Sudit v Labin

[*1] Sudit v Labin 2013 NY Slip Op 51824(U) Decided on October 24, 2013 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 This opinion is uncorrected and will not be published in the printed Official Reports.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 October 24, 2013
Supreme Court, Kings County

Vladimir Sudit, d/b/a VS INTERNATIONAL, Plaintiff,

against

Esther M. Labin, et al., Defendants.



12235/08



Plaintiff Attorney: Sanders, Gutman & Brodie, P.C., 26 Court Street, Suite 409, Brooklyn NY 11242

Defendant Attorney: Fidelity National Law Group, 350 Fifth Avenue, Suite 3000, New York, NY 10118

David I. Schmidt, J.

The following papers numbered 1 to 17 read herein:

Papers Numbered

Notice of Motion/Order to Show Cause/

Petition/Cross Motion and

Affidavits (Affirmations) Annexed1-2, 3-4, 5-6

Opposing Affidavits (Affirmations)7

Reply Affidavits (Affirmations)8, 9, 10

Affidavit (Affirmations)of objections to referee's report11, 12, 13, 14

Other Papers supplemental affirmation14, 15, 16, 17

Upon the foregoing papers, defendants Moshe Lieb Lax and Zlaty Schwartz, as Preliminary Executors of the Estate of Chaim Lax (Lax defendants) and Citibank, N.A. as Successor Trustee to US Bank National Association, as Trustee for MASTR Adjustable Rate Mortgagees Trust 2007 HF1, Mortgage Pass-Through Certificates, Series 2007 HF1 (Citibank) move for an order, pursuant to CPLR 3025, granting leave to serve an amended answer to assert affirmative defenses and counterclaims of equitable subrogation and unjust [*2]enrichment.[FN1] Defendants Eugen Weiss, Rachel Weiss and Bais Hamedrash Ateres Chaim Hanipoly (Weiss defendants) cross-move for an order, pursuant to CPLR 3025, granting leave to serve an amended answer to assert affirmative defenses and counterclaims for equitable subrogation and unjust enrichment. By separate motion, defendant Esther Labin moves for an order, pursuant to CPLR 3025, granting leave to serve an amended answer to assert counterclaims of equitable subrogation and unjust enrichment.

Plaintiff Vladimir Sudit d/b/a VS International (hereinafter "Sudit"), commenced this action to foreclose a purported "equitable mortgage" which encumbers various parcels of property located at 725 Bedford Avenue, 727 Bedford Avenue, 460 Flushing Avenue and 464 Flushing Avenue in Brooklyn. Bedford Place, LLC was the developer and sponsor of a condominium project involving the subject properties. In the course of developing the condominium project, Bedford Place, LLC borrowed the sum of $10,500,000.00 from Builders Bank, which took a mortgage on the subject properties. By assignment dated March 3, 2003, the Builders Bank mortgage was assigned to RCG Longview L.P. (RCG). By consolidation and extension agreement, dated March 11, 2003, the Builders Bank mortgage was consolidated with a separate mortgage from RCG in the amount of $996,195.22. The RCG mortgage, assignment and consolidation agreement were recorded on December 3, 2003.

