The following papers have been read on this motion: Papers Numbered Notice of Motion, Affidavit, Affirmation and Exhibits and Memorandum of Law 1 Affirmation in Opposition and Exhibit 2 Reply Memorandum of Law 3 Upon the foregoing papers, it is ordered that the motion is decided as follows: Plaintiff moves, pursuant to CPLR §3212, for an order granting summary judgment on all causes of action in the Verified Complaint; and moves, pursuant to RPAPL §1321, for an order appointing a referee to compute and fix sums owed to plaintiff and conduct a foreclosure sale of the mortgaged premises; and moves for an order dismissing the counterclaims of defendants Philip J. Kassover, as Executor under the Last Will and Testament of Ruth Kassover, deceased, and in his individual capacity (“Kassover”). Defendants Kassover oppose the motion. Plaintiff commenced the instant action with the filing of a Summons and Verified Complaint on or about June 27, 2019. See Plaintiff’s Affirmation in Support Exhibit A. Issue was joined by defendants Kassover on or about August 29, 2019. See Plaintiff’s Affirmation in Support Exhibit C. Plaintiff filed a Verified Reply to defendants Kassover’s counterclaims on or about September 27, 2019. See Plaintiff’s Affirmation in Support Exhibit D. In support of the motion, counsel for plaintiff submits, in pertinent part, that, “[t]his is an action for a commercial mortgage foreclosure of the premises located at 5 Shore Drive, Kings Point, New York 11024, Section 1, Block 45, Lots 51, 52 (‘Mortgaged Premises’)…. The Verified Complaint alleges, inter alia, that: (1) on or about February 7, 2017, Java Brick Capital LLC and the Executor of the Estate of Ruth Kassover (‘Estate’), Philip J. Kassover (‘Executor’), entered into a Mortgage, Assignment of Rents and Security Agreement (‘Initial Mortgage’), dated that date, with the Initial Mortgage being duly filed and recorded in the Office of the County Clerk, Nassau County, on February 21, 2017, as Liber 41931, Page 88, mortgage tax being paid; (2) the Initial Mortgage was expressly for business or commercial purposes and not for personal, family, consumer or household purposes; (3) pursuant to the Initial Mortgage, on February 7, 2017, the Executor, on behalf of the Estate, duly executed, acknowledged, and delivered to Java Brick Capital LLC the Mortgage Note (‘Initial Note’), dated that date, binding the Estate to pay to Java Brick Capital LLC the principal sum of $1,325,000.00; and (4) as collateral security for the payment of such indebtedness the Executor, on behalf of the Estate, mortgaged to Java Brick Capital LLC the Mortgaged Premises. Thereafter on or about April 4, 2018, Java Brick Capital LLC executed an Assignment of Mortgage (‘Assignment’), dated that dated and duly filed and recorded in the Office of the County Clerk, Nassau County on April 20, 2018, as Liber 42793, Page 478, by which Java Brick Capital LLC, for good and valuable consideration, assigned all of its interests in the Initial Mortgage to Plaintiff effective April 10, 2018. Immediately following the Assignment, on or about April 10, 2018, Plaintiff and the Executor, on behalf of the Estate, entered into a Gap Mortgage (‘Gap Mortgage’), under which the Estate borrowed an additional $1, 175, 000.00 from Plaintiff, and a Mortgage Consolidation and Extension Agreement (‘CEMA’), consolidating the Initial Mortgage and Gap Mortgage, bringing the total indebtedness to Plaintiff to $2,500,000.00. The Gap Mortgage, dated April 10, 2018, was duly filed and recorded in the Office of the County Clerk, Nassau County, on April 20, 2018, as Liber 42793, Page 484, and the mortgage recording tax being paid, and the CEMA was duly filed and recorded in the Office of the County Clerk, Nassau County, on April 20, 2018, as Liber 42793, Page 499…. The CEMA was for business or commercial purposes, and not for personal, family, consumer or household purposes. Pursuant to the Gap Mortgage and the CEMA, and in order to evidence the loan for which the Gap Mortgage and CEMA were provided, on April 10, 2018, the Executor, on behalf of the Estate, duly executed, acknowledged, and