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Exhibit A
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SUPREME COURT OF THE STATE OF NEW YORK
COUNTY OF ROCKLAND
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HELLO LIVING DEVELOPER NOSTRAND LLC and Index No.
HELLO NOSTRAND LLC,
VERIFIED COMPLAINT
Plaintiffs,
-against-
1580 NOSTRAND MEZZ, LLC,
MADISON REALTY CAPITAL, L.P.,
Defendants.
------------------------------------------------------------------------X
The plaintiffs, Hello Living Developer Nostrand LLC (“Hello Developer Nostrand”) and
Hello Nostrand LLC (“Hello Nostrand”) by their attorneys, Marcus and Zelman, LLC and the Law
Offices of Victor A. Worms, for their complaint against the defendants state and allege the
following:
THE PARTIES
1. Plaintiff Hello Developer Nostrand is a New York limited liability company with an
address for the transaction of business located at 17 Tokay Lane, Monsey, New York 10952.
2. Plaintiff Hello Nostrand is a New York limited liability company that operates as a
real estate developer in the State of New York, County of Kings with an address at all relevant
times at 33 35 Street, Suite B-613, Brooklyn, New York 11232.
3. Defendant 1580 Nostrand Mezz LLC (“1580 Nostrand Mezz”) is, upon information
and belief, a Delaware limited liability company with an address for the transaction of business
located at 520 Madison Avenue, Suite 3501, New York, New York 10022. Defendant 1580
Nostrand Mezz, which is not authorized to do business in the State of New York under N.Y.
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Limited Liability Company Law (“LLCL”) is, upon information and belief, a shell company
formed and wholly-owned by defendant Madison Realty Capital, L.P. (“Madison Capital”) for
the sole purpose of acquiring the promissory note and pledge which are at issue in this action and
in furthering the bad faith and predatory lending practices of Madison Capital as set forth below.
4. Defendant Madison Capital is, upon information and belief, a limited liability
partnership formed under the laws of the State of Delaware, with a principal place of business
located at 520 Madison Avenue, Suite 3501, New York, New York 10022.
JURISDICTION AND VENUE
5. Jurisdiction and venue are proper in this court based upon the residency of plaintiff
Hello Developer Nostrand and all of the material events giving rise to this action occurred in the
County of Rockland.
THE NATURE OF THE ACTION
6. This is an action for a declaratory judgment declaring that defendant 1580 Nostrand
Mezz is a foreign limited liability company which is not authorized to do business in the State of
New York pursuant to LLCL and, therefore, it cannot conduct a UCC sale of the collateral
which is scheduled for September 2, 2021 beginning at 1 p.m. until it is authorized to do
business in the State of New York; and a declaratory judgment declaring that a certain purported
promissory note which was executed by plaintiff Hello Developer Nostrand cannot be enforced
by a UCC sale because, by incorporating by reference the various loan agreements which were
secured by mortgages, it violated N.Y. U.C.C. Law § 9-109(d)(11) which provides that Article 9
of the UCC does not apply to the “creation or transfer of an interest in or lien on real property."
7. This action also seeks a declaratory judgment that defendant 1580 Nostrand Mezz has
acted commercially unreasonable in attempting to conduct a UCC sale of the collateral, and that
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the purported waiver by Hello Developer Nostrand to object to the commercially unreasonable
sale of the collateral, as provided for in the pledge agreement, is void under N.Y. U.C.C. Law.
8. In addition, this action seeks a declaratory judgment declaring that defendants 1580
Nostrand Mezz and Madison Capital have acted in bad faith to clog the plaintiffs’ right of equity
redemption and to frustrate plaintiff Hello Developer Nostrand’s exercise of its right of
redemption, under N.Y. U.C.C. Law, to redeem the collateral prior to the public sale of that
collateral.
9. Finally, plaintiff Hello Developer Nostrand also seeks a permanent injunction
enjoining defendant 1580 Nostrand Mezz from selling the collateral at a UCC sale because the
plaintiffs will suffer irreparable injury if injunctive relief is not granted, and the collateral is sold
before there is a resolution of this action. Indeed, without injunctive relief, any declaratory
judgment which this Court may enter in this action will be ineffectual as the sale of the collateral
will effectively make this action moot.
