Norman Realty & Constr. Corp. v. 151 E. 170th Lender LLC

• Decision Date: 21 March 2022
• Docket Number: 2022-50212,Index 802734/21E
• Court: New York Supreme Court
• Parties: Norman Realty & Construction Corporation, Plaintiff(s), v. 151 East 170th Lender LLC, Defendant(s)/Counterclaim-Plaintiff(s), and MICHAEL J. MASON, LINDA MASON, EDWARD MACIAS D/B/A KATH-ED BAKERY, LIUBO JUNKOVIC, MOSCOSO PHARMACY, MORALES PHARMACY HENRY MOLANNO, MOSCOSO PHARMACY II, MORALES PHARMACY II AND HENRY MOLANNO, NOVA LAUNDROMAT CORP., READYCAP COMMERCIAL LLC H. NAJI WAEL AND SOTORE HASSAN S. DIHYEM, KE DI ZHENG D/B/A WING LING RESTAURANT, NEW YORK STATE DEPARTMENT OF TAXATION & FINANCE, NEW YORK CITY DEPARTMENT OF FINANCE, ENVIRONMENTAL CONTROL BOARD OF THE CITY OF NEW YORK; AND JOHN DOE No.#1-10, SAID JOHN DOE DEFENDANTS BEING FICTITIOUS, IT BEING INTENDED TO NAME ALL OTHER PARTIES WHO MAY HAVE SOME INTEREST IN OR LIEN UPON THE PREMISES SOUGHT TO BE FORECLOSED, Additional Counterclaim-Defendant(s).

Norman Realty & Construction Corporation, Plaintiff(s),
v.
151 East 170th Lender LLC, Defendant(s)/Counterclaim-Plaintiff(s),

and MICHAEL J. MASON, LINDA MASON, EDWARD MACIAS D/B/A KATH-ED BAKERY, LIUBO JUNKOVIC, MOSCOSO PHARMACY, MORALES PHARMACY HENRY MOLANNO, MOSCOSO PHARMACY II, MORALES PHARMACY II AND HENRY MOLANNO, NOVA LAUNDROMAT CORP., READYCAP COMMERCIAL LLC H. NAJI WAEL AND SOTORE HASSAN S. DIHYEM, KE DI ZHENG D/B/A WING LING RESTAURANT, NEW YORK STATE DEPARTMENT OF TAXATION & FINANCE, NEW YORK CITY DEPARTMENT OF FINANCE, ENVIRONMENTAL CONTROL BOARD OF THE CITY OF NEW YORK; AND JOHN DOE No.#1-10, SAID JOHN DOE DEFENDANTS BEING FICTITIOUS, IT BEING INTENDED TO NAME ALL OTHER PARTIES WHO MAY HAVE SOME INTEREST IN OR LIEN UPON THE PREMISES SOUGHT TO BE FORECLOSED, Additional Counterclaim-Defendant(s).

No. 2022-50212

Index No. 802734/21E

Supreme Court, Bronx County

March 21, 2022

Unpublished Opinion

Counsel for plaintiff: Munzer & Saunders, LLP

Counsel for defendant/counterclaim plaintiff: Armstrong Teasdale LLP

Counsel for counterclaim defendants Morales Pharmacy Inc, D/B/A Moscoso Pharmacy, Moscoso Pharmacy, Moscoso Pharmacy II, Morales Pharmacy II and Henry Molano: Allegaert Berger & Vogel LLP

FIDEL E. GOMEZ, J.

In this action for unconscionability and fraudulent inducement, defendant moves seeking an order, inter alia, granting it summary judgment as to plaintiff's causes of action in the complaint and on defendant's counterclaims seeking, inter alia, to foreclose on a mortgage and sell the real property which secures it. Defendant also seeks summary judgment on its counterclaim which seeks to enforce a guaranty executed by counterclaim defendants MICHAEL J. MASON (MM) and LINDA MASON (LM). Saliently, defendant avers that because plaintiff, within the agreements between the parties, waived all claims arising from the instant transactions, summary judgment as to those claims is warranted. Moreover, with regard to its counterclaims, defendant avers that summary judgment is warranted insofar as the record establishes that plaintiff has defaulted under the terms of the relevant mortgages, that defendant holds the notes secured by the mortgages, and that MM and LM have failed to comply with the payment obligations assumed by them in the guaranty.

Plaintiff opposes defendant's motion, asserting that because it has sought leave to amend the complaint, the instant motion must be denied as moot. MM and LM also oppose defendant's motion asserting that because they executed the guaranty after the other loan documents were executed, the agreements are unenforceable insofar as they lack consideration. Plaintiff cross-moves for an order pursuant to CPLR § 3025 granting it leave to amend both its complaint and answer to the counterclaims. Saliently, plaintiff seeks to add Harold Sherr (Sherr) as an additional defendant and omit its cause of action for unconscionability from the complaint and assert it as an affirmative defense in its answer. MM and LM also cross-move seeking an order granting them summary judgment on defendant's counterclaim seeking to enforce the guaranty agreement. Specifically, MM and LM seek summary judgment for the same reasons they oppose defendant's motion. Defendant opposes plaintiff, MM, and LM's cross-motion. Defendant saliently asserts that the amendments sought are devoid of merit such that leave to amend should be denied. Accordingly, absent leave to amend the complaint and answer, defendant contends that its motion is not rendered moot. Moreover, defendant contends that the record establishes that the guaranty agreement executed by MM and LM were supported by ample consideration, namely the loan made to plaintiff.

