N.Y. Life Ins. Co. v. 717 GFC, LLC

• Docket Number: Index No. 850164/2022,MOTION SEQ. No. 002
• Decision Date: 08 December 2023
• Citation: 2023 NY Slip Op 34351 (U)
• Parties: NEW YORK LIFE INSURANCE COMPANY, Plaintiff, v. 717 GFC, LLC, NEW YORK STATE DEPARTMENT OF TAXATION AND FINANCE, NEW YORK CITY DEPARTMENT OF FINANCE, JOHN DOE NO. 1 THROUGH JOHN DOE NO. 100 Defendant.
• Court: New York Supreme Court

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2023 NY Slip Op 34351(U)

NEW YORK LIFE INSURANCE COMPANY, Plaintiff, v. 717 GFC, LLC, NEW YORK STATE DEPARTMENT OF TAXATION AND FINANCE, NEW YORK CITY DEPARTMENT OF FINANCE, JOHN DOE NO. 1 THROUGH JOHN DOE NO. 100 Defendant.

Index No. 850164/2022, MOTION SEQ. No. 002

Supreme Court, New York County

December 8, 2023

Unpublished Opinion

PRESENT: HON. FRANCIS A. KAHN, III Justice

DECISION + ORDER ON MOTION

Francis A. Kahn III Judge

The following e-filed documents, listed by NYSCEF document number (Motion 002) 65, 66, 67, 68, 69, 70, 71, 72, 73, 74, 75, 76 77, 78, 79, 80, 81, 82, 83, 84, 85, 86, 87, 90, 91,92, 93 94, 95, 96, 97, 98, 99, 100,101,102,103 were read on this motion to/for JUDGMENT - SUMMARY.

Upon the foregoing documents, the motion is determined as follows:

The within action is to foreclose on a mortgage encumbering a parcel of commercial real property located 717 Fifth Avenue, New York, New York. The mortgage, dated June 29, 2012, was given by Defendant 717 GFC, LLC ("GFC") to Plaintiff and non-party Teachers Insurance and Annuity Association of America, Co. ("Teachers").^[1] The mortgage secures two loans, each with an original principal amount of $150,000,000.00. These loans are evidenced by separate amended and restated promissory notes of the same date as the mortgage. The parties also executed a loan agreement. The notes and mortgage were executed by former Defendant Jeff Sutton as an authorized signatory of GFC. Plaintiff commenced this action and alleged that Defendant GFC defaulted in repayment of the indebtedness. GFC answered and pled one [1] affirmative defense.

In moving for summary judgment, Plaintiff was required to establish prima facie entitlement to judgment as a matter of law though proof of the mortgage, the note, and evidence of Defendants' default in repayment Gee U.S. Bank, N.A. v James, 180 A.D.3d 594 [1^st Dept 2020]; Bank of NY v Knowles, 151 A.D.3d 596 [1^st Dept 2017]; Fortress Credit Corp, v Hudson Yards, LLC, 78 A.D.3d 577 [I^s* Dept 2010]). Proof supporting a prima facie case on a motion for summary judgment must be in admissible form (see CPLR §3212[b]; Tri-State Loan Acquisitions III, LLC v Litkowski, 172 A.D.3d 780 [1^st Dept 2019]). In support of such a cause of action for foreclosure, a plaintiff may rely on evidence from persons with personal knowledge of the facts, documents in admissible form and/or persons with knowledge derived from produced admissible records (see eg U.S. Bank N.A. v Moulton, 179 A.D.3d 734, 738 [2d Dept 2020]). No particular set of business records must be proffered, as long as the admissibility requirements of CPLR 4518[a] are fulfilled and the records evince the facts for which they are relied upon (see eg Citigroup v Kopelowitz, 147 A.D.3d 1014, 1015 [2d Dept 2017]).

Here, Plaintiffs motion was supported with the affidavit of Roger Braxton ("Braxton"), a Corporate Vice President for plaintiff, as well as the documents annexed thereto. The affidavit established the mortgage, note, and evidence of mortgagor's default and was sufficiently supported by appropriate documentary evidence (see eg Bank of NY v Knowles, supra; Fortress Credit Corp, v Hudson Yards, LLC, supra).

