FTBK Investor II LLC v. Genesis Holding LLC

• Decision Date: 19 August 2014
• Docket Number: 810163/2011
• Citation: 48 Misc.3d 274,2014 N.Y. Slip Op. 24426,7 N.Y.S.3d 825
• Parties: FTBK INVESTOR II LLC, as Trustee for N.Y. Brooklyn Investor II Trust 2, Plaintiff v. GENESIS HOLDING LLC, New York State Department of Taxation and Finance, New York City Department of Finance, New York City Environmental Control Board, New York City Department of Housing Preservation and Development, and Sean Ku, Defendants.
• Court: New York Supreme Court

48 Misc.3d 274

7 N.Y.S.3d 825

2014 N.Y. Slip Op. 24426

FTBK INVESTOR II LLC, as Trustee for N.Y. Brooklyn Investor II Trust 2, Plaintiff

v.GENESIS HOLDING LLC, New York State Department of Taxation and Finance, New York City Department of Finance, New York City Environmental Control Board, New York City Department of Housing Preservation and Development, and Sean Ku, Defendants.

810163/2011

Supreme Court, New York County, New York.

Aug. 19, 2014.

Jerold Feuerstein Esq. and Matthew Klein Esq., Kriss & Feuerstein LLP, New York, for Plaintiff.

Umar Sheikh Esq., Loanzon Sheikh, LLC, White Plains, for Defendant Genesis Holding LLC.

Yat Man Esq., New York, for Defendant Ku.

Opinion

LUCY BILLINGS, J.

Plaintiff sues to foreclose on an Amended and Restated Mortgage, Security Agreement, Assignment of Leases and Rents, and Fixture Filing, Aff. of Jerold Feuerstein Ex. A, at 25, and a Mortgage Consolidation, Modification and Extension Agreement, id. Ex. B2, at 3, both executed November 16, 2005, between defendant Genesis Holding LLC and the defunct nonparty Washington Mutual Bank. The mortgage is on real property at 2035 Adam Clayton Powell Jr. Boulevard, New York County, and secures loans from Washington Mutual to Genesis Holding.

Plaintiff has moved for summary judgment on the complaint's claims against Genesis Holding. C.P.L.R. § 3212(b). Genesis Holding has cross-moved (1) to amend its answer, C.P.L.R. § 3025(b), and (2) for summary judgment dismissing the complaint against Genesis Holding. C.P.L.R. § 3212(b). For the following reasons, the court denies plaintiff's motion and grants Genesis Holding's cross-motion in part as set forth below.

I. GENESIS HOLDING'S CROSS–MOTION TO AMEND ITS ANSWER

C.P.L.R. § 3025(b) permits amendments to an answer adding affirmative defenses as long as the proposed affirmative defenses, as alleged, are meritorious. Mezzacappa Bros., Inc. v. City of New York, 29 A.D.3d 494, 815 N.Y.S.2d 549 (1st Dep't 2006) ; Tishman Constr. Corp. of N.Y. v. City of New York, 280 A.D.2d 374, 377, 720 N.Y.S.2d 487 (1st Dep't 2001) ; Lanpont v. Savvas Cab Corp., 244 A.D.2d 208, 209–10, 664 N.Y.S.2d 285 (1st Dep't 1997) ; Norwood v. City of New York, 203 A.D.2d 147, 148, 610 N.Y.S.2d 249 (1st Dep't 1994). See Sterling Natl. Bank v. American Elite Props. Inc., 91 A.D.3d 581, 937 N.Y.S.2d 221 (1st Dep't 2012). Genesis Holding bears the burden to demonstrate the merits of the proposed defenses through admissible evidence. See Anoun v. City of New York, 85 A.D.3d 694, 695, 926 N.Y.S.2d 98 (1st Dep't 2011) ; Guzman v. Mike's Pipe Yard, 35 A.D.3d 266, 825 N.Y.S.2d 480 (1st Dep't 2006) ; Lanpont v. Savvas Cab Corp., 244 A.D.2d at 210, 664 N.Y.S.2d 285. While Genesis Holding need not establish at this stage that the proposed defenses will succeed, Genesis Holding still must show their viability, by alleging their elements in a proposed verified amended answer or supporting them with other admissible evidence. Anoun v. City of New York, 85 A.D.3d at 695, 926 N.Y.S.2d 98 ; CDR Créances S.A.S. v. Cohen, 77 A.D.3d 489, 490, 909 N.Y.S.2d 697 (1st Dep't 2010) ; Guzman v. Mike's Pipe Yard, 35 A.D.3d 266, 825 N.Y.S.2d 480.