In July 2003, the principal balance of the consolidated mortgage was approximately $2,800,000.00. At this time, Mendel Brach and Moshe Roth, the principals of Bedford Place, LLC, approached Sudit, a private lender, and requested an extension of credit in the amount of $4,000,000.00. According to Sudit's plan, Brach and Roth would pay $310,500.00 of the principal amount to RCG while Sudit would pay the remaining $2,500,000.00. Sudit anticipated that he would receive an assignment of the mortgage from RCG following the payments. A written agreement, dated July 17, 2003, states that Sudit, identified as the "MORTGAGEE," is the "holder" of the prior mortgages from Builders Bank and RCG, which were consolidated by consolidation agreement dated March 11, 2003. The July 17, 2003 agreement (hereinafter the "Sudit mortgage agreement") states that the consolidated mortgage "was assigned by an assignment dated JULY 17, 2003, by BUILDERS BANK, AND RCG LONGVIEW and recorded SIMULTANEOUSLY HEREWITH." According to Sudit, Brach and Roth were given until July 21, 2003 to wire their share of the payoff to RCG. On July 21, 2003, Brach and Roth presented Sudit with a wire transfer confirmation purporting to establish that their share had been sent to RCG. In reliance on the wire confirmation, Sudit wired his $2,500,000.00 share to RCG. As it turned out, the share of Brach and Roth was not previously sent to RCG and, consequently, RCG refused to assign the mortgage to Sudit. A few weeks later, RCG allowed Brach and Roth to sell a condominium unit in one of the mortgaged properties and use the proceeds to pay the remaining $310,500.00 of mortgage debt. Upon the payment of the remaining indebtedness, RCG issued a satisfaction of mortgage dated September 22, 2003. On October 10, 2003, Bedford Place, LLC encumbered the property with a new mortgage, in favor of Mercury Capital Corp. (Mercury), to secure a loan in the amount of $3,500,000. The Mercury mortgage was recorded on January 8, 2004. The RCG satisfaction was recorded on May 25, 2004. The [*3]

Sudit mortgage agreement was recorded on July 5, 2004.

Lawsuits and Settlements

On or about October 8, 2003, Brach and Roth, individually and on behalf of Bedford Place, LLC, entered into an agreement with Sudit providing, inter alia, that instead of "the required [RCG] assignment]," Sudit would be paid principal and interest in the amount of $2,500,000.00 by November 1, 2003. In accordance with the terms of the agreement, Brach and Roth, individually and on behalf of Bedford Place, LLC, provided an estoppel certificate, dated October 29, 2003, stating that the Sudit mortgage agreement "is a valid first lien on the premises" with no defenses or offsets. Sudit did not receive payment of the $2,500,000.00 on November 1, 2003. On December 24, 2003, Sudit filed a notice of pendency covering the subject properties in conjunction with the commencement of a lawsuit against Bedford Place, LLC to recover the debt (Sudit d/b/a VS International v Bedford Place LLC, Kings County Index No. 48966/03) (hereinafter, the "2003 Sudit-Bedford action"). This action was consolidated in August 2004 with a lawsuit commenced in New York County against RCG for a declaration that the RCG satisfaction is void and that Sudit is the holder of the RCG consolidated mortgage. Prior to the referral of the action to this court, the Hon. Martin M. Solomon issued an order, dated December 4, 2004, which granted a cross motion of Bedford Place, LLC for summary judgment dismissing Sudit's "foreclosure cause of action" and which vacated the notice of pendency. Justice Solomon's order was entered on December 14, 2004.

On December 6, 2004, Sudit commenced a separate action against Bedford Place, LLC and Mercury (Sudit v Mercury Capital Corp., et ano., Kings County Index No. 39597/04) (hereinafter, the "2004 Sudit-Mercury action") seeking, among other relief, a

declaration that Sudit held an equitable mortgage over the subject premises. In conjunction with the commencement of this action, Sudit filed another notice of pendency against the subject properties on December 6, 2004.

On July 24, 2006, a settlement was reached in the actions and put on record in open court. The settlement covered numerous transactions between Sudit, Brach and Roth. Among the stipulations was that Sudit held an equitable mortgage on the subject Bedford Place LLC properties by virtue of the Sudit mortgage agreement. Sudit agreed that the equitable mortgage was subordinate to the Mercury mortgage. The settlement called for the payment to Sudit of approximately $5,000,000.00 on February 1, 2007. If payment was made on time, then all instruments filed by and on behalf of Sudit would be deemed satisfied. If the money was not paid on time, then Sudit would be able to enter a $7,300,000.00 judgment. Further, the parties agreed on a method that would allow the sale of individual condominium units owned by Bedford Place, LLC, stipulating that "upon the closing of any of the units the bank will be paid off and Mr. Sudit will receive $35,000 on each unit and he will deliver a release to the purchasers of those units upon the payment of $35,000."

