E. Sixth St. Funding v. Cherny Props.

• Decision Date: 09 September 2022
• Docket Number: 850248/2021,MOTION SEQ. No. 002
• Parties: EAST SIXTH STREET FUNDING LLC, Plaintiff, v. CHERNY PROPERTIES INC..CHERNY REALTY INC.,ZDZISLAW CZERNY, NEW YORK STATE DEPARTMENT OF TAXATION AND FINANCE, NEW YORK CITY DEPARTMENT OF FINANCE, BUREAU OF HIGHWAY OPERATIONS, NEW YORK CITY DEPARTMENT OF TRANSPORTATION, NEW YORK CITY ENVIRONMENTAL CONTROL BOARD, JOHN DOE 1 THROUGH 100, Defendant.
• Court: New York Supreme Court

2022 NY Slip Op 33060(U)

EAST SIXTH STREET FUNDING LLC, Plaintiff, v. CHERNY PROPERTIES INC..CHERNY REALTY INC.,ZDZISLAW CZERNY, NEW YORK STATE DEPARTMENT OF TAXATION AND FINANCE, NEW YORK CITY DEPARTMENT OF FINANCE, BUREAU OF HIGHWAY OPERATIONS, NEW YORK CITY DEPARTMENT OF TRANSPORTATION, NEW YORK CITY ENVIRONMENTAL CONTROL BOARD, JOHN DOE 1 THROUGH 100, Defendant.

No. 850248/2021, MOTION SEQ. No. 002

Supreme Court, New York County

September 9, 2022

Unpublished Opinion

DECISION + ORDER ON MOTION

HON FRANCIS A. KAHN, III JUSTICE

The following e-filed documents, listed by NYSCEF document number (Motion 002) 162, 163, 164, 165, 166, 167, 168, 169, 170 171, 172, 173, 174, 175, 176, 177, 178, 179, 180, 181, 182 183, 184, 191, 192, 193, 194, 195, 196, 197, 198, 199 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 two parcels of real property located at 421 East 12^lh Street, New York, New York and 511 East 6^th Street, New York, New York. The mortgage was given by Defendants Cherny Properties, Inc. and Cherny Realty, Inc. and secures a loan with an original principal amount of $6,000,000.00. The indebtedness is memorialized by a loan agreement as well as an amended, restated and consolidated note. The mortgage and loan documents were executed by Defendant Zdzislaw Czerny ("Czerny") as President of both corporations. Concomitantly therewith Czerny executed a guaranty of the indebtedness. Plaintiff commenced this action alleging Defendants defaulted in making installment payments under the note. Defendants Cherny Properties, Inc., Cherny Realty, Inc. and Zdzislaw Czerny answered jointly and pled four affirmative defenses and a counterclaim.

Now, Plaintiff moves for summary judgment against Defendants Cherny Properties, Inc., Cherny Realty, Inc. and Zdzislaw Czerny, striking their answer, a default judgment against all non-appearing parties, to appoint a Referee to compute and to amend the caption. Defendants Cherny Properties, Inc., Chemy Realty, Inc. and Zdzislaw Czerny oppose the motion.

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 (see 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 [1^st 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]). 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]). In a foreclosure action, a plaintiff is not required to rely on any particular set of business records, 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]).;

Plaintiffs motion was supported with affidavits from Doris Shen ("Shen"), an asset manager and authorized signatory of Plaintiff, as well as Mark Bahiri ("Bahiri"), a Managing Partner of Emerald Creek Capital 3, LLC ("Emerald"), the original lender. Although Shen's knowledge was not based upon her personal knowledge, it was sufficiently founded by the business records of Plaintiff, her employer (see eg Wells Fargo Bank, N.A. v Yesmin, 186 A.D.3d 1761, 1762 [2d Dept 2020]; Deutsche Bank Natl. Trust Co. v Kirschenbaum, 187 A.D.3d 569 [1^st Dept 2020]). Shen laid a proper foundation for the admission of his employer's own records by demonstrating the requisites of CPLR §4518 (see Bank of N Y. Mellon v Gordon, 171 A.D.3d 197 [2d Dept 2019]). The records of Emerald were also admissible since Shen attested those records were received from the maker, incorporated into the records her employer kept and were routinely relied on by Plaintiff in its business (see Bank of Am., N.A. v Brannon, 156 A.D.3d 1, 10 [1st Dept 2017]; see also U.S. Bank Trust, N.A. v Bank of Am., N.A., 201 A.D.3d 769, 772 [2d Dept 2022]). Moreover, the affidavit of Bahri, as an employee of Emerald, evidenced the requisites of CPLR §4518 for the admission of Emerald's records as business records. Annexed to each affidavit were the records which the affiants relied upon (see eg Ciras, Inc. v Katz, 202 A.D.3d 590 [1^stDept 2022]). The affidavits established the mortgage, note, and evidence of mortgagor's default and were sufficiently supported by appropriate documentary evidence (see eg Bank of NY v Knowles, supra; Fortress Credit Corp, v Hudson Yards, LLC, supra).

