Feiner v Galpern
Annotate this CaseDecided on February 28, 2017
Supreme Court, Westchester County
Barry Feiner, Individually and as Trustee of The Feiner Family Trust, and 170 Harrison Avenue LLC, Plaintiffs,
against
Ariel Galpern and Louis Galpern, Defendants.
52218/2016
For the plaintiffs:
Michael Katz. Esq.
630 Third Avenue — 23rd Floor
New York, N.Y. 10017
212 682-6260
For the defendants:
David H. Singer, Esq.
233 Broadway, Suite 810
New York, NY 10279
212 233-8800
Terry J. Ruderman, J.
The following papers were considered in connection with the defendants' motion for summary judgment pursuant to CPLR on their first and second counterclaims (Motion Seq. No. 1), and the plaintiffs' motion to file an amended reply (Motion Seq. No. 2):
Papers (Motion Seq. No. 1)/Numbered
Notice of motion, affidavit, affirmation, Exs. A - H 1
Affirmation in opposition, affidavit, Exs. 1 — 4 2
Reply 3
Papers (Motion Seq. No. 2)/Numbered
Notice of motion, affirmation, Exs. 1 - 5 1
Affirmation in opposition, Exs. A, B 2
Reply, Exs. 1, 2 3
The defendants move for an order pursuant to CPLR 3212 granting them summary judgment on their first and second counterclaims. The plaintiffs submit written opposition, and move separately to amend their verified reply to the counterclaims.
On November 30, 2010, the plaintiffs borrowed $350,000 from the defendants, secured by a mortgage on premises located in Harrison, Westchester County. The note had a maturity date of November 30, 2011 (Notice of motion, Seq. No. 2, Ex. A [note], par. 3A), and bore interest at the rate of 12%, or, in the event of default, at the default rate of 24% (Notice of motion, Seq. No. 1, Ex. A [note], par. 2). The payments were $3500 monthly. The note stated that, "Even if, at a time when I [mortgagor] am in default, the Note Holder does not require me to pay immediately in full as described above, the Note Holder will still have the right to do so if I am in default at a later time." (Notice of motion, Seq. No. 1, Ex. A [note], par. 6(D)). The mortgage, but not the note, provided that it "may not be changed or terminated orally." (Notice of motion, Seq. No. 1, Ex. B [mortgage], par. 17).
On the stated date of maturity of the note (November 30, 2011) until April 30, 2015, the plaintiffs continued to pay $3500 monthly. In April, 2015, the plaintiffs requested a "pay off" letter. The defendants included in the payoff figures the amount of $14,000, which they deemed an appropriate amount to "compromise" the failure to pay the full amount of the loan at the maturity date. Plaintiffs paid the amount stated in the pay off letter, minus the $14,000 fee which the defendants had included.
Plaintiffs subsequently commenced this action, alleging that they were entitled to a satisfaction of the mortgage. The defendants asserted counterclaims against the plaintiffs, alleging that the plaintiffs were in default under the note and mortgage as of December 1, 2011, and that, as of that date, interest accrued at the rate of 24%, leaving a balance due of $143, 500.
The defendants now move for summary judgment on their counterclaims. The defendants argue that since they never agreed in writing to extend the maturity date of the mortgage, the plaintiffs were in default and interest accrued at the default interest rate from December 1, 2011.
In opposition, plaintiff Barry Feiner submits his own affidavit, in which he alleges that non-party Saul Jakubowitz facilitated the loan, and made the arrangements for the defendants to lend the funds to the plaintiffs. Feiner avers that Jakubowitz obtained a one-year extension of the mortgage in December, 2011, and that pursuant to that verbal agreement, he provided post-dated checks representing the payments due for the ensuing year. (Affidavit in opposition, at pars. 7, 8.) These post-dated checks were sent to defendant Louis Galpern with a cover letter dated December 28, 2011, thanking the defendants for extending the mortgage, and stating that the "checks are in payment for the interest on the Note as required by the Note and Mortgage." This letter was admittedly received and retained, without objection, by the defendants. (Notice of motion, Seq. No. 1, affidavit of Louis Galpern in support, at par. 11; Notice of motion, Seq. No. 1, Ex. C [cover letter].) According to the plaintiffs, Jakubowitz later spoke with the defendants, at the plaintiffs' request, and obtained their consent to an indefinite extension of the mortgage on condition that post-dated checks be provided in advance. Plaintiffs assert that the defendants extended the mortgage, and waived the default interest rate.