On March 8, 2007, this court vacated the settlement on the ground that Roth, a fifty-percent holder in all the entities involved in the settlement, did not consent to the settlement and did not agree that the properties held by those entities could be used to raise the funds to pay the $2,500,000.00 debt.

A second settlement was reached on June 29, 2007 which was "so ordered" by this court. The settlement addressed a multitude of obligations, including the Sudit mortgage agreement. Among the stipulations in the second settlement was that if Brach [*4]

paid Sudit $4,400,000.00 by October 29, 2007, then all mortgages held by Sudit, covering properties in Kings County and Sullivan County, including the Sudit mortgage agreement, would be deemed satisfied. Otherwise, Sudit would file a confession of judgment against Brach for the amount of $7,500,000.00. When Brach failed to pay the promised amount on October 29, 2007, Brach reached an additional settlement with Sudit, dated October 29, 2007 (the "second addendum"), which granted him additional time to pay the settled amount in exchange for certain changes to the terms of the second settlement. Among the terms of the new settlement agreements was that the Sudit would not release the liens on sold units at the Bedford Place, LLC properties, that Sudit could foreclose against the units and that "Brach, Roth and the Brach Roth Entities waive all defenses and shall not act in defense of any foreclosure actions." Thus, the ultimate effect of the voiding of the first settlement and the failure of Brach to pay $4,400,00.00 by October 29, 2007 under the terms of the second settlement was that the sold condominium units in the subject properties were no longer deemed released from the Sudit mortgage agreement by the purchasers' payments of $35,000, and that the units were subject to a continuing lien in favor of Sudit.

Based on the alleged breach of the settlement agreements by Brach, Roth and Bedford Place, LLC, Sudit commenced the instant foreclosure action. Joined as defendants were individuals and entities which had purchased condominium units in the properties affected by the Sudit mortgage agreement, in addition to various lenders which financed the purchase of the units. Sudit subsequently moved for summary judgment. By referral order dated October 14, 2009, the motion for summary judgment was referred to a judicial hearing officer (JHO) to hear and report. On March 20, 2013, the Referee

(Hon. Richard M. Allman) issued a "decision" granting Sudit's motion for summary judgment, finding, inter alia, that Sudit possessed an equitable mortgage against the subject properties by way of the Sudit mortgage agreement and that the defendants/purchasers of the condominium units were on constructive notice of Sudit's equitable mortgage by reason of the extant notice of pendency filed against the properties. Insofar as the referral order directed only that the JHO or Referee hear and report, this court, in its June 6, 2013 order, directed that the "decision" be deemed a report of the Referee rather than a decision or order.

Following the issuance of the Referee's report, the moving defendants sought leave to amend their answers to interpose affirmative defenses and/or counterclaims for equitable subrogation and unjust enrichment based on their payment of sums to release the Mercury mortgage which is senior to Sudit's purported equitable lien. These payments reduced the principal of the Mercury mortgage to Sudit's benefit. The parties further submit affirmations in support of and in opposition to the confirmation of the Referee's report.

"It is well settled that the determination of a Referee appointed to hear and report is entitled to great weight, particularly where conflicting testimony and matters of credibility are at issue, since the Referee, as the trier of fact, had the opportunity to see and hear the witnesses and to observe them on the stand. Thus, the report and recommendation of a Referee should be confirmed if the findings in the report are supported by the record" (Frater v Lavine, 229 AD2d 564, 564 [1996] [citations omitted] [emphasis added]). The problem with confirming the Referee's report in this instance is that, despite the language in the referral order to hear and report, the Referee did not

conduct a hearing. Rather, the Referee made a determination based on a review of the papers submitted by the parties on the summary judgment motion. Such a practice is appropriately performed by the court itself rather than through reference. For this reason, this court declines Sudit's request to formally confirm the Referee's report. [*5]

