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236 CANNON REALTY v. ZISS

February 8, 2005.

236 CANNON REALTY, LLC, Plaintiff,
v.
TIMOTHY ZISS, HOWARD PADERNACHT, MICHAEL PADERNACHT, GEORGE C. COFFINAS, MICHAEL CARRIERI, and FRANCIS KORZEKWINSKI, Defendants.



The opinion of the court was delivered by: WILLIAM PAULEY, District Judge

MEMORANDUM AND ORDER

Plaintiff 236 Cannon Realty, LLC ("Cannon") brings this action alleging violations of the Racketeer Influenced Corrupt Organizations ("RICO") Act, 18 U.S.C. § 1962(c) and § 1962(d). Cannon alleges that Timothy Ziss, George C. Coffinas, Howard Padernacht, Michael Padernacht, Michael Carrieri and Francis Korzekwinski (collectively, "defendants") engaged in a scheme to obtain control over the rental income of a residential building (the "Property") owned by plaintiff. Cannon also asserts pendent state law claims.

  Presently before this Court is defendants' motion for summary judgment, pursuant to Rule 56 of the Federal Rules of Civil Procedure. For the following reasons, defendants' motion is granted. Page 2

  BACKGROUND

  Cannon is a limited liability company owned by Jack Saljanin. (Defendants' Rule 56.1 Statement of Material Facts*fn1 ("Defs. 56.1 Stmt.") ¶ 25; Deposition of Jack Saljanin, dated Jan. 30, 2004 ("Saljanin Dep."), at 58.) Since April 1999, Cannon has held title to the Property, which is located in the Bronx. (Defs. 56.1 Stmt. ¶¶ 3, 24-25, 50, 71; Saljanin Dep. at 58; Deposition of Tony "Nua" Shala, dated Jan. 27, 2004 ("Shala Dep."), at 81, 188.) Saljanin manages Cannon with the assistance of Tony Shala. (Defs. 56.1 Stmt. 24-25; Saljanin Dep. at 58; Shala Dep. at 81, 188.) On April 6, 1999, Cannon obtained a $6.35 million mortgage loan from Flushing Savings Page 3 Bank ("FSB" or the "Bank") to satisfy its outstanding debts on the Property. (Defs. 56.1 Stmt. ¶ 28, 32-33; Saljanin Dep. at 31, 36, 58-60; Shala Dep. at 18, 22.) Michael Carrieri, a licensed real estate broker, helped Cannon obtain that loan. (Defs. 56.1 Stmt. ¶ 29.)

  In April 2000, Cannon fell behind in its mortgage payments. (Defs. 56.1 Stmt. ¶ 35.) FSB commenced a foreclosure proceeding in June 2000. (Defs. 56.1 Stmt. ¶ 35-37; Declaration of Jeffrey L. Bernfeld, dated Apr. 30, 2004 ("Bernfeld Decl."), Ex. B: FSB Letter to Cannon, dated May 10, 2000; Saljanin Dep. at 70-72; Shala Dep. at 32-33.) On July 6, 2000, the New York State Supreme Court (Bronx County) appointed a receiver to collect rents and manage the Property. (Defs. 56.1 Stmt ¶¶ 36-37; Bernfeld Decl. Ex. B: FSB Letter to Cannon, dated May 10, 2000; Saljanin Dep. at 70-72; Shala Dep. at 32-33.)

  After the receiver was appointed, Cannon and FSB entered into a forbearance agreement (the "Forbearance Agreement") on July 11, 2000. (Bernfeld Decl. Ex. C.) Francis Korzekwinski, an FSB senior vice president, signed the Forbearance Agreement on behalf of the Bank. (Defs. 56.1 Stmt. ¶ 41; Deposition of Francis Korzekwinski, dated Jan. 26, 2004 ("Korzekwinski Dep."), at 114-15.) In return for Cannon's bringing the loan current, FSB agreed to forgive the default interest. (Defs. 56.1 Stmt. ¶ 40; Bernfeld Decl. Ex. C; Shala Page 4 Dep. at 26-29.) The Forbearance Agreement also provided for the removal of the receiver if Cannon remained current on its monthly mortgage payments. (Defs. 56.1 Stmt. ¶ 40; Shala Dep. at 26-29; Bernfeld Decl. Ex. C.)

  However, Cannon failed to make any mortgage payments after the Forbearance Agreement was executed. (Defs. 56.1 Stmt. ¶ 43; Korzekwinski Dep. at 131.) Instead, it sought alternative financing to pay off the entire FSB mortgage. (Defs. 56.1 Stmt. ¶¶ 43, 47; Pl. 56.1 Stmt. ¶ 47; Korzekwinski Dep. at 131; Shala Dep. at 35-36.) Toward that goal, Shala discussed a proposed $10 million loan at ten percent interest with Jake Selechnik. (Defs. 56.1 Stmt. ¶¶ 3, 25, 50, 71; Saljanin Dep. at 58, 138-41; Shala Dep. at 37-38, 81.) However, they never agreed on the terms. (Shala Dep. at 81.)

