Greystone Bank v. 15 Hoover St., LLC

• Decision Date: 28 September 2010
• Docket Number: No. 007223–10.,007223–10.
• Citation: 2010 N.Y. Slip Op. 51762,29 Misc.3d 1209,958 N.Y.S.2d 307
• Court: New York Supreme Court
• Parties: GREYSTONE BANK, Plaintiff, v. 15 HOOVER STREET, LLC, a New York Limited Liability Company, David Neuberg, an individual Malkie Neuberg, an individual, Ian S. Rubenstein, an individual, My New York Properties LLC, a New York Limited Liability Company, Best Development Consulting LLC, a New York Limited Liability Company, Karat Platinum LLC, a New York Limited Liability Company, A & B Enterprises USA, INC., a New York corporation, Unitex Cargo Services, Inc., a New York Corporation, Design for Living, LLC, a New York Limited Liability Company, Platinum Gem Corp., a New York corporation, Zee Courier Corporation, a New York corporation, Atlantic Feather & Foam, Inc., a New York corporation, and “John Doe No.1” to “John Doe # 50,” Both Inclusive, the Names of the Last 50, Defendants, Being Fictitious, Said Defendants' True Names Being Thereby Intended to Designate Parties with Liens that are Subject and Subordinate to the Lien of the Mortgage Being foreclosed herein and Tenants, Lessees, or Occupants of Portions of the Mortgaged Premises Described in the Complaint, Defendants.

29 Misc.3d 1209

958 N.Y.S.2d 307

2010 N.Y. Slip Op. 51762

GREYSTONE BANK, Plaintiff,

v.15 HOOVER STREET, LLC, a New York Limited Liability Company, David Neuberg, an individual Malkie Neuberg, an individual, Ian S. Rubenstein, an individual, My New York Properties LLC, a New York Limited Liability Company, Best Development Consulting LLC, a New York Limited Liability Company, Karat Platinum LLC, a New York Limited Liability Company, A & B Enterprises USA, INC., a New York corporation, Unitex Cargo Services, Inc., a New York Corporation, Design for Living, LLC, a New York Limited Liability Company, Platinum Gem Corp., a New York corporation, Zee Courier Corporation, a New York corporation, Atlantic Feather & Foam, Inc., a New York corporation, and “John Doe No.1” to “John Doe # 50,” Both Inclusive, the Names of the Last 50, Defendants, Being Fictitious, Said Defendants' True Names Being Thereby Intended to Designate Parties with Liens that are Subject and Subordinate to the Lien of the Mortgage Being foreclosed herein and Tenants, Lessees, or Occupants of Portions of the Mortgaged Premises Described in the Complaint, Defendants.

No. 007223–10.

Supreme Court, Nassau County, New York.

Sept. 28, 2010.

Foley & Lardner LLP, for Plaintiff.

Goldberg & Rimberg, PLLC, for Defendants, 15 Hoover and Rubinstein.

Schneider Goldstein Bloomfield LLP, for Defendants, Neuberg, Neuberg, My N.Y. Properties, Karat Platinum and Best Development.

TIMOTHY S. DRISCOLL, J.

This matter is before the Court for decision on 1) the motion filed by Defendants David Neuberg, Malkie Neuberg, My New York Properties LLC, Karat Platinum LLC and Best Development Consulting LLC on July 7, 2010, and 2) the cross motion filed by Defendants15 Hoover LLC and Ian Rubinstein on July 9, 2010, both of which were submitted on August 9, 2010. For the reasons set forth below, the Court 1) grants the motion and cross motion to the to the extent that the Court hereby stays Plaintiff's prosecution of the deficiency judgment on the note pending resolution of the foreclosure action and further order of the court; and2) otherwise denies the motion and cross motion.

BACKGROUND

A. Relief Sought

Defendants David Neuberg, Malkie Neuberg, My New York Properties LLC, Karat Platinum LLC and Best Development Consulting LLC move for an Order, 1) pursuant to Banking Law § 200, Business Corporation Law (“BCL”) § 1312 and CPLR § 3211(a), dismissing or staying this action on the ground that Plaintiff Greystone Bank (“Plaintiff”) is not duly licensed or authorized to do business in the State of New York (“New York”); and2) pursuant to CPLR § 3211(a) and Real Property Actions and Proceedings Law (“RPAPL”) § 1301, dismissing the Amended Complaint (“Complaint”) on the ground that Plaintiff was required, but failed, to elect its remedy.¹

Defendants 15 Hoover LLC (“Hoover”) and Ian Rubinstein (“Rubinstein”) cross move for an Order 1) pursuant to Banking Law § 200, BCL § 1312 and CPLR § 3211(a), dismissing or staying this action on the ground that Plaintiff is not duly licensed or authorized to do business in New York and, thus, may not maintain this action; and 2) pursuant to CPLR § 3211(a) and RPAPL § 1301, dismissing the Complaint on the ground that Defendant was required, but failed, to elect its remedy.²

Plaintiff opposes the motion and cross motion.

B. The Parties' History

In the Complaint (Ex. A to motion), Plaintiff alleges as follows:

This is an action 1) to foreclose on a first mortgage lien on certain premises located in Nassau County (“Property”), 2) to enforce a guaranty (“Guaranty”), and 3) for related relief.

Plaintiff is the owner and holder of the subject first mortgage lien on the Property. Plaintiff is a North Carolina corporation with its principal place of business in North Carolina. Plaintiff maintains a branch in New York.

