Opinion
No. 10985/2013.
12-04-2014
VFC PARTNERS 19, LLC, Plaintiff, v. ROMAZ PROPERTIES, LTD., Robert Romeo, Carmella Holland, Metropics, New York, LLC., and New York Department of Taxation and Finance, “John Doe # 1” through “John Doe # 50” the last fifty names being fictitious and unknown to, PC plaintiff, the persons or parties intended being the tenants, occupants, persons or corporation, if any, having or claiming an interest in or lien upon the premises, described in the complaint, Defendants. Romaz Properties, Ltd., Robert Romeo and Carmella Maria Holland, Third–Party Plaintiffs, Hudson Valley Bank, Third–Party Defendant.
Certilman, Balin, Adler, Hauppauge, Attys. for Plaintiff. Michael Kohl, PC, Bohemia, Atty. for Romaz Prop., Romero & Holland. Clifford J. Petroske, PC, Bohemia, Joseph Law Group, LLP, New York, Attys. for T–Mobile. Garfunkle, Wild, PC, Great Neck, Attys. for University Assoc. Belkin, Burden, Wenig, New York, Attys. for Hudson Valley Bank.
Certilman, Balin, Adler, Hauppauge, Attys. for Plaintiff.
Michael Kohl, PC, Bohemia, Atty. for Romaz Prop., Romero & Holland.
Clifford J. Petroske, PC, Bohemia, Joseph Law Group, LLP, New York, Attys. for T–Mobile.
Garfunkle, Wild, PC, Great Neck, Attys. for University Assoc.
Belkin, Burden, Wenig, New York, Attys. for Hudson Valley Bank.
Opinion
THOMAS F. WHELAN, J.
Upon the following papers numbered 1 to 11 read on this motion by the third party defendant for summary judgment dismissing the third party complaint; Notice of Motion/Order to Show Cause and supporting papers 1–4; Notice of Cross Motion and supporting papers; Answering papers 5–7; Reply papers 8–9; 10–11; Other; (and after hearing counsel in support and opposed to the motion) it is,
ORDERED that those portions of this motion (# 003) by the third-party defendant, Hudson Valley Bank, NA, for an order granting it summary judgment, is considered under CPLR 3212 and is granted; and it is
ORDERED that the remaining portions of this motion by the third-party defendant for an order awarding it costs and counsel fees and/or imposing monetary sanctions against the third-party plaintiff and its counsel by reason of their engagement in frivolous conduct is denied.
In April of 2013, the plaintiff, VFC Partners 19, LLC commenced the main action captioned first above against defendants, Romaz Properties Ltd. (“Romaz”), Robert Romeo (“Romeo”), Carmella Holland (“Holland”), and two other entities for a judgment foreclosing the lien of a consolidated mortgage in the amount of $2,800,000.00 and other relief. The consolidated mortgage loan bundled several prior mortgages given by Romaz on commercial property located in Bohemia, New York with a September 29, 2006 Gap mortgage in the amount of $1,157,500.00 given by Romaz to secure the Hudson Valley Bank lien. As further security, Hudson Valley Bank accepted written guarantees of the obligations of Romaz from defendants Romeo and Holland. The $2,800,000.00 consolidated mortgage formed the single lien in the amount $2,800,000, 00 in favor of Hudson Valley who thereafter assigned the underlying notes mortgages to the plaintiff. The main action was settled in October of this year, although it has not yet proceeded to judgment.
Following the joinder of issue in the main action, defendants Romaz, Romeo and Holland commenced the second action above captioned which is styled as a third-party action of the type contemplated by CPLR 1007. The three causes of action asserted therein charge the third-party defendant Hudson Valley Bank [hereinafter “Hudson Valley”] with breaching obligations purportedly arising under the terms of the September 29, 2006 consolidated mortgage note indenture which afforded Romaz an option to renew the note for an additional five year term thereby extending its maturity date beyond the October 1, 2011 maturity date set forth in such note. By virtue of this purported breach of a contractual obligation, Hudson is alleged to be responsible for Romaz's default under the terms of the consolidated mortgage that is the subject of the main action and for damages directly recoverable by Romaz and its guarantors, including litigation costs.