FACTUAL BACKGROUND
I. Madison Capital’s Fraudulent Scheme To Use Its Predatory
Lending Practices To Take Away The Nostrand Building
10. On May 17, 2017, the Attorney General of the State of New York, in a bankruptcy
proceeding, indicated that defendant Madison Capital engages in predatory lending practices
with a business model of “loan to own.”1
11. In more fully describing defendant Madison Capital’s predatory loan to own business
model, the Attorney General stated the following:
1
See Objection of The New York Attorney General As A Party In Interest To the Final Consent Order (I)
Authorizing And Directing Use Of Cash Collateral Pursuant To 11 U.S.C. § 363(c) (II) Granting Adequate
Protection Pursuant To 11 U.S.C. § 361, And (III) Granting Related Relief” (hereinafter referred as to the
Objection”) filed in the bankruptcy proceeding entitled In Re: East Village Properties, et. al., United States
Bankruptcy Court, Southern District of New York, Case No. 17-22453.
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. . . Madison engages in predatory ‘loan to own’ deals with unaffordable
terms that it expects to result in a foreclosure and property acquisition.
A. The Nostrand Building
12. Plaintiff Hello Nostrand is the owner and developer of a real estate project consisting
of 209 luxury residential rental units, 15,000 square feet of community space, 134 parking spots,
and 50 storage units located at 1580 Nostrand Avenue, Brooklyn, New York (the “Nostrand
Building”).
13. On or about December 6, 2017, Plaintiff Hello Nostrand and non-party Prophet
Mortgage Opportunities LP (hereinafter alternatively the “Original Lender” or “Prophet
Mortgage”) entered into a loan agreement that would provide Plaintiff Hello Nostrand with
financing for the construction of the Nostrand Building (the “Loan”), consistent with a letter of
intent dated October 31, 2017.
14. The Loan was for the sum of $63,000,000.00 and was trifurcated into a senior
project, and building loan components, during the period of December 6, 2017 to March 6, 2020
(the “Term”).
15. Under the guise of attempting to provide Eli Karp, the principal of plaintiff Hello
Nostrand, with financing for his other projects, defendant Madison Capital requested that Mr.
Karp provide defendant Madison Capital with financial and other business documents on the
Nostrand Building.2
16. Unbeknownst to plaintiff Hello Nostrand and Mr. Karp, armed with the financial and
other business documents which were provided to defendant Madison Capital, 1580 Nostrand
Avenue, LLC (“1580 Nostrand Avenue”), a Delaware limited liability company, one of the many
2
Mr. Karp, a resident of Monsey, New York, is a well know real estate developer, operating through the company
by the name of Hello Living, and providing affordable housing.
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shell companies of defendant Madison Capital which it uses to conduct its predatory lending
practices, purchase the Loan on the Nostrand Building from Prophet Mortgage. The Loan on the
Nostrand Building was secured by mortgages against the building.
17. Upon purchasing the Loan on the Nostrand Building, defendant Madison Capital,
through its shell company, defendant 1580 Nostrand Avenue, became the owner of the
mortgages against the Nostrand Building, which secured the Loan.
B. The Fraudulent Declaration of Default On The Nostrand Building Loan
18. No sooner than defendant Madison Capital, through 1580 Nostrand Avenue,
acquired the Loan on the Nostrand Building, it promptly stopped providing any funding for the
completion of the Nostrand Building.
19. In response, plaintiffs Hello Developer Nostrand and Hello Nostrand, and Mr. Karp
repeatedly requested payoff letters on the Loan from defendant Madison Capital and 1580
Nostrand Avenue to refinance out of the Loan.
20. However, for more than 10 weeks, despite repeated requests for payoff letters,
defendant Madison Capital and 1580 Nostrand Avenue failed and refused to provide the
requested payoff letters.
21. When the payoff letters were finally provided, defendant Madison Capital and 1580
Nostrand Avenue had declared a default on the Loan, backdated that alleged default, and added
millions of dollars of default interests to the Loan.
22. The transparent objective of these fraudulent lending practices by defendant Madison
Capital, and its agents, and those acting in concert with them, was to hold plaintiffs Hello
Developer Nostrand and Hello Nostrand hostages in the Loan, and to manufacture a default on
the Loan and to obtain ownership of the building in a foreclosure proceeding of the mortgages
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which were secured against the Nostrand Building as part of defendant Madison Capital’s “loan
to own” business model which was described by the Attorney General of the State of New York.
