Continental Capital Group, LLC v Lazar Bldrs., LLC

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Continental Capital Group, LLC v Lazar Bldrs., LLC 2020 NY Slip Op 34281(U) December 23, 2020 Supreme Court, Kings County Docket Number: 507817/14 Judge: Lawrence S. Knipel 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] KINGS COUNTY CLERK 12/23/2020 04:43 PM NYSCEF DOC. NO. 247 INDEX NO. 507817/2014 RECEIVED NYSCEF: 12/23/2020 At an IAS Term, Part Comm 4 of the Supren1e Co1irt of the State of New Yorlc,. held in and for the County of Kings, at the Courthot1se, at Civic Center, Brooklyn, New York, on the 23rd day of Dece1nber, 2020. PRESENT: HON. LAWRENCE KNIPEL, J11stice. - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -X CONTINENTAL CAPl1'AL GROUP, LLC and WOLF LANDAU·, Plaintiff, - against - Index No. 507817/14 [,AZAR BUILDERS, LLC and LAZAR 0STREICHER a/k/a MORDEC!-lAI ELAZER 0STREICl-IER, Defendants. - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -X I~AZ/\.R 0STREICl-IER a/k/a MORDECHAI ELAZER ()STRE!Cl-IER, Third-Party Plaintiff, - agai11st AARON ROSENFELD, Third-Party Defendant. - - -- - -- - - - - - - - - -- - - - - -- - - - - - - - -- -- -X 'fhe following e-filed papers read herein: NYSCEF Doc. Nos. Notice of Motion/Order to Show Cause/ Petition/Cross Motion and Affidavits (Affirmations) An11exed,_ _ _ __ 212-220 Opposing Affidavits (Affirmations)• _ _ __ 224-245 Upon the foregoing papers in this foreclosure action, defendant Lazar Ostreicher a/l<la Mordechai Elazer Ostreicher (Ostreicher) moves (in motion sequence [mot. seq.] nine), by order to show cause, for an order, pursuant to CPLR 5015 (a)(!), vacating and 1 of 6 [*FILED: 2] KINGS COUNTY CLERK 12/23/2020 04:43 PM NYSCEF DOC. NO. 247 INDEX NO. 507817/2014 RECEIVED NYSCEF: 12/23/2020 setting aside the June 26, 2020 default judgment entered against him (Default Judgment). On August 26, 2014, plaintiffs Continental Capital Group, LLC (Continental Capital) and Wolf Landau (Landau) (collectively, plaintiffs) c01mnenced this action to foreclose a mortgage. On December 1, 2014, plaintiffs amended their complaint. The ainended co1nplaint alleges that defendant Ostreicl1er executed a pro1nissory note on behalf of defendant Lazar Builders LLC as well as a personal guarantee in favor of Continental Capital. On January 13, 2015, Ostreicher, who was then represented by The Silber Law Firm LLC (Silber Law Firm), answered the complaint. On September 3, 2015, Ostreicher answered the amended complaint and com1nenced a third-party action against Aaron Rosenfeld (Rosenfeld), alleging that plaintiffs and Rosenfeld, acting in concert, •·strttctured a loan transaction whereby defendant Ostreicher's signature was forged and Rosenfeld absconded with inonies, none of which ever reached [d]efendant Ostreicher." By a March 23, 2018 order, the third-party action against Rosenfeld was severed from the 111ai11 action since Rosenfeld l1ad filed a bankruptcy petition. By a Nove1nber 8, 2019 order, the court relieved the Silber Law Firm as counsel for defendant Ostreicl1er. Two months later. on January 17, 2020, this action was scheduled for trial, but defendant Ostreicher failed to appear. On January 17, 2020, an inquest was held in Ostreicher's absence, and the court granted plaintiffs a judgment against Ostreicher for $225,000.00 with interest from September 9, 2012. 2 2 of 6 On June 26, 2020, the Default [*FILED: 3] KINGS COUNTY CLERK 12/23/2020 04:43 PM NYSCEF DOC. NO. 247 INDEX NO. 507817/2014 RECEIVED NYSCEF: 12/23/2020 Judgtnent was entered in favor of plaintiffs and against Ostreicher. Ostreicher now moves for an order vacating tl1e Default Judg1ne11t, pursuant to CPLR 5015 (a) (1), based on excusable default Ostreicher submits an affidavit attesting that from September 2019 through late November 2019 he Jell the country due to a family 1natter, While Ostreicher was overseas, the court issued the November 8, 2-019 order relieving the Silber Law Firm as his counsel. Ostreicher attests that his former counsel at the Silber Law Firm "atte1npted to serve notice upon 1ne that he had been relieved as cotn1sel[,]" but he did not receive such notice. Ostreicher attests that he received no com1nunications from the Silber Law Firm regarding either its motion to be relived as counsel or the January 17, 2020 trial. Ostreicher attests that he was not aware of the January 17, 2020 trial date, and that he only learned about the Default Judgment when it 'vas served upon him with notice of entry thereof on or about June 29, 2020, approxi1nately six 1nonths after the Default Judg1nent was issued. Ostreichcr asserts that he has a meritorious defense to the action because be never signed t11e loa11 docu1nents and his signature was forged. Ostreicher requests tl1at the comt consider the following: "(i) evidence of bogus loan docmnents: (ii) roan proceeds that are co1npletely unaccot1nted for; (iii) Plaintiff's t1nexplained failt1re to atte1npt any foreclosure of the subject prop_erty instead seel<ing relief only against