Document for Ny 2015 Boat Llc v. 2435 Kingsland Llc, Eric Shapiro, Steven J. Shapiro, City Of New York Department Of Finance, City Of New York Environmental Control Board

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                                INDEX     NO.     806264/2022E
NYSCEF   DOC.     NO.      152                                                                            RECEIVED      NYSCEF:     11/06/2023



                                         NEW YORK SUPREME COURT - COUNTY OF BRONX
                                                          PART 32

                SUPREME COURT OF THE STATE OF NEW YORK
                COUNTY OF THE BRONX
                                                    a=.                              --X
                NY 2015 BOAT LLC,
                                                                                                Index No. 806264/2022E
                                                          Plaintiff,
                                                                                                Hon. FIDEL E. GOMEZ
                           - against -                                                                     Justice

                2435 KINGSLAND LLC, ERIC SHAPIRO, STEVEN J.
                SHAPIRO, CITY OF NEW YORK DEPARTMENT OF
                FINANCE, CITY OF NEW YORK ENVIRONMENTAL
                CONTROL BOARD AND “JOHN DOE NO. 1 THOUGH
                JOHN DOE NO.99,” SAID NAMES EING FICTITIOUS,
                PARTIES INTENDED BEING POSSIBLE TENANTS OR
                OCCUPANTS OF PREMISES, AND CORPORATIONS,
                OTHER ENTITTIES OR PERSONS WHO CLAIM, OR
                MAY CLAIM, A LIEN AGAISNT THE PREMISES,

                                                          Defendants.
                                                    a=.                              --X
                The following papers numbered | to 2, Read on this Motion noticed of 9/22/23, and duly
                submitted as no. 4 on the Motion Calendar of 9/22/23.
                                                                                     PAPERS NUMBERED
                 Notice of Motion - Order to Show Cause —                                 1
                 Exhibits and Affidavits Annexed
                 Answering Affidavit and Exhibits
                 Replying Affidavit and Exhibits
                 Notice of Cross-Motion - Affidavits and Exhibits
                 Pleadings - Exhibit
                 Stipulation(s) - Referee’s Report - Minutes
                 Filed Papers- Proposed Order of Reference
                 Memorandum of Law

                Plaintiff's motion is decided in accordance with the           CCISIGN     an    rder annexed hereto.


                     “11/3/23
                                                                                         IFIDEL E. GOMEZ, JSC

                 1.CHECK ONE                              O CASE DISPOSED                IX NON-FINAL DISPOSITION
                2. MOTION/CROSS-MOTION        IS.         X GRANTED (MOTION)             CO DENIED (MOTION)
                                                          O GRANTED IN PART              O OTHER
                3. CHECK    IF APPROPRIATE.               O SETTLE ORDER                 O FIDUCIARYAPPOINTMENT
                                                          O SUBMIT ORDER                 (REFEREE APPOINTMENT
                                                          O DO NOT POST                  CO NEXT APPEARANCE DATE:




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                SUPREME COURT OF THE STATE OF NEW YORK
                COUNTY OF THE BRONX
                                                                                        X
                NY 2015 BOAT LLC,

                                   Plaintiff,
                -against-                                                                   DECISION AND ORDER

                                                                                            Index No. 806264/2022E
                2435 KINGSLAND LLC, ERIC SHAPIRO, STEVEN
                J. SHAPIRO, CITY OF NEW YORK
                DEPARTMENT OF FINANCE, CITY OF NEW
                YORK ENVIRONMENTAL CONTROL BOARD
                AND “JOHN DOE NO. 1 THROUGH JOHN DOE
                NO. 99,” SAID NAMES BEING FICTITIOUS,
                PARTIES INTENDED BEING POSSIBLE TENANTS
                OR OCCUPANTS OF PREMISES, AND
                CORPORATIONS, OTHER ENTITIES OR
                PERSONS WHO CLAIM, OR MAY CLAIM, A
                LIEN AGAINST THE PREMISES,


                                   Defendants.
                ween ene                        eee        eee een     en enenen ene,

                           Plaintiff's motion for, inter alia,   summary judgment, pursuant to CPLR § 3212, is

                granted.

