Citibank, N.A. v. Tenants
| Decision Date | 16 March 2012 |
| Docket Number | No. 3523/10.,3523/10. |
| Citation | 950 N.Y.S.2d 721 |
| Parties | CITIBANK, N.A., Plaintiff, v. VAN BRUNT PROPERTIES, LLC; and “John Does” and “Jane Does” No. 1–100, the last names being fictitious and unknown to the plaintiff, the persons and parties intended being the tenants, occupants, persons or corporations, if any, having or claiming an interest in or lien upon the premises described in the verified amended complaint, Defendant. Sutter Avenue Management, LLC Miller Lumber & Mill Work Inc., Plaintiff, and “John Does” and “Jane Does” # 1–100, the last names being fictitious and unknown to the plaintiff, the persons and parties intended being the tenants, occupants, persons or corporations, if any, having or claiming an interest in or lien upon the premises described in the verified amended complaint, Defendants. v. Sutter Avenue Management, LLC Miller Lumber & Mill Work Inc., Plaintiff, and “John Does” and “Jane Does” # 1–100, the last names being fictitious and unknown to the plaintiff, the persons and parties intended being the tenants, occupants, persons or corporations, if any, having or claiming an interest in or lien upon the premises described in the verified amended complaint, Defendants. |
| Court | New York Supreme Court |
OPINION TEXT STARTS HERE
Dacia C Cocariu, Esq., Sills Cummis & Gross, for Plaintiff.
Kirk P. Tzandies, Esq., for Defense.
Defendant Van Brunt Properties, LLC (Van Brunt) and defendant Sutter Avenue Management, LLC (Sutter) collectively move for an order, pursuant to Civil Practice Law and Rules (CPLR) § 602(a), to consolidate the foreclosure action of Citibank, N.A. v. Sutter Avenue Management, LLC., Midwood Lumber & Mill Work, Inc., et al. (Index No. 354/10), into the foreclosure action of Citibank, N.A. v. Van Brunt Properties, LLC, et al. (Index No. 3523/10). Upon consolidation, the defendants seek an order, pursuant to the doctrine of collateral estoppel, declaring that this court's March 4, 2011 order in the Van Brunt action is equally binding on the Sutter action. The defendants further move for equitable relief in the Sutter action based on their assertion that Citibank acted unconscionably and in bad faith during the protracted period of settlement negotiation. Finally the defendants seek an order terminating the temporary receivership imposed on the Sutter property.
Citibank cross-moves for an order striking all references to conduct and statements made during settlement negotiations, including a pre-negotiation agreement (signed by all three parties), which together form much of the basis of the defendants' claims for equitable relief, in the Van Brunt action under CPLR § 4547. Citibank also cross-moves, pursuant to CPLR § 1018, to substitute Wells Fargo as the plaintiff in the Van Brunt action, and, pursuant to CPLR § 3025, to correspondingly amend the case caption. Finally, Citibank cross-moves for an order clarifying the portion of this court's March 4th order which requires Van Brunt to commence making monthly payments to Citibank.
Sutter is the legal and equitable owner of premises located at 529 Sutter Avenue in Brooklyn. On October 29, 2007, Citibank entered into a mortgage loan in the principal amount of $2,610,000.00 with Sutter. Van Brunt is the legal and equitable owner of premises located at 252–254 Van Brunt Street, also in Brooklyn, which is encumbered by a mortgage in the amount of $950,000.00 financed by Citibank, dated March 21, 2007. Roland Dib is a managing member of both Sutter and Van Brunt. Both the defendants began to have difficulty meeting their mortgage obligations and assert that attempts were made in late 2008 and early 2009 to negotiate with Citibank for a modification of the interest rate so that the requisite payments could be made. The defendants assert that they expended substantial sums to attract new tenants to the properties.
Commencing on July 1, 2009, Van Brunt failed to make its required monthly payments.. Citibank contends that on December 16,2009, it notified Van Brunt that it was in default and advised that if the default was not cured, Citibank reserved its right to exercise all of its rights and remedies. Citibank initiated a foreclosure proceeding against Van Brunt on February 5, 2010.On August 9, 2010, Citibank moved for summary judgment on its foreclosure action against Van Brunt and sought dismissal of Van Brunt's answer and affirmative defenses and the appointment of a temporary receiver. Van Brunt cross-moved for an order determining that Citibank was not entitled to: any interest on the principal balance of the mortgage loan, late charges, advances, attorneys' fees, prepayment penalties, commissions and all other costs and expenses. On October 15, 2010, Citibank transferred all interest in the note and mortgage, as well as the other loan documents, to LSREF2 Nova Investments, LLC (“Nova”). On December 10, 2010, all interest in the note and mortgage, together with the other loan documents, were transferred to Wells Fargo. On June 24, 2011, Citibank moved to substitute Wells Fargo into the action as the plaintiff.