By the instant motion, Hudson Valley seeks summary judgment dismissing the third-party complaint and an award of costs, including counsel fees or sanctions, due to conduct on the part of the third-party plaintiffs and/or their counsel that allegedly constitutes frivolous conduct within the purview of the rules at 22 NYCRR Part 130–1. For the reasons stated, the motion is granted to the extent that summary judgment is awarded.
It is well established that the essential elements of a cause of action to recover damages for breach of contract are as follows: the existence of a contract, the plaintiff's performance under the contract, the defendant's breach of that contract, and resulting damages (see Elisa Dreier Reporting Corp. v. Global NAPs Networks, 84 AD3d 122, 921 N.Y.S.2d 329 [2d Dept 2011] ; JP Morgan Chase v. J.H. Elec. of NY, Inc., 69 AD3d 802, 893 N.Y.S.2d 237 [2d Dept 2010] ; Palmetto Partners, L.P. v. AJW Qualified Partners, 83 AD3d3d 804, 921 N.Y.S.2d 260 [2d Dept 2011] ). Allegations that are vague, conclusory, and indefinite as to the alleged breach of one or more provisions of the agreement are insufficient as a matter of law (see Island Surgical Supply Co. v. Allstate Ins. Co., 32 AD3d 824, 820 N.Y.S.2d 854 [2d Dept 2006] ). Moreover, viable claims for breach of contract must rest upon controversies that are within the scope of the subject matter of the contract allegedly breached (see Simon v. Granite Bldg. 2, LLC, 114 AD3d 749, 980 N.Y.S.2d 489 [2d Dept 2014] ; Countrywide Home Loans, Inc. v. United General Title Ins. Co., 109 AD3d 950, 971 N.Y.S.2d 353 [2d Dept 2013] ; Kaprall v. WE: Women's Entertainment, LLC, 74 AD3d 1151, 904 N.Y.S.2d 721 [2d Dept 2010] ).
Here, the moving papers established prima facie that none of the third-party plaintiffs' pleaded claims for relief, all of which sound in purported breaches of contractual obligations imposed upon Hudson Valley under the terms of the September 29, 2006 note, are without merit. The third-party plaintiffs failed to allege, let alone establish, any of the elements necessary for the successful prosecution of a breach of contract claim as no provision of the subject note nor any of the other loan documents are alleged to have been breached by Hudson Valley. The option provision of the note about which Romaz and its guarantors complain inured to the benefit of Romaz and imposed upon it certain obligations for the successful exercise of such option. Since there is an admitted failure on the part of Romaz to exercise the contractual option of renewal on the part of Romaz, and in light of its admitted breach of its payment obligations under the terms of the note and mortgage, its claims of breach on the part of Hudson Valley are insufficient as a matter of law.
The attempt by Romaz to defeat Hudson Valley's prima facie showing of its entitlement to the summary judgment demanded by Romaz's assertion of an unpleaded claim of fraud is rejected. While modern practice permits a plaintiff to successfully oppose a motion for summary judgment by relying on an unpleaded claim (see Alvord and Swift v. Stewart M. Muller Constr. Co., Inc., 46 N.Y.2d 276, 413 N.Y.S.2d 309 [1978] ), any such opposition must be supported by evidentiary submissions which establish the elements of the unpleaded claim in a manner sufficient to give rise to questions of fact as to its plausibility and the adverse party's entitlement to the summary judgment demanded by it (see Begley v. City of New York, 111 AD3d 5, 972 N.Y.S.2d 48 [2d Dept 2013] ; Comsewogue Union Free School Dist. v. Allied–Trent Roofing Sys., 15 AD3d 523, 790 N.Y.S.2d 220 [2d Dept 2005] ). To make out a claim for fraud in the inducement or a defense premised on it, the claimant must establish a material misrepresentation of an existing fact, made with knowledge of the falsity, an intent to induce reliance thereon, justifiable reliance upon the misrepresentation and damages” (Fromowitz v. W. Park Assoc., Inc., 106 AD3d 950, 965 N.Y.S.2d 597 [2d Dept 2013] ; quoting Introna v. Huntington Learning Ctrs., Inc., 78 AD3d 896, 898,911 N.Y.S.2d 442 [2d Dept 2010] ; see Eurycleia Partners, LP v. Seward & Kissel, LLP, 12 NY3d 553,559, 883 N.Y.S.2d 147 [2009] ; County of Suffolk v. Long Is. Power Auth., 100 AD3d 944, 954 N.Y.S.2d 619 [2d Dept 2012] ). Where the facts allegedly misrepresented are not matters peculiarly within the knowledge of the presenter of such facts and the claimant has the means to discover the true nature of the transaction by the exercise of ordinary intelligence and fails to make use of those means, the defendant cannot claim justifiable reliance on misrepresentations of his adversary (see Danann Realty Corp. v. Harris, 5 N.Y.2d 317, 320–321, 184 N.Y.S.2d 599 [1959] ; DiBuono v. Abbey, LLC, 95 AD3d 1062, 944 N.Y.S.2d 280 [2d Dept 2012] ; Urstadt Biddle Prop., Inc. v. Excelsior, 65 AD3d 1135, 885 N.Y.S.2d 510 [2d Dept 2009] ).