                           BACKGROUND

                           This is an action to foreclose a commercial mortgage which encumbers real property

                located at 2435 Kingsland Avenue, Bronx, New York 10469.                     The complaint alleges, inter alia,

                as follows:      On February 11, 2021, defendant 2435 Kingsland LLC (Kingsland) executed and

                delivered a promissory note to plaintiff whereby it promised to pay the principal sum of

                $300,000 plus interest. On that same date, defendants Eric Shapiro (Eric) and Steven J. Shapiro
                (Steven) executed a guaranty to plaintiff guaranteeing Kingsland’s repayment of the note. As

                collateral security for repayment of the note, Kingsland executed and delivered a mortgage in the

                principal sum of $300,000.        Plaintiff is the holder of the note and was in possession of the note

                and mortgage at the time this action was commenced.                Pursuant to the note, Kingsland promised

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                to make consecutive monthly payments of principal and/or interest on the first day of each month

                commencing on April 1, 2021 and on the first day of each succeeding month to and including

                November 11, 2022, at which time the remaining principal amount and accrued interest became

                due and payable.     Kingsland defaulted on its obligations under the terms of the note by failing
                and omitting to pay plaintiff
                                            the amounts due on April 1, 2021 and each and every month

                thereafter.    By the filing of the complaint, plaintiff
                                                                       has elected to declare the entire unpaid

                principal balance, unpaid interest and other amounts due and payable.



                                          MOTION      FOR SUMMARY JUDGMENT

                         Plaintiff's motion seeking summary judgment           on its cause of action to foreclose on the

                mortgage and for the sale of the property is granted to the extent of appointing a referee to

                compute all sums due to plaintiff under the note and mortgage.            Significantly, plaintiff
                establishes that it currently holds the note and mortgage, both executed by Kingsland, and that

                Kingsland defaulted under the terms of the note and mortgage.            Further, plaintiff establishes the

                existence of the guaranty signed by Eric and Steven, the underlying debt and their failure to

                perform under the guaranty.



                STANDARD OF REVIEW

                         The proponent of a motion for summary judgment carries the initial burden of tendering

                sufficient admissible evidence to demonstrate the absence of a material issue of fact as a matter
                of law (Alvarez v Prospect Hospital, 68 NY2d 320, 324 [1986]; Zuckerman v City of New York,

                49 NY2d 557, 562 [1980]).       Thus, a defendant seeking summary judgment           must establish prima

                facie entitlement to such relief by affirmatively demonstrating, with evidence, the merits of the

                claim or defense, and not merely by pointing to gaps in plaintiff's proof (Mondello v DiStefano,

                16 AD3d 637, 638 [2d Dept 2005]; Peskin v New York City Transit Authority, 304 AD2d 634,

                634 [2d Dept 2003]).       There is no requirement that the proof be submitted by affidavit, but

                rather that all evidence proffered be in admissible form (Muniz v Bacchus, 282 AD2d 387, 388

                [1st Dept 2001], revd on other grounds; Ortiz v City of New York, 67 AD3d 21, 25 [Ist Dept


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                2009]).     Notably, the court can consider otherwise inadmissible evidence, when the opponent

                fails to object to its admissibility and instead relies on the same (Niagara Frontier Tr. Metro Sys.

                v County of Erie, 212 AD2d      1027, 1028 [4th Dept 1995]), or when the opponent fails to object to

                the admission of such evidence (Bank of New York Mellon v Gordon, 171 AD3d 197, 202 [2d
                Dept 2019] [“However, as a general matter, a court should not examine the admissibility of

                evidence submitted in support of a motion for summary judgment            unless the nonmoving party

                has specifically raised that issue in its opposition to the motion.”]; see Greene v Kevin D.

                Greene, LLC, 188 AD3d        1012, 1013 [2d Dept 2020]; Rosenblatt v St. George Health and

                Racquetball Assoc., LLC, £119 AD3d 45, 55 [2d Dept 2014] [“Thus, the Supreme Court erred

                when it, sua sponte, determined that the plaintiff's deposition transcript was inadmissible

                because of the lace of a certification and, as a result, concluded that Eastern Athletic had failed

                to meet its prima facie burden.”’]).     The latter is premised on the well settled principal that a court
                ought not raise arguments never raised by the parties themselves (Misicki v Caradonna, 12

                NY3d 511, 519 [2009] [We are not in the business of blindsiding litigants, who expect us to

                decide their appeals on rationales advanced by the parties, not arguments their adversaries never

                made.”]).

