United States District Court, S.D. New York
OPINION AND ORDER
LORNA G. SCHOFIELD, District Judge.
Plaintiff Capital One, N.A. brings this action against Defendants 48-52 Franklin, LLC ("Franklin"), Marshall Weisman, the Bureau of Highway Operations, Creative Habitats, Inc. and CM & Associates Construction and asserts the following causes of action: (1) Foreclosure of Mortgage, (2) Possession, (3) Entitlement to Rents, (4) Appointment of a Receiver and (5) Foreclosure of Security Interest in Personalty. Currently before the Court is Plaintiff's motion for partial summary judgment on its claim for Foreclosure of Mortgage. For the reasons stated below, Plaintiff's motion is granted.
Also for the reasons stated below, the Court (1) enters a final judgment of foreclosure and sale; (2) finds that the amount owed as of October 31, 2013, under the mortgages at issue is $1, 747, 482.17; (3) finds that interest at 9% per annum continued to accrue from November 1, 2013; and (4) grants to Plaintiff attorneys' fees and legal costs in the amounts of $52, 770.92 and $2, 076.19, respectively.
This action involves the commercial foreclosure of two condominium units and seven parking spaces. The facts are taken from the parties' summary judgment submissions and, as required on this motion, viewed in the light most favorable to the non-moving party. The following facts are undisputed unless otherwise noted.
Plaintiff Capital One's predecessor-in-interest, the North Fork Bank, provided financing in a principal amount of approximately $52 million (the "Loan") to Defendant Franklin for development of a seventy-two-unit condominium structure located in Manhattan, New York (the "Property"). The Loan was secured by three mortgages (the "Mortgages") and corresponding notes (the "Notes"), all dated December 21, 2007 (the "Loan Documents"). As additional security for the Loan, Defendant Weisman executed a payment and performance guaranty, also dated December 21, 2007.
The first Mortgage and Note, referred to as the "Land Loan, " was for $17 million, and constituted a first lien over the Property. The second Mortgage and Note, referred to as the "Construction Loan, " was for approximately $32 million and constituted a second lien over the Property. The third Mortgage and Note, referred to as the "Project Loan, " was for approximately $3.6 million and constituted a third lien over the Property. Subsequently, seventy of the seventy-two condominium units and all but seven parking spaces at the Property were sold to third parties and are no longer subject to the Mortgages.
The Loan Documents provide that they cannot be modified orally, but only by a signed written agreement. Capital One, Franklin and Weisman modified the Loan Documents, through the execution of new signed writings, on three occasions: May 18, 2009, February 3, 2010, and September 24, 2010. Each of these modifications included a provision stating that the parties "acknowledge and agree that... neither the Borrower nor the Guarantor has any defense, set-off, counterclaim, or challenge against the payment of any sums due and owing to the Agents or the Lenders or the enforcement of any terms of the Loan Agreements."
In addition, by letter dated October 11, 2011, the maturity date of the Notes was extended to November 30, 2011. This letter stated:
Other than as to changing the maturity date under the Loan Documents... no modification of the Loan Documents and no other agreement or understanding of any nature shall be deemed to have been entered into by or be binding on Lender... and Borrower shall be obligated to perform all of its obligations under the Loan Documents... including... the obligation to make all... payments required under the Loan Documents.
When the Loan matured, Franklin failed to make the full payment owed to Capital One, which constituted a default under the terms of the Loan. Capital One issued a notice of default on February 23, 2012. Franklin and Weisman have admitted that they did not pay the Loan in full when the Notes matured. However, the parties dispute the amount owed under the Loan.
Capital One has submitted its records regarding the Loan, which show the payments made and a running principal balance for each of the Notes. These records show that the principal balance outstanding on the Land Loan is $790, 443.78; the principal balance outstanding on the Construction Loan is $612, 915.74; and the principal balance outstanding on the Project Loan is $54, 273.68.
The interest on each of the Notes before the maturity date was 4%. The interest on each of the Notes following default is 9%. Interest continues to accrue. According to Capital One's records, as of October 31, 2013, the total amount owed including principal and interest on the Land Loan is $940, 328.77; on the Construction Loan is $729, 137.49; and on the Project Loan is $68, 531.11.
Additionally, Capital One's records show that it paid $1, 600 for an environmental study and $4, 500 for an appraisal of the Property (the "Expenses"), which Expenses the mortgagor is required to reimburse under the terms of the Loan Documents. Capital One is waiving any late fees owed.
According to Capital One's records, as of October 31, 2013, the total amount owed under the Mortgages, including the outstanding principal balances on all three Notes, the 4% interest accrued through the maturity date, the 9% default interest accrued through October 31, 2013 and the Expenses, is $1, 744, 097.38. Franklin and Weisman do not provide the Court with an alternate amount that they believe is owed, nor do they present any records or other evidence of their own regarding the amounts paid or outstanding under the Loan.
Instead, Franklin and Weisman claim that Capital One officers Bill Booth and Michael Verguer made an oral promise that Capital One would not seek to recoup the entire amount of the Loan; specifically, that if the condominium units were sold at "depressed prices, " then Capital One would not "sue in the case of a deficiency." Capital One denies that any such oral promise was made.
Capital One also seeks attorneys' fees in the amount of $52, 770.92 and legal costs in the amount of $2, 076.19. According to the terms of the Loan Documents, the mortgagor is liable for attorneys' fees and legal costs in the event of a default.
A. Procedural History
Capital One filed the Complaint in this action on April 27, 2012. On June 12, 2012, as none of the defendants had responded to the Complaint, Capital One filed a request for the entry of default judgment against Defendants Franklin, Weisman, the Bureau of Highway Operations and Creative Habitats, Inc. Then, on July 18, 2012, Capital One filed a request for the entry of default judgment against Defendant ...