Here, Romaz makes no claim that it was fraudulently induced into entering into the loan at the time of its origination and it admits that it did not exercise its option to renew the loan at least 60 days prior to the October 1, 2011 maturity date as required by the terms of the note (see ¶ 5 of the affidavit in opposition of Robert Romero). However, it attributes this failure to renew to purportedly wrongful conduct on the part of Hudson Valley prior to August 1, 2011, which was the date on which the option had to be exercised. Roamz asserts that it was then that bank officer, Terrance J. “Edwards, and several other bank officers with whom I was negotiating [a separate] loan and the [separate] C.A.R.S. building loan, told me not to exercise the option” (see id. ). Hudson Valley is then charged with agreeing to extend these two separate mortgage and/or building loans and the loan that is the subject of this action at a meeting with Edwards on June 29, 2011 (see id., at ¶ 11). However, in late August of 2009, Hudson Valley allegedly presented documents purporting to extend the separate Cove Road loan in a manner that included “onerous” modifications to the original terms of that loan that were not satisfactory to Romaz. It thus refused to sign the proposed documents in response to which and Hudson Valley threatened to end advances due under the Cove Road loan and to foreclose on both the Southampton property loan and the mortgage loan that is the subject of this action (see id. at ¶¶ 11 and 14). Hudson Valley's purported reversal of its position on extending these loans is alleged to have put the subject loan and the Southampton loan into default (see id. at ¶ 12).
For the reasons stated below these allegations of utterances on the part of officers and/or other agents of Hudson Valley, in which Romaz through its principal and guarantor Romeo were purportedly advised not to exercise the option to renew the subject note, are not actionable. Likewise not actionable are the claims that Hudson Valley committed an actionable wrong when it “reneged” on its purported promise to extend the subject loan.
