Opinion
Index No. 85006/13
11-06-2013
2013 FUNDING LLC, Plaintiff, v. PARK 91 LLC, et al., Defendants.
DECISION/ORDER
HON. CYNTHIA S. KERN, J.S.C.
Recitation, as required by CPLR 2219(a), of the papers considered in the review of this motion for: ___
| Papers | Numbered |
| Notice of Motion and Affidavits Annexed | 1 |
| Answering Affidavits | 2 |
| Cross-Motion and Affidavits Annexed | 3 |
| Answering Affidavits to Cross-Motion | 4 |
| Replying Affidavits | 5 |
| Exhibits | 6 |
Plaintiff commenced the present action for foreclosure of a mortgage. Plaintiff now moves for an order pursuant to CPLR § 3212 granting it summary judgment against defendants Park 91 LLC and Michael Gardner and for an order pursuant to CPLR § 3215 granting default judgment against defendants Lynda Gardner and New York State Department of Taxation and Finance. Additionally, plaintiff seeks an order directing that the caption be amended to remove John Doe as a defendant. Defendants Park 91 LLC, Michael Gardner and Lynda Gardner (collectively referred to herein as "moving defendants") cross-move for an order dismissing the complaint and vacating any notice of pendency. As will be explained more fully below, plaintiff's motion is granted and moving defendants' motion is denied.
The relevant facts are as follows. In February, 2009, defendant Park 91 LLC ("Park 91") borrowed $7 million from Signature Bank ("Signature"). In connection with the loan, it executed a $7 million note in favor of Signature Bank (the "Note") and a supplemental mortgage and consolidation agreement securing the payment of the Note (the "Mortgage"). Additionally, defendant Michael Gardner guaranteed repayment of the loan by executing a guaranty in favor of Signature Bank (the "Guaranty"). Moreover, Mr. Gardner, on behalf of Park 91, executed and delivered to Signature a "Statement of Business Purpose," which stated:
The proceeds of the loan are to be used for the refinancing of existing debt on the premises owned by the Borrower located at 1145 Park Avenue, New York, NY and by the Borrower for business or commercial purposes. The loan proceedings will not be used for personal, family, household or agricultural purposes.Starting May 1, 2012, and thereafter, Park 91 defaulted under the Note by failing to make payment when it became due. On or about March 15, 2013, Signature Bank sold the loan, including the Note, Guaranty and Mortgage to plaintiff.
On a motion for summary judgment, the movant bears the burden of presenting sufficient evidence to demonstrate the absence of any material issues of fact. See Alvarez v. Prospect Hosp., 68 N.Y.2d 320, 324 (1986). Summary judgment should not be granted where there is any doubt as to the existence of a material issue of fact. See Zuckerman v. City of New York, 49 N.Y.2d 557, 562 (1980). Once the movant establishes a prima facie right to judgment as a matter of law, the burden shifts to the party opposing the motion to "produce evidentiary proof in admissible form sufficient to require a trial of material questions of fact on which he rests his claim." Id.
It is well settled that a plaintiff who seeks summary judgment in a foreclosure action establishes a prima facie case for such relief by producing copies of the mortgage, the unpaid note and evidence of a default under the terms thereof. E.g., Red Tulip, LLC v. Neiva, 44 A.D.3d 204 (1st Dept 2007). Once plaintiff establishes its prima facie right to foreclosure, the burden shifts to defendant "to raise a triable issue regarding [its] affirmative defenses and counterclaims in opposition to foreclosure." Id.; see also Mahopac Natl. Bank v. Baisley, 244 A.D.2d 466 (2nd Dept 1997).
In the instant action, plaintiff has established its prima facie right to judgment as a matter of law by producing a copy of the executed Note, Mortgage and Guaranty and the affidavits of James Forie, Senior Vice President of Signature Bank and James Guarino, Manager of plaintiff, attesting to Park 91 and Mr. Gardner's non-payment under the Note and Guaranty.
In opposition, moving defendants have failed to raise a triable issue of fact. Moving defendants do not dispute their nonpayment and default under the Note and Guaranty. Instead, moving defendants argue that the instant action must be dismissed as plaintiff has failed to comply with the requirements of RPAPL §§ 1302, 1303, 1304, 1320 and 3408. Moreover, moving defendants contend that plaintiff may not proceed with foreclosure as Signature, the original holder of the Note, did not properly accelerate the Note, nor has plaintiff demonstrated proper service of the notice of default. However, all of these arguments are without merit.
As an initial matter, RPAPL §§ 1302, 1304 and 3408 are inapplicable to the instant action as plaintiff seeks to foreclose on a commercial mortgage, not on a home loan. Section 1302 explicitly states that it only applies to "[f]oreclosure of high-cost home loans and subprime home loans." Similarly, the notice required under Section 1304 is only required when foreclosing on a "high-cost home loan . . . a subprime home loan or a non-traditional home loan." Additionally, a mandatory settlement conference under Section 3408 is only required in a "residential foreclosure action involving a home loan." Pursuant to Banking Law § 6-1, in order for a loan to qualify as a "home loan" the borrower must be a "natural person" and the debt must be incurred "by the borrower primarily for personal, family, or household purposes." McKinney's Banking Law § 6-1(e)(ii) and (iii). Here, it is undisputed that the Borrower is Park 91, a limited liability company, which is not a natural person. Moreover, in the Statement of Business Purposes provided by Park 91 at the time it took out the loan it explicitly stated that the loan was to be used for "business or commercial purposes" and "the loan proceeds [would] not be used for personal, family, household or agricultural purposes." Accordingly, the loan at issue herein is not a home loan as a matter of law and any assertion by moving defendants to the contrary is unavailing.
Additionally, moving defendants' contention that plaintiff failed to comport with the requirements of RPAPL §§ 1320 and 1303, which do apply to the instant action, is without merit as plaintiff's summons, annexed to its moving papers, contains the exact language, word for word, in bold face type that is required under Section 1320 and is accompanied by the separate notice required under Section 1303.
Finally, moving defendants' contention that summary judgment should be denied and this action dismissed on the ground that Signature's default notice was insufficient and an improper acceleration of the Note is unavailing as the Mortgage did not require prior notice of acceleration or prior demand for payment as a precondition to commencing this foreclosure action. Pursuant to Section 2.1.1.(a) of the Mortgage, nonpayment of any installment of principal or interest constituted an Event of Default and under Section 2.1.2, upon an Event of Default the full amount of the debt "[a]utomatically [became] due." Morever, pursuant to Section 2.4 (a)(iii),upon an Event of Default, the mortgagee could "institute proceedings for the complete foreclosure of this Mortgage . . .." Accordingly, as Park 91's nonpayment is undisputed, it had the right to commence the instant foreclosure proceeding and the sufficiency of the default notice sent by Signature is immaterial.
Based on the foregoing, plaintiff's motion for summary judgment is granted and moving defendants' motion is denied as moot. Additionally, the remaining portions of plaintiff's motion for default against the non-answering defendants and to remove John Doe as a defendant are granted without opposition. Settle Order.
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J.S.C.