In an order dated March 4, 2011, this Court denied that branch of Citibank's motion seeking the appointment of a receiver, and denied without prejudice that branch of the motion seeking substitution and for summary judgment. The order granted Van Brunt's cross motion to the extent of ordering that Citibank is not entitled to any interest from the date of the alleged default to and through March 31, 2011 and found that Citibank is not entitled to any default interest or expenses, including attorneys fees and prepayment penalties. Van Brunt was directed to pay the principal and interest due under the loan commencing on April 1, 2011. In addition, it was directed to pay to Citibank by April 1, 2011, the principal only from the date of default to March 31, 2011, which would be applied to the reduction of the principal.
As regards Sutter, beginning October 2009 it failed to make its required monthly payments under the mortgage. By letter dated December 16, 2009, Citibank maintains that it advised Sutter that it was in default and that failure to cure could result in Citibank exercising its right to accelerate the indebtedness. On February 5, 2010, Citibank filed a separate foreclosure action against the Sutter property. On February 24, 2010, a receiver was appointed to manage the Sutter property.On May 26, 2011, Citibank moved for summary judgment on its foreclosure action and to dismiss Sutter's answer and affirmative defense. On October 15, 2010, Citibank transferred all interest in the note and mortgage, as well as the other loan documents, to LSREF2 Nova Investments, LLC (“Nova”). On December 10, 2010, all interest in the note and mortgage, together with the other loan documents, were transferred to Wells Fargo. On April 11,2011, Citibank moved to substitute Wells Fargo into the action as the plaintiff.
The defendants move to consolidate the Van Brunt and Sutter actions arguing that both actions involve common questions of law and fact and arise from the same facts and circumstances and assert the identical legal theories and defenses, in accord with the direction of § 602(a) of the CPLR. If successful on the issue of consolidation, the defendants then seek an order, pursuant to the doctrine of collateral estoppel, declaring that this court's March 4, 2011 order in the Van Brunt action is equally binding on the Sutter action. The defendants further move for equitable relief in the Sutter action based on their assertion that Citibank acted unconscionably and in bad faith during the protracted period of settlement negotiation. Finally the defendants seek an order terminating the temporary receivership imposed on the Sutter property.They further contend that the resolution of both cases will involve the same documents and witnesses and thus, such overlap, necessitates consolidation to avoid unnecessary costs, delays and inconsistent judgments. Finally, they contend that there would be no prejudice to Citibank if the actions were consolidated arguing that both actions are in the same pre-discovery stage.
The defendants assert that Citibank treated the two mortgages as a package from the moment of default, noting for example, that Citibank alleges that it notified both properties of default on the same day and that all renegotiation' efforts were done with both properties and as a package. The defendants note that every transfer of the property-October 15, 2010 to Nova and December 10, 2010 to Wells Fargo-was packaged as well. They argue that both of the defendants' theory of the case is that foreclosure should be denied due to the bad faith and unconscionable behavior of Citibank throughout the course of said joint negotiations. They allege that they were jointly induced to make substantial personal investments in the respective properties at issue, based on an implied promise by Citibank that this show of good faith on the defendants' part would result in a renegotiation of both mortgages, thereby avoiding default. The defendants conclude that the substance and legal theories of both cases are identical, will require the same testimony and evidence to be presented to the court, and should therefore be consolidated to avoid unnecessary costs, delay and inconsistent judgments.In opposition, Citibank argues that Van Brunt and Sutter are foreclosure actions filed separately by Citibank on February 5th, 2010 against two different commercial borrowers, namely Van Brunt Properties LLC, et al. and Sutter Avenue Management, LLC, et. al., each of whom holds a mortgage on a distinct property. They further point out that the circumstances under which each loan was made, the loan documents, and the defaults differ from one another. Moreover, Citibank avers that the receivership status and procedural posture of each case differs. Citibank maintains that consolidation should...
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