That a lender has no obligation to forebear its remedies before or after a default by a borrower or to modify the terms of its loan by the extension of a new loan or other refinance arrangement is clear (see Graf v. Hope Bldg. Corp., 254 N.Y. 1, 4–5, 171 NE 884 [1930] ; Wells Fargo Bank, N.A. v. Meyers, 108 AD3d 9, 966 N.Y.S.2d 108 [2d Dept 2013] ; Wells Fargo Bank, N.A. v. Van Dyke, 101 AD3d 638, 958 N.Y.S.2d 331 [1st Dept 2012] ; Key Intern. Mfg. Inc. v. Stillman, 103 A.D.2d 475, 480 N.Y.S.2d 528 [2d Dept 1984] ; Valley Natl. Bank v. 58 Vlimp, LLC., 39 Misc.3d 1221[A], 2013 WL 1849124 [Sup.Ct. Suffolk County 2013] ; Flushing Preferred Funding Corp. v. Patricola Realty Corp., 36 Misc.3d 1240[A], 2012 WL 3984476 [Sup.Ct. Suffolk County 2012] ; Carver Fed. Sav. Bank v. Redeemed Christian Church, 35 Misc.3d 1228[A], 954 N.Y.S.2d 758 [Sup.Ct. Suffolk County 2012] ; US Bank Natl. Ass'n v. Major Holdings, LLC., 35 Misc.3d 1224[A], 953 N.Y.S.2d 554 [Sup.Ct. Suffolk County 2012] ). Consequently, a failure to modify, extend or refinance an existing loan does not give rise to an estoppel or constitute bad faith, unclean hands or other conduct upon which a mortgagor defendant may predicate a cognizable claim against the lender or defense to its claim for foreclosure and sale (see Graf v. Hope Bldg. Corp., 254 N.Y. 1, supra; Jo–Ann Homes v. Dworetz, 25 N.Y.2d 112, 302 N.Y.S.2d 799 [1969] ; Wells Fargo Bank, N.A. v. Van Dyke, 101 AD3d 638, supra; Key Intern. Mfg. Inc. v. Stillman, 103 A.D.2d 475, supra; ; Valley Natl. Bank v. 58 Vlimp, LLC., 39 Misc.3d 1221[A], supra; cf., Nassau Trust Co. v. Montrose Concrete Prods., 56 N.Y.2d 175, 451 N.Y.S.2d 663 [1982] (potentially meritorious waiver defense based on oral assurances ); but see DiStefano v. Maclay, 102 Fed.Appx. 188 [C.A. 2 2004] (that parties communicate orally about the status of their affairs with a view toward concluding a contract does not indicate an agreement to perform the contract on any terms other than those stated in the written agreement and does not indicate a willingness to waive the contract's requirement for written waiver of any of its terms ). The court thus rejects the third-party plaintiffs' claims that oral negotiations between the lender and third-party plaintiffs effected an enforceable modification upon which the third-party plaintiffs reasonably relied to their detriment which warrants the imposition of an estoppel against the third-party defendants.
Romaz's claim that the loan was extended and/or modified through a “novation” that is purportedly evidenced by the Hudson Valley's acceptance of Romaz's payment of the monthly installment on October 1, 2011 is equally unavailing. Modification of mortgages and/or forbearance agreements are subject to our statute of frauds and, accordingly, must be in writing to be enforceable (see GOL § 5–703[4] ). A resort to parol evidence by a defendant asserting the existence of any purported modification or forbearance agreement is generally precluded (see Messner Vetere Berger McNamee Schmetterer Euro RSCG v. Aegis Group, 93 N.Y.2d 229, 689 N.Y.S.2d 674 [1999] ; Martini v. Rogers, 6 AD3d 404, 774 N.Y.S.2d 378 [2d Dept 2004] ). A second statute of frauds applies where, as here, a mortgage or guarantee is unambiguous and contains a clause prohibiting amendment other than in writing. These contracts fall within the contemplation of GOL § 15–301(1) and alleged oral modifications of such contracts are ineffective to preclude enforcement thereof or other contractual remedies available to the plaintiff (see GOL § 15–301 [1 ]; North Bright Capital, LLC v. 705 Flatbush Realty, LLC, 66 AD3d 977, 889 N.Y.S.2d 596 [2d Dept 2009] ; B. Reitman Blacktop, Inc. v. Missirlian, 52 AD3d 752, 860 N.Y.S.2d 211 [2d Dept 2008] ; Wasserman v. Harriman, 234 A.D.2d 596, 651 N.Y.S.2d 620 [2d Dept 1996] ; Bank of Smithtown v. Boglino, 254 A.D.2d 319, 678 N.Y.S.2d 640 [2d Dept 1998] ; FGH Realty Credit Corp. v. VRD Realty Corp., 231 A.D.2d 489, 647 N.Y.S.2d 229 [2d Dept 1996] ; Can–Am Dev. Corp. v. Meldor Dev. Corp., 214 A.D.2d 695, 625 N.Y.S.2d 600 [2d Dept 1995] ; see also Lehman Bros. Holdings Inc. v. Walji, 2011 WL 1842838 [SDNY 2011] ). Here, there are no allegations that any purported modification of the maturity date of the loan nor a promise to forbear on the part of Hudson Valley was reduced to a writing.
