Arnav Indus. Inc. Profit Sharing Plan & Trust v JNY Bedford Realty LLC

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Arnav Indus. Inc. Profit Sharing Plan & Trust v JNY Bedford Realty LLC 2022 NY Slip Op 32953(U) August 29, 2022 Supreme Court, Kings County Docket Number: Index No. 500852/20 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. 500852/2020 FILED: KINGS COUNTY CLERK 09/01/2022 03:43 PM NYSCEF DOC. NO. 187 RECEIVED NYSCEF: 09/01/2022 At an IAS Term, Part Comm 6 ofthe Supreme Court of the State of New Yotk, held in and for the County of Kings, at the Courthouse, at Civic Center, Brooklyn; New York, cin the .29t1i day of Augtist, 2022. PRESENT: HON. LAWRENCEKNIPEL, Justice. ·- -.. _. - -.- - - -· ~ - - - -. - ·- - ... - - - - - - - - - - - - - -· ·- - -X ARNA V INDUSTRIES INC. PROFlTBHARING PLAN AND TRUST, Plaintiff, Index No. 500852/20 - against JNY BEDFORD REALTY LLC, LEBOW REALTY INC., EZRA UNGER, CITY OF NEW YORK ENVIRONMENTAL CONTROL B0ARD,NYS DEPARTMENT OF TAXATlON AND FINANCE, NYC OF FINANCE arid JOHN DOE . .DEPARTMENT . . . . and MARY DOE, said name being fictitious, it being the intention of Plaintiff to designate any and all occupants, tenants; persons or corporations, if any, having or claiming an interestinor lien upon the premises being foreclosed herein; Defendants. ------------~--------~~---~----~--~x NYSCEFDoc Nos. The following e.,.filed papers read herein: Notice of Motion/Order to Show Cause/ Petition/Cross Motion and Affidavits (Affirmations) Annexed._ _ __ 143-168 Opposing.Affidavits (Affirmations)_·_ _ __ 173-180 Reply Affidavits (Affirmations) _ _ _ __ 181-186 Upon. the. foregoing papers in this action to foreclose two mortgages on the cornmercfal propi:!rty·at 910 Bedford Avenue in Brooklyn, New York(Block 1914, Lot 39) [* 1] 1 of 12 FILED: KINGS COUNTY CLERK 09/01/2022 03:43 PM NYSCEF DOC. NO. 187 INDEX NO. 500852/2020 RECEIVED NYSCEF: 09/01/2022 (Property), plaintiffArnav Industries Inc. Profit Sharing Plartand Trust (Arnav or plaintiff) .rrtoves (in motion sequence [mot. seq,l sevei1) for an order: (1) pursuant to CPLR 321:t granting it summary judg111ent against defendants JNY Bedford· Realty LLC ("JNY" or ;·'borrower"},, Ezra Unger (""Ung~r" or "guarantor"), and Lebow.Realty, Inc. (''Lebow" .or "guarantor");:(2) appointiriga referee to compute:the amollht due and to examine and report whether or not the Ptof,erty can be so let in parcels; pursuant to RP APL 1321; ancl (3) awarding. plaintiff' reasonable· attornefs fees= for the enforc;e1nent of defendants' obligations under the mortgage.sand guarantees. Background On January 13, 2020, Arnav ·Commenced this foreclosure action by filing a •summons,. a verified complaint ·and a notice of pendenc:y against the Prop.erty. The complaint alleges that: (l). on July 20, 2017, Arn.av loane:d JNY $1, 100.0.00.00 ~s evidenced by a note executed by JNY in favor of Arnav, which ~ 1a~ secuted by a first mortgage on .the Propeity {Arnav complaint.at ,i,i 4i.-43), and (2) on·Decetnbet 29, 2017., Arnav loaned JNY $1,.600,000.00 as ·evidenced by a note executed by JNY in favor ofAmav; which W.as secured by a s.econd mortgage. on the Property (id. at ~112-14). The cmnplaint further alleges that on July 20, 2017, Lebo\v and Unger executed personal guarantees of the aillounts, owed 1mdet the first note and inortgag¢ (first guarantee) and on July .23, i0I8, Lebow and Unger executed personal guarantees of the amounts owed under the second note and mortgage (second guarantee) (id. at~ 16). The complaint alleges that JNY failed to make the monthly payment due under the first arid second loans as of July l, 20f8 and 2 [* 2] 2 of 12 FILED: KINGS COUNTY CLERK 09/01/2022 03:43 PM NYSCEF DOC. NO. 187 INDEX NO. 500852/2020 RECEIVED NYSCEF: 09/01/2022 failed to.make the monthly payments and outstanding !lmounts owed since that date (id. at ,~ 20 ~nd49). The complaint asserts the :following four causes of action: (1) foreclosure on the second.mortgage;· (2) breach of the second guarantee; "(3) foreclosure on the first mortgag_e; and (4) bre_ach of the first guarantee.. When