                          Once a movant meets its initial burden on summary judgment, the burden shifts to the

                opponent who must then produce sufficient evidence, generally also in admissible form, to

                establish the existence of a triable issue of fact (Zuckerman at 562).      It is worth noting, however,

                that while the movant’s burden to proffer evidence in admissible form is absolute, the
                opponent’s burden is not. As noted by the Court of Appeals,



                                  [t]o obtain summary judgment it is necessary that the movant
                                  establish his cause of action or defense ‘sufficiently to warrant the
                                  court as a matter of law in directing summary judgment’ in his
                                  favor, and he must do so by the tender of evidentiary proof in
                                  admissible form.     On the other hand, to defeat a motion for
                                  summary judgment the opposing party must ‘show facts sufficient
                                  to require a trial on any issue of fact.’ Normally if the opponent is
                                  to succeed in defeating a summary judgment motion, he too, must
                                  make his showing by producing evidentiary proof in admissible


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                                 form. The rule with respect to defeating a motion for summary
                                 judgment, however, is more flexible, for the opposing party, as
                                 contrasted with the movant, may be permitted to demonstrate
                                 acceptable excuse for his failure to meet strict requirement of
                                 tender in admissible form. Whether the excuse offered will be
                                 acceptable must depend on the circumstances in the particular case

                (Friends of Animals v Associated Fur Manufacturers, Inc., 46 NY2d 1065, 1067-1068 [1979]

                [internal citations omitted]). Accordingly, generally, if the opponent of a motion for summary

            judgment seeks to have the court consider inadmissible evidence, s/he must proffer an excuse for

                failing to submit evidence in admissible form (Johnson v Phillips, 261 AD2d 269, 270 [1st Dept

                1999).
                          When deciding a summary judgment      motion the role of the court is to make
                determinations as to the existence of bonafide issues of fact and not to delve into or resolve

                issues of credibility.   As the Court stated in Knepka v Talman (278 AD2d 811, 811 [4th Dept

                2000)),
                                 [s]upreme court erred in resolving issues of credibility in granting
                                 defendants’ motion for summary judgment dismissing the
                                 complaint. Any inconsistencies between the deposition testimony
                                 of plaintiffs and their affidavits submitted in opposition to the
                                 motion present issues for trial


                (see also Yaziciyan v Blancato, 267 AD2d      152, 152 (1st Dept   1999]; Perez v Bronx Park

            Associates, 285 AD2d 402, 404 [1st Dept 2001]). Accordingly, the court’s function when
                determining a motion for summary judgment        is issue finding, not issue determination (Si//man v

                Twentieth Century Fox Film Corp.,      3 NY2d 395, 404 [1957]).    Lastly, because summary

            judgment is such a drastic remedy, it should never be granted when there is any doubt as to the

                existence of a triable issue of fact (Rotuba Extruders v Ceppos, 46 NY2d 223, 231 [1978]),

                When the existence of an issue of fact is even debatable,    summary judgment    should be denied

                (Stone v Goodson, 8 NY2d 8, 12 [1960]).

                          In a foreclosure action, plaintiff establishes prima facie entitlement to summary judgment

                by submitting proof of a note, a mortgage, and defendant’s default or failure to pay the same
                (Barcy Investors, Inc. v Sun, 239 AD2d 161, 161 [1st Dept 1997]; Chemical Bank v Broadway

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                55-56th St. Assoc., 220 AD2d 308, 309 [1st Dept 2005]; Federal Home Mortgage Corp. v

                Karastathis, 237 AD2d 558, 558 [2d Dept 1997]; DiNardo v Patcam Service Station Inc., 228

                AD2d 543, 543 [2d Dept 1996]).        Once plaintiff demonstrates prima facie entitlement to

                summary judgment, it is then incumbent upon defendant to demonstrate a viable defense which
                creates an issue of fact, thereby precluding summary judgment        (id.). When there is no issue as

                to defendant’s default and the only issue is as to the amount actually owed,       summary judgment

                must nevertheless be granted (Crest/Good Manufacturing Co., Inc.          v Baumann,   160 AD2d 831,

                831-832 [2d Dept 1990]; Johnson v Gaughan, 128 AD2d 756, 757 [2d Dept 1987]). Any dispute
                as to the amount owed is to be resolved after summary judgment is granted pursuant to RPAPL §

                1321 (id.).
                          In addition to the foregoing, it is also well settled that since “foreclosure of a mortgage

                may not be brought by one who has no title to it’ (Lasalle Bank Natl. v Ahearn, 59 AD3d           911,
                912 [3d Dept 2009) [internal quotation marks omitted]), plaintiff in a foreclosure action must

                therefore establish that it has legal or equitable interest in the mortgage, such that it has standing

                to foreclose on the mortgage when an action is commenced (Aurora Loan Servs., LLC v

                Weisblum, 85 AD3d 636, 637 [2d Dept 2011]; Deutsche Bank Natl. Trust Co. v Barnett, 88

