Ilya Magid, as trustee for the Magidenko Family Irrevocable Trust, respondent,
Sunrise Holdings Group, LLC, appellant.
Tsyngauz & Associates, P.C., New York, NY (Yevgeny
Tsyngauz and Simon I. Malinowski of counsel), for appellant.
Offices of Marc E. Bengualid, PLLC, New York, NY (Etan C.
Harris of counsel), for respondent.
E. CHAMBERS, J.P., ROBERT J. MILLER, SYLVIA O. HINDS-RADIX,
COLLEEN D. DUFFY, JJ.
DECISION & ORDER
action for a judgment declaring, inter alia, that a UCC-1
financing statement recorded against a cooperative apartment
known as 2940 West Fifth Street, Apt. 5A, in Brooklyn, was
null and void and that a notification of disposition of
collateral relating to that cooperative apartment was
invalid, and for related injunctive relief, the defendant
appeals, as limited by its brief, from so much of an order of
the Supreme Court, Kings County (Lewis, J.), dated August 27,
2015, as granted those branches of the plaintiff's motion
which were, in effect, for summary judgment declaring that
the UCC-1 financing statement recorded against 2940 West
Fifth Street, Apt. 5A, in Brooklyn, was null and void and
that the notification of disposition of collateral relating
to that cooperative apartment was invalid, and that branch of
the plaintiff's motion which was pursuant to CPLR 6301
for a preliminary injunction enjoining the defendant from
foreclosing on that cooperative apartment.
that the order is modified, on the law, by deleting the
provisions thereof granting those branches of the
plaintiff's motion which were, in effect, for summary
judgment declaring that the UCC-1 financing statement filed
against the cooperative apartment known as 2940 West Fifth
Street, Apt. 5A, in Brooklyn, was null and void and that the
notification of disposition of collateral relating to that
cooperative apartment was invalid, and substituting therefor
provisions denying those branches of the motion; as so
modified, the order is affirmed insofar as appealed from,
with costs to the defendant.
plaintiff is the sole trustee of the Magidenko Family
Irrevocable Trust (hereinafter the trust), which was created
by his parents, Natan Magidenko and Tsilya Magidenko
(hereinafter together the Magidenkos), in 2008 to hold their
shares of stock in a cooperative apartment known as 2940 West
Fifth Street, Apt. 5A, in Brooklyn. The Magidenkos, as
grantors, were named as the income beneficiaries of the
trust, and also retained a life estate in the apartment. In
addition to his role as trustee, the plaintiff was also
designated as the primary remainderman of the trust, and his
children were named as contingent remaindermen.
2011, the plaintiff, both personally and in his capacity as
trustee, executed a promissory note in favor of the defendant
in the amount of $150, 000. As collateral for the loan, the
plaintiff, in his capacity as trustee, executed a loan
security agreement in which he allowed the defendant, inter
alia, to record a UCC-1 financing statement against the
apartment. Pursuant to the agreement creating the trust, a
copy of which was reviewed by the defendant, the trustee, in
his fiduciary capacity, had full right, power, and authority,
inter alia, "[t]o borrow... such sums of money or other
property for such purposes and periods of time, at such rates
of interest, as [he] may, in his discretion, determine, to
execute promissory notes or other instruments evidencing such
borrowings, and if necessary, to furnish any trust property
as security therefore." The loan documentation made no
mention of the purpose or purposes for which the loan
proceeds would be used.
undisputed that the plaintiff stopped making payments on the
loan after November 1, 2013. After declaring the plaintiff in
default by letter dated August 5, 2014, the defendant
notified the plaintiff of its intent to sell the subject
apartment at a public auction on November 25, 2014.
plaintiff thereafter commenced this action for declaratory
and injunctive relief, and simultaneously moved, on an
emergency basis, for a preliminary injunction to stop the
November 25, 2014, sale, and, in effect, for summary judgment
declaring, inter alia, that the UCC-1 financing statement was
null and void. In support of his motion, the plaintiff
submitted an affidavit in which he averred, inter alia, that
the loan proceeds were for his personal use.
opposition, the defendant submitted, inter alia, evidence
that $30, 000 of the loan proceeds were used to satisfy a
money judgment against "Ilya Magid, Natan Magidenko,
Tsilya Magidenko and The Magidenko Family Irrevocable Trust,
" $85, 922.50 of the proceeds were transferred to a law
firm that had represented the trust, and all but $10, 000 of
the remaining proceeds were used to pay for various closing
costs or were retained by the defendant as "pre-paid
interest." The remaining $10, 000 was paid to the
defendant as "repayment of a prior loan [the defendant]
had made to the [p]laintiff."
supplemental affidavit submitted in reply to the
defendant's opposition papers, the plaintiff denied the
existence of any prior loan from, or relationship with, the
Supreme Court, inter alia, granted that branch of the
plaintiff's motion which was, in effect, for summary
judgment declaring that the UCC-1 financing statement was
null and void. The defendant appeals.
dealing with a trustee must take notice of the scope of the
trustee's authority. "An act within [the
trustee's] authority will bind the trust estate or the
beneficiaries as to third persons acting in good faith and
without notice, although the trustee intended to defraud the
estate, and actually did accomplish his [or her] purpose by
means of the act in question" (Kirsch v Tozier,
143 NY 390, 395-396; see Dye v Lincoln Rochester Trust
Co., 40 A.D.2d 583, affd 31 N.Y.2d 1012).
Moreover, "[a] person who in good faith transfers money
or property to a trustee is not responsible for the proper
application of such money or property; and any right or title
derived by him from the trustee in consideration of such
transfer is not affected by the trustee's misapplication
of such money or property" (EPTL 7-3.3).
even assuming that the plaintiff's moving papers were
sufficient to establish his prima facie entitlement to
judgment as a matter of law, the Supreme Court erred in
granting summary judgment to the plaintiff declaring that the
UCC-1 financing statement filed against the apartment was
null and void and that the notification of disposition of
collateral was invalid as the record presents unresolved
material issues of fact as to whether the loan proceeds were
used to satisfy non-trust debts, and whether the lender acted
in good faith in extending the loan (see Matter of
Pepi, 1996 WL 34571234, 1996 NYLJ Lexis 64, ...