FEDERAL SAV. AND LOAN INS. v. 52 Park Associates
| Decision Date | 06 April 1989 |
| Docket Number | No. 88 Civ. 5349 (RWS).,88 Civ. 5349 (RWS). |
| Parties | FEDERAL SAVINGS AND LOAN INSURANCE CORPORATION, Plaintiff, v. 52 PARK ASSOCIATES, Donald M. Flaks, Arthur Fefferman, Edwin J. Glickman, Bertram Lewis, Riverview Construction Co., Inc., Apex Erectors, Inc., Lastrada General Contracting Corp., Jobin Waterproofing Corp., Henry Paul, Inc., Par Plumbing Co., Inc., Prestige Elevator Cab Remodeling and Accessories Co., Arrow Louver & Damper, Circle Industries Corp., Master Thermal Systems, Inc., Inland Architectural Products, Inc., Harry Wolsky, Inc., Jansons Associates, Inc., Anthony Perri, Inc., Ram Compaction Corp., Blitman Building Corp., David Kenneth Spector & Associates, Westinghouse Electric Corporation, and the City of New York, Defendants. |
| Court | U.S. District Court — Southern District of New York |
Patterson, Belknap, Webb & Tyler, New York City (Lawrence S. Menkes and Richard
H. Savage, of counsel), Hopkins & Sutter, Chicago, Ill. (Albert C. Maule and Joseph F. Griffin, of counsel), Federal Home Loan Bank Bd., Office of Gen. Counsel, Washington, D.C. (Thomas J. Segal, John B. Beaty and Bea Valdez, of counsel), for plaintiff.
Kronish, Lieb, Weiner & Hellman, New York City (Laurence J. Kaiser, of counsel), for defendant 52 Park Ave. Associates, Donald M. Flaks, Arthur Fefferman, Edwin J. Glickman and Bertram Lewis.
Postner & Rubin, New York City (Scott D. Stechman, of counsel), for defendant Riverview Const. Co., Inc.
Corwin & Solomon, New York City (Erwin L. Corwin, of counsel), for defendant Apex Erectors, Inc.
John J. Tenenbaum, Valley Stream, N.Y., for defendant Lastrade General Contracting Corp.
Hart & Hume, New York City (Cecil Holland, Jr., of counsel), for defendant Henry Paul, Inc.
Yesnowitz & Yesnowitz, Valley Stream, N.Y. (Gilbert Yesnowitz, of counsel), for defendant Par Plumbing Co., Inc.
Arnold E. Rubinstein, New York City, for defendant Circle Industries.
Tunstead, Schechter & Torre, New York City (John J.P. Krol, of counsel), for defendant Master Terminal Systems.
Krainin, Paltrowitiz & McKenzie, New York City (Harold L. Krainin, of counsel), for defendant Inland Architectural Products.
Ronald J. Rosenberg, Garden City, N.Y. (William J. Birney, of counsel), for defendant Harry Wolsky, Inc.
Taylor Newmark & Rosenberg, New York City (Stuart Newmark, of counsel), for defendant Jansons Associates.
Anthony D. Perri, Bayville, N.Y., for defendant Anthony D. Perri, Inc.
Greenberg & Shernoff, New York City (Richard Greenberg, of counsel), for defendant Ram Compaction Corp.
Ross & Cohen, New York City (Charles Fastenberg and Daniel E. Katz, of counsel), for defendant Blitman Building Corp.
Davis & Davis, New York City (Harold Davis, of counsel), for defendant David Kenneth Spector.
Feltman, Karesh, Major & Farbman, New York City, for defendant Westinghouse Elec. Corp.
Maria T. Jones, Sp. Asst. Corp. Counsel, Brooklyn, N.Y. by Gene Gaffney, Asst. Corp. Counsel, for defendant the City of New York.
Plaintiff Federal Savings and Loan Insurance Corporation ("FSLIC") has moved pursuant to Federal Rules of Civil Procedure 12(b)(1) and 12(b)(6) to dismiss all counterclaims, affirmative defenses and cross-claims asserted by the defendants 52 Park Associates ("Associates"), and various guarantors and lienors (collectively the "defendants") arising out of the relationship to the property at 52 Park Avenue in New York City (the "property") to reduce their liens to judgment. Further, FSLIC has moved pursuant to Federal Rule of Civil Procedure 56(e) for an order granting it summary judgment foreclosing its consolidated mortgage on the property upon the default of Associates. For the reasons set forth below, FSLIC's motion to dismiss is denied, but the motion for summary judgment is granted.
FSLIC is an agency of the United States Government and was appointed as Receiver for First South, F.A. ("First South") in December 1986 by the Federal Home Loan Bank Board (the "Board") pursuant to 12 U.S.C. § 1464(d)(6)(A). First South is a federally chartered savings and loan association and the record holder of the consolidated mortgages FSLIC seeks to foreclose in this action.
Associates is a New York partnership and the owner in fee of the property encumbered by the consolidated mortgages which are the subject of this action.
Donald M. Flacks ("Flacks"), Arthur Fetterman ("Fetterman"), Edwin J. Glickman ("Glickman"), Bertram Lewis ("Lewis") are guarantors of the loan secured by the consolidated mortgages at issue.