                AD3d 636, 637 [2d Dept 2011]).        Thus, when a defendant raises the issue of plaintiff's standing,

                plaintiff must prove its standing to be accorded relief (U.S. Bank National Assoc. v Dellarmo, 94

                AD3d 746, 748 [2d Dept 2012]; Bank of           N.Y. v Silverberg, 86 AD3d 274, 279 [2d Dept 2011]).
            A plaintiff in a mortgage foreclosure action has standing to bring suit when it is “both the holder
                or assignee of the subject mortgage and the holder or assignee of the underlying note at the time

                the action is commenced” (Dellarmo at 748 [internal quotation marks omitted]; Weisblum at

                108; Barnett at 637; Silverberg at 279; U.S. Bank, N.A. v Collymore, 68 AD3d 752, 753 [2d Dept

                2009]).    Neither the assignment of a note nor of a mortgage need be in writing and merely the

                transfer of those instruments, meaning physical delivery, confers title upon an assignee and,

                therefore, also confers standing (Flyer v Sullivan, 284 AD 697, 699 [1954]; Dellarmo at 748;

                Barnett at 637; Silverberg at 280; Weisblum at 108; Ahearn at 912 ). Insofar as the mortgage is

                merely security for the note, namely the debt, assignment of a note also effectuates assignment


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                of the mortgage (Dellarmo at 748; Silverberg at 280).          However, assignment of the mortgage

                does not, by itself, result in the assignment of the note (id.). Thus, the assignment of a mortgage

                without the concomitant assignment of the note is a nullity (Fiver at 698; Merrit v Bartholick, 9

                Tiffany 44, 45 [1867]; Dellarmo at 749; Collymore at 754).
                         To the extent that standing to foreclose on a mortgage is required at the time an action is

                commenced, where standing is absent at the time of commencement, such shortcoming cannot

                be cured by retroactive assignment occurring after an action is commenced (Countrywide Home

                Loans v Gress, 68 AD3d 709, 710 [2d Dept 2009] [“‘a retroactive assignment cannot be used to

                confer standing upon the assignee in a foreclosure action commenced prior to the execution of

                the assignment.”]; Wells Fargo Bank, N.A. v Marchione, 69 AD3d 204, 210 [2d Dept 2009] [“If

                an assignment is in writing, the execution date is generally controlling and written assignment

                claiming an earlier effective date is deficient unless it is accompanied by proof that the physical
                delivery of the note and mortgage was, in fact, previously effectuated.”] [internal quotation

                marks omitted]; Ahearn at 912 [same]).        In the event that a note and mortgage are validly

                assigned to a third party subsequent to the commencement of a foreclosure action, the assignee

                can continue an action in the name of the original mortgagee, even in the absence of a formal

                substitution (CPLR § 1018; Brighton BK, LLC v Kurbatsky, 131 AD3d              1000, 1001 [2d Dept

                2015]; Lincoln Sav. Bank, FSB v Wynn, 7 AD3d 760, 761 [2004]).             CPLR § 1018 provides that

                “Tupjon any transfer of interest, the action may be continued by or against the original parties

                unless the court directs the person to whom the interest is transferred to be substituted or joined
                in the action” (id.). Nonetheless, an assignee may, if it chooses, take the steps necessary to

                effect a formal substitution (Brighton BK, LLC at 1001).

                         RPAPL § 1311(1) states that in an action sounding in foreclosure a necessary defendant

                is, inter alia,

                                  [e]every person having an estate or interest in possession, or
                                  otherwise, in the property as tenant in fee, for life, by the curtesy,
                                  or for years, and every person entitled to the reversion, remainder,
                                  or inheritance of the real property, or of any interest therein or
                                  undivided share thereof, after the determination of a particular
                                  estate therein.


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                Since the objective of a foreclosure action is “to extinguish the rights of redemption of all those

                who have a subordinate interest in the property and to vest complete title in the purchaser at the

            judicial sale” (6820 Ridge Realty LLC v Goldman, 263 AD2d 22, 26 [2d Dept 1999] [internal
                quotation marks omitted]; Polish Nat. All. of Brooklyn, U.S.A. v White Eagle Hall Co., Inc., 98

                AD2d 400, 404 [2d Dept 1983]), it is well settled that tenants residing at the premises sought to

                be sold at foreclosure are necessary parties in an action to foreclose a mortgage (6820 Ridge

                Realty LLC at 25; see 1426 46 St., LLC v Klein, 60 AD3d 740, 742 [2d Dept 2009]; Flushing