none of the defendants ans\vered or otherwise responded to the co1nplah'1t, Arnav 1noved on September 9, 2020 (in mot. seq. one) for a defaultjudgnient against all defendants, including JNY; Lebrow and Unger, and an otder of reference. By an October 26i 2020 decision and order; this court granted Atnav's motion. upon d~fault, and on Novem_b~r 13, 2020 _issue an order of refefe_nce appointing a referee to compute the amounts owed to Arnav and to .discern whether the ·Property could ·be sold in parcels; On November 19, 2020~ JN.Y and Unger moved (in mot. seq. two),.by orderto sh.ow cause, for an order vacating the default judgm~nt issued against them. By aDecember 8, 2020 order, this court gqmted JNYand Unger~sinotion ''only to the extent that JFS granted on default by ord·er da,ted l 0/26/20 is vacated & de[fendant] is grante.d. leave to answer as sub1nitted". Defendants JNY and Unger collectively answered the complaint, denied the material allegations therein and asserted affi:ri-riative defenses, includin"f!; lack of _personal jurisdiction, l(\ck. qf standing, that plaintiffs dc!,ims 'are fottred- by the doctrine of payment, fraud based 011 plaintifPs misrepresentation of the lending agreement .and predatory lending. J [* 3] 3 of 12 FILED: KINGS COUNTY CLERK 09/01/2022 03:43 PM NYSCEF DOC. NO. 187 INDEX NO. 500852/2020 RECEIVED NYSCEF: 09/01/2022 On March 4, 2021, Arnav moved (in mot. seq. three) for defaultjudgment against all non-answering defendants, and for smnmary judgment as against JNY and Unger and an ordet of reference. On March 26, 2021, Lebow opposed Arnav's motion and crossmoved (in mot. seq. four) for an order, pursuant to CPLR 2004 and 5015 (a)(l), vacating its default in appearance and grn11ting it an extension of tiine to file a late answer to the c0111plaint. Purst1ant to an of this court, dated October I, 2021, Arnav's motionwas denied with leave to renew (with respect to the first and third causes of action only) upon submission of the proper evidentiary papers, and granted Lebow's mqtion to vacate its default and extended its time within which to answer Arnav's complaint by 30 days after service of the decision and order with notice ofentry. Defendant Lebow answered the complaint on January IQ; 2022. In its answer, Lebow deniedthe·allegations in the complaint c1nd asserted affirmative defenses including, criminal usury ,lack of subject mattetjurisdiction, Jack ofstanding,·waiver, unclean hands, unjustenrichment, prmnissmy estoppel; and breach of contract. Arnav's JnstantRenewedSummary Judgmei1t~l,lotion On January 17, 2022, Arnav filed the instant renewed motion forsummaryjudgrnent against JNY, Unger, and Lebow. Arnav submits an affirmation of merit from Judah Wassner ("Wassner"), Arna.v's manager, who describes the first and second 1nortgages and affirms that the borrower, ..TNYj artd the guatantorsi Unger and Lebow, defaulted 011 their repayment.obligations.under the.mortgages and.the·guarantees and that ''[t]he lastpayment by the Borrower was made in March2019." Wassner affirms that his affirrnation is based 4. [* 4] 4 of 12 FILED: KINGS COUNTY CLERK 09/01/2022 03:43 PM NYSCEF DOC. NO. 187 INDEX NO. 500852/2020 RECEIVED NYSCEF: 09/01/2022 on his review of Arnav's business records which are annexed thereto. Specifically, Wassner' s affitmati on has annexed to it the pleadings, the notes, mortgages and_ guarantees for both the first and second mortgages, proof of the defendant$' default which includes the schedule of interest payments made by JNY (ledger), notices of default for both loans, and proof of delivery of the notices_, ArnaV's affidavits of service upon defendants, and documents relating to Arnav's prior motion for summary judgment; default judgment, and an order of reference. Amav, in further support of its motion, submits an affinnation from Judah Zelmanovitz ("Zeli11anoviti"), its transactional counsel ''in connection with the loan transactions ... '' whose firm Fink & Zelmanovitz{"F &Z';) notonly participated in the loan transactions but :also acted as servicer for the loans. Zelmanovitz