Opinion
12299/10
09-08-2011
Signature Bank,, Plaintiff, v. 1775 East 17th St., LLC, joseph tyrnauer, martin daskal, new york state environmental control board, new york state department of taxation and finance, new york city department of finance, john doe No.1 through john doe #10, the last ten names being fictitious, and unknown to plaintiff, the persons or parties intended being the tenants, occupants,persons or corporations, if any, having an interest in or lien upon the premises, described in the complaint,, Defendants.
Attorney for Plaintiff: Sabbir Ahmed, Esq. Daniel Levine, Esq. Deutsch and Schneider, LLP Attorney for Defendant 1775 E. 17th St., LLC and Daskal: Michael Korsinsky, Esq. Korsinsky & Klein, LLP Attorney for Defendant 1775 E. 17th St., LLC and Tyrnauer: Steven Weg, Esq. Goldberg & Rimberg PLLC
Attorney for Plaintiff: Sabbir Ahmed, Esq. Daniel Levine, Esq. Deutsch and Schneider, LLP
Attorney for Defendant 1775 E. 17th St., LLC and Daskal: Michael Korsinsky, Esq. Korsinsky & Klein, LLP
Attorney for Defendant 1775 E. 17th St., LLC and Tyrnauer: Steven Weg, Esq. Goldberg & Rimberg PLLC
Carolyn E. Demarest, J.
Upon the foregoing papers, in this action to foreclose a consolidated mortgage on commercial real property, 1775 Capital Associates, LLC moves for an order: (1) granting it summary judgment, pursuant to CPLR 3212, in its favor on the complaint against defendants 1775 East 17th St., LLC, Joseph Tyrnauer, and Martin Daskal (collectively, defendants), and striking their answers, (2) appointing a referee, pursuant to RPAPL 1321, to hear and compute the amount due and owing to it on the mortgage and to ascertain and determine whether the premises can be sold as one parcel, (3) amending the caption, pursuant to CPLR 3025, by substituting it in place and stead of the plaintiff, Signature Bank, (4) striking the discovery demands of Martin Daskal and 1775 East 17th St., LLC, and of Joseph Tyrnauer and 1775 East 17th St., LLC, pursuant to CPLR 3214 (b), and (5) pursuant to CPLR 603, severing the five cross claims interposed in the answer of Martin Daskal and 1775 East 17th St., LLC as against Joseph Tyrnauer. Martin Daskal moves for an order, pursuant to CPLR 3025 (b), for leave to amend his answer, which he asserts on his individual behalf and on behalf of 1775 East 17th St., LLC.
775 Capital Associates, LLC's motion, insofar as it sought an order appointing a receiver of rents and profits of the property, pursuant to CPLR 6401, was granted by the court on April 29, 2011, with an order appointing the receiver dated May 12, 2011. The oath of the receiver was executed on July 11, 2011.
The subject commercial real property (the property) is a multi-unit dwelling consisting of six separate apartments, which is located at 1775 East 17th Street, in Brooklyn, New York. Joseph Tyrnauer and Martin Daskal formed 1775 East 17th St., LLC, which holds title to the property, to acquire, own, develop, and manage the property, which was to be converted into a condominium building. Martin Daskal asserts that he personally invested his own money in 1775 East 17th St., LLC, and that Joseph Tyrnauer did not invest his own money in 1775 East 17th St., LLC (except for half of the purchase price of the property), and that Joseph Tyrnauer, instead, agreed to provide his labor and expertise to the task of developing and managing the property. Pursuant to the Operating Agreement of 1775 East 17th St., LLC, Martin Daskal and Joseph Tyrnauer are 1775 East 17th St., LLC's sole members.
On or about May 25, 2006, Signature Bank, as lender, loaned $2,350,000 to 1775 East 17th St., LLC, as borrower, as a building loan (the Loan) for the development of the property. The Loan was evidenced by a Building Loan Promissory Note (the Note), dated May 25, 2006, in the amount of $2,350,000, in favor of Signature Bank, executed by Joseph Tyrnauer and Martin Daskal, as the members of 1775 East 17th St., LLC, on behalf of 1775 East 17th St., LLC. In connection with the Loan, 1775 East 17th St., LLC, as mortgagor, and Signature Bank, as mortgagee, also entered into a Building Loan Mortgage and Security Agreement (the Building Loan Mortgage), dated May 25, 2006 and recorded on July 18, 2006. The Building Loan Mortgage secured $2,142,531.36 of the total $2,350,000 amount of the Loan.
In connection with the Loan, Signature Bank, as assignee, also took an Assignment of Mortgage, which was dated May 25, 2006, and recorded on July 18, 2006, from Astoria Federal Savings and Loan Association, as assignor, of certain mortgages on the property, which were consolidated to form a single lien in the amount of $207,468.64. These mortgages consisted of a mortgage dated October 24, 1996 made by 1775 East 17th St., LLC to Green Point Bank in the amount of $185,500 and recorded on November 6, 1996, which was assigned pursuant to an Assignment of Mortgage dated February 4, 2000 made by Green Point Bank to Astoria Federal Savings and Loan Association and recorded on March 22, 2000, and a consolidated mortgage dated February 8, 2000 made by 1775 East 17th St., LLC to Astoria Federal Savings and Loan Association in the amount of $58,768.33 and recorded on March 22, 2000, which, by its terms, was consolidated with mortgage no. 1 to form a single lien in the amount of $228,750 (of which $207,468.64 remained due and owing).