C. The Forced Forbearance On The Nostrand Building Loan
23. As part of its fraudulent scheme to obtain ownership of the Nostrand Building by
means of predatory lending practices, after declaring a default on the Loan, backdating that
default and adding millions of dollars in default interests, defendant Madison Capital and 1580
Nostrand Avenue required plaintiffs Hello Nostrand and Hello Developer Nostrand and Mr.
Karp to execute a forbearance agreement, which added millions of dollars more to the Loan.
24. All of this was in furtherance of defendant Madison Capital’s fraudulent scheme to
obtain ownership of the Nostrand Building using its predatory lending practices.
25. Importantly, there was a systematic plan by defendant Madison Capital and certain of
its agents and those acting in concert with them aimed at gaining ownership of the Nostrand
Building by means of fraudulent and predatory lending practices.
26. The plan was simple and clever, and the details only became clear in hindsight. At
the core of this scheme by defendant Madison Capital was to obtain ownership of the loans on
Mr. Karp’s various real estate development projects; put all of those loans in default; add
millions of dollars in default interests on those loans; force Mr. Karp into forbearance
agreements; falsely represent that defendant Madison Capital or one of its shell companies would
provide refinancing of those loans, but never really doing so, and then obtain UCC pledges of the
ownership shares in those projects.3
3
Defendant Madison Capital, acting through various shell companies, purchased or otherwise acquired the loans on
Mr. Karp’s projects at 1520 Fulton Street, Brooklyn, New York (the “Fulton Project”); 271 Lenox Road, Brooklyn,
New York (the “Lenox Project”); 1357 Flatbush Avenue, Brooklyn, New York (the “Flatbush Project); and the
Nostrand Building.
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27. The key to defendant Madison Capital’s fraudulent scheme to use predatory lending
practices to gain ownership of the Nostrand Building was to make sure that defendant Madison
Capital or one of its shell companies were both the owners of the mortgages against the building
and the financing company that would be providing the refinancing to pay off those loans.
28. Therefore, operating from both ends of the loan transactions, defendant Madison
Capital or one of its shell companies could manufacture defaults on the loans by delaying
refinancing of the loans, and, thereby running up millions of dollars in defaults interests,
ultimately making it financially oppressive for Mr. Karp and the plaintiffs to pay off the loans.
29. When this occurred, there was only one outcome, defendant Madison Capital or one
of its shell companies would obtain ownership of the Nostrand Building in either a foreclosure
proceeding or at a UCC sale.
II. Defendant Madison Capital’s Use Of The UCC As Part Of Its
Fraudulent Scheme To Take Away The Nostrand Building
30. As part of its fraudulent scheme to obtain ownership of the Nostrand Building by
means of predatory lending practices, defendant Madison Capital, acting through defendant 1580
Nostrand Mezz, the shell company which it formed for the UCC transaction, was able to get
plaintiff Hello Developer Nostrand on August 28, 2020, to sign a promissory note, a mezzanine
loan agreement, and a pledge agreement for a mezzanine loan of $3,000,000.00.4
31. Importantly, defendant 1580 Nostrand Mezz is a Delaware limited liability company
that was formed on July 13, 2020, with the Delaware Department of State: Division of
Corporation, File Number 3229037.
4
A mezzanine loan is a loan which is generally secured not against a building, but against shares of ownership in a
company that owns the building.
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32. However, defendant 1580 Nostrand Mezz is not authorized to do business in the
State of New York pursuant to LLCL § 802.
33. LLCL § 802 provides, in relevant part, that “[b]efore doing business in this state, a
foreign limited liability company shall apply for authority to do business in this state. . . .”
34. In addition, LLCL § 802 provides that [“w]ithin one hundred twenty days after the
filing of the application for authority with the department of state, a copy of the same or a notice
containing the substance thereof shall be published once in each week for six successive weeks,
in two newspapers of the county within this state in which the office of the foreign limited
liability company is located . . . . .”
A. The Mezzanine Promissory Note
35. As part of the mezzanine loan transaction, plaintiff Hello Developer Nostrand was
required to execute a promissory note on August 28, 2020 (hereafter the “Mezzanine Promissory
Note”).
36. Plaintiff Hello Developer Nostrand was the maker of the Mezzanine Promissory
Note and defendant 1580 Nostrand Mezz was the payee of the note. (A copy of the Mezzanine
Promissory Note is annexed hereto as Exhibit “A”).
