Elizon DB Transfer Agent LLC v 1711 E. 15 St. LLC

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Elizon DB Transfer Agent LLC v 1711 E. 15 St. LLC 2023 NY Slip Op 30087(U) January 11, 2023 Supreme Court, Kings County Docket Number: Index No. 512350/2022 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. INDEX NO. 512350/2022 FILED: KINGS COUNTY CLERK 01/11/2023 02:08 PM NYSCEF DOC. NO. 187 RECEIVED NYSCEF: 01/11/2023 SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF KINGS : CIVIL TERM: COMMERCIAL PART 8 --- . -· -------·-. ---· _____.____,__ . ----- .. - .. -x ELIZON DB TRANSFER AGENT LLC, Plaintiff, Decision and order Index No. 512350/2022 - against - 1711 EAST 15 STREET LLC, BENZION EISENBERG, SPRINGLAND ENTERPRISES, LLC,. MR. SUPER INC .. ; NEW YC5RK CITY PARKING VIOLATIONS BUREAU, NEW YORK C:TTY ENVIRONMENTAL CONTROL BOARD, NEW YORK CITY TRANSIT AUTHORITY TRANSIT ADJUDICATION BUREAU, NEW YORK CITY DEPARTMEN.T OF FINANCE, NEW YORK STATE DEPARTMENT OF TAXATION AND FINANCE AND "JOHN DOEu #1 THROUGH "JOHN DOE" #10, THE LAST TEN (10) NAMES BEING FICTITIOUS AND UNKNOWN TO THE PLAINT I.FF, THE PERSONS OR PARTIES INTENDED BEING THE TENANTS, OCCUPANTS, PERSONS OR PARTIES, IF ANY, HAVING OR CLAIMING AN INTEREST IN OR LIEN UPON THE MORTGAGED PREMISES DESCRIBED IN THE VERIFIED COMPLAINT, Defendants, January 11, 2023 -·----·. ---·-· .-------·----- ·----. -- ·---.- ... ·- ··-x PRESENT: HON. LEON RUCHELSMAN The plaintiff has moved pursuant to CPLR §3212 seekiri.:g summary judgement. The defendant has opposed the motion. were submitted by the parties and .arguments held. Papers After reviewing all the arguments this co·urt now makes the following determination. Ort July 21, 2020, the plain.tiff loaned the defendant 1711 East 15 Street LLC five million dollars. a mortgage on real property located at Kings county. The loan w,3.s secured by .1711 East 15 th Street .in Further, the defe.ndarit Eisenberg executed a promissory note to the plaintiff in the. amount of $5,000,000. The defendant was required to make.monthly .interest until July 2021 when the entire amount was d.ue. [* 1] 1 of 7 only payments The defendant INDEX NO. 512350/2022 FILED: KINGS COUNTY CLERK 01/11/2023 02:08 PM NYSCEF DOC. NO. 187 RECEIVED NYSCEF: 01/11/2023 failed to make any interest payments from April 2021 and failed to return the five million dollars loaned, Tti.e plaintiff instituted this lawsuit seeking to foreclose on the above noted property. The complaint asserts causes of acti:on for foreclos.ure and a declaratory judgement. All of thEc: defendants defaulted except .for defendant Eisenberg. Eisenberg served an answer and has asserted a counterclairrr the plaintif £ misapplied escrow funds which induced the default by preventing the defendant from making payments. Specifically, the defendant argues the plaintiff frustrated defendant's efforts to restructure the debt to return plaintiff's loan. The plaintiff has now moved seeking summary judgement arguing there are no questions of fact and the court should award judgement in plaintiff's favor. As noted, the defendant Opposes the motion. Conclusions of Law Where the material facts at issue in a case are in dispute .summary judgment cannot be granted (Zuckerman v. City of New York, 49 NYS2d 557, 427 NYS2d 595 [1980]). Generally, it is for the jury, the trier of fact to determine the legal cause of any injury, however, where only one conclusion may be drawn from th,e facts then the question of le.gal ca:u:Se may be decided by the trial court as .a matter of ia-w (Marino v. Jamison, 189 A!)3d 102i, 136 NYS3ct 324 [2d Dept., 2021) . 