By a Consolidation, Extension and Modification Agreement between Signature Bank and 1775 East 17th St., LLC, dated May 25, 2006 and recorded on July 18, 2006, the May 25, 2006 mortgage in the amount of $2,142,531.26 was consolidated with the two assigned consolidated mortgages which then had an unpaid principal sum due and owing of $207,468.64, to form a single first mortgage lien upon the property in the principal sum of $2,350,000 (the Consolidated Mortgage). Joseph Tyrnauer and Martin Daskal each executed a General Guarantee, dated May 25, 2006, in favor of Signature Bank, guaranteeing the obligations of 1775 East 17th St., LLC in connection with the Loan. By an Assignment of Leases dated May 25, 2006 and recorded on July 18, 2006, 1775 East 17th St., LLC also assigned to the rents and profits of the property to Signature Bank.
By a letter agreement dated May 21, 2008, Signature Bank extended the maturity date of the Loan from June 1, 2008 to December 1, 2008. The maturity date of the Loan was further extended by Signature Bank from December 1, 2008 to December 1, 2013 by a Commercial Mortgage Note and an accompanying Consolidation, Modification and Extension Agreement, both dated November 25, 2008.
1775 East 17th St., LLC failed to comply with the conditions of the Note and Consolidated Mortgage by failing to pay the monthly mortgage payment which became due on January 1, 2010, and subsequent thereto, or within 30 days thereafter. Consequently, Signature Bank, by a Notice of Default and Acceleration letter dated February 12, 2010, notified 1775 East 17th St., LLC that it was in default of its obligations to it with respect to the Loan in the principal amount of $2,350,000, and that it was declaring the entire amount of the indebtedness due.
On May 18, 2010, Signature Bank, who was then the holder and owner of the Consolidated Mortgage and Note, filed this action and a notice of pendency. Signature Bank's complaint seeks to foreclose the mortgaged property, and a judgment that Joseph Tyrnauer and Martin Daskal be required to pay the residue of any debt remaining unsatisfied after a foreclosure sale of the property.
Both Joseph Tyrnauer and Martin Daskal, who, as noted above, are members of 1775 East 17th St., LLC, claim to represent 1775 East 17th St., LLC by their separate counsel. An answer dated August 6, 2010 was interposed by Joseph Tyrnauer and 1775 East 17th St., LLC, by their counsel, Goldberg & Rimberg PLLC, in which they deny the material allegations of the complaint and raise 12 affirmative defenses. Joseph Tyrnauer and 1775 East 17th St., LLC also served a notice of deposition dated August 6, 2010 on Signature Bank. An answer dated September 27, 2010 was separately interposed by Martin Daskal and 1775 East 17th St., LLC by their then counsel, Wasserman Grubin & Rogers LLP, which denies the material allegations in the complaint, raises six affirmative defenses, and asserts five cross claims as against Joseph Tyrnauer. Martin Daskal and 1775 East 17th St., LLC also served a notice of deposition and notice for discovery and inspection, both dated September 27, 2010, on Signature Bank.
By an Allonge to Note and Assignment of Mortgage, both dated September 8, 2010 and recorded on September 28, 2010, Signature Bank assigned the Note and Consolidated Mortgage to 1775 Capital Associates, LLC. Signature Bank, by an Assignment of Assignment of Leases dated September 8, 2010 and recorded on September 28, 2010, also assigned the assignment of leases to 1775 Capital Associates, LLC.
In support of its motion, 1775 Capital Associates, LLC has submitted the Note, the Consolidated Mortgage, the other relevant documents (discussed above) related to the Loan, the Allonge to Note, and the Assignment of Mortgage. 1775 Capital Associates, LLC has also submitted the affidavit of its president and manager, James H. Ross. James H. Ross, in his sworn affidavit, attests that 1775 East 17th St., LLC has defaulted on the Note and Consolidated Mortgage, and that there is now due on account of the Consolidated Mortgage the principal balance in the sum of $2,299,930.89, with accrued interest thereon from January 1, 2010, which interest computed to February 10, 2010 amounts to $29,071.68, making a total due, as of February 10, 2010, of $2,329.002.47.
By presenting the Consolidated Mortgage and unpaid Note, along with evidence of 1775 East 17th St., LLC's default,1775 Capital Associates, LLC has established its prima facie entitlement to judgment as a matter of law (see Washington Mut. Bank, F.A. v O'Connor, 63 AD3d 832, 833 [2009]; Daniel Perla Assoc., LP v 101 Kent Assoc., Inc., 40 AD3d 677, 677 [2007]; US Bank Trust N.A. Trustee v Butti, 16 AD3d 408, 408 [2005]; Republic Natl. Bank of NY v O'Kane, 308 AD2d 482, 482 [2003]; Hypo Holdings v Chalasani, 280 AD2d 386, 387 [2001]; Marine Midland Bank v Micheli Contr. Corp., 95 AD2d 946, 947 [1983]). Thus, the burden shifted to defendants to produce evidentiary proof, in admissible form, sufficient to raise a triable issue of fact as to their defenses (see Washington Mut. Bank, F.A., 63 AD3d at 833; US Bank Trust N.A. Trustee,16 AD3d at 408).
Joseph Tyrnauer has not submitted opposition papers to 1775 Capital Associates, LLC's motion. Martin Daskal has submitted opposition papers by his and 1775 East 17th St., LLC's new counsel for him, Korsinsky & Klein, LLP. On April 29, 2011, this case was adjourned based upon Martin Daskal's intent to seek amendment of his and 1775 East 17th St., LLC's answer. On May 2, 2011, Martin Daskal, by his counsel, Michael Korsinsky, Esq., made the instant motion to amend his and 1775 East 17th St., LLC's answer.