37. The maturity date of the Mezzanine Promissory Note was March 1, 2021.
38. Significantly, the Mezzanine Promissory Note contained an additional promise or
order to pay other than the promise to repay any sum provided for in the note, and which stated,
in relevant part, as follows:
Notwithstanding anything to the contrary contained herein, except for the
prepayment described in Section 7(c) above, the Principal Balance of this Note
may not be prepaid by Maker unless, simultaneously with such prepayment, the
following is also prepaid in full: (a) that certain loan originated as of December 6,
2017 (the "First Land Loan") in the principal amount of $17,730,000.00 from
PROPHET MORTGAGE OPPORTUNITIES LP (the "Original Mortgage
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Lender"), to HELLO NOSTRAND LLC, a New York limited liability company
(the "Mortgage Borrower"), as evidenced by that certain Amended, Restated
and Consolidated Senior Loan Promissory Note dated as of December 6, 2017
(the "First Land Note") in the principal amount of $17,730,000.00 executed by
Mortgage Borrower in favor of Original Mortgage Lender, and as secured by that
certain Consolidation, Extension and Modification of Senior Loan Mortgage,
Assignment of Leases and Rents, Security Agreement and Fixture Filing executed
by Mortgage Borrower in favor of Original Mortgage Lender in the principal
amount of $17,730,000.00 and encumbering the property owned by Mortgage
Borrower located at 1580 Nostrand Avenue, Brooklyn, New York 11226 (the
"Property"), as well as all guarantees, pledges, and other documents executed in
connection therewith (the "First Land Loan Documents"), which First Land
Loan was assigned by an Assignment of Consolidation, Extension and
Modification of Senior Loan Mortgage, Assignment of Leases and Rents, Security
Agreement and Fixture Filing and Senior Loan Collateral Assignment of Leases
and Rents dated June 7, 2019 by Original Mortgage Lender to 1580 NOSTRAND
AVE LLC, a Delaware limited liability company (collectively, together with its
successors and/or assigns, the "Mortgage Lender"); (b) that certain building
loan originated as of December 6, 2017 (the "Building Loan") in the principal
amount of $39,770,000.00 from Original Mortgage Lender to the Mortgage
Borrower, as evidenced by that certain Building Loan Promissory Note dated as
of December 6, 2017 (the "Building Note") in the principal amount of
$39,770,000.00 executed by Mortgage Borrower in favor of Original Mortgage
Lender, and as secured by that certain Building Loan Mortgage, Assignment of
Leases and Rents, Security Agreement and Fixture Filing executed by Mortgage
Borrower in favor of Original Mortgage Lender in the principal amount of
$39,770,000.00 and encumbering the Property, as well as all guarantees, pledges,
and other documents executed in connection therewith (the "Building Loan
Documents"), which Building Loan was assigned by an Assignment of Building
Loan Mortgage, Assignment of Leases and Rents, Security Agreement and
Fixture Filing and Senior Loan Collateral Assignment of Leases and Rents dated
June 7, 2019 by Original Mortgage Lender to Mortgage Lender; (c) that certain
project loan originated as of December 6, 2017 (the "Project Loan") in the
principal amount of $5,500,000.00 from Original Mortgage Lender to the
Mortgage Borrower, as evidenced by that certain Project Loan Promissory Note
dated as of December 6, 2017 (the "Project Note") in the principal amount of
$5,500,000.00 executed by Mortgage Borrower in favor of Original Mortgage
Lender, and as secured by that certain Project Loan Mortgage, Assignment of
Leases and Rents, Security Agreement and Fixture Filing executed by Mortgage
Borrower in favor of Original Mortgage Lender in the principal amount of
$5,500,000.00 and encumbering the Property, as well as all guarantees, pledges,
and other documents executed in connection therewith (the "Project Loan
Documents"), which Project Loan was assigned by an Assignment of Project
Loan Mortgage, Assignment of Leases and Rents, Security Agreement and
Fixture Filing and Senior Loan Collateral Assignment of Leases and Rents dated
June 7, 2019 by Original Mortgage Lender to Mortgage Lender; and (d) that
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certain loan originated as of the date hereof (the "Second Land Loan") in the
principal amount of up to $8,300,000.00 from Mortgage Lender to the Mortgage
Borrower, as evidenced by that certain Mortgage Note dated as of the date hereof
(the "Second Land Note") in the principal amount of up to $8,300,000.00
executed by Mortgage Borrower in favor of Mortgage Lender, and as secured by
that certain Mortgage and Security Agreement executed by Mortgage Borrower in
favor of Mortgage Lender in the principal amount of up to $8,300,000.00 and
encumbering the Property, as well as all guarantees, pledges, and other documents
executed in connection therewith (the "Second Land Loan Documents" and,
together with the First Land Loan Documents, the Building Loan Documents, and
the Project Loan Documents, collectively, the "Mortgage Loan Documents").
