Brooklyn Fed. Saving Bank v 9096 Meserole St. Realty LLC

[*1] Brooklyn Fed. Saving Bank v 9096 Meserole St. Realty LLC 2010 NY Slip Op 51914(U) [29 Misc 3d 1220(A)] Decided on November 5, 2010 Supreme Court, Kings County Miller, 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 This opinion is uncorrected and will not be published in the printed Official Reports.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 5, 2010
Supreme Court, Kings County

Brooklyn Federal Saving Bank, Plaintiff,

against

9096 Meserole Street Realty LLC, et al., Defendants.



3012/10



The plaintiff is represented by Satterlee, Stephens, Burke & Burke, LLP, by Christopher Belmonte, Esq., of counsel, the defendants 9096 Meserole Street Realty, LLC, Meserole Plaza LLC, and Nik Lavrinoff are represented by Sol Mermelstein, Esq.

Robert J. Miller, J.

Plaintiff Brooklyn Federal Savings Bank moves for an order 1) granting plaintiff summary judgment and 2) striking the affirmative defenses and dismissing the counterclaims of defendants 9096 Meserole Street Realty LLC ("9096 LLC"), Meserole Plaza LLC and Nik Lavrinoff a/k/a Nikol L. Vonlarinoff a/a Nikol Louis Ravitsch Von Lavrinoff a/k/a Nikol Vonlavrinoff ("Lavrinoff"). Defendants cross-move for an order granting leave to serve an amended answer with counterclaims.

Plaintiff commenced this action to foreclose a Consolidated Building Loan Mortgage ("mortgage") executed by 9096 LLC on January 26, 2006 and encumbering property located at 90-96 Meserole Street in Brooklyn. The mortgage secures a Consolidated Building Loan Note ("note") in the amount of $8,425,000.00, the proceeds of which being intended to finance the construction of a condominium project on the subject property pursuant to a Building Loan Agreement ("agreement"). Lavrinoff signed a personal guarantee of 9096 LLC's payment and other performance obligations under the mortgage, note and agreement.

Paragraph 2 of the note provides, in relevant part: Maker shall pay to Holder (a) commencing March 1, 2006, and on the first day of each and every month thereafter through and including February 1, [*2]2007 (such date, or such earlier date on which Holder accelerates payment of the indebtedness evidenced hereby pursuant to the provisions hereof or of any Loan Documents) being herein referred to as the "Maturity Date", monthly payments, in arrears, of interest only, on the unpaid balance of the Principal Sum disbursed in accordance with a Building Loan Agreement dated the date hereof (the "Building Agreement"), continuing monthly until the Maturity Date. On the Maturity Date, whether by acceleration, prepayment, or otherwise, the outstanding balance of the Principal Sum disbursed under the Building Loan Agreement, together with accrued and unpaid interest and any other amounts due and payable to the Holder hereunder, under the Mortgage or the Loan Documents, shall be paid in full.

The mortgage defines certain "Events of Default," which include a default "made in the payment of the principal and interest due under the Note at maturity." Pursuant to a Loan Modification Agreement, dated August 2008, plaintiff agreed to a conditional extension of the Maturity Date to August 1, 2009.

According to the complaint and affidavit of Marc Leno, Executive Vice President and Chief Lending Officer of plaintiff, 9096 LLC defaulted under the terms of the mortgage and note by failing to pay the outstanding indebtedness on the Maturity Date as extended to August 1, 2009, and was further in default under the agreement by reason of the filing of mechanics liens against the property.

"It is the well-settled law of this State that a mortgagor is bound by the terms of his contract as made and cannot be relieved from his default, if one exists, in the absence of waiver by the mortgagee, or estoppel, or bad faith, fraud, oppressive or unconscionable conduct on the latter's part'" (Citidress v 207 Second Ave. Realty, 21 AD3d 774, 776-777 [2005], quoting Nassau Trust Co. v Montrose Concrete Prods., 56 NY2d 175, 183 [1982], appeal denied 57 NY2d 674 [1982], quoting Ferlazzo v Riley, 278 NY 289, 292 [1938]). Plaintiff established its prima facie entitlement to summary judgment by submitting proof of the existence of the mortgage, the unpaid note, and default under the terms thereof (see Republic Natl. Bank of NY v O'Kane, 308 AD2d 482 [2003]; Village Bank v Wild Oaks Holding, 196 AD2d 812 [1993]). Further, there is no dispute in this matter that 9096 LLC failed to pay the outstanding indebtedness on the maturity date. In its answer and opposition papers, defendants raise various affirmative defenses, including, breach of contract, breach of the covenant of good faith and fair dealing and unclean hands. However, paragraph 8.8 of the note provides, in relevant part: [9096 LLC] acknowledges that this Note and [9096 LLC's] obligations hereunder are and shall at all times be absolute and unconditional in all respects and shall at all times be valid and enforceable irrespective of any other agreement or circumstances of any nature whatsoever which might otherwise constitute a defense to this Note and the obligations of [9096 [*3]LLC] hereunder. . .[9096 LLC] absolutely, unconditionally and irrevocably waives any and all right to assert any defense, setoff, counterclaim or cross-claim of any nature whatsoever with respect hereto or the obligations of [9096 LLC] hereunder...in any action or proceeding brought by [plaintiff] to collect the outstanding balance of the Principal Sum, accrued and unpaid interest, late charges, and other amounts owing, or any portion thereof, or to enforce foreclose and realize upon the liens and security interests created by the Mortgage and any other security document.