  Thereafter, Howard Padernacht, an acquaintance of Shala and Saljanin, arranged a meeting for them with Timothy Ziss who had a financing proposal for Cannon. (Defs. 56.1 Stmt. ¶ 51; Shala Dep. at 38-40, 53-54, 191-92.) Plaintiff claims that Howard Padernacht said that Ziss would offer a loan on the same terms as Selechnik. (Shala Dep. at 149-50.)

  On or about August 31, 2000, Shala and Saljanin met with Ziss in the law offices of George Coffinas regarding a possible loan. (Defs. 56.1 Stmt. ¶ 53.) Coffinas and Howard Padernacht also attended the meeting. (Defs. 56.1 Stmt. ¶¶ 53, Page 5 60.) Although Ziss offered Cannon a loan, no agreement was reached. (Defs. 56.1 Stmt. ¶¶ 69, 73; Shala Dep. at 93-95.) On September 5, 2000, Saljanin executed a ground lease (the "Ground Lease") for the Property on behalf of Cannon. (Defs. 56.1 Stmt. ¶ 76; Pl. 56.1 Stmt. ¶ 76.) Ziss also signed the Ground Lease (Bernfeld Decl. Ex. E), although the date he did so is unknown. Saljanin acknowledges that he never read the Ground Lease before signing it. (Saljanin Dep. at 155-58.)

  Since Cannon was in default of its FSB mortgage, Ziss' company, Allied Properties, LLC ("Allied"), assumed the mortgage on the Property. Allied and FSB executed an assumption agreement (the "Assumption Agreement") on September 14, 2000. (Defs. 56.1 Stmt. ¶ 78.) The record contains no evidence that Cannon participated in the negotiations for the Assumption Agreement. In late September 2000, Ziss informed Cannon that he had agreed with FSB to assume the mortgage on the Property. (Defs. 56.1 Stmt. ¶ 99; Pl. 56.1 Stmt. ¶ 99.)

  On September 20, 2004, Coffinas recorded the Ground Lease with the City Registrar. (Defs. 56.1 Stmt. ¶ 94; Bernfeld Decl. Ex. E: Ground Lease.) The Ground Lease provides, inter alia, for a forty-five (45) year term with four thirty-five (35) year extensions. (Bernfeld Decl. Ex. E.) It also requires Allied to satisfy the FSB mortgage. (Bernfeld Decl. Ex. E.) Plaintiff claims that the recorded Ground Lease differs from the Page 6 copy Saljanin signed on September 5, 2000. (Pl. 56.1 Stmt. ¶¶ 76, 94.) Saljanin maintains that when he signed the Ground Lease he initialed the bottom portion of each page. (Saljanin Dep. at 157-58.) However, the recorded Ground Lease does not bear his initials on each page. (Bernfeld Decl. Ex. E.) Other than the absence of Saljanin's initials, Cannon offers no evidence as to how the Ground Lease was altered, or who might have altered it. (See Pl. 56.1 Stmt. ¶¶ 76, 94.)

  After Coffinas recorded the Ground Lease, Allied took control of the Property in late September 2000. (Defs. 56.1 Stmt. ¶¶ 94-96; Saljanin Dep. at 264; Shala Dep. at 83, 143-44.) Allied then retained Midas Management, LLC ("Midas") to manage the Property. (Defs. 56.1 Stmt. ¶¶ 96-97.) Midas is owned and operated by Howard Padernacht's son, Michael. (Defs. 56.1 Stmt. ¶ 96; Saljanin Dep. at 264; Shala Dep. at 83, 143-44.)

  While Cannon still holds legal title to the Property, it does not receive any of the rental income. (Defs. 56.1 Stmt. ¶¶ 102, 151; Pl. 56.1 Stmt. ¶ 102.)

  DISCUSSION

  I. Summary Judgment Standard

  A court may grant summary judgment only if "there is no genuine issue as to any material fact" and "the moving party is entitled to summary judgment as a matter of law." Page 7 Fed.R.Civ.P. 56(c). The movant bears the burden of establishing that no genuine issues of material fact exist. Celotex Corp. v. Catrett, 477 U.S. 317, 322-24 (1986); accord McLee v. Chrysler Corp., 109 F.3d 130, 134 (2d Cir. 1997). Once the movant satisfies this requirement, the burden shifts to the nonmoving party "to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial." Celotex, 477 U.S. at 322. The court is required to resolve any ambiguities and to make all reasonable inferences in favor of the nonmoving party. Flanigan v. Gen. ...


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