delivered to Plaintiff: (1) the Gap Secured Promissory Note (‘Gap Note’), dated that date, binding the Estate to pay to Plaintiff the principal sum of $1,175,000.00; and (2) the Consolidated Secured Promissory Note (‘Consolidated Note’), dated that date, binding the Estate to pay to Plaintiff the combined sum of the Initial Note and the Gap Note, in the combined principal sum of $2,500,000.00 as follows:…The Consolidated Note was for business or commercial purposes and not for personal, family, consumer or household purposes…. As collateral security for the payment of such indebtedness, the Executor, on behalf of the Estate, mortgaged to Plaintiff the Mortgaged Premises. Moreover, to induce Plaintiff in its discretion to make the aforementioned loans, on April 10, 2018, Philip J. Kassover, individually, duly executed, acknowledged, and delivered to Plaintiff the Guaranty (‘Guaranty’), dated that date, guaranteeing to Plaintiff to unconditionally, absolutely and irrevocably pay promptly when due all obligations and liabilities of any and all kinds owed by the Estate to the Plaintiff, including but not limited to, all obligations arising under the Consolidated Note in the principal sum of $2,500,000.00…. The CEMA provides that in the case of a default in payment of said sum of money or the interest thereon, or in the case of any other Event of Default, Plaintiff is empowered to, among other things, commence foreclosure proceedings…. The Estate defaulted on the terms of the CEMA and Consolidated Note by failing to pay $2,500,000.00 on May 1, 2019 when the loan matured (‘Default’)…. Philip J. Kassover, in his individual capacity as guarantor, defaulted on the terms of the Guaranty by failing to pay the Estate’s obligations under the Consolidated Note…. As a result of the Default, there is now due to Plaintiff the principal sum of $2,500,000.00, together with interest thereon at the default rate set forth in the Consolidated Note of sixteen percent (16 percent) per annum from May 1, 2019 forward…. To date, Plaintiff is owed no less than $3,225,000.00 by virtue of the Default…. The Guarantor, Kassover, has not made any payment toward the amount owed to Plaintiff as a result of the Default, under the terms of his Guaranty, to date…. In response to the Verified Complaint, Kassover Defendants filed an Answer with Counterclaims on August 29, 2019, purporting to assert Counterclaims pursuant to NY General Business Law §349 and NY Uniform Commercial Code §3-305…. Plaintiff filed a Verified Reply to Counterclaims on September 27, 2019.” See Plaintiff’s Affirmation in Support Exhibits A-D. In further support of the motion, plaintiff submits the Affidavit of Michael Morris, President of plaintiff corporation. See Plaintiff’s Affidavit in Support. Counsel for plaintiff argues, in pertinent part, that, “Section 8.8 of the Consolidated Note, signed by Philip J. Kassover on behalf of the Estate of Kassover, states as follows…[emphasis added]: * 8.8 Obligations. Maker [Kassover Estate] acknowledges that this Note and Maker’s obligations hereunder are and shall at all times continue to be absolute and unconditional in all respects…This Note sets forth the entire agreement and understanding of Holder [Plaintiff] and Maker, and Maker absolutely, unconditionally and irrevocably waives any and all right to assert any defense, setoff, counterclaim or cross-claim of any nature whatsoever with respect hereto or the obligations of Maker hereunder or the obligations of any other person or party relating hereto in any action or proceeding brought by Holder to collect the outstanding balance of the Principal Sum, accrued and unpaid interest, late charges, and other amounts owing, or any portion thereof, or to enforce, foreclose and realize upon the liens and security interests created by the Mortgage and any other security document. Section 2 of the Guaranty, signed by Philip J. Kassover in his individual capacity, states as follows…[emphasis added]: Section 2. Guaranty Absolute. The Guarantor guaranties that the Obligations [including those in the Consolidated Note] will be paid strictly