Ponce Bank v Bushwick &.Jefferson Realty LLC

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Ponce Bank v Bushwick &.Jefferson Realty LLC 2021 NY Slip Op 31473(U) April 28, 2021 Supreme Court, Kings County Docket Number: 526914/19 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 04/30/2021 02:26 PM NYSCEF DOC. NO. 47 INDEX NO. 526914/2019 RECEIVED NYSCEF: 04/30/2021 At an IAS Term, Part Com1n 6 of the Supreme Court of the State of New Yorlc, held in and for the County of Kings, at the Courthot1se, at Civic Center, Brooklyn, New Yorlc, on the 28th day of April, 2021. PRESENT: HON. LAWRENCE KNIPEL, Justice. -- ---- - - - - - - - -- - - -- - - - - - -- - - - - - -- --X PoNcEBANK, Plaintiff, - against - Index No. 526914/19 BUSHWJCJ( &.JEFFERSON REALTY LLC, JOSE RODRIGUEZ, NYC BUREAU OF l-l!GH\VA Y OPERATIONS, FIRST IC BANK, NEW YORI< CITY ENYIRONMEN1"AL CONTROL BOA'RD, GCAP HOLDINGS LLC, CRJMJNAL COURT OF THE CITY OF NEW YORK, NE\V YORK STATE DEPARTMENT OF TAXATION :\ND FINANCE, 21ST MORTGAGE CORP., COl\tIMISSIONER OF SOCIAL SERVICES OF Tt-IE CITY OF NEW YORK, SHERESE ANNETTE LEWIS, HFI-l CAPJ'fAL FUNDING, BARBARA PIASCIK, NE\V YORI<. CITY DEPARTMENT OF FINANCE, THE UNITED STA'fES OF AMERICA INTERNAL REVENUE SEJlVICE DEPARTMENT OFTl·lE TREASURY, NE\V YORl( CITY PARKING VIOLATIONS BUREAU PAYlvlENT AND ADJUDICA1"10N CENTER, NEW YORK CITY 'fRA.NSIT ADJUDICATION BUREAU and "JOlJN DOE" #1-10, "MARY DOE" #1-10, and "JANE DOE"# 1-10, the nan1es being fictitious, t11eir true names being unl<nown to the plaintiff, persons i11tended being persons in possession of portions of the premises 11erein described, Defendants. - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -X 1 of 10 [*FILED: 2] KINGS COUNTY CLERK 04/30/2021 02:26 PM INDEX NO. 526914/2019 NYSCEF DOC. NO. 47 RECEIVED NYSCEF: 04/30/2021 NYSCEF Doc Nos. The following e-filed papers read herein: Notice of Motion/Order to Show Cause/ Petition/Cross Motion and Affidavits (Affinnations) Annexed,_ _ __ 14-27 Opposing Affidavits (Affirmations) _ _ __ 31-32 38-41 Reply Affidavits (Affirmations). _ _ _ __ 38-41 42 30-32 34 Upon tl1e foregoing papers in this action to foreclose a consolidated 1nortgage on the commercial property at 1195 Bushwick Avenue in Brooklyn (Property), plaintiff Ponce Bank (Ponce) moves (in motion sequence [mot. seq.] one) for an order: (I) appointing a referee to co1npute the total su1ns due a11d owing, pursuant to RPAPL 1321, and (2) a1ne11ding the caption to substitute Kev & J Groce1y I11c., Jose Cruz, Juan Zapata and Sopl1ia Sanchez for t11e "John Doe" and "Jane Doe" defendants and striking the "John Doe," "Mary Doe" and "'Jane Doc" defendants fro1u the caption. Defendant First IC Bank (First IC) cross-moves (in mot. seq. two) for an order granting it leave to file a late answer to the complaint. Background On Dece1uber 11, 2019, l)oncc co1n1uenced this foreclosure action by filing a su1u1uons, a verified con1plaint and a notice of pendency against the Property. The complaint alleges that on or about January 25, 2017, defendant Bushwick & Jefferson Realty LLC (B&J) executed and delivered a mortgage note in the principal amount of $750,000.00 in favor of 1195 Bushwick Ave. Funding LLC c/o Hirshmark Capital LLC, secured by a mortgage encumbering the Property, which was recorded on March 1, 2017 2 2 of 10 [*FILED: 3] KINGS COUNTY CLERK 04/30/2021 02:26 PM NYSCEF DOC. NO. 47 INDEX NO. 526914/2019 RECEIVED NYSCEF: 04/30/2021 under CRFN 2017000081999 (complaint at '\12). The complaint alleges that on or about March 28. 