodore P. Kaplan, dated October 17, 2012, ¶ 11. Relatedly, plaintiff asserts that defendant's contention that the Astoria action was, in fact, an impediment to obtaining financing, is entirely devoid of proof in admissible form. Id., ¶ 14. As a result, plaintiff argues that the court has no basis to infer plaintiff's actions had any effect on defendant's ability to obtain financing. Further, plaintiff posits that even if the proof was in admissible form, defendant must still demonstrate that the Astoria action was "undertaken for the exclusive purpose of harming the defendant." Id., ¶ 12 n 1.

Finally, plaintiff contends that this court "has no right to interfere" with the parties' Settlement Agreement and is without any authority to extend defendant's deadline for payment. Id., ¶¶ 17, 18.

B.Analysis

As an initial matter, plaintiff's argument that this court is without authority to provide the requested relief is unsupported and wrong. In the context of a so-ordered stipulation agreement, like the one at issue here, "[t]he power of a trial court to exercise supervisory control over all phases of pending actions and proceedings has long been recognized." Teitelbaum Holdings, Ltd. v Gold, 48 NY2d 51, 54 (1979). As such, "a court possesses discretionary power to relieve parties from the consequences of a stipulation effected during litigation." Id. Moreover, the legislature has expressly authorized the judicial extension of time limits in the interests of justice. CPLR 2004 ("[T]he court may extend the time fixed by any statute, rule or order for doing any act, upon such terms as may be just and upon good cause shown, whether the application for extension is made before or after the expiration of the time fixed." [emphasis added]); see also Lee v Caric, 125 AD2d 453, 453 (2d Dept 1986) (holding that, pursuant to CPLR 2004, trial court properly exercised its discretion "to extend the time for payment set forth in its prior order").

Here, apart from this court's authority to grant the requested relief under Teitelbaum, there is also is good cause to further extend defendant's deadline for payment. Plaintiff brought the Astoria action and filed the lis pendens after entering into the Agreement. Regardless of his motives at the time, plaintiff understood,no later than July 9, 2012, that his refusal to cancel the lis pendens and issue the requested releases was interfering with defendant's ability to obtain refinancing. See affirmation of Juda Mochkin, dated July 5, 2012, ¶ 12.

Further, plaintiff has not made any secret of his intentions to interfere with defendant's ability to satisfy the terms of the Agreement. During a hearing on July 12, 2012, plaintiff shouted words to the effect that defendant would be unable to get the property;[FN2] a sentiment at odds with the parties' Agreement.[FN3] [*5]

Accordingly, defendant's request for an extension of his payment deadline is granted.For a separate and independent reason, the court grants the requested relief. It is well settled that a stipulation is a contract between parties, and is governed by general principles for its interpretation and effect. See McKenzie v Vintage Hallmark, PLC., 302 AD2d 503, 504 (2d Dept 2003). Every contract contains an implied covenant of good faith and fair dealing. See Rowe v Great Atl. & Pac. Tea Co., 46 NY2d 62, 69 (1978). "This covenant is breached when a party to a contract acts in a manner that, although not expressly forbidden by any contractual provision, would deprive the other party of the right to receive the benefits under their agreement." Aventine Inv. Mgt. v Canadian Imperial Bank of Commerce, 265 AD2d 513, 514 (2d Dept 1999).

As such, plaintiff's contentions regarding his motives for commencing the Astoria action and the filing of the lis pendens are entirely irrelevant. As explained at length by the Court of Appeals, "the covenant of good faith and fair dealings is an unexpressed promise that in fact is implicit from the agreement as a whole." Rowe, 46 NY2d at 69. If the court determines that "a reasonable person in the position of the promisee would be justified in understanding [that a covenant was] included" (id.), conduct by a party contrary to that covenant would constitute a breach. Thus, the issue here is whether defendant had a justifiable expectation that plaintiff would not interfere with his efforts to refinance the property.

