Atlantic Ave. Capital LLC v 980 Atl. Holdings LLC

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Atlantic Ave. Capital LLC v 980 Atl. Holdings LLC 2022 NY Slip Op 31674(U) May 19, 2022 Supreme Court, Kings County Docket Number: Index No. 500917/19 Judge: Lawrence 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. INDEX NO. 500917/2019 FILED: KINGS COUNTY CLERK 05/23/2022 09:40 AM NYSCEF DOC. NO. 113 RECEIVED NYSCEF: 05/23/2022 At an IAS Term, Part Coimn 6 of the Supreme Court of the State of New York, held in and for the County of Kings, at the Courthouse, at Civic Center, Brooklyn, New York, on the l 9th day of May, 2022. PRES ENT: HON. LAWRENCE KNIPEL, Justice. ·- ---··- . ---·- -----·- "' - -.- ---.-. ---·- -·- ----. -x· ATLANTIC AVENUE CAPITAL LLC, Plaintiff; - against - hidcx No~ 5Q09 l 7/l 9 980 ATLANTIC HOLDINGS LLC, TRANSl'r WIRELESS, LLC, CHASKIEL STRULOVICH, ''JOHN DOE# 1" through "JOHN DOE #60" inclusive, thetruc names ofsaiddefendants being unknown to plai11tiff, the patties being intended to be those persons having or claiming an interest in the mortgaged premises described in the complaint by virtue.of being tenants; occupants, owrtel's, judgment creditors, or licnors of any type or nature, a:rtd/or their heirs, successors or assigns in alLor part of said premises; Defendants. -·- - - - -·~·- -·- - - - -·- - - - - - - - - - - - - - - - - - - - ~x The foHo wing c~ filed papers read herein: NYSCEFDoc. Nos. Notice of Motion/Order to Show Cause/ Petition/Cross Motion and Affidavits (Affirmations) Aimexed_____ 55~61 Opposii1g. Affidavits (Affinn~tions)_._ _ __ 62.:.63 .R~ply Affidavits (Affirmations) _ _ _ __ [* 1] 1 of 5 64 • INDEX NO. 500917/2019 FILED: KINGS COUNTY CLERK 05/23/2022 09:40 AM NYSCEF DOC. NO. 113 RECEIVED NYSCEF: 05/23/2022 Upon the. foregoing papers in this action to foreclose a leasehold mortgag_e on the commercial propertie_s-at 976/984 Atlantic.Avenuc·,_534 Grand Avenue· and 971/973 Pacific Street ·in Brookiyn (Rental l>toperties) 1 defendants 980 Atlantic: Holdings LLC (980 Atlantic or ·borrower) and Chaskiel Strulovich (Strulovic h or gmfrantor) (collectively, defond~nts) move {in motion sequence [mot. seq.] two) for art order gr_1;1nting. them equitable relief. Spe_cifically, defendants ·=seek an order- directing. plaintiff to turn over the rental income that it collecteq pursuant to an. Assigr:uncnt of Leases and Rents. to 980 Atlantic's landlord. On January 14~ 2019, plaintiff Atlantic A venue Capital LLC (plain.tiff) comjnenc_ed this action against defendant s to foreclose a $2, 700~0.00.00 leasehold m.ortgage on the Rental Properties; which·secur~d ·a Septi!.nlber _19, 201_6 note executed by 9 80 Atlantic and guaranteed by Stiulovich ht favor of Prospect Place Capital Ll.,C (Prospect). Coritcmporaneoµsly with. the loan, 980 Atlantic executed· an Assignme nt of Leases and Rents. In January 2018, Prospect cJectedto accelerate the loan based on. 980 Atlantic.'s payment default. On orab.oµt December .14, 2:018, .Pros_pect assigned-the loan~ the guaranty and the Assignnie nt of Leases and Ri;;nts.'to plaintiff On or about March 5, 2019, defendants c-tlllcctivdy answered the complaint and asserted nin·e affirmative defenses, none of which sought eq4itable relief regarding the Assignme nt ofLeascs and Rents.. By a January 24_, 2020: order, this court_ granted plaintiff's. suminary juqgment. 