affinns that he was "directly involved'' in the preparation of the loan documents for the first and second loans fro111 Arnav to JNY. ITe states that when the first loan was extended, JNY was for1ned by Lebow, the sole member of JNY. Zelmanovitz explains that in connection with both the first and second loans, Certificates as to Corporate Resolutions of the Shareholders and Officers of Lebow (Corporate.ResolutionCertificates)-were executed by Moishe Lebovits, the president and sole shareholder of Lebow; and Unger before a notary, and Unger was identified therein as Lebow's Vice President Zelmanovitz affirms; upon his infonnation and belief,. that ;'Lebovits and Unger each had full and fair opportunity to review the. [Corporate Resolution]. Certificates and-to consult with legal counsel befm;e affi,xing.. their . signatures to these docmnents." Zelmanovitz also states that F &Z, as servicer of the loans, 5 [* 5] 5 of 12 INDEX NO. 500852/2020 FILED: KINGS COUNTY CLERK 09/01/2022 03:43 PM NYSCEF DOC. NO. 187 RECEIVED NYSCEF: 09/01/2022 wasresponsible fat collecting payments on the loans and issuing the default notices when the defendants failed to make payments on the loans. As a member of F&Z; Zelmanovitz states he had personal knowledge of defendants' default. Zelmanovitz also states that he possessed personal knowledge of the schedule of interest payments (ledger) ptepared by F&Z and submitted by Arnavin support of the instant ittotion for summary judgment, and . . he confirmed that it pertains to defendants' loans. Arnav;s counsel submits an affirmation asserting that Arnav has established its prirna fade entitlement to summary judgment against JNY, the borrower, Unger and Lebow, the guarantors, artdto the appointment ofa referee to calculate damages. Plaintiffs counsel atgues that Arnav is entitled to an award ofteasonable attomeys' fees, pursuantto Section 42 of both the first. and second mortgages and Section Four of the guarantees. Notably, plaintiff"s counsel asserts that "[e]ven if there is a dispt1te respec;ting the sums paid by JNY before its default or in the amount of damages, such in no way constitutes a basis for this Court to decline entering ajudgment of foreclosure as the amounts due under the mortgages can and will be determined and calculated by the Referee appointed by this Court." JNY and U11ger's Opposition JNY and Unger, in opposition, submit ah attorney affinnation in which they argue that Unger was never properly served in this actionbecause he was not served athis actual place of busin~ss; nor place of abode as required under CPLR 308(2). Consequeritiy, they argue; the court lacks petsonc1 I jqrisdj cti on over Unger. JNY and U11ger ·also 6 [* 6] 6 of 12 argue that the FILED: KINGS COUNTY CLERK 09/01/2022 03:43 PM NYSCEF DOC. NO. 187 INDEX NO. 500852/2020 RECEIVED NYSCEF: 09/01/2022 affirmation of Wassner is insufficient in that Amavfails to establish a proper foundation for the admission ofArnav's business records as they relate to JNY. They contend that Wassner failed to set forth that he is an individual with personal knowledge of Arnav;s business practices and procedures, JNY and Unger also argue that the schedule of interest payments/ledger submitted by Arnav is inadmissible in that it does not contain any identifying information such as the name of the purpotted debtor/client, debtor/client's address or contact information, and also lacks any infomrntion about the note or mortgage upon which the ledger was generated, and lacks the date it was produced, all of which renders it defective on its -face. Arnav's Reply In its reply, Amav asserts that JNY and Unger's opposition is conspicuous for what it does not dispute. JNY and Unger do not dispute the facts as set forth in the statement of material facts ;md in the affirmationof Arnav's counsel,Jeffrey Fleischmahrt, or arty other facts presented i11 Arnav's moving papers and exhibits. Amav argues that Unger has not moved to dismiss this action for failure to properly serve him and has otherwise participated in this action and, therefore, has consented to