Genesis Holding seeks to add affirmative defenses that plaintiff lacks standing. Although Genesis Holding offers no explanation for the delay in seeking amendment, to defeat the amendments, the delay must have caused plaintiff surprise or other prejudice. Anoun v. City of New York, 85 A.D.3d 694, 926 N.Y.S.2d 98 ; Antwerpse Diamantbank N.V. v. Nissel, 27 A.D.3d 207, 208, 810 N.Y.S.2d 180 (1st Dep't 2006) ; Tishman Constr. Corp. of N.Y. v. City of New York, 280 A.D.2d at 377, 720 N.Y.S.2d 487 ; Cseh v. New York City Tr. Auth., 240 A.D.2d 270, 271, 658 N.Y.S.2d 618 (1st Dep't 1997). To show prejudice from the delay, plaintiff must demonstrate that the delay has hindered the preparation of support for plaintiff's claims. Anoun v. City of New York, 85 A.D.3d 694, 926 N.Y.S.2d 98 ; Antwerpse Diamantbank N.V. v. Nissel, 27 A.D.3d at 208, 810 N.Y.S.2d 180 ; Cseh v. New York City Tr. Auth., 240 A.D.2d at 271, 658 N.Y.S.2d 618 ; Norwood v. City of New York, 203 A.D.2d at 149, 610 N.Y.S.2d 249.

Genesis Holding's proposed seventh defense alleges that JPMorgan Chase did not hold the note and mortgage and thus lacked standing when JPMorgan Chase commenced this action. The proposed eighth defense alleges that the note and mortgage were never transferred to the current plaintiff, so that it lacks standing to prosecute this action.

Genesis Holding demonstrates that its delay in moving to add these defenses has not caused plaintiff surprise or other prejudice. Although Genesis Holding did not oppose plaintiff's motion to be substituted as plaintiff for JPMorgan Chase, C.P.L.R. § 1018, at least two reasons may explain Genesis Holding's silence at that earlier stage. First, Genesis Holding has never focused its dispute on the current plaintiff's possession of the note and mortgage. Second, the documents necessary to support a lack of standing defense were in plaintiff's control. Antwerpse Diamantbank N.V. v. Nissel, 27 A.D.3d at 208, 810 N.Y.S.2d 180. Then plaintiff made a prior motion for summary judgment, before plaintiff's current motion, and affirmatively presented evidence to show its standing. Only at that point, when plaintiff relied on documents that post-date commencement of the action to support standing upon commencement of the action as well as currently, may Genesis Holding have realized that a defense regarding standing might be viable.

More importantly, plaintiff's first motion for summary judgment indicated that plaintiff anticipated a lack of standing defense, undermining any claim of prejudice due to Genesis Holding subsequently seeking to plead this defense.See Lettieri v. Allen, 59 A.D.3d 202, 873 N.Y.S.2d 39 (1st Dep't 2009). Once plaintiff revealed the evidence relied on for standing, Genesis Holding raised plaintiff's lack of standing in opposition to its first summary judgment motion. See BMX Worldwide v. Coppola N.Y.C., 287 A.D.2d 383, 384, 731 N.Y.S.2d 701 (1st Dep't 2001). Although Genesis Holding has not explained why it did not then move to amend its answer to add this defense, under all the circumstances, Genesis Holding's delay between then and now does not, without more, amount to a waiver of the defense, see Cadles of Grassy Meadows II, L.L.C. v. Lapidus, 93 A.D.3d 535, 940 N.Y.S.2d 263 (1st Dep't 2012) ; CDR Créances S.A.S. v. Cohen, 77 A.D.3d at 490, 909 N.Y.S.2d 697 ; Centaur Props., LLC v. Farahdian, 29 A.D.3d 468, 817 N.Y.S.2d 7 (1st Dep't 2006) ; plaintiff does not identify any prejudice from this interval of delay; and the court discerns none. Tishman Constr. Corp. of N.Y. v. City of New York,