2 [* 2] 2 of 7 INDEX NO. 512350/2022 FILED: KINGS COUNTY CLERK 01/11/2023 02:08 PM NYSCEF DOC. NO. 187 RECEIVED NYSCEF: 01/11/2023 It is well settled that where a party introduces evidence of the existence of a loan, personal guarantees and the defendant's failure to make payments according to the terms of the instruments then summary judgement is proper (see, JPMorgan Chase Bcihk N.A., 2012]). V; Bauer, 92 AD3d 641, 938 NYS2d 190 [2d Dept., In this case,. the plaintiff submitted the affidavit of Katherine' Meagher cl. vice president of the plaintiff who stated that she reviewed the plaintiff's records in connection with the loarts extended. She further stated that all the documents she reviewed were maintained in the regular course of business and all such records were made near their occurrence with someone who had knowledge at that time and that the plciintiff'S standard practic,e is to keep such, records in the ordinary course of business (see, Affidavit of Katherine Meagher [NYSCEF Doc. No. 119]). Thus,. the plciintiff has established the admissibility of the records relied upon since Ms. Meagher had knowledge of the plaintiff's practices and procedures (see, Cadlerock Joint Venture L.P. v. Trombley, 150 AD3d 957, 54 NYS3d 127 [2d Dept., 2017]), Therefore, the plaintiff established its entitlement to summary judgement. The defendant has not presented any .evidence raising questions of f a'Ct whether the debt has .be.en pa-id. Rather, the d~fendarit argues that when the loan was initiated $.200, 000 was impounded to provicle for interest payments and th.at there was 3 [* 3] 3 of 7 INDEX NO. 512350/2022 FILED: KINGS COUNTY CLERK 01/11/2023 02:08 PM NYSCEF DOC. NO. 187 RECEIVED NYSCEF: 01/11/2023 enough to cover interest payments throl,lgh February 2021. Further, defendant argues that in December 2020 he sought to restructure the debt and requested a verification of mortga:ge from plaintiff which was produced in March 2021 and which demonstrated the defendant was current in all payments due. Thus, the defendant argues that first this demonstrates no default existed and more importantly that if the verification of mortgage had been provided immediately when requested then the defendant could have restructured the debt avoiding the default. ln essence, the defendant asserts the d,efault was manufactured by the plaintiff and summary judgement cannot be awarded. First, the default is based upon the fact no interest payments were made commencing April 2021 and that none of the principal has been paid back. The defendant's counterclaim fails to addre,ss these issues at all. Thus, the defendant failed to make the necessary interest payments and failed to repay the amount loaned. verifi.cation The mere fact the plaintiff provided a mortgage from .Mar<::h 2·021 ra.i::;.es no guestion::i about the repayment of interest or principal after that date. The g.efendant's obligation to repay principal and interest existed reqardless of whether or not the defendant was able to re:,ftructure the debt. The counte:r::claim does ass.$.rt that the plaintiff misappr·.opriated escrow funds a.rid provided a false aC<::ouriting and that )'defendants could not secure the ref.iriartc:irig 4 [* 4] 4 of 7 INDEX NO. 512350/2022 FILED: KINGS COUNTY CLERK 01/11/2023 02:08 PM NYSCEF DOC. NO. 187 RECEIVED NYSCEF: 01/11/2023 as a result of the misappropriate escrow funds and the false accounting" (see, Answer, '11129 [NYSC:EF Doc. No. 111]). The allegations of affirmative misconduct on the part of the plaintiff essentially asserts an allegation of tortious interference with a prospective business relation. To establish this tort the defendant must demonstrate the plaintiff engaged in culpable conduct which interfered with a prospective contractual r'elationship between the defendant and a third party (see, Lyons v. Menoudakos & Dept., 2009]). 