The court rejects the nuanced claim of counsel for the third party plaintiffs of an enforceable promise to extend the subject loan notwithstanding the absence of any writing by application due to Hudson Valley's acceptance of installment payments remitted by Romaz after the maturity date of the loan. This claim implicates the part performance doctrine which removes the writing requirement otherwise applicable to these types of contracts (see GOL § 5–703[4] ). Invocation of this codified equitable doctrine requires the court to consider only the actions and detrimental reliance of the party seeking enforcement of the unwritten agreement and to find them “unequivocally referable” to such agreement (see Messner Vetere Berger McNamee Schmetterer Euro RSCG v. Aegis Group, 93 N.Y.2d 229, 236–237, 689 N.Y.S.2d 674 [1999] ). The third party plaintiffs failed to demonstrate the existence of facts constituting these elements of the part performance doctrine. In addition, it is well settled law that a mortgagee is not required to accept less than full repayment of all amounts due under a mortgage note that has matured or has been accelerated following a default in payment (see EMC Mtge. Corp. v. Stewart, 2 AD3d 772, 769 N.Y.S.2d 408 [2d Dept 2003] ; First Federal Sav. Bank v. Midura, 264 A.D.2d 407, 694 N.Y.S.2d 121 [2d Dept 1999] ). Hudson Valley's rejection of the part payments forwarded to it by Romaz in October of 2011, which had matured on October 1, 2011, is not actionable as all amounts due for principal and interest were then owing.
To the extent that any oral utterances allegedly made by Hudson Valley officers and employees may be construed as enforceable settlement agreement because they were engaged in to avert impending defaults or to ameliorate existing ones, such negotiations do not furnish the third-party plaintiffs with a cognizable claim against Hudson Valley. A promise or agreement to negotiate “cannot be equated with a promise to finalize an agreement on a restructured mortgage” (Massachusetts Mut. Life Ins. Co. v. Gramercy Twins Assocs., 199 A.D.2d 214, 217, 606 N.Y.S.2d 159 [1st Dept 1993] ). Consequently, the mere engagement in settlement discussions does not effect an enforceable forbearance or a modification of maturity dates or other terms of a mortgage that is the subject of a foreclosure action (see Citibank, N.A. v. Van Brunt Prop., LLC., 95 AD3d 1158, supra ; Citibank, N.A. v. Silverman, 85 AD3d 463, 925 N.Y.S.2d 442 [1st Dept 2011] ). The record here contains undisputed evidence that no agreement to extend or forbear remedies was entered into by the parties.
To the extent that the third party plaintiffs' claims that instant motion should be denied because any default in payment on the part of Romaz was directly attributable to wrongful conduct on the part Hudson Valley's officers and employees, such claim is rejected. While not expressly articulated, this claim implicates the frustration of performance doctrine which rests upon the implied covenant of good faith and fair dealing out of which mutual obligations not to intentionally interfere or prevent the other party from carrying out such party's obligations under an agreement arise (see International Firearms Co. v. Kingston Trust Co., 6 N.Y.2d 406, 189 N.Y.S.2d 911 [1959] ; Patterson v. Meyerhofer, 204 N.Y. 96, 97 NE 472 [1912] ; Thor Prop., LLC v. Chetrit Group LLC, 91 AD3d 476, 936 N.Y.S.2d 196 [1st Dept 2012] ; REP A8 LLC v. Aventura Tech., Inc., 68 AD3d 1087, 893 N.Y.S.2d 83 [2d Dept 2009] ; Syracuse Orthopedic Specialists, P.C. v. Hootnick, 42 AD3d 890, 839 N.Y.S.2d 897 [4th Dept 2007] ; see also A.H.A. Gen. Constr., Inc. v. New York City Hous. Auth., 92 N.Y.2d 20, 677 N.Y.S.2d 9 [1998] ; Pesa v. Yoma Dev. Group, Inc., 18 NY3d 527, 942 N.Y.S.2d 1 [2012] ; Lager Assoc. v. City of New York, 304 A.D.2d 718, 759 N.Y.S.2d 116 [2d Dept 2003] ).