For the reasons that follow hereinafter, defendant's motion is granted, in part and plaintiff, MM and LM's cross-motion is denied.

The instant action is for unconscionability and fraudulent inducement. The complaint alleges the following. Over the course of several years, plaintiff and defendant executed a series of agreements related to real property located at 151 East 170 Street, Bronx, NY 10452 (151). On July 31, 2017, the parties executed a gap note in the amount of $1, 253, 400.48. On November 19, 2018, the parties executed a Restated Consolidated Secured Promissory Note in the amount of $5, 634, 929.18 and a gap note in the amount of $1, 231.443.24. On February 24, 2020, the parties executed a Restated Consolidated Secured Promissory Note and a Mortgage Consolidation Modification and Extension Agreement in the amount of $5, 634.929.18. Based on the foregoing, plaintiff asserts three causes of action. The first and second causes of action allege that the foregoing agreements violated UCC § 2-302, in that the agreements were discriminating, unconscionable, one-sided and oppressive. As a result of the foregoing, plaintiff alleges that it sustained extensive damage totaling $5, 000, 000. The third cause of action alleges that defendant misrepresented its intent to defraud plaintiff when it executed the agreements between the parties, that defendant knowingly and willfully failed to advise plaintiff that upon executing the agreements, plaintiff would immediately be in default at an interest rate of 24 percent, and that defendant promised to provide plaintiff with an extension agreement, but then delayed the same for four months in order to have plaintiff accrue additional interest. As a result of the foregoing, plaintiff seeks to void the agreements between the parties.

Defendant's answer alleges the following. On November 19, 2018, the parties executed a Consolidated Secured Promissory Note, wherein plaintiff agreed to repay defendant for a loan in the amount of $5, 634, 929.18. On that same day, as additional security, the parties executed a Mortgage Consolidation and Extension Agreement, an Assignment of Leases and Rents and Security Agreement. The Mortgage Consolidation and Extension Agreement secured the Consolidated Secured Promissory Note, pledging 151 as security. On that same day, MM and LM also executed a guaranty, wherein they guaranteed plaintiff's obligations under the first mortgage and the Mortgage Consolidation and Extension Agreement, Assignment of Leases and Rents, and Security Agreement. On February 24, 2020, the parties executed a Restated Consolidated Secured Promissory Note in the amount of $5, 634, 929.18. On that same day, as additional security, the parties executed a Mortgage Consolidation and Extension Agreement, and another Assignment of Leases and Rents and another Security Agreement. The Restated Consolidated Secured Promissory Note promulgated plaintiff's obligation to repay the loan, plus interest. The Mortgage Consolidation and Extension Agreement, which secured the Restated Consolidated Secured Promissory Note, defines default as the failure to make a payment on the loan when due, and authorized the initiation of an action to foreclose the Mortgage Consolidation and Extension Agreement and sell the security when and if plaintiff defaulted. Based on the foregoing, defendant asserts three counterclaims. The first counterclaim is to foreclose on the Mortgage Consolidation and Extension Agreement because plaintiff defaulted thereunder and owes $9, 680, 468.49, with interest and late charges through May 14, 2021. The second cause of action is for the sale of 151. Plaintiff alleges that 151 was pledged as security for the second note, by virtue of the Mortgage Consolidation and Extension Agreement, and that plaintiff has defaulted under the terms of the Restated Consolidated Secured Promissory Note in that it failed to make the payments due thereunder. The third cause of action is for a deficiency judgment, wherein it is alleged that pursuant to the Restated Consolidated Secured Promissory Note, the Mortgage Consolidation and Extension Agreement and the guaranty, plaintiff, MM, and LM are liable for any sums owed on the loan after 151 is sold.

Defendant's summons with counterclaims, wherein it asserted the three counterclaims in its answer against MM, LM and several counterclaim defendants states that with regard to the additional counterclaim defendants, with the exception of NEW YORK STATE DEPARTMENT OF TAXATION & FINANCE, NEW YORK CITY DEPARTMENT OF FINANCE, and ENVIRONMENTAL CONTROL BOARD OF THE CITY OF NEW YORK, all are tenants at 151. As to the remaining defendants the foregoing alleges that they have an interest in 151.

DEFENDANT'S MOTION FOR SUMMARY JUDGMENT

Defendant's motion for summary judgment and dismissal of the complaint and on its counterclaims for (1) foreclosure on the mortgage and the sale of 151 and; (2) a deficiency judgment against plaintiff, MM, and LM after the sale of 151 is granted, to the extent, inter alia, of appointing a referee to compute sums due to defendant on the loan. Significantly, on this record, defendant establishes that all of plaintiff's causes of action are barred by, inter alia, the waiver portion of the Restated Consolidated Secured Promissory Note. Moreover, the record establishes that plaintiff's cause of action for fraudulent inducement is additionally barred by the disclaimer clause in the Mortgage Consolidation and Extension Agreement, wherein plaintiff expressly disclaimed reliance on any statements and representations made to it by defendant. Lastly, defendant establishes that it holds the Restated Consolidated Secured Promissory Note and Mortgage Consolidation and Extension Agreement, that plaintiff defaulted under the terms therein, that foreclosure and sale of 151 is a remedy provided therein, and that MM, and LM are liable for plaintiff's debt under the guaranty. Defendant's motion for summary judgment as against counterclaim defendants MORALES PHARMACY INC, D/B/A MOSCOSO PHARMACY, MOSCOSO PHARMACY, MOSCOSO PHARMACY II, MORALES PHARMACY II and HENRY MOLANO (collectively "the pharmacy") is granted because by granting defendant's motion as against...