Brooklyn 5511 Mgt. LLC v Hang Feng 5511 LLC

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Brooklyn 5511 Mgt. LLC v Hang Feng 5511 LLC 2021 NY Slip Op 32449(U) November 24, 2021 Supreme Court, Kings County Docket Number: Index No. 521763/21 Judge: Leon Ruchelsman 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 11/24/2021 04:20 PM INDEX NO. 521763/2021 NYSCEF DOC. NO. 43 RECEIVED NYSCEF: 11/24/2021 SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF KINGS : CIVIL TERM: COMMERCIAL PART 8 -·-------·-----.-·-·---·--· . - ·--·. -----·-·------- .. :x BROOKLYN 5511 MANAGEMENT LLC Plaintiffs, Decisibn and brder Index No. 521763/21 - against HANG FENG 5511 LLC, November 24, 2021 Defendant, ------ -------------- ----------- - ----- k PRESENT: HON. LEON RUCHELSMAN The defendant has moved pursuant to CPLR §3212 seeking summary judg.ement dismissing the lawsuit and cancelling the Notice o.f Pendertcy. The plaintiff opposes the mbtion. were submitted by the parties and arguments held. Pa.pets After reviewing all the arguments this court now makes the following determination. On April 7, 2021 the plaintiff purchaser entered into a contract with defendant seller concerning property located at 5517 7 th Avenue in Kings County. The purchase price w-as $2,999,000 and the plaintiff made a down payment of $300;000. A rider to the contract provided that "Seller acknowledges that Purchaser is permitted tb assume the S0ller's existing underlying mortgage and Seller shall cooperate to facilitate the process. However, if the mortgage is. not assumable, purchaser .wust: still proceed to purchase" ( ~ , Rider tq Contr9ct, assuming the mortgage and C:orripletihg a ':I[ Xl . In-stead of inortcj'a9e application required b:f the mortgagor, the plaintiff propos.ed purchasing the .defendant's shares of the corporation to assume the mortga.g:e in 1 of 5 [*FILED: 2] KINGS COUNTY CLERK 11/24/2021 04:20 PM NYSCEF DOC. NO. 43 that way. INDEX NO. 521763/2021 RECEIVED NYSCEF: 11/24/2021 The defendant Consented, however, upon learning of negative tax consequences in the amount of ~54~750, requested the plaintiff pay that amount to facilitate the transfer of shares. The plaintiff refused arid offered $10,000. A time of the essence letter was sent by the defendant requiring the closing take place on July 3(), 2021. On that date the plaintiff failed to appear. The defendant declared the contract breached and entered into another contract to sell the property to someone else. The plaintiff filed a Notice of Pendency and a summons and complaint seeking a :return of the down payment or specific performance ordering a closing pursuant to the contract and attorney's fees. The defendant has moved essentially seeking ·summary judgement distnis:Sing the complaint as well as cancelling the Notice of Pendency on the grounds there are no qul:lstions of fact the complaint fails to support the claims asserted. The plaintiff opposes the motion contending there are questions of fact whether the complaint alleges valid claims. Conclusions of Law facts at issue in a case are in dispute material Where the summary judgment cannot be granted (Zuckerman v. City of New York, 49 NYS2d 557, 427 NYS2d 595 [1980]). Generally, it is fQr the jury, the trier of fact to determine the legal c::ause of any injury jAronSon v. Uorace Mann~Barnaid School, 224 AD2d 249, 637 NYS2 d 41 O [1 st Dept • , 199 6] ) • However, where on 1 y one cone lus ion 2 2 of 5 [*FILED: 3] KINGS COUNTY CLERK 11/24/2021 04:20 PM NYSCEF DOC. NO. 43 INDEX NO. 521763/2021 RECEIVED NYSCEF: 11/24/2021 may be drawn from the facts then the question of legal cause may be decided by the trial court as a matter 0£ law (Derdiarian v.Felix contracting Inc., 51 NY2d 308, 434 NYS2d 166 [1980]). In this case the plaintiff argues there are questions of fact whether the defendant satisfied its obligation to cooperate and facilitate the assumption of the mortgage. Andy Wai Lain To a member of the plaintiff subrnitted an affidavit wherein he notes that his attorney corttacted the mortgagor Cathay Bank who informed him that a new appraisal would be required in order to assume the mortgage. Alternatively, Cathay Bank explained that an appraisal would be waived if the seller would amend its operating agreement whereby the purchaser would assume ownership of the seller entity (see, Affidavit of Mr. To). The seller refused to agree to this transfer unless the purchaser paid the additional increase in taxes the seller would incur and the purchased refused to pay that arriou:Ii.t. The seller asserts there was no requirement demanding they exchange its shares to enable the purchaser to avoid an appraisal. Rather, they contend they were only required ta, facilitate the mortg.age assumption and tl)e.te are no questions the seller did not breach that requirement, The purchaser argues that "the defendant h.ad the con.tractual duty to take whatl;!ver steps were necessary to progress this to conclusion, to wit, the assumption of the mortgage and the sale bf the property" (see, 3 3 of 5 [*FILED: 4] KINGS COUNTY CLERK 11/24/2021 04:20 PM NYSCEF DOC. NO. 43 INDEX NO. 521763/2021 RECEIVED NYSCEF: 11/24/2021 Affirmation in Opposition, 'TI 24). Of course, the contract did riot require the s:.eller to take "whatever steps" were necessary, rather merely to "cooperate'; and to "facilitate;' the process. surely, such duty on the :part of the seller did not include incurring any additional expense and surely riot an extra $54,000 in tax liabilities. However, counsel for the purchaser Ms. Choy asserted that "Cathay Bank acknowledged that the only option of having the underlying loan assumed would be by an Amendment of the existing Operating Agreement and Assignment and Assumption of membership interest between the parties,; (see, Affirmation of Lana Choy Esq., ':IL 32) . Similarly, Mr. To asserted that "Cathay Bank acknowledged that the only bption of ha~ing the underlying loan assumed would be by an Amendment of the existing Operating Agreement and Assignment and Assumption of membership intere.st between the partiesfl (see, Affirmation of Mr. To, '][ 22). Thus, there are representations there was no other way in which to effectuate the assumption of the mortgage. To be sure, the seller could not be expected to incur extra tax liabilities, however, that is a matter that .could ha.ve been resol v:ed between the parties or could have been subject to separate litigation. Indeed, it is curious the parties would frustrate a deal of this nature for approximately $44,0QO. Irt ~nY e~~rtt the repre~entations in ihe name of Cathay Bank 4 of 5 [*FILED: 5] KINGS COUNTY CLERK 11/24/2021 04:20 PM NYSCEF DOC. NO. 43 INDEX NO. 521763/2021 RECEIVED NYSCEF: 11/24/2021 that a standard deed transfer was not an option in this case, although initially such option was av,aiiable, requires further examination and will inform whether the seller breached the agreement by not consenting to that method of mortgage assumption. Moreover, although the seller has asserted transferring the stock would have incurred tax liability there is no indication of the tax liability -from a deed transfer. Thus, the good faith of the seller is called into question further raising questions of fact. Cons_equently, the motion seeking to dismiss the lawsuit and the cancel the Notice -of Pendency is denied. So ordered, ENTER: DATED: November 24, 2021 Brooklyn N.Y. Hon. Leon Ruchelsman JSC .5 5 of 5

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