Hoover, a New York limited liability company, is the mortgagor of the first mortgage lien on the Property, and a maker of the note (“Note”) secured by the mortgage lien. David and Malkie Neuberg (“Neubergs”) are makers of the Note. Hoover and the Neubergs are referred to collectively as the “Borrowers.” Rubinstein is the guarantor of the Borrowers' obligations under the Note and mortgage (“Mortgage”), pursuant to the Guaranty that he executed.

Defendants My New York Properties, LLC (“New York Properties”), Best Development Consulting, LLC (“BDC”), Karat Platinum LLC (“Karat”), A & B Enterprises USA, Inc. (“A & B”), Unitex Cargo Services, Inc. (“Unitex”), Design for Living, LLC (“Design”), Platinum Gem Corp. (“Platinum”), Zee Courier Corporation (“Zee”) and Atlantic Feather & Foam, Inc. (“Atlantic”) are lessees of a portion of the Property.

The Complaint alleges that Borrowers failed to make required payments pursuant to the Note and Mortgage and are thereby in default. In the Complaint, Plaintiff asserts six causes of action: (1) foreclosure and sale of the Property that secures the loan, (2) foreclosure of Greystone's security interest in personal property, (3) recovery of rental proceeds pursuant to an assignment of leases and rents, (4) possession of the Property, (5) a deficiency judgment against Borrowers for any deficiency due to Greystone following foreclosure and sale of the Property, and (6) a money judgment against Guarantor Ian Rubinstein for any deficiency due to Greystone following foreclosure and sale of the Property.

While Greystone does not maintain a branch office in New York, Greystone submits that it does have a “domestic representative office” in New York. In support, Plaintiff provides copies of relevant pages from the New York State Banking Department website (Ex. B to Aff. in Opp.) reflecting 1) that Plaintiff is listed on a document titled “Institutions We Supervise–Domestic Out of State Representative Offices–As of June 30, 2010;” and 2) the Supervisory Policy for the registration of Domestic Representative Offices.

Section 8.2 of the New York Banking Department's Supervisory Policy provides the following definitions:

(a) Banking institution means any bank, trust company, savings bank, and savings and loan association chartered under the laws of New York State, Puerto Rico or any other state or territory of the United States.

(b) Representative office means any office located in this State of a banking institution that engaged in representational functions (including but not limited to soliciting business, marketing services or acting as liaison with customers) on behalf of the banking institution, but shall not include a branch office of a banking institution or any office that engages solely in administrative or supervisory functions. A representative office shall also include an office of a New York chartered institution located outside this State that engages in representational functions.

Defendants submitted Reply Affidavits of Eli Neuberg and Ian Rubinstein. In his Reply Affidavit, Eli Neuberg affirms, in pertinent part, as follows:

I am a member of My New York Properties LLC, a Defendant in the above-captioned action.

* * *

From mid–2008 through the present, I have engaged in numerous meetings, phone conversations and correspondence with representatives of Greystone Bank in New York in connection with a loan to 15 Hoover Street, LLC and other potential business transactions.

At no time did any representative of Greystone Bank, or any sign, notice or promotional material of Greystone Bank of which I am aware, state that Greystone Bank's office at 152 West 57th Street, New York, New York or elsewhere in this state was a representative office.

In his Reply Affidavit, Ian Rubinstein affirms that:

In early February I was in direct contact with Greystone Bank (“Bank”) in a effort to work out past due monies owed on the Mortgage in question. My communications with the Bank was [sic] on the Phone and by e-mail. The two individuals that I dealt with were James Lieblich and Bob Boralak. As part of my e-mail communications with Mr. Lieblich the “signature” at the conclusions of his e-mails appeared as

Best regards.

Jim

James K. Lieblich

Greystone Bank

152 West 57th Street

New York, N.Y. 10019

(212) 649–9738

jlieblich@greystonebank.com

In late February, 2010 I and Mr. Neuberg [sic] met with Bob Boralak, Jim Lieblich and one other person at the Greystone branch at 152 West 57th Street, New York, New York 10019 (“Branch”). The offices had a magnificent view of Central Park and the City and I commented that their customers must love to come up and do business.

* * *

At all times I was under the impression that the Greystone Bank location at 152 West 57th Street was the New York branch of Greystone Bank.

The Parties' Positions

Defendants argue that Plaintiff is not authorized to maintain this action because it is a foreign corporation that is not licensed or authorized to do business in New York. Defendants contend, further, that Plaintiff may not pursue this action in which it seeks both to foreclose on the subject mortgage and to recover from the Borrowers for payments due under the Mortgage and Note, but rather must elect which remedy it wishes to pursue.

Plaintiff submit that 1) the instant action does not violate the RPAPL, or election of remedies doctrine, because they do not prohibit actions such as this one in which Plaintiff seeks foreclosure of a mortgage and a deficiency judgment against the borrower and guarantor; and2) Greystone, as a foreign bank with a domestic representative office, may foreclose a New York mortgage.

RULING OF THE COURT

A. Standards for Dismissal

A complaint may be dismissed based upon documentary evidence pursuant to CPLR § 3211(a)(1) only if the factual allegations contained therein are definitively contradicted by the evidence submitted or a defense is conclusively established thereby. Yew Prospect, LLC v. Szulman, 305 A.D.2d 588 (2d Dept.2003); Sta–Bright Services, Inc. v. Sutton, 17 AD3d 570 (2d Dept.2005).

In addition, it is well settled that a motion interposed pursuant to...