However, taking into consideration the submissions of the parties for confirmation and rejection of the Referee's report, along with the original summary judgment motion papers, the court finds that Sudit is entitled to summary judgment. In this foreclosure action, Sudit alleges that he is entitled to an "equitable mortgage" against the subject properties. "New York law allows the imposition of an equitable lien if there is an express or implied agreement that there shall be a lien on specific property. While [a] court will impose an equitable mortgage where the facts surrounding a transaction evidence that the parties intended that a specific piece of property is to be held or transferred to secure an obligation, it is necessary that an intention to create such a charge clearly appear from the language and the attendant circumstances" (Deutsche Bank Trust Co. Americas v Cox, ___ AD3d ___ ; 2013 NY Slip Op 065432013 [2013] [citations and internal quotation marks omitted]). Even though it was originally intended that Sudit's security for the loan was to be in the form of the existing RCG mortgage, which was never assigned to him, the undisputed facts of this case clearly establish that the parties subsequently intended that the subject properties would secure the repayment to Sudit of the $2,500,000.00 expended to help satisfy the RCG mortgage. Such facts include the execution of the October 8, 2003 agreement and estoppel certificate along with the terms of parties' settlements in this litigation. In his affidavit in support of the motion for summary judgment, Sudit attests to Bedford Place LLC's default in the repayment of the

loan, averring that "[t]here remains due and owing on the Bedford Place debt the original principal of 2.5 Million plus interest from the date of the October agreement." The arguments raised by defendants in opposition are insufficient to raise an issue of fact.

Bona Fide Purchaser Status

Among the contentions of defendants is that they took title to their units as bona fide purchasers and encumbrancers without notice of Sudit's lien. Defendants argue, in essence, that the recorded Sudit mortgage agreement cannot constitute a facially valid lien since the security was based on an assignment of the RCG mortgage, which was previously satisfied and discharged according to the records. "Generally, a lien affecting real estate, satisfied through mistake, may be restored to its original status and priority as a lien, provided that no one innocently relied upon the discharge and either purchased the property or made a loan thereon in reliance upon the validity of that satisfaction" (DLJ Mtge. Capital, Inc. v Windsor, 78 AD3d 645, 647 [2010]). The court agrees with defendants that the recorded Sudit mortgage agreement, by itself, was insufficient to provide notice to potential purchasers of condominium units that Sudit possessed a viable mortgage lien.The express terms of the agreement contemplate that as security for his $2,500,000.00 loan to Bedford Place, LLC, Sudit would receive an assignment of the RCG mortgage. Put another way, the agreement contemplated that Sudit was to take the place of RCG with respect to that particular mortgage lien. At the time defendants purchased their condominium units, the records indicated that the RCG mortgage was satisfied, and the records did not include any assignment instrument from RCG to Sudit or any other entity . There was nothing on the face of the Sudit mortgage agreement to suggest that it constituted a new and separate mortgage on the property, or gave any

indication as to the circumstances behind the RCG mortgage satisfaction. Therefore, in the absence of any other actual or constructive notice of Sudit's claims, a purchaser could have properly relied on the RCG satisfaction document and concluded that Sudit no longer had an existing mortgage lien on the property (see Baron Assoc. v Latorre, 74 AD3d 714 [2010]; Regions Bank v Campbell, 291 AD2d 437 [2002]). [*6]