the court's jurisdiction over him. Arnav also contet1ds that Unger has failed to demonstrate that service of process against him was inadequate. Amav also argues that Wassner hastnet the requirements of CPLR 3212 (b) in that he avers in his nffidavit that he has knowledge of the facts, and that his reply affidavit has removed any doubt that he does in fact have full knowledge of the daywtowday business 7 [* 7] 7 of 12 FILED: KINGS COUNTY CLERK 09/01/2022 03:43 PM NYSCEF DOC. NO. 187 INDEX NO. 500852/2020 RECEIVED NYSCEF: 09/01/2022 practices and procedures ofAmav. Amav also points to the affirmations ofZelmanovitz as providing evidence that the schedule of interest payments/ledger was made in the course of F&Z's business, was based on F&Z's own computerized system and pertains to JNY's Joans. Arnav also states "[n]otably, defendants nowhere dispute the factual explanations offered by plaintiff with respect to the ledger/spreadsheet". Discussion As an initial matter, the court notes that JNY and Unger have waived the argument that the court lacks personal jurisdiction over Unger because he was not properly served with the con1plaint. Pursuant to CPLR 3211 (e ), defendants were required to move to dismiss the complaint for lack of proper service on Unger within 60 days following the service oftheir answer (in November 2020); unless an extension of time was warranted on the ground of undue hardship. Inasmuch as no motion was made within 60 days based on improper service of process, and there has been no showing of any undue hardship that prevented defendants from making the motion within the required 60,.day period, that defense is deemed waived (CPLR 3211 [eJ; see Deutsche Bank Nat'! Tr. Co. v Jorgensen, 185 AD3d 784, 785, [2020]; US Bank Nafl Ass;n v Roque, 172 AD3d 948, 950 [2019]; Deutsche Bank Natl. Trust Co, v Acevedo1 157 AD3d 859, 861 [20181). Turning to the merits, the court notes that summary judgment is a drastic remedy that deprives a litigant of his or her day in court and should, thus, only be employed when there is no doubt as to the absenc.e of triable issues of material fact (Kolivas v Kirchoff, 14 AD3d 493 [20_05]; s.ee also Andre v Pomeroy, 35 NY2d 361, 364 [19741). "The 8 [* 8] 8 of 12 FILED: KINGS COUNTY CLERK 09/01/2022 03:43 PM NYSCEF DOC. NO. 187 INDEX NO. 500852/2020 RECEIVED NYSCEF: 09/01/2022 proponentof a motion for summaryjudgtnent 1rtust make a prirna facie showing of entitlement to judgment, aR a lliatter oflaw, tendering sufficient evidence to demonstrate the absence ofany material issues of fact" (Manicone v City of New York; 75 AD3d 535, 537 [2010], quotingAlvarez v ProspectHosp., 68 NY2d 320,324 [1986]; see also Winegrad v New York Univ ..Med, Ctr., 64 NY2d 851, 853 [1985]; Zuckerman v City of New York, 49 NY2d 557; 562 [ 19 80]). If it is determined thatthe movant has made a prima facie showing of entitlement to summary judgment, ''the burden shifts to the opposing party to produce evidentiary proofin admissible form sufficient to establish the a existence of material issues of fact which require trial oftheaption"{Garnham & Han Real EstateBrokers v Oppenheimer, 148 AD2d 493 [1989]). Generally, to establish prima facie>entidementtojudgrnentas a matter of lawin an action to foreclose a mortgage, a plaintiff must produce the mortgage, the unpaid note 1 and evidence of default (see Deutsche Bank Natl. Trust Co. v Karibdndi, I 8 8 AD3d 650, 651 [:2020]; Christiana Trust v Moneta, 186 AD3d 1604, 1605 [2020]; Deutsche Bank Trust Co. Ams. v Garrison, 147 Ab3d 725, 726 [2017]). Where a plaintiff establishes prima facie entitlement to judgment as a matter of law, the burden then shifts to the defendant to raise a triable issue of fact as to a bona fide defense to the action (CitiMortgage, Inc. v Guf!fermo, 143 AD3d 852; 853 [2016]; Mahopac Natl. Bank v Baisley, 244 AD2d 466 1 467 [I 9971) .. Here,_Arnav submitted copies ofthe first and se.cond notes,. the.first and second mmigages and the guarantees, d~fault lett¢rs, schedule/ledger of interest payments, as 9 [* 9] 9 of 12 FILED: KINGS COUNTY CLERK 09/01/2022 