The plaintiffs move separately to amend their reply to the defendants' counterclaims. In this regard, their original reply includes a fourth affirmative defense based on equitable estoppel. The proposed amended pleading includes detailed allegations of fact that the defendants never asserted that the plaintiffs were in default, or sought to charge the 24% default interest rate, as a result of which the plaintiffs were mislead into believing that the 12% pre-default interest rate applied. (Notice of motion, Seq. No. 2, Ex. 4.) Defendants allege that since they have already served their motion for summary judgment, the motion to amend is an improper "end run" to circumvent and defeat their motion.
Analysis
The court's function on this motion for summary judgment is issue finding rather than issue determination. (Sillman v. Twentieth Century Fox Film Corp., 3 NY2d 395 [1957]). Since summary judgment is a drastic remedy, it should not be granted where there is any doubt as to the existence of a triable issue. (Rotuba Extruders v. Ceppos, 46 NY2d 223 [1978].) The burden on the movant is a heavy one, and the facts must be viewed in the light most favorable to the non-moving party. (Jacobsen v. New York City Health & Hosps. Corp., 22 NY3d 824 [2014].)
Defendants deny that there was an oral agreement. Moreover, they argue that any oral agreement as to a forbearance, on which defendants should be estopped from asserting the default interest rate, is not enforceable absent a writing signed, as required by the mortgage (see North Bright Capital, LLC v. 705 Flatbush Realty, LLC, 66 AD3d 977 [2d Dept. 2009]), and by the Statute of Frauds (see General Obligations Law § 15-301 [1].)
However, General Obligations Law § 15-301 (1) does not preclude proof of executed oral modifications. (Savino v. Savino, 146 AD2d 766 [2d Dept. 1989].) A party can overcome a "no oral modification" clause, or the Statute of Frauds, and enforce an oral modification to a written agreement by demonstrating either that the oral modification has in fact been acted upon to completion; or, where there is only partial performance, that the partial performance is unequivocally referable to the alleged oral modification. (Eujoy Realty Corp. v. Van Wagner Communications, LLC, 22 NY3d 413 [2013].)
In addition, once a party to a written agreement has induced another's significant and substantial reliance upon an oral modification, that party may be estopped from invoking the Statute to bar proof of the oral modification. Just as partial performance must be unequivocally referable to the oral modification, so, too, conduct relied upon to establish estoppel must not otherwise be compatible with the agreement as written. (Eujoy, supra.) Lastly, when the parties dispute whether an oral agreement has been formed, it is the conduct of the party advocating in favor of the oral agreement that is "determinative," although the conduct of both parties may be relevant. (Eujoy, supra; Messner Vetere Berger McNamee, Schmetterer Euro RSCG, Inc. v. Aegis Group PLC, 93 NY2d 229, 237 — 238 [1999].)
In order to be unequivocally referable, conduct must be inconsistent with any other explanation, and the conduct at issue must be unintelligible or extraordinary, and thus explainable only with reference to the oral agreement. (Anostario v Vicinanzo, 59 NY2d 662, 664 [1983]).
Plaintiffs have raised issues of fact as to whether the parties entered into an oral agreement to modify the loan, and whether the partial performance exception applies. (Bowers v. Hurley, 134 AD3d 1191 [3d Dept. 2015] [plaintiff raised triable issues of fact as to whether the partial-performance exception to the Statute of Frauds applies].) Plaintiffs assert, in essence, [*2]that Jakubowitz, as the defendants' agent, agreed to an indefinite extension of the mortgage, on the previous terms. The cover letter accompanying the post-dated checks, which was admittedly received and retained by the defendants without any objection, specifically referred to the alleged oral extension. Continued payment of the original amount due on the note and mortgage by the plaintiffs, while an equal amount of interest accrued in arrears due to the 24% default interest rate, would have been extraordinary absent an alleged oral agreement to extend the terms of the mortgage.
With respect to the plaintiffs' motion to amend, leave to amend should be liberally granted absent prejudice to the opposing party, as long as the proposed amendment is not palpably insufficient. (Castlepoint Ins. Co. v. Command Sec. Corp., 144 AD3d 731 [2d Dept. 2016].) In view of the foregoing, the evidence in support of equitable estoppel is not palpably insufficient.
Accordingly, it is hereby,
ORDERED that defendants' motion for summary judgment is denied; and it is further
ORDERED that the plaintiffs' motion to file a verified amended reply is granted, and the verified amended reply annexed to the moving papers is deemed filed and served; and it is further
ORDERED that all parties appear in the Settlement Conference Part on Tuesday, March 21, 2017 at 9:15 a.m., in room 1600 of the Westchester County Courthouse located at 111 Dr. Martin Luther King, Jr., Boulevard, White Plains, New York, 10601.
The remaining arguments are found to be without merit or not dispositive in view of the foregoing.
This constitutes the Decision and Order of the Court.
Dated: February 28, 2017
White Plains, New York
________________/s/___________________
HON. TERRY JANE RUDERMAN, J.S.C.
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