Gluckstern v Arklow-FBF LLC

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Gluckstern v Arklow-FBF LLC 2019 NY Slip Op 33735(U) December 16, 2019 Supreme Court, New York County Docket Number: 652499/2019 Judge: Barry Ostrager Cases posted with a "30000" identifier, i.e., 2013 NY Slip Op 30001(U), are republished from various New York State and local government sources, including the New York State Unified Court System's eCourts Service. This opinion is uncorrected and not selected for official publication. [*FILED: 1] NEW YORK COUNTY CLERK 12/18/2019 03:58 PM INDEX NO. 652499/2019 NYSCEF DOC. NO. 48 RECEIVED NYSCEF: 12/18/2019 SUPREME COURT OF THE STATE OF NEW YORK NEW YORK COUNTY PRESENT: HON BARRY R OSTRAGER PART IAS MOTION 61EFM Justice ---------------------------------------------------------------------){ INl>E)( NO. 652499/2019 STEVEN GLUCKSTERN MOTION I>ATE Plaintiff, MOTION SEQ. NO. -v- 001 ARKLOW-FBF LLC, DECISION+ ORDER ON MOTION Defendant. ---------------------------------------------------------------------){ The following e-filed documents, listed by NYSCEF document number (Motion 001) 15, 16, 17, 18, 19,20,21,22,23,24,25,26,27,28,29,30,31,32,33,34,36,37,38,39,40,41,42,43,44, 45 were read on this motion to/for STRIKE & SUMMARY JUDGMENT OSTRAGER, BARRY R. J.S.C. Before the Court is Plaintiffs motion 001 to strike Defendant Arklow-FBF LLC's affirmative defenses and counterclaims, and for summary judgment on his first cause of action, and entry of judgment plus interest accruing at the contractual rate, plus attorneys' fees and costs to collect the debt. The Court heard oral arguments on this motion on November 26, 2019. Based on the foregoing documents and the representations made before the Court at oral argument, Plaintiffs motion for summary judgment on his first cause of action is granted. This is a simple action to recover on a loan agreement. Defendant Arklow-FBF LLC ("Arklow") entered into a loan agreement (the "Loan Agreement") with non-party Great-West Life & Annuity Insurance Company ("Great West") (NYSCEF Doc. No. 3). The most recent amendment to the Loan Agreement became effective as of December 17, 2010 (the "Third Amendment") (NYSCEF Doc. No. 4). Together with the Third Amendment to the Loan 652499/2019 GLUCKSTERN, STEVEN vs. ARKLOW-FBF LLC Motion No. 001 1 of 5 Page 1of5 [*FILED: 2] NEW YORK COUNTY CLERK 12/18/2019 03:58 PM NYSCEF DOC. NO. 48 INDEX NO. 652499/2019 RECEIVED NYSCEF: 12/18/2019 Agreement, Arklow delivered a secured promissory note dated December 17, 2010, in the Original Principal Amount of $1,542,490.35, plus interest (the "Note") to Great-West (NYSCEF Doc. No 5). Plaintiff, Mr. Gluckstern served as a personal guarantor on the Note. Defendant Arklow ultimately defaulted on the Note on August 11, 2017 (NYSCEF Doc. No. 6). Defendant failed to cure its default and pay the amount due to Great-West. Great-West then sued Plaintiff as the guarantor to recover on the Note. To resolve that litigation, Plaintiff purchased the Note from Great-West. As a result, Plaintiff became and continues to be the holder of the Note, with all the same rights and remedies available to the previous lender, Great-West. Plaintiff brought this action in April 2019 for (1) breach of the Note and Loan Agreement and (2) in the alternative, for replevin of the collateral pledged under the Loan Agreement (NYSCEF Doc. No. 2). Plaintiff admits that if summary judgment is granted on his first cause of action, his second cause of action is rendered moot (NYSCEF Doc. No. 34). Defendant raises several unsupported affirmative defenses. Defendant failed to provide a factual basis for his first, second, third, fourth, fifth, seventh and eleventh affirmative defenses. Defendant's eight, ninth and twelfth affirmative defenses relate to Plaintiffs second cause of action. As such, only Defendant's sixth affirmative defense is the subject of discussion here. Defendant's sixth affirmative defenses alleges that Plaintiff does not have standing to maintain this action because he is not the holder of the Note under U.C.C. Article 3. In an action for non-payment of loan obligations created under loan documents, a prima facie case is established through proof of the note at issue and the failure of the obligee to make payment in accordance with its terms. See Seaman-Andwall Corp. v Wright Mach. Corp., 31 AD2d 136 (1st Dept 1968, cifld 29 NY2d 617 (1971 ); see also Interman Indus. Prods. v R. S. M Electron Power, 37 NY2d 151, 155 (1975). 