in accordance with the terms thereof, regardless of any law, regulation or order now or hereafter in effect in any jurisdiction affecting any of such terms or the rights of the Lender with respect thereto. The liability of the Guarantor under this Guaranty shall be absolute and unconditional irrespective of:…(e) any other circumstance which might otherwise constitute a defense available to, or a discharge of, a Borrower[.] Plaintiff specifically raised, in its Third Affirmative Defense in response to Kassover Defendants’ counterclaims, that Defendants’ counterclaims are barred by the doctrine of waiver…. Thus, the First Counterclaim should be dismissed with prejudice.” See Plaintiff’s Affirmation in Support Exhibits A and D. Counsel for plaintiff also argues, in pertinent part, that, “[a] claimant under NY Gen. Bus. Law §349 must allege that the conduct complained of is harmful to the public at large. Otherwise, the claim must be dismissed, [citations omitted]. Moreover, NY Gen. Bus. Law §349 is specifically inapplicable ‘to commercial loan transactions,’ which is the type of transaction at issue. [citations omitted]. Kassover Defendants do not, and cannot, allege that Plaintiff’s actions were directed at the public at large. The counterclaim merely alleged that ‘Plaintiff commenced this action to deprive Defendant (sic) of their home because Plaintiff has NOT and CANNOT establish that it ever had ownership or possession of the note by right.’ These allegations should be swiftly rejected for the following reasons: First, they are demonstrably false. Plaintiff and Kassover duly executed the documents at issue and did so specifically for commercial, and not residential, purposes…. Second, they do not give rise to an actionable claim under this law as this action concerns a private contract dispute, which does not ‘fall within the ambit of the statute.’ Accordingly, the First Counterclaim should be dismissed in its entirety. Kassover Defendants’ allegations with respect to their ‘Second Counterclaim’ are made pursuant to NY UCC §3-305…. Kassover Defendants specifically waived the right to assert a defense or counterclaim in this action. Thus, the Second Counterclaim should be dismissed…. The section of NY UCC §3-305 referenced in the Second Counterclaim states, in pertinent part: To the extent that a holder is a holder in due course he takes the instrument free from…(2) all defenses of any party to the instrument with whom the holder has not dealt except…(c) such misrepresentation as has induced the party to sign the instrument with neither knowledge nor reasonable opportunity to obtain knowledge of its character or its essential terms…. The section cited by Kassover Defendants provides ground for a defense to a claim on an instrument, not a counterclaim. Without more, Kassover Defendants’ pleading falls short of raising an actionable counterclaim and should be dismissed.” See Plaintiff’s Affirmation in Support Exhibit A. In opposition to the motion, counsel for defendants Kassover asserts, in pertinent part, that, “I make this affirmation in opposition to Plaintiff’s motion for summary judgment and (sic) order of reference on the basis that it has failed to present prima facie evidence of its entitlement to summary judgment for failure to present evidence in admissible form that the bank fulfilled all of its obligations pursuant to RPAPL §1304. While RPAPL §1304 is applicable only to residential properties, the Defendant is entitled to these protections as the property is, and always was his primary residence, a fact which was known and acknowledged by the Plaintiff at the time the loans were offered to the Defendant…. The Plaintiff, Tolbex, Inc., under information and belief, is owned by Mr. Michael Morris (hereinafter ‘Morris’). Morris visited the property with the Defendant prior to making the loan, at which time he was told and was aware that the Defendant lived in the property as his primary residence. The Defendant, Phillip Kassover, is currently 72 years old and has continuously and exclusively resided in the subject property for the past 69 years. As further