On February 23, 2011, the return date for 1775 Capital Associates, LLC's motion, an attorney from Wasserman, Grubin & Rogers, LLP appeared and requested an adjournment of the motion because it was being replaced as counsel for Martin Daskal and1775 East 17th St., LLC. 1775 Capital Associates, LLC's attorney consented to the adjournment, and the court adjourned the motion to April 6, 2011. On March 29, 2011, Martin Daskal, by his new attorney, Michael Korsinsky, Esq., of Korsinsky & Klein, LLP, interposed opposition papers, including a memorandum of law, to 1775 Capital Associates, LLC's motion. Thereafter, Michael Korsinsky, Esq. represented Martin Daskal and 1775 East 17th St., LLC on the record. On May 17, 2011, Wasserman, Grubin & Rogers, LLP filed a motion seeking to be relieved as counsel for Martin Daskal and 1775 East 17th St., LLC and for a 30-day stay of the foreclosure to permit them to retain new counsel. On June 1, 2011, that motion relieving Wasserman, Grubin & Rogers, LLP as counsel for Martin Daskal and1775 East 17th St., LLC was granted without a stay since Michael Korsinsky, Esq. had already appeared on behalf of Martin Daskal and 1775 East 17th St., LLC.
Since the issue of whether1775 Capital Associates, LLC's summary judgment motion should be granted turns upon the viability of Martin Daskal and 1775 East 17th St., LLC's defenses, the court must first address Martin Daskal's motion to amend his and 1775 East 17th St., LLC's answer. Martin Daskal, in his motion for leave to amend his and 1775 East 17th St., LLC's answer, seeks to add five affirmative defenses and a first counterclaim against 1775 Capital Associates, LLC.
Although pursuant to CPLR 3025 (b), leave to amend a pleading should generally be freely granted absent prejudice to the opposing party (see CPLR 3025 [b]; Edenwald Contr. Co. v City of New York, 60 NY2d 957, 959 [1983]; Charleson v City of Long Beach, 297 AD2d 777, 778 [2002]), such leave should be denied where the proposed amendment is palpably insufficient as a matter of law or is totally devoid of merit (see Mortgage Elec. Registration Sys., Inc. v Reid, 85 AD3d 880, 881 [2011]; Scofield v DeGroodt, 54 AD3d 1017, 1018 [2008]; Lucido v Mancuso, 49 AD3d 220, 229 [2008]; Buckholz v Maple Garden Apts., LLC, 38 AD3d 584, 585 [2007]; Morton v Brookhaven Mem. Hosp., 32 AD3d 381, 381 [2006]; Ruddock v Boland Rentals, 5 AD3d 368, 370 [2004]; AYW Networks v Teleport Communications Group, 309 AD2d 724, 725 [2003]; Leszczynski v Kelly & McGlynn, 281 AD2d 519, 420 [2001]; McKiernan v McKiernan, 207 AD2d 825, 825 [1994]). 1775 Capital Associates, LLC contends that each of Martin Daskal's affirmative defenses and his counterclaim, which he seeks to add to his and 1775 East 17th St., LLC's answer by his motion to amend it, are insufficient as a matter of law and totally devoid of merit.
Martin Daskal seeks to add a seventh affirmative defense alleging that because of an alleged connection and affiliation between Joseph Tyrnauer and 1775 Capital Associates, LLC, the September 8, 2010 assignment of the Note and Consolidated Mortgage by Signature Bank to 1775 Capital Associates, LLC, as assignee, was illegal and improper, and, thus, invalid and void, and was not a bona fide transaction.
In response to the allegations set forth in Martin Daskal's proposed seventh affirmative defense, 1775 Capital Associates, LLC has submitted the sworn affidavit of James H. Ross (who, as noted above, is its president). In his affidavit, James H. Ross sets forth that 1775 Capital Associates, LLC has one manager, ICC Venture Corp., and two members, ICC Performance LP and 1775 Member LLC. James H. Ross specifically attests that Joseph Tyrnauer has no interest, economic or otherwise, in 1775 Capital Associates, LLC, that Joseph Tyrnauer is not a member, manager, shareholder, or officer of 1775 Capital Associates, LLC, and that Joseph Tyrnauer has no contractual relationship with 1775 Capital Associates, LLC or any of its subsidiaries. James H. Ross also sets forth that he is the president of ICC Venture Corp., which is the sole manager of 1775 Capital Associates, LLC, and that ICC Venture Corp is the general partner to ICC Performance LP. James H. Ross further attests that Joseph Tyrnauer has no interest, economic or otherwise, in ICC Venture Corp. or ICC Performance LP, and that Joseph Tyrnauer is not a member, shareholder, or officer of ICC Venture Corp. or ICC Performance LP, and has no contractual relationship with ICC Venture Corp., ICC Performance LP, or any or their subsidiaries. James H. Ross also affirms, to the best of his knowledge, that Joseph Tyrnauer does not have any interest in 1775 Member, LLC in its capacity as a member of 1775 Capital Associates, LLC.
In addition, 1775 Capital Associates, LLC has submitted the sworn affidavit of Aaron Klein, who is the manager of 1775 Member, LLC (which, as noted above, is one of the members of 1775 Capital Associates, LLC). In his affidavit, Aaron Klein also sets forth that 1775 Capital Associates, LLC has one manager, ICC Venture Corp., and two members, ICC Performance LP and 1775 Member LLC. Aaron Klein similarly attests that Joseph Tyrnauer has no interest, economic or otherwise, in 1775 Capital Associates, LLC, that Joseph Tyrnauer is not a member, manager, shareholder, or officer of 1775 Capital Associates, LLC, and that Joseph Tyrnauer has no contractual relationship with 1775 Capital Associates, LLC or any of its subsidiaries. Aaron Klein further attests, as the manager of 1775 Member, LLC, that Joseph Tyrnauer has no interest, economic or otherwise, in 1775 Member, LLC, that Joseph Tyrnauer is not a member, manager, shareholder, or officer of 1775 Member, LLC, and that Joseph Tyrnauer has no contractual relationship with 1775 Member, LLC or any of its subsidiaries. Aaron Klein also affirms, to the best of his knowledge, that Joseph Tyrnauer does not have any interest in ICC Performance LP or ICC Venture Corp.
