US Bank Nat'l Ass'n v. Major Holdings, LLC

• Decision Date: 08 May 2012
• Docket Number: No. 35268/11.,35268/11.
• Citation: 953 N.Y.S.2d 554,2012 N.Y. Slip Op. 50852,35 Misc.3d 1224
• Court: New York Supreme Court
• Parties: US BANK NATIONAL ASSOCIATION, Plaintiff, v. MAJOR HOLDINGS, LLC, Glen Feldman, et als, Defendants.

35 Misc.3d 1224

953 N.Y.S.2d 554

2012 N.Y. Slip Op. 50852

US BANK NATIONAL ASSOCIATION, Plaintiff,

v.MAJOR HOLDINGS, LLC, Glen Feldman, et als, Defendants.

No. 35268/11.

Supreme Court, Suffolk County, New York.

May 8, 2012.

Venable, LLP, New York, for Plaintiff.

Certilman, Balin, Adler, East Meadow, for Defendant.

Mark Cuthbertson, Esq., Huntington, Receiver.

THOMAS F. WHELAN, J.

It is, ORDERED that this motion (No.002) by the plaintiff for an order: (1) awarding it summary judgment against the answering defendants including dismissal of their asserted affirmative defenses; (2) deleting as party defendants the unknown defendants listed in the caption; (3) fixing the defaults in answering of the remaining defendants; and (4) appointing a referee to compute amounts due under the subject note and mortgage is considered under CPLR 3212, 1024, 3215 and RPAPL § 1321 and is granted; and it is further

ORDERED that the plaintiff's pleaded demand for a deficiency judgment against the obligor defendant by assumption is dismissed as the same has been withdrawn.

This action arises out of a July 30, 2004 commercial mortgage loan in the amount of $7,000,000.00 made by predecessors of the plaintiffs to predecessors of defendant, Major Holdings, LLC (hereinafter “Major Holdings”). Major Holdings acquired title to the mortgaged premises on February 4, 2005 and it assumed the obligations of the original borrower under the mortgage note by an assumption agreement dated February 4, 2005. Also executed on that day, was a written guaranty of the obligations of Major Holdings by defendant, Glen Feldman.

Under terms of the July 30, 2004 note and mortgage, the loan matured on August 1, 2009. The full outstanding principal balance of the loan, together with all accrued and unpaid interest thereon and all other sums required by the loan documents, became fully due and owing on the maturity date of August 1, 2009. Following the failure of Major Holdings and its guarantor to make the maturity payment, a notice of default issued from counsel for plaintiff, CW Capital Asset Management, LLC in its capacity as loan servicer for plaintiff, U.S. Bank National Association, as Trustee, successor-in-interest to Bank of America, NA, as trustees, successor by merger to LaSalle Bank National Association, in its capacity as Trustee for the Registered Holders of Greenwich Capital Commercial Funding Corp., Commercial Mortgage Trust 2005–GG3, Commercial Mortgage Pass–Through Certificates Series 2005–GG3, as holder (hereinafter “Trust plaintiff”).

In September of 2009, the plaintiff's counsel and defendant Feldman, on behalf of defendant Major Holdings, entered into a pre-negotiation agreement aimed at attaining some mutually agreeable resolution of the default. This pre-negotiation agreement required that the resolution of issues, if any be reached, had to be reduced to a writing; that the loan documents remained in full force; and that neither the existing defaults nor any rights or remedies possessed by the plaintiffs were waived by the servicer plaintiff's engagement in the discussions and/or settlement negotiations contemplated by the post-default agreement.

The complaint served and filed herein in November of 2011 contains two causes of action. By the First, the plaintiff seeks a judgment of foreclosing the subject mortgage, all subordinate liens and encumbrances, the sale of the mortgaged premises and a deficiency judgment against defendant, Major Holdings. The demand for a deficiency judgment was, however, withdrawn by the plaintiff in its moving papers due to the existence of a non-recourse clause in the original loan documents ( see p. 21 of plaintiff's Memorandum of Law in support of its motion). By the Second cause of action, the plaintiff seeks recovery from defendant Feldman of any counsel fees remaining unpaid after application of the net proceeds of the foreclosure sale.

