542 Broadway Lender LLC v 60G 542 Broadway Owner, LLC
Annotate this CaseDecided on August 27, 2018
Supreme Court, New York County
542 Broadway Lender LLC, Plaintiff,
against
60G 542 Broadway Owner, LLC,60G 542 BROADWAY HOLDINGS, LLC, Defendant.
850017/2017
Judith Reeves McMahon, J.
Nonparty and proposed intervenor Prince Fashions, Inc.'s ("PRINCE") Order to Show Cause seeking leave to intervene in this action is denied.
Plaintiff 542 Broadway Lender LLC filed the Summons and Verified Complaint in this matter on January 13, 2017.
Defendants 60G 542 Broadway Owner, LLC and 60G 542 Broadway Holdings, LLC have not appeared in the action, nor answered the Complaint.
Plaintiff 542 Broadway Lender LLC's motion for an Order of Reference was granted on June 2, 2017, by the Honorable Barbara Jaffe.
On May 14, 2018, by way of an efiled letter to the Court, nonparty PRINCE opposed Plaintiff 542 Broadway Lender LLC's application for a Judgement of Foreclosure and Sale in this matter. PRINCE's letter alleged, in part, that "a fraud had been committed on the part of Plaintiff [542 Broadway Lender LLC]."
At the scheduled court appearance on May 15, 2018, the Court directed Plaintiff 542 Broadway Lender LLC to respond in writing to PRINCE's letter.
Plaintiff 542 Broadway Lender LLC efiled a response on May 22, 2018. Plaintiff 542 Broadway Lender LLC's letter revealed multiple litigations involving PRINCE as the lessee of the subject property. Also, Plaintiff 542 Broadway Lender LLC's letter indicated that PRINCE's counsel was given notice of this foreclosure action on January 17, 2017, and Plaintiff 542 Broadway Lender LLC provided proof that PRINCE did receive said notice. Furthermore, Plaintiff 542 Broadway Lender LLC's letter also argued that PRINCE's submission was procedurally improper and untimely.
PRINCE efiled another letter on May 24, 2018. PRINCE's second letter challenged the legal validity of the cancellation of its lease and argued its intervention was timely because of recently discovered collusion and fraud between Plaintiff 542 Broadway Lender LLC and Defendant 60G 542 Broadway Owner, LLC in the case at bar.
At a court conference on June 5, 2018, the Court directed PRINCE to make the instant motion to intervene in order for all parties to respond by written submission as to all claims proffered in their respective letters, including, but not limited to, Plaintiff 542 Broadway Lender LLC's claim of untimeliness on the part of PRINCE.
PRINCE's interest in the subject property began on or about April 11, 1980, when PRINCE, through an assignment, became a commercial tenant in the building of the subject foreclosure, 542 Broadway, New York, New York.
On or about March 4, 2016, Defendant 60G 542 Broadway Owner, LLC, PRINCE's landlord, served PRINCE with a Notice of Default due to PRINCE's alleged material breach of its Lease for failing to maintain general liability insurance in favor of the landlord.
In response to the Notice of Default, PRINCE initiated a proceeding against Defendant 60G 542 Broadway Owner, LLC seeking a Yellowstone injunction.
In decisions dated June 29, 2016, (Motion Sequence 002) and June 30, 2016, (Motion Sequence 001), the Honorable Richard F. Braun denied motion(s) by PRINCE seeking a Yellowstone injunction in the action Prince Fashions, Inc. v 60G 542 Broadway Owner, LLC, Supreme Court, New York County, Index Number 651255/2016.
On or about July 5, 2016, Defendant 60G 542 Broadway Owner, LLC cancelled PRINCE's lease.
On or about July 11, 2016, Defendant 60G 542 Broadway Owner, LLC initiated a holdover proceeding against PRINCE in Civil Court of the City of New York.
On or about December 22, 2016, Plaintiff 542 Broadway Lender LLC sent Defendant 60G 542 Broadway Owner, LLC a Notice of Event of Default and Acceleration Notice following Defendant 60G 542 Broadway Owner, LLC's default on the subject note and mortgage.
Shortly thereafter, on or about January 13, 2017, Plaintiff 542 Broadway Lender LLC initiated the instant foreclosure action. As noted above, Plaintiff 542 Broadway Lender LLC provided PRINCE's counsel from the holdover proceeding with notice of this foreclosure action on January 17, 2017.