However, the defendant purchasers here were on notice of Sudit's claim insofar as a notice of pendency was filed against the property in conjunction with the 2004 Sudit-Mercury action, which was in existence at the time the purchases of the condominium units were made.[FN2] "A person whose conveyance or encumbrance is recorded after the filing of [a] notice [of pendency] is bound by all proceedings taken in the action after such filing to the same extent as a party. The purpose of the notice of pendency is to afford constructive notice from the time of the filing so that any person who records a conveyance or encumbrance after that time becomes bound by all of the proceedings taken in the action" (Mallick v Farfan, 66 AD3d 649, 649-650 [2009] [citations and internal quotation marks omitted]). "By merely filing a notice of pendency, the world [is put] on notice of the plaintiff's potential rights in the action and . . . warning all comers that if they then buy the realty . . . or otherwise rely on defendant's right, they do so subject to whatever the action may establish as the plaintiff's right" (Goldstein v Gold, 106 AD2d 100, 102 [1984], affd 66 NY2d 624 [1985] [citations and internal quotation marks omitted]). The 2004 Sudit-Mercury action was settled under the terms of the June 29, 2007 so-ordered settlement agreement and second addendum which provided that Sudit shall have the right to foreclose on the subject properties upon the failure of Brach, Ross and Bedford Place, LLC to meet their obligations to Sudit. As the condominium units were subject to the notice of pendency at the time of sale, the defendant purchasers are bound by the settlements.

Res Judicata

Another contention is that the instant action to foreclose the equitable mortgage is barred by res judicata by reason of the December 4, 2004 order by Justice Solomon in the 2003 Sudit-Bedford action which dismissed the cause of action for foreclosure. However, the handwritten short form order issued by Justice Solomon does not address the merits of Sudit's entitlement to an equitable lien or provide the grounds for which the foreclosure cause of action was dismissed. "Where a dismissal does not involve a determination on the merits, the doctrine of res judicata does not apply" (Sclafani v Story Book Homes, 294 AD2d 559, 559-560 [2002]). Moreover, res judicata is an affirmative defense which may be waived (CPLR 3211 [e]). Following the dismissal of the foreclosure cause of action in the 2003 Sudit-Bedford action, Sudit commenced the 2004 Sudit-Mercury action whereby he sought a declaratory judgment that he has an equitable mortgage on the property. In settling the action, Bedford Place, LLC agreed that Sudit possessed an equitable lien which may be foreclosed upon if Bedford Place, LLC, Brach or Roth failed to meet certain obligations to repay the indebtedness. There is no indication in the record that Bedford Place, LLC objected to Sudit's equitable lien on res judicata grounds at any time during the course of the litigation. Rather, the parties came to an agreement by way of the "so ordered" settlements that Sudit possessed a viable equitable mortgage over the

subject properties. Parties "may fashion the basis upon which a particular controversy will be resolved" (Cullen v Naples, 31 NY2d 818, 820, 291 N.E.2d 587, 339 NYS2d 464 [1972]) [*7]and in doing so "[they] may stipulate away statutory, and even constitutional rights" (Matter of New York, Lackawanna & W. R.R. Co., 98 NY 447, 453 [1885] ). "Parties, by their stipulations, may in many ways make the law for any legal proceeding to which they are parties, which not only binds them, but which the courts are bound to enforce" (Matter of New York, Lackawanna & W. R.R. Co., 98 NY 447, 452 [1885]). Because defendants' interests were subject to the notice of pendency filed in the 2004 Sudit-Mercury action, defendants are bound by the resolution of the litigation between and among Sudit and the other parties acknowledging the existence of Sudit's equitable mortgage.

Unclean Hands

Defendants further argue that Sudit is barred from relief by unclean hands. Defendants base their contention on testimony given by Brach at a hearing on whether he owed an additional $500,000.00 obligation to Sudit under the June 29, 2007 settlement agreement. Brach testified, in essence, that Sudit and his counsel devised a scheme where Brach would admit to owing an increased indebtedness ($7,500,000.00 instead of $4,400,000.00), which would allow Sudit to foreclose on the Bedford Place, LLC properties and squeeze the unit owners' title companies for the increased amount. Even assuming the truthfulness of Brach's testimony, which is disputed by Sudit, defendants have not shown that Sudit's conduct would form the basis of an unclean hands defense to foreclosure of their units. The unclean hands defense is not applicable "unless the plaintiff is guilty of immoral, unconscionable conduct and even then only when the conduct relied