a guarantor; (iv) payments by check allegedly made by me on the purported loan which evidence at least three different handwritings; (v) multiple property transfers ainong different entities before, during and after the pt1rported loan was issued; (vi) a subsequent \Vriting 3 3 of 6 [*FILED: 4] KINGS COUNTY CLERK 12/23/2020 04:43 PM NYSCEF DOC. NO. 247 INDEX NO. 507817/2014 RECEIVED NYSCEF: 12/23/2020 where Plaintiff disavows the loan and the loan docu1nents and atte1npts to manufacture a new agreement; (vii) not one but two party writings that make plain the swindle that plaintiffs and third-party defendant knowingly schemed against me; (viii) that Landau (as lender) and third party defendant Rosenfeld (as property owner and true borrower) knew each other and were seen by Affiant Steiner in Rosenfeld's New Jersey office before or at the purported funding of the loan .. ; (ix) that Rosenfeld was cash-strapped in 2006 and created sha111 transactions to transfer the inortgaged property to an entity affiliated with me so that Landau would fund the loan, despite !mowing that I was at that point, no longer working with Rosenfeld on the subject property; (x) that Landau willingly and knowingly loaned money to Rosenfeld based on docurnents he J<new were forged; (xi) that I received none of the claimed loan proceeds; (xii) that Plaintiff failed to com1nence - even threaten - a foreclosure action when the loan was not repaid in 2007; (xiii) that this entire sche1ne enriched third party defendant Rosenfeld when I received notl1ing from it; and (xiv) that plaintiff acknowledged to third parties that Rosenfeld was the responsible party." Ostreicher asserts that "[i]n light of these unusual circu1nstances Plaintiffs' clai1ns inust not only be reexamined they must [be] scrutinized and the Judgment should be vacated." Plaintiffs, i11 opposition, argue that Ostreicher's forgery defense is not meritorious beca11se Ostreicher ad1nitted that he signed a related agreement on Septe1nber 9, 2009. Plaintiffs also argue that Ostreicher's forgery defense is meritless based on the deposition testi1nony from two attorneys who attended the loan's closing. Additionally, plaintiffs sub1nit a report l'ro111 a hand\vriting expert who concluded that there is a "strong probability" that Ostreicher signed the loan docu1nents. Landau, a inanaging me1nber of Continental Capital, sub1nits a11 affidavit attesting that Continental Capital, a hard 1noney 4 4 of 6 [*FILED: 5] KINGS COUNTY CLERK 12/23/2020 04:43 PM NYSCEF DOC. NO. 247 INDEX NO. 507817/2014 RECEIVED NYSCEF: 12/23/2020 lender, loaned $600,000.00 to Ostreicher's company, Lazar Builders, and that Ostreicher personally gttaranteed the loan. According to Landau, the mortgage matured on Attgust 10, 2007, and Lazar Builders failed to pay the money owed on the maturity date. Landau attests that "[!]or years, Ostreicher, Lazar Builder's principal, tendered approximately 30 check pay1nents under the (alleged) fraud11lent loan" and Ostreicher signed the 1najority of tl1ose checks. Landau asserts that "Ostreicher ratified the fraudulent loa11 by l1is contint1ed substantial pay1nents that lasted for tl1ree years" even if Ostreicher did not exectLte the protnissory 11ote. Landau denies having any lmowledge of a forgery. A party seeking to vacate a default in appearing pursuant to CPLR 5015 (a)(!) tnust demonstrate a reasonable excuse for the default and a potentially meritorious defense to the action" (92-18 149'" Street Realty Corp. v Stoizberg, 152 AD3d 560, 562 [2017] [internal quotations omitted]). Furtlwrmore, where a default in appearing results fro1n law office failure, the court 1nay "exercise its discretion in the interest of justice to excuse delay or default ... "pursuant to CPLR 2005 (see JP Morgan Chase Bank, N.A. v Russo, 121AD3d1048, 1049 [2014]). flere, Ostreicher has de1nonstrated a reasonable excuse for his default because he \Vas out of the country for tl1ree months and was unaware that his prior counsel at the Silber Law Firm had been relieved and that a trial was scheduled on January 17, 2020. Ostreicher has established a potentially meritorious defense to this action based on his testimo11y that his signatt1re was forged on the loan documents, despite the fact that 5 5 of 6 [*FILED: 6] KINGS COUNTY CLERK 12/23/2020 04:43 PM NYSCEF DOC. NO. 247 INDEX NO. 507817/2014 RECEIVED NYSCEF: 12/23/2020 plaintiffs have produced some evidence to the contrary. In the court's discretion, and in the interest of justice, Ostreicher's motion to vacate the Default J11dgment is granted since Ostreicher's failure to appear in court was neither willful nor deliberate, and the validity of the underlying loan should be determined at trial on the merits. Accordingly, it is ORD_ERED that Ostreicl1er's motion (in 1not. seq. nine) is granted, and the J11ne 26, 2020 Default Judgment is hereby vacated. This constitutes the decision and order of the court. ENTER, J. S. Justice La~vrence l\nips-i 6 6 of 6

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