NCCMI, Inc. v. Bersin Props.

• Decision Date: 14 March 2022
• Docket Number: Index 650276/2015
• Parties: NCCMI, Inc., Plaintiff, v. Bersin Properties, LLC, SCOTT CONGEL, Defendant.
• Court: New York Supreme Court

2022 NY Slip Op 50198(U)

NCCMI, Inc., Plaintiff, v. Bersin Properties, LLC, SCOTT CONGEL, Defendant.

Index No. 650276/2015

Supreme Court, New York County

March 14, 2022

Unpublished Opinion

Robert R. Reed, J.

The following e-filed documents, listed by NYSCEF document number (Motion 006) 218, 219, 220, 221, 222, 223, 224, 225, 226 227, 228, 229, 230, 231, 232, 233, 234, 235, 236, 237, 238 240, 241, 242, 243, 244, 245, 246, 247, 248, 249, 250, 251 252, 253, 254, 255, 256, 257, 258, 260, 339 were read on this motion to/for PRECLUDE.

The following e-filed documents, listed by NYSCEF document number (Motion 007) 265, 266, 267, 268, 269, 270, 271, 272, 273 274, 275, 276, 277, 311, 312, 313, 314, 315, 316, 317, 318 319, 320, 321, 322, 323, 324, 325, 326, 327, 328, 329, 330, 331, 332, 333, 334, 335, 336, 337, 338, 345, 346, 347, 348, 349, 350, 351, 352, 353 were read on this motion to/for JUDGMENT - SUMMARY.

The following e-filed documents, listed by NYSCEF document number (Motion 008) 278, 279, 280, 281, 282, 283, 284, 285, 286, 287, 288, 289, 290, 291, 292, 297, 298, 299, 300, 301, 302, 303, 304, 305, 306, 307, 308, 309, 310, 341, 342, 343, 344, 354, 355, 356, 357, 358 were read on this motion to/for PARTIAL SUMMARY JUDGMENT.

In this contractual dispute over a loan agreement and guaranty, successor to lender ^[1], plaintiff, NCCMI, Inc. ("Lender"), moves, pursuant to CPLR 3212, for summary judgment (motion sequence 007). Defendants, Bersin Properties, LLC ("Bersin" or "Borrower") and Scott R. Congel ("Congel"), move, pursuant to CPLR 3212(e), for partial summary judgment on all claims brought against Congel for personal liability under the Indemnity and Guaranty Agreement ("Guaranty") (motion sequence 008). Plaintiff also moves, to preclude defendants' real estate finance expert (motion sequence 006).

BACKGROUND

On January 29, 2007, Bersin entered into a $135 million Amended and Restated Loan Agreement (the "Loan" or "Loan Agreement") with Nomura Credit & Capital Inc. ("Nomura") for the renovation and re-leasing of the Medley Centre project ("the project") located in Irondequoit, New York (Plaintiff's Rule 19A Statement of Material Facts [SMF], motion no. 007, New York St Cts Elec Filing [NYSCEF] Doc No. 267 ¶ 1). In connection with the Loan Agreement, Nomura and defendants also entered an Indemnity and Guaranty ("Guaranty") dated January 29, 2007 and executed on January 8, 2007 (Defendants' SMF, motion no. 008, NYSCEF Doc No. 280 ¶ 5; Plaintiff's Response to Defendants' SMF, motion no. 008, NYSCEF Doc No. 310 ¶ 5). The Loan Agreement had an Initial Maturity Date of February 9, 2009, with an option for three consecutive one-year extensions, subject to Bersin Properties' satisfaction of certain criteria (NYSCEF Doc No. 280 ¶ 2). From January 29, 2007 to February 9, 2009, Nomura/Lender had funded $44 million to the project (NYSCEF Doc No. 280 ¶ 4).

Borrower, on February 9, 2009 and February 13, 2009, believing that its loan had been extended, made draw requests for $54 million and $2.8 million, which were both declined (NYSCEF Doc No. 267 ¶ ¶ 16, 18). On March 18, 2009, Centerline Servicing Inc. (Centerline or "the loan servicer"), Lender's loan servicer, sent Borrower notice, on Lender's behalf, that the Loan had "matured on February 9, 2009 and all principal, interest and other sums owed by Borrower to Lender are due and payable" (Maturity Notice, NYSCEF Doc No. 14). On May 22, 2009, the loan servicer sent Borrower a Default Notice, stating that "[w]e are aware that Borrower takes the position that it has duly exercised the extension option set forth in Section 2.8 of the Loan Agreement. We disagree with that position" (Default Notice, NYSCEF Doc No. 15). On April 25, 2014, Borrower commenced suit in a separate action, alleging, among other things, that Nomura/Lender had breached the Loan Agreement by failing to extend the maturity date and declining to fund its draw requests (Bersin suit, NYSCEF Doc No. 26). On January 30, 2015, Lender commenced this action for Borrower's failure to repay the Loan at maturity and sought to foreclose the mortgages encumbering the project (Complaint, NYSCEF Doc No. 2). On March 24, 2015, Borrower interposed an Answer contesting the action (Answer, NYSCEF Doc No. 25). Originally filed as an action for foreclosure, this matter has since been converted into one for recovery of debt. Leave to serve a first and second supplemental complaint was granted on October 6, 2015 and July 5, 2016, respectively (first supplemental complaint, NYSCEF Doc No. 85; second supplemental complaint, NYSCEF Doc No. 132). Plaintiff in its second supplemental complaint asserts that Congel is jointly and severally liable, alongside Bersin, for the cost of the Loan pursuant to the Guaranty (NYSCEF Doc No. 132).