Issue was joined by the service of a joint answer of defendants Major Holdings and Feldman. Set forth therein, are some nine affirmative defenses but no counterclaims. In January of 2012, the plaintiff moved, ex-parte, for the appointment of a receiver which was granted on January30, 2012.

By the instant motion (# 001), the plaintiff seeks summary judgment against the answering defendants, Major Holdings and Feldman, including the dismissal of their affirmative defenses. The plaintiff also seeks an order deleting as party defendants, the unknown defendants. The plaintiff further demands an order fixing the defaults in answering of the remaining defendants and an order appointing a referee to compute amounts due under the subject note and mortgage.

In support of its motion, the plaintiffs rely upon the language of the mortgage indenture, the assumption agreement and the written guaranty. In ¶ 1(d) of the consolidated mortgage of July 30, 2004, the original borrower expressly agreed that “the Note, this Mortgage and the other Loan documents are not subject to any right of recession, set-off, counterclaim or defense, including the defense of usury, nor would the operation of the terms of the Note, Mortgage or the other Loan documents, or the exercise of any right thereunder, render this Mortgage unenforceable, in whole or in part, or subject to any right of recession, set-off counterclaim or defense, including the defense of usury”. Major Holdings assumed the obligations of the mortgagor in the assumption agreement executed by it in February of 2005, at the time of its acquisition of title to the mortgaged premises, which obligation, defendant Feldman guaranteed in his written guaranty of the same date. The written guaranty of the obligations of Major Holdings executed by defendant Feldman in consideration of the assumption agreement, described such guaranty as “an irrevocable, absolute continuing guaranty of payment and performance and not a guaranty of collection” which “shall not be reduced by reason of any existing or future offset, claim or defense of Borrower or any other persons” ( see Guaranty attached as Exhibit 1–k to Complaint ¶¶ 1.3 & 1.4). The plaintiff contends that by virtue of these contractual waivers of defenses, the answering defendants are precluded from asserting the defenses set forth in their answer, including the lack of standing defense asserted in opposition to the instant motion. The plaintiff thus claims that all affirmative defenses asserted herein by the answering defendants are without merit and that the plaintiff is entitled to the award of summary judgment demanded by it on this motion.

The answering defendants oppose solely on the grounds asserted in their first affirmative defense, namely, that the servicer plaintiff lacks standing to prosecute this action. For the reasons stated, the court rejects this defense and grants the plaintiff's motion to the extent set forth below.

It is well established that in an action to foreclose a mortgage, a prima facie case is made by the plaintiff's production of the note and mortgage and proof on the part of the defendant/mortgagor and any guarantors of a default in payment or any other material term set forth in the mortgage ( see 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] ). Here, the plaintiff established its entitlement to summary judgment on its complaint by its production of the consolidated note and mortgage, the assumption agreement executed by Major Holdings and the written guaranty of defendant Feldman, together with due proof of the defaults in payment of amounts due and owing thereunder.

It was thus incumbent upon the answering defendants to submit proof sufficient to raise a genuine question of fact casting doubt on the plaintiff's prima facie showing or implicating support for one or more of the affirmative defenses asserted in their answer ( see Grogg Assocs. v. South Rd. Assocs., 74 AD3d 1021, 907 N.Y.S.2d 22 [2d Dept 2010]; Washington Mut. Bank v. O'Connor, 63 AD3d 832, 880 N.Y.S.2d 696 [2d Dept 2009] ). The opposing papers submitted by the answering defendants were insufficient in this regard.

It is now well established that the issue of a plaintiff's standing is not an issue concerning subject matter jurisdiction, but instead, is an affirmative defense in bar which may be waived by a defendant possessed of such defense ( see Wells Fargo Bank Minn, NA v. Mastropaolo, 42 AD3d 239, 837 N.Y.S.2d 247 [2d Dept 2007]; see also HSBC Bank USA, NA v. Schwartz, 88 AD3d 961, 931 N.Y.S.2d 528 [2 Dept 2011]; CitiMortgage, Inc. v. Rosenthal, ...