280 A.D.2d at 378, 720 N.Y.S.2d 487.

The sole claim of prejudice to plaintiff is raised merely by its attorney, who suggests that a formal pleading of lack of standing might have dissuaded plaintiff from purchasing the note and mortgage. E.g., Murray v. City of New York, 74 A.D.3d 550, 903 N.Y.S.2d 34 (1st Dep't 2010) ; Coleman v. Maclas, 61 A.D.3d 569, 877 N.Y.S.2d 297 (1st Dep't 2009) ; 2084–2086 BPE Assoc. v. State of N.Y. Div. of Hous. & Community Renewal, 15 A.D.3d 288, 289, 790 N.Y.S.2d 92 (1st Dep't 2005) ; Figueroa v. Luna, 281 A.D.2d 204, 205, 721 N.Y.S.2d 635 (1st Dep't 2001). Even had an officer of plaintiff actually attested that it relied on the absence of that formal pleading in making the purchase, the possibility that a defendant that had answered would seek to add a lack of standing defense, as has occurred, or other defendants would answer and raise it, undermines any justification for such reliance. Therefore there would be no justifiable prejudice on this basis. Anoun v. City of New York, 85 A.D.3d 694, 926 N.Y.S.2d 98 ; Lettieri v. Allen, 59 A.D.3d 202, 873 N.Y.S.2d 39 ; Antwerpse Diamantbank N.V. v. Nissel, 27 A.D.3d at 208, 810 N.Y.S.2d 180 ; Tishman Constr. Corp. of N.Y. v. City of New York, 280 A.D.2d at 378, 720 N.Y.S.2d 487.

Absent prejudice on any basis, delay alone is insufficient to deny amendment to a pleading. Since plaintiff's current motion again affirmatively and vigorously litigates its standing, and, as discussed below, Genesis Holding's lack of standing defenses have merit, the court grants Genesis Holding's cross-motion to amend its answer to the extent of permitting inclusion of those defenses. C.P.L.R. § 3025(b) ; Anoun v. City of New York, 85 A.D.3d at 695, 926 N.Y.S.2d 98 ; Mezzacappa Bros., Inc. v. City of New York, 29 A.D.3d 494, 815 N.Y.S.2d 549 ; Tishman Constr. Corp. of N.Y. v. City of New York, 280 A.D.2d at 378, 720 N.Y.S.2d 487 ; Lanpont v. Savvas Cab Corp., 244 A.D.2d at 210, 664 N.Y.S.2d 285.

II. STANDARDS FOR SUMMARY JUDGMENT

To obtain summary judgment, the moving party must make a prima facie showing of entitlement to judgment as a matter of law, through admissible evidence eliminating all material issues of fact. C.P.L.R. § 3212(b) ; Vega v. Restani Constr. Corp., 18 N.Y.3d 499, 503, 942 N.Y.S.2d 13, 965 N.E.2d 240 (2012) ; Smalls v. AJI Indus., Inc., 10 N.Y.3d 733, 735, 853 N.Y.S.2d 526, 883 N.E.2d 350 (2008) ; JMD Holding Corp. v. Congress Fin. Corp., 4 N.Y.3d 373, 384, 795 N.Y.S.2d 502, 828 N.E.2d 604 (2005) ; Giuffrida v. Citibank Corp., 100 N.Y.2d 72, 81, 760 N.Y.S.2d 397, 790 N.E.2d 772 (2003). Only if the moving party satisfies this standard, does the burden shift to the opponent to rebut that prima facie showing, by producing evidence, in admissible form, sufficient to require a trial of material factual issues. Morales v. D & A Food Serv., 10 N.Y.3d 911, 913, 862 N.Y.S.2d 449, 892 N.E.2d 842 (2008) ; Hyman v. Queens County Bancorp, Inc., 3 N.Y.3d 743, 744, 787 N.Y.S.2d 215, 820 N.E.2d 859 (2004). If the moving party fails to meet its initial burden, the court must deny summary judgment despite any insufficiency in the opposition. Vega v. Restani Constr. Corp., 18 N.Y.3d at 503, 942 N.Y.S.2d 13, 965 N.E.2d 240 ; JMD Holding Corp. v. Congress Fin....