1450 Gun Hill Road LLC; Sterling Trust Company, Custodian FBO Ira Saferstein Ira 380206 and Sterling Trust Company, Custodian FBO Norman Saferstein Ira 380207, Plaintiffs,
Capital Hill Partners, LLC, 9016 Realty, LLC, Baxter Forty Four, LLC, Terence C. Scheurer, Aftab Uddin Tanvir, William Slattery, the City of New York Environmental Control Board and Columbia Estates, LLC, Defendants.
This case is not published in a printed volume and its disposition appears in a table in the reporter.
For Plaintiffs: Loeb &
Loeb, LLP By: David M. Satnick
For Defendant Columbia
Estates, LLC: Boris Zivotov, Esq., P.C.
Paul G. Feinman, J.
In this mortgage foreclosure action, defendant Columbia Estates, LLC ("Columbia") moves, by order to show cause, pursuant to CPLR 317 and/or CPLR 5015(a), to vacate an October 11, 2007 judgment of foreclosure and sale entered against it on default.
Plaintiffs oppose the motion and request costs and sanctions against Columbia.
In March, 2005, defendant Capital Hill Partners, LLC ("Capital") executed a mortgage securing the $2.7 million financing that plaintiffs provided to Capital. That financing enabled Capital to purchase property located at 308 West 116th Street in Manhattan ("the property") from Columbia. The mortgage encumbers the property as well as two buildings that Capital owns in Brooklyn, New York. Non-party Titan Capital arranged the financing and the loan proposal states that financing will be advanced by Titan or "its affiliates and/or assigns." (Saferstein Opp. Aff., Ex. 1, p. 1). Because of particular financing arrangements associated with this loan, Titan directed that the loan documents, including the mortgage note and mortgage be made in the names of Titan's affiliate, plaintiff 1450 Gun Hill Road LLC and plaintiff Sterling Trust Company.  Plaintiffs claim that they were not aware that, on the same day that Capital closed on the $2.7 million loan, Capital also gave a "second position mortgage" to Columbia that secured a $1 million loan that Columbia granted to Capital.
By its terms, plaintiffs' $2.7 million mortgage, and the loan secured thereby, matured and became fully due and payable on April 30, 2007. On that date, Capital defaulted by failing to pay the outstanding principal and accrued interest.
On May 1, 2007, following Capital's default, plaintiffs commenced this mortgage foreclosure action. On May 11, 2007, Columbia was served with the summons and complaint by service upon the New York Secretary of State (Zivitov Aff., Ex. B).  Pursuant to LLCL section 303(a) service was complete on May 11, 2007 when the Secretary of State was served. Once served, the Secretary of State sent a copy of the summons and complaint, by certified mail, return receipt requested, to Columbia in care of its designated agent for service of process, Itzhak Katan, at the address on file with the Secretary of State. On May 17, 2007, Itzhak Katan, or someone on his behalf, signed the Secretary of State's certified mail receipt. (Satnick Aff., Ex. 1). Thereafter, Columbia neither answered nor moved within the thirty days allotted by statute (CPLR 320[a]). However, on September 17, 2007, after plaintiffs had moved for a judgment of foreclosure, but before the judgment was entered, Columbia filed a notice of appearance. Columbia took no further action for more than two months until it filed this order to show cause to vacate its default dated November 27, 2007. The proposed order to show cause contained two stay provisions requesting that the court stay enforcement of the judgment and that the court stay the referee from conducting the foreclosure sale. After hearing from both sides, the court declined to sign the stay provisions.
In support of vacatur, Columbia contends that it did not receive the pleadings in this action in time to defend in the mortgage foreclosure action and that it has a meritorious defense because its vendor's purchase money ...