evidence of his residency, Morris was provided with a driver’s license identification for the Defendant which evidenced the fact that the Defendant did live in the subject property as his primary residence. The driver’s license was issued by New York State on October 4, 2013 and is valid through October 19, 2021, and it clearly shows that the Defendant lives at the subject property, 5 Shore Drive, Kings Point, NY 11024…. As this transaction did involve a residential property, under information and belief, the Plaintiff formed a provision within the contract to classify this as a commercial loan for the sole purpose of stripping the Defendant of his protections under the New York State residential foreclosure laws. As this is a residential property, the Defendant should be entitled to the protections afforded on residential foreclosures under RPAPL §1304, including but not limited to the requirement that the lender strictly adhere to the issuance of a 90 day notice. Under RPAPL, the lender is required to send a 90 day notice by certified and regular mail. The Plaintiff provides no proof that the 90-day letter was ever sent by certified or regular mail as is required by RPAPL §1304. Since plaintiff has not produced an affidavit of service and there is no mailing receipt or discussion in any affidavit from the servicer which delineates the mailing procedures for such §1304 mailings as a matter of course, we must assume it was never sent. Had Plaintiff sent the letter by regular or certified mail, extrinsic evidence would have been presented as proof in admissible form that Plaintiff satisfied all of the conditions precedent of RPAPL §1304 which is grounds for dismissal. Plaintiff has failed to show by competent admissible evidence that the required 90 day notice was sent to the Defendant by providing a sworn statement as to the mailing procedure of the servicer or providing proof of payment of the letter which would provide unequivocal proof that 90-day letter was sent via certified and regular mail, a seemingly fatal mistake in fulfilling the conditions precedent to maintain a foreclosure action against Defendants, and at a minimum raises a question of fact which would necessarily preclude Plaintiff from obtaining summary judgment. Instead, the Plaintiff hoped that this honorable Court would overlook his attempt to bypass the requirements under RPAPL §1304 by classifying what clearly was a residential loan as a commercial loan thus bypassing all of the necessary and legally required conditions precedent to maintain the instant foreclosure action.” See Defendants Kassover’s Affirmation in Opposition Exhibit A. In reply to defendants Kassover’s opposition, counsel for plaintiff asserts, in pertinent part, that, “Kassover Defendants’ sole argument in opposition is that, since Guarantor Kassover resides in the Mortgaged Premises, this action should proceed as a residential, rather than a commercial, foreclosure action. This argument fails, and Plaintiff’s motion should be granted in its entirety, because: First, RPAPL §1304(6) defines a home loan as a loan in which ‘[t]he borrower is a natural person.’ Here, Guarantor Kassover is not the borrower. The borrower-Estate of Ruth Kassover — is an estate, which is not a natural person. Second, the loan at issue was undisputedly for business or commercial purposes and not for personal, family, consumer or household purposes. Third, Kassover Defendants do not dispute that they are in default. Fourth, Kassover Defendants do not oppose that portion of Plaintiff’s motion which seeks to dismiss their counterclaims…. Kassover Defendants argue that since Guarantor Kassover resides in the Mortgaged Premises, this action should proceed as a residential, rather than a commercial, foreclosure action. Kassover Defendants are wrong. It is well-settled that residential foreclosure actions are those which involve home loans, which are defined by RPAPL §1304 as loans made to a ‘natural person’ and in which ‘the debt incurred is primarily for personal, family, or household purposes.’ [citations omitted]. In this case, there is no dispute that the borrower/mortgagor is an estate…. Further, a party’s submission of an attorney’s affirmation, instead of ‘an affidavit by [the individual defendant] or any other party with firsthand knowledge of the matter stating that the debt was incurred primarily for personal, family, or household purposes, or that defendant intended to occupy the premises on the property as his principal dwelling,’ is insufficient to raise a triable issue of fact as to the nature of the transaction at issue. [citation omitted]…. The Initial Mortgage securing the Mortgaged Premises plainly states that it was made for commercial purposes…. In opposition, Kassover Defendants do not dispute this. Instead, defense counsel argues that the ‘provision within the contract to classify this as a commercial loan’ was only added to ‘strip[] the Defendant of his protections under the New York State residential foreclosure laws.’…Not only is this claim baseless it necessarily admits that the transaction, by its own terms, was commercial, thus placing it squarely outside the definition of a ‘home loan’ under the RPAPL. While the loan may have been secured by what Kassover Defendants purport to be Guarantor Kassover’s primary residence,…, it does not change the nature of the transaction: a loan made to an estate for business purposes.” See Plaintiff’s Affirmation in Support Exhibit A. It is well settled that the proponent of a motion for summary judgment must make a prima facie showing of entitlement to judgment as a matter of law by providing sufficient evidence to demonstrate the absence of material issues of fact. See Sillman v. Twentieth Century-Fox Film Corp., 3 N.Y.2d 395, 165 N.Y.S.2d 498 (1957); Alvarez v. Prospect Hospital, 68 N.Y.2d 320, 508 N.Y.S.2d 923 (1986); Zuckerman v. City of New York, 49 N.Y.2d 557, 427 N.Y.S.2d 595 (1980); Bhatti v. Roche, 140 A.D.2d 660, 528 N.Y.S.2d 1020 (2d Dept. 1988). To obtain summary judgment, the moving party must establish its claim or defense by tendering sufficient evidentiary proof, in admissible form, sufficient to warrant the court, as a matter of law, to direct judgment in the movant’s favor. See Friends of Animals, Inc. v. Associated Fur Mfrs., Inc., 46 N.Y.2d 1065, 416 N.Y.S.2d 790 (1979). Such evidence may include deposition transcripts, as well as other proof annexed to an attorney’s affirmation. See CPLR §3212(b); Olan v. Farrell Lines Inc., 64 N.Y.2d 1092, 489 N.Y.S.2d 884 (1985). If a sufficient prima facie showing is demonstrated, the burden then shifts to the non-moving party to come forward with competent evidence to demonstrate the existence of a material issue of fact, the existence of which necessarily precludes the granting of summary judgment and necessitates a trial. See Zuckerman v. City of New York, supra. When considering a motion for summary judgment, the function of the court is not to resolve issues but rather to determine if any such material issues of fact exist. See Sillman v. Twentieth Century-Fox Film Corp., supra. Mere conclusions or unsubstantiated allegations are insufficient to raise a triable issue. See Gilbert Frank Corp. v. Federal Ins. Co., 70 N.Y.2d 966, 525 N.Y.S.2d 793 (1988). Further, to grant summary judgment, it must clearly appear that no material triable issue of fact is presented. The burden on the court in deciding this type of motion is not to resolve issues of fact or determine matters of credibility, but merely to determine whether such issues exist. See Barr v. Albany County, 50 N.Y.2d 247, 428 N.Y.S.2d 665 (1980); Daliendo v. Johnson, 147 A.D.2d 312, 543 N.Y.S.2d 987 (2d Dept. 1989). It is the existence of an issue, not its relative strength that is the critical and controlling consideration. See Barrett v. Jacobs, 255 N.Y. 520 (1931); Cross v. Cross, 112 A.D.2d 62, 491 N.Y.S.2d 353 (1st Dept. 1985). Although summary judgment is a drastic remedy (see Andre v. Pomeroy, 35 N.Y.2d 361, 362 N.Y.S.2d 131 (1974)), nevertheless, a “court must evaluate whether the alleged factual issues presented are genuine or unsubstantiated” (see Assing v. United Rubber Supply Co., Inc., 126 A.D.2d 590, 511 N.Y.S.2d 31 (2d Dept. 