2018, B&J executed and delivered a Gap Note in the principal amount of $300,000.00 to Ponce providing "for repayment of outstanding principal plus all accrued and unpaid interest payable on demand[,]" secured by a gap mortgage (second mm1gage) encumbering the Property, which was recorded on April I 0, 2018 under CRFN 2018000119517 (id. at ii 3). On or about March 28, 2018, B&J allegedly executed and delivered a consolidated note in tl1e principal arnount of $1,050,000.00 in favor of Ponce, which provided for monthly installments commencing on May I, 2018 (id. at 114). The complaint alleges that tl1e first and second mortgages were consolidated into a $1,050,000.00 mortgage encumbering the Property, which was recorded on April 10, 2018 under CRFN 2018000119518 (id. at 'II 5). The complaint alleges that "[a]s collateral security for payment of this indebtedness, Defendant[ ] Jose Rodriguez personally guaranteed performance and payment to PONCE BANK, its successors and/or any subsequent holder of the note by Guaranty dated March 28, 2018" (id.). The complaint alleges that "prior to filing the Complaint, Plaintiff, or Plaintiff's Agent \Vas in possession and control of the original note with a proper endorsement and/or allonge and was therefore, the holder of both the note and mortgage, which passes as it1cident to the note'' and «Plaintiff is still tl1e owner and holder of said note and mortgage ... " (id. at '11116 and 14). The complaint alleges that defendant B&J '"has failed to comply with the terms 3 3 of 10 [*FILED: 4] KINGS COUNTY CLERK 04/30/2021 02:26 PM NYSCEF DOC. NO. 47 INDEX NO. 526914/2019 RECEIVED NYSCEF: 04/30/2021 a11d provisions of said note and mortgage by failing to make the 1nonthly pay111ents of interest and principal due on September I, 2019, and each s11ccessive 1nonth thereafter" (id. at 1 12). The complaint alleges that "there is now due and owing .. , the principal sum of ONE MILLION TWENTY NINE THOUSAND SEVEN HUNDRED TWENTY DOLLARS AND 48/100 ($1,029,720.48) plus interest from August 1, 2019, together with accrued late charges, and related expenses incurred in protecting the plaintiffs security" (id. at~ 14 ). The complaint alleges that "[t]he defendants herein ha[ve], or claims to have, some interest in or lie11 upon said 1nortgaged pre1nises or some part thereof, which interest or lien, if any, accrued subsequent to the lien of the plaintiffs mortgage and is subject and subordinate thereto" (id. at 1 19). Regarding defendant First IC, the complaint alleges that it was ''1nade a party defendant herein solely b)' reason of a subordinate mortgage which might affect the premises ... " (id. at 119 [c]). On December 19, 2019, defendant First JC filed a notice of appearance. Although other defendants also filed notices of appearance, none of the named defendants answered the co1nplaint. Ponce's Motion for an Order o/Refere11ce Ponce 11ow inoves for an order appointing a referee to compute the ainount due and owing and to amend the caption. Ponce sub1nits an affidavit fro1n Ja1nes C. Visioli (Visioli), Ponce's Vice President, who describes the $750,000.00 note that B&J executed 4 4 of 10 [*FILED: 5] KINGS COUNTY CLERK 04/30/2021 02:26 PM NYSCEF DOC. NO. 47 INDEX NO. 526914/2019 RECEIVED NYSCEF: 04/30/2021 and delivered to 1195 Bushwick Ave. Funding LLC c/o Hirshmark Capital LLC on or about January 25, 2017. Visioli attests that: "The Plaintiff (or the Plaintiffs agent on behalf of the plaintiff) has possession of the original note that is the subject matter of this cause of action, having tak:en physical possession of the original note and mortgage on MARCH 28 2018, and therefore has an enforceable interest that allows the plaintiff (or the plaintiffs agent on behalf of the plaintiff) the rigl1t to foreclose. PONCE Bank was in possession of the Note at the time of co1nmencement of this action." Visioli attests that the note provided for repayment of 1nonthly install1nents commencing March 1, 2017 and continuing thereafter, with a final payment due on February 1, 2018. Visioli attests that the $750,000.00 note was secured by a mortgage on the Property, which 1195 Bushwick Ave. Funding LLC c/o Hirshmark Capital LLC assigned to Ponce by a March 28, 2018 1uortgage assign1ncnt, which was recorded on April 10, 2018 under CRJ'N 2018000119516. Visioli also describes the $300,000.00 gap note that B&J executed and delivered to Ponce on or about March 28, 2018, which "provided for repayment of outstanding principal plus all