Moreover, paragraph 7 of the August 2008 Loan Modification Agreement provides:

7. Representations and Warranties.

[9096 LLC] hereby represents and warrants to [plaintiff] as follows:

a. This Agreement is a valid, binding and enforceable obligation of [9096 LLC];

b. Each of the statements and representations made by [9096 LLC] in thisAgreement, the Note, the Mortgage and the Loan Documents is true andcorrect as of the date hereof;

c. [9096 LLC] has no claims against [plaintiff];

d. The Mortgagor herein is a valid first lien on the Property;

e. [9096 LLC] has no defenses to, of offsets against, any of its obligations under theNote, the Mortgage or under the Loan Documents;

f. [Plaintiff] has performed and satisfied all of its obligations under the Note, theMortgage and the Loan Documents through the date hereof;

g. No documentary taxes or other similar taxes are payable in connection withthe transaction evidenced by this Agreement; and

h. The Property is not in violation of any applicable laws, rules, regulations orordinances including, without limitation, any applicable environmental laws.

Since defendants validly waived all defenses, counterclaims, and setoffs in the loan documents, their answer and opposing papers are not sufficient to preclude summary judgment to plaintiff (see Petra CRE CDO 2007-1, Ltd. v 160 Jamaica Owners, LLC, 73 AD3d 883 [2010]; Quest Commercial, LLC v Rovner, 35 AD3d 576 [2006]; PGA Mktg. v Windsor Plumbing Supply, 124 AD2d 576, 577 [1986]). Further, by executing the Loan Modification Agreement, Mr. Lavrinoff expressly represented that, to that time, plaintiff [*4]had performed all its obligations under the loan documents and that 9096 LLC had no defenses or offsets thereunder.

Defendants seek to amend their answer to add defenses/counterclaims that plaintiff violated Lien Law § 22 by filing an affidavit containing material misstatements concerning the amount available from loan proceeds and that Mr. Leno orally represented at a September 29, 2009 meeting with Mr. Lavrinoff that plaintiff would not declare a default until March 25, 2010 so as to allow 9096 LLC to sell or refinance the property.

Motions for leave to amend pleadings should be freely granted, absent prejudice or surprise directly resulting from the delay in seeking leave, unless the proposed amendment is palpably insufficient or patently devoid of merit (see CPLR 3025[b]; Aurora Loan Servs., LLC v Thomas, 70 AD3d 986, 987 [2010]; Unger v Leviton, 25 AD3d 689, 690 [2006]). Assuming there was a material misstatement in the Lien Law § 22 affidavit, such fact is only relevant to the question of the priority of the mechanics' liens over plaintiff's mortgage. The purpose of Lien Law § 22 is to acquaint materialmen with the exact amount of money available for the improvement so that they can plan and act accordingly, and subordination of the mortgage to a subsequently filed mechanics' lien is a "penalty" imposed for not filing a true and accurate affidavit (Nanuet Nat. Bank v Eckerson Terrace, Inc., 61 AD2d 810, 812 [1978], affd 47 NY2d 243 [1979]). The subordination of the mortgage to a mechanics' lien under this section does not affect the mortgagee's priority over the mortgagor and thus has no bearing on plaintiff's entitlement to summary judgment striking defendants' answer and counterclaims. The interest of a lienor that is superior to the mortgage is not extinguished by a judgment of foreclosure and sale (Jacobie v Mickle, 144 NY 237 [1894]).

Further, there is no merit to the proposed defense that plaintiff, through the alleged oral representations by Mr. Leno, "temporarily waived" its right to declare a default and commence this action. The loan documents unequivocally require that any waiver of plaintiff's rights thereunder may not be made orally. Specifically, the mortgage contains the following provisions:

Section 3.11. This Mortgage cannot be altered, amended, waived, modified or discharged orally, and no executory agreement shall be effective to modify, waive or discharge, in whole or in part, anything contained in this Mortgage unless it is in writing and signed by the party against whom enforcement of the modification, alteration, amendment, waiver or discharge is sought.

Section 3.21. The Mortgagor recognizes that, in general, borrowers who experience difficulties in honoring their loan obligations, in an effort to inhibit or impede lenders from exercising the rights and remedies available to lenders pursuant to mortgages, notes, loan agreements or other instruments evidencing or affecting loan transactions, frequently present in court the argument, without merit, that some loan officer or administrator of the lender made an oral modification or made some statement that could be interpreted as an extension or modification or amendment of one or more debt instruments and that the borrower relied to its detriment upon such "oral modification of the loan document". For that reason, and in order to protect the Mortgagee from such allegations in connection with the transactions contemplated by this Mortgage and the Building Loan Agreement, the Mortgagor acknowledges that this [*5]Mortgage, the Note, the Building Loan Agreement, and all instruments referred to in any of them can be extended, modified or amended only in writing executed by the Mortgagee and that none of the rights and benefits of the Mortgagee can be waived permanently except in a written document executed by the Mortgagee. The Mortgagor further acknowledges the Mortgagor's understanding that no officer or administrator of the mortgagee has the power or the authority from the Mortgagee to make an oral extension or modification or amendment of any such instrument or agreement on behalf of the Mortgagee. (Emphasis added).

Accordingly, plaintiff cannot be bound by any alleged oral statements made by Mr. Leno at the September 29, 2009 meeting. As the proposed amendments are not meritorious, defendants' cross motion for leave to amend is denied.

Plaintiff's motion for summary judgment is granted and the answer and counterclaims of defendants are hereby stricken and dismissed, and a referee shall be appointed to compute the amount due under the mortgage.

Settle order on notice.

E N T E R,

__________________

Robert J. Miller

J. S. C.