As the Agreement itself expressly contemplated refinancing and plaintiff was informed that his actions created an impediment to defendant's performance, the court finds that, as a matter of law, plaintiff cannot claim that defendant breached the Settlement Agreement by failing to tender payment by the deadline. See e.g. Gross v Neuman, 53 AD2d 2, 4 (1st Dept 1976) ("a party to a contract cannot rely on the failure of another to perform a condition precedent where he has frustrated or prevented the occurrence of the condition") (internal citations omitted). Unless the lis pendens is canceled and defendant is given an appropriate extension of time to complete the refinancing, plaintiff cannot be permitted to exercise his option to purchase the property.

Although plaintiff strenuously argues that defendant failed to submit any admissible evidence regarding the effect of plaintiff's actions on defendant's ability to refinance the property, this is simply not the case. In support of his August 21st order to show cause, defendant submitted a letter, dated July 5, 2012, from Stuart I. Rich, counsel to W Financial (see defendant's aff., Ex. C), as well as an e-mail, dated August 21, 2012, from Fidelity, both stating, in effect, that the lis pendens would need to be removed prior to the closing of any loan. See Farber aff., ¶¶ 6, 9, Ex. E. No matter how much plaintiff wishes it otherwise, the letter and e-mail are admissible.

New York has long recognized that circumstantial evidence may satisfy the requirement that a writing be authenticated before it may be introduced. See People v Dunbar Contr. Co., 215 NY 416, 423 (1915) (upholding admission of a letter by the prosecution in a criminal trial based on circumstantial evidence). Here, the weight of circumstantial evidence, none of which is refuted by plaintiff, constitutes ample grounds to authenticate the challenged correspondence. [*6]See e.g. People v Jean-Louis, 272 AD2d 626, 627 (2d Dept 2000).

In this regard, Mr. Farber attests to receiving the letter and e-mail from counsel for W Financial and Fidelity. Farber aff., ¶¶ 6, 9. Both correspondence reference the anticipated refinancing, and the need to cancel the lis pendens in anticipation of the closing. The Fidelity e-mail contains the e-mail address of both the author and recipient. As well, the W Financial letter, written on firm letterhead, was sent in response to an application for a loan submitted by defendant. It is also written on the stationery of the attorney assigned to the loan application and bears his signature.

In short, this court sees no reason to exclude the correspondence from W Financial and Fidelity from its consideration of these applications.

For the foregoing reasons, it is:

ORDERED that the July 25, 2011so-ordered Settlement Agreement, as modified by the July 12, 2012 Order, is further modified to the extent that the deadline for defendant Juda Mochkin to make a final payment of $700,000 to plaintiff Joseph Mochkin, is extended 120 days from the date of service of a copy of this order with notice of entry on plaintiff's counsel; and it is further

ORDERED that if a refinancing by defendant Juda Mochkin of the property located at 838-840 Montgomery Street, Brooklyn, New York is accomplished and the $700,000 payment is made to plaintiff Joseph Mochkin or placed in escrow with an agent approved by this court on behalf of plaintiff, the lis pendens that plaintiff filed against the subject property is canceled and the Astoria action is dismissed; and it is further

ORDERED that the temporary relief granted by order dated September 12, 2012 is continued.

The foregoing constitutes the decision and order of this court.

Dated: November 28, 2012

ENTER:

_______________________

J.S.C. Footnotes

Footnote 1: The notice is annexed as Exhibit A to the August 14th Joseph Mockin affidavit. It is a letter addressed to Juda Mockin, the defendant.

Footnote 2: Plaintiff's outburst resulted in his removal from the courtroom.

Footnote 3: Plaintiff makes the charge that defendant is not credible because he claims to be a survivor of the Holocaust, when, in fact, he was living in the Ukraine during World War II and was "not affected" by it. Joseph Mochkin aff., ¶ 11 n 2. The court is astounded that plaintiff puts forward such an offensive charge considering that the Ukraine was under Nazi occupation from 1941-45, resulting in the death of over a million people, a majority of them Jews. See Paul Robert Magocsi, A History of Ukraine 633 (1996).