accrued and unpaid interest payable on demand" and the $1,050,000.00 consolidated note that B&J executed and delivered to Ponce on or about March 28, 2018. Visioli described the March 28, 2018 gap mortgage in the amount of$300,000.00, which was consolidated with the January 25, 2017 mortgage in the amount of $750,000.00 to form the consolidated mortgage in the amount of $1,050,000.00, which was recorded on April 10, 2D.18. Visioli's affidavit annexed copies of the notes, mortgages and the 5 5 of 10 [*FILED: 6] KINGS COUNTY CLERK 04/30/2021 02:26 PM NYSCEF DOC. NO. 47 INDEX NO. 526914/2019 RECEIVED NYSCEF: 04/30/2021 1nortgage assign1ne11ts. Visioli attests that "Defendant(s) breached said obligation by failing to tender the installment which became due and payable on SEPTEMBER I, 2019 and by failing to tender subsequent installments" and that $1,105,512.83 is presently due and owing. First /C's Oppositio11 and Cross Motio11 First IC sub1nits an attorney affirmation in opposition to Ponce's motion for an order of reference, in which defense counsel affirms that: "The only allegation in the Complaint relating to FIRST IC BANK, paragraph l 9c, alleges: 'The following is made a party defendant 11erein solely by reason of a subordinate 1no1igage which 1night affect the pre1nises described in Schedule A: FIRST IC BANK.' "While FIRST IC BANK'S mortgage is subordinate to the 'first mortgage' of PONCE BANK, FIRST IC BANK's mortgage is not subordinate to PONCE BANK's 'second mortgage,' as FIRST IC BANK's mortgage was executed [on March 26, 2018] before ... the execution of the 'second mortgage' [on March 28, 2018] and recorded [on April 2, 2018] before the recording of the 'second mortgage' [on April 10, 2018]. "The Complaint, as filed, did not specifically allege that PONCE BANK's 'second mortgage' was superior to FIRST IC BANK's mortgage. * * * ''In his Afiidavit of Merit and Amount Due, Mr. Visioli stated tl1at amount due was tl1e total a1nounts of the first and second PONCE BANK mortgages, effectively subordinating FIRST IC BANK's mortgage to the second mortgage, despite the second mortgage's junior position. Mr. Visioli's affidavit 6 6 of 10 [*FILED: 7] KINGS COUNTY CLERK 04/30/2021 02:26 PM NYSCEF DOC. NO. 47 INDEX NO. 526914/2019 RECEIVED NYSCEF: 04/30/2021 failed to disclose in any respect that FIRST IC BANK's mortgagek was always superior to PONCE BANK's second Mortgage." First IC cross-1noves for an order granting it leave to file a late answer to the complaint to -assert that l;irst IC's mortgage is superior to Ponce's second mortgage. Defe11se counsel asserts that "[t]o the exte11t I erred in not filing an Answer instead of a Notice of Appearance, it was the product of 'excusable neglect' which I seek to have rectified by filing this opposition and cross-motion, and sub1nitting a proposed Answer 011t-of-time." Po11ce's Oppositio11 to tlte Cross Motio11 Ponce, i11 opposition to the cross motion, asserts that defendant First IC was served with process on December 16, 2019, pursuant to CPLR 308 (3), and filed a notice of appearance on December 18, 2019. Ponce argues that "[t]o allow this defendant to interpose an[ ] answer at this point to oppose Plaintiff's lien priority would severely prejudice the Plaintiff, which apparently is a victitn of 1nisrepresentation and fraudulent acts of the defendant, [B&J]." Ponce argues that First IC has failed to satisfy the requirements to file a late answer. Discussio11 "Wl1en seel<.ing an order of reference to determine the amount that is due on an encu1nbered property, a plaintiff must show its entitlement to a judg1nent. That entitle1nent 1nay be shown ... by the plaintiff Showing entitlement to s1tm1nary judgtnent 7 7 of 10 [*FILED: 8] KINGS COUNTY CLERK 04/30/2021 02:26 PM NYSCEF DOC. NO. 47 INDEX NO. 526914/2019 RECEIVED NYSCEF: 04/30/2021 ... "(U.S. Bank NA. v Miller, 49 Misc 3d 1205 (A), * 5 [Sup Ct, Kings County 2015] [citing RPAPL § 1321; 1-2 Bruce J. Bergman, Bergman on New York Mortgage Foreclosures§ 2.01 (4) (k) (note: online edition)]). Generally, to establish pritna facie entitle1nent to judgment as a matter of law in an action to foreclose a mortgage, a plaintift' 1nust prod1tce the tnortgage, the unpaid note and evidence of default (see Deutsche Bank Natl. Trust Co. v Karibandi, 188 AD3d 650, 65 l [2020]; Christiana Trust v Moneta, 186 AD3d 1604, 1605 [2020]; Deutsche Bank Trust Co. Ams. v Garrison, 147 AD3d 725, 726 [2017]). Where a plaintiff establishes priina facie entitlement to judg1nent as a 1natter of law, the burden then shifts to the. defendant to raise a triable iss11e of fact as to a bona fide defe11se to the action (CiliMortgage, Inc. v Guillermo, 143 AD3d 852, 853 [2016]; Mahopac Natl. Bank v Baisley, 244 AD2d 466, 467 [1997]). Ponce, in support of its motion for an order of reference, has demonstrated its prima facie entitlement to judgment as a matter of law by submitting: (1) the mortgages, the notes, and ru1 affidavit attesting to the B&J's default under the terms of the mortgages; (2) proof of service of a copy of the summons and complaint; and (3) proof of the facts constituting a cause of action for foreclosure (see Barile of New Yorlc Mellon v Genova) 159 AD3d 1009, 1010 [2018]). While First IC raises an issue regarding the priority of its 1nortgage against the Property, it ad1nittedly failed to answer the complaint to assert that defense, and defense 8 8 of 10 [*FILED: 9] KINGS COUNTY CLERK 04/30/2021 02:26 PM NYSCEF DOC. NO. 47 INDEX NO. 526914/2019 RECEIVED NYSCEF: 04/30/2021 counsel specifically elected to file a notice of appearance instead. First I C's assertion that its 1no1igage has priority over Ponce's second mortgage does not preclude the appoi11t1nent of a referee to ascertain the a1nounts owed under Ponce's consolidated 1nortgage. First IC's cross inotion for leave to file a late answer is granted absent any discernible prej1rdice to Ponce, which will have an a1nple opportunity to challenge First IC's priority when it tnoves for sum1nary judg1nent. Accordingly, it is hereby ORDERED that Ponce's motion (mot. seq. one) for an order of reference to compute the amount due to plaintiff, pursuant to RP APL 1321, is granted, and an order of reference sl1all be settled on notice; and it is further ORDERED that the branch of Ponce's motion seeking to amend the caption to substitute Kev & J Grocery Inc., Jose Cruz, Juan Zapata and Sophia Sanchez for the "John Doe" and "Jane Doe" defendants and strike the "John Doe," "Mary Doe" and "Jane Doe" defendants fro1n the caption is granted a11d the caption shall hereinafter read: - - -- - - - - - - - - - - - - - - - - - - - - - - -- - - -- -- -X PONCE BANK, Plaintiff, - againstBUSHWICK & JEFFERSON REALTY LLC, JOSE RODRIGUEZ_, NYC BUREAU OF f-!JGI-IWAY OPERATIONS, FIRST IC BANK, NEW YORK CI1'Y ENVIRONMENTAL CON'J'ROL BOARD, GCAP HOLDINGS LLC, CRltvllNAL COURT OF THE CITY OF NE\V YORK, NEW YORK STATE DEPARTMENT 9 9 of 10 [*FILED: 10] KINGS COUNTY CLERK 04/30/2021 02:26 PM NYSCEF DOC. NO. 47 INDEX NO. 526914/2019 RECEIVED NYSCEF: 04/30/2021 OF TAXATION AND FINANCE, 21 ST MORTGAGE CORP., C.OMMISSIONER OF SOCIAL SERVICES OF Tl~E C!TY OF NE\V YORK, SHERESEANNETTE LEWIS, HFH CAPITAL FUNDING, BARBARA PIASCIK, NEW YORK C-!TY DEPARTivIBNT OF FINANCE, THE UNITED STATES OF AMERJCA INTERNAL REVENUE SERVICE DEPARTMENT OF THE TREASURY, NE\V YORK CITY PARKING VIOLATIONS BUREAU PAYMENT AND ADJUDICAl'JON CENTEH., NE\V YORK CITY TRANSIT ADJUDICATION BUREAll, KEV & J GROCERY INC., JOSE CRUZ, JUAN ZAPATA and SOP!f!A SANCHEZ, Defendants. - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -X; and it is further ORDERED that First !C's cross motion (mot. seq. two) for leave to file a late answer to the co1nplaint is granted, and First IC shall file its answer to the co1nplaint within 30 days after service of this order with notice of entry thereof. 'I'hi.s constittrtes the decision and order of the court. ENTER, I. S. C. HON. LAWRE CE KNIPEL ADMINISTRATIVE JUDGE IO 10 of 10

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