2 [* 2] 2 of 5 INDEX NO. 500917/2019 FILED: KINGS COUNTY CLERK 05/23/2022 09:40 AM NYSCEF DOC. NO. 113 RECEIVED NYSCEF: 05/23/2022 Defendants now move for equitable relief. Defendants assert that they lease the Rental Properties from Bldg Oceanside LLC (Oceanside) and, in turn, sub-lease the Rental Properties to various businesses. Defendants assert that "when 980 Atlantic defaulted on the loan, plaintiff began to collect the rents d1rectly from the various busii1esses, pursuant to the Assignment of Leases and Rents." Defendants also assert that ''because the rents were diverted to plaintiff; defendants 980 Atlantic and Strulovich were unable to pay Oceanside [rent]" whichresultcd in Oceanside commencing aLandlord andTenantac:tion to evict defendants. Defendants argue that "plaintiff is looking for a double award by taking the re11tal procec:ds before a final determination is made as to what is owed'' and that "the rental proceeds should be used to maintain the status quo by paying for the rent defendants owe to Oceanside until a final dctcnnination can be made as to what plaintiff is entitled." Defendants asserts that ''[wJithoutthe Court's equitable use ofits power, plaintiff will force defendants to fal1 furtherbehind on the mmigageand thcrcntal arrears." Plaintiff, in opposition, argues that defendants' motion should be denied becauscit requests "extraordinary relief, outside of the usual procedures in a mortgage foreclosure.;, Plaintiff notes that defendants answered the complaint and "did not plead any equitable defenses relating to the rents/' Plaintiff argues that ''[ e]quitable relief arises only when plaintiff has done something. wrong;' and that ·1t "did not cause defendant's mortgage ~efault, and the A~signmcnt of Leases and Rents was triggered only after the defendant 3 [* 3] 3 of 5 INDEX NO. 500917/2019 FILED: KINGS COUNTY CLERK 05/23/2022 09:40 AM NYSCEF DOC. NO. 113 RECEIVED NYSCEF: 05/23/2022 defaulted on the loan." Plaintiff argues that it "has a legal right to the subtenant rents[,]" "the amount of the subtenant rents arc· minisculc compared to the amount which defendant owes [it]"and ''[t]here is no risk that [it] will recover more in subtenant rents than what defendant owes [itF' Plaintiff asserts that defendants' inability to pay its creditors is not a reason for the court to prevent plaintiffS enforcement of its right to the subtenantrents. Defendants,. in reply, clarify that ''[p]laintiff is permitted to retain the amounts of rent c·oJlected over and above what is due to Oceansic:le'' under the Assignment of Leases and Rents, but argues that plaintiff should be required to turn over that portion of the subtenants' .rent needed to pay its landlord, Oceanside. The Assignment of Leases and Rents provides, in relevant part: "1. It is agreed that this is an absolute assigrunent of rents, incotrte arid profits; hqwever, Assignee grants and deems unto Assignor a license to collect all tents, issues and profits for so long as Assignor is not in default under any provisions of the Note or any other agreements which secure the Note . " (emphasis added). Plaintiff correctly argues that the Assignment of Leases artd Rents, having been recorded with the niottgage, is not just a contract right, but an enforceable Hen that plaintiff is explicitly entitled to enforce against "all tents." Defendants have failed to establish that there are any extraordinary circumstances warranting the equitable relief they now seek. Accordingly, it is hereby 4 [* 4] 4 of 5 INDEX NO. 500917/2019 FILED: KINGS COUNTY CLERK 05/23/2022 09:40 AM NYSCEF DOC. NO. 113 RECEIVED NYSCEF: 05/23/2022 ORDERED that defendants' motion (in mot. seq. two) is denied . This constitutes the decision and order of the court. E NTER, J. S. C. HON. LAWRENCE KNIPEL ADMINISTRATIVE JUDGE 5 [* 5] 5 of 5

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