Thus, based upon these affidavits, 1775 Capital Associates, LLC has established that Joseph Tyrnauer does not have an interest in 1775 Capital Associates, LLC or its manager or members. In support of his proposed seventh cause of action, Martin Daskal does not address the sworn assertions contained in these affidavits. Martin Daskal merely speculates that Joseph Tyrnauer is somehow associated with or has an interest in 1775 Capital Associates, LLC. As support for this speculation, Martin Daskal relies upon the fact that the title bill for recording the Assignment of Mortgage was sent by the title company to 1775 East 17th St., LLC. Martin Daskal asserts that while it is possible that the title company may have simply made a clerical error, he surmises that the reason why it sent the bill for the Assignment of Mortgage to Joseph Tyrnauer was because Joseph Tyrnauer is associated with 1775 Capital Associates, LLC and Joseph Tyrnauer instructed it to have the bill sent to 1775 East 17th St., LLC.
The fact that this bill was sent by the title company to 1775 East 17th St., LLC, however, merely evidences nothing other than confusion on the part of the title company. It does not constitute evidence that Joseph Tyrnauer has an interest in 1775 Capital Associates, LLC, particularly in view of the sworn affidavits of James H. Ross and Aaron Klein, which specifically attest to Joseph Tyrnauer's lack of any interest in 1775 Capital Associates, LLC. As 1775 Capital Associates, LLC explains, the title bill could very likely have been sent to 1775 East 17th St., LLC based simply upon the fact that it is the owner of the property. Furthermore, as 1775 Capital Associates, LLC points out, there is no showing that 1775 East 17th St., LLC or Joseph Tyrnauer actually paid the bill to the title company.
Martin Daskal further asserts that he finds it to be suspicious that all of the assignment documents from Signature Bank to 1775 Capital Associates, LLC do not contain any information as to who are 1775 Capital Associates, LLC's officers, principals, or managers, and that the signature page of the Mortgage Loan Purchase Agreement, dated September 8, 2010, in which 1775 Capital Associates, LLC purchased the Consolidated Mortgage, Note, Guaranty, Assignment of Leases, and Additional Loan Documents for $1,875,000, from Signature Bank, only contains the title of an authorized signatory with an illegible signature on behalf of 1775 Capital Associates, LLC. This document, however, was executed by James J. Campagno, as vice-president of Signature Bank.
Moreover, there is no legal requirement or practice within the mortgage industry that an Assignment of Mortgage (by which 1775 Capital Associates, LLC acquired the Consolidated Mortgage) be executed by the assignee, much less name the officers, principals, or managers of the assignee. Furthermore, there is also no requirement that there even needed to be a Mortgage Loan Purchase Agreement for the loan transfer to be valid, in view of 1775 Capital Associates, LLC's possession of the Assignment of Mortgage and Allonge to Note.
Martin Daskal (in his affidavit which was submitted in opposition to 1775 Capital Associates, LLC's motion) further speculates that the assignment to 1775 Capital Associates, LLC was Joseph Tyrnauer's "backdoor approach to obtaining the [p]roperty from [him]." Martin Daskal claims that Joseph Tyrnauer has previously fraudulently tampered with other business records in the past for his personal benefit, and he has attached a copy of a contract (unrelated to this action), which was submitted by Joseph Tyrnauer in another case, involving a construction project owned by 333-345 Greene LLC, of which Martin Daskal and Joseph Tyrnauer were members (Davis v 333-345 Green LLC, Sup Ct, Kings County, index No. 33929/07), and a copy of the same contract, which shows a different contract amount. Martin Daskal asserts that these contracts, which show differing contract amounts, constitute evidence that Joseph Tyrnauer falsifies business records to suit his needs. Such assertion, however, is irrelevant to the present action as it does not show any impropriety in the assignment to 1775 Capital Associates, LLC or any involvement by Joseph Tyrnauer in such assignment.
Thus, in response to 1775 Capital Associates, LLC's evidentiary showing that Joseph Tyrnauer has no interest in it, Martin Daskal has only submitted conjecture and speculation, which is devoid of any evidentiary proof whatsoever sufficient to raise a triable issue of fact with respect to Martin Daskal's allegation of such a claimed interest of Joseph Tyrnauer in 1775 Capital Associates, LLC. Therefore, Martin Daskal's allegations regarding such a claimed interest by Joseph Tyrnauer in 1775 Capital Associates, LLC, as set forth in his proposed seventh cause of action, fail to constitute a viable defense to 1775 Capital Associates, LLC's instant foreclosure action. Consequently, Martin Daskal's motion for leave to amend his and 1775 East 17th St., LLC's answer to assert this proposed seventh defense must be denied (see Mortgage Elec. Registration Sys., Inc., 85 AD3d at 881; Scofield, 54 AD3d at 1018; Morton, 32 AD3d at 381).
Martin Daskal also seeks to add an eighth affirmative defense to his and 1775 East 17th St., LLC's answer, alleging that 1775 Capital Associates, LLC cannot prove that it is the owner of the Note and Consolidated Mortgage. Such proposed eighth affirmative defense alleges that the signatures of the various entity documents of 1775 Capital Associates, LLC do not match those signatures on the assignment of the Note and Consolidated Mortgage, and that since 1775 Capital Associates, LLC cannot show that it presently owns the Note and Consolidated Mortgage, it lacks legal capacity to bring this foreclosure action. Such proposed eighth affirmative defense further alleges that 1775 Capital Associates, LLC is not, in fact, the holder in due course of the Consolidated Mortgage and Note, and, therefore, has no standing to assume the interests of Signature Bank in this action.