                Sav. Bank v CCN Realty Corp., 73 AD2d 945, 945 [2d Dept 1980]). The failure to join a
                necessary party in a foreclosure action leaves that party’s rights unaffected and the sale at

                foreclosure void as to that party (Polish Nat. All. of Brooklyn, U.S.A. at 406; 1426 46 St., LLC v

                Klein at 742; 6820 Ridge Realty LLC at 26).
                        RPAPL § 1321(1) states that
                                [if the defendant fails to answer within the time allowed or the
                               right of the plaintiffis admitted by the answer, upon motion of the
                                plaintiff, the court shall ascertain and determine the amount due, or
                               direct a referee to compute the amount due to the plaintiff and to
                               such of the defendants as are prior incumbrancers of the mortgaged
                               premises, and to examine and report whether the mortgage
                               premises can be sold in parcels and, if the whole amount secured
                               by the mortgage has not become due, to report the amount
                               thereafter to become due.


                Thus, on an application for an order of reference, a plaintiff establishes entitlement to said relief

                when it submits “the mortgage, the unpaid note, the complaint, other proof setting forth the facts

                establishing the claim, an affidavit of an individual authorized to act on its behalf attesting to the

                default on the note, and proof that the defendants failed to answer within the time allowed”

                (Household Fin. Realty Corp. of New York v Adeosun-Ayegbusi, 156 AD3d 870, 871 [2d Dept

                2017]; Lasalle Bank Nat. Ass'n v Jagoo, 147 AD3d 746, 746 [2d Dept 2017]; John T. Walsh

                Enterprises, LLC v Jordan, 152 AD3d 755, 756 [2d Dept 2017]; US Bank Nat. Ass’n v Singer,

                145 AD3d 1057, 1058 [2d Dept 2016).


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                        Despite the language in RPAPL § 1321(1), which limits the appointment of a referee to

                actions where the mortgagee defaults in the plenary action or where the same admits plaintiff's

                right to foreclose on the mortgage in an answer, courts routinely appoint referees pursuant to

                RPAPL § 1321 in cases where the mortgagor is awarded the right to foreclose upon a motion for
                summary judgment     (Excel Capital Group Corp. v 225 Ross st. Realty, Inc., 165 AD3d            1233,

                1233-1234 [2d Dept 2018] [In an action for foreclosure and sale, the court appointed a referee to

                compute after granting plaintiffs motion for summary judgment.]; see Deutsche Bank Natl. Tr.

                Co. v Logan, 183 AD3d 660, 661-663 [2d Dept 2020[ [same]; U.S. Bank N.A. v Calabro, 175

                AD3d    1451, 1451 [2d Dept 2019] [same]; Deutsche Bank Nat. Tr. Co. v Logan, 146 AD3d 861,

                861 [2d Dept 2017] [same]).

                        A guaranty agreement must be strictly construed (White Rose Food v Saleh, 99 NY2d

                589, 591 [2003]; Cooperatieve Centrale Raiffeisen-Boerenleenbank, B.A. v Navarro, 25 NY3d
                485, 592 [2015]).    Summary judgment         seeking an order enforcing a guaranty is warranted upon

                proof of “the existence of the guaranty, the underlying debt and the guarantor’s failure to

                perform under the guaranty” (Cooperatieve Centrale Raiffeisen-Boerenleenbank, B.A. at 492;

                Davimos v Halle, 35 AD3d 270, 272 [1st Dept 2006]; City of New York v Clarose Cinema Corp.,

                256 AD2d 69, 71 [Ist Dept 1998]).

                DISCUSSION

                        Plaintiff's motion for, inter alia,     summary judgment   on its foreclosure claim against
                Defendants 2435 Kingsland LLC, Eric Shapiro and Steven J. Shapiro is granted.

                        In support of the motion, plaintiff submitted the affidavit of its manager, Andrea Butler

                (Butler) wherein she reiterated the allegations in the complaint and, in addition, states as follows:

                She is the Manager of plaintiff and has full knowledge of the facts of this matter.       Plaintiff owns

                and services its own mortgage loans and is possession of and maintains the books and records

                with respect to the instant loan. With respect to this loan, plaintiff
                                                                                     has collected and posted

                payments, if any, handled all aspects of customer service, and referred this loan for foreclosure

                when the borrower, Kingsland, defaulted on its monthly loan payments.           In the regular


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                performance of her duties as Manager, she is familiar with the business records maintained by

                plaintiff for the purpose of servicing mortgage loans.           These records are made at or near the time

                of the activity or transactions by, or from information provided by, persons with knowledge of

                the activity and transactions reflected in such records, and are kept in the course of business
                conducted regularly by plaintiff.    It is the regular practice of plaintiff's mortgage servicing

                business to make, incorporate and/or maintain these records.            Butler has knowledge of the

                underlying facts herein, having negotiated the underlying loan and personally            processed the

                received loan payments.      She has personally reviewed every document attached to her affidavit.