652499/2019 GLUCKSTERN, STEVEN vs. ARKLOW-FBF LLC Motion No. 001 2 of 5 Page 2 of 5 [*FILED: 3] NEW YORK COUNTY CLERK 12/18/2019 03:58 PM NYSCEF DOC. NO. 48 INDEX NO. 652499/2019 RECEIVED NYSCEF: 12/18/2019 The Court finds that Plaintiff has made a sufficient showing that: (1) Defendant entered into the Note and the Loan Agreement with Great-West; (2) Plaintiff bought the loan from GreatWest; (3) the assignment from Great-West to Plaintiff was valid under both the Note and the Loan Agreement's terms; (4) Defendant defaulted and remains in default on the Note; and (5) no payment has been made by Defendant. Thus, Plaintiff has met his burden of establishing his prima facie case. Defendant argues that Plaintiff did not establish a prima facie case because Plaintiff has not proven that he is the holder of the Note pursuant to UCC § 3-202(b). Specifically, Defendant argues that Plaintiff has not afforded Defendant the opportunity to inspect the original Note and the Allonge, and Defendant disputes that the Allonge is firmly affixed to the Note. The Court is unpersuaded by Defendant's argument. Plaintiff filed an affidavit stating that he purchased the Note from Great-West (NYSCEF Doc. No. 16 ~4). Plaintiff e-filed the Note (NYSCEF Doc. No. 21) and the Allonge to the promissory note signed by Great-West (NYSCEF Doc. No. 24). Plaintiffs counsel represented in two affirmations made on personal knowledge the original Note and Allonge were sent to Plaintiff in care of his attorneys directly from counsel for Great-West and was received by counsel as a single document, with the allonge "firmly affixed" to the Note at the back by a staple and that the staple was removed by counsel so the document could be necessarily scanned and included as an exhibit in this e-filed case (NYSCEF Doc. Nos. 41 and 42). In compliance with the Court's instructions, Plaintiffs counsel brought the original Note and Allonge to Court on November 26, 2019 for inspection. Plaintiffs counselrepresented on the record to the Court that the Allo~ge arrived firmly affixed to the Note and the staple was only 652499/2019 GLUCKSTERN, STEVEN vs. ARKLOW-FBF LLC Motion No. 001 3 of 5 Page 3 of 5 [*FILED: 4] NEW YORK COUNTY CLERK 12/18/2019 03:58 PM NYSCEF DOC. NO. 48 INDEX NO. 652499/2019 RECEIVED NYSCEF: 12/18/2019 removed for the purpose of e-filing it (NYSCEF Doc. No. 47). Defendant apparently did not avail itself of the opportunity to inspect the Note and Allonge at the oral argument. The Court is satisfied with the representations made by Plaintiff and Plaintiffs counsel in their affirmations and by counsel at oral argument. As such, the Court finds that Defendant's argument put forth in its sixth affirmative defense that Plaintiff is not holder of the Note because Plaintiff failed to show the Allonge was firmly affixed to the Note is without merit. Accordingly, Plaintiffs motion for summary judgment on his first cause of action is granted. Plaintiffs second cause of action is dismissed as moot without prejudice to be raised in enforcement of this judgment. Plaintiff is entitled to $1,633,889.79, the total amount that Defendant owed to Great-West on the date of the original notice of default August 9, 2018 (NYSCEF Doc. No. 6), plus contractual interest at the default rate (NYSCEF Doc. No. 3). The Loan Agreement defines the "default rate" as the lesser of either the maximum legal rate or 5% above the defined "interest rate" (6.84%) per annum. As such, Plaintiff is entitled to $1,633,889.79, plus interest at a rate of 11.84% per annum accruing from the original notice of default on August 9, 2018 until the date of the decision and order on this motion. Plaintiff also requests attorney's fees as provided in Section 4.1.14,ofthe Loan Agreement (NYSCEF Doc. No. 3). If Plaintiff intends to pursue his claim for attorney's fees, he should file a motion on notice, attaching all relevant bills or invoices as exhibits by January 22. 2020. Accordingly, it is hereby ORDERED that Plaintiffs motion to strike Defendant's affirmative defenses and counterclaims is granted; and it is further 652499/2019 GLUCKSTERN, STEVEN vs. ARKLOW-FBF LLC Motion No. 001 4 of 5 Page 4 of 5 [*FILED: 5] NEW YORK COUNTY CLERK 12/18/2019 03:58 PM NYSCEF DOC. NO. 48 INDEX NO. 652499/2019 RECEIVED NYSCEF: 12/18/2019 ORDERED that the Plaintiffs motion for summary judgment on his first cause of action in the Complaint herein is granted, and the Clerk of the Court is directed to enter judgment in favor of Plaintiff Steven Gluckstem and against defendant Arlow-FBF LLC in the amount of $1,633,889.79, together with interest at the contractual rate of 11.84% per annum until the date of the decision and order on this motion, and thereafter at the statutory rate of 9% per annum, as calculated by the Clerk, together with costs and disbursements to be taxed by the Clerk upon efiling of a propose judgment and an appropriate bill of costs; and it is further ORDERED that Plaintiffs second cause of action in his Complaint is dismissed without prejudice as moot. 12/16/2019 DATE CHECK ONE: CASE DISPOSED GRANTED D DENIED APPLICATION: SETTLE ORDER CHECK IF APPROPRIATE: INCLUDES TRANSFER/REASSIGN 652~99/2019 GLUCKSTERN, STEVEN vs. ARKLOW-FBF LLC Motion No. 001 5 of 5 ~ NON-FINAL DISPOSITION GRANTED IN PART SUBMIT ORDER FIDUCIARY APPOINTMENT D D OTHER REFERENCE Page 5 of 5

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