With respect to the assignment of the Consolidated Mortgage and Note to 1775 Capital Associates, LLC, it is noted that "[i]n a mortgage foreclosure action, a plaintiff has standing where it is both the holder or assignee of the subject mortgage and the holder or assignee of the underlying note at the time the action is commenced" (U.S. Bank, N.A. v Collymore, 68 AD3d 752, 753 [2009]; see also Mortgage Elec. Registration Sys., Inc. v Coakley, 41 AD3d 674, 674 [2007]; Federal Natl. Mtge. Assn. v Youkelsone, 303 AD2d 546, 546-547 [2003]; First Trust Natl. Assn. v Meisels, 234 AD2d 414, 414 [1996]). Here, Signature Bank was the holder of the Note and Consolidated Mortgage at the time this action was commenced, and, thus, it had standing to bring this action.
"A mortgage can be assigned in two ways - by the delivery of the bond and mortgage by the assignor to the assignee with the intention that all ownership interest be thereby transferred . . . or by a written instrument of assignment" (Deutsche Bank Trust Co. Ams. v Peabody, 2008 NY Slip Op 51286[U], *2 [Sup Ct, Saratoga County 2008]). Thus, "[e]ither a written assignment of the underlying note or the physical delivery of the note . . . is sufficient to transfer the obligation, and the mortgage passes with the debt as an inseparable incident" (U.S. Bank, N.A., 68 AD3d at 754; see also Weaver Hardware Co. v Solomovitz, 235 NY 321, 331-332 [1923]; Payne v Wilson, 74 NY 348, 354-355 [1878]; LaSalle Bank Natl. Assn. v Ahearn, 59 AD3d 911, 912 [2009]; Mortgage Elec. Registration Sys., Inc., 41 AD3d at 674; Flyer v Sullivan, 284 App Div 697, 699 [1954]).
Here, 1775 Capital Associates, LLC is an assignee of the Consolidated Mortgage and the Note by virtue of the Assignment of Mortgage dated September 8, 2010, and the Allonge to the Note which indicates the transfer of the debt to 1775 Capital Associates, LLC. In addition, James H. Ross and Aaron Klein, in their affidavits, attest that at the time the Consolidated Mortgage was assigned and the Note endorsed over to 1775 Capital Associates, LLC, the Consolidated Mortgage and the Note were also physically delivered to 1775 Capital Associates, LLC, and that 1775 Capital Associates, LLC remains in physical possession of these documents. Thus, 1775 Capital Associates, LLC has obtained standing, as an assignee of the Consolidated Mortgage and the Note, to continue this foreclosure action by both written assignment and physical delivery of the Consolidated Mortgage and the Note.
Therefore, 1775 Capital Associates, LLC has demonstrated that Martin Daskal's proposed eighth affirmative defense, which challenges the substantive validity of the assignment of the Consolidated Mortgage and the Note to 1775 Capital Associates, LLC, is devoid of merit. Consequently, Martin Daskal's motion, insofar as it seeks leave to add this eighth affirmative defense, must be denied (see Mortgage Elec. Registration Sys., Inc., 85 AD3d at 881; Blueberry Invs. Co. v Ilana Realty, 184 AD2d 906, 907 [1992]).
Martin Daskal further seeks to add a ninth affirmative defense to his and 1775 East 17th St., LLC's answer, alleging that Joseph Tyrnauer had a fiduciary duty to act on behalf of him and 1775 East 17th St., LLC, and that to the extent that Joseph Tyrnauer obtained any interests, directly or indirectly, in the Consolidated Mortgage and/or the Note, it was done on behalf of, and for his and 1775 East 17th St., LLC's benefit. This proposed ninth affirmative defense further alleges that as a result, 1775 Capital Associates, LLC cannot maintain this foreclosure action against Martin Daskal, 1775 East 17th St., LLC, and Joseph Tyrnauer. Since the court finds that Martin Daskal's allegations that Joseph Tyrnauer has an interest in 1775 Capital Associates, LLC have been refuted by 1775 Capital Associates, LLC's evidentiary showing, this proposed ninth affirmative defense is patently lacking in merit, and Martin Daskal's motion for leave to amend Martin Daskal and 1775 East 17th St., LLC's answer to assert it must be denied (see Blueberry Invs. Co.,184 AD2d at 907).
Martin Daskal additionally seeks to add a tenth affirmative defense to his and 1775 East 17th St., LLC's answer. Martin Daskal's proposed tenth affirmative defense alleges that 1775 Capital Associates, LLC has failed to amend the complaint to reflect 1775 Capital Associates, LLC's allegations that it is, in fact, the owner and assignee of the Note and the Consolidated Mortgage, and, that, therefore, it has no standing to assume the interests of Signature Bank in this action.
It is well settled, however, that an assignee of a mortgage can continue an action in the name of the original mortgagee, even in the absence of a formal substitution (see CPLR 1018). Thus, there is no merit to Martin Daskal's allegation in his proposed tenth affirmative defense that 1775 Capital Associates, LLC may not properly proceed with this action due to its failure to amend the complaint (see Central Fed. Sav. v 405 W. 45th St., 242 AD2d 512, 512 [1997]). Therefore, Martin Daskal's motion, insofar as it seeks leave to amend his and 1775 East 17th St., LLC's answer to assert this proposed tenth affirmative defense, must be denied (see Blueberry Invs. Co.,184 AD2d at 907). Furthermore, insofar as 1775 Capital Associates, LLC's motion seeks an order of substitution, amending the caption to substitute it in place and stead of Signature Bank, as the plaintiff herein, such an order shall be granted (see CPLR 1018,1021).