                         Kingsland default on its obligations under the terms of the note by failing to pay to the

                owner and holder of the note the payments due on March 1, 2022 and each and every month

                thereafter.    The current balance due plaintiff is $365,884.84.        Other than the pre-paid payments

                received pursuant to the Interest Reserve Agreement, no payments have been made on the loan.
                         Butler states that she has personally reviewed the documents attached to her affidavit,

                which include the note in the principal amount of $300,000 (signed by Eric on behalf of the

                LLC), guaranty (signed by Eric and Steven), mortgage between plaintiff and Kingsland (signed

                by Eric on behalf of the LLC), and Interest Reserve Agreement (signed by Eric on behalf of the

                LLC).
                         Here, Butler’s affidavit and attached exhibits sufficiently establish plaintiff's prima facie

                entitlement to judgment as a matter of law, and, thereby, shift the burden to defendants to

                produce sufficient evidence, generally also in admissible form, to establish the existence of a
                triable issue of fact (Zuckerman at 562).

                         In opposition to the motion, Eric and Steven (together “defendants”) contend that the

                motion should be denied on two grounds: (1) there are triable issues of fact as to whether the

                mortgage at issue was fraudulently induced, thereby rendering the loan voidable, and whether

                the loan itself is either civilly or criminally usurious and (2) the motion is premature as no

                discovery has taken place and pertinent evidence relating to defendants’ affirmative defenses is

                solely within plaintiff's custody and control.




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                        In support of their contentions, defendants submitted the affidavits of Eric and Steven,

                respectively.    In his affidavit, Eric states as follows:      Plaintiff seeks to enforce a hard-money

                loan, with abusive terms, “disguised” as a commercial loan when the property pledged as

                security for the loan is a residential property — a house occupied by Steven, the co-borrower.                  As
                such, Eric asserts, this action should be heard in the residential foreclosure part and not the

                commercial division.      The property at issue has been in his family for more than 50 years, and

                both and he and Steven grew up in the house.           After their father died, Eric and Steven transferred

                the deed to the property to themselves as co-owners.               In early 2020, Eric and Steven began

                approaching banks for a mortgage loan to make overdue repairs to the house and to pay off

                certain debts and judgments.      Of particular concern to them were arrears for property taxes, in

                connection with they were afraid that the NYC Dept. of Finance would file a lien against the

                property.     Both Eric and Steven are tradesmen with limited income and bad credit, and were told
                by banks that they would not qualify for a loan.         In Spring 2020, Eric found an advertisement on

                the internet by a broker named Larry Jonathan (Jonathan).               Eric contacted Jonathan who assured

                Eric that he worked with lenders who could provide Eric and Steven with a loan. Jonathan told

                Eric that he had experience in helping individuals with poor credit get mortgage loans, but that

                the loan would have a higher interest rate than a regular mortgage loan. Eric understood that the

                mortgage loan would be about $300,000 with a term of eighteen months, during which time no

                payments would be due. This would give Eric and Steven some breathing room to pay off debts,

                get rid of judgments and improve their credit so that they could qualify for a “regular mortgage
                loan to pay off the loan.” On or about January 31, 2021, Jonathan sent Eric over 18 documents

                to review, including the note, mortgage, pledge and security agreement, guaranty, and certificate

                of commercial loan with a waiver of federal and state regulations of lending. Not being a

                lawyer, Eric was overwhelmed by these documents and did not understand the legal terms.                    Also,

                since he had never taken out a mortgage, Eric did not understand why so many documents were

                created for a small loan.    Eric noted that the documents referred to Kingsland as the borrower

                and himself and Steven as members of the LLC.                Until he received those documents, he had no

                idea that an LLC had been created.       He first received a copy of the LLC papers from Jonathan at


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                the closing, at which time he realized that the LLC was set up with the Dept. of State in May

                2020, without his knowledge or consent.      Eric was concerned that the loan was set up as a

                commercial loan and, when he questioned Jonathan about this, he was told that the lender would

                only make commercial loans even though Eric and Steven were “just homeowners.”                 Eric now
                understands that this was done to get around federal and state laws that govern lending.           Eric

                first met Jonathan in person at the closing on February 11, 2021.         Steven was unable to attend the

                closing because he had Covid-19.      Eric met an attorney named Martin Braunschweig