In opposition. Defendant posits that an issue of fact precluding summary judgment exists as to whether Plaintiff frustrated Defendant's right to fully tender all mortgage arrears. "'The law is clear that when a mortgagor defaults on loan payments, even if only for a day, a mortgagee may accelerate the loan, require that the balance be tendered or commence foreclosure proceedings, and equity will not intervene'" (Home Sav. of Am. v Isaacson, 240 A.D.2d 633 [2d Dept 1997], quoting New York Guardian Mortgagee Corp, v Olexa, 176 A.D.2d 399, 401 [3d Dept 1991 ]). A "tender of payment is a valid defense in a mortgage foreclosure action" and "constructively reject[ing a] defendant's efforts to tender payment satisfying the mortgage" can constitute an issue of fact barring summary judgment (see Cassara v Wynn, 55 A.D.3d 1356 [4^th Dept 2008]; see also New York Guardian Mortgagee Corp, v Olexa, 176 A.D.2d 399 [3d Dept 1991]; cf. First Fed. Sav. Bank v Midura, 264 A.D.2d 407, 408 [2d Dept 1999]). However, for a tender to be effective a mortgagor must proffer all mortgage arrears, which generally encompasses accrued interest and late charges (see EMC Mortg. Corp, v Stewart, 2 A.D.3d 772, 773 [2d Dept 2003]; United Cos. Lending Corp, v Hingos, 283 A.D.2d 764, 766 [3d Dept 2001]; First Fed. Sav. Bank v Midura, supra).

Here, Defendant asserts that Plaintiffs inclusion in its August 5, 2022, payoff letter of a total late fee of $9,977,299.28 was inconsistent with the terms of the loan documents and a constructive rejection of its tender. In opposition, Defendant submitted the affidavit of Sutton who averred that upon receipt of the payoff letter he contacted Plaintiff and "explained that the imposition of a 4% late fee in addition to the collection of Default Interest in the amount of over $1.83 million was an attempt to penalize Defendant", apparently to no avail. The provision relied upon by Defendant is contained in section 2.3.4. of the loan agreement and provides:

Late Payment Charge. If any principal, interest or any other sums dueunder the Loan Documents, including the payment of principal due on the Maturity Date, is not paid by Borrower within five (5) days of the date on which it is due, Borrower shall pay to Lender upon demand an amount equal to the lesser of (a) five percent (5%) of such unpaid sum, and (b) the maximum amount permitted by applicable law, in order to defray the expense incurred by Lender in handling and processing such delinquent payment and to compensate Leader for the loss of the use of such delinquent payment. Any such amount shall be secured by the Mortgage and the other Loan Documents to the extent permitted by applicable law.

In this case, Defendant does not cite, and the Court could not find, any contractual provision requiring Plaintiff to issue a payoff letter prior to commencing foreclosure proceedings. It appears, though, a borrower is entitled to payoff figures from a lender as an adjunct of the common-law right to redeem (see Luna Light., Inc. v Just Indus., Inc., 45 A.D.3d 814, 816 [2d Dept 2007]["[Borrower] is entitled to redeem the subject real property, and is entitled to a calculation of the redemption price"]; see also 1 Bergman on New York Mortgage Foreclosures §4.07 [2023]). Defendant does not deny that Plaintiff issued a payoff statement, albeit later than rather than sooner. Instead, it only takes issue with the late fees included in payoff amount demanded. Ordinarily, disputes as to the amount owed are not a defense to a motion for summary judgment on a foreclosure cause of action (see eg Emigrant Bank v Cohen, 205 A.D.3d 103, 109 [2d Dept 2022]; Heywood Condominium v Rozencraft, 148 A.D.3d 38 [1^st Dept 2017]; see also NYCTL 2009-A Trust v Tsafatinos, 101 A.D.3d 1092 [2^nd Dept 2012]). This is because the amount owed does not affect the validity of a mortgage nor whether a mortgagor defaulted (see Johnson v Gaughan, 128 A.D.2d 756, 757 [2d Dept 1987]). Whether Plaintiffs imposition of the late fee was necessary to "defray the expense incurred by Lender in handling and processing such delinquent payment and to compensate Lender for the loss of the use of such delinquent payment" is not a reason to depart from this rule under the present circumstances (see Orchard Hotel LLC v DAB Group, LLC, 106 A.D.3d 628 [1^st Dept 2013]). Defendant does not dispute its default; Plaintiff is not alleged to have precipitated the default and Plaintiff does not seek to recover a fee that is entirely incognizable under the loan documents.

The assertion the motion must be denied because no discovery' has been conducted is unavailing as Defendant offered nothing to demonstrate Plaintiff is in exclusive possession of facts which would establish a viable defense to summary judgment (see Island Fed. Credit Union v I&D Hacking Corp., 194 A.D.3d 482 [1^st Dept 2021]).

Plaintiff has established that it is entitled to a default judgment against all non-appearing Defendants (see CPLR §3215; SRMOF II 2012-I Trust v Telia, 139 A.D.3d 599, 600 [1^st Dept 2016]).

The branch of Plaintiff s motion to amend caption is granted without opposition (see generally CPLR §3025; JP Morgan Chase Bank, N.A. v Laszio, 169 A.D.3d 885, 887 [2d Dept 2019]).

Accordingly, it is

ORDERED that Plaintiff is awarded summary judgment on its causes of action for foreclosure against the appearing parties and a default judgment against the non-appearing defendants; and it is further

ORDERED that that Roberta Ashkin, Esq., 400 East 70th Street New York...