In opposition, Defendants' claim that Plaintiff or its predecessor hindered its performance in repayment of the loan fails to raise an issue of fact. The amendment to the loan agreement, executed by the parties on May 15, 2020, permitted Defendants to make three months of partial payments. There is no dispute that the term of that amendment expired. Contrary to Defendants' assertion, Plaintiffs unwillingness to further extend the period of partial payments does not ipso facto demonstrate the existence of bad faith. "'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, citing New York Guardian Mortgagee Corp, v Olexa, 176 A.D.2d 399, 401 [3d Dept 1991]; see also EMC Mortg. Corp. v. Stewart, 2 A.D.3d 772 [2d Dept 2003]). In addition, bare assertions of a lender's agreement to forebear foreclosure are also insufficient to defeat summary judgment (see New York State Urban Dev. Corp. v. Marcus Garvey Brownstone Houses, Inc., 98 A.D.2d 767, 771 [2d Dept 1983]).

As to the branch of Plaintiff s motion to dismiss all Defendants' affirmative defenses, CPLR §3211 [b] provides that "[a] party may move for judgment dismissing one or more defenses, on the ground that a defense is not stated or has no merit". For example, affirmative defenses that are without factual foundation, conclusory or duplicative cannot stand (see Countrywide Home Loans Servicing, L.P. v Vorobyov, 188 A.D.3d 803, 805 [2d Dept 2020]; Emigrant Bank v Myers, 147 A.D.3d 1027, 1028 [2d Dept 2017]). When evaluating such a motion, a "defendant is entitled to the benefit of every reasonable intendment of its pleading, which is to be liberally construed. If there is any doubt as to the availability of a defense, it should not be dismissed" (Federici v Metropolis Night Club, Inc., 48 A.D.3d 741,743 [2d Dept 2008]).

As pled all the affirmative defenses are entirely conclusory and unsupported by any facts in the' answer. As such, these affirmative defenses are nothing more than unsubstantiated legal conclusions which are insufficiently pled as a matter of law (see Board of Mgrs. of Ruppert Yorkville Towers Condominium v Hayden, 169 A.D.3d 569 [1^st Dept 2019]; see also Bosco Credit V Trust Series 2012-1 v. Johnson. 177 A.D.3d 561 [1^st Dept 2020]; 170 W. Vil. Assoc, v. G &E Realty, Inc., 56 A.D.3d 372 [1st Dept 2008]; see also Becher v Feller, 64 A.D.3d 672 [2d Dept 2009]; Cohen Fashion Opt., Inc. v V& M Opt., Inc., 51 A.D.3d 619 [2d Dept 2008]). Also, as Defendants proffered no argument in support of its affirmative defenses, they were abandoned (see U.S. Bank N.A. v Gonzalez, \T1 A.D.3d 1273, 1275 [2d Dept 2019]; Flagstar Bank v Bellafiore, 94 A.D.3d 1044 [2d Dept 2012]; Wells Fargo Bank Minnesota, N.A v Perez, 41 A.D.3d 590 [2d Dept 2007]). !

Likewise, Plaintiff demonstrated that the counterclaim is insufficiently pled (see Countrywide Home Loans Servicing, L.P. v Vorobyov, supra) and, in any event, it fails to state a cognizable claim j under New York Law (cf. Acres Loan Origination LLC v 170 E. 80th St. Mansion, LLC, Misc3d, 2021 NY Slip Op 32477[U][Sup Ct NY Cty 2021]).

Any assertion the motion must be denied because no discovery has been conducted is unavailing as Defendants have offered nothing to demonstrate Plaintiff is in exclusive possession of facts which would establish a viable defense to Defendants' repayment default (see Island Fed. Credit Union v I&D i Hacking Corp., 194 A.D.3d 482 [1^st Dept 2021]). Moreover, as "the affirmative defenses are precluded,' no discovery could lead to facts that would warrant denial of plaintiffs summary judgment motion" (Bernstein v Dubrovsky, 169 A.D.3d 410 [1^st Dept 2019]).

The branch of Plaintiffs motion for a default judgment against the non-appearing parties is granted (see CPLR §3215; SRMOFII2012-1 Trust v Telia, 139 A.D.3d 599, 600 [1^st Dept 2016]).

The branch of Plaintiff s motion to amend the caption is granted (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 Plaintiffs motion for summary judgment against the appearing parties and for a default judgment against the non-appearing parties is granted; and it is further

ORDERED that the affirmative defenses and counterclaim pled by the appearing Defendants are dismissed; and it is further

ORDERED that Mark McKew, Esq., 1725 York Ave, Ste 29A, New York, New York, 212876-6783 is hereby appointed Referee in accordance with RPAPL § 1321 to compute the amount due to Plaintiff and to examine whether the property identified in the notice of pendency can be sold in parcels;...