People's United Bank v. Whitford Dev., Inc.

Decision Date13 May 2013
Docket NumberNo. 35728–12.,35728–12.
Citation39 Misc.3d 1228,972 N.Y.S.2d 146,2013 N.Y. Slip Op. 50795
PartiesPEOPLE'S UNITED BANK, successor by merger to Bank of Smithtown, Plaintiff, v. WHITFORD DEVELOPMENT, INC., New York State Department Of Taxation And Finance, Victor Irizarry, “John Doe No. I to John Doe No. XXX” inclusive, the last thirty names being fictitious and unknown to plaintiff, the persons or parties intended being the tenants, occupants, persons or corporations, if any, having or claiming an interest in or lien upon the premises described in the complaint, Defendants.
CourtNew York Supreme Court

39 Misc.3d 1228
972 N.Y.S.2d 146
2013 N.Y. Slip Op. 50795

PEOPLE'S UNITED BANK, successor by merger to Bank of Smithtown, Plaintiff,
v.
WHITFORD DEVELOPMENT, INC., New York State Department Of Taxation And Finance, Victor Irizarry, “John Doe No.
I to John Doe No. XXX” inclusive, the last thirty names being fictitious and unknown to plaintiff, the persons or parties intended being the tenants, occupants, persons or corporations, if any, having or claiming an interest in or lien upon the premises described in the complaint, Defendants.

No. 35728–12.

Supreme Court, Suffolk County, New York.

May 13, 2013.


Jaspan Schlesinger, LLP, Garden City, Attys. For Plaintiff.

Peter. Gierer, Esq., Hauppauge, Atty. For Defs. Whitford & Irizarry.


Charles E. Gary, Esq., Assist. Attorney General, Hauppauge, Atty. For NYS Dept. of Taxation.

THOMAS F. WHELAN, J.

ORDERED that this motion (# 001) by the plaintiff for accelerated judgments against the defendants, substitution and deletion of parties, the appointment of a referee to compute and other incidental relief is considered under CPLR 3212, 3215 and RPAPL 1321 and is granted.

The plaintiff commenced this action to foreclose two mortgages given by the corporate defendant, Whitford Development, Inc., to the plaintiff's predecessor-in-interest by merger on January 27, 2006 that encumber certain parcels in Riverhead, New York. The second mortgage secured a building loan note in the amount of $1,000,000.00 while the First mortgage secured a commercial First note in the amount of $1,443,750.00. Also executed on January 27, 2006 was a broad and unconditional written guaranty of the obligations owing from the corporate defendant by defendant Irizarry. The plaintiff alleges that the defendants defaulted in their payment obligations in January of 2008. Following service of the summons and complaint, issue was joined by service of a joint answer by the obligor defendants that includes some nine affirmative defenses.

The plaintiff now moves for an order: (1) awarding it summary judgment on its claims for foreclosure and sale, counsel fees and deficiency judgments against the answering defendants together with a dismissal of the affirmative defenses and counterclaims asserted against the plaintiff; (2) the deletion of the unknown defendants listed in the caption; and (3) appointing a referee to compute amounts due under the subject mortgage. The plaintiff also seeks accelerated judgments on its FOURTH cause of action for declaratory relief by which the second mortgage would be elevated to the same priority of that enjoyed by the First mortgage. The motion is considered under CPLR 3001, 3215, 3212 and RPAPL § 1321 and is granted.