1987); Rotuba Extruders, Inc. v. Ceppos, 46 N.Y.2d 223, 413 N.Y.S.2d 141 (1978)) and where there is nothing left to be resolved at trial, the case should be summarily decided. See Andre v. Pomeroy, supra at 364. In moving for summary judgment in this foreclosure action, plaintiff has established its case as a matter of law through the production of the subject mortgages, notes and guaranties and evidence of defendants Kassover’s default. See Rossrock Fund II, L.P. v. Osborne, 82 A.D.3d 737, 918 N.Y.S.2d 514 (2d Dept. 2011); HSBC Bank USA, NA v. Schwartz, 88 A.D.3d 961, 931 N.Y.S.2d 528 (2d Dept. 2011); JP Morgan Chase Bank, N.A. v. Galt Group, Inc., 84 A.D.3d 1028, 923 N.Y.S.2d 643 (2d Dept. 2011); Emigrant Mortg. Co., Inc. v. Turk, 71 A.D.3d 721, 895 N.Y.S.2d 722 (2d Dept. 2010); Neighborhood Housing Services of New York City, Inc. v. Meltzer, 67 A.D.3d 872, 889 N.Y.S.2d 627 (2d Dept. 2009). As plaintiff has demonstrated prima facie entitlement to summary judgment, the burden shifts to defendants Kassover to demonstrate an issue of fact which precludes summary judgment. See Zuckerman v. City of New York, supra. The Court finds that the opposition submitted by defendants Kassover fails to raise triable issues of fact, relying only upon the argument that, since defendant Kassover resides in the subject mortgage premises, this action should proceed as a residential foreclosure action rather than a commercial foreclosure action. It is evident from the subject Mortgages and Notes that the loan at issue was for business/commercial purposes, and not for personal, family, consumer or household purposes. Furthermore, as argued by counsel for plaintiff, the borrower was the Estate of Ruth Kassover, which, in fact, is not a natural person. Consequently, for these reasons, RPAPL §1304 does not apply to the instant matter. Accordingly, the branches of plaintiff’s motion, pursuant to CPLR §3212, for an order granting summary judgment on all causes of action in the Verified Complaint; and for an order dismissing the counterclaims of defendant Philip J. Kassover, are hereby GRANTED. The branch plaintiff’s motion, pursuant to RPAPL §1321, for an order appointing a referee and directing the referee to ascertain and compute the amounts due plaintiff upon the lien being foreclosed in this action, is also hereby GRANTED. Accordingly it is ORDERED that this action be and the same hereby is referred to Joseph Ra, Esq., Fiduciary #575569, having an office at 105 Pacific Street, Franklin Square, New York 11010-2911, telephone number (516) 398-2162, as Referee, to ascertain and compute the amount due to plaintiff herein, except for attorney’s fees, for principal, interest and other disbursements advanced as provided for in the lien upon which this action was brought, and to report to the Court with all convenient speed. And it is further ORDERED that, pursuant to CPLR §8003(a), in the discretion of the Court, a fee of $350.00 shall be paid to the Referee for the computation stage and upon the filing of his report. And it is further ORDERED that, by accepting this appointment, the Referee appointed herein is subject to the requirements of Rule 36.2(c) of the Chief Judge, and, if the Referee is disqualified from receiving an appointment pursuant to the provision of that Rule, the Referee shall notify the Appointing Judge forthwith. And it is further ORDERED that, by accepting this appointment, the Referee certifies that he is in compliance with Part 36 Rules of the Chief Judge (22 NYCRR Part 36), including, but not limited to, Section 36.2(c) (“Disqualifications from appointment”) and Section 36.2(d) (“Limitations on appointments based upon compensation”). And it is further ORDERED that the Referee is prohibited from accepting or retaining any funds for himself or paying funds to himself without compliance with Part 36 of the Rules of the Chief Judge. And it is further ORDERED that, on filing the Referee’s report, plaintiff may move for confirmation of said report and for judgment as prayed for in the Complaint. This constitutes the Decision and Order of this Court. Dated: September 28, 2021