                (Braunschweig) at the closing and was told that he would represent Eric and Steven.            Eric had

                never met Braunschweig before and he did not have the opportunity to review, and ask questions

                about, the documents with him.      Braunschweig “had [Eric] sign over a dozen documents with

                virtually no explanation as to what [he] was signing.” The only issue Eric understood from

                Braunschweig was that the term of the loan was eighteen months, that it was a high interest rate,
                and that no payments would be due.      One of the documents Eric was asked to sign was an

                “Interest Reserve Account,” which allowed the lender to retain $36,000 to cover the monthly

                interest of $3,000 over a twelve-month period.       This was another reason why Eric believed that

                no payments would be due, at least for twelve months.           An attorney from the title company

                attended the closing, and the title company retained some of the funds to pay off the outstanding

            judgments and debts.        At the end of the closing, Eric was presented with a breakdown of the

                distribution of the funds.   After the payment of debts, and fees associated with the loan

                transaction, Eric and Steven were to receive $103,692.69, payable to Kingsland.          Although Eric
                was a bit shocked by all the fees, he expected to walk away from the closing with a check in the

                amount of $103,692.69 in hand but he received no check at the closing.          About a week later,

                having not received a check in the mail, Eric inquired with Braunschweig about the check.

                Thereafter, Braunschweig contacted the lender’s attorney who provided Braunschweig with a

                wire transaction receipt which indicated that the funds had been wired to Navy Federal Credit

                Union (Navy Credit), located in Virginia.    Braunschweig determined that the account to which

                the funds were wired was set up by Jonathan, who had used his own social security number to

                open the account.   Based upon information received after an investigation, Eric and Steven


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                believe that the name Larry Jonathan is an alias.          Eric called Navy Credit to withdraw the funds

                but was informed that the account had been “flagged for potential fraud and was frozen.” About

                one month after the closing, Eric and Steven drove to a branch of Navy Credit, located near West

                Point, NY.      Although Eric presented the LLC papers to a bank representative along with
                personal identification documents, the bank was “unwilling or unable” to release the funds to

                him, “apparently because [of] the way the account was set up by the broker Jonathan.”                  Despite

                many attempts, Eric and Steven have never been able to access the funds.                After payment of the

            judgments and debts, Eric and Steven received only $75,000 of the loan proceeds.                      Eric and

                Steven are unfamiliar with the lender NY 2015 Boat LLC and believe that they have been

                defrauded.      Despite this fraud, the lender is now seeking to take their home and remaining equity

                by bringing this foreclosure action.    Attorneys have explained to Eric that, to get to the bottom of

                what happened, they need to conduct discovery because there are many factual issues. Eric
                attached copies of the deed to the property, the documents Braunschweig sent to him, LLC

                documents, a deed transfer, a wire transaction receipt, and several emails between Jonathan

                and/or the lender’s attorney and Braunschweig to his affidavit.

                          In his affidavit, Steven reiterates much of what        Eric stated in his affidavit.   In addition,

                Steven states as follows:     Steven grew up in the subject house and never moved out. He found

                out about the foreclosure by accident when he went to the bank to see if he could refinance the

                loan. At that time, Steven was informed by a bank representative that his home was in

                foreclosure.     Although Steven lives at the property, he discovered the foreclosure complaint was
                never served at the property because the process server erroneously claimed that the house was

                vacant.   The house next door is vacant so it is possible that the process server confused the two

                homes.    Up to the time of the closing, Eric mostly dealt with the broker.           Steven had Covid-19 at

                the time of the scheduled closing and the lender refused to adjourn the closing.              A few days

                before the closing, he received “a few documents to sign.”             Steven signed the documents,

                although not before a notary public, and sent them back to Braunschweig.                Steven was surprised

                to learn from Eric that an LLC was set up in May 2020.             Neither of them knew about the LLC or

                signed any papers to set up the LLC.      It is Steven’s understanding that Navy Credit did not


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                release the funds to Eric because the account had been set up by Jonathan.             It is now clear to Eric

                and Steven that they were defrauded.

                        As noted above, defendants assert that triable issues of fact exist as to whether the

                mortgage at issue was fraudulently induced, thereby rendering the loan voidable, and whether
                the loan itself is either civilly or criminally usurious and (2) the motion is premature as no

                discovery has taken place and pertinent evidence relating to defendants’ affirmative defenses is

                solely within plaintiff's custody and control.        These arguments fail for the following reasons.