Martin Daskal also seeks to add an eleventh affirmative defense to his and 1775 East 17th St., LLC's answer. Martin Daskal's proposed eleventh affirmative defense alleges that Signature Bank and/or its assignee has failed to name necessary parties herein. However, there is no showing of an absence of any necessary party, and Martin Daskal does not allege what necessary party Signature Bank or 1775 Capital Associates, LLC has failed to name. Thus, Martin Daskal's proposed eleventh affirmative defense lacks merit, and leave to assert it must be denied (see Blueberry Invs. Co.,184 AD2d at 907).
In addition, Martin Daskal seeks to add a first counterclaim against 1775 Capital Associates, LLC, which asserts that in the event that the court deems the assignment to 1775 Capital Associates, LLC valid, then, as a result of Joseph Tyrnauer's alleged affiliation with1775 Capital Associates, LLC or of any interests he obtained in 1775 Capital Associates, LLC, a judgment must be rendered, declaring that Joseph Tyrnauer acted on behalf of 1775 East 17th St., LLC, that 1775 East 17th St., LLC is, in fact, the assignee of the Loan, and that he (Martin Daskal), therefore, has obtained a 50% ownership interest in the assigned Loan. Since, as noted above, 1775 Capital Associates, LLC's evidentiary showing has established the lack of an affiliation between it and Joseph Tyrnauer, such proposed counterclaim is devoid of merit and leave to amend Martin Daskal and 1775 East 17th St., LLC's answer to assert it must be denied (see Mortgage Elec. Registration Sys., Inc., 85 AD3d at 881; Blueberry Invs. Co., 184 AD2d at 907).
Thus, since the court finds that Martin Daskal's proposed affirmative defenses and counterclaim are patently devoid of merit and insufficient to defeat this foreclosure action, and that Martin Daskal's motion to amend his and 1775 East 17th St., LLC's answer must be denied, it must address whether any triable issues exist as to the denials and affirmative defenses raised in Martin Daskal and 1775 East 17th St., LLC's original answer.
Martin Daskal and 1775 East 17th St., LLC's answer contains merely general denials, which are insufficient to raise a triable issue of fact and defeat 1775 Capital Associates, LLC's motion for summary judgment (see Matter of Gruen v Deyo, 218 AD2d 865, 866 [1995]; Stern v Stern, 87 AD2d 887, 887 [1982]). Moreover, Martin Daskal, in his opposition papers, has admitted that the Consolidated Mortgage and Note are in default.
Martin Daskal and 1775 East 17th St., LLC's first affirmative defense alleges that Signature Bank claims are barred by the doctrine of unclean hands, waiver, laches, and estoppel. Martin Daskal, however, fails to provide any specific factual allegations whatsoever in support of this defense. Thus, such defense must be stricken (see Jo Ann Homes at Bellmore v Dworetz, 25 NY2d 112, 122 [1969]; New York State Mtge. Loan Enforcement & Admin. Corp. v North Town Phase II Houses, 191 AD3d 151, 152 [1993]; Federal Land Bank of Springfield v Azapian, 98 AD2d 760, 760 [1983]).
Martin Daskal and 1775 East 17th St., LLC's second affirmative defense asserts that Signature Bank has failed to mitigate their damages. Such defense is wholly devoid of merit as Signature Bank timely notified defendants of 1775 East 17th St., LLC's default and its intent to accelerate the amount due under the Note. Therefore, the striking of this defense is warranted.
Martin Daskal and 1775 East 17th St., LLC's third affirmative defense alleges that the claims asserted by Signature Bank are barred in whole or in part by the express and/or implied terms of the various agreements among Signature Bank, 1775 East 17th St., LLC, Joseph Tyrnauer, and Martin Daskal. This defense lacks any specific factual allegations to support it, and Martin Daskal does not pursue this defense in his opposition papers. Consequently, this defense must be stricken.
Martin Daskal and 1775 East 17th St., LLC's fourth affirmative defense asserts that Signature Bank is in breach of the covenant of good faith and fair dealing owed to 1775 East 17th St., LLC and Martin Daskal and inherent in the agreements between them by, among other things, failing to timely issue the necessary funding for work completed on the project, failing to negotiate to extend the maturity dates, and/or failing to negotiate a workout agreement in good faith and in a timely fashion. Martin Daskal, however, in his opposition, papers, does not contend that Signature Bank breached any obligation to issue funding with respect to the project. In addition, 1775 Capital Associates, LLC was under no obligation to renegotiate the terms of the Note or the Consolidated Mortgage to extend the maturity dates or to negotiate a workout agreement, and its failure to do so does not constitute a defense to this foreclosure action. This defense must, therefore, be stricken.
Martin Daskal and 1775 East 17th St., LLC's fifth affirmative defense alleges that the claims asserted against Martin Daskal are barred in whole or in part because the alleged damages sustained by Signature Bank were the result of the wrongful conduct and negligence of Joseph Tyrnauer, as set forth in Martin Daskal's complaint in the action entitled Daskal v Tyrnauer (Sup Ct, Kings County, index No. 31074/09) and the counterclaim set forth in Martin Daskal's answer in the action entitled Tyrnauer v Daskal (Sup Ct, Kings County, index No. 28384/09). Such claims by Joseph Tyrnauer in these other actions (which, as discussed below, are also the subject of Joseph Tyrnauer's cross claims), however, deal with the internal strife between Martin Daskal and Joseph Tyrnauer and do not relate to 1775 East 17th St., LLC's undisputed default.