All other defendants are parties that had mechanics' or other liens or encumbrances of record against the property.
This action by FSLIC to foreclose on the First South mortgage was filed on August 1, 1988. Various counterclaims and affirmative defenses have been filed by defendants. FSLIC has moved to dismiss the counterclaims, affirmative defenses and cross-claims and for summary judgment. The motion to dismiss and the summary judgment motion were argued and considered fully submitted on December 9, 1988 and February 17, 1989, respectively. The facts are set forth in affidavits submitted and except as noted are not disputed.
On December 4, 1986, the Board, acting pursuant to 12 U.S.C. § 1464(d)(6)(A), appointed FSLIC as receiver for First South.
From 1982 to 1986 Associates received three loans in connection with its development and construction of a luxury condominium project on the property. The first loan amounted to $1,600,000. In consideration for this loan, Associates made, executed and delivered a promissory note to the Mercantile Bank of Canada ("MBC") on January 13, 1982, promising to pay the note on demand, and interest and annualized fees on a monthly basis.
As security for the loan, Associates made, executed and delivered a first mortgage to MBC on the property on January 13, 1982. The 1982 mortgage was duly recorded and the mortgage recording tax was duly paid thereon. By instrument, on March 8, 1984, MBC assigned the 1982 mortgage and promissory note to First South. The assignment was duly recorded or March 8, 1984.
In 1984, First South made the second loan to Associates of up to $10,800,000 for construction on the property (the "Building Loan Agreement"). A portion of this loan was made solely for the purposes of improvements (the "building loan"). The affidavit to the building loan portion states:
That the net sum available for improvements was $5,825,101 "less such amounts as may become due and payable for insurance premiums, interest on the Building Loan portion of the loan, taxes, assessments, water rents and sewer rents accruing during the making of the improvements."
(Exhibit E of Complaint). As consideration for a loan of $9,200,000, Associates made, executed and delivered to First South a promissory note of $9,200,000. As security for the loan, Associates executed and delivered to First South a second mortgage on April 6, 1984. The 1984 mortgage was duly recorded and the mortgage recording tax was duly paid thereon on April 17, 1984.
The 1982 and 1984 promissory notes and mortgages were consolidated, extended, amended and restated pursuant to a promissory note secured by mortgage and made, executed and delivered to First South by Associates in April 1984. This agreement was duly recorded on April 27, 1984. As assurance of payment of the consolidated mortgage, defendants Flaks, Fetterman, Glickman and Lewis executed and delivered to First South a guaranty dated April 6, 1984.
In January 1986, First South made the third loan to Associates of $1,520,000 in an amendment to the Building Loan Contract. As consideration for the loan, Associates delivered to First South a promissory note, whereby it promised to pay the note plus interest on demand. As security for the loan, Associates made a third mortgage. The mortgage was duly recorded and the mortgage recording tax was duly paid thereon on January 23, 1986.
This 1986 note was consolidated with the 1984 consolidated note, and the 1986 mortgage was consolidated, extended, spread, and modified pursuant to the terms of an agreement dated January 15, 1986. The 1986 consolidated mortgage was duly recorded on January 23, 1986. As assurance for the payment of the consolidated mortgage and note of 1986, the guarantors executed and delivered to First South an amended guaranty dated January 15, 1986. The amendment was duly recorded on January 22, 1986.
Subsequently, the lienor defendants filed various mechanics liens and the City filed a tax lien against the property between the dates of July 31, 1986 and November 16, 1987.
Pursuant to the terms of the 1986 consolidated note, payment in full of principal, interest and charges was first due on April 6, 1986 but was extended to October 7, 1987. However, although FSLIC has given Associates notice of the default and demanded payment, Associates has failed to satisfy this obligation, and none of the guarantors have made payment. As of July 31, 1986, First South had advanced to Associates principal sums in the aggregate amount of $11,602,887.89. As of December 31, 1988, there was due and owing an unpaid principal indebtedness of $12,015,075.15 plus accrued interest and charges which are now in excess of $3 million, with interest accruing under the consolidated note and consolidated mortgage at the rate of $3,620.98 per day.
A court should dismiss a complaint for a failure to state a claim under Rule 12(b)(6) if it appears beyond doubt that the plaintiff can prove no set of facts supporting his claim that entitles him to relief. See Dahlberg v. Becker, 748 F.2d 85, 88 (2d Cir. 1984), cert. denied, 470 U.S. 1084, 105 S.Ct. 1845, 85 L.Ed.2d 144 (1985). In considering a 12(b)(6) motion to dismiss, a court must construe the complaint's allegations in the light most favorable to the plaintiff and accept these allegations as true. See Scheuer v. Rhodes, 416 U.S. 232, 236, 94...
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..."net sum available" in the required affidavit, no claim for violation of Section 22 will lie. See Federal Savings and Loan Ins. Corp. v. 52 Park Assocs., 710 F.Supp. 490 (S.D.N.Y.1989). As already shown, however, NEBF's argument does not accord with simple mathematics. The ERA II Reimbursem......