The moving papers established the plaintiff's entitlement to summary judgment on its complaint to the extent it asserts claims for foreclosure and sale and a deficiency judgment against the corporate defendant as such moving papers included copies of the mortgages, the unpaid notes and due evidence of a default under the terms thereof ( seeCPLR 3212; RPAPL § 1321; Citibank, N.A. v. Van Brunt Prop., LLC, 95 AD3d 1158, 945 N.Y.S.2d 330 [2d Dept 2012]; Garrison Special Opportunities Fund, L.P. v. Arthur, 82 AD3d 1042, 918 N.Y.S.2d 894 [2d Dept 2011]; Swedbank, AB v. Hale Ave. Borrower, LLC., 89 AD3d 922, 932 N.Y.S.2d 540 [2d Dept 2011]; Rossrock Fund II, L.P. v. Osborne, 82 AD3d 737, 918 N.Y.S.2d 514 [2d Dept 2011] ). The moving papers further established the plaintiff's entitlement to summary judgment on its pleaded demands for a deficiency judgment against the answering guarantor defendant by the production of the written guarantee signed by him together with the other loan documents listed above and proof of defaults in payment by the corporate borrower/note obligor and the guarantor ( see Emigrant Mtge. Co., Inc. v. Beckerman, 105 AD3d 895, 2013 WL 1632059 [2d Dept 2013]; Solomon v. Burden, 104 AD3d 839, 961 N.Y.S.2d 535 [2d Dept 2013]; Baron Assoc., LLC v. Garcia Group Enter., 96 AD3d 793, 946 N.Y.S.2d 611 [2d Dept 2012]; Archer Capital Fund, L.P. v. GEL, LLC, 95 AD3d 800, 944 N.Y.S.2d 179 [2d Dept 2012] ). The moving papers also established a prima facie showing that each of the affirmative defenses asserted in the answer of the obligor defendants are without merit.

A prima facie showing of summary judgment was also advanced by the plaintiff in its moving papers as supplemented with respect to the plaintiff's FOURTH cause of action sounding in declaratory relief for consolidation of the First and second mortgages. Since the foreclosure of a mortgage extinguishes the liens of owners of subordinate mortgages who have been jurisdictionally joined as party defendants to the action and relegates such owners to the remedies, if any, that are available in surplus money proceedings of the type contemplated by RPAPL § 1371 ( see Polish Natl. Alliance of Brooklyn, U.S.A. v. White Eagle Hall Co., Inc., 98 A.D.2d 400, 470 N.Y.S.2d 642 [2d Dept 1983]; see also Board of Mgrs. of Parkchester N. Condominium v. Alaska Seaboard Partners Ltd. Partnership, 37 AD3d 332, 831 N.Y.S.2d 370 [1st Dept 2007]; New Falls Corp. v. Board of Mgrs. of Parkchester N. Condominium, Inc., 10 AD3d 574, 782 N.Y.S.2d 425 [1st Dept 2004] ), the foreclosure of multiple mortgages in a single action is not generally sought by the owners of mortgages of unequal priorities.

There are, however, certain limited circumstances in which a plaintiff may seek foreclosure of one or more mortgages of unequal priority without violating the extinguishment rule that is critical to the remedy of foreclosure and sale. For example, a plaintiff may ask the court to consolidate mortgages of differing priority by declaring them to be of equal priority thereby removing the multiple mortgage conundrum from the case ( see Bergman on New York Mortgage Foreclosures § 2.07 p 2–26.6). So long as the demand for such declaratory relief is expressly pleaded and due proof is put before the court that shows that the elevation of the subordinate mortgage by consolidation of such mortgage with the First by reason of their unity of the time and subject matter will not adversely affect the rights of persons having interests in the premises, including intervening interests, the foreclosure of two separate mortgages of differing priorities may be successfully prosecuted in a single action.

Here, the plaintiff has advanced a duly pleaded claim for consolidation of the First and Second mortgages by a judicial declaration elevating the Second to the same priority as the First. Under well established precepts of contract law, contemporaneous instruments between the same parties relating to the same subject matter are entitled to be read together and interpreted as forming part of one and the same transaction ( see County of Suffolk v. Long Is. Power Auth., 100 AD3d 944, 954 N.Y.S.2d 619 [2d Dept 2012]; 131 Heartland Blvd. Corp. v. C.J. Jon Corp., 82 AD3d 1188,supra; Davimos v. Halle, 60 AD3d 576, 877 N.Y.S.2d 20 [1st Dept 2009] ). The two mortgages at issue here were executed on the same day, by the same parties and have a common subject matter. Accordingly, they may be read together as a single unified, interdependent document. The plaintiff has further demonstrated that the granting...

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