on is directly related to the subject matter in litigation and the party seeking to invoke the doctrine was injured by such conduct" (National Distillers & Chemical Corp. v Seyopp Corp., 17 NY2d 12, 15-16 [1966] [emphasis added]; see Malaty v Malaty, 95 AD3d 961 [2012]). Defendants here do not show that they were by injured by the alleged conduct. Regardless of whether the amount of total indebtedness was $4,400,000.00 or a "fraudulently inflated" $7,500,000.00, defendants' units were always subject to Sudit's lien. Sudit's conduct, if true, did not suddenly create a right to foreclose on the units where there was previously none, and the unit owners were not put in a worse position than they had been when the new indebtedness figure was agreed to by the parties. Moreover, assuming Brach's testimony is truthful, the alleged scheme was not intended to compel payments from the individual unit owners or to deprive them of their units but rather to extract monies from the title companies. Because defendants have failed to show how they were injured by Sudit's alleged conduct, there is no issue of fact raised as to their unclean hands defense.

Finally, any dispute over the amount owed under the Sudit mortgage agreement or whether there is even any remaining principal or interest due and owing, may be determined by the referee appointed to compute. Such a dispute does not preclude a grant of summary judgment in a foreclosure action (see Long Island Sav. Bank of Centereach, F.S.B. v Denkensohn, 222 AD2d 659 [1995]; Crest/Good Mfg. Co. v Baumann, 160 AD2d 831, 832 [1990]).

Motions to Amend

In the absence of prejudice or surprise to the opposing party, leave to amend an answer to assert an affirmative defense should be freely given where the proposed

amendment is neither palpably insufficient nor patently devoid of merit (see CPLR 3025 [b]; Tomasino v American Tobacco Co., 57 AD3d 652, 653 [2008]; Matter of Roberts v Borg, 35 AD3d 617, 618 [2006]). "The legal sufficiency or merits of a proposed amendment to a pleading will not be examined unless the insufficiency or lack of merit is clear and free from doubt" (Sample v Levada, 8 AD3d 465, 467-468 [2004]; see Maldonado v Newport Gardens, Inc., 91 AD3d 731, 732 [2012]; Vista Props., LLC v Rockland Ear, Nose & Throat Assoc., P.C., 60 AD3d 846, 847 [2009]). [*8]The doctrine of equitable subrogation provides that "[w]here property of one person is used in discharging an obligation owed by another or a lien upon the property of another, under such circumstances that the other would be unjustly enriched by the retention of the benefit thus conferred, the former is entitled to be subrogated to the position of the obligee or lien-holder" (King v Pelkofski, 20 NY2d 326, 333 [1967] [internal quotation marks omitted]). "A claim for equitable subrogation is one of the mechanisms by which the law of restitution and unjust enrichment will reallocate the burden of a given liability from one who has originally discharged it to another whom the law considers more appropriate to bear it'" (Cashel v Cashel, 94 AD3d 684, 688 [2012], quoting Restatement [Third] of Restitution and Unjust Enrichment § 24, Comment a). Actual knowledge of the intervening interest is an absolute bar to application of the doctrine of equitable subrogation, though constructive knowledge is not (Arbor Commercial Mtge., LLC v Associates at the Palm, LLC, 95 AD3d 1147, 1150 [2012]).

"The essential inquiry in any action for unjust enrichment . . . is whether it is against equity and good conscience to permit the defendant to retain what is sought to be recovered. A plaintiff must show " that (1) the other party was enriched, (2) at that

party's expense, and (3) that "it is against equity and good conscience to permit [the other party] to retain what is sought to be recovered" (Branch Servs., Inc. v Cooper, 102 AD3d 645, 647 [2013] [citations and internal quotation marks omitted]).