Specifically, Martin Daskal, in his opposition papers, states that Joseph Tyrnauer and Martin Daskal opened a bank account at Signature Bank in accordance with section 5 of 1775 East 17th St., LLC's Operating Agreement, into which all of 1775 East 17th St., LLC's monies were to be deposited and from which its debts were to be paid. Martin Daskal asserts that Joseph Tyrnauer handled 1775 East 17th St., LLC's finances and misrepresented the true cost of construction in connection with developing the property, and that he overbilled 1775 East 17th St., LLC and kept the monies acquired through overbilling for his own use. Martin Daskal claims that he and Joseph Tyrnauer received an e-mail from Andrew Taylor, an employee of Signature Bank, which stated that the funds in 1775 East 17th St., LLC's bank account were inadequate to cover its monthly loan payment. While Martin Daskal admits that 1775 East 17th St., LLC defaulted on its March 2010 mortgage payment, he claims that such default was the result of Joseph Tyrnauer's conduct in not depositing sufficient monies into 1775 East 17th St., LLC's account. Thus, Martin Daskal's allegations regarding Joseph Tyrnauer, do not affect 1775 Capital Associates, LLC's right to foreclosure, and fail to provide a defense to this foreclosure action. Consequently, the striking of this defense is mandated.
Martin Daskal and 1775 East 17th St., LLC's sixth affirmative defense asserts that any damages allegedly sustained by Signature Bank were caused, in whole or in part, by the culpable conduct, carelessness, recklessness, negligence, or wrongdoing of Signature Bank, its agents, and others for whom it was responsible. Martin Daskal, however, fails to specifically plead the acts or conduct that Signature Bank allegedly engaged in which, he claims, caused its own damages, and Martin Daskal does not raise any allegations with respect to this defense in his opposition papers. Therefore, this defense must be stricken.
While Joseph Tyrnauer and 1775 East 17th St., LLC have interposed an answer containing eleven affirmative defenses, 1775 Capital Associates, LLC, in its motion papers, have made a prima facie showing that each of these defenses lacks merit, and that they are entitled to summary judgment. Thus, since, as noted above, Joseph Tyrnauer has failed to submit any opposition papers to 1775 Capital Associates, LLC's motion, such defenses must be stricken.
Consequently, defendants, in response to 1775 Capital Associates, LLC's prima facie showing of its entitlement to a judgment of foreclosure as a matter of law, have failed to demonstrate any triable issue of fact as to any defense to this foreclosure action (see Washington Mut. Bank, F.A., 63 AD3d at 833; Daniel Perla Assoc., LP, 40 AD3d at 678; US Bank Trust N.A. Trustee, 16 AD3d at 408; Republic Natl. Bank of NY, 308 AD2d at 482; Federal Home Loan Mtge. Corp. v Karastathis, 237 AD2d 558, 558 [1997]). Martin Daskal, however, contends that he needs to conduct discovery in order to ascertain whether the assignment was proper and whether this foreclosure action is proper. With respect to the discovery requests by defendants, 1775 Capital Associates, LLC asserts that these discovery demands are devoid of merit, and notes that the purpose of CPLR 3214 (b), which stays disclosure until determination of a summary judgment motion, is to prevent unnecessary disclosure in the event that its motion for summary judgment is granted.
With respect to Martin Daskal's claim that further discovery is needed by him in order to oppose 1775 Capital Associates, LLC's motion, it is noted that CPLR 3212(f) provides that if it appears from affidavits submitted in opposition to the motion for summary judgment "that facts essential to justify opposition may exist but cannot be stated, the court may deny the motion or may order a continuance to permit affidavits to be obtained or disclosure to be had and may make such other order as may be just." However, "[m]ere hope and speculation that additional discovery might uncover evidence sufficient to raise a triable issue of fact is not sufficient" to warrant denial of a motion for summary judgment (Sasson v Setina Mfg. Co., Inc., 26 AD3d 487, 488 [2006]). The granting of a summary judgment motion should not be postponed to allow for discovery where the proponent of the additional discovery has failed "to demonstrate that the discovery sought would produce relevant evidence "(Frith v Affordable Homes of Am., 253 AD2d 536, 537 [1998]). "A grant of summary judgment cannot be avoided by a claimed need for discovery unless some evidentiary basis is offered to suggest that discovery may lead to relevant evidence" (Bailey v New York City Tr. Auth., 270 AD2d 156, 157 [2000]; see also Freiman v JM Motor Holdings NR 125-139, LLC, 82 AD3d 1154, 1156 [2011]; Dempaire v City of New York, 61 AD3d 816, 817 [2009]; Conte v Frelen Assoc., LLC, 51 AD3d 620, 621 [2008]; Lopez v WS Distrib., Inc., 34 AD3d 759, 760 [2006]; Ruttura & Sons Constr. Co. v Petrocelli Constr., 257 AD2d 614, 615 [1999]).
Here, there is no showing that discovery would provide a basis for any of Martin Daskal and 1775 East 17th St., LLC's asserted defenses. Indeed, the undisputed fact of 1775 East 17th St., LLC's default (which, as noted above, has been admitted by Martin Daskal) renders immaterial the matters sought in further disclosure. Thus, Martin Daskal and 1775 East 17th St., LLC have failed to demonstrate that discovery could potentially lead to any relevant evidence which could defeat 1775 Capital Associates, LLC's motion (see Freiman, 82 AD3d at 1156; Dempaire, 61 AD3d at 817; Conte, 51 AD3d at 621; Lopez, 34 AD3d at 760). Consequently, there is no need to delay the determination of 1775 Capital Associates, LLC's motion by virtue of CPLR 3212 (f).
Therefore, inasmuch as defendants have failed to demonstrate any triable issue of fact as to any defense to this foreclosure action, 1775 Capital Associates, LLC is entitled to summary judgment in its favor, granting it a judgment directing the foreclosure and sale of the property, and appointing a referee to ascertain and compute the amounts due to it (see Washington Mut. Bank, F.A., 63 AD3d at 833; Daniel Perla Assoc., LP, 40 AD3d at 677; US Bank Trust N.A. Trustee, 16 AD3d at 408; Republic Natl. Bank of NY, 308 AD2d at 482).