The First Land Loan Documents, the Building Loan Documents, and the Project
Loan Documents are subject to the terms of the Forbearance Agreement (as
defined in the Loan Agreement).
(See Mezzanine Promissory Note, ¶ 9, Exhibit “A” annexed hereto).
39. The inclusion of the additional promises with references to loan agreements and
documents collateral to the mezzanine loan, and which are secured by mortgages, rendered the
Mezzanine Promissory Note not a negotiable instrument subject to the UCC.5
40. This is because by incorporating by reference the various loan agreements which
were secured by mortgages, the Mezzanine Promissory Note violated N.Y. U.C.C. Law § 9-
109(d)(11) and, therefore, the collateral which secures the note cannot be sold at a UCC sale.6
B. The Mezzanine Loan Agreement
41. The Mezzanine Loan Agreement, dated August 28, 2020, provided that the amount
of the loan was $3,000,000.00, and it was evidenced by the Mezzanine Promissory Note.
42. In the Mezzanine Loan Agreement, plaintiff Hello Developer Nostrand is defined as
the “Borrower” and defendant 1580 Nostrand Mezz is defined as the “Lender.”
5
See, N.Y. U.C.C. Law § § 9-109(d)(11) which explicitly exempt from Article 9 of the UCC, the "creation or
transfer of an interest in or lien on real property."
Thus, by incorporated by reference the various loans secured by
mortgages against the Nostrand Building, the mezzanine promissory and the mezzanine pledge agreement cannot be
enforced under Article 9 of the UCC. Thus, – any purported sale of the collateral consisting of
6
See, N.Y. U.C.C. Law § § 9-109(d)(11) which explicitly exempt from Article 9 of the UCC, the "creation or
transfer of an interest in or lien on real property."
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43. Notably, the Mezzanine Loan Agreement provided, in relevant part, as follows:
WHEREAS, Borrower is the direct beneficial owner of all of the membership
interests in Mortgage Borrower (collectively, the "Pledged Interests");
WHEREAS, Borrower has requested Lender to make a loan to it in the principal
amount of up to $3,000,000.00 (the "Loan"), which Loan is evidenced by that
certain Mezzanine Promissory Note executed by Borrower in favor of Lender (the
"Note");
WHEREAS, as a condition precedent to the obligation of Lender to make the
Loan to Borrower, Borrower has entered into that certain Ownership Interests
Pledge and Security Agreement, dated as of the date hereof, in favor of Lender (as
amended, supplemented or otherwise modified from time to time, the "Pledge
Agreement"), pursuant to which Borrower has granted to Lender a first priority
security interest in the Collateral (as hereinafter defined) as collateral security for
the Debt (as hereinafter defined) (the Pledge Agreement, together with the Note,
this Agreement, and all other documents and guarantees executed by Borrower
and Guarantor and any other party in favor of Lender in connection with the
Loan, hereinafter, the "Loan Documents"). . . .
(A copy of the Mezzanine Loan Agreement is annexed hereto as Exhibit “B”).
C. The Ownership Interests Pledge And Security Agreement With
Its Unlawful Waiver Of The Commercial Unreasonableness Of
Any UCC Sale of The Collateral
44. To secure the Mezzanine Promissory Note, plaintiff Hello Developer Nostrand was
required to execute an Ownership Interests Pledge and Security Agreement, dated August 28,
2021, pledging to defendant 1580 Nostrand Mezz 100% of plaintiff Hello Developer Nostrand’s
membership interest in plaintiff Hello Nostrand (the “Collateral”), the owner of the Nostrand
Building. (A copy of the Ownership Interests Pledge and Security Agreement is annexed hereto
as Exhibit “C”).
45. In the Ownership Interests Pledge and Security Agreement, plaintiff Hello Developer
Nostrand was defined as the “Pledgor” and defendant 1580 Nostrand Mezz was defined as the
“Lender.”
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46. The Ownership Interests Pledge and Security Agreement referred to defendant 1580
Nostrand Mezz has a “secured party” “in the Collateral under Article 9 of the UCC.7
47. In a complete lack of good faith, the Ownership Interests Pledge and Security
Agreement unlawfully provided that plaintiff Hello Developer Nostrand waived any defense of
commercial unreasonableness to a UCC sale of the Collateral by providing, in relevant part, as
follows:
. . . Pledgor agrees that any such private sale shall be deemed to have been
made in a commercially reasonable manner and that Lender shall have no
obligation to engage in public sales . . . .