Although their interests are subordinate to Sudit's equitable mortgage, insofar as the Lax defendants and the Weiss defendants do not allege, nor is there evidence to suggest, that they had actual notice of Sudit's equitable mortgage, they are entitled to equitable subrogation to the extent of their payments to pay off the Mercury mortgage. With respect to Labin, it is noted that she may be charged with actual notice of the equitable mortgage as she states in her answer that she agreed to pay $35,000.00 for a release of the lien. However, while she may have been aware of the lien, it is clear that she had a good faith belief that the lien would be released with respect to her unit upon payment of the $35,000.00. Thus, under the circumstances, equity should not prevent Labin from recouping those funds expended to pay off the Mercury mortgage. Further, Sudit does not demonstrate that the amendments to movants' answer would result in prejudice.

As a result, the motions of the Lax defendants and Labin and the cross motion of the Weiss defendants to amend their answer to set forth affirmative defenses of equitable subrogation and unjust enrichment are granted in all respects.

Equitable Remedy

A foreclosure action is equitable in nature and triggers the equitable powers of the court (see Notey v Darien Constr. Corp., 41 NY2d 1055, 1055-1056 [1977]). "Once equity is invoked, the court's power is as broad as equity and justice require" (Norstar Bank v Morabito, 201 AD2d 545, 546 [1994]). As previously discussed, those who

purchased units in the Bedford Place, LLC properties were on constructive notice of Sudit's equitable lien on account of the notice of pendency filed in the 2004 Sudit-Mercury action. However, in accordance with the terms of the first settlement agreement of July 24, 2006, certain purchasers remitted $35,000.00 at closing believing that their units would thereafter be released from Sudit's lien. When the settlement was voided, through no fault of the purchasing defendants, the units remained encumbered and Sudit was no longer under any obligation to accept money and deliver releases. Sudit, Brach and Roth were thereafter free to enter into the subsequent settlements allowing Sudit to foreclose against units in which Bedford Place, LLC Brach and/or Roth no longer had any interest. This created an inequitable situation for the purchasers who in good faith believed that they would take their units free and clear of Sudit's lien, which necessitates the fashioning of an appropriate remedy.

From the time of the first settlement on July 24, 2006 to its vacatur on March 8, 2007, Sudit agreed and was willing to provide releases of his lien to those unit purchasers remitting the sum of $35,000.00 during this period. Equity considers done that which ought to have been done (see Lahey v Lahey, 174 NY 146, 158 [1903]). As a matter of equity, Sudit should be held to his word and [*9]deliver releases to those defendants who purchased their units while the first settlement was in effect, upon the payment of $35,000.00 for each unit seeking to be released. Such a remedy does not effect the obligations of Brach and Roth under the second settlement and second addendum, nor would it effect Sudit's entitlement to foreclose on unsold units, those units purchased after the vacatur of the first settlement or those units whose owners do not provide the $35,000.00 release payment. Moreover, the option to make the $35,000.00 release

payment should be provided to any unit owner who closed between the date of the first settlement (July 24, 2006) and its vacatur (March 8, 2007). Upon the tender of $35,000.00 by these owners, Sudit is directed to provide releases of his equitable lien from their respective units.

The foregoing constitutes the decision and order of the court.

E N T E R,

J. S. C. Footnotes

Footnote 1:That part of Citibank's motion to amend the caption to reflect its substitution in place of Mortgage Electronic Registration Systems s/h/a First Meridian Mortgage was granted by order dated June 6, 2013.

Footnote 2:In finding that defendants were on notice of Sudit's equitable lien, the Referee cites to the filing of the notice of pendency in the 2003 Sudit-Bedford action . Defendants argue that since this notice of pendency was vacated by Justice Solomon's order in December 2004, it could not serve as notice with respect to the subsequent purchases of units. However, whether the referee was mistaken or never apprised of Justice Solomon's order is of no moment, since there was an active notice of pendency filed in the 2004 Sudit-Mercury action.