Concurrently, the denial of the Yellowstone injunction was affirmed by the Appellate Division, First Department. See Prince Fashions, Inc. v. 60G 542 Broadway Owner, LLC, 149 AD3d 529, 53 N.Y.S.3d 24 (N.Y.A.D. 1st Dept., 2017). The Appellate Division denied the appeal on the ground that appellate relief was barred because PRINCE failed to seek appellate relief until after PRINCE's lease had been terminated and a holdover proceeding had begun. Id. However, the Appellate Division also stated that, "Were [the Appellate Division] to consider [PRINCE's] arguments on their merits, [the Appellate Division] would reject them." Id. The Appellate Division explained that the default upon which the lease termination was based was "incurable for several reasons." Id.
In a decision dated May 31, 2018, the Honorable W. Franc Perry denied PRINCE's motion to renew Judge Braun's denial of the Yellowstone injunction. PRINCE's arguments in the motion to renew are identical to its arguments herein on the motion to intervene. Prince Fashions, Inc. v 60G 542 Broadway Owner, LLC, Supreme Court, New York County, Index Number 651255/2016
In the present action, PRINCE moves to intervene. "Upon timely motion, any person shall be permitted to intervene in any action...when the action involves the disposition or distribution of, or the title or a claim for damages for injury to, property and the person may be affected adversely by the judgment." CPLR 1012.
RPAPL 1311 provides that, "Each of the following persons, whose interest is claimed to be subject and subordinate to the plaintiff's lien, shall be made a party defendant to [a foreclosure] action: every person having an estate or interest in possession, or otherwise, in the property." RPAPL 1311.
"[RPAPL 1311] is a codification of the equitable principle that persons holding title to the premises or acquiring any right to or lien on the property subsequent to the mortgage should be made parties in the foreclosure action." New Falls Corp. v. Bd. of Managers of Parkchester N. Condo., Inc., 10 AD3d 574, 782 N.Y.S.2d 425 (N.Y.A.D. 1st Dept. 2004).
The termination of PRINCE's lease was effective as of July 5, 2016. The termination of PRINCE's lease has been the subject of appeals in Supreme Court and the Appellate Division, First Department, all of which have been denied. Following the termination of the lease, PRINCE has no interest in the subject property. See Omansky v. 160 Chambers St. Owners, Inc., 155 AD3d 460, 64 N.Y.S.3d 212 (N.Y.A.D. 1st Dept. 2017).
Additionally, this foreclosure action is not the proper forum for PRINCE's claims. As detailed above, there has been extensive motion practice in New York County Supreme Court and the Appellate Division, First Department regarding PRINCE's leasehold interest in the subject property. As noted by the parties, there is also an ongoing commercial holdover proceeding in Civil Court of the City of New York wherein PRINCE may adjudicate its leasehold interest, 60 G 542 Broadway Owner, LLC v. Prince Fashions, Inc., Civil Court of the City of New York, Index Number 69380/2016. In a Decision and Order dated February 9, 2018, deciding a motion to renew filed by PRINCE in the holdover proceeding, the Honorable Debra Rose Samuels detailed all of PRINCE's claims and stated that, "these issues are to be determined at trial."
The status of PRINCE's leasehold interest clearly is the subject of litigation in Civil Court where it is best adjudicated and already scheduled for trial.
Finally, it should be noted that PRINCE's motion is not timely. The Summons and Complaint in this matter is dated January 13, 2017. PRINCE was given notice of the foreclosure action on January 17, 2017. PRINCE's Order to Show Cause to Intervene was efiled July 5, 2018, at the direction of the Court, eighteen months after PRINCE was given notice that this foreclosure action had begun. For PRINCE to have efiled a letter to the Court the day before Plaintiff 542 Broadway Lender LLC's motion to confirm the Referee's Report and grant a Judgment of Foreclosure and Sale was to be heard by the Court is an improper delay. See In re HSBC Bank U.S.A., 135 AD3d 534, 22 N.Y.S.3d 448 (N.Y.A.D. 1st Dept. 2016); See also RKH Holding Corp. v. 207 Second Ave. Realty Corp., 236 AD2d 254, 653 N.Y.S.2d 558 (N.Y.A.D. 1st Dept. 1997).
Despite all of the above, it should be noted that PRINCE was heard at oral argument before this Court granted Plaintiff 542 Broadway Lender LLC's Motion for Judgment of Foreclosure and Sale, the order granting such which was signed August 20, 2018.
Therefore, it is hereby
ORDERED that nonparty and proposed intervenor Prince Fashions, Inc.'s Order to Show Cause seeking leave to intervene in this action is denied.
DATE
Judith Reeves McMahon, J.S.C.
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