Without in any way limiting Lender's right to conduct a foreclosure sale in
any manner which is considered commercially reasonable, Pledgor hereby
agrees that any foreclosure sale conducted in accordance with the
following provisions shall be considered a commercially reasonable sale
and hereby irrevocably waives any right to contest any such sale . . . .
(Emphasis added).
. . . . Further Borrower hereby waives any offsets, counterclaims or
defenses to the commercial reasonableness of a foreclosure sale arising
directly or indirectly from the existence and/or spread of the Coronavirus
Disease (COVID-19) or any related strain or mutation thereof . . . .
. . . . Notwithstanding Pledgor's agreement that any foreclosure sale
conducted in accordance with the foregoing provisions shall be considered
a commercially reasonable sale, the foregoing description of potential
foreclosure sale procedures and the agreement of Pledgor that such
procedures are commercially reasonable shall create no implication that a
foreclosure sale conducted using different procedures is commercially
unreasonable.
(See the Ownership Interests Pledge and Security Agreement, annexed hereto as Exhibit “C,” ¶¶
12 (b), (d), (d)(iv) & (vi)).
48. The purported waiver by plaintiff Hello Developer Nostrand of its rights to assert
the commercial unreasonableness of any sale of the Collateral under the UCC by defendant 1580
7
N.Y. U.C.C. Law § 9-102(73) provides that a “Secured party” means “a person in whose favor a security interest is
created or provided for under a security agreement . . . .”
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Nostrand Mezz was null and void under New York law and reflected the bad faith determination
of defendant Madison Capital, using its shell company, defendant 1580 Nostrand Mezz, to take
away the Nostrand Building using a UCC sale.8
D. The Commercially Unreasonable Notice Of Sale
49. On July 14, 2021, defendant 1580 Nostrand issued a Notice of Sale to sell the
Collateral at a UCC sale. The Notice of sale indicated that the UCC sale of the Collateral “will
take place beginning at 1:00 p.m. on September 2, 2021.” (A copy of the Notice of Sale is
annexed hereto as Exhibit “D”).
50. The Notification of Disposition of Collateral, which was attached to the Notice of
Sale, and incorporated therein, indicated that plaintiff Hello Developer had defaulted under the
“Loan Documents” for the failure to pay “the real estate taxes due on January 1, 2021 in
accordance with the Mortgage Loan Documents” and for failing to pay off the loan on the
maturity date on March 1, 2021. (See Notification of Disposition of Collateral annexed to
Exhibit “D” hereto).
8
N.Y. U.C.C. Law § 9-602(g) makes the waiver of the defense of commercial unreasonableness to the disposition of
the collateral a non-waiver defense by providing as follows:
Except as otherwise provided in Section 9-624, to the extent that they give rights to a debtor or obligor and
impose duties on a secured party, the debtor or obligor may not waive or vary the rules stated in the
following listed sections: (Emphasis added)
(g) Sections 9-610 (b), 9-611, 9-613, and 9-614, which deal with disposition of collateral. . . .
(Emphasis added).
N.Y. U.C.C. Law § 9-610(b) provides, in relevant part, as follows:
Every aspect of a disposition of collateral, including the method, manner, time, place,
and other terms, must be commercially reasonable.
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51. Importantly, the Notification of Disposition of Collateral explicitly stated that the
[p]ledgor and other obligated parties may be liable for any indebtedness which shall remain after
such sale to the extent permitted by applicable law and the Loan Documents.”
52. In this respect, the Mezzanine Promissory Note, incorporated by reference, the loans,
and mortgages against the Nostrand Building.
53. Therefore, the Notice of Sale is commercially unreasonable because it is materially
misleading since it suggests that any purchaser of the Collateral could be liable on the loans and
the mortgages against the Nostrand Building.
54. Therefore, since defendant Madison Capital, through its various shell companies,
own the mortgages against the Nostrand Building, the Notice of Sale is designed to ensure that
defendant Madison Capital or one of its shell companies will be the only bidders for the
Collateral.
55. The Notice of Sale is also commercially unreasonable because by being materially
misleading, it has effectively rigged the auction to ensure that defendant Madison Capital or one