Like the prevention doctrine, which is premised upon the prevention of contractual conditions precedent, the frustration of performance doctrine exists solely for purposes of serving the intent of the parties. It cannot be invoked to add unexpressed new terms, to imply obligations inconsistent with the terms of an existing contract between the parties or to ify such terms (see Thor Prop., LLC v. Chetrit Group LLC, 91 AD3d 476, supra; REP A8 LLC v. Aventura Tech., Inc., 68 AD3d 1087, supra; HGCD Retail Serv., LLC v. 44–45 Broadway Realty, 37 AD3d 43, 826 N.Y.S.2d 190 [1st Dept 2006] ; Fesseha v. TD Waterhouse Inv. Serv., Inc., 305 A.D.2d 268, 761 N.Y.S.2d 22 [1st Dept 2003] ; Consolidated Edison, Inc. v. Northeast Util., 426 F3d 524, 529 [2d Cir.2005] ). Where a party seeks to achieve a right through the prevention doctrine that was denied to it under the terms of the contract at issue, such party will not succeed in defeating the exercise of contractual rights willingly conferred upon the other party to the agreement. Such is the case here, since Hudson Valley had no duty to modify the subject loan, by extending its maturity date or othewise.
Finally, Romaz's claim that the instant motion is premature due to a need for discovery also lacks merit. The rule at CPLR 3212(f) which governs such a claim provides that “should it appear from affidavits submitted in opposition to the motion that facts essential to justify opposition may exist but cannot then 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”. Appellate case authorities have long instructed that to avail oneself of the safe harbor this rule affords, the claimant must “offer an evidentiary basis to show that discovery may lead to relevant evidence and that the facts essential to justify opposition to the motion were exclusively within the knowledge and control of the plaintiff” (Martinez v. Kreychmar, 84 AD3d 1037, 923 N.Y.S.2d 648 [2d Dept 2011] ; see Seaway Capital Corp. v. 500 Sterling Realty Corp., 94 AD3d 856, 941 N.Y.S.2d 871 [2d Dept 2012] ). In addition, the movant must show that his or her ignorance was unavoidable and that reasonable attempts were made to discover the facts which would give rise to a triable issue of fact (see Swedbank, AB v. Hale Ave. Borrower, LLC, 89 AD3d 922, 932 N.Y.S.2d 540 [2d Dept.2011] ; Zheng v. Evans, 63 AD3d 791, 881 N.Y.S.2d 461 [2d Dept 2009] ), as the “mere hope or speculation that evidence sufficient to defeat a motion for summary judgment may be uncovered by further discovery is an insufficient basis for denying the motion” (Woodard v. Thomas, 77 AD3d 738 at 740, 913 N.Y.S.2d 103 [2d Dept 2010], quoting, Lopez v. WS Distrib., Inc., 34 AD3d 759, 760, 825 N.Y.S.2d 516 [2d Dept 2006] ; see Friedlander Organization, LLC v. Ayorinde, 94 AD3d 693, 943 N.Y.S.2d 538 [2d Dept 2012] ). The record here is devoid of any showing of the factors necessary to invoke the provisions of CPLR 3212(f).
Left for consideration are those portions of this motion wherein Hudson Valley seeks the imposition of monetary sanctions against Romaz and its guarantors or their counsel and/or an award for costs and counsel fees due to their frivolous conduct in commencing and maintaining the third-party complaint. While the court considers the issue presented by such application to be a close one, it denies the relief requested due to the absence of sufficient proof that the complained of conduct was frivolous within the contemplation of the rules at 22 NYCC Part 130–1 (see Stone Mtn. Holdings, LLC v. Spitzer, 119 AD3d 548, 990 N.Y.S.2d 39 [2d Dept 2014] ).
In view of the foregoing, the instant motion (# 003) by third-party defendant, Hudson Valley Bank, for summary judgment dismissing the third-party complaint and sanctions is granted to the extent that summary judgment dismissing the third-party complaint is awarded to Hudson Valley. The third party complaint is thus dismissed. The within action shall marked disposed, as all claims posited herein are now resolved.