                        With respect to (1) above, significantly, defendants failed to plead either fraud or usury

                as an affirmative defense in their answer.'   Notably, CPLR § 3018(b) provides that

                               [a] party shall plead all matters which if not pleaded would be
                               likely to take the adverse party by surprise or would raise issues of
                               fact not appearing on the face ofa prior pleading such as
                               arbitration and award, collateral estoppel, culpable conduct
                               claimed in the diminution of damages as set forth in article
                               fourteen A, discharge in bankruptcy, facts showing illegality either
                               by statute or common law, fraud, infancy or other disability of the
                               party defending, payment, release, res judicata, statute of frauds, or
                               statute of limitations. The application of this subdivision shall not
                               be confined to the instances enumerated.



                        'As Plaintiff notes, to the extent that the fortieth affirmative defense can be construed as a
                fraudulent inducement defense, it is inadequately plead. In this regard, defendants allege merely
                that “Plaintiff and/or its predecessor engaged in conduct to transfer the property from the
                individual defendants to an LLC without the knowledge of the individual defendants. It is
                unknown who the members of the LLC are.” This is insufficient to satisfy the pleading
                requirements for fraud claims as set forth in CPLR § 3016(b), which requires that “the
                circumstances constituting the wrong shall be stated in detail.” Significantly, “a plaintiff seeking
                to recover for fraud and misrepresentation is required to set forth specific and detailed factual
                allegations that the defendant personally participated in or had knowledge of any alleged fraud”
                (Friedman v. Anderson, 23 AD3d 163, 166 [1st Dept 2005]). Here, there are no specific
                allegations that plaintiff had any involvement in either the creation of the LLC or the transfer of
                the real property to the LLC. Indeed, in their affidavits, Eric and Steven state that they are
                “unfamiliar with the lender NY 2015 Boat LLC.”                Moreover, the elements of a cause of action
                for fraud consist of “a misrepresentation or a material omission of fact which was             false and
                known to be false by [the] defendant, made for the purpose of inducing the other             party to rely
                upon it, justifiable reliance of the other party on the misrepresentation or material         omission, and
                injury” (Mandarin Trading Ltd. v Wildenstein, 16 NY3d 173, 178 [2011]). Here,                 the answer and
                affidavits of Eric and Steven are bereft of any such allegations against plaintiff.

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                        An affirmative defense, as defined by CPLR § 3015(b) is waived if not pleaded in an

                answer (Butler v Catinella, 58 AD3d    145, 150 [2d Dept 2008] [Affirmative defenses, such as

                those set forth in CPLR 3018(b), as a general rule, would be deemed waived if not raised in the
                pleadings.”]); Surlak v Surlak, 95 AD2d 371, 383 [2d Dept 1983] [“The general rule is that an

                affirmative defense is deemed waived if not raised in the pleadings.”]).

                        However, when a defendant fails to plead an affirmative defense, as required by CPLR §

                3211(e) and CPLR § 3018(b), but nevertheless asserts that defense in connection with a motion

                for summary judgment, the waiver is said to be retracted and the court can grant, when the

                defendant is the movant, or deny, when the defendant is the opponent,         summary judgment   based

                upon the unpleaded affirmative defense ( Lerwick v Kelsey, 24 AD3d 918, 919-920 [3d Dept

                2005]; Allen v Matthews, 266 AD2d 782, 784 [3d Dept 1999]; Adsit v Quantum Chem.
                Corp.,199 AD2d 899, 900 [3d Dept 1993]).       The threshold inquiry is whether in considering the

                unpleaded defense, the opponent of the defense is prejudiced thereby ( BMX Worldwide v

                Coppola, 287 AD2d 383, 384      [lst Dept 2001]; Allan at 784; Seaboard Sur. Co. v Nigro, Bros.,

                222 AD2d 574, 574 -575 [2d Dept 1995]; Rogoff'v San Juan Racing Assn. Inc., 77 AD2d 831,

                832 [1st Dept 1980, affd, 54 NY2d 883 [1981]).           Such prejudice, however, is ameliorated when

                the defense was previously raised on a prior motion or during discovery (id.), or when the

                opponent of the motion, where defendant seeks summary judgment based upon said defense, is

                given an opportunity to fully respond to the motion for summary judgment (Sheils v County of
                Fulton, 14 AD3d 919, 921 [3d Dept 2005], /v denied 4 NY3d 711[2005]; Kirilescu v American

                Home Prods. Corp., 278 AD2d 457, 457-458 [2d Dept 2000], /v denied 96 NY2d 933 [2001];

                McSorley v Philip Morris, Inc. , 170 AD2d 440, 441 [2d Dept 1991], appeal dismissed 77 NY2d

                990 [1991]; International