1775 Capital Associates, LLC, in its motion, also seeks an order severing Martin Daskal and 1775 East 17th St., LLC's five cross claims pursuant to CPLR 603. CPLR 603 provides that "[i]n furtherance of convenience or to avoid prejudice the court may order a severance of claims, or may order a separate trial of any claim, or of any separate issue."
Martin Daskal and 1775 East 17th St., LLC s first cross claim for fraud against Joseph Tyrnauer asserts that Joseph Tyrnauer advised Martin Daskal that he possessed prior experience as a contractor and that he would develop a residential rental building, and that, during the course of construction and development of the property, Joseph Tyrnauer misrepresented the true cost of the construction and overbilled them. Martin Daskal and 1775 East 17th St., LLC further assert that Martin Daskal relied upon Joseph Tyrnauer's representations in contributing monies to 1775 East 17th St., LLC and in agreeing to have 1775 East 17th St., LLC receive the loan funds from Signature Bank. Martin Daskal and 1775 East 17th St., LLC claim that Joseph Tyrnauer falsely billed them and diverted monies derived from his overbilling and the rental income of the property for his own personal benefit and use. Martin Daskal and 1775 East 17th St., LLC allege that Joseph Tyrnauer misrepresented that the funds were used to make mortgage payments to Signature Bank, and that, as a result of Joseph Tyrnauer's misrepresentations and wrongful diversion of funds, he and 1775 East 17th St., LLC have sustained damages, including the possible foreclosure of the property.
Martin Daskal and 1775 East 17th St., LLC's second cross claim for conversion against Joseph Tyrnauer alleges that Joseph Tyrnauer wrongfully diverted monies he received and collected on behalf of 1775 East 17th St., LLC and converted them for his own personal use and benefit, and seeks damages against Joseph Tyrnauer. Martin Daskal and 1775 East 17th St., LLC's third cross claim for breach of fiduciary obligations against Joseph Tyrnauer asserts that Joseph Tyrnauer breached his fiduciary obligations to them by wrongfully diverted funds belonging to 1775 East 17th St., LLC. It seeks damages against Joseph Tyrnauer. Martin Daskal and 1775 East 17th St., LLC fourth cross claim for waste of corporate assets against Joseph Tyrnauer alleges that Joseph Tyrnauer's unauthorized use of 1775 East 17th St., LLC's monies and Joseph Tyrnauer's mismanagement of 1775 East 17th St., LLC resulted in the waste of 1775 East 17th St., LLC's assets, and demands damages against Joseph Tyrnauer. Martin Daskal and 1775 East 17th St., LLC's fifth cross claim for contribution and indemnification against Joseph Tyrnauer asserts that any liability in this action was solely caused by the negligence and wrongful acts of Joseph Tyrnauer. It seeks common-law indemnification and/ or contribution from Joseph Tyrnauer.
In addressing the issue of whether these cross claims should be severed from the foreclosure action, it is noted that Martin Daskal and Joseph Tyrnauer are involved in acrimonious ongoing litigation by and against each other, namely, the cases: Daskal v Tyrnauer (Sup Ct, Kings County, index No. 31074/09) and Tyrnauer v Daskal (Sup Ct, Kings County, index No. 28384/09). There is also a proceeding, initiated by Tyrnauer, for the dissolution of the LLC defendant herein (In the Matter of the Application of Joseph Tyrnauer for the judicial dissolution of 1775 East 17th St., LLC, Sup Ct, Kings County, index No. 26129/10) in which dissolution has been granted and the only remaining issues concern those very complaints interposed herein as cross-claims. As 1775 Capital Associates, LLC points out, raising these issues again in this action is completely redundant and duplicative, would only cause confusion with respect to the main issue of foreclosure involved in this action, and would cause delay and prejudice plaintiff's rights to recovery.
Since Martin Daskal and 1775 East 17th St., LLC's cross claims are asserted solely as against Joseph Tyrnauer and seek damages from him, and do not affect the validity of the mortgage, the appropriate remedy is to sever them from this foreclosure action (see First Union Mtge. Corp. v Fern, 298 AD2d 490, 491 [2002]; Tri-Land Props. v 115 W. 28th St. Corp., 238 AD2d 206, 206 [1997]; Norton Co. v C-TC 9th Ave. Partnership, 198 AD2d 696, 698 [1993]; Highland Views Corp. v Gerdts,190 AD2d 954, 956 [1993]; Marine Midland Bank v Cafferty, 174 AD2d 932, 935 [1991]; Spano v Perry, 59 Misc 2d 1062, 1064-1065 [1969]). Thus, inasmuch as the court is granting summary judgment to 1775 Capital Associates, LLC on its right to foreclose the property, 1775 Capital Associates, LLC's motion, insofar as it seeks an order severing these cross claims, must be granted (see Tri-Land Props.,238 AD2d at 206; Norton Co.,198 AD2d at 698). However, in light of the duplication of litigation regarding these cross-claims in three separate suits which are currently pending before this court, those cross-claims are dismissed pursuant to CPLR 3211 (a) (4) and 3212 (e), without prejudice.
Accordingly, Martin Daskal's motion to amend his and 1775 East 17th St., LLC's answer is denied. 1775 Capital Associates, LLC's motion for summary judgment in its favor is granted, defendants' discovery demands are stricken, and defendants' answers are hereby stricken and their affirmative defenses are dismissed. Martin Daskal and 1775 East 17th St., LLC's five cross claims against Joseph Tyrnauer are dismissed without prejudice. A referee shall be appointed to compute the amount due under the mortgage to 1775 Capital Associates, LLC. The caption of this action shall be deemed amended to substitute 1775 Capital Associates, LLC in place and stead of Signature Bank as the plaintiff in this action.
Plaintiff is directed to settle an order on notice, consistent with this decision.
This constitutes the decision and order of the court.
ENTER,
J. S. C.