63 AD3d 801, Menoudakos P.C., 880 NYSZd 509 [2d Culpable conduct has been defined as conduct that is a: crime or an independent tort and includes physical violence, fraud, misrepresentation and economic pressure (Smith v. Meridian Technologies Inc., 52 AD3d 685, 861 NYS2d fr87 [2d Dept., 2008]), The countetclairil asserts the plaintiff misapplied escrow funds by paying taxes that were not yet due and by pay:i.ng insuranc.e premiums that did not need to be paid. The counterclaim furthe.r asserts the plaintiff misapplied escrow funds and provided a false accounting with "calculated intent" and with ''reckless disregard for the truth" (see, Answer, <JICJ[124,125, 126 [NYSCEF Doc. No. 111] ) . Notwithstanding the above allegations there are no facts presented which raise questions w~ether the plaintiff in .any way iri t er f erect with the def eridan t' s .abi 1 it y to .obtain financing. Thus, on November 25., 2020 Spencer Savin.gs Bank presented a. 5 [* 5] 5 of 7 INDEX NO. 512350/2022 FILED: KINGS COUNTY CLERK 01/11/2023 02:08 PM NYSCEF DOC. NO. 187 RECEIVED NYSCEF: 01/11/2023 preliminary term sheet concerning restxucturing the existing debt {NYSCEF Doc. No, 179). That refinance never occurred. In an email dated September 19, 2022 Andrew French, a vice president of Spencer Savings Bank responding to an inquiry regarding the verification of mortgage in particular and the refinance in general noted that "looks like we did receive it in and started the underwriting process. However, it never was sent for approval or closing. Looks like we never received .3.ll of the docs. were looking to cut it;' Doc. No. 156]). (Email dated September 19, 2022 And we [NYSCEF Thus, there is no evidence at all that any of plaintiff's actions had anything to do with the failure to obtain a restructuring of the debt. fact in this regard. Indeed, there are no questions of Likewise, there are no questions of fact that an improper accounting was filed. Other than conclusor'y assertions within the counterclaim there is no evidence supporting such allegations. Further, there is no evidence that the misapplication of escrow funds, with the defendant's failure if any, had a:nythin9 to do to obtain such debt restructuring. The defendant further argues tha:t the plaintiff has already exercised a remedy, namely foreclosirig upon defendant's equity interest in 1711 East 1sth Street LLC and that such remedy forecloses any relief contemplated here. (see, Affidavit .of Benzion Ei.senberg, 9l170 [NYSCEF .Doc;:. No. 170]). .Fi~st, if the defendant has no ownership. interest in. the entity the'h the 6 [* 6] 6 of 7 INDEX NO. 512350/2022 FILED: KINGS COUNTY CLERK 01/11/2023 02:08 PM NYSCEF DOC. NO. 187 RECEIVED NYSCEF: 01/11/2023 defendant has no standing to purst1e any defenses regarding this foreclosure since i t is no longer a member of the entity. In any event, merely securing rights of ownership pursuant to the ucc does not foreclose this lawsuit. Of course, the plaintiff cannot recover more than i t is owed and a hearing will be required to evaluate the worth of the shares obtained through the UCC foreclosure. Therefore, based on the foregoing, the motion seeking a defaµlt against all defendants except Eisenberg is granted without opposition. The motion seeking sumniary judgement against Eisenberg is g.tahted, The pa.tties must attend a hearing where the precise amount of the shares will be evaluated and the exact amount defendant repaid will be determined. Thus, the only isSu'e that remains is the amount that remains outstanding and the amount to which the plaintiff is entitled. So ordered. ENTER: DATED: January 11; 2023 Brooklyn N.Y. Hon. Leon R ~ m a n JSC 7 [* 7] 7 of 7

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