03:43 PM NYSCEF DOC. NO. 187 INDEX NO. 500852/2020 RECEIVED NYSCEF: 09/01/2022 well as the affidavits ofWassnerandZelmat10vitz, who both have authenticated the documents and attest to defendants' default. Arnav also submitted a statement of material facts. Arn av has thus established its prima facie entitlement to summary judgment and an order of reference (see Karibandi, l 88 AD3d at 651). The burden of proof now shifts to the defendants to produce admissible evidence of a triable issue of fact (see Oppenheiine;-, 148 AD2d at 494). In opposition, defendants have failed to dispute the facts as articulated by Arnav in the statement ofmaterial facts and in it; moving papers. JNY and Unger do not dispute the valigity of the notes and mortgages, the amounts set forththerein, that they defaulted on the loans, or the dates of the default. Instead, JNY and Unger assert that Arnav "failed to establish a proper foundation" for the admissionofArnav's business records as they relate to JNY. In this regard, JNY and Unger state that Wassner "failed toset forth that he is an individual with personatlmowledge of plaintiff's business practices and procedures". "A proper foundation for the admission of a business record must be provided by someone with personal knowledge.of the maker's business practices and.procedures" (City Natl Bank v Found,y Dev. Group, LLC, 160 AD3d 920, 921 [2d Dept 2018] [citations omitted]). Here1 Wassner avers in his affirmation of merit that he is the manager of Arnav and inakes. said affirmation based on his personal knowledge and a review of Arnav's books. and .records and. the records maintained by Arn av' s transaction al counsel, F&Z, who acted as servicer for th~ loans at issue herein. He avers that, with resp.ect t9 the loarts that .10 [* 10] 10 of 12 FILED: KINGS COUNTY CLERK 09/01/2022 03:43 PM NYSCEF DOC. NO. 187 INDEX NO. 500852/2020 RECEIVED NYSCEF: 09/01/2022 are the subject of this action,he made decisions respecting those loans which included his review and approval of notices of default, and the spread sheet/ledger detailing the interest payments which F&Z kept track of. In his affirmation, Zelmanovitz~ as a princip1:1.l ofF &Z, avers that he was directly involved with the preparation of documents pertaining to defendants' loans and their default The Court finds that the affirrnations submitted lay the necessary foundatio11 under CPLR 45 I 8(a) for admission of the business records herein, including the ledger pertaining to the interest payment history for the subject loans (see Foundry Dev. Group; LLC, 160 A03d at 921; Yellow Book of NY., L.P. v Cataldo, 81 AD3d 638, 639~640 [20111). Thus, Arnav ha.s established its prima facie entitlement to judgment as a 1uatter of law by submitting copies of the mortgages, unpaid notes, and evidence ofthe default (see Deutsche Bank Natl. Tr. Co. v Finger, 19 5 AD3 d 789) 791 [2d Dept 2021]). JNY and Unger have failed to raise any triable issues of fact that would preclude summary judgment in Arnav's favor. As to Lebow, the court notes that it previously held in its prior decision dated October 1, 2021 that triable issues of fact exist regarding Unger;s actual or apparent authority to execute the guarantees on behalf of Lebow. As such, sQmmary judgment is precluded as against Lebow at this time, Accordingly, it is hereby ORDERED that Amav's motibn .for smmnary judgment (mot. seq; seven) 1s granted as against .TNY and_Unger; and itis further 11 [* 11] 11 of 12 FILED: KINGS COUNTY CLERK 09/01/2022 03:43 PM NYSCEF DOC. NO. 187 INDEX NO. 500852/2020 RECEIVED NYSCEF: 09/01/2022 ORDERED that Amav is entitled to an order of reference to determine the amounts due and owing under the first and second mortgages and whether the Property can be sold in parcels, which Arnav shall settle on notice within 30 days after service of this decision and order with notice of entry thereof upon all defendants. This constitutes the decision and order of the court. E N T~ HON. LAWRENCE KNIPEL -ADMINISTRATIVE JUDGE J. S. C. 12 [* 12] 12 of 12

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