The Loan Agreement

The Loan Agreement defines the "Initial Maturity Date" as February 9, 2009. In addition and in pertinent part, it provides:

"SECTION 2.8 Extension of the Initial Maturity Date. Borrower shall have the option to extend the term of the Loan beyond the Initial Maturity Date for three (3) successive terms (each, an "Extension Option") of one (1) year each (the Initial Maturity Date following the exercise of each such option is hereinafter the "Extended Maturity Date") upon satisfaction of the following terms and conditions:

(a) no Default shall have occurred and be continuing at the time the applicable Extension Option is exercised and on the date that the applicable extension term is commenced;

(b) Borrower shall notify Lender of its irrevocable election to extend the Maturity Date as aforesaid not earlier than six (6) months, and no later than one (1) month, prior to the Initial Maturity Date or any Extended Maturity Date, as applicable;

(c) if the Interest Rate Cap Agreement is scheduled to mature prior to the applicable Extended Maturity Date, Borrower shall obtain and deliver to Lender not later than ten (10) Business Days prior to the first day of each Extension Option, one or more Replacement Interest Rate Cap Agreements from an Acceptable Counterparty which Replacement Interest Rate Cap Agreement shall be effective commencing on the first date of such Extension Option and shall have a maturity date not earlier than the applicable Extended Maturity Date; and

(d) In connection with each Extension Option, Borrower shall have delivered to Lender together with its notice pursuant to subsection (b) of this Section 2.8 and as of the commencement of the applicable Extension Option, an Officer's Certificate in form acceptable to Lender certifying that each of the representations and warranties of Borrower contained in the Loan Documents is true, complete and correct in all material respects as of the date of such Officer's Certificate to the extent such representation and warranties are not matters which by their nature can no longer be true and correct as a result of the passage of time.

(Loan Agreement, NYSCEF Doc No. 3)

...

SECTION 2.2 Interest Rate.

2.2.7 Interest Rate Cap Agreement.

(f) Each Interest Rate Cap Agreement obtained in accordance with this Section 2.2 shall provide for a strike price equal to the Strike Price; provided. however, Borrower shall have the right to effect an increase in the applicable Strike Price by virtue of depositing additional amounts into the Debt Service Reserve Account (and thereby increasing Proforma Net Cash Flow). Such deposits must be made prior to the date on which the required additional or replacement Rate Cap Agreement is obtained.

...

4.1.18 No Set-off. The Loan Documents are not subject to any right of rescission, set off, counterclaim or defense by Borrower, Sole Member, or Guarantor, including the defense of usury, nor would the operation of any of the terms of the Loan Documents, or the exercise of any right thereunder, render the Loan Documents unenforceable (subject to principles of equity and bankruptcy, insolvency and other laws generally affecting creditors' rights and the enforcement of debtors' obligations), and Borrower, Sole Member, and Guarantor have not asserted any right of rescission, set off, counterclaim or defense with respect thereto.

(id.)

...

[T]he Debt shall be fully recourse to Borrower... if Borrower defaults hereunder in any way and Borrower or any Guarantor contests or in any way interferes with, directly or indirectly, any foreclosure action, Uniform Commercial Code sale and/or deed in lieu of foreclosure transaction commenced by Lender or with any other enforcement of Lender's rights, powers or remedies under any of the Loan Documents or under any document evidencing, securing or otherwise relating to all or any portion of the Property (whether by making any motion, bringing any counterclaim, claiming any defense seeking any injunction or other restraint, commencing any action, seeking to consolidate any such foreclosure or other enforcement with any other action, or otherwise)"

(id. at 154-155).

Guaranty

Notwithstanding anything to the contrary in this Agreement the Loan Agreement, the Notes or any of the Loan Documents the Debt shall be fully recourse to Borrower (vii) if Borrower defaults hereunder in any way and Borrower or any Guarantor contests or in any way interferes with, directly or indirectly, any foreclosure action, Uniform Commercial Code sale and/or deed in lieu of foreclosure transaction commenced by Lender or with any other enforcement of Lender's rights, powers or remedies under any of the Loan Documents or under any document evidencing, securing or otherwise relating to all or any portion of the Property (whether by making any motion, bringing any counterclaim, claiming any